United in
purpose
Ferrexpo plc
Annual Report & Accounts 2024
As a leading European supplier of premium iron
ore pellets we are enabling the transition to green
steel. Our products are important to Ukraine and
to customers around the world.
We are determined to protect our people and
our assets so that we may continue to operate
and contribute positively to Ukrainian society
and the economy.
Who we are
Ferrexpo is a leading European producer and
supplier of premium iron ore products that
are enabling the transition to green steel.
Our products are important to Ukraine and
to our customers around the world.
Read more
Pages 20-25
Read more
Pages 26-29
What we do
We are a vertically integrated producer and
supplier of high-grade iron ore products.
Our long-life deposits feed ore to our modern
processing and beneficiation plants to produce
high grade iron ore products which we can
deliver by rail, barge or ship to our customers.
Read more
Pages 20-25
4
3
6
7
8
9
1
2
5
10
Ferrexpo at a Glance
HIGHLIGHTS OF THE YEAR
Despite the challenges of operating
during a third year of war, 2024 marked
a year of unprecedented achievement
for Ferrexpo. The reopening of Ukrainian
Black Sea ports allowed us to increase
production and sales, supplying
customers in MENA and Asia for the first
time since the full-scale invasion in
February 2022.
Strategic Report
01
Executive Chair’s Statement
02
Group Chief Financial
Officer’s Statement
04
Operating during a time of war
06
Our Business
Business Model
10
Value Proposition
12
Strategic Framework
14
KPIs
16
Operational Review
20
Market Review
26
Financial Review
30
Our People
36
Responsible Business Review
Introduction
44
Health and Safety
46
Diversity, Equity and Inclusion
47
Environmental Stewardship
49
Governance
54
Stakeholder Engagement
Section 172
56
Task Force on Climate-Related
Financial Disclosures (“TCFD”)
64
Risk Management
81
Principal Risks
84
Viability Statement
95
Corporate Governance
97
Financial Statements
160
Additional Disclosures
239
Alternative Performance Measures
240
Glossary
242
Purpose and values
Our purpose is to deliver value to our
stakeholders by producing and marketing
premium iron ore products in a socially
responsible and sustainable manner. We
are focused on taking an ethical approach
and developing positive relationships with
all stakeholders.
Read more
Pages 11-13
Strategic direction
The war has taught us to be flexible and
adaptive to the challenges we face. Our focus
is the safety and wellbeing of our people,
whilst preserving the integrity of our assets.
We also consider our longer-term strategic
direction so that we can maintain stability
and resilience.
Read more
Pages 14-15
of taxes and royalties
paid in Ukraine in 2024
US$74M
66% increase in production
compared to 2023
6.9 Mt
capital investment
in 2024
US$102M
EBITDA, 30% decrease
compared to 2023
US$69M
strong workforce
8,000
humanitarian aid*
since February 2022
US$28M
FTSE 250
FTSE4Good
7
Office, Dubai
9
Office, Shanghai
8
Office, Singapore
10
Office, Tokyo
2
Ferrexpo AG, Baar
4
Operations, Horishni Plavni
3
Ferrexpo Services Ltd, Kyiv
5
Port facilities
6
First DDSG, Danube
For references to Ferrexpo plc
in this report see glossary.
*including CSR spending
1
Ferrexpo Plc, London
01
Financial Statements
Corporate Governance
Strategic Report
A year of
unprecedented
achievement
Ferrexpo plc
Annual Report & Accounts 2024
02
Executive Chair’s Statement
Undeterred by the
challenges of a third year
of war, 2024 marked a
year of unprecedented
achievement for Ferrexpo.
Our people worked as a united team to bring
back production and increase sales to the
highest levels since the start of the full-scale
invasion in February 2022. In the first quarter
of 2024 alone, production and sales doubled
compared to the final quarter of 2023. We
also brought back production of our highest
quality, and higher margin products. I am very
pleased that our organisation has been able
to achieve such a dramatic recovery, during a
time of war.
A MORE AGILE AND
FLEXIBLE BUSINESS
Throughout the operational recovery of 2024,
the business demonstrated tremendous
agility, by coordinating more than 8,000
people, from the mine face to dock side,
varying production between one and three
of our four pelletising lines, depending on
power availability, customer demand and
pricing. By quickly scaling up or down our
production, we were also able to produce
a variety of different product qualities
and restart shipping activities on a variety
of vessel sizes, including the larger, more
efficient capesize vessels. This allowed us to
diversify geographically to supply existing
and new customers in MENA and Asia, having
previously been constrained logistically to
mainly European markets.
PRESERVING OUR BUSINESS
IN A CHALLENGING
ENVIRONMENT
This agility was important during 2024. In the
first quarter, we were able to benefit from
higher production volumes sold at higher
iron ore prices. This allowed us to increase
salaries and invest to preserve the integrity of
our assets. As the year progressed, however,
iron ore prices fell, month after month.
New war-related challenges, in particular the
need to import power at significantly higher
tariffs, resulted in our costs increasing. These
factors combined have eroded our margins
and cash position, more of which our Chief
Financial Officer reports on in his statement
on the following pages.
CONTRIBUTING TO THE
UKRAINIAN ECONOMY
AND TO SOCIETY
Despite the challenges, our business
remains relevant. During the year, in
Ukraine, we paid US$54 million in salaries
and procured US$657 million in goods from
our suppliers. We generated US$933 million
in revenues, and paid US$74 million in taxes
and royalties. We also continued to fund
humanitarian and social initiatives, including
making large donations to address critical
national emergencies. These are significant
contributions that support employment
and livelihoods, sustain communities, and
contribute to Ukraine’s resilience.
When I look at our business and our people,
I see a relentless energy of purpose, a drive
to work hard, and a determination to keep
delivering, time and time again. To this end,
I have asked my fellow Executive Committee
members to convey in detail how their
respective functions – from operations to
marketing to finance and human resources –
have adapted, and how they add value to the
business during a time of war. It is important
to me that shareholders understand that,
whilst we are consumed by war, we are
navigating through it.
COLLEAGUES SERVING IN
THE ARMED FORCES AND
VETERANS RETURNING
At the end of 2024, 706 of our colleagues
were serving in the Armed Forces of Ukraine.
We support serving colleagues through
the provision of equipment such as bullet
proof vests, ballistic helmets, clothing items,
sleeping bags and mats, tactical first aid kits,
and seemingly ordinary daily essentials such
as mess kits and sanitary items. We maintain
constant contact with them, either directly or
through relatives, so that we can continue to
supply them with replacements and additional
items that make military life more manageable.
We also guarantee their jobs when they return
as veterans.
Indeed, as the war continues, we are
welcoming an increasing number of veterans
home – 160 at the end of December 2024.
The Ferrexpo Veteran Support Service
guides them through decommissioning,
convalescence, their physical and mental
health needs, and, when they are ready,
return to the workplace, including retraining
if necessary. It is clear that mental health is
one of the biggest challenges that we must
rise to – not just for the veterans, but also for
family members. In this report, we present a
detailed case study on the support we provide
for veterans and their families, in a new section
titled “People”.
PREPARING TO BE AN
IMPORTANT PLAYER IN
UKRAINE’S RECONSTRUCTION
Reconstruction of Ukraine is an important
part of our future. It is one part of the
plans we progressed during 2024 to play
an important role in the reconstruction of
Ukraine. As a Ukrainian industrial company,
with headquarters and stock exchange listing
in Western Europe, we are uniquely positioned
to play a leading role in reconstruction.
We have the skills and experience raising
capital on international markets to invest
in Ukraine, following the high governance
standards international investors expect.
Our first step will be to restore full production,
which has been constrained due to the war.
Subsequently, we plan to expand further
and to decarbonise, allowing us to increase
our contribution to the Ukrainian economy
and society.
GOVERNANCE
As in previous years, the Board met more
frequently than is required. There were no
changes to the Board during 2024, and only
a few changes within the sub-committees.
Subsequent to the 2024 reporting period,
Natalie Polischuk resigned from the Board of
Ferrexpo in January 2025. I am particularly
grateful to Natalie who, as Chair of the Health,
Safety, Environment and Community (“HSEC)
Committee, oversaw our Humanitarian Fund
and CSR activities, which have provided
a tangible positive social impact for our
workforce and communities since the start
of the full-scale invasion. Following Natalie’s
resignation, the Board continues to have
a majority of independent Non-executive
Directors and a search for a new independent
Non-executive Director is ongoing.
I close my letter as I opened it: 2024 marked
a year of unprecedented achievement for
Ferrexpo. It was pleasing that 2024 was also
capped by a series of awards for our business
and our people, and a strong rally in the share
price at the end of the year that resulted in us
re-entering the FTSE 250.
I recognise it has been a difficult year, and I am
grateful to every colleague for their exceptional
efforts and to our shareholders and broader
stakeholders for their continued support.
Lucio Genovese
Interim Executive Chair, Ferrexpo Plc
Corporate Governance
Financial Statements
03
Strategic Report
United against
challenges
Ferrexpo plc
Annual Report & Accounts 2024
04
Group Chief Financial Officer’s Statement
In 2024, our business was
dominated by a third year
of war in Ukraine, while
at the same time having
to manage the cyclical
dynamics of the iron
ore and steel sector
in a global economy
being shaped by other
transformational forces.
CHALLENGING MARKETS
FOR IRON ORE
Iron ore markets traditionally exhibit some
seasonality in demand and pricing, both
positive and negative. For example, extreme
weather can disrupt supply from various
markets as well as influence production rates
of steel mills and limit or increase demand for
our products.
There are also shorter-term dynamics
affecting the iron ore and steel markets.
Examples of factors that affected Ferrexpo
in 2024 include economic contraction in
Europe, evidenced by weakness in the
automotive sector, resulting in less demand
for steel and, ultimately, the iron ore pellets
we supply to our European customers.
INCREASED PRODUCTION
COUNTERED HIGHER
COSTS AND WEAKER
REALISED PRICES
This complex environment is reflected in our
financial results. A 66% increase in production
translated into a 43% increase in revenue
due to a 17% fall in realised prices. Higher
production volumes supported a better
absorption of our fixed costs on a unit cost
basis, although this remained suboptimal as
we operated at below two thirds of our full
capacity. Overall, our C1 cash costs on a unit
basis increased by 10% to US$83.9 per tonne.
The main reason for this increase is the
requirement to import electricity at prices
sometimes double the usual domestic tariff.
We also continued to incur higher costs
compared to the period before the full-
scale invasion for other energy sources, key
consumables, transport and logistics, and to
fund necessary salary increases.
Reflecting the broader macroeconomic
challenges in Ukraine, the Ukrainian hryvnia
depreciated 10% against the US dollar in 2024.
This had a positive impact on our financial
statements, resulting in a net US$44 million
foreign exchange gain for the year. Historically,
it’s fair to say that the devaluation of the
Ukrainian hryvnia offsets cost inflation, but
this was less the case in 2024, particularly as
we incurred more costs in other currencies,
for example, to purchase imported power.
The non-cash impairment loss of US$72 million
recorded as at 31 December 2024 on the
Group’s non-current operating assets,
including property, plant and equipment,
intangible assets and other non-current
assets, is the result of the Group’s lower cash
flow generation driven by a decrease of prices
for iron ore products due to a less optimistic
long‑term outlook for the iron ore market and
higher prices for input material due to the
ongoing war in Ukraine.
Although the Group made a loss of US$50
million, had the impairment of US$72 million
not occurred the Group would have made
a profit of US$22 million. This was 52%
lower compared to 2023, if the provisions of
US$131 million recorded for legal disputes
are added back. This demonstrates that,
while the strategy to bring back production
volumes did not result in the expected profit
growth, it helped to limit losses in the face of
exceptional challenges.
A YEAR OF TWO HALVES
Behind the headline annual numbers, there
are some interesting themes worth pointing
out. First, the annual results are a tale of two
halves. During the first half of 2024, we sold
56% of our production at prices that were on
average 10% higher than those in the second
half; and average C1 costs in the second half
of the reporting period were 13% higher
compared to the first half.
Indeed, in the interim results we reported an
Underlying EBITDA of US$79 million, whereas
for the full year, it has fallen to US$69 million,
reflecting the more challenging second
half of the year and a reduction in realised
profits. As we move into 2025, and at the
time of the release of this report, we are in
the fourth year of war, and it is important to
state that operating conditions continue to
be challenging, and we have not yet seen any
improvement in iron ore prices or costs.
ADDING VALUE THROUGH
OUR WORK
Preparing for and responding to these
challenges is one of the ways that the finance
function demonstrates how we add value to
the business. In many senses we are a nexus
that co-ordinates other functions of the
business, providing the data necessary to drive
short-term strategies for the business. As an
example, we liaise between our colleagues in
marketing to identify which of our products,
in which markets, at what times will generate
the best possible margin, whilst at the same
time, making sure that our colleagues in
operations are prepared and are allocated
the cash resources that they need to produce
these products, from mining the ores needed
at the pit face to getting the finished products
to port in time for export.
Our challenge was greater in 2024 because we
had to diligently manage our cash flows while
ensuring adequate liquidity – without access
to debt or trade finance. This was particularly
demanding in the first quarter because we had
to deploy capital into operations to expand
mining and processing rates, whilst at the
same time the cash cycle lengthened due to
more goods in longer transits as we resumed
seaborne sales to Asia.
SOLID INVESTMENT
Since the full-scale invasion in February 2022,
the Group has invested US$352 in capital
expenditure in Ukraine. This is in addition
to over US$300 million in tax and royalty
payments in Ukraine, and US$1.8 billion
we have spent procuring goods and services.
In 2024, we invested US$102 million in our
operations, in line with the previous year.
Around 40% of the Capex was spent on
maintenance, helping to restore and maintain
production capacity, thereby ensuring the
integrity of our assets. It was complicated
at times, as we operated between two and
three pellet lines due to volatility in power
availability and market constraints. Overall,
we deployed the majority of this capital on
development projects. Some of the larger
capital investments included additional
funds for the new press filtration complex in
the first half of the year and, in the second
half, a new concentrate conveyor line along
the production circuit to produce iron
ore concentrates concurrently with pellet
production, rather than being limited to
producing only pellets or concentrates at any
one time.
BUILDING MORE FLEXIBILITY
IN OUR BUSINESS
The outcome of these investments is that we
have built in further operational flexibility, and,
at the same time, continued to improve the
quality of our products. In turn, this means
that we can be more responsive to short‑term
changes in market dynamics and to our
customers’ evolving needs.
THANKS
I would like to express my gratitude to the
many colleagues across our business for their
commitment and hard work throughout
another challenging year for the Group. It is
their collective effort that enabled us to adapt
quickly to market opportunities and challenges
to achieve a year-end net cash position of
US$101 million.
In particular, I would like to convey my thanks
to the finance team, from colleagues on the
ground in Horishni Plavni, to here in Baar and
elsewhere; those working in financial planning
and management, accounting, treasury,
reporting and internal audit. A tremendous
amount has been achieved this year to keep
our business relevant and one step wiser for
the year ahead.
Nikolay Kladiev
Group Chief Financial Officer
Corporate Governance
Financial Statements
05
Strategic Report
With all our operations based in Ukraine, our
workforce and facilities continue to be affected
by the ongoing war. In this section we detail the
ongoing and changing effects of war on our people,
communities, operations and logistics.
PEOPLE
The safety and wellbeing of our people are
our primary concern. People want to work,
to secure their livelihoods and to feel they are
contributing to the broader war effort. It is
our responsibility to ensure that they can do
so safely.
At the end of 2024, our workforce in Ukraine
comprised 8,542 employees and contractors.
This includes 706 colleagues serving in the
Armed Forces of Ukraine. 160 have been
discharged from the armed forces, of whom
102 have returned to work.
Throughout the war, we have maintained a
full workforce. Production rates can fluctuate
because of factors beyond our control,
such as the availability of power or access
to logistics capacity. For this reason, there
have been times we have had to place some
employees on furlough; and others when we
have asked employees to work extra hours or
defer planned leave. Our people have come to
understand that this flexible model ensures
that the business can continue to operate.
Following missile and drone attacks on
Ukraine’s energy grid, power outages and load
shedding were more frequent during 2024.
These result in frequent interruptions to the
working day, as well as time at home. They
may also mean working in unlit buildings, with
limited heating in winter or air conditioning
in summer. At these times the resilience of
our people is clear: working extended hours,
switching to battery and generator backups,
and a ‘just get on with it’ approach, when it
is too hot, too cold or too dark. Air raid alerts
during missile and drone attacks are frequent.
At these times we require all employees to
seek shelter underground or in bomb shelters.
This results in additional interruptions to
the working day, and travel to and from the
workplace. Of course, air raid alerts also affect
time at home, which can interrupt sleep,
domestic activities, and schooling, placing a
major strain on an individual’s daily life and
psychological wellbeing.
Ferrexpo plc
Annual Report & Accounts 2024
06
Operating during a time of war
Humanitarian support
US$28M
Our role as an employer is to protect the safety
and security of our people. We aim to do this
in several ways. Physical protection through
allowing people to work from home (where
feasible), and the provision of underground
and bomb shelters are some examples.
Mental health and wellbeing are increasingly
important as the war prolongs. The “Ferrexpo
Wellbeing and Psychological Support Project”
has been operating since February 2022.
The objective of this project is to support
mental health issues that employees and their
families are experiencing as a result of the
war. Its implementation helped employees
understand that seeking psychological
support is acceptable. Access to anonymous
consultations with leading specialists allows
employees to work through crisis situations.
Cultural and sporting activities are important
contributors to general wellbeing. Examples
include: our corporate theatre project called
“FerroTale”, which has attracted an audience
of over 3,000 since it was launched and raised
over UAH500,000 for the Armed Forces of
Ukraine, and our annual charity run which
attracted over 250 participants and raised
funds for a socialisation programme for
children with disabilities.
LOCAL COMMUNITIES
As the principal employer in the city of
Horishni Plavni, we have always played a central
role in the community. This has become more
important since the full-scale invasion, as local
and national authorities are under significant
strain and the pressures on the community
are formidable.
At its most basic, a resilient community
needs functioning infrastructure, health and
educational services. This is why we have
helped to secure power and water supply,
build and repair homes and hospitals, fund
education initiatives in local schools, and
provide medical equipment for local hospitals.
Corporate Governance
Financial Statements
07
Strategic Report
A resilient community also needs cultural and
sporting facilities and events to keep people
occupied and healthy. FerroTale and the charity
run mentioned above are good examples.
During 2024, we placed additional emphasis
on funding sports, facilities such as gyms,
swimming pools and stadiums, and teams that
compete at a national level, including men’s
and women’s football, basketball and rowing.
Ferrexpo plays a vital role in supporting sports
for individuals with disabilities by funding facility
upgrades and equipment purchases. This
support helps all athletes, regardless of physical
ability, further solidifying Horishni Plavni’s
reputation as a hub for athletic excellence.
Since the full-scale invasion, community
needs have evolved. In the early days, we
were focussed on housing and feeding
refugees, later on providing equipment such
as generators, laptops, and mobile phones,
and more recently, on mental health and
wellbeing. Through the Ferrexpo Humanitarian
Fund and usual CSR spending, we have
supported over 100 humanitarian projects
and initiatives that have not only helped our
immediate communities, but also supported
another 11 regions across Ukraine, reaching an
estimated five million people in total.
More information on supporting our
communities can be found in our latest
Responsible Business Report on pages 44-63
and in a case study about our support for
veterans on pages 42-43.
OPERATIONS AND LOGISTICS
Our operations are large in scale and
follow a relatively simple process flow:
mining, processing and beneficiation, with
considerable built-in production flexibility at
each stage.
The reopening of the Ukrainian Black Sea ports
at the end of 2023 removed the limitations
of exporting only by rail, river barge and out
of alternative Black Sea ports. Production
activities therefore ramped up in the final
quarter of 2023 and first quarter of 2024 to
fill this additional export availability.
Since the start of the full-scale invasion,
we have learnt to adapt to ever-changing
conditions and have built significant flexibility
into our operations. This has included
establishing alternative suppliers for critical
inputs and adopting an operating model
that can quickly scale up or down, using one
to three of our four production lines, and
managing our human resources accordingly.
During 2024, we experienced frequent
interruptions to the power supply, disrupting
throughput of ore, concentrates and pellets.
We had to learn to manage these outages and
keep operating so as to reduce production
cycle down-time and losses. This took time,
but we have become adept at mitigating
power shortages and have mostly been able
to ensure constant production.
The reopening of Ukrainian Black Sea ports
also presented some challenges, as port
facilities required repairs and capacity was
restored slowly. Vessel loading times improved
throughout the first half, resulting in more
optimal laycan and minimising demurrage
charges. At the end of 2024, the ports were
operating effectively, and we are starting to
see more ship owners expressing interest in
taking Black Sea cargoes as well as a lowering
in tariffs and insurance risk premiums. As long
as it continues to be safe to operate out of the
Black Sea, we will continue to do so in 2025.
Ferrexpo plc
Annual Report & Accounts 2024
08
Operating during a time of war continued
Remembering those we have lost
Tragically, ten colleagues were killed serving in
the Armed Forces of Ukraine during 2024,
bringing the total to 46 since February 2022.
We mourn their passing and honour their
selfless and brave strength.
2024
Viacheslav Burhardt, age 38
Maksym Dmytryienko, age 44
Kostiantyn Koposov, age 39
Ihor Koriakovtsev, age 43
Oleksandr Koval, age 53
Eduard Lozenko, age 45
Volodymyr Taranyshych, age 37
Roman Vernyhora, age 43
Mykola Yastrebkov, age 35
Ruslan Yerko, age 31
2022
Andriy Albit, age 34
Dmytro Belikov, age 32
Oleksiy Bridnya, age 33
Andriy Chernya, age 37
Oleksandr Chugainov, age 54
Guy Dudka, age 52
Andriy Dukanych, age 33
Serhiy Kharlamov, age 57
Serhiy Kondyk, age 31
Denys Koshovyy, age 31
Oleksiy Nazimov, age 25
Kostiantyn Orchikov, age 30
Oleksandr Scherbakov, age 28
Denys Svyrydov, age 50
Yaroslav Taran, age 50
Oleksiy Yatskov, age 36
Anatoliy Zakupets, age 37
2023
Yuriy Bilenko, age 38
Serhiy Buhuev, age 42
Oleksiy Bulba, age 45
Serhiy Chemkayev, age 44
Maksym Chystiakov, age 24
Volodymyr Holub, age 54
Oleksiy Khanilevych, age 24
Rostyslav Ledovskyy, age 25
Dmytro Lysachenko, age 28
Roman Lytvynenko, age 31
Vitaliy Med, age 40
Ihor Novohatniy, age 39
Volodymyr Pavlenko, age 43
Petro Perovskiy, age 25
Andriy Petrenko, age 49
Serhiy Pizniy, age 34
Oleksandr Smyrnov, age 32
Vladyslav Solomko, age 33
Oleksandr Terlenko, age 48
SLAVA UKRAINI.
09
Ferrexpo is a vertically integrated,
pure-play iron ore pellet producer
and supplier
Mining
QUALITY
ASSETS
LOW-COST
PRODUCTION
GLOBAL
DISTRIBUTION
Transportation
and logistics
What we do
The competitive advantages that help us to create value
Our world-class, long-life
deposits hold 5.7 billion tonnes of
JORC-compliant mineral resources.
Contiguous open pit mines use
modern equipment and have an
industry-leading safety performance.
Our ore processing metallurgical
beneficiation and pelletiser plants
produce a variety of pellets.
Established and efficient large-scale
plants with built-in operational
flexibility to supply evolving
customer needs.
Owned transport equipment and
logistics infrastructure, including
rail, ports, river and ocean vessels.
Flexible handling and shorter delivery
times to Europe and MENA than
global peers.
50YEARS
Mineral Reserves
12MT
Annual capacity from
four pelletising lines
3RD
Largest exporter of
pellets globally (pre-war)
REINVESTMENT INTO PEOPLE, TECHNOLOGY INNOVATION AND R&D
Processing
Ferrexpo plc
Annual Report & Accounts 2024
10
Our Business Model
Economic
Social
Environmental
The outcomes we deliver
Our high quality products are preferred by premium steel
producers around the world and are enabling the transition
to green steel, whilst at the same time supporting the
Ukrainian economy.
PREMIUM
PRODUCTS
Marketing
We have relationships with premium
steel mills around the world, serving
customers in Europe, MENA and Asia
Our premium products enable us
to add more value for customers,
supporting higher margins.
65-67%
Fe content in
all our products
ROBUST PRE-WAR EARNINGS TRACK RECORD
SHAREHOLDER DISTRIBUTIONS
FISCAL CONTRIBUTIONS
ENABLING GREEN STEEL
SUPPORTING THE DRIVE TO NET ZERO
INVESTMENT IN UKRAINE
SUPPORT DURING TIME OF WAR
SUPPORTING OUR WORKFORCE AND COMMUNITIES
DEVELOPING OUR WORKFORCE
Read more on how we create value for all of our stakeholders on
pages 56 to 61
Corporate Governance
Financial Statements
11
Strategic Report
Why
invest in
Ferrexpo?
The essential
nature of steel
Transition to
green steel
Iron ore is the main ingredient to make
steel, on which our everyday lives depend.
If something is not made of steel, it is made
using it. Steel is also integral to the energy
transition and critical for energy generation
technologies and end-user products such as
electric vehicles.
Traditional steel production is emissions-
intensive. Legislation and environmentally
conscious end users are driving a shift to lower
and zero carbon steel, and the associated
feedstocks and production methods.
What’s the industry challenge?
>1.8BN
Total steel production
in 2024 (tonnes)
7%
Global greenhouse gas
emissions currently generated
through steel production
US$376BN
Value of global iron ore trade
in 2024
30%
Forecast growth in demand
for steel by 2050
+200MT green steel
Forecast global lower and zero
carbon steel demand growth
by 2030
80MT DR pellets
Forecast global demand growth
for DR pellets by 2030, over one
third of which in Europe
Ferrexpo plc
Annual Report & Accounts 2024
12
Value Proposition
Our industry-
leading products
Established large
scale operations
Our focus
on responsible
operations
Ferrexpo is already a leading supplier
of premium iron ore pellets and Direct
Reduction Iron (“DR”) pellets, the products
needed to transition to lower carbon steel.
When used in an electric arc furnace (“EAF”),
our DR pellets are proven to improve
productivity and lower carbon emissions.
As the only publicly listed, vertically
integrated iron ore pellet producer and
supplier of its size in Europe, Ferrexpo
is uniquely positioned. The established
scale of our assets, and the infrastructure,
technology and skills that we have invested
in over decades, are difficult to replicate.
Before the war, Ferrexpo was the world’s
third-largest exporter of iron ore pellets.
We have committed to decarbonisation
and Net Zero by 2050. We are a significant
contributor to the local communities where
we operate, and the Ukrainian economy.
Why are we well positioned for the future?
-37%
Lower global warming
potential of steel made
with Ferrexpo DR pellets
50+YEARS
Life-of-mine high grade
magnetite deposits
0.54LTIFR
Good safety performance.
2024 slightly above five-year
historical average 0.52
100MTPA
Forecast DR grade pellet deficit
by 2031 as pellets outpace
traditional concentrates
Pellet efficiency
DR pellets command premium
prices due to their efficiency
in lower carbon steel making
Large scale
Mines and pellet lines ensure
flexible production
Owned logistics
infrastructure
Providing multiple export routes
to a global customer base
50% reduction
2050 Net Zero pathway,
targeting 50% reduction
in Scope 1 and 2 by 2030
US$28M
Funding for more than 100
humanitarian and social projects
and initiatives
Corporate Governance
Financial Statements
13
Strategic Report
Strategic
direction
Managing the business through a
prolonged war has taught us to be
flexible and adaptable to the constant
challenges that we face. It is important
that, despite the war, we continue to
consider our longer-term strategic
direction to remain resilient.
Our five strategic principles may not
always resonate with the immediacy
of war, but they continue to help guide
us through uncertainty and provide a
framework for decision making that
will affect us over the longer term.
In this way, we are able to build trust for our stakeholders, from
employees to investors, and ensure we are managing the business
appropriately today, with a view to value creation in the future.
We cannot currently say that our operations are low cost when
benchmarked to international peers; we are, however, very focused
on identifying every opportunity to optimise costs, preserve the
integrity of our assets, and improve operating efficiencies. This year,
we invested US$102 million into our assets, including US$65 million in
capital investments for development projects. In this sense, lowering
the cost of operations is an immediate strategic priority.
High quality
production
Focus on higher grade
premium iron ore
products that enable our
customers to transition
to lower carbon steel.
2024 PROGRESS
AND HIGHLIGHTS
• 66% increase in production.
• High grade focus with 100%
of all pellet and concentrate
production grading 65% Fe
or higher.
• Record annual DR pellet sales,
even compared to before the
full-scale invasion.
• Capital investments resulted in
improvements in the physical
strength and chemical quality
of higher-grade pellets.
2025 AMBITIONS
AND TARGETS
• Continue to expand DR pellet
customer portfolio and
production.
Read more
Pages 20-29
14
Ferrexpo plc
Annual Report & Accounts 2024
Strategic Framework
Low cost
operations
Conserve the integrity of
our assets and continue
investing to maintain
competitive cost of
production.
World-class
customer
network
Working in partnership
with our customers to
improve efficiencies
and decarbonise steel
production.
Disciplined
capital
allocation
Prudent capital
framework that balances
operational and societal
demands during a time
of war.
Focus on
sustainability
Through sustainable,
ethical partnerships,
realise value for all
stakeholders, prioritising
support for Ukraine
during a time of war.
2024 PROGRESS
AND HIGHLIGHTS
• C1 costs increased 10% to
US$84 per tonne due to higher
electricity tariffs.
• Fixed overheads reduced
on a unit basis due to a 66%
increase in production.
• Logistics costs reduced on a
unit basis.
• Cost savings programme
strengthened.
• More stable supply chain
eased procurement risks
for key consumables.
2024 PROGRESS
AND HIGHLIGHTS
• Reopening of Ukrainian Black
Sea ports enabled expansion
of sales.
• Restoration of supplies to
existing and new customers
in Europe, MENA and Asia.
• MoUs signed with premium
customers to deepen
co-operation, in particular
for lower carbon iron ore
feedstocks.
• Meetings around the world with
existing and potential customers.
• Attendance at global iron ore
and steel industry events.
2024 PROGRESS
AND HIGHLIGHTS
• Increased production boosted
sales revenue, offsetting higher
costs.
• Focus on expanding premium
products enhanced total sales
margins.
• Shorter production and
logistics periods permitted
some strategic pricing.
• US$108 million capital
investment.
2024 PROGRESS
AND HIGHLIGHTS
• Safety performance below the
five-year trailing average.
• Zero fatalities for the fourth
consecutive year.
• Publication of second Climate
Change Report determined and
on track to realise Net Zero
pathway, even in a prolonged
war scenario.
• Publication of eighth
Responsible Business Report
framed by a Double Materiality
Assessment.
• Scope 1 and 2 emissions
increased due to the mandatory
requirement to import up to
80% of electricity from
carbon-intensive sources
outside of Ukraine.
2025 AMBITIONS
AND TARGETS
• Ensure flexible operations that
adapt to customers’ needs.
• Continue to implement
cost-saving initiatives across
the Group’s operations.
• Work with peers, industry
associations and government
agencies to improve electricity
import tariffs.
2025 AMBITIONS
AND TARGETS
• Continue to export through the
Black Sea, providing it is safe.
• Focus on expanding higher
margin products sales.
2025 AMBITIONS
AND TARGETS
• Continue to rigorously monitor
capital allocation in a highly
disciplined manner.
2025 AMBITIONS
AND TARGETS
• Continue strong safety
performance
• Continue to respond to the
needs of our workforce and
local communities during a
time of war.
Read more
Pages 20-25
Read more
Pages 26-29
Read more
Pages 49-53
Read more
Pages 30-35
15
Financial Statements
Corporate Governance
Strategic Report
2021
2020
2022
2023
2024
0
300
600
900
1,200
1,500
Measuring our
performance
Underlying EBITDA
US$69M
2024 PERFORMANCE
Underlying EBITDA in 2024 fell 30% to
US$69 million. This is due mainly to increased
sales volumes, although it also reflects
deteriorating realised prices and pellet
premiums throughout the year, and a 10%
increase in C1 costs.
Underlying EBITDA also includes operating
foreign exchange gains of US$83 million in
2024 compared to US$31 million in 2023.
These foreign exchange differences are due
largely to the fluctuation of the exchange rate
of the Ukrainian hryvnia against the US dollar.
The primary KPIs that we
use to measure and report
our annual performance
are divided into two
categories: financial and
non-financial.
Our financial KPIs provide a snapshot of
our financial performance and include
four measures:
1. Underlying EBITDA: a way to measure
how much money we make from our
business activities.
2. Profit or loss after tax: how much money
is left after all costs, including taxes.
3. Net cash flow from operating activities:
the amount of cash we made, adjusting
for non-cash items, from our day-to-day
operations.
4. C1 costs: the basic essential costs to
produce one tonne of our products. This
is an average cost of the many different
products that we produce, some of which
are of higher value and therefore incur
higher costs of production.
Except for the Net cash flow from operating
activities figure, all other financial metrics are
Alternative Performance Measures (“APMs”).
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
an additional way of disclosing financial
performance, rather than a substitute or a
superior measure according to the same
numbers that are also reported in this report
in accordance with IFRSs. Definitions of our
APMs can be found on page 237 of this report.
The four non-financial principal KPIs that the
Group reports include:
5. Lost-time injury frequency rate (“LTIFR”):
a metals and mining industry standard
for measuring the workforce operational
safety performance.
6. Diversity in management roles: our chosen
DEI metric to track progress with our
broader ambitions.
7. Greenhouse gas emissions: a measure
of our CO2 emissions on the basis of a
kilogram of unit production, to track our
progress against our Net Zero pathway.
8. Sales volume by region, which we share
to provide more detail than our total
sales and break down to show how we
are progressing our strategic intention
to sell higher margin products to
premium customers.
These non-financial KPIs represent a broad
snapshot of our approach to responsible
business, DEI, climate change, and
commitment to enabling our customers’
transition to green steel.
This is the third consecutive year that we have
reported these KPIs. Not every year shows an
increase or an improvement, which is why in
the descriptions we detail what worked, and
what didn’t. In the spirit of transparency, we
will continue to report these numbers against
the four proceeding years so that our progress
can be tracked.
Financial KPIs
LINK TO STRATEGY AREAS:
More information on Underlying EBITDA can be
found on page 33
2025 OUTLOOK
The future performance of the Group is largely
dependent on the ongoing war in Ukraine and
the levels of achievable sales due to logistics
restrictions. The market outlook for iron ore
prices and pellet premiums is subdued due to
prevailing weakness in steel markets, especially
in Europe, and expectations of higher exports
of lower grade iron ore supply from Australia,
Brazil and West Africa.
Ferrexpo plc
Annual Report & Accounts 2024
16
Key Performance Indicators (“KPIs”)
2021
2020
2022
2023
2024
0
300
600
900
1,200
1,500
2021
2020
2022
2023
2024
-200
0
200
400
600
800
1,000
2021
2020
2022
2023
2024
0
20
40
60
80
100
Net cash flow from operating activities
US$92M
C1 cash cost of production
US$83.9/t
2024 PERFORMANCE
The Group reported a loss of US$50 million
for the year. This is largely due to a non-
cash impairment loss of US$72 million. This
compares to a loss of US$85 million in 2023,
due largely to provisions for ongoing legal
proceedings and disputes in Ukraine totalling
US$131 million. The improvement for 2024 is
due to higher sales volumes, albeit at lower
margins. Group taxation for 2024 increased
due to the gradual introduction of the OECG
and G20 ‘Global Minimum Tax Rate’ of 15%
which affects the Group’s sales and bases in
the UAE and Switzerland. The Group effective
tax rate increased from 26.1% in 2023 to
33.7% in 2024.
2024 PERFORMANCE
The net cash flow from operating activities for
the year was US$92 million, slightly lower than
in 2023. Despite lower operating cash flow, this
was offset by positive effects from working
capital movements as of 31 December 2024.
Despite this, the Group maintained a closing
balance of cash and cash equivalents at
US$106 million as of 31 December 2024
(2023: US$115).
2024 PERFORMANCE
The average C1 costs for 2024 increased 10%
to US$83.9 per tonne compared to US$76.5
per tonne in 2023. The main reason for the
increase was higher electricity prices because
of requirements to import up to 80% of
electricity from Ukraine’s neighbours at higher
tariffs than domestically produced electricity.
An increase in production volumes helped
to absorb large fixed overheads, however, as
the Group continues to operate at below full
capacity, absorption continues to be below the
full capacity potential.
Profit/(Loss) after tax
-US$50M
LINK TO STRATEGY AREAS:
LINK TO STRATEGY AREAS:
LINK TO STRATEGY AREAS:
More information on profits and losses can be
found on page 34
More information on net cash flow from operating
activities can be found on page 34
More information on C1 cash costs of production
can be found on page 32
2025 OUTLOOK
Like other factors, the Group’s outlook for the
year ahead is heavily dependent on the war.
In 2025, it is anticipated that the Group may
be affected by subdued demand for iron ore
and persistent lower prices. In addition, the
effective tax rate of the Group will increase
further due to the gradual increases in the
Global Minimum Tax Rate.
2025 OUTLOOK
The Group’s financial performance, including
net cash flow from operating activities, is
dependent on the ongoing war, with a wide
range of potential outcomes.
The Group continues to focus on higher-grade
and higher-quality beneficiated iron ore
products, which generate higher margins and
differentiate the Group from its peers, and
allow the Group to remain more competitive
throughout the commodities cycle.
2025 OUTLOOK
The war in Ukraine affects a range of
production outcomes and the Group will
likely continue to operate below full capacity.
Continued attacks on Ukrainian energy
infrastructure are likely to result in an ongoing
need to import power, and supply chains
for key consumables will continue to be
constrained.
Corporate Governance
Financial Statements
17
Strategic Report
2021
2020
2022
2023
2024
0
5
10
15
20
25
2021
2020
2022
2023
2024
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
2021
2020
2022
2023
2024
0
20
40
60
80
100
120
2024 PERFORMANCE
Safety is the Group’s highest priority. The
Group’s LTIFR has remained at a relatively
low level for approximately five years, falling
from an average of 1.18 (2016–2018) to an
average of 0.54 for 2024, above the Group’s
historical five-year trailing average of 0.52. It
is also higher than the 0.32 reported in 2023.
This is due to an increase in reported injuries
during the year. The Group’s operations have
remained fatality-free for more than four
successive years.
2024 PERFORMANCE
Female representation in managerial positions
increased to 22.9% in 2024, compared to
22.3% in 2023, following a multi-year trend
from 18% in 2019. The Group target is 25%
by 2030.
Ferrexpo has initiatives to promote diversity
in many forms – including based on gender,
disability, sexual orientation and cultural
diversity. Gender diversity is measured
in several ways, including total workforce
and female representation in management
positions. The Group chooses to focus on
female representation in management roles
as a reporting metric, as it is a reflection of
women progressing their careers at Ferrexpo.
2024 PERFORMANCE
Scope 1 and 2 emissions per tonne (unit basis)
increased by 5% to 94kg/t 2024, compared to
89kg/t in 2023. The increase mainly reflects a
mandatory requirement in Ukraine to import
up to 80% of the operation’s electricity
needs from abroad. This is generated mostly
from carbon-intensive sources, in contrast to
domestic electricity generated from cleaner
sources including hydro and nuclear power.
Absolute Scope 1 and 2 emissions increased
by 64% year-on-year, reflecting higher overall
production in the year.
During the year, the Group produced 489,720
DR pellets, a record amount even for years
before the full-scale invasion. Consequently,
Scope 3 emissions on a unit basis decreased
to 1.31 tCO2/t of pellet production from
1.32 tCO2/t in 2023. Absolute Scope 3
emissions increased 11% year-on-year,
reflecting higher overall pellet production
and increased seaborne logistics.
Non-financial KPIs
More information on health and
safety can be found on
page 46
More information on diversity in our
workforce can be found on
page 47
More information on greenhouse gas emissions
can be found on pages 49 to 51 and also the
Group’s second Climate Change Report
Lost-time injury frequency rate (“LTIFR”)
0.54 LTIFR
Diversity in management roles
22.9% female
Greenhouse gas emissions
94kg/t
LINK TO STRATEGY AREAS:
LINK TO STRATEGY AREAS:
LINK TO STRATEGY AREAS:
2025 OUTLOOK
The Group has maintained a low level of
injuries and injury incidents in recent years.
The Group aims to continue this progress,
through targeting zero lost-time injuries.
In 2022, Ferrexpo introduced a ‘Zero Harm’
policy that aims to ensure all workers return
home safely from every shift.
2025 OUTLOOK
The Group’s diversity programme is targeting
female representation across departments
and levels within our organisation. Our lead
programme for promoting gender diversity in
management roles is our Fe_munity Women in
Leadership programme (“Fe_munity”), which
is now in its fifth year of selecting and training
high potential future female leaders of our
business. This programme has trained over
200 participants since its inception.
2025 OUTLOOK
The Group aims to continue its
decarbonisation pathway, although a
protracted war may require some revisions
to targets. The current targets include a 50%
reduction in Scope 1 and 2 emissions by 2030.
Due to the war in Ukraine, it is difficult to
estimate short-term outcomes in emissions
reduction, but we remain focused on our goal
to decarbonise.
Ferrexpo plc
Annual Report & Accounts 2024
18
Key Performance Indicators (“KPIs”) continued
0
20
40
60
80
100
120
2021
2020
2022
2023
2024
Asia
Europe
MENA
Other
2024 PERFORMANCE
Group sales increased by 64% to 6.8 million
tonnes compared to 4.2 million tonnes in
2023, due mainly to the reopening of Ukrainian
Black Sea ports. This provided the Group with
the opportunity to increase sales to customers
in MENA and Asia using larger vessels, and also
to switch some sales to European customers
from more costly rail and barge to lower cost
seaborne routes.
As a result, in 2024, sales to European
customers increased by 26% to 5.3 million
tonnes compared to 4.2 million tonnes in
2023. During this period, relationships with
our premium European customers deepened
during the year with the signing of several
MoUs to explore DR pellet sales, enhance
pellet quality and explore the decarbonisation
of logistics routes. MoUs were also signed with
customers in Asia and MENA.
More information on sales and
marketing can be found on
pages 26 to 29
Sales volumes
64% increase
LINK TO STRATEGY AREAS:
1.
The Group’s definition of Europe includes sales to Turkey
2025 OUTLOOK
As long as it remains safe and economic to do
so, the Group intends to continue exporting
its products from Ukrainian Black Sea ports.
This means that, whilst Europe remains a
core regional market, the Group is aiming to
continue sales to Chinese and other Asian
customers, and to its growing customer base
in MENA.
Corporate Governance
Financial Statements
19
Strategic Report
United by our
shared goals
20
Ferrexpo plc
Annual Report & Accounts 2024
Operational Review
As access to Ukrainian Black Sea ports
reopened towards the end of 2023, our
mining, processing, beneficiation and logistics
teams worked around the clock to bring
back idled production capacity for seaborne
export. This meant that we were able to start
2024 on a strong footing, with a threefold
increase in production in the first quarter of
2024, compared to the last quarter of 2023.
This was a significant achievement due to the
challenging circumstances war imposes on the
workforce, and operations had to deal with
power constraints due to relentless attacks
on Ukraine’s energy grid.
HEALTH AND SAFETY
In 2024, the Group recorded a fourth
successive fatality free year. The average
recorded lost-time injury frequency rate
(“LTIFR”) for the year was 0.54, higher than the
0.32 recorded last year, and above the 5-year
trailing historical average of 0.52 due to an
increase in recorded injuries.
RESERVES AND RESOURCES
Ferrexpo controls licences covering a series
of contiguous deposits located along the
Kremenchuk Magnetic Anomaly, a magnetite
deposit that extends for more than 50
kilometres. The Group has mines on three
deposits and additional licences for deposits
contiguous with our existing operations.
Across the Group’s three active mines, JORC-
compliant Ore Reserves at 1 January 2025
are estimated to be 1,595 million tonnes of
iron ore, with an iron (“Fe”) content of 32%
Fe (2023: 1,615 million tonnes grading 32%
Fe). The JORC-compliant Mineral Resource
estimate across our three mines is 5,717
million tonnes of iron ore, with an iron content
of 32% Fe (2023: 5,737 million tonnes grading
32% Fe), which is inclusive of Ore Reserves.
More information detailing the Group’s
JORC-compliant Ore Reserves and Mineral
Resources as at 1 January 2024 is detailed in
this report, including a new section detailing
how we updated our Reserves and Resource
models during the year.
MINING ACTIVITIES
In 2024, mining operations were sustained
with limited interruption, achieving targets
and maintaining higher productivity levels
despite the challenges.
Timely repairs and maintenance played an
important part in maintaining a high level
of equipment reliability and availability. All
necessary maintenance work is carried out
in accordance with the regulations and in
full, which ensured that production targets
were achieved.
A critical factor in stable operation is the
supply of spare parts and consumables.
In 2024, the Company did not face any
interruptions in the supply of components,
which allowed us to maintain equipment
in proper technical condition and avoid
unplanned downtime.
PROCESSING AND
BENEFICIATION ACTIVITIES
During 2024 the main factor determining
production stability was the reliable supply of
electricity. Due to intense attacks on Ukraine’s
power grid, the Group needed to import
electricity from abroad, especially during cold
weather periods. To mitigate this, special
systems were implemented to run additional
equipment through the night to accumulate
concentrate stocks for the next day and
reduce the risk of pellet production losses due
to the potential power shortages.
In 2024, vacuum filtration technology was
introduced after the successful launch of press
filtration. This solution is intended to further
enhance product quality and optimise
production processes. Despite all the challenges,
approximately 90% of the processing complex
equipment is fully operational, which helping to
maintain efficiencies.
UKRAINIAN LOGISTICS
Despite many logistics challenges, in particular
transporting goods through the Odesa region,
the Company managed to ensure a stable
transportation process throughout 2024. 84%
of all domestic rail transport was performed
by the Group’s own rail wagon fleet with only
16% using third-party providers.
Our own repair facilities played an important
part in ensuring uninterrupted transportation.
The Company’s existing facilities almost
completely cover the needs for maintenance,
repair and refurbishment of rail wagons,
which reduces dependence on external
contractors and ensures a high level of
rolling stock availability.
An important factor that could affect future
costs is the initiative of state rail company,
Ukrzaliznytsia, to index tariffs, which is likely to
lead to higher freight costs. Ferrexpo is carefully
analysing the potential impact of this decision
and considering ways to minimise costs.
BELANOVO UPDATE
Due to the martial law on the territory of
Ukraine, the mining operations at Belanovo
are paused.
The expiry date of Belanovo deposit licence
was 20 December 2024. However, and based
on the existing Ukrainian legislation, the
validity period of the Special permit No.3572
for Belanovo deposit has been automatically
extended until the end of the martial law
period (9 May 2025). It is anticipated that a
further six months will be available to submit
an application for extension.
In early 2024, geological and economic
re-estimations of the Belanovo Deposit
Mineral Reserves were conducted. The results
of the geological and economic re-estimations
were approved by the State Commission of
Ukraine on Mineral Resources. According to
the results of the re-estimations the licence
area of Belanovo Deposit was reduced from
989 to 716 hectares, the area of the Belanovo
Deposit contour was reduced, lean ores (K232
and K233) were written off, and the volume of
the balance Mineral Reserves of Belanovo
Deposit was reduced from 1,706 Mt to 614 Mt.
In February 2025, the Ukrainian Geological
Survey provided the original of the updated
Special permit No. 3572 for Belanovo Deposit.
FBM continues the works with the State
Authorities and Ukrainian business associations
regarding the extension of Belanovo Deposit
licence due to the extension of martial law
period and amendments to the Subsoil Code
of Ukraine to provide the possibility of the
extension of the special permit.
During the year, the first volunteer firefighting
team, which consists from FBM employees,
was established at the enterprises of the
mining industry of Ukraine. The team was
involved extinguishing fires the result of the
shelling of the critical infrastructure facilities
in Kremenchuk District.
GROWTH PROGRAMME
The Group’s expansion and decarbonisation
programmes remain longer-term objectives.
The initial Wave 1 programme to add 3 million
tonnes production capacity a year continues
to be reviewed. Desktop work, including
optimisation studies, is ongoing. However,
wherever possible, investment has been
deferred. Nevertheless, despite the ongoing
war, various capital expenditure projects
aimed at improving product quality and
efficiencies have advanced. For example, the
Company installed technology in the pellet
workshop to strengthen finished pellets,
whilst increasing productivity and reducing
iron losses, to generate cost savings and a
reduction in Scope 1 emissions.
For more information on our plans to electrify
the mining fleet please see the case study the
‘Green Mine Initiative’ in this report.
During 2024, the Group
increased production
significantly, operating
two mines and up to
three of four pelletiser
lines to achieve
production of 6.9 million
tonnes of high-quality
iron ore products.
Viktor Lotous
Head of Ferrexpo’s Operations in Ukraine
(Ferrexpo Poltava Mining General Director)
Financial Statements
Corporate Governance
Strategic Report
21
including both ore and surrounding strata, and
covering the surface well beyond the mining
license areas. The block model was built for
the time of initial mining (before stripping,
40 years from now to the past) to accurately
reflect any surface movement at any chosen
time period.
The Competent Person updated the Resources
and Reserves for GPL and Yeristovo Deposits
as of 1st January 2025 by assigning digital
terrain wireframes for current pit surfaces to
modernised Resources and Reserves models,
and subtracted the mined ore volumes from
the Total Resource and Reserves figures as
of 1st January 2024. Reconciliation of the
model against actual mining data reported
to DKZ has been conducted. Because the
Resources and Reserves estimates are not
exact calculations, the estimated tonnages
and grades were rounded to the nearest whole
numbers as prescribed by the JORC Code
(2012) reporting rules.
The current Resource and Reserve update
concerns only GPL and Yeristovo Deposits
since the Belanovo Deposit is currently
going through the process of reducing the
licensed area and writing off low-grade lean
mineralisation. The next full re-estimation of
Resources and Reserves, including Belanovo,
will be conducted when following conditions
are met:
• Writing-off the low-grade lean ore from the
total Ferrexpo Resource balance.
• Implementation of the new edition of the
JORC Code, the draft has already been
released for public consultation
• An end to the war in Ukraine.
1.
Ferrexpo Gorishne-Plavninske-Lavrykivske and
Yerystivske deposit Mineral Resource and Ore
Reserve statement, 14th August 2020, Copyright
Bara Consulting Limited
Operational performance
(000’t unless otherwise stated)
2024
2023
YoY change
Production
Iron ore mined
20,278
12,112
+67%
Strip ratio
2.2
2.0
+10%
Iron ore processed
16,331
11,576
+41%
Concentrate production
6,723
4,605
+46%
Pellet production
6,071
3,845
+58%
– Direct reduction pellets (67% Fe)
490
0
–
– Premium blast furnace pellets (65% Fe)
5,581
3,845
+45%
Commercial concentrate production
819
307
+167%
Iron ore sales
– Pellets
6,010
3,868
+55%
– Concentrate
819
306
+168%
– Total products sold
6,830
4,174
+64%
OUTLOOK
Logistics availability will continue to determine
sales and production during 2025. The Group
intends to continue the operation of two to
three pelletiser lines. Depending on the
availability to continue exporting through
Ukrainian Black Sea ports, the Group intends
to continue expanding its customer base.
Whilst the Group cannot with any certainty
offer production and cost guidance for 2025,
there are some opportunities to enhance
efficiencies, production and sales.
JORC-COMPLIANT ORE
RESERVES AND MINERAL
RESOURCES1
The Resources and Reserves update for our
assets was prepared in accordance with the
guidelines prescribed by the Australasian Code
for Reporting of Exploration Results, Mineral
Resources and Ore Reserves (the JORC Code,
2012 edition), as required by the Listing Rules
of the London Stock Exchange.
Since Ferrexpo mineral assets are located in
Ukraine, we also issue reports to the State
Commission on Reserves (“DKZ”) of Ukraine on
a regular five-year term basis. DKZ is the only
regulatory jurisdiction in Ukraine on Resources
and Reserves. Our Competent Persons
and external consultants are versed in the
correlation appraisals of both systems.
The last updates of our Reserve and Resource
estimates were conducted in August 20201,
17 months before the full-scale invasion of
Ukraine. Both Gorishne-Plavninske-Lavrykivske
(“GPL” or “FPM”) and Yerystivske (“Yeristovo”)
Deposits were re-estimated in a joint effort
with Bara Consulting Pty Ltd, Tecoma
Strategies Ltd and Ferrexpo Services Ltd.
The Competent Persons from all these parties
have been involved in the mining industry for
several decades in various roles, have
international experience in exploration,
geostatistics, resource and reserve estimation,
project development, and in the economic
evaluation of mineral deposits including iron
ore, are members of professional institutions
such as the Australian Institute of Geoscientists
and Australian Institute of Mining and
Metallurgy, are bounded by the AIG Code of
Ethics and the South African Natural Scientists
Act, as well as by personal declarations, and are
independent from the Company.
For the purpose of the 2025 Resource and
Reserve update, the geological interpretation
for the GPL, Yeristovo, Bilanivske (Belanovo)
and Northern Deposits were checked
and corrected where necessary following
new data collected during 2023-2024
exploration campaign. The 2025 Resource
and Reserve models for referred deposits
were subsequently updated using the same
interpolation parameters and reporting
criteria applied in 2020 to keep consistency
with previously reported numbers. In addition
to iron grades, the deleterious elements and
metallurgical parameters have been modelled
and added to the model. In addition, the bulk
densities have been studied geostatistically
and interpolated into the model. This has
resulted in an improvement in the accuracy
of local estimates.
The Dynamic Anisotropy geostatistical
method was chosen for estimation, as it
not only takes the spatial interdependence
of drill hole data into account but also
orientates the searching volume to follow the
structural trend of mineralisation. Because
the Dynamic Anisotropy option allows for the
rotation angles for the searching volume, the
semivariogram is defined individually for each
block model cell. Thus, a misalignment of the
searching volume is avoided and the negative
effect of extrapolation of ore into waste and
vice versa is minimised.
To take into account different scenarios of
economic extraction, the resource block model
was built to the maximal depth of -1,000 m RL,
Ferrexpo plc
Annual Report & Accounts 2024
22
Operational Review
JORC-Compliant Ore Reserves and Mineral Resources2
Proven
Probable
Total
JORC-compliant Ore Reserves
Mt
Fe
total
%
Fe
magnetic
%
Mt
Fe
total
%
Fe
magnetic
%
Mt
Fe
total
%
Fe
magnetic
%
Gorishne-Plavninske-Lavrykivske (“GPL”)
296
33
26
809
31
23
1,105
32
24
Yerystivske
205
30
25
285
33
26
489
32
26
Total
501
32
26
1,094
32
24
1,595
32
25
Measured
Indicated
Inferred
Total
JORC-compliant Mineral
Resources
Mt
Fe
total
%
Fe
magnetic
%
Mt
Fe
total
%
Fe
magnetic
%
Mt
Fe
total
%
Fe
magnetic
%
Mt
Fe
total
%
Fe
magnetic
%
Gorishne-Plavninske-
Lavrykivske (“GPL”)
462
35
29
1,607
30
22
744
32
24
2,813
31
24
Yerystivske
254
35
29
566
34
27
382
33
27
1,201
34
27
Bilanivske
336
31
24
1,149
31
23
217
30
21
1,702
31
23
Total
1,052
34
27
3,322
31
23
1,343
32
24
5,717
32
24
2. The Group’s JORC-compliant Ore Reserves and Mineral Resources shown above are based on an independent review completed by Bara Consulting, and are shown on a depleted
basis as of 1 January 2025.
Corporate Governance
Financial Statements
23
Strategic Report
The ‘Green
Mine’ initiative.
24
Ferrexpo plc
Annual Report & Accounts 2024
CASE STUDY
A joint working group for the Green
Mine has been established that
includes internal specialists across
disciplines such as mining, mining
equipment and repairs, power and
energy, finance and IT. The group has
visited different mines and OEM
facilities in North America, Asia and
Australia, and attended industry events
to review various options.
The research study favoured larger,
300-tonne capacity electric diesel
trucks, powered by trolley-assist where
feasible, based on the topography and
scale of Ferrexpo’s mining operations.
The performance, emissions, cost and
availability of the equipment were also
considered.
PHASE 2
As a second phase, we identified a
pilot area to install trolley-assist
infrastructure and start conceptual
design. This will consider the adoption
and local needs in Ukraine and practical
aspects, such as securing power supply,
the optimal positioning of charging
stations, maintenance requirements
and the provision of spare parts. We
appointed ABB, along with MEC Mining,
to assist with the conceptual design for
the pilot trolley-assist project. The pilot
study determined the optimal sites of
the mine pit ramp and haulage road on
the dump at FYM.
The study also determined a
specification of ABB power equipment
including the eTrolley Catenary System
and Rectifier Substation, the optimal
fleet size, staffing requirements,
tyre specifications, spare parts,
maintenance requirements and
auxiliary equipment needs. This
analysis has provided us with a
comprehensive understanding of the
project’s capital costs and the potential
operating cost savings. Smaller studies
have also been conducted regarding
excavators, other mining equipment,
locomotives and logistics equipment.
There is still more to do before
investment decisions can be made,
including site work and equipment
orders. However, we have initiated
early discussions on funding options
that consider the ending or
continuation of the war.
One of the biggest opportunities
to reduce our own emissions is to
electrify and automate our mining
processes. This transition supports
our environmental goals, while
presenting a significant financial
opportunity, such as through lower
production costs. These efforts are
central to Ferrexpo’s Green Mine
initiative, formalised in 2023.
We are working on the Green Mine
initiative with MEC Mining, a leading
global technical research and
consulting firm. Together, we have
undertaken a comprehensive
research study based on a ten-year
mine plan to identify opportunities for
electrification of our mining operations.
IDENTIFYING A
PATH FORWARD
PHASE 1
The study’s solutions include:
• Excavators and dump trucks of
various sizes that use diverse
technologies from a range of original
equipment manufacturers (“OEMs”).
• Potential installation of trolley-assist
technology, where heavy trucks are
equipped with pantographs
connected to overhead electric
power lines to supplement the diesel
engines with additional electric
power. This leads to improved fuel
efficiency, enhanced productivity –
as trucks can ascend at greater
speeds – extended engine life due
to reduced strain on the diesel
engine, and lower emissions.
• The replacement of the existing
diesel and diesel-electric locomotive
fleet with battery-electric
locomotives and traction
performance technologies.
“Our work on the
Green Mine initiative
includes calculation of
potential savings on
CAPEX and OPEX and
the overall reduction
of carbon emissions
over the modelled
ten-year period.”
Yurii Khymych
Ferrexpo Belanovo Mining General Director,
Chief Project Officer: fleet electrification and
automation and Head of Ukraine CSR Projects.
25
Financial Statements
Corporate Governance
Strategic Report
United to
realise value
26
Ferrexpo plc
Annual Report & Accounts 2024
Market Review
Europe
77%
Asia
17%
MENA
6%
Ferrexpo
Direct
Reduction
Pellets
Ferrexpo
Premium
Pellets
62 Index
(Medium
Grade
Benchmark)
65 Index
(High
Grade
Benchmark)
59
60
61
62
63
64
65
66
67
68
Customer sales in 2024
6.8MT
“In a constantly
evolving
marketplace,
it is important
to understand
our customer’s
needs to create
common value”
Access to Ukrainian Black Sea
ports enabled us to expand sales
to existing and new customers
in Europe, the MENA region and
the Far East.
Sales rebounded in 2024. The trust that was
built throughout the organisation and with
our logistics providers enabled the Group to
overcome the many risks and challenges we
faced as we restored capacity. This resulted in
an improvement in customer confidence and the
expansion of sales to former markets in Europe,
the MENA region and Asia.
The marketing team travelled extensively in 2024,
meeting with customers in China, Japan, Vietnam,
and across the Middle East, Europe and North
America. Communicating with customers to
understand their concerns and needs is
important. It allows the sales and marketing team
to be the voice of the customer within the Group,
and to work with colleagues in production and
logistics, to deliver our customers the products
they need when they need them.
This co-ordination was particularly important
during 2024, due to lower iron ore and steel prices
and margins, because it helped us to deliver value
to our customers. By being responsive to their
needs, we were able to build more flexibility into
our business, selling a variety of products in
varying cargo sizes, on different terms to
customers around the world.
UKRAINIAN BLACK SEA PORTS
As access to Ukrainian Black Sea ports started to be
restored in late 2023, the sales and marketing team
moved swiftly to secure port access, vessels, crews and
risk insurance, and in mid-January the first capesize vessel
departed for Tianjin in China.
The first vessels to China helped restore customer
confidence in the Black Sea route, and in February
shipments resumed to customers in Europe and the
MENA region. A total 32 vessels were fixed and loaded
from Ukrainian Black Sea ports in 2024. During the year,
loading times at the ports have improved, and freight rates
and risk-insurance premiums have come down. However,
volumes are still lower and costs higher than in 2021, the
last full year before the full-scale invasion, when the Group
fixed 67 vessels from Ukrainian ports.
As long as it remains safe and affordable to export from
Ukrainian Black Sea ports, we will continue to do so. We
are transparent about this with our customers and open
about all the mitigations that we have in place to minimise
reliability risks.
FERREXPO SALES SPLIT
With access to Ukrainian Black Sea ports, Ferrexpo was able to
resume supplies to customers in Asia and MENA in 2024.
FE content (%)
Yaroslavna Blonska
Acting Chief Marketing Officer
Financial Statements
Corporate Governance
Strategic Report
27
DECARBONISING LOGISTICS
NETWORKS
A consequence of the reopening of Ukrainian
Black Sea ports has been the scaling back of
our exports by river barge and also through
Romanian Black Sea ports. Although some
customers still opt for delivery by rail or
Danube river barge, this accounted for only
50% of sales in 2024, compared to 69%
in 2023.
Ferrexpo’s deliveries to the Black Sea ports
and the Western Ukrainian border are made
using electric locomotives. As Ukraine starts
accession talks for EU membership, Ferrexpo
has been advocating for electrified rail
routes all the way to customers in Europe to
decarbonise logistics and reduce Scope 2
and 3 emissions. The company’s river barging
subsidiary, First DDSG, is also advocating
for greater EU support to cover the cost of
converting to lower carbon fuels, in particular,
hydrotreated vegetable oil (“HVO”). Support
for this could result in the Danube being a low
carbon transport network, connecting the
ten Danube shore countries with the Black
Sea and the wider greater European river
and canal network.
CUSTOMER GROWTH
MARKETS
During 2024, the Group restarted production
of Ferrexpo DR pellets (“FDP”) for the first
time since the full-scale invasion of Ukraine.
A total of 380,000 tonnes of FDP were
sold. These sales were predominantly to
new customers in the MENA region, and
are an example of the marketing team’s
efforts to enhance sales margins by product
and geography.
The team has also worked as a conduit
between customers and colleagues in
production, facilitating feedback about
pellet quality so that adjustments and
improvements can be made. Working in a
collaborative manner has also enabled the
production and supply of customised pellets
for certain customers that have particular
quality, coating and logistics requirements.
STEEL MARKET
During 2024, global crude steel production
increased and prices decreased for the second
year in a row. In North America and Europe,
high interest rates and inflation resulted
in lower demand from the steel-intensive
construction and automotive sectors. This
was made worse due to an oversupply of
cheap Chinese steel into these regions, as
steel production in China increased despite
weaker domestic demand due to a fall in
infrastructure and construction activity.
As a result, market commentators are
suggesting that regional tariffs for Chinese
steel imports are increasingly likely, which
could place more pressure on the Chinese
steel industry, though provide for higher steel
prices in non-Chinese regional markets. This
would be a welcome shift for the European
steel industry which has been battling the
Chinese imports, at a time of high energy
costs and the looming effects of EU CBAM. It
is important that the European iron ore and
steel industry continues to work together and
lobby for investment and policy measures to
protect it, so that common value chains, from
mining and metallurgical companies, to steel
manufacturers, fabricators and end users, can
work together to decarbonise.
IRON ORE MARKET
Global iron ore production is approximately
2.5 billion tonnes a year, of which 1.6 billion
tonnes are traded on seaborne markets.
Australia and Brazil are the largest exporters,
with Ukraine ranking eighth in 2024, compared
to fourth in 2021, the last full year before the
full-scale invasion.
In the final quarter of 2023, the iron ore
market rallied due to unexpected Chinese
stimulus measures which temporarily boosted
iron ore prices, notably due to a strong
interest from paper and derivative trading
markets. As a result, iron ore prices opened
the year on a strong footing with the higher-
grade benchmark 65% Fe opening at US$153
per tonne and the medium grade 62% Fe
benchmark at US$143 per tonne.
Ferrexpo plc
Annual Report & Accounts 2024
28
Market Review continued
Iron ore prices (2024) (US$/t)
Summary of industry key statistics
50
100
150
200
Mar 24 Apr 24 May 24
Feb 24
Jun 24
Jul 24
Aug 24 Sep 24 Oct 24 Nov 24 Dec 24
Jan 24
Fe 62%
Fe 65%
During 2024, the three largest iron ore
producers have increased production,
and avoided weather-related disruptions
as a result of calmer and drier cyclone and
rainy seasons. Real demand, however, has
been subdued throughout the year as no
significant Chinese stimulus has succeeded
in igniting the Chinese property market,
and in turn the construction industry and
demand for steel rebar. There were
indications that iron ore prices at times
traded more on sentiment towards the
Chinese macroeconomic outlook rather
than actual fundamentals, with iron ore
price shifts of US$5 to US$10 for short
periods of anticipation, or disappointment
at the lack of, large fiscal stimulus measures.
In September 2024, the benchmark prices
dipped below US$100 per tonne, later
recovering on limited Chinese stimulus
measures. The benchmark 65% Fe price
closed the year at US$114 per tonne, 26%
lower than the start of the year.
IRON ORE PELLET MARKET
Pellet markets also witnessed a clear
downtrend throughout 2024. The
‘benchmark’ Atlantic blast pellet premium
went from US$40 per tonne in the first
quarter of 2024 to US$38 per tonne in the
fourth quarter. Ferrexpo’s pellet premiums
are based on this benchmark, adjusted for
quality differences.
The pellet market faced similar challenges
to the iron ore fines market, although it
was uniquely noticeable that the DR pellet
market was being dampened by a weak
blast furnace pellet market. This was
evident in China where pellet premiums
were especially low, and to a lesser degree
in Europe as several blast furnaces were
closed or idled.
One bright spot in the DR market was
stable demand from the MENA region,
which is benefiting from strong
construction market demand from
Saudi Arabia and the UAE. Steel
producers using DR pellets are operating
at near full capacity, which translated
into increased demand for our products.
2024
2023
YoY change
Iron ore fines price (65% Fe CFR China)
123
132
-6%
Iron ore fines price (62% Fe CFR China)
109
120
-9%
Average 65% over 62% Fe
14
12
+14%
Atlantic blast pellet premium
40
45
-10%
Atlantic direct reduction pellet premium
58
57
+2%
C2 freight rate (Brazil Netherlands)
11
10
+6%
C3 freight rate (Brazil China)
25
21
+19%
FREIGHT
The freight market was less volatile in 2024
than in 2023. Freight rates were higher in the
first quarter as dry weather in the southern
hemisphere increased demand, and fleets
worked through dislocations and longer
voyage times caused by heightened tensions
in the Red Sea and longer journey times
through the Suez Canal.
As vessel demand eased in the second and
subsequent quarters of 2024, freight rates
started to reduce. This was also the case for
Ukrainian seaborne exporters, as more vessels
became available, and risk premia started to
narrow. In June 2024, a leading global
container shipping company resumed services
to Ukraine. Although Ferrexpo uses dry bulk
vessels, this was a positive step, and it is
hoped that more ship owners will feel
incentivised to return to Ukraine.
2025 OUTLOOK
The outlook for 2025 remains dominated by
China’s macroeconomic and construction
outlook. Further iron ore supply increases
are also anticipated, as the major suppliers
expand their activities in Australia and Brazil,
and new projects in West Africa come into
production. There are some early signals that
the down cycle in European steel is starting
to turn, but it is too early to call, and more
investment and policy support are needed.
The sales and marketing team are continuing
their efforts to work with existing and new
customers and focussing on expanding the
portfolio of premium iron ore products to
premium steel mills around the world.
Yaroslavna Blonska,
Acting Chief Marketing Officer,
Ferrexpo plc
Corporate Governance
Financial Statements
29
Strategic Report
United to
optimise
the business
30
Ferrexpo plc
Annual Report & Accounts 2024
Financial Review
Electricity
32%
Natural gas and
sunflower husks
7%
Fuel
(including diesel) 9%
Materials
12%
Personnel
8%
Maintenance
and repairs
17%
Grinding media
6%
Royalties
7%
Explosives
2%
Net cash position
US$101M
Stable net cash position in
continued challenging environment
(2023: US$108 million).
Net cash flows from operating activities
US$92M
Positive operating cash flow generation,
slightly lower than in previous year (2023:
US$101 million)
Stable net cash position despite
challenging markets for iron ore
products and war-related spike
in prices for input material
affecting margins
SUMMARY
The Group continued to demonstrate resilience and
flexibility from an operating perspective, although the
ongoing war in Ukraine continues to affect financial results.
The regained access to Ukrainian Black Sea ports enabled
the Group to expand sales to existing and new customers
in Europe, the MENA region and the Far East, resulting in
a strong increase in sales volume in 2024 and a further
geographical diversification of the Group’s customer base.
However, the second half of the year saw market weakness
and turbulence in the pricing of iron ore products,
affecting, affecting margin and cash flow generation.
The situation in Ukraine continues to require the Group to
be extremely flexible, as mining operations and production
have to be adapted to the prevailing market conditions.
During 2024, the Group operated between two and three
out of four pelletising lines, aligned with the sales portfolio
and depending on the availability of electricity. Despite the
positive effects from higher production on the fixed cost
absorption of iron ore pellets produced, the Group’s
production cost per tonne increased as result of higher
than expected prices for input materials, especially for
electricity imported from EU countries.
In 2024, the Group invested US$102 million in its operation,
mainly in Ukraine, and finished the year with a net cash
position of US$101 million.
REVENUE
Revenue increased by 43% to US$933 million in 2024
(2023: US$652 million).
In 2024, the Group benefited from the reopening
of Ukrainian Black Sea ports. As a result, total sales
volumes were 64% higher at 6.8 million tonnes
(2023: 4.2 million tonnes).
The positive effect from higher sales volumes was partially
offset by a 7% decline in the annual average benchmark
iron ore price (65% Fe) and a 10% decline in the annual
average pellet premium. At the same time, the average
index rates for international freight increased by 18% to
US$24.9 per tonne compared to US$21.1 per tonne in 2023,
and lowered the Group’s net back realised prices for sales
under the International Commercial Terms (“Incoterms”)
of FOB (“Free on Board”).
Due to the availability of the Ukrainian Black Sea ports,
the proportion of seaborne sales increased, compared to
those transported by rail or barge to the Group’s customers
in Europe.
For more information on the market factors influencing
pricing of the Group’s products and logistics, please see
the Market Review section on pages 26 to 29.
C1 CASH COST BREAKDOWN
Ferrexpo continues to sell the majority of its products to
long-standing customers, thereby securing stable offtake
volume for the Group and commands greater certainty
of supply for customers.
“We are
immensely proud
of the resilience of
our teams across
our supply chain.
It has made a huge
impact on our
performance.”
Nikolay Kladiev
Chief Financial Officer
Financial Statements
Corporate Governance
Strategic Report
31
C1 CASH COST OF
PRODUCTION
Cost of sales in 2024 totalled US$597 million
compared to US$362 million in 2023. The
increase is a result of significantly higher pellet
production volume, which increased by 58%
to 5.7 million tonnes, compared to 3.8 million
tonnes in 2023. Similar to the previous year,
the Group’s production volume was generally
aligned to accessible logistics capacity to
minimise the working capital outflow and,
additionally, dependent on the availability
of electricity during the second half of 2024.
In addition to these, the higher production
volume in 2024 supported a better absorption
of fixed costs and limited losses in view of the
extraordinary challenges posed by inflationary
pressure on input material.
The C1 cash cost of production (“C1 costs”)
reflects the Group’s operating costs for
the production of iron ore pellets, with a
breakdown of the different cost components
shown in the table below.
2024
2023
Electricity
32%
32%
Natural gas and
sunflower husks
7%
9%
Fuel (including
diesel)
9%
7%
Materials
12%
8%
Personnel
8%
11%
Maintenance and
repairs
17%
16%
Grinding media
6%
6%
Royalties
7%
9%
Explosives
2%
2%
The numbers above are rounded to full decimals.
The Group’s average C1 costs increased to
US$83.9 per tonne, compared to US$76.5 per
tonne in 2023. The positive effects from the
higher production on the fixed cost absorption
per tonne of iron ore pellets produced and, the
devaluation of the local currency, were offset
by higher prices for input material.
The main C1 costs drivers are the price of
electricity, natural gas and diesel in Ukraine,
which are outside of the Group’s control. The
increase of the C1 costs in 2024 was driven
primarily by the sharp increase in electricity
prices as a result of the continued Russian
attacks on power generation and distribution
facilities in Ukraine, meaning that a significant
proportion of the electricity required has to
be imported from neighbouring European
countries at higher prices. Increased mining
and maintenance activities during the year
resulted in a higher proportion of diesel
consumption and repair costs. Another
important component of the Group’s C1 costs
that is also outside of the Group’s control
relates to royalties in Ukraine, which came into
effect in January 2022, and which accrue and
are paid based on a tiered system. According
to this regime, royalties are calculated based
on the benchmark index price for a medium-
grade (62% Fe) iron ore fines price and
computed based on the cost of different iron
ore products. The rate varies between 3.5%,
5.0% and 10% depending on the benchmark
index price for 62% Fe. The royalty expense
totalled US$32 million in 2024, compared to
US$25 million in 2023, driven mainly by the
higher production volume, but partially offset
by the effect of lower index prices during most
periods in 2024.
Group operating costs, denominated in
Ukrainian hryvnia (“UAH”), account for
approximately two thirds of the Group’s C1
costs. Consequently, changes in hryvnia to
dollar rates can have a significant impact on
the Group’s operating costs, including the C1
costs. The UAH depreciated by 11% to the US
dollar in 2024, compared to a depreciation of
4% in 2023.
The Group’s C1 costs per tonne represent the
cash cost of the production of iron pellets
from ore, divided by the production volume.
The C1 costs exclude non-cash costs such as
depreciation, pension costs and inventory
movements. The C1 cash cost of production
(US dollars per tonne) is regarded as an
Alternative Performance Measure (“APM”).
BREAKDOWN OF C1 COSTS
The main C1 costs components are electricity,
natural gas and diesel in Ukraine, which
collectively represent 48% (2023: 48%) of
the total cost base as presented in the chart
above with changes and the proportions of
the different cost components.
In 2024, the proportion of the C1 costs per
tonne for electricity remained unchanged at
32% because increased production volumes
were not enough to offset higher electricity
prices. The average electricity price in Ukraine
in 2024 increased by 27% in US dollar terms,
peaking at US$188 per megawatt-hour
(“MWh”) in July 2024, compared to an average
of US$109 per MWh in 2023. The proportion
of natural gas decreased to 7% (2023: 9%)
due to lower prices on the global markets
and improved consumption, whereas the
proportion of fuel increased from 7% in 2023
to 9%, mainly due to the Group’s ramp up
of mining activities in 2024. As a result, total
costs for fuel and consequently the share
of fuel increased, despite lower fuel prices
in 2024. The proportion of natural gas was
also reduced as a result of increased use of
sunflower husks as a substitute. The average
Brent price for oil and the average price
for natural gas decreased by 3% and 16%
respectively in US dollar terms, compared
to an increase of 17% and 68% in 2023.
The increase in the proportion for materials
from 8% in 2023 to 12% in 2024 is due to the
higher local inflation, partially offset by the
effects of the devaluation of the Ukrainian
currency, and items available in stock and
expensed when consumed. The decrease of
the proportion of personnel expenses from
11% in 2023 to 8% is largely driven by the more
favourable fixed cost absorption per tonne of
pellets produced, which was, however, partially
offset by adjustments made to the salaries of
the workforce in Ukraine.
Due to the ongoing war in Ukraine resulting
in lower production activities than before
the war, the Group sustained its maintenance
and repair programme for its mining and
processing equipment at a similar level to
that of 2023.
See section “C1 cash cost of production”
for further information on the Group’s
production costs.
SELLING AND
DISTRIBUTION COSTS
Total selling and distribution costs increased
to US$246 million in 2024 (2023: US$161
million), due to growth in sales to seaborne
markets after access to Ukrainian Black Sea
ports was regained. As a result, CFR and CIF
sales volume increased to 2,492 thousand
tonnes, compared to 168 thousand tonnes in
2023, increasing international freight costs
from these sales by US$88 million, compared
to US$51 million in 2023. In addition to the
effect from higher seaborne sales volumes,
international freight costs in 2024 were also
affected by higher freight costs for exports
through Black Sea ports due to the ongoing
war in Ukraine. In addition to the higher freight
rates, considerable insurance premiums were
also incurred for shipments from Ukrainian
Black Sea ports. The Group spent US$9
million for war risk covers during 2024 (2023:
nil) in the Ukrainian Black Sea area as well as
in the Red Sea area for shipments to certain
customers in MENA and Asia.
Seaborne logistics routes are generally the
lowest cost and most efficient way to deliver
the Group’s products to customers. However,
as a result of the ongoing war in Ukraine, the
Group has had to bear significantly higher
logistic costs than before the war, exerting
additional pressure on margins. Since the
full-scale invasion of Ukraine, and before
access to the Ukrainian Black Sea ports was
regained, the Group established new logistics
routes and relationships with alternative
logistics providers and port operators, which
Ferrexpo plc
Annual Report & Accounts 2024
32
Financial Review continued
1.
Source: S&P Global Commodity Insights
2. Source: National Bank of Ukraine
Ukrainian hryvnia vs. US dollar2
UAH per USD
Spot 14.03.25
41.527
Opening rate 01.01.24
37.982
Closing rate 31.12.24
42.039
Average 2024
40.152
Average 2023
36.574
in combination were more expensive and also
adversely affected the Group’s cash conversion
cycle during the comparative year 2023.
The Ukrainian rail network is essential to
delivering the Group’s products to Black Sea
ports and to the Western border of Ukraine.
In 2022 and 2023, the Ukrainian rail network
experienced congestion, but the situation
continued to improve in 2024. Rail tariffs in
Ukraine remained unchanged in 2024 and
2023, after a hefty 70% increase was imposed
from July 2022. Tariffs in US dollar terms
benefited, however, from the devaluation of
the local currency.
GENERAL AND
ADMINISTRATIVE EXPENSES
General, administrative and other expenses in
2024 increased to US$69 million, compared
to US$64 million in 2023. Positive impacts
from planned cost management and saving
initiatives and the devaluation of the Ukrainian
hryvnia have, however, been offset by higher
legal and consulting costs in connection with
an increase in legal disputes against the Group.
See Note 30 Commitments, contingencies and
legal disputes to the Consolidated Financial
Statements for the current environment
in Ukraine vis-à-vis the Group, and further
information on the ongoing legal challenges
and disputes of the Group in Ukraine.
OTHER OPERATING EXPENSES
Other operating expenses increased from
US$29 million in 2023 to US$92 million in 2024,
predominantly due to a non-cash impairment
loss of US$72 million recorded as at
31 December 2024 on the Group’s non-current
operating assets, including property, plant and
equipment, intangible assets and other
non-current assets. The recorded impairment
loss resulted from the Group’s lower cash flow
generation, driven by a material decline of
prices for iron ore products due to a less
optimistic long-term outlook for the iron ore
market and higher prices for input material due
to the ongoing war in Ukraine. Further to that,
the balance of Other operating expenses
benefited from lower allowances for doubtful
debts under the expected credit loss model
and outstanding VAT receivable balances.
CURRENCY
Ferrexpo prepares its accounts in US dollars.
The functional currency of the Group’s
operations in Ukraine is the Ukrainian hryvnia,
as approximately two thirds of the Group’s
operating costs are historically denominated
in local currency.
The local currency devalued from 37.982 at
the beginning of the year to 42.039 as at
31 December 2024 (-10%), compared to a
devaluation of 4% in 2023. With the
continuation of Martial Law during 2024,
the National Bank of Ukraine (“NBU”) has
continued to maintain significant currency
and capital controls in Ukraine to manage the
local currency.
As a result, there are limitations to converting
balances in local currency into US dollars, and
to transferring US dollars between onshore
and offshore accounts of the Group. See Note
30 Commitments, contingencies and legal
disputes to the Consolidated Financial
Statements for further information.
OPERATING AND NON-
OPERATING FOREIGN
EXCHANGE GAINS/LOSSES
As 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 Group’s
Ukrainian subsidiaries’ US dollar denominated
receivable balances from the sale of pellets.
As a result of the higher devaluation in
2024, the operating foreign exchange gains
increased to US$83 million in 2024, compared
to US$31 million in 2023.
Non-operating foreign exchange losses
increased from US$8 million in 2023 to
US$39 million in 2024, and relate primarily
to the translation of US dollar denominated
loan payable balances of the Group’s
Ukrainian subsidiaries.
For further information on the operating
foreign exchange gains and the non-operating
foreign exchange losses, please see Note 9
Foreign exchange gains and losses to the
Consolidated Financial Statements.
UNDERLYING EBITDA
Despite the loss for the year, underlying EBITDA
remained positive in 2024, but decreased by
30% to US$69 million, mainly due to lower
operating profits because of lower realised
prices and higher C1 costs as a result of
increased prices for production inputs.
Historically and in line with the Group’s
definition of the Underlying EBITDA at that
time, the Group’s Underlying EBITDA included
operating foreign exchange gains and
losses, which could be material depending
on exchange rate of the Ukrainian hryvnia
to the US dollar. During the financial year
2024, the Group amended its definition of
Underlying EBITDA by excluding operating
foreign exchange gains and losses. As a result,
the Underlying EBITDA as at the end of the
comparative period ended 31 December
2023 was restated from US$130 million to
US$99 million. See the section Items excluded
from underlying earnings on page 34 for the
effects considered as an exceptional item and
excluded from the Group’s underlying EBITDA.
Underlying EBITDA is an Alternative
Performance Measure (“APM”) and further
information is provided on page 237.
NET FINANCE EXPENSE
The Group’s finance expenses remained stable
compared to 2023, at US$5 million.
With the exception of lease liabilities, the Group
does not have any outstanding interest-bearing
loans and borrowings, therefore no interest
expenses on finance facilities were incurred.
As in the prior year, the majority of finance
expense relates to the calculated interest on
the Group’s pension scheme, without any cash
outflow effects, and to bank charges. At the
same time, interest income decreased from
US$5 million in 2023 to US$4 million in 2024.
Interest income is derived from the available
funds invested in deposits and depends on
interest rates on the global financial markets
and the funds invested.
Further details on finance expense are
disclosed in Note 10 Net finance expense to
the Consolidated Financial Statements.
Key Financial Performance Indicators
US$ million (unless stated otherwise)
2024
2023
YoY change
Total pellet production (kt)
6,071
3,845
58%
Total pellet and concentrate production (kt)
6,890
4,152
66%
Sales volumes (kt)
6,830
4,174
64%
Iron ore price (65% Fe Index, US$/t)1
123
132
(7%)
Revenue
933
652
43%
C1 cash cost of production (US$/t)
83.9
76.5
10%
Underlying EBITDAA
69
99
(30%)
Underlying EBITDAA margin
7%
15%
(8pp)
Capital investmentA
102
101
1%
Closing net cash
101
108
(6%)
Corporate Governance
Financial Statements
33
Strategic Report
INCOME TAX
The Group’s income tax expense increased to
US$30 million, compared to US$16 million in
2023, resulting in an effective tax rate of 33.7%
(2023: 26.1%), after the elimination of exceptional
items resulting in a loss before tax in both
financial years and distorting the effective tax
rate. The Group’s effective tax rate is generally
impacted by effects which are not tax deductible
in different jurisdictions according to the local tax
regulations. The effective tax rate for 2024 was
affected by an impairment loss of US$72 million
on the Group’s non-current operating assets, of
which US$68 million is not tax deductible in
Ukraine, and no deferred tax asset was
recognised. Further to that, there is a significant
effect from low-grade ore extracted by one of
the Group’s subsidiaries, which is expensed for
Group reporting purposes, but capitalised in
the stand-alone financial statements of the
subsidiary, as it is not accepted as an expense
under the current mining licence. The effective
tax rate for the comparative year 2023 was
affected by the recognition of provisions for legal
disputes in Ukraine totalling US$131 million, which
are not tax deductible, and no deferred tax asset
was recognised. In addition, valuation allowances
on recognised deferred tax assets have an impact
on the effective tax rate of the Group. An
additional allowance of US$4 million was
recorded in the financial year 2024, compared to
an allowance of US$10 million in the comparative
year 2023, on deferred tax assets recognised by
the Group’s two major subsidiaries in Ukraine. The
allowances are necessary because of profitability
is lower than expected due to the war in Ukraine
and due to a shorter period allowed for the
unwinding of the temporary differences due to
the material uncertainty in respect of the Group’s
ability to continue as a going concern. For further
information see Note 11 Taxation to the
Consolidated Financial Statements.
In 2024, the income tax paid by the Group
totalled US$23 million (2023: US$13 million),
of which US$16 million was paid in Ukraine
(2023: US$12 million). The income tax paid
includes withholding tax on intercompany
dividend and interest payments considered
as income tax paid.
Further details on taxation are disclosed
in Note 11 Taxation to the Consolidated
Financial Statements.
ITEMS EXCLUDED FROM
UNDERLYING EARNINGS
The underlying EBITDA in 2024 was adjusted by
the impairment loss of US$72 million recorded
as a result of a reduction in the carrying value
of the Group’s assets and the continued lower
cash flow generation of the Group due to the
ongoing war in Ukraine. See Note 13 Property,
plant and equipment to the Consolidated
Financial Statements for further details.
There are a number of events after the
reporting period that are treated as non-
adjusting post balance sheet events. Some of
these events could lead to an impairment in a
future period. For further information, see
Note 35 Events after the reporting period.
In the comparative year 2023, the effect of
US$131 million of provisions recognised for
ongoing legal disputes is considered as an
exceptional item and is therefore excluded
from the Group’s underlying EBITDA.
CAPITAL INVESTMENT
Capital expenditure in 2024 totalled US$102
million, and thus remained on the same level
as in 2023. Of the total amount spent in 2024,
sustaining capital expenditures increased to
US$37 million, compared to US$31 million
spent in 2023, and covered the activities at
all of the Group’s major business units. The
current level of sustaining capital expenditures
takes into account the operational and logistics
constraints as a result of the ongoing war in
Ukraine. The Group continuously reviewed and
optimised the level and timing of its activities
to ensure the reliability of operations in
Ukraine and to avoid unexpected downtimes.
The increase compared to 2023 also reflects
the backlog of certain sustaining capital
expenditures that have been postponed since
the beginning of the war.
At the same time, the Group considered the
timing of investments in strategic development
projects, resulting in expenditures of US$65
million, compared to US$70 million in 2023.
Some of the larger capital investments included
additional funds for the new press filtration
complex and a new concentrate conveyor line
along the production circuit, which totalled
US$24 million and US$2 million, respectively.
These investments will allow the Group to
increase production of high-grade products in
the near term once the operation returns to full
capacity, and to produce iron ore concentrates
and pellets at the same time, thereby removing
the restriction on the simultaneous production
of pellets or concentrates. Further to that, the
Group spent US$9 million (2023: US$22 million)
on stripping activities for future production
growth and US$18 million on the concentrator
and pelletiser projects (2023: US$22 million)
as part of the Wave 1 Expansion Programme
to manage commitments made previously.
The Group also spent US$3 million on the
development and exploration of the Belanovo
deposit (2023: US$3 million), as well as US$1
million in a hydrolysis plant (2023: US$1 million)
to trial using hydrogen as a fuel in the Group’s
pelletiser. For further information on the
Group’s activities to grow its business in 2024,
please see page 21.
Considering the unchanged cash flow
generation, which is still affected by the
ongoing war in Ukraine, no ordinary dividends
were paid during the calendar years 2024 and
2023. The Group has a shareholder returns
policy outlining the Group’s intention to deliver
up to 30% of free cash flows as dividends in
respect of a given year. The Group’s ability to
make dividend payments also depends on
developments in respect of the ongoing legal
disputes in Ukraine.
For further information see Note 30
Commitments, contingencies and legal disputes
to the Consolidated Financial Statements.
DEBT AND MATURITY PROFILE
The Group has maintained its strong balance
sheet in 2024, being basically debt free, and in
a net cash position of US$101 million as at
31 December 2024 (2023: US$108 million).
With the exception of lease liabilities, the
Group did not have any outstanding interest-
bearing loans and borrowings as of
31 December 2024 and 2023.
LOSS FOR THE YEAR
The Group’s result for the financial year 2024
is a loss of US$50 million, mainly coming
from an impairment loss of US$72 million,
compared to a loss of US$85 million in 2023.
The loss in 2023 resulted from the recognition
of provisions for ongoing legal proceedings
and disputes in Ukraine amounting to
US$131 million. Without the special effects in
2024 and 2023, the results would have been
profits of US$22 million and US$46 million,
respectively. Beside the effect from the
impairment loss recorded in 2024, the Group’s
operating profit was affected by lower prices
for iron ore products on the global markets
and higher prices for input material due to the
ongoing war in Ukraine.
CASH FLOWS AND CASH
EQUIVALENTS
Operating cash flow before changes in working
capital decreased by 35% to US$67 million,
compared to US$103 million in the previous
year. The lower operating cash flow generation
is driven by the Group’s lower operating profit.
There was an overall working capital inflow of
US$52 million compared to US$13 million in
2023, which was driven largely by the decrease
of the trade receivable balance due to better
cash collection, whereas the increase of the
trade payable was almost offset by the slightly
higher inventory accumulated for planned
sales at the beginning of 2025, and other taxes
recoverable balances. The Group continued to
receive regular VAT refunds in 2024,
supporting the Group’s cash flow generation,
with the higher VAT closing balance as at
31 December 2024 reflecting the increased
operating activity than in 2023.
The net cash flow from operating activities was
US$92 million, slightly lower than in 2023. The
effect from the lower operating cash flow was
offset by positive effects from working capital
movements as at 31 December 2024.
The Group continued its capital expenditure
programme and the investments totalled
US$102 million in 2024, and thus remained on
the same level as in 2023. See the section below
for further information.
Despite the lower operating cash flow
generation and capital expenditures at a similar
level as in 2023, the Group managed to maintain
its closing balance of cash and cash equivalents
above US$100 million, totalling US$106 million
as of 31 December 2024, compared to US$115
million as of 31 December 2023.
The balance of cash and cash equivalents held
in Ukraine amounts to US$4 million as at
31 December 2024 (31 December 2023: US$6
million). The significant currency and capital
control restrictions introduced in Ukraine by
the NBU following the adoption of Martial Law
are still in place. Although these measures
were softened by the regulator in 2024, they
are still affecting the Group in terms of its
ability to make cross-border payments, which
may be carried out only in exceptional cases.
For further information see Note 30
Commitments, contingencies and legal disputes
to the Consolidated Financial Statements.
Ferrexpo plc
Annual Report & Accounts 2024
34
Financial Review continued
As of 31 December 2024, the credit rating
agency S&P had a corporate and debt rating
for Ferrexpo of CCC, with a negative outlook.
The credit ratings agency Moody’s had a
long-term corporate and debt rating for
Ferrexpo of Caa3, with a negative outlook. The
credit ratings agency Fitch maintains a CCC+
with a negative outlook rating on the Group.
While the credit rating of Ferrexpo is capped
by the sovereign credit rating of Ukraine, the
ceilings for credit ratings ascribed to Ferrexpo
by S&P, Moody’s and Fitch are higher (five
notches above sovereign, SD, for S&P, one
notch above sovereign, Ca, for Moody’s and
five notches above sovereign, RD, for Fitch).
RELATED PARTY
TRANSACTIONS
The Group enters into arm’s length transactions
with entities under the common control of
Kostyantin Zhevago and his associate. All these
transactions are considered to be in the
ordinary course of business.
During the financial year 2024, the Group
made bail payments totalling US$1 million
(2023: US$15 million) on behalf of three
members of the top management (2023: four)
of one of the Group’s subsidiaries in Ukraine in
respect of various legal actions and ongoing
court proceedings initiated by certain
governmental bodies against the Group’s
subsidiaries and members of the senior
management in Ukraine.
See also below under Contingent liabilities
and legal disputes and Note 34 Related party
disclosures to the Consolidated Financial
Statements for further details.
CONTINGENT LIABILITIES AND
LEGAL DISPUTES
The Group is exposed to risks associated with
operating in a challenging environment in
Ukraine during a time of war and the current
circumstances facing Mr Zhevago. As a result,
the Group is subject to various legal actions and
ongoing court proceedings initiated by different
government agencies in Ukraine. There is a
continued risk that the independence of the
judicial system and its immunity from economic
and political influences in Ukraine is not upheld.
Consequently, Ukrainian legislation might be
applied inconsistently to resolve the same or
similar disputes. As a result, the Group is exposed
to a number of higher risk areas than those
typically expected in a developed economy,
which require a significant portion of critical
judgements to be made by the management.
As announced on 4 February 2025, the Group’s
subsidiary Ferrexpo Poltava Mining (“FPM”) has
received a civil claim seeking joint liability of FPM
and its General Director for damages amounting
to UAH 157 billion (approximately US$3.8 billion
as at 14 March 2025) in favour of the Ukrainian
state. This claim is related to an initial accusation
of the illegal sale of waste products, as disclosed
in the Group 2023 Annual Report & Accounts,
which have transformed into accusations
that FPM is illegally mining and selling subsoil
(minerals other than iron ore), which is said to
have caused damage to the environment. FPM
rejects these allegations in their entirety on
the basis that there was no illegal extraction
of the subsoil. Even if a court in Ukraine would
conclude that there was illegal mining and sale
of subsoil, the extent of this claim is in no way
comprehensible and it is Group management’s
position that no reliable estimate can be made
as at the date of approval of these consolidated
financial statements. As a consequence, no
provision was recorded as at 31 December 2024
in accordance with IAS 37 Provisions, contingent
liabilities and contingent assets.
In respect of the ongoing contested sureties
claim, several court hearings took place in
2024 and 2025 without a final Supreme Court
ruling and the next hearing is scheduled for
21 March 2025. If the final Supreme Court
ruling is not in favour of FPM, the claimant
may take steps to appoint either a state or a
private bailiff and request the commencement
of enforcement procedures, which could have
a material negative impact on the Group’s
business activities and its ability to continue as
a going concern, as the assets of FPM could be
seized or subject to a forced sale.
See Note 2 Basis of preparation and Note 30
Commitments, contingencies and legal
disputes to the Consolidated Financial
Statements as well as the Principal Risks
section on pages 81 to 94 for further details.
In addition to the cases above, there are a
number of events after the reporting period,
which had to be assessed by the management
when preparing the financial statements for
the year ended 31 December 2024. Most of
these events are treated as non-adjusting
post balance sheet events from an accounting
perspective. See Note 35 Events after the
reporting period for further information.
GOING CONCERN
As at the date of the approval of these
Consolidated Financial Statements, the war
is ongoing and poses a significant threat to
the Group’s mining, processing and logistics
operations in Ukraine. This threat results in
material uncertainties outside of the Group’s
control. In addition to the war-related material
uncertainty, the Group is still exposed to the
risks associated with operating in a challenging
environment in Ukraine, which may or may not
be exacerbated by the war and/or the current
circumstances facing Mr Zhevago (see Ukraine
country risk on pages 85 to 87). As a result, the
Group is exposed to a number of risk areas that
are heightened compared to those expected
in a stable economy, such as an environment
of political, fiscal and legal uncertainties, which
represents another material uncertainty as at
the approval of these consolidated financial
statements. As mentioned in the section
Contingent liabilities and legal disputes
above, there are a number of events after
the reporting period (see also Note 35 Events
after the reporting period), which had to be
assessed by the management also in terms
of the Group’s ability to continue as a going
concern and required critical judgements.
Detailed information on the Group’s ability
to continue as a going concern is disclosed
and material uncertainties in Note 2 Basis
of preparation to the Consolidated
Financial Statements.
Nikolay Kladiev
Group Chief Financial Officer, Ferrexpo plc
Underlying EBITDA margin
7%
Underlying EBITDA margin
remains positive despite
sharp fall in market
prices (2023: 15%).
Capital investment
US$102M
Continued investments in
sustaining and development
capital projects in 2024
(2023: US$101 million).
Corporate Governance
Financial Statements
35
Strategic Report
United
by trust
36
Ferrexpo plc
Annual Report & Accounts 2024
Our People
Ferrexpo is recognised as a
human resources pioneer in
Ukraine. The changes that we
started implementing almost
a decade ago, meaningfully
integrating global best practices
into everything we do, have
helped us leave behind many
of the outdated characteristics
of an industrial Eastern
European enterprise.
The human resources function at Ferrexpo
operates as a tight-knit team, with oversight
from the Board and direction from the
Executive Committee. The team at our
operations like to describe themselves as
“invisible”, as they go about their work
smoothly shaping and resourcing our
activities in such a way that their presence
makes a positive impact without being
overtly perceived.
OPERATING MODEL
On a fundamental level, Ferrexpo’s approach to human
resources is about managing the human capability and
capacity of the organisation, in a way that a corporate culture
is fostered and an operating model delivered that supports
the achievement of the broader business objectives.
We understood that to be a modern mining and
metallurgical company required a shift in our organisational
culture and a transformation in our working structure and
practices. In 2017, we embarked on a cultural transformation
initiative called “One Ferrexpo”. This initiative, along with
restructuring some of our subsidiaries, including
consolidating some functions, aimed to transition our
culture from separate businesses operating independently
to a more cohesive business operating interdependently.
Our redefined values
RESPONSIBILITY
Promoting responsibility within the workforce,
with individuals focused on a safety-first
approach, environmental responsibility, and
accountability to local communities.
1
INTEGRITY
Representing high ethical standards and
delivering on commitments. This authentic
approach is supported through extensive
training and a robust corporate governance
framework. This includes our interaction with
our local communities.
3
DIVERSITY
WITHIN ONE TEAM
Through embracing diversity within one team,
the Group aims to promote acceptance and
harnessing of differences of opinions and
backgrounds to drive our performance.
4
CONTINUOUS INNOVATION
Essential for improvement and adaptation.
Through embracing change, the Group
aims to create a culture of collaboration
for a bright future.
5
‘MAKE IT HAPPEN’
A collective effort to deliver superior business
results, which are achieved through engagement
and training.
2
As the catalyst for the transformation, we
initially focused on aligning leaders around the
business strategy and developing new values
in collaboration with employees. We view these
values as our expectations of each other and
how we work together:
These values and the resulting behaviours serve
as the engine that drives our collective approach
to achieving our common business objectives.
“The war
continues to
place incredible
pressure on
companies in
Ukraine. We
understand our
role in helping to
provide support
to individuals
during this
difficult time.”
Greg Nortje
Group Chief Human Resources Officer
Financial Statements
Corporate Governance
Strategic Report
37
While “One Ferrexpo” and its values provide
guidance, we recognised that achieving a
meaningful cultural shift required a top-down
approach as a company’s culture is created by
its leaders. This is why we began aligning the
leadership team around Ferrexpo’s purpose
and strategies, followed by training and
coaching sessions to empower our leaders
to effectively demonstrate the required
behaviours and communicate our business
strategy, and our commitments to DEI and
sustainability, for example. We observed that
management and early adaptors eventually
drove a tipping point, at which time the
changes cascaded throughout the organisation.
Systems and policies have also been enhanced,
providing line managers with the tools they
need to measure performance, promote
efficiencies and foster ideas and innovation.
One unique example is the ‘Bank of Ideas’
initiative, whereby all employees have the
opportunity to propose innovative solutions
to improve operations. Since the initiative
launch in 2017, more than one thousand
employees have submitted ideas. Colleagues
in production and repair departments are
the most active, submitting suggestions to
increase the efficiency of the work process,
or minor modernisations that can increase
the service life of certain equipment.
Another performance assessment tool
is the implemented system of annual
staff evaluations – 9-Box career potential
and competency-based and individual
performance assessments. The results of
these processes are to motivate employees
to develop, learn to gain certain competencies
and obtain the best performance indicators
for further career growth and achievement
of potential.
Since February 2022, however, the immediate
focus has been the war. This is perhaps more
acute for the HR team than for other business
functions. During a time of war, health and
safety are even more paramount. It is important
to ensure the emotional wellbeing and
psychological resilience of the workforce, both
collectively and also at an individual level. This is
an ever-evolving challenge because each person
is enduring their own unique and changing
experience of war. We know that one of the
biggest contributions that we can make to the
war effort is to keep the business running and
our people employed, and it is important that
we do this in a manner that makes them feel as
protected and safe as possible.
For more information on Health and Safety,
please see the sub-section in the Responsible
Business section on page 46.
Workforce composition and planning must
also be managed, as dynamic factors, including
changing demographics, skills availability,
legislation and regulations and technological
advancement, are affecting how we manage
our workforce today and into the future.
WORKFORCE COMPOSITION
The war has changed the demographic of our
workforce, and we anticipate this to remain
the case as the war continues and indeed after
the war ends, given its impact on the wider
population. Managing the shifting structure
of the workforce and labour pool through war
is complex, making attraction and retention
more important.
One critical issue is colleagues serving in the
Armed Forces of Ukraine and in ancillary
support functions. Many colleagues have
volunteered or been conscripted. At the end
of 2024, 706 of our workforce were serving
in the Armed Forces of Ukraine (698 men and
8 women), equivalent to 8.3% of the total
workforce. This is more than at any time since
the start of the full-scale invasion. As the war
prolongs, we are welcoming back more and
more returning veterans, 160 in total as at the
end of 2024, of which 102 have been able to
return to work, with the balance undergoing
rehabilitation, retraining, or electing not to
return to work.
A further issue is that a higher proportion of
skilled workers in positions such as electrical
and gas welders, electricians and fitters are
currently serving in the Armed Forces than
we have on average across the business.
Ferrexpo plc
Annual Report & Accounts 2024
38
Our People continued
2024
2023
2022
Total workforce
8,542
8,040
8,277
Serving in the Armed Forces of Ukraine
706
656
582
Employees*
6,372
6,472
6,937
Contractors
1,464
912
758
Male percentage**
67.8%
69.7%
69.5%
Female percentage**
32.2%
30.3%
30.5%
Serving in Armed Forces of Ukraine***
706
656
582
Total killed serving in the Armed Forces of Ukraine
45
34
16
Veterans demobilised from the Armed Forces of Ukraine
160
67
6
Veterans returned to the workplace
102
40
1
Veterans waiting to return to the workplace
18
3
0
Veterans elected not to return to Ferrexpo
40
24
5
* number of full-time employees is stated excluding those serving in the Armed Forces of Ukraine
** percentage of men and women is calculated excluding contractors, as we do not keep detailed gender records of
contractors. In terms of the number of employees by gender, at the end of 2024 there were 2,052 women and 4,320
men (2023: 1,961 women and 4,511 men)
*** information on the servicemen is based on the data of previous periods under the cumulative system
During the war, employee turnover rates have
remained similar to pre-full-scale invasion
levels, ranging from 5% to 7%. However,
at the start of the full-scale invasion, many
people moved within Ukraine or overseas due
to safety concerns or to avoid conscription.
In total, 506 employees left in the period
from 2022 to 2024, with a ratio of 45% men
and 55% women, skewing the composition
of our workforce.
As we consider how we will staff our business
in the future, we want to increase the
participation of women. To achieve this, we
are looking deeper into our business to better
understand what roles and functions that
previously were legislatively reserved for men
can be undertaken by women, work practice
adaptations we will need to consider, and
what further cultural changes need to be
implemented. Already Ferrexpo has one of
the highest female to male staff ratios for any
Ukrainian metallurgical company. We have
already made some progress, for example, by
recruiting women to our truck driving team:
12 women received a C category driver’s
training at the Horishni Plavni training centre,
6 of whom already joined FYM in December
2024. However, we understand that we need
to move forward, and we plan to continue
to attract women to roles including heavy
truck drivers, excavator operators, forklift
drivers, electricians, and electric welders.
This academic year, our partner vocational
schools began to offer courses to train women
in the skills needed for these professions,
and we expect to see more female applicants
once they have completed their studies in
three to four years’ time. However, we are
not staying on the sidelines and are engaging
women from Horishni Plavni city to work at
our operations by organising the Fe_munity
& Skills project jointly with the city. A number
of training programmes have been created to
encourage women to acquire new skills and
join our industry. In 2025, we will continue to
implement this project.
Corporate Governance
Financial Statements
39
Strategic Report
Ferrexpo’s on-site Qualification Centre
has expanded its activities in 2024 to offer
additional vocational training programmes.
In December 2024, the centre was recognised
by the National Qualifications Agency, the
first such centre in the Poltava Region.
The main and most important function of
the Centre is to provide employees with
appropriate qualifications by certifying their
existing skills and abilities without theoretical
training or retraining. Recognising an
employee’s prior learning by offering formal
certification in their profession – subject
to passing an exam – shortens the process
of obtaining a qualification compared with
undertaking theoretical and practical training.
Currently, the Centre has the right to certify
qualifications in 24 professions, a number
that will be expanded in 2025.
Education and skills training is also a key factor
for recruiting young people, a labour pool
that is shrinking in Ukraine. We cooperate
with the technical schools in our communities,
run events and projects, offer bursaries and
scholarships, and run programmes with
regional universities.
For more information about women in the
workplace, please see the Diversity, Equity
and Inclusion sub-section in the Responsible
Business section on pages 47 to 48.
In 2025, there are many complex scenarios
to plan for, depending on the war continuing
or ceasing. We are continuing to broaden
our efforts to be an employer of choice, to
retain our existing employees and attract
new employees. There will likely be more
demographic changes as well as potential
migratory shifts if the war ceases, with some
deciding to leave if the borders re-open,
and the Ukrainian diaspora may return.
Government support and programmes will
be necessary to encourage people to stay
and to return, especially young people. We
will need to work together to ensure that
Ukraine is an attractive place to live and work.
EMPLOYEE ENGAGEMENT
SURVEY
Towards the end of 2024, an Employee
Engagement Survey was undertaken, the
first since 2019. The response rate of 62%
exceeded previous surveys and represented a
good cross-section of business demographics.
The Group’s overall engagement score of
73% ranked well above the industry average
according to the third party that managed the
survey. It was pleasing to learn from the survey
that, despite the very difficult conditions,
our people are enduring and that they are
committed to the business.
WORKFORCE PLANNING
On a more immediate and practical level,
workforce planning demands day-to-day
analysis and vigilance, to ensure that the
Company has sufficient available human
resources to operate, support and manage our
operations. This requires constant assessment
of the workforce composition, skills, and
capabilities available to us, so that we can
match these to the production plan staffing
requirements, which change frequently.
At the outset of the full-scale invasion, we
decided to maintain a full workforce. The
war has meant times of intermittent or
suspended production, and indeed periods
of needing to boost production, that have
required enormous flexibility. In addition to
managing fluctuating production with devices
such as furlough, adjusting pay structures
and asking employees to work more shifts or
postpone leave, in 2024 we established a skills
diversification pilot. This has introduced multi-
and cross-functionality for specific skills in our
repairs and maintenance functions to generate
efficiencies and aid retention, and we intend to
expand the programme to other areas in 2025.
By learning to be more agile, we have
successfully adapted how we plan our
workforce to meet changing needs and
challenges. At the same time, we have
engendered comfort in these working
practices and confidence among our
workforce that we can sustain our business.
Section Title continued
40
Ferrexpo plc
Annual Report & Accounts 2024
Our People continued
“We are united in our
purpose because we
know that to survive
and to function, we
must trust one another.”
Yuliya Klevova
HR Director, Operations
Corporate Governance
Financial Statements
41
Strategic Report
CASE STUDY
Supporting
our veterans
When a colleague is mobilised to the
Armed Forces of Ukraine, our ’Backpack
for the Mobilised’ project supplies them
with equipment such as a bulletproof
vest, ballistic helmet, clothing items,
sleeping bag and mats, a tactical first
aid kit, and daily essentials such as mess
kits and sanitary items. We maintain
constant contact directly or through
relatives, so that we can continue to
supply them with replacement or other
items that they need while serving.
42
Ferrexpo plc
Annual Report & Accounts 2024
Our People continued
When the soldier returns, we
understand that their health and
mental state are often heavily affected.
Since the full-scale invasion of Ukraine,
160 members of Ferrexpo’s workforce
have been demobilised from the Armed
Forces of Ukraine, of whom 102 have
returned to work. This will likely increase
in the near-term, and we are eager to
have the right policies and practices in
place to help with the transition back to
civilian and working life.
After the formal decommissioning
process, veterans are introduced to
the ‘Ferrexpo Veteran Support Service’.
This programme was devised with
input from specialists including
health and security services provider
International SOS, who has experience
supporting veterans in the USA. In
2024, we also established our own
internal Veterans Committee.
Initially, personal contact is made
through the veteran’s line manager.
An appropriate period of paid leave
for resettling is agreed. Experience
suggests that getting back to work
sooner rather than later can limit the
risk of mental health issues. Medical
examinations for both physical and
mental health are undertaken, with
secondary screening when needed, and
advice and support are provided on any
legal, administrative or financial issues.
Subsequently, Ferrexpo veterans have
the right to return to their previous
roles. If their physical or mental health
or other circumstances do not allow
for this, they may choose to undertake
funded training for a new role or enrol
with a higher education institution at
the Group’s expense.
In addition to immediate resettling
support, Ferrexpo offers a
comprehensive social and material
support programme. This includes an
annual bonus and retirement packages.
Ferrexpo has also implemented a
six-week training programme for
managers and colleagues of veterans.
This programme teaches the basics of
interacting with individuals who have
physiological disabilities and post-
traumatic stress disorder (“PTSD”),
ensuring a supportive work
environment for returning veterans.
In November 2024, Ferrexpo joined
the ‘Principles of Veteran Friendly
Business’ initiative, along with
other large Ukrainian businesses,
in association with ‘Veteran Hub’, a
Ukrainian NGO dealing with veterans’
affairs, with the support of the Ministry
of Veterans. The principles are based
around a set of values designed to help
Ukrainian businesses support veterans
in their transition back to civilian life.
One of the biggest challenges is
persuading people of the benefits of
psychological counselling, because
there is a cultural hesitance in Ukraine,
particularly from men, to accept this
sort of help. One initiative being
launched in 2025 is to promote the
benefits of psychological assistance
to the local population at large,
rather than singling out individuals.
Efforts to promote mental health are,
however, constrained by the low
number and availability of mental
health specialists in Ukraine compared
to other countries, at a time of high
need. Several colleagues from
Ferrexpo’s HR function are taking a
keen interest in studying psychology
and related subjects such as neuro-
linguistic programming, not only to
help themselves, but also to apply
this knowledge in their work to
support colleagues.
Towards the end of 2024 and into 2025,
Ferrexpo launched a video series
“Veterans”, dedicated to sharing the
personal stories and insights of Ukrainian
veterans and their partners. It is
important to record these for two
reasons: so that we can share and learn
from each other today, and so future
generations will also have access to our
experiences, in the hope that this will
ensure a true and full picture of events
and contribute to a more peaceful future.
A video featuring each of the veterans
and their partner, are released at the
same time, so that viewers can see their
unique story from both perspectives.
43
Financial Statements
Corporate Governance
Strategic Report
United by our
shared values
44
Ferrexpo plc
Annual Report & Accounts 2024
Responsible Business Review
This section of the report
details our continued
commitment to the
safety and wellbeing of
our colleagues, our
efforts to reduce the
environmental impact of
our operations, and the
positive social impact we
have achieved for the
communities in which we
operate and Ukrainian
society more broadly.
STEPPING IN AS INTERIM HSEC
COMMITTEE CHAIR
In January 2025, I resumed the role of Health,
Safety, Environment and Community (“HSEC”)
Committee Chair on an interim basis while
a new Director and Committee Chair is
sought to replace Natalie Polischuk. Having
previously chaired the committee from 2020
to 2022, I have remained involved in its work
and activities. Also, as Ferrexpo’s Senior
Independent Director, I continue to interact
with our largest shareholders and to bring
their feedback to our Board on all aspects of
our responsible business activities.
RESPONSIBLE BUSINESS
DURING A TIME OF WAR
At a time of war, the role of the HSEC
Committee is more important than ever.
Doing everything we can to protect our
people, within and outside the workplace,
is our priority.
In February 2022, we made the decision to
retain our entire workforce. It may have been
easier to shutter production and lay off
employees, however, this was never an option
for the Board. Three years later, we can see
that this was the right decision as we observe
the resilience of our people and everything
they have achieved, for Ferrexpo, for Horishni
Plavni and for Ukraine.
In 2025, we will need to advance our
programmes for veteran support and
reintegration. The number of decommissioned
personnel may increase, and we must focus
on putting in place the right rehabilitation
programmes to support their return to civilian
life and work. More about our Veterans’
Programme can be found on pages 42 to 43,
including our efforts to date and our near-term
plans.
Another issue close to my heart is our drive
to attract and retain more female employees.
In 2020, when I previously chaired the HSEC
Committee, we launched our Fe_munity
programme to improve opportunities for
women within our organisation. It’s pleasing
to see that this initiative has expanded to
include a programme adapted for teenagers
in our local community. To date, more than
200 people have completed Fe_munity
programmes, including three cohorts since the
full-scale invasion. This is just one of several
initiatives that have helped us attract new
female employees and increase the number of
women as a percentage of the workforce, and
the number of women in managerial positions.
RESPONSIBLE BUSINESS
REPORTING LEADERSHIP
In 2024, we published our second Climate
Change report. When consumed by the
immediacy of war, climate may not seem
a priority. We know from listening to our
workforce and broader stakeholders, however,
that they want to know about our plans, and
how we will continue to modernise to remain
relevant and competitive.
In updating our Net Zero strategy we
considered three scenarios: “Continued War,”
“Post-war Rapid Adoption,” and “Post-war
Slow Adoption”. These scenarios allowed us
to model pathways for absolute emissions
reductions, helping us understand how we will
deliver our 2050 objectives.
2024 was the first year in five that our absolute
Scope 1 emissions increased. Targeted missile
and drone attacks on Ukraine’s energy
infrastructure during the year crippled
Ukraine’s ability to generate and transmit
electricity. This resulted in a mandated
requirement for companies like Ferrexpo to
import up to 80% of our electricity needs from
Ukraine’s European neighbours. This imported
electricity is generated from carbon-intensive
sources, instead of the cleaner nuclear and
hydro powered electricity we traditionally
source in Ukraine, hence increasing our Scope 1
emissions.
This example illustrates that, despite our
plans to lower our CO2 emissions, the war
creates situations beyond our control. For this
reason, during the year, the Remuneration
Committee decided to remove the element
relating to emissions reductions from senior
management’s incentive-based remuneration.
This is detailed in our Remuneration Report
on pages 130 to 151. Since the Climate Change
Report outlines a range of scenarios, we do
not intend to publish an update until we have
a clearer sense of which scenario is likely
to unfold.
In 2024, we published our ninth Responsible
Business Report, which provides more detail
on how we are developing our workforce,
supporting communities, contributing to
a sustainable environment and operating
ethically. I look forward to having the
opportunity to lead our tenth anniversary
edition and intend to focus on how we are
working to maintain our licence to operate
despite the many challenges we are facing.
In terms of reporting, it is pleasing to note that
in this Annual Report, we have increased the
range of ESG metrics assured by our auditors.
This year for the first time, several human
resource-related metrics have been assured.
Although not yet mandatory, we strive to
remain ahead of reporting requirements to
instil a culture of strong governance and so
that our stakeholders recognise and trust us
as a leader in ESG reporting. This was reflected
in 2024 when we were named as a Climate
Leader by the Financial Times and Statista –
the only Ukrainian operating company to be
recognised.
CONCLUDING REMARKS
I’d like to conclude by expressing my gratitude
to our workforce for their tremendous efforts
during 2024. Thanks to them, we have
continued to operate and export our products,
allowing us to advance our humanitarian, social
and environmental programme.
Fiona MacAulay
Interim Chair
Health Safety, Environment and
Community (“HSEC”) Committee
Corporate Governance
Financial Statements
45
Strategic Report
The health, safety and
wellbeing of our people
and communities are
paramount.
PROTECTING OUR PEOPLE
99% of our 8,000-strong workforce,
comprising employees and contractors, is
based in Ukraine, mainly at our operations in
the Poltava Region, but also in Kyiv and other
locations. Some of our workforce are currently
serving in the Armed Forces of Ukraine.
Given the scale of our workforce and the
nature of our activities, it was never an option
to evacuate our people during the war. Our
people want and need to continue working.
Being employed is critical during a time of
war, therefore it is our responsibility to take
extensive measures to protect our workforce
in the workplace, and, where possible, in the
communities where they live.
Measures have included remote working
for those with suitable roles, to ensure that
colleagues are as far as possible from the
front line. For our on-site workforce, measures
have included the provision of air-raid shelters,
adjusting shift patterns to align with night-
time curfews and the provision of free meals
in light of disruption to supply chains in local
communities.
In the early phases of the war, when
uncertainty arose over the continued provision
of social services, the Group established an
on-site childcare facility for the children of
employees, staffed by Ferrexpo volunteers, to
ensure children could be close by and safe.
As the war evolved, the need for such facilities
diminished as life began to resume in Ukraine,
with schools re-opening and a ‘new normal’
emerging.
As the war has evolved so too has our response. In the months after the full-scale invasion
commenced in February 2022, our efforts focussed on housing and feeding dislocated people,
ensuring the supply of critical equipment such as armoured ambulances and food packages to
towns along the front line. In late 2023 and into 2024, needs shifted, and psychological wellbeing
has become more important as people try to deal with the stress of living in a protracted war.
This is also the case as veterans return to our communities and workplace.
Please see the case study “Veterans” on pages 42 to 43 of this report.
In 2024, the Group recorded a fourth successive year without a fatality. The average recorded
lost-time injury frequency rate (“LTIFR”) for the year was 0.54, higher than the 0.32 recorded
last year, and above the 5-year trailing historical average of 0.52 due to an increase in recorded
injuries.
2024
2023
Change
Lagging safety indicators
Fatalities
0
0
–
Lost time injuries
6
4
+50%
Lost time injury frequency rate (“LTIFR”)
0.54
0.32
+22%
All injuries frequency rate (“AIFR”)
0.52
0.64
-19%
Near miss events
0
1
-100%
Significant incidents
0
4
-100%
Restricted work days
678
675
0%
Severity rate (average lost days per incident)
113
169
-33%
Leading safety indicators
Health and safety inspections
7,368
6,282
+17%
Health and safety meetings
1,686
1,466
+15%
Health and safety inductions
5,651
2,897
+95%
Training hours
13,025
7,264
+79%
Hazard reports
753
688
+9%
High visibility management tours
155
149
+4%
ZERO
The Group recorded a fourth
successive fatality-free year.
Ferrexpo plc
Annual Report & Accounts 2024
46
Responsible Business: Health and Safety
“We strive to create
a workplace culture in
which all contributions
are valued, alternative
perspectives are
embraced, and biases
are acknowledged
and mitigated.”
Greg Nortje
Group Chief Human Resources Officer
There is clear need for diversity, equity and
inclusion within each successful leadership
team and workforce to drive better decision
making and a more productive working
environment. The Company’s Diversity, Equity
and Inclusion (“DEI”) Policy was adopted by
the Board in 2019. This policy sets out our
commitments to prohibit all forms of unfair
discrimination on the basis of age, gender,
race, national or ethnic origin, disability,
sexual orientation, pregnancy and parenthood,
political opinion, and social origin. In support
of the Policy, the Company’s diversity
initiatives are focused on helping us to develop
a diverse workforce that embraces difference
and an inclusive working environment.
DEI PROGRESS
Following the launch of the DEI strategy, we
recruited a DEI officer and DEI Ambassadors.
In 2024, a female DEI specialist joined the
team.
We also introduced DEI KPIs, in particular a
target of 25% women in management roles
across the Group by 2030, which we define
as Grade 10 or above. In 2024, this figure
increased to 22.9%, compared to 22.3% in
2023 and a baseline of 18% in 2019. During
2024, we promoted or recruited 36 women
to positions of Grade 10 or higher.
Our DEI efforts were boosted from 2020 when
we established our flagship diversity platform
‘Fe_munity’. The project started with a women
in leadership programme, to develop our
high-potential, future female leaders. Through
seminars and workshops, participants were
mentored and coached on topics including
leadership and negotiation, plus soft skills
such as public speaking and networking. In
2022, the Fe_munity platform was expanded
outside the Company to include non-Ferrexpo
employees in our local communities and other
Ukrainian regions, representing government,
business and society. The platform was
broadened further in 2023 with a ‘Fe_munity
Teens’ programme, offered to 54 teenagers
drawn from the community local to the
Group’s operations. This programme is
built around the themes of self-discovery,
self-directed learning and personal growth.
The programme aims to accelerate the
development of participants as they navigate
the challenges and gender biases that might
hinder their personal progression at secondary
or tertiary education level or generally within
broader society. It is noteworthy that this
programme was conceptualised and is run by
alumni of previous Fe_munity programmes.
In 2020 we also established an ‘Inclusion
School’, a training programme for our
employees in Ukraine aimed at fostering
inclusion and diversity, and how this can
help Ferrexpo’s business model. Our
Inclusion School is also open to local
authority employees keen to learn more about
challenging prejudice and discrimination. In
2024, 400 employees and 30 local authority
and education employees completed the
course. Learning covers topics such as
identifying different forms of discrimination,
why it is important to eliminate prejudice
and how tolerance can help Ukraine tackle
its wartime challenges.
32.2%
Positions held by women
accounted for 32.2% of
all employees in Ukraine.
(2023: 30.3%).
22.9%
Women in management roles
in Ukraine increased to 22.9%
in 2024 (2023: 22.3%).
Corporate Governance
Financial Statements
47
Strategic Report
Responsible Business: Diversity, Equity and Inclusion
DE I highlights for 2024
Progress highlights for the Group’s DEI activities
and programmes in 2024 included:
INTERNAL
• Leadership breakfasts: motivational meetings bringing
together successful women leaders with female
employees.
• ‘TOGETHER’ mentoring programme: promoting the
career development of women in the Company and
training a talent pool for middle management positions
by engaging managers as mentors to help women
overcome barriers to professional growth and adapt to
the specifics of the industry.
• ‘PATH’ programme: supporting the development of
managerial competences and a broad understanding of
different business functions for women in management
by rotating them through different departments with
the support of senior leaders and experts.
• Work shadowing programme: a full immersion for a
cohort of employees working with Viktor Lotous, the
FPM General Director and head of Ferrexpo’s
operations in Ukraine, to gain practical experience and
broaden employee horizons.
• Creating Employee Resources Group communities,
starting with support for employees with children
with disabilities.
EXTERNAL
• Implementation of the second stream of the Fe_munity
Teens training programme, which aims to promote the
principles of inclusivity and gender equality among
young people in Horishni Plavni.
• Teens Hub: regular meetings with community youth to
challenge professional stereotypes and offer career
guidance.
• Implementation of the ‘Be the First’ project, jointly with
the Higher Vocational School of Mining and Construction,
aimed at helping school graduates overcome gender
stereotypes and providing equal opportunities for girls
and women in these industries. Development of the
Fe_munity & Skills programme, which aims to encourage
the city’s women to apply for gender-unbalanced
positions by improving their knowledge and skills
through free training and education.
• Cooperation with the “Reskilling Ukraine” project,
supported by the Swedish government and aimed at
empowering and increasing women’s participation in
the labour market through retraining.
• Supporting the “Of Course You Can!” national
communication campaign to draw attention to the
gender pay gap and help overcome gender stereotypes
in the professional sphere.
Our DEI efforts were recognised externally
in 2024. Women in Mining UK, a leading
global advocacy organisation promoting
the employment, retention and progress of
women in the mining industry, recognised
Ferrexpo’s Olena Nikolaichuk-Neroda as one
of the “100 Global Inspirational Women in
Mining”, the first Ferrexpo employee and
Ukrainian to be inducted into this prestigious
cohort. Olena joined a pilot programme
in 2018 to encourage women to become
dump truck drivers. She was in the first
group to qualify and start work, changing
the perceptions of women in the Ukrainian
mining industry. And today, she helps teach
other women, including a new 12-strong
group who are expected to qualify in 2025.
Among other external awards related to DEI,
in 2024, Ferrexpo’s Fe_munity Teens project
was recognised as the best social initiative for
young people by Delo.ua as part of the ‘Best
Ukrainian Employers 2024’ award.
Looking to the future DEI agenda, more
is planned with the roll-out of employee
resource groups. These internal communities
of workers, convened around shared identities
and interests, will serve to strengthen
workplace relationships, foster a sense of
belonging, promote personal and professional
growth, and bolster the voices of minorities.
The first will be launched in 2025 and will focus
on employees who are parents to a child with
disabilities, with further groups to be launched
throughout the year.
Ferrexpo plc
Annual Report & Accounts 2024
48
Responsible Business: Diversity, Equity and Inclusion continued
NET ZERO PATHWAY
We recognise the need for Ferrexpo to
contribute to mitigating climate change
and to adopt a meaningful approach to
reducing our emissions.
CLIMATE CHANGE REPORTING
In December 2024, the Group published its
second Climate Change Report, outlining
climate-related risks and opportunities for
the Group, its greenhouse gas footprint,
and a potential pathway towards low carbon
production by 2050. This publication
marked an important milestone in Ferrexpo’s
decarbonisation plans and enhancing
stakeholder understanding of climate-
related issues. Similarly, the continued
work on climate scenario modelling and
decarbonisation initiatives, as explained in the
report, underscores the Group’s commitment
to sustainable development and addressing
the scourge of climate change, even in a time
of war.
Due to the many uncertainties, we recognised
the importance of flexibility in our Net Zero
roadmap to account for external events
that affect our ability to operate and invest
effectively. To incorporate this adaptability, we
collaborated with our sustainability partner,
Ricardo, to assess Ferrexpo’s pathway to Net
Zero under three potential scenarios:
1. CONTINUED WAR SCENARIO:
Ferrexpo will face considerable challenges
in reaching its climate goals if the ongoing
conflict continues. This scenario thoroughly
analyses how prolonged conflict impacts
emissions reduction efforts and identifies
strategies to mitigate these challenges.
2. POST-WAR RAPID ADOPTION
SCENARIO:
Upon the return of peace, Ferrexpo aims
to quickly accelerate its actions toward
achieving its climate targets. This scenario
outlines the necessary actions, investments,
and innovations required to compensate for
time and progress lost due to the conflict.
3. POST-WAR SLOW ADOPTION
SCENARIO:
Ferrexpo examines how best to meet its
climate targets under standard operating
conditions in a post-conflict setting with
normalised operations. Each scenario provides
insight into the strategies required for
Ferrexpo to adapt and succeed in reaching our
climate commitments, regardless of external
challenges.
Each scenario relied on date and growth assumptions, set out in the table below.
THE KEY ASSUMPTIONS BEHIND EACH MEASURE
Assumption
Continued War
Post-war Rapid Adoption
Post-war Slow Adoption
Conflict end
2035
2027
2027
Cool-off period
2 years
1 year
3 years
Growth
0% until 2035
+5% avg YoY until
2045
0% until 2027
+8% avg YoY until
2045
0% until 2027
+8% avg YoY until
2045
Misc
No measures implemented until conflict end
(except efficiency and monitoring projects).
Grid decarbonisation fluctuation based on scenario.
Focus on implementing Scope 1 measures first.
A select group of projects were identified as playing a central role in driving 90% of the emissions
reductions, namely:
Rank
Measure
Savings
1
Biofuel fired pelletiser
28%
2
Phase out fossil fuels
28%
3
Electric mining vehicles
26%
4
Electrify mining equipment
5%
5
Lower carbon-fueled barges
3%
Modelling these, it was determined that in
comparison to the targets we set ourselves
in 2019, we are on track to out-perform them
for every year and within every scenario.
The Continued War scenario, which does
not complete all measures by 2050 and
assumes the conflict will continue until the
late 2030s, appears to be the strongest
performing pathway. However, this is only
due to a comparative lack of growth in this
time, maintaining limited operations and,
therefore, limited emissions. When compared
to the Science Based Targets initiative (“SBTi”)
approach, which necessitates a 4.2% annual
reduction in emissions from 2019 to 2030,
and emissions to be at a maximum of 10% of
baseline year emissions, it was determined
that we are on track to out-perform SBTi by
a considerable margin until 2040 across the
“Post-war Rapid Adoption” and “Continued
War” pathways. At this point the pathways
begin to align with SBTi, but ultimately still
deliver SBTi-aligned emission reductions.
The “Post-war Slow Adoption” pathway
outperforms the SBTi targets until 2035, after
which it aligns with the trajectory of SBTi. This
is positive because it allows us to seriously
assess making a pledge to SBTi once we have
clarity on the national conflict situation.
Corporate Governance
Financial Statements
49
Strategic Report
Responsible Business: Environmental Stewardship
NET ZERO SCENARIO EMISSIONS BY YEAR COMPARED TO
FERREXPO TARGETS
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
Continued War
2019
2025
2030
2035
2040
2045
2050
Post-war Rapid Adoption
Ferrexpo targets
Post-war Slow Adoption
tCO2e
NET ZERO SCENARIO EMISSIONS BY YEAR COMPARED TO SBTI
TARGETS
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
Continued War
2019
2025
2030
2035
2040
2045
2050
Post-war Rapid Adoption
Post-war Slow Adoption
tCO2e
More information on the second Climate Change
Report can be found at www.ferrexpo.com
2024 GREENHOUSE GAS EMISSIONS
The war had a strong impact on greenhouse gas emissions in 2024, in two principal areas: an
increase in total production due to the ability to export through the Ukrainian Black Sea ports,
and the need to import electricity generated from carbon-intensive sources compared to cleaner
domestic sources.
Total energy consumption for 2024 was 11,142 terajoules, 43% higher than the consumption of
7,786 terajoules in 2023.
GREENHOUSE GAS EMISSIONS FOOTPRINT AND ENERGY CONSUMPTION
(1 JANAURY TO 31 DECEMBER)
2024
2023
Change
Absolute
(kilotonnes
CO2e)
Unit1
(kg CO2e per
tonne)
Absolute
(kilotonnes
CO2e)
Unit
(kg CO2e per
tonne)
Absolute
Unit
Scope 1 emissions
352
52
247
57
+42%
-9%
Scope 2 emissions
277
41
137
32
+102%
+29%
Subtotal (S1+S2)
emissions
629
94
384
89
+64%
+5%
Scope 3 emissions
8,856
1,299
5,698
1,324
+55%
-2%
Total emissions
9,485
1,392
6,082
1,413
+56%
-1%
1.
Unit basis represents the intensity ratio, aligning to requirements of SECR (“Streamlined Energy and Carbon
Reporting”).
In addition, emissions from biofuels totalled
seven kilotonnes CO2e compared to four
kilotonnes CO2e in 2023.
SCOPE 1 EMISSIONS
Scope 1 direct emissions relate principally
to three activities at our operations – diesel
consumption (primarily used in mining
activities), natural gas (primarily used in
pelletising activities) and gasoil (primarily
used in inland waterway logistics activities).
Collectively, these three sources of emissions
represented % of Scope 1 emissions in
2024 (2023: 97%), with emissions from the
consumption of diesel and gasoil for transport
making up 78% of Scope 1 emissions (2023:
70%) and natural gas making up 38% of Scope
1 emissions (2023: 37%). In addition, we track
a further 15 sources of Scope 1 emissions
across our operations, ensuring that multiple
aspects of our operations are covered in our
emissions estimates.
Absolute Scope 1 emissions increased by
42% in 2024. This was primarily due to higher
production rates. Scope 1 emissions on a unit
basis decreased by 9% compared to 2023 due
to increased volume efficiencies.
SCOPE 2 EMISSIONS
Scope 2 indirect emissions relate exclusively
to our purchasing of electricity from third
parties, which is predominantly used in our
concentrator equipment. On an absolute
basis, this increased by 102% compared to
2023. This was mainly due to two reasons,
higher overall production, and since May
2024, Ukrainian law has mandated that up to
80% of electricity be imported depending
on domestic availability. This has resulted in
higher Scope 2 emissions because the majority
of the imported electricity does not come
from renewable sources. On a unit basis,
Scope 2 emissions increased by 29% due to
an increased proportion of electricity being
sourced from carbon-intensive energy sources.
Calculations of Scope 1 and Scope 2 emissions
have been independently assured for a fourth
successive year.
Ferrexpo plc
Annual Report & Accounts 2024
50
Responsible Business: Environmental Stewardship continued
SCOPE 3 EMISSIONS
For Ferrexpo, Scope 3 emissions primarily
relate to the type of iron ore pellet produced,
since the downstream processing of iron ore
accounted for 96% of Scope 3 emissions
in 2024 (2023: 96%). In 2024, direct
reduction (“DR”) pellet production increased,
representing 7% of all production on a
tonnage basis (2023: 0%). This resulted in
the lowering of total Scope 3 emissions. On
a unit basis Scope 3 emissions decreased
to 1.30tCO2/t of pellet production in 2024
compared to 1.32 tCO2/t of pellet production
in 2023. Absolute Scope 3 emissions increased
for the year by 55%.
METHODOLOGY
Where possible, Ferrexpo’s methodology for
calculating its GHG emissions footprint utilises
emissions factors provided by the Greenhouse
Gas Protocol, in line with the Global Reporting
Initiative’s (“GRI”) framework for reporting
sustainability topics. Through using carbon
factors provided by the Greenhouse Gas
Protocol, the Group is able to provide carbon
dioxide-equivalent emissions figures (“CO2e”)
that also account for emissions of both
methane (CH4) and nitrogen oxide (N2O).
WATER
Our operations include multiple water cycle
interactions, from the water ingress into our
mines, to recycling water in our processing
operations, to the River Dnipro, which flows
adjacent to our operations. Testing of water
quality has continued throughout 2024, with
any discharged water quality tested across
more than 12 different chemical elements or
attributes. In our processing plant, where water
is utilised in the processing of iron ore, we
recycled 98% of process water (2023: 97%).
-6%
Scope 1 and 2 emissions fell 6%
in 2024, due to increased
production volumes.
WASTE GENERATION
The Group generates solid form waste from
its mining operations (overburden in the form
of waste rock and sand), as well as emissions
of other gases and dust from its mining and
processing operations.
During 2024, waste removal from mining
activities increased by 96% due to increased
production. It is important to note that the
overburden and waste removed from our
mining operations are non-hazardous and
stored in on-site waste dumps designed by
our mine planning department.
Aside from greenhouse gases, gaseous
emissions include those emitted from our
processing operations (NO2, SO2, and CO), with
emissions from such sources increasing by an
average of 80% during the year, in line with
mining volumes. Dust emissions in 2024 also
increased 39% compared to the previous year.
ISO-CERTIFIED SYSTEMS
Ferrexpo has an ISO-compliant environment
management system (ISO 14001:2015) at
both FPM and FBM, with the latter achieving
accreditation during 2022. This is in addition
to accreditation of our Energy Management
System (ISO 50001:2018) at the same two
subsidiaries, with FBM also acquiring this
accreditation in 2022.
Corporate Governance
Financial Statements
51
Strategic Report
C A S E S TU DY
Climate change
report
During 2024, we released
our second Climate
Change Report,
reaffirming our Net Zero
commitments. The
full‑scale invasion of
Ukraine has highlighted
the importance of
flexibility and resilience
in pursuing these goals.
52
Ferrexpo plc
Annual Report & Accounts 2024
Responsible Business Review continued
The report details our work during 2024
to deepen our understanding of climate
challenges and guide our responses. This
includes our efforts to decarbonise, our
approach to managing climate risks and
opportunities, regulatory developments,
and the impact of the war on our Net Zero
pathway. Highlights included:
STRATEGIC AMBITION
AND TARGETS
• Net Zero Scope 1 and 2 emissions by 2050
• 50% reduction in scope 1 and 2 by 2030
(from 2019 baseline)
• 50% reduction in Scope 3 emissions by
2050 (from the 2019 baseline)
• 10% reduction in Scope 3 emissions by
2030 (from 2019 baseline)
PROGRESS AND
ACHIEVEMENTS
• Achieved significant emissions reductions
from 2019 to 2023:
– Scope 1 by 58%
– Scope 2 by 70%
– Scope 3 by 67%
ANALYSIS AND OUTCOMES
• Three war-related scenarios modelled to
navigate our Net Zero pathway and the
impact of the war.
• Five decarbonisation projects targeted to
deliver 90% of emissions savings.
• Modelling indicated 95% reduction in Scope
1 and 2 emissions, and 84% reduction in
Scope 3 by 2050.
• 30 material climate change risks and
opportunities assessed across six key focus
areas.
• 69 environmental and climate-focused
policies reviewed.
CHALLENGES AND
ADAPTATIONS IN THE
CONTEXT OF THE WAR
The ongoing war in Ukraine has presented
significant challenges to Ferrexpo’s operations
and decarbonisation efforts. These include:
• Infrastructure risks affecting local green
energy resources
• Export disruptions affecting transport
carbon emissions
• Increased Scope 2 emissions due to
Ukrainian energy procurement laws
• Funding challenges for climate initiatives
• Workforce disruptions affecting response
to climate policies
• Time constraints on achieving Net Zero
targets due to post-war reconstruction
priorities
Despite these challenges, we remain
committed to our climate goals and
demonstrating flexibility in adapting
our strategies.
NET ZERO ROADMAP
Our updated Net Zero strategy outlines three potential war-related scenarios
1
Continued war
93% absolute reduction
exceeds SBTi requirements and
Ferrexpo’s targets
2
Post-war rapid adoption
91% absolute reduction
exceeds SBTi requirements and
Ferrexpo’s targets
3
Post-war slow adoption:
89% absolute reduction
falling short of the SBTi target but
surpasses our internal goals.
The top five emission-saving measures to implement for achieving Net Zero
Rank
Measure
Savings
1
Biofuel fired pelletiser
28%
2
Phase out fossil fuels
28%
3
Electric mining vehicles
26%
4
Electrify mining equipment
5%
5
Lower carbon-fueled barges
3%
CLIMATE-RELATED RISKS
AND OPPORTUNITIES
MANAGEMENT AND
SCENARIO ANALYSIS
In the report we updated our TCFD analysis
and identified new climate change risks and
opportunities. This resulted to a refined
shortlist of 35 risks and 28 opportunities,
including transition and physical risks
from climate change. Of the 63 risks
and opportunities analysed, 15 risks and
15 opportunities were deemed material,
with additional considerations for the war in
Ukraine and evolving legislation. The identified
material risks and opportunities were then
grouped into six priority areas for climate
scenario analysis.
Building on this analysis, we modelled four
climate scenarios from the IEA and IPCC,
addressing both transition and physical risks
across short-term (2024-2030), medium-term
(2030-2040), and long-term (2040-2050)
timeframes. Additionally, we reviewed our
business resilience strategies and adaptive
capability measures against the identified
material risks and opportunities. See pages 64
to 68 for more information on our TCFD.
CLIMATE POLICY AND
REGULATORY ANALYSIS
It is essential to understand how shifting
climate policies influence our operations
in Ukraine and our main global markets.
We analysed 69 environmental and
climate‑focused policies across 12 geographical
locations, including 11 countries and the EU.
Commitments and policies are evolving, with
the most significant economic impacts in
advanced economies with established carbon
pricing. EU policy is a priority for Ferrexpo, as
it leads global climate regulation and the EU
accounted for 72% of total sales in 2023. The
EU’s Carbon Border Adjustment Mechanism
(“CBAM”) aims to level carbon costs for
supplying EU markets, potentially favouring
Electric Arc Furnaces (“EAF”) over Blast
Furnace‑Basic Oxygen Furnaces (“BF/BOF”)
processes.
ENGAGEMENT
Through collaboration, we aim to reduce
emissions, improve resource efficiency,
and support decarbonisation across our value
chain. Ferrexpo’s ‘Green Mine Initiative’ is
a 10-year plan to electrify operations. The
initiative focuses on fleet electrification and
automation, collaborating with industry
leaders and manufacturers. Planned projects
include electrifying the mining fleet, installing
trolley-assist technology, and integrating
battery-electric solutions for equipment like
locomotives, excavators, and dump trucks
from various OEMs.
53
Financial Statements
Corporate Governance
Strategic Report
Governance:
Building trust
20%
Female representation on the
Group’s Executive Committee
(one out of five members).
20%
Female representation on the
Group’s Board of Directors
(one out of five Directors).
40%
Target for gender diversity at
Board level, as set by the FTSE
Women Leaders Review.
3
Three of the Group’s six Directors
appointed in the past four years.
Sound corporate governance engenders trust with
stakeholders and brings benefits associated with a
strong reputation.
BOARD COMPOSITION
Effective corporate governance starts with the
Board of Directors (“Board”). As of the date of
this report, Ferrexpo’s Board comprises five
Directors – including two Executive Directors
and three Independent Non‑executive
Directors. For more details of the Board
composition and activities during the year,
please see the Corporate Governance section
of this report on pages 97 to 157.
BOARD CHANGES AND
POSITION APPOINTMENTS
There were few changes to the Board and its
sub-committees in 2024. Stuart Brown was
appointed Chair of the Audit Committee and
member of the Remuneration Committee in
January 2024, and member of the Committee
of Independent Directors in February 2024.
On 11 January 2025, Non-executive Director
Natalie Polischuk resigned from the Board of
Ferrexpo with immediate effect. Natalie was
Chair of the Health, Safety, Environment and
Community (“HSEC”) Committee, a member
of the Audit Committee and a member of
the Committee of Independent Directors.
On an interim basis, Fiona MacAulay, Senior
Independent Non-executive Director, has been
appointed a member of the Audit Committee
and appointed as a member of and will Chair
the HSEC Committee.
FTSE WOMEN LEADERS
REVIEW
The FTSE Women Leaders Review is an
independent, business-led framework
supported by the UK Government, which
sets recommendations for Britain’s largest
companies to improve the representation of
Women on Boards and in Leadership positions.
As a result of this work, the FTSE Women
Leaders Review recommends that companies
within the FTSE 350 have a minimum 40%
female representation at Board level by the
end of 2025, as well as at least one woman
appointed as chair, senior independent
director (“SID”), CEO or CFO by the end
of 2025.
As of the date of this report, Ferrexpo’s
Board is 20% female (31 December 2023:
33%). This means that although Ferrexpo
met the requirement for a female in one of
the stated roles, with Fiona MacAulay as the
Group’s Senior Independent Director, the
recommendation for Board gender diversity
set by the FTSE Women Leaders Review was
unfortunately not met.
The Group is also focusing on increasing
diversity further down its organisational
structure; details of this work can be found
on pages 36 to 41, in the People section and
in the Corporate Governance Report on
pages 128 to 129.
PARKER REVIEW
The Parker Review was an independent
review in 2021 led by Sir John Parker, which
considered how to improve the ethnic and
cultural diversity of UK boards to better reflect
their employee base and the communities they
serve. To encourage progress with regards to
ethnic diversity, the Parker Review proposed a
target of one Director from an ethnic minority
group on the Boards of FTSE 250 companies
by December 2024.
Throughout the year, the Board continued
to search for an Independent Non-executive
Director from an ethnic minority group, led by
the Nominations Committee and supported
by external consultants. Following Natalie
Polischuk’s departure, recruitment has been
prioritised to find a suitable replacement.
This search is at an advanced stage and
it is anticipated that an appointment of
an independent Non-executive Director
will be made in the near future. Following
Ms. Polischuk’s departure from the Board in
January 2025, the Board’s gender diversity
Ferrexpo plc
Annual Report & Accounts 2024
54
Responsible Business: Governance
fell further below the 40% target set by the
FTSE Women Leaders Review. While the
Board remains committed to achieving this
benchmark, its immediate priority is ensuring
it has the right mix of skills, particularly
sector expertise and geopolitical experience,
crucial for navigating the ongoing crisis in
Ukraine. The Board expects that its current
search for a new Non-executive Director will
help it restore gender balance on the Board
but, while recognising the Parker Review
deadline of 31 December 2024 for FTSE
250 companies, it has decided to defer the
appointment of a director from an ethnic
minority group until the situation in Ukraine
stabilises. Nonetheless, the Board remains
fully committed to broadening its composition
and will continue to focus on both gender and
ethnic diversity targets for UK-listed boards as
part of the Board’s refreshment programme.
CORPORATE GOVERNANCE
CONTROLS
The Group’s financial advisors are Panmure
Liberum Limited, who also provide broking
services to the Group. As a London-quoted
company, it is best practice for the Company
to have a sponsor to provide advice and
guidance on certain corporate matters,
with BDO LLP appointed in this role.
SHAREHOLDER AND
STAKEHOLDER ENGAGEMENT
As a responsible company, we aim to engage
with our shareholders, to understand
their concerns and priorities. Shareholder
engagement is conducted via a range of
methods – from various reports published on
an annual basis (Annual Report and Accounts
and Responsible Business Report), events
such as the Annual General Meeting (”AGM”),
in person and online meetings, attendance at
major investment and industry conferences
and the use of our corporate website and
social media channels.
We also endeavour to engage with
stakeholders located within Ukraine and
overseas, with communications in both
Ukrainian and English.
Please see pages 56 to 63 for more detail on
stakeholder engagement.
RELATED PARTY MATTERS
To maintain strong corporate governance and
ensure that these business relationships are
conducted on an arm’s length basis, the Group
has both the Committee of Independent
Directors at the Board level and the Executive
Related Party Matters Committee at the
management level.
NON-FINANCIAL
INFORMATION STATEMENT
The Ferrexpo Group complies with the non-
financial reporting requirements contained in
Sections 414CA and 414CB of the Companies
Act 2006. The table below, and information
it refers to, is intended to help stakeholders
understand the Company’s position on key
non-financial matters. This builds on existing
reporting that the Company already does
under the following frameworks: Global
Reporting Initiative, Guidance on the Strategic
Report (UK Financial Reporting Council), UN
Global Compact, UN Sustainable Development
Goals and UN Guiding Principles. In addition
to its Annual Reports, Ferrexpo also publishes
a standalone report covering its Responsible
Business activities, with the report for 2023
available on the Group’s website and the
report for 2024 expected to be released
in 2025.
Reporting requirements
Reports, policies and standards
Additional information
Risks
Environmental
Climate Change Report
Responsible Business Report
Tailings Management
Net Zero pathway, pages 49 to 51
Energy consumption, page 49
Climate Change Report on www.ferrexpo.com
Principal Risks, pages
81 to 94
Employees
Ethics and Responsible Business Policy
Code of Conduct
Health and Safety Policy
People section, pages 36 to 41
Health and safety, page 46
DEI, pages 47 to 48
Responsible Business Report on www.ferrexpo.com
Principal Risks, pages
81 to 94
Human rights
Human Rights Policy
Data Privacy Policy
Anti-Slavery and Trafficking Statement
Information Security
People section, pages 36 to 41
DEI, pages 47 to 48
Ferrexpo Code of Conduct
www.ferrexpo.com/about-ferrexpo/corporate-
governance/policies-and-standards
Principal Risks, pages
81 to 94
Social matters
Donations Policy
Community Policy
Operating during a time of war, pages 6 to 9
Community and civil society, page 59
Responsible Business Report
www.ferrexpo.com/responsibility/supporting-
communities
Principal Risks, pages
81 to 94
Anti-corruption
and anti-bribery
Anti-Bribery Policy
Anti-Money Laundering and
Counter Terrorist Financing Policy
Fraud Risk Management
Whistleblowing Policy
Internal controls, page 123
Governance, pages 54 to 63
Governance Report, pages 97 to 157
www.ferrexpo.com/about-ferrexpo/corporate-
governance/policies-and-standards
www.ferrexpo.com/whistleblowing
Principal Risks, pages
81 to 94
Principal risks and
impact on business
activities
Business Model, pages 10 to 11
Risk Management, pages 81 to 94
Viability Statement, pages 95 to 96
Going Concern Statement, page 155
Principal Risks, pages
81 to 94
Non-financial KPIs
Key Performance Indicators, pages 16 to 19
Corporate Governance
Financial Statements
55
Strategic Report
We engage with our
stakeholders on an
ongoing basis to
understand what
matters to them and
how we can create
value together.
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Our key
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56
Ferrexpo plc
Annual Report & Accounts 2024
Stakeholder Engagement – Section 172
The Board of Directors acts to promote
the long-term sustainable success of the
Company for the benefit of all stakeholders.
This includes addressing the long-term
strategic direction of the Company, which is
presented on pages 56 to 61 of this report.
This long-term sustainable success includes
governing the business in the short term
during a time of war and through the
challenging operating environment in Ukraine.
In doing so the importance of having due
regard to the matters set out in Section 172(1)
(a) to (f) of the Companies Act 2006 is
recognised, notably:
• The likely consequences of any decision in
the long term.
• The interests of the Company’s employees.
• The need to foster the Company’s business
relationships with suppliers, customers
and others.
• The impact of the Company’s operations on
the community and the environment.
• The desirability of the Company maintaining
a reputation for high standards of business
conduct.
• The need to act fairly between members
of the Company.
The Board receives regular training and
briefings on directors’ duties and updates
in relation to corporate governance
developments and stakeholder engagement.
New directors appointed to the Board receive
tailored, individual briefings on their duties
and obligations as part of their induction.
The following section outlines the Group’s
different stakeholder groups, engagement
activities conducted in 2024 and feedback
that was received as part of this work.
HOW CONSIDERING
STAKEHOLDERS IN DECISION
MAKING WORKS IN PRACTICE
The Group engages regularly with
stakeholders, with interactions led largely
by the day-to-day management team, with
Board-level interactions when appropriate.
Where management-level engagement has
taken place, feedback is provided to the Board
by way of regular reporting and updates at
meetings to help inform decision making and
ensure stakeholder views and considerations
are taken into account.
During Board discussions, the Board considers
as appropriate the various stakeholders’
interests and the potential impact of decisions
on relevant stakeholder groups for the
purposes of Section 172 of the Companies Act
2006. This includes considering competing
stakeholder interests and the differential
impact certain decisions may have on different
constituencies.
CREATING VALUE FOR
STAKEHOLDERS
Ferrexpo has a wide range of stakeholders –
from our employees, contractors, and
communities located close to our operations
in Ukraine, to local and national governments
and our international customers, investors and
suppliers. We consult frequently with all our
stakeholders, to help shape, coordinate and
communicate our approach to responsible
business and hear their feedback.
INDEPENDENT LIMITED
ASSURANCE FOR NON-
FINANCIAL REPORTING CRITERIA
For the 2024 Annual Report and Accounts,
the Group engaged its auditors to perform
a limited assurance on certain non-financial
reporting criteria. In the previous year, this was
performed for Scope 1 and 2 emissions, and
in 2024 this was expanded to include Scope
3 emissions for the first time. This year the
limited assurance was provided for the LTIFR,
and also, for an additional seven safety or
human resources related reporting criteria.
Further details on the Group’s approach to the matters outlined in Section 172 can be found in the following sections of this report:
Section 172 factor
Key examples
Page
Employees and wider workforce
Operating during a time of war
06
Our People section
36
Responsible Business: Health and Safety
46
Responsible Business: Diversity, Equity and Inclusion
47
Suppliers and customers
Market Review
26
Strategic Framework
14
Local communities
Operating during a time of war
06
Environment
Responsible Business: Net Zero pathway
49
Scenario analysis selection and TCFD
64
High standards of business
Business Model
10
Responsible Business Review
45
Responsible Business: Governance
54
Risk Management
81
Investors
Executive Chair’s Statement
02
Chief Financial Officer’s Statement
04
Business Model
10
Value Proposition
12
Corporate Governance
Financial Statements
57
Strategic Report
The table on the following
pages details how the
Board interacts with
stakeholders
FINANCIAL
MARKETS
WORKFORCE
AND UNIONS
We have a broad range of
financial stakeholders, notably
our shareholders (institutions and
individuals), in addition to banks,
lenders, market experts and
financial media.
How we engaged
• Annual General Meeting
• Regulatory reporting: Annual Report and
Accounts, Interim Results and Quarterly
Production Reports
• Regulatory announcements
• Regular meetings, calls and presentations
• Financial and industry forums
• Website and electronic digests
• Company hosted forums
What matters to them
• Performance and profitability
• Corporate governance standards
• Corporate access
• Interaction with other stakeholders, such
as our customers, partners and
government
What matters to them
• Health and safety
• Job security
• Future investment
• Humanitarian support
• CSR activities
• Support for veterans
What was important in 2024
• Business continuity due to ongoing war in
Ukraine
• Legal cases against the Company
• Weakness in iron ore markets
What was important in 2024
• Concerns about business continuity due to
ongoing war
• Support for colleagues serving in the
Armed Forces of Ukraine and veterans
• Visit to operations by Director Designate
for workforce engagement
• Employee engagement survey
• Communications from Executive Chair
Feedback and response of the Board
The majority of the Board of Directors
attended the AGM in person, offering
shareholders a formal opportunity to provide
feedback and ask questions. There was also
an informal opportunity to meet with the
Directors after the formal proceedings.
During the year, the Executive Directors met
frequently, in person and online with existing
and prospective shareholders, including on
roadshows arranged by the Company’s
broker Panmure Liberum. Post event
feedback is provided to the Board (and
Executive Committee) for deliberation.
Through the Company’s investor relations and
communications team, reports are submitted
for every Board and Executive Committee
meeting to provide in-depth updates and
analysis, and request for activities are
considered.
Feedback and response of the Board
To ensure effective engagement, the Board
recognises the importance of a strong
presence in Ukraine, where 99% of the
workforce is based. To this end, during
2024 the Board included two Ukrainian
Independent Non-executive Directors and
one Ukrainian Executive Director. Through this
presence, Vitalii Lisovenko, the Board’s
nominated representative for workforce
engagement, visited operations during 2024
(see case study Board workforce engagement
on pages 62 to 63), and Natalie Polischuk
visited employees and stakeholders in Kyiv
on a frequent basis.
The Board regularly interacts with the Group’s
executive management team through its
various committees.
How we engaged
• Director Designate for Workforce
engagement
• In-person sessions with Directors
• Regular employee townhalls
• Employee engagement surveys
• Weekly meetings with managers
• Print and digital channels and social media
are used for internal and external
communications
• Company newspaper “The Miner”
Our people are critical to the success
of our business. More than 99% of
our employees and contractors are
based in Ukraine, some of whom
are serving in the Armed Forces
of Ukraine. We also engage with
former employees, recruitment
agencies, trade unions and business
and industrial associations.
Ferrexpo plc
Annual Report & Accounts 2024
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Stakeholder Engagement – Section 172 continued
SUPPLIERS
CUSTOMERS
COMMUNITIES
AND CIVIL SOCIETY
What matters to them
• Local issues
• Education and health initiatives
• Employment support and professional
development
• Humanitarian and charity support
• Corporate governance standards
What matters to them
• Business continuity
• Availability of logistics capacity
• Alignment with Ferrexpo supplier
standards
• Reduction of emissions
What matters to them
• Business continuity
• Logistics capacity and availability
• Innovation and product developments
• Corporate governance standards
• Climate change and Scope 3 emissions
What was important in 2024
• US$28 million spent on more than 100
humanitarian projects and initiatives and
CSR spending since February 2022
What was important in 2024
• Site visits to existing and potential
suppliers in Europe, MENA, Asia, North
America and Australia
• Business continuity due to ongoing war in
Ukraine
• Legal cases against the Company
What was important in 2024
• Visits to existing and potential customers
in Europe, MENA and Asia
• Business continuity due to ongoing war
in Ukraine
• Security of supply
• Legal cases against the Company
Feedback and response of the Board
Strong ties with local communities are
maintained. The Group communicates
frequently through print and digital media,
television and a calendar of community
activities. This includes contact with local
and national officials.
The Ferrexpo Humanitarian Fund and CSR
spending, which are controlled and monitored
at Board level, have provided US$28 million of
funding for over 100 projects and initiatives
since the full-scale invasion of Ukraine. These
have included local, regional and national
initiatives estimated to have reached over five
million people. Donations in 2024 included
UAH10 million to the Okhmatdyt Children’s
Hospital.
Feedback and response of the Board
The Group is an important player in the local
economy in the Poltava Region, and therefore
it is important to maintain constructive
relationships with suppliers, for example by
paying suppliers promptly.
By imposing a Code of Conduct and engaging
with suppliers, the Group aims to reduce risks
in the supply chain such as environmental
concerns and modern slavery.
Feedback and response of the Board
The Board understands that customers have
concerns about the war, security of supply
and logistics access. To address these, the
Executive Chair visited customers around the
world with the sales and marketing team to
provide a transparent and open explanation
of how the business is remaining resilient.
To address increasing interest in climate
change, the Board was proud to issue the
Group’s second Climate Change Report in
December 2024.
The Board also approved a suite of MoUs with
customers to explore DR pellet supplies and
common decarbonisation projects.
How we engaged
• Open days and key calendar events
• Humanitarian projects and initiatives
• Local infrastructure support
• Attendance at key national forums
• CSR and charity events, sometimes in
partnership with other groups
• Regular digital digest and social media
How we engaged
• Meetings and dialogue
• Meetings with Ukrenergo (the main
electricity supplier in Ukraine)
• Compliance and certification processes
• Regulatory and non-regulatory
announcements
• Attendance at industry forums
• Print and digital media
• Site visits
How we engaged
• Regular meetings with existing global
customers and meetings with potential
new customers
• Customer site visits internationally (those in
Ukraine to resume post war)
• Attendance at industry forums
• Reports including the Annual Report and
Accounts, Responsible Business and
Climate Change Reports
These are people who are based
locally, regionally and nationally,
including the mayor and council
members of Horishni Plavni, and
chairs and members of other
local and regional councils.
These stakeholders also include
educational, health, cultural
and sporting institutions and
charity groups.
Our suppliers include providers
of equipment, consumables and
services, along with ancillary
and support providers, such as
maintenance and professional
services. The Group paid
US$657 million to suppliers in
2024 (2023: US$514 million)
Our customers include steel mills
in Europe, MENA and Asia, in
addition to commodity traders
around the world.
Corporate Governance
Financial Statements
59
Strategic Report
GOVERNMENT
Our government stakeholders are
state agencies and representatives
in Ukraine and globally, as well as
international organisations and IFIs.
We also engage with state licensing
institutions, law enforcement
bodies, lobbying and politically
related groups including the
diplomatic community, think-tanks,
industry and business associations.
How we engaged
• Regular dialogue to keep our workforce safe
• Contributions to Ukraine and EU policy
development
• Dialogue to understand resource,
infrastructure, transport and logistics
constraints
• Site visits
• Attendance at key forums
• Regulatory and non-regulatory reporting
• Digital digest
• Position papers on critical issues
• In person and online meetings
What matters to them
• Contribution to the Ukrainian economy
• Provision of stable employment for the
Poltava Region
• Positive economic and social impact in the
Poltava Region and Ukraine
• Adherence to laws and regulations
What was important in 2024
• The situation in Ukraine remains
challenging due to the ongoing war and it
is important to have frequent and open
dialogue with government and its agencies
to protect the Company’s people and
assets.
• The Company is currently experiencing
undue pressure on its activities due to a
series of legal cases targeting its largest
shareholder. It is important that Ferrexpo’s
perspectives are conveyed to all
government related stakeholders to
protect the interests of the Company.
Feedback and response of the Board
With direction from the Board, the Group
works to maintain its legal permits and licences
with various government agencies.
Board Directors, ExCo members and other
management maintain ongoing dialogue with
government and related officials. This is
particularly important to allow the Board and
management to understand the numerous
changes to the operating environment, which
has changed significantly throughout the war.
This includes sharing information to keep our
workforce safe, updates on the supply of
power and access to transport and logistics
infrastructure from port closures, limitations
to rail access and the availability of electricity,
amongst other effects. Other meetings with
national and international officials are arranged
frequently to convey the Board’s perspectives
on critical legal and financial issues.
Board members, ExCo and other management
regularly attend domestic and international
events, sometimes as speakers. This includes
events dedicated to the current situation in
Ukraine and eventual recovery.
Ferrexpo plc
Annual Report & Accounts 2024
60
Stakeholder Engagement – Section 172 continued
THE ENVIRONMENT
The Board’s principal engagement with
stakeholders on environmental matters is
through the Board-approved Climate Change
Report and annual Responsible Business
Report.
In December 2024, the Group published its
second Climate Change Report, outlining
climate-related risks and opportunities for
the Group, its greenhouse gas footprint,
and a potential pathway towards low carbon
production by 2050. More information can be
found in the Net Zero pathway section in this
report on pages 49 to 53 and the full report
can be viewed at www.ferrexpo.com
The Group’s 2023 Responsible Business
Report, also published in December 2024,
is divided into four sections, one of which is
titled “Sustainable environments”. This section
looks at the Group’s contributions to enabling
the transition to green steel, nature and
biodiversity, and climate change. The report
also provides comprehensive environmental
reporting data on emissions, energy
consumption, waste generation, materials
consumption, and water usage.
A Board sub-committee, called the Health,
Safety, Environment and Communities
(“HSEC”) Committee is responsible for
managing the Group’s environmental policy.
The terms of reference of the HSEC Committee
can he viewed at www.ferrexpo.com.
OPERATING DURING
A TIME OF WAR
During the year, the main focus of the Board
was to continue to operate during a time of
war. A significant number of Board decisions
and oversight related to this. Stakeholder
interests play a fundamental part of these
decisions, given the impact the war is
having on all of our stakeholders. The Board
considered relevant stakeholders for each
decision with a strong desire to protect
all of our stakeholders’ interests, but with
particular focus on the workforce given
the unpredictable nature of the operating
environment in Ukraine. The Board was also
mindful of the need to balance interests of
different stakeholders while at the same time
protecting the financial position and long-
term viability of the Company for the benefit
of shareholders as a whole and the long-
term success of the business. This included,
for example, decisions around maintaining
flexibility of our product-mix in order to be
able to respond quickly to the changing market
environment, to meet customer demands and
to support the Group’s operations. For further
information, see Operating during a time of
war section on pages 6 to 8.
Corporate Governance
Financial Statements
61
Strategic Report
Vitalii Lisovenko
Non-executive Director resident, Vitalii Lisovenko,
is the Board’s nominated representative for
workforce engagement.
Such a nomination is one of the options under
Provision 5 of the 2018 UK Corporate Governance
Code which aims to integrate stakeholder interests
into board decision-making, in particular those of
the workforce, to ensure that their interests are
heard at the board level.
62
Ferrexpo plc
Annual Report & Accounts 2024
CASE STUDY
Vitalii was nominated for this role because he
is a Ukrainian resident and decided to stay in
Ukraine after the full-scale invasion in February
2022. Vitalii is well recognised in Ukraine; he is
currently an advisor to the Minister of Finance
of Ukraine, having spent over 20 years in
government-related finance roles. He is
also a graduate of the Kyiv State Economic
University, where he later obtained a PhD
in Economics, and has been an Associate
Professor of Finance for 15 years.
In his role as Director Designate for Workforce
Engagement, Vitalii visits our operations in
Horishni Plavni, and meets frequently with
other colleagues in Kyiv. In September 2024,
Vitalii undertook a three-day site visit. The
busy schedule included:
• Three individual meetings with company
directors.
• Five separate meetings with different
employee groups, including senior
managers, line managers, operations staff
from the mining, technology and repairs
functions, and with demobilised veterans
who have returned to the workplace.
• Site visits to the Company’s Yeristovo (FYM)
and Belanovo (FBM) operations.
• Meetings with the heads of the local city
administration.
• Visits to cultural and educational institutions
in Horishni Plavni, including the recently
opened exhibition documenting Russia’s
war in Ukraine at the Ferrexpo-funded city
museum and Secondary School Number 3,
where Ferrexpo has funded a classroom and
curriculum dedicated to artificial intelligence.
Following the visit, Vitalii presented a report at
the subsequent Board meeting. This covered a
variety of issues identified from conversations,
including topics such as cost of living and
salaries.
These were discussed and considered by
the Board, and committed outcomes have
included salary increases for Ukrainian
based employees. In this way, these visits,
the feedback that is garnered, the Board
discussion and decisions made, demonstrate
the value that is realised – and that this
engagement has a meaningful impact for
our most important stakeholder group.
“My visit to Horishni Plavni in the autumn of 2024
was my fourth as the Director Designate of
Workforce Engagement, and one of my most
extensive yet. I have come to learn that the more
open and frank my interactions with the workforce,
the more that I listen instead of talk, the more
trust and value is created. Frankly speaking, the
outcomes of my visits are a true example of
governance that creates value, for stakeholders,
for the Board, and the business as a whole.”
Vitalii Lisovenko
Non-executive Director
63
Financial Statements
Corporate Governance
Strategic Report
Ferrexpo considers that it has made climate-related financial disclosures consistent with the four recommendations and 11 recommended
disclosures of the Task Force on Climate-Related Financial Disclosures (“TCFD”) – covering Governance, Strategy, Risk Management, and Metrics
and Targets. In this reporting period, we have also partially incorporated core elements of the International Sustainability Standards Board (“ISSB”)
IFRS 2 for Climate-related Disclosures (“IFRS S2”), which aims to provide stakeholders with a comprehensive update on our climate-related financial
information. While we remain committed to our climate targets and goals in the long term, we must prioritise business continuity and employee
welfare during these challenging times, with plans to reinstate and potentially enhance these initiatives once stability is restored.
Summary disclosure against TCFD recommendations
Governance
How Ferrexpo complies
Actions in 2024
Board oversight of climate-related risks and opportunities
• The Board of Directors holds ultimate responsibility for overseeing the Group’s
strategy, which includes climate change, and climate-related risks and opportunities.
The Board considers climate-related issues as part of its decision-making, including in
relation to risk management, annual budgets and business plans.
• The Board is supported by the HSEC Committee, which has been delegated
management of climate-related issues by the Board. The HSEC Committee receives
information about climate-related issues through activities such as internal briefings
by members of the executive management team, other management and colleagues,
and briefings from external advisors. The HSEC Committee reports the Group’s
progress on climate change related matters, including progress against climate-
related goals and targets to the Board on a quarterly basis. A monthly HSEC Report
is also provided to and discussed by the Executive Committee.
• The HSEC Committee comprises the following members:
– Fiona Macaulay, Senior Independent Non-executive Director, and Interim Chair
of the HSEC Committee.
– Yuriy Khimich, Ferrexpo Belanovo Mining General Director, and Chair of the
local Corporate Social Responsibility Committee.
– Greg Nortje, Group Chief Human Resources Officer.
– Nataliya Storozh, Health and Safety Director, Ferrexpo Poltava Mining.
• The Audit Committee serves as a partner to the Board, monitoring the Group’s risk
exposure and risk appetite, including in relation to climate-related risks, to ensure
they align with established thresholds. Additionally, the Audit Committee provides an
oversight function by reviewing the effectiveness of implemented risk management
and control systems. The Audit Committee is assisted in its oversight role by the
Group’s internal audit function, which undertakes both regular and ad-hoc reviews of
risk management controls and procedures, including in relation to climate-related
risks; the results of these reviews are reported to the Audit Committee. The Chair of
the Audit Committee reports to the Board after each meeting on all matters within its
duties and responsibilities, including any climate-related matters that were discussed.
• The combined roles and responsibilities of the different committees’ members
ensure comprehensive oversight of ESG topics, and their related climate-related
risks and opportunities across Ferrexpo’s business operations. This diversity enables
individuals with the correct experience and level of oversight across the business to
appropriately develop strategies and actions to respond to climate-related risks and
identified opportunities.
Climate change was included as a standing agenda item at
all scheduled Board meetings this year.
The HSEC Committee met four times across the year
(four times in previous year 2023), with climate change
highlighted as a standing agenda item at all scheduled
HSEC meetings throughout the year.
Further refinements
We intend to continue to deliver climate education for the
Board through ESG Engagement Sessions, for example, on
Climate Transition Plans and the Transition Plan Taskforce
and their new framework, which now falls under the IFRS
Foundation, as well as emerging UK and EU climate policy
and expectations for climate reporting.
Independent limited assurance for non-financial
reporting criteria
As part of the Board’s oversight of climate-related risks
and opportunities, it engaged its auditors to perform a
limited assurance on certain non-financial reporting
criteria. As in previous years this included absolute Scope 1
and 2 emissions, and in 2024 this was expanded to include
Scope 3 emissions for the first time. In so doing the Board
is able to add confidence in its emissions disclosures and
track progress with more certainty over time.
Ferrexpo’s 2024 climate-related
financial disclosures for the purposes
of UK Listing Rule 6.6.6R(8) and
section 414CB of the Companies Act
2006 are detailed below.
Ferrexpo plc
Annual Report & Accounts 2024
64
Task Force on Climate-Related Financial Disclosures (“TCFD”)
Summary disclosure against TCFD recommendations
Governance
How Ferrexpo complies
Actions in 2024
Management’s role in assessing and managing climate related risks and opportunities
• The Executive Committee, chaired by Executive Chair Lucio Genovese, oversees the
implementation of Ferrexpo’s climate strategy, monitors controls, and mitigates
Group-wide risks. The Committee is supported by members representing essential
business functions.
• The Group’s executive management team monitors and assesses climate-related
risks through its risk monitoring activities as part of the Group’s Finance, Risk
Management and Compliance Committee (“FRMCC”). Further information on the
FRMCC and how management assesses and manages climate-related risks and
opportunities is set out in the ‘Risk Management’ disclosures below.
The FRMCC met nine times in 2024 to assess and evaluate
risks, including climate-related risks. The FRMCC reviewed
the risk register and oversaw the integration of findings
from the 2024 climate materiality assessment into the
risk register.
RISK MANAGEMENT RESPONSIBILITY
RISK MANAGEMENT PROCESS
FERREXPO BOARD
– Holds overall responsibility for maintaining sound risk management and internal control systems
– Sets strategic objectives and defines risk appetite
– Monitors the nature and extent of risk exposure
OPERATIONAL LEVEL
– Ensures risk management processes and internal controls are embedded across all Ferrexpo operations
FINANCE, RISK MANAGEMENT AND COMPLIANCE COMMITTEE
– Monitors centralised financial risk management structures
– Monitors Group compliance
– Oversees Group and local compliance officers
INTERNAL AUDIT FUNCTION
– Supports the Audit Committee in reviewing the effectiveness of risk management
– Oversees internal control systems
AUDIT COMMITTEE
– Supports the Board in monitoring
risk exposure and risk appetite
– Reviews effectiveness of risk
management and control
systems
EXECUTIVE COMMITTEE
– Assesses and mitigates
Group-wide risk
– Monitors internal controls
HSEC COMMITTEE
– Oversees responsible business
matters and performance
PROCEDURES
POLICIES
Figure 1: Ferrexpo governance structures and risk management process
More information
Board Committees on
page 100
Corporate Governance
Financial Statements
65
Strategic Report
Summary disclosure against TCFD recommendations
Governance
How Ferrexpo complies
Actions
Climate-related risks and opportunities identified over the short, medium, and long term
With support from Ricardo, a global environmental, engineering and strategic
consulting company, we reviewed and refreshed our list of climate-related risks and
opportunities, which resulted in an updated shortlist of 63 risks and opportunities (34
new), encompassing transition risks linked to the shift towards a low-carbon economy
and physical risks arising from climate change.
• These were scored individually based on potential financial magnitude, likelihood
of occurrence, and potential business impact. The scoring analysis found 15
opportunities and 15 risks to be material to Ferrexpo. These material risks were
grouped under six key focus areas and brought forward for climate scenario analysis.
• In order of priority, these six focus areas are: (1) Energy & Emissions, (2) Climate-
related Policy & Legislation, (3) Market Demand – Green Steel, (4) Physical Climate
Risks, (5) Stakeholder Climate Consciousness, and (6) Circular Economy Principles.
Climate-related risks and opportunities were considered over the following time
horizons: short- (2024-2030), medium- (2030-2040), and long-term (2040-2050)
timeframes. The short-term horizon reflects our five-year strategic and financial
planning cycle, and the medium and long-term timeframes are consistent with our
Net Zero targets.
We used scenario analysis to determine which risks and opportunities could have a
material financial impact on our business, by evaluating the impacts on operating costs,
ability to generate revenues, business interruption, supply chain issues and the timing of
key company events and milestones across the selected climate scenarios. For further
information, see the ‘Resilience based on climate change scenarios’ disclosures below.
A description of the climate-related risks and opportunities in the short, medium,
and long term that could have a material financial impact on the Group is available
on page 94 in this report.
The updated process to refresh our key climate-related
risks and opportunities incorporated the latest data,
emerging trends, and evolving legislative and regulatory
frameworks. This included insights from last year’s TCFD,
our 2024 climate change regulatory analysis (see our
Climate Change Report for more detail) and the output of
our 2023 Double Materiality Assessment (“DMA”). Through
the DMA, industry-based disclosure concepts were also
incorporated in the refresh, including the SASB Extractives
and Mineral Processing Sector Standards.
Further refinements
We intend to review our risks and opportunities annually
to ensure the most relevant ones are considered and,
where possible, directly integrate all into the principal risk
register. The risks and opportunities are also assessed to
evaluate the impact across Ferrexpo’s business model and
value chain, to identify where these are concentrated. We
will continue to review relevant industry-based guidance
when identifying the risks and opportunities, such as the
Sustainability Accounting Standard (“SASB Standard”) for
Metals & Mining.
Impact on the Ferrexpo business, strategy and financial planning
• Climate change considerations are central to Ferrexpo’s business model, with
outcomes from this year’s TCFD refresh informing future Climate Change Reports
and the 2024 Annual Report and Accounts.
• The climate-related risks and opportunities that have been identified through
scenario analysis serve as the foundation for Ferrexpo’s business strategy and
financial planning across the short-, medium- and long-term time horizons set out
above, guiding our actions and investments to mitigate risks and capitalise on
opportunities in alignment with our long-term sustainability goals. This includes
increased focus on direct reduction pellets, investment in new technologies, and
renewable power generation.
• Climate-related risks input into financial planning processes through the
consideration of the potential carbon emissions footprint of existing and proposed
operating projects and capital investment projects.
• Climate-related factors are expected to negatively impact financial performance in
the short to medium term (CapEx, OpEx and regulatory costs of the EU Carbon
Border Adjustment Mechanism (“EU CBAM”)), but may present opportunities in the
long term due to an anticipated increase in demand for iron ore feedstocks that
enable the transition to lower emissions steelmaking.
• The EU CBAM will affect supply of our products to European customers, and
therefore we have evaluated its impact to prepare for full implementation,
considering potential scenarios, including Ukraine’s possible EU accession. While
the uncertainty caused by the war in Ukraine adds complexity to forecasting the
EU CBAM’s application, we have analysed best- and worst-case scenarios, reflecting
our proactive approach to maintaining robust governance, underscored by our
completed Double Materiality Assessment process. To demonstrate our alignment
with upcoming regulatory requirements in line with a 1.5°C trajectory, as well as
demonstrate our greenhouse gas reduction target trajectory and planned and future
decarbonisation investments, we have been following development of the Transition
Plan Taskforce (“TPT”) Disclosure Framework, with a focus on the Metals & Mining
Sector. This is further outlined on page 6 of our 2024 Climate Change Report.
A complete description of business impacts under each focus area is available on
page 66.
We undertook quantitative financial analyses of one
material risk and one material opportunity:
1. Energy & Emissions: energy usage & GHG emissions
(risk) – modelling the potential financial impact linked
to our emissions and carbon taxes.
2. Market Demand – Green Steel (opportunity): iron ore
pellet sustainability price premiums – modelling the
potential financial impacts linked to the expansion of
our direct reduction electric arc furnace (“DR-EAF”)
pellets into the emerging green steel market.
These analyses enabled us to quantify the financial
impacts of these material climate risks and opportunities
for further integration into our risk management and
strategic planning. This financial quantification
incorporated our business assets, revenue, and costs, and
considered potential changes to future revenue streams.
We have also taken proactive steps to monitor the
potential impacts of the EU CBAM, Ukraine’s EU accession,
and other policy developments such as the requirement
during 2023 and into 2024 to procure Scope 2 electricity
outside Ukraine, which has directly influenced our
emissions.
Further refinements
While specific details of our financial analyses are
considered commercially sensitive, we plan to advance
the quantitative analysis of our other material climate
change risks and opportunities to strengthen our
transition planning, with the aim of publishing our
results in future reports.
Ferrexpo plc
Annual Report & Accounts 2024
66
Task Force on Climate-Related Financial Disclosures (“TCFD”) continued
Summary disclosure against TCFD recommendations
Governance
How Ferrexpo complies
Actions
Resilience based on climate change scenarios
Climate scenarios from two publicly available, scientifically recognised independent
climate change authorities were selected to assess our business impact and resiliency
to each material climate-related risk and opportunity under short- (2024-2030),
medium- (2030-2040) and long-term (2040-2050) timeframes.
We selected four scenarios: two from the IEA and two from the IPCC, providing context
on risks and opportunities as the economy transitions to Net Zero and global
temperatures rise. The scenarios included:
• IEA Net Zero Emissions by 2050 (NZE) – Paris Agreement aligned.
• IEA Stated Policy Scenario (STEPS).
• IPCC SSP1 – RCP 2.6- Paris Agreement aligned.
• IPCC SSP4 – RCP 3.4.
Further details and justification of the scenarios used can be found on pages 72 to 79.
This modelling provides insights into our resilience under varying climate-related risks
and opportunities. Whilst regulatory shifts in energy supply and carbon pricing may
raise concern about Ferrexpo’s operating costs, our scenario analysis indicates that
short-term impacts are manageable, with medium- and long-term risks being
monitored and solutions being investigated. Through ongoing scenario analysis and
integration of mitigation plans into business strategy, we are confident the resilience
of our business and climate change adaption efforts are sufficient to manage the
identified risks.
For a detailed overview and progress update on Ferrexpo’s strategic actions and
resilience strategies to mitigate risks and leverage opportunities under each focus area,
refer to pages 14 and 15.
As part of the 2024 TCFD refresh, the scenario selection
was updated to align with the latest data provided by
the IEA and IPCC and to provide further granularity to
the analysis of physical risks.
In addition, we considered the potential impacts of the
war in Ukraine across multiple scenarios and time horizons,
recognising the added challenges these circumstances
could present to our resilience strategies at Ferrexpo,
particularly in the short term.
During a business resilience workshop, Ricardo reviewed
our resiliency and adaptive capability measures in order to
update the maiden Climate Change Report and identify
new actions to ensure an updated strategic plan of action
across the short, medium, and long-term.
Pages 20 to 34 in the updated 2024 Climate Change
Report further detail the TCFD process and results,
including this refresh and update.
Further refinements
To align with best practices, our ambition is to renew our
detailed comprehensive climate scenario analysis every
three years, unless there is a significant change to the
business or external change related to identified risks and
opportunities that requires an update sooner. We intend
to continue to review our climate-related risks and
opportunities annually through our risk management
process, adjusting any financial impacts based on the
latest data and drive progress on our resiliency actions in
line with our targets and goals.
Risk Management
Process for identifying and assessing climate-related risks
• Ferrexpo’s Board of Directors oversees the Group’s strategy and future direction.
This includes overall responsibility for the identification of emerging and principal
risks and associated strategies to manage and mitigate such risks.
• The Group maintains an internal risk register to evaluate principal and emerging risks
related to our business, including climate-related risks. This determines their relative
significance regarding monetary impact, probability, maximum foreseeable loss,
trends, and mitigating actions.
• The risk register is updated monthly and discussed by executive management
at meetings of the FRMCC. Here, the completeness of the risk register is also
considered, and any new identifiable risks are added. The risk register is also
discussed and reviewed by the Audit Committee at least quarterly. The FRMCC
ultimately reports to the Board for further review and approval of the risk register.
• The FRMCC closely monitors existing and proposed regulatory requirements to
assess how they may pose risks to our business and impact our future strategy.
• Refer to the Principal Risks section on page 94 for further information on climate
risk integration amongst our other principal risks.
The Group conducted an in-depth analysis of its business
and financial exposure to climate risks, evaluating both
operational and strategic resilience through a
comprehensive review of climate policies and regulations.
This included assessing current and emerging regulatory
landscapes across the entire value chain, with a particular
focus on the markets into which we sell our products. For
example, the EU CBAM carbon tariff on imports will affect
how our products are sold into the EU. This analysis
supports Ferrexpo’s process for identifying and assessing
climate-related risks by providing critical insights into
regulatory impacts and potential vulnerabilities.
Further refinements
We plan to continue to monitor and assess the risks and
opportunities that were not deemed financially material in
this year’s assessment, as they may become more relevant
in the future due to changes in the markets and regulatory
landscapes In the meantime, our identified climate risks
and opportunities continue to be integrated into our risk
register and are assessed and managed under the Group’s
risk management process.
Corporate Governance
Financial Statements
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Summary disclosure against TCFD recommendations
Risk Management
How Ferrexpo complies
Actions
Managing climate-related risks
• To effectively manage climate-related risks, the Board continuously oversees our risk
management and internal control systems, with support from the Audit Committee,
Executive Committee, and HSEC Committee, as detailed above.
• Where a risk is deemed to be sufficiently significant in terms of potential impact
or likelihood, appropriate risk mitigation measures are sought, including with the
assistance of third-party specialists where relevant (refer to Strategy section –
climate risks and opportunities and scenario analysis on page 70, which discusses
the materiality process and prioritisation of climate-related risks).
• The Executive Chair, Chief Financial Officer, Chief Operating Officer, and Chief
Marketing Officer manage specific risks, including climate-related risks, on a
day-to-day basis related to their functions.
• Further information on the actions taken to manage and mitigate risks relating to
climate change is set out in the Principal Risks section on page 94.
The ongoing war in Ukraine has created unprecedented
operational and financial uncertainties, necessitating that
we shift our focus from growth, decarbonisation, and
cultural development to business continuity and resilience.
With significant disruptions to electricity supply and
broader instability affecting operational stability, we have
rebalanced the measures previously included in incentive
arrangements to reflect our current near-term priorities
and better align costs with performance and reward.
These changes take into account the dynamic operating
environment that currently prevails as a result of the
full-scale invasion of Ukraine. Our Short-term Incentive
Plan continues to reflect our strong commitment to
sustainability, with Health and Safety, Diversity and
Inclusion continuing as key priorities and integral to our
policies. Our Long-term Incentive Plan factors in both
Company and individual performance with potential
reductions—including to zero—if results do not align with
the Company’s financial, operational, and sustainability
objectives. Any awards made under the Company’s
Short-term and Long-term Incentive Plans remain subject
to recovery provisions.
How processes for identifying, assessing, and managing climate-related risks are integrated into the company’s overall risk management
• The Group’s processes for identifying, assessing, and managing climate-related risks
are fully integrated into the Group’s overall risk governance framework, further
details of which are set out above and in the Risk Management section on pages 81
to 94.
We acknowledge the importance of being transparent and
accountable in our approach to climate transition planning
and we have been following the development of the TPT
Disclosure Framework, with a focus on the Metals & Mining
Sector Guidance. We are committed to providing our
stakeholders with a detailed update on our progress in
implementing the climate transition plan, which will
include an overview of our strategies for identifying,
assessing, and managing climate-related risks and
opportunities in the metals and mining sector, as well as in
our governance structure and risk management practices.
Further details of the Group’s transition plans are available
in our 2024 Climate Change Report.
In 2024, climate-related risks and opportunities were
integrated into the risk management framework and the
internal Enterprise Risk Management (“ERM”) processes.
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Task Force on Climate-Related Financial Disclosures (“TCFD”) continued
Summary disclosure against TCFD recommendations
Metrics and Targets
How Ferrexpo complies
Actions
Metrics used to assess climate-related risks and opportunities
• The Group uses a wide range of climate-related metrics including GHG emissions
(Scopes 1, 2 and 3 and emissions intensity), as well as consumption of diesel,
electricity and natural gas, water usage and waste generation, and land use,
including biodiversity baseline mapping to assess and manage climate-related
risks and opportunities.
For more information on our emissions data (Scope 1, 2 and 3) and climate-related
metrics, please see pages 58 to 63 of the 2024 Climate Change Report.
• Our Remuneration Policy is designed to incentivise our executives by integrating
sustainability-linked objectives into the Short-term Incentive Plan. We set annual
targets that are aligned with our medium-term carbon reduction goals for Scope 1
and Scope 2 emissions, aiming for significant progress by 2030. Additionally for
Scope 3, we emphasise enhancing production of higher-grade direct reduction
pellets, vital for reducing the Group’s Scope 3 emissions. Metrics related to our
carbon reduction progress are incorporated into our remuneration policies.
However, due to the war, it was subsequently agreed that in the current environment,
executives are not able to influence this, and our targets are temporarily suspended.
More information can be found on page 68, and throughout our 2024 Climate
Change Report.
• By consistently tracking climate-related metrics and developing policy landscapes
(such as the EU CBAM and Ukraine ETS), we aim to ensure that our strategies and
actions are aligned with climate-related targets and that we remain responsive to the
evolving market demands and environmental imperatives.
Our monitored climate-related metrics have been
re-evaluated during the 2024 TCFD refresh to ensure
they continue to align with the Group’s goals and the
expectations of stakeholders. These include: steel carbon
intensity, trends in carbon pricing, data on electric arc
furnace steel production, recycling rates, renewable
energy availability and costs, green steel market trend,
and related client preferences. These metrics were
selected based on their direct relevance to the Group’s
operations and products, and their ability to effectively
track policy, market, and technological changes.
In terms of internal carbon pricing, Ukraine is progressing
towards an ETS, with a pilot launch anticipated in 2025,
though this may face delays due to the ongoing war.
Nevertheless, to mitigate the impacts of the EU CBAM and
ETS, Ferrexpo remains focused on reducing the embodied
carbon in our products to align with emerging regulatory
frameworks. We plan to conduct further research to better
understand the technology, equipment, and offsetting
capacity required to transition Ferrexpo to a Net Zero
business by 2050, to support the development of an internal
carbon price to consider short—and long-term impacts.
Given the war in Ukraine and the impact on business
operations, we have temporarily suspended climate-linked
components of executive compensation packages. This
prudent measure allows us to maintain focus on critical
business resilience and operational stability, while ensuring
our executive incentive structure remains aligned with
immediate strategic priorities during this period of
heightened uncertainty.
Ferrexpo’s Scope 1, 2 and 3 greenhouse gas emissions
• We have calculated Scope 1, 2 and 3 emissions, including our reductions to date,
against a 2019 baseline (see pages 49 to 53 of this report). Our methodology for
calculating GHG emissions footprint utilises, where possible, emissions factors
provided by the Greenhouse Gas Protocol, which is in line with reporting
requirements under the Global Reporting Initiative’s (“GRI”) framework for reporting
sustainability topics. Through using carbon factors provided by the Greenhouse Gas
Protocol, the Group is able to provide carbon dioxide-equivalent emissions figures
(“CO2e”) that also account for emissions of both methane (CH4) and nitrogen oxide
(N2O). We include historical periods to allow for trend analysis.
• With MHA, the Group’s principal auditor, an independent assurance process for
Scope 1 and Scope 2 carbon emissions was conducted. The conclusion of this review
has served to confirm the relevant information as presented in our 2024 Annual
Report and Accounts.
As a result of infrastructure upgrades and reduced
operational activity due to the ongoing war, the Group
emissions from 2019 to 2024 are as follows:
• Scope 1 and 2 emissions: reduced by 29%
• Scope 3 emissions: increased by 2%
Targets
• Our initial carbon reduction targets were developed as part of the decarbonisation
pathways throughout 2021 and 2022 and were outlined in our inaugural Climate
Change Report in 2022. These targets were reinstated in our second updated Climate
Change Report, issued in December 2024.
• Our targets to achieve Net Zero emissions by 2050 and a 50% reduction by 2030
across Scope 1 and 2 emissions, and a 10% reduction by 2030 and 50% reduction
by 2050 in Scope 3 emissions (all against a 2019 baseline) remain.
• Due to the war in Ukraine, we consider emissions per tonne, not absolute emissions,
as the most representative performance measure. Although we are not currently able
to set formal science-based targets due to the war, Ferrexpo remains focused on
decarbonisation, aiming to reduce emissions across our operations.
Despite challenges relating to the ongoing war in 2024, we
continued to develop our decarbonisation and Net Zero
strategy to support the achievement of our emissions
targets. Some programmes are on hold, due to the
practicalities of operating during war time – for example,
the plans to electrify our mining fleet are progressing, but
much of the work is limited to desktop research. However,
our intention to reach Net Zero still stands, and our
ambitions in the field were published in our recent second
Climate Change Report.
We collaborated with our sustainability partner, Ricardo,
to create a science-based roadmap for achieving Net Zero
emissions by 2050. Our latest pathway analysis has assessed
the potential to achieve an approximate 90% reduction in
emissions across all scopes, supporting our plans to align our
target to the Science-Based Targets initiative.
Further information can be found throughout our 2024
Climate Change Report.
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Strategy: Climate related risks and
opportunities, and scenario analysis
Scenario analysis is a strategic tool used to explore potential climate futures by examining a range of “what-if”
scenarios, from rapid decarbonisation under a Net Zero scenario to ‘business-as-usual.’ This process allows
Ferrexpo to stress-test current strategies to identify those that are resilient across different climate outcomes,
challenging assumptions, fostering innovation, and building resilience. A rigorous process to refresh Ferrexpo’s
list of climate-related risks and opportunities was applied to scenario analysis to help strengthen our resiliency
strategies to maximise climate-related opportunities and minimise risks.
REFRESH CLIMATE-
RELATED RISKS AND
OPPORTUNITIES
REFRESH STRATEGIC
RESPONSES
MATERIALITY SCORING
& CONSOLIDATION
BUSINESS IMPACT
ANALYSIS
CLIMATE SCENARIO
SELECTION
SCENARIO
ANALYSIS
Overview of scenario analysis process
Determine key climate-related risks
(e.g., physical risks, transition risks)
and opportunities that may arise
over the short, medium, and
long term.
Define strategic actions the
company will take in response to
the scenario outcomes, ensuring
Ferrexpo remains resilient and
adaptable to future climate
challenges.
Score risks and opportunities
aligned with Ferrexpo’s internal risk
management criteria. Compile the
results of the materiality scoring
to identify and prioritise climate-
material risks and opportunities by
common themes.
Analyse the risks and opportunities
under the scenarios and evaluate
their short-, medium-, and
long-term impacts on business
operations, strategy, and financial
performance.
Select climate scenarios, including
Paris Agreement 1.5°C aligned
(best-case) and a worst-case
pathway, to assess future climate-
related risks and opportunities.
Conduct qualitative analysis of
material risks and opportunities
under each climate scenario and
assess how these could evolve
across time horizons.
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Task Force on Climate-Related Financial Disclosures (“TCFD”) continued
To update the list of key potential climate-related risks and opportunities
Ferrexpo faces, we incorporated insights from our 2023 TCFD, 2024
climate change regulatory analysis (see our Climate Change report for
more detail), our 2023 Double Materiality Assessment, desk research,
and competitor review. Through our Double Materiality Assessment
process, we also engaged external stakeholders as well as experts from
across the different functions within Ferrexpo, including sustainability,
corporate governance, risk management, human resources and finance.
This process allows us to identify the most relevant risks and
opportunities (“R&Os”) to Ferrexpo, considering the business
implications resulting from the war and current legislative landscape.
Focus area
Priority order
Energy & Emissions
#1
Climate-related Policy
& Legislation
#2
Market Demand –
Green Steel
#3
Physical Climate Risks
#4
Stakeholder Climate
Consciousness
#5
Circular Economy
Principles
#6
EE = Energy & Emissions
CP = Climate-related Policy & Legislation
GS = Market Demand – Green Steel
PCR = Physical Climate Risks
SCC = Stakeholder Climate Consciousness
CEP = Circular Economy Principles
PROBABILITY
3.0
2.5
3.5
4.5
5.5
1.5
4.0
5.0
6.0
IMPACT
CEP
EE
GS
SCC
PCR
CP
A financial materiality assessment was conducted to evaluate and
prioritise the risks and opportunities considered the most financially
material to Ferrexpo. For 2024, the materiality scoring method was
updated to align with Ferrexpo’s risk management process. R&Os were
assessed based on their potential financial magnitude, likelihood of
occurrence and potential business impact. Of the 63 updated risks
and opportunities that were identified and evaluated, 15 opportunities
and 15 risks were deemed to be material. These were clustered into
six priority focus areas for climate scenario analysis.
The matrix in Figure 3 presents the prioritisation of material risks and
opportunities as determined through the financial materiality scoring,
grouped by priority focus area.
Figure 3: Prioritisation of material risks and opportunities by focus area, based on financial materiality scoring.
Bubble size represents the qualitative financial impact on Ferrexpo.
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Scenario selection and time horizons
TRANSITION
PHYSICAL
IEA NET ZERO EMISSIONS BY 2050 (“NZE”)
IEA NET ZERO EMISSIONS BY 2050
IEA STATED POLICY SCENARIO (STEPS)
IPCC SSP4 – RCP 3.4
A “best-case” scenario where the Paris Aligned 1.5°C goal is
achieved through policies, paving a feasible path for the global
energy sector to reach Net Zero CO2 emissions by 2050, with
advanced economies achieving this earlier. This scenario replaces
the previously used Sustainable Development Scenario (“SDS”),
which was not aligned with the Paris Agreement, and is no longer
modelled by the IEA.
KEY METRICS:
• Paris Agreement aligned (1.5°C)
• Global carbon price by economy (e.g. US$250/tonne CO2 by 2050)
• Internal and shadow carbon prices, by geography
• Hydrogen demand
• Carbon intensity of steel
• Steel production costs by geography
A “best-case” scenario where global development follows a
sustainable path and envisions robust international cooperation,
rapid technological advancements, and significant progress in
reducing inequality and environmental degradation.
KEY METRICS:
• 1.8°C temperature rise by 2080 – 2100
• Mean temperature in Central and Eastern Europe
• Extreme heat days (can be defined as consecutive days with
temperatures over 30 – 35°C).
A worst-case, “business as usual” scenario which provides a more
conservative benchmark whereby governments are assumed not to
reach all announced goals.
KEY METRICS:
• 2.4°C Temperature Rise by 2100
• Global energy consumption by sector and fuel type
• Global energy supply sources
• Iron & steel sector CO2 emissions
• Global carbon price by economy (e.g. US$135/t by 2050)
• Internal carbon price, shadow carbon price, by geography
• Crude steel production volumes by production method
• Scrap share in metallic inputs.
A worst-case, “business as usual” scenario where highly unequal
investments in human capital, combined with increasing disparities
in economic opportunity and political power, lead to increasing
inequalities and stratification across and within countries.
KEY METRICS:
• 3.7°C temperature rise by 2080 – 2100.
• Mean temperature in Central and Eastern Europe
• Extreme heat days (can be defined as consecutive days with
temperatures over 30 – 35°C).
Due to the split of transition and physical climate-related risks and opportunities identified, scenarios from
the IEA and IPCC were selected to assess the business impacts of and Ferrexpo’s resilience to each climate-
material risk and opportunity under the focus areas. Given the IEA’s focus on energy systems and shorter-
to medium-term projections, IEA scenarios primarily assessed transition-related risks, while the IPCC’s
specificity on increasing temperatures and weather patterns, helped evaluate physical impacts.
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WAR CONTEXT – WAR SCENARIOS
CONSIDERATIONS
The full-scale invasion of Ukraine which began on
24 February 2022 has had a profound impact on Ferrexpo’s
workforce and operations, given that all our production
is based in Ukraine. Since our inaugural Climate Change
Report published in December 2022, the war has continued
and the outlook remains uncertain. In addition to the
transition and physical specific scenarios above, we also
integrated the impact of Russia’s war in Ukraine using three
scenarios detailed below, acknowledging the additional
direct and indirect challenges these could present to
building Ferrexpo’s resiliency strategies:
• Continuation of the War: In the event that the ongoing
war persists, Ferrexpo faces significant challenges in
meeting its climate targets. This scenario considers how
prolonged war impacts emission reductions and what
strategies Ferrexpo can employ to mitigate these
challenges.
• Post-War rapid achievement of climate targets. Once
the War is over, Ferrexpo aims to rapidly accelerate its
efforts to achieve climate targets. This scenario explores
the necessary actions, investments, and innovations
required to make up for lost time and progress.
• Post-War business-as-usual scenario: In a business-as-
usual post-war scenario, Ferrexpo evaluates how to
achieve climate targets under normalised operation.
These scenarios may result in specific challenges that
affect Ferrexpo's near-term strategies and ability to seize
climate-related opportunities and effectively manage risks:
• Infrastructure risks: the ongoing war threatens
local green energy infrastructure, potentially limiting
opportunities to increase the proportion of renewable
energy use in Ferrexpo’s operational processes.
• Export disruptions: ports were reopened, allowing
exports to resume in 2024, which poses a risk of
increased transport carbon emissions.
• Increased emissions: Ukrainian law currently mandates
that up to 80% of electricity to be purchased from
Europe and 20% from domestic sources depending
on the availability of domestic supply. This may affect
Ferrexpo’s Scope 2 emissions if imported energy does
not come from renewable sources.
• Funding: current challenges in securing international
finance, with capital likely being prioritised for post-war
rebuilding efforts.
• Workforce issues: disruptions may slow the response
to climate policies due to employee safety concerns,
workforce conscription and other war related workforce
structure and composition issues.
• Time constraints: limited time remains to achieve Net
Zero targets.
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RISK RATING
Short
Medium
Long
2024–2030
2030–2040
2040+
IEA STEPS
IEA NZE
OPPORTUNITY RATING
Short
Medium
Long
2024–2030
2030–2040
2040+
IEA STEPS
IEA NZE
Current:
• Original Equipment Manufacturer
and industry site visits and attending
events to gain insights into mining
decarbonisation and implement key
learnings.
• Electrification of mining vehicles and
improved energy efficiency to reduce
Scope 1 GHG emissions.
• Transition to clean electricity sources,
while implementing more efficient
processes and equipment upgrades.
• Increase direct reduction (“DR”) pellet
sales to reduce Scope 3 emissions and
support green steelmaking.
Longer-term (2030+):
• High CapEx for low-carbon technologies
raises upfront costs but can lower
long-term expenses.
• The war risks disrupting green energy
infrastructure, limiting renewable energy
use in operations.
• Delayed decarbonisation risks fines,
litigation, and loss of competitive edge.
• Faster decarbonisation than competitors
offers reputational gains, investor
support, and capital access.
Near-term (2024-2030):
• Secure long-term Power Purchase
Agreements for renewable energy and
install on-site solar generation.
• Evaluate investment in private renewable
energy sources independent of Ukraine’s
grid.
• Conduct feasibility study to assess
technology and equipment required for
Net Zero by 2050.
• Invest in R&D and pilot projects for green
hydrogen in iron ore processing.
Climate-related risks and opportunities
and scenario analysis
ENERGY & EMISSIONS
Considers emissions management across Scope 1, 2, and 3, the transition to renewable
energy, energy efficiency, and alignment with global and regional climate targets.
POTENTIAL RESILIENCY RESPONSES:
SCENARIO RISK/OPPORTUNITY RATING:
? Risks
• Electrification of mining processes
• Energy usage & GHG emissions
• Scope 3 emissions
• Limited alternative energy sources
• Ukraine grid mix uncertainty
Opportunities:
• Renewable energy sourcing
• Alternative fuels
• Electrification of mining processes
GEOGRAPHIC FOCUS:
Ukraine, EU
POTENTIAL BUSINESS IMPACT:
• High CapEx for low-carbon technologies
raises upfront costs but can lower
long-term expenses.
• The war risks disrupting green energy
infrastructure, limiting renewable energy
use in operations.
• Delayed decarbonisation risks fines,
litigation, and loss of competitive edge.
• Faster decarbonisation than competitors
offer reputational gains, investor support,
and capital access.
High
Key:
Medium
Low
High
Key:
Medium
Low
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RISK RATING
Short
Medium
Long
2024–2030
2030–2040
2040+
IEA STEPS
IEA NZE
OPPORTUNITY RATING
Short
Medium
Long
2024–2030
2030–2040
2040+
IEA STEPS
IEA NZE
Current:
• Developing cold bonded pellets as a
green alternative to reduce Scope 3
emissions.
• Improving DR pellet quality to meet
market demand and support sector
decarbonisation.
• Monitor global steel emissions intensity
to shape Ferrexpo’s strategy and
influence low-energy steel development.
• Producing DR pellets for the growing
DR-EAF market.
Longer-term (2030+):
• Monitor Ferrexpo’s product carbon
emissions intensity compared to
competitors to maintain our position
as market leaders.
Near-term (2024-2030):
• Develop strategies to mitigate potential
short-term market saturation for DR pellets
and green products.
• Establish manufacturing capability for
technology and equipment required to
integrate into a market shift towards
green steel.
• Accelerate the integration of technologies
to reduce emissions, such as using green
hydrogen in pelletising process, to increase
competitive advantage.
MARKET DEMAND – GREEN STEEL
Considers market trends and demand for low-carbon steel and the industry’s shift towards
decarbonisation, including technological advancements and market implications.
POTENTIAL RESILIENCY RESPONSES:
SCENARIO RISK/OPPORTUNITY RATING:
? Risks
• Demand for low energy steel
• Ferrexpo product strategy
Opportunities:
• Iron ore pellet sustainability price premiums
• Alternative methods of agglomerating iron
ore at low temperatures
• Ferrexpo premium product
• DR pellet market readiness
• Customer emission reductions
• Promotion of DR pellets
GEOGRAPHIC FOCUS:
Ukraine, EU, global downstream customer
markets
POTENTIAL BUSINESS IMPACT:
• Green steel adoption is accelerating due
to stricter environmental policies, rising
carbon prices, and shifting customer
demand.
• The cost gap between green steel and
traditional steel is forecast to narrow,
creating opportunities for Ferrexpo to
lead in sustainable steel production.
• Ferrexpo can support market
decarbonisation with direct reduction,
cold-bonded pellets, and electric arc
furnace production.
• Renewable electricity costs decrease as
its share of the global energy mix grows.
• The market for green steel products will
continue to evolve, potentially becoming
saturated with competitors.
High
Key:
Medium
Low
High
Key:
Medium
Low
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RISK RATING
Short
Medium
Long
2024–2030
2030–2040
2040+
IEA STEPS
IEA NZE
OPPORTUNITY RATING
Short
Medium
Long
2024–2030
2030–2040
2040+
IEA STEPS
IEA NZE
Current:
• Ferrexpo’s DR product supports the
scrap steel market by providing virgin
feedstock for recycled iron.
• Ferrexpo monitors customers using scrap
steel, aligning with growing demand for
low-carbon steel.
• Ferrexpo subscribes and is partner to
CRU Group to stay informed on the
evolving steel sector and value chain.
Near-term (2024-2030):
• Progress movement towards circular
economy principles through strategic
decisions on investment, diversification,
and the development of new products.
Informed by monitoring of global scrap
steel recycling rates, including identifying
leading countries where a shift to a circular
economy is increasing.
Climate-related risks and opportunities
and scenario analysis continued
CIRCULAR ECONOMY PRINCIPLES
Considers the enhancement of resource efficiency through sustainable product design and practices that aim to
minimise waste and maximise resource reuse across Ferrexpo’s product market and offerings.
POTENTIAL RESILIENCY RESPONSES:
SCENARIO RISK/OPPORTUNITY RATING:
? Risks
• Increased recycling rates for scrap iron due
to circular economy shift
Opportunities:
• Increased recycling rates for scrap iron due
to circular economy shift
• EU circularity Initiatives
GEOGRAPHIC FOCUS:
Ukraine, EU, EU downstream customer
market
POTENTIAL BUSINESS IMPACT:
• High CapEx for low-carbon technologies
Demand for virgin iron ore may decrease
due to increased use of scrap. However,
increased demand for virgin iron ore as
a necessary mix with recycled steel is
expected to offset losses.
• Demand for high-grade direct reduced
iron (“DRI”) pellets will rise in the
long-term, driven by carbon reduction
and the EU’s transition to scrap-EAF
and hydrogen-based DRI.
• Ferrexpo’s DR pellets align with EU
circular economy goals, potentially
establishing a position as a preferred
supplier for eco-conscious steel
producers.
• Scrap availability in the EU may be
insufficient for recycled steel targets,
supporting opportunities to expand
into scrap recycling.
High
Key:
Medium
Low
High
Key:
Medium
Low
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RISK RATING
Short
Medium
Long
2024–2030
2030–2040
2040+
IEA STEPS
IEA NZE
OPPORTUNITY RATING
Short
Medium
Long
2024–2030
2030–2040
2040+
IEA STEPS
IEA NZE
Current:
• Our Net Zero roadmap and continuous
monitoring of global carbon prices
enables decisions on diversification and
the development of carbon reduction
technology and processes to be directly
influenced.
• Continuous and regular monitoring of
emission reduction performance against
our targets enables assessment of
exposure and vulnerability to risk.
• Ferrexpo continues to collaborate with
local and national governments on
climate policies.
Longer-term (2030+):
• Promote technology for shipping
partners to meet carbon emission
regulations, depending on the scale,
scope and timing of policies introduced.
• Monitor Ferrexpo’s carbon intensity
to stay competitive and identify
opportunities to increase revenue.
• Evaluate the impact of Ukraine’s EU
accession on emissions trading and
carbon tax implications.
• Track carbon tax scope and boundaries to
optimise product positioning and reduce
tax burdens.
Near-term (2024-2030):
• Gain funding and support through European
government subsidies and funded projects.
• Understand the technology, equipment, and
offsetting capacity required to transition
Ferrexpo to a Net Zero business by 2050
and develop an internal carbon price to
consider short and long-term impacts.
CLIMATE-RELATED POLICY & LEGISLATION
Considers the complex landscape of climate-related policies and regulations impacting the mining & steel industry.
Key themes include EU climate policies, carbon pricing mechanisms, the evolving standards for emissions reporting
and sustainability, and the variation across global policies.
POTENTIAL RESILIENCY RESPONSES:
SCENARIO RISK/OPPORTUNITY RATING:
? Risks
• Increase in ESG reporting
• Policy landscape – geographical variation
• European climate law & policies
• Access to green finance
• EU CBAM
Opportunities:
• EU CBAM
• Government subsidiaries (Europe)
GEOGRAPHIC FOCUS:
Ukraine, UK, and Switzerland (corporate
offices), global downstream customer
markets
POTENTIAL BUSINESS IMPACT:
• Carbon pricing, especially under IEA NZE
(US$250/t by 2050 in advanced economies),
could increase operational costs.
• Export of iron ore pellets to the EU market
may be subject to higher prices if Ukraine
implements more aggressive carbon
pricing mechanisms in response to
EU CBAM.
• Stricter reporting obligations and
compliance requirements could lead
to increased operational expenses and
reputational risks.
• Potential for revenue increase from
sales of products that support steel
decarbonisation, as EU CBAM levels the
playing field with non-EU jurisdictions.
• Government subsidies in Europe could
offer additional funding avenues, and
access to capital for decarbonisation
initiatives may increase.
High
Key:
Medium
Low
High
Key:
Medium
Low
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RISK RATING
Short
Medium
Long
2024–2030
2030–2040
2040+
IEA STEPS
IEA NZE
OPPORTUNITY RATING
Short
Medium
Long
2024–2030
2030–2040
2040+
IEA STEPS
IEA NZE
Current:
• Ferrexpo maintains flexibility to adapt DR
pellet production to customer demand,
ensuring premium pricing is achieved,
aligning with the speed of the low-carbon
transition.
• Continue to improve DR pellet quality.
• Continue transparent reporting and
communication through Ferrexpo’s
Annual Report and Accounts, Responsible
Business Report, and Climate Change
Report.
Longer-term (2030+):
• Clearly communicate our climate and
sustainability actions.
• Be recognised as a leader in sustainability
reporting, such as by reporting fully
against the Transition Plan Taskforce
(“TPT”) and taking measurable action.
Near-term (2024-2030):
• Benchmark Ferrexpo’s sustainability and
climate performance against competitors,
focusing on consumer and investor
perceptions.
• Enhance climate literacy awareness by
providing training for all employees.
Climate-related risks and opportunities
and scenario analysis continued
STAKEHOLDER & CLIMATE CONSCIOUSNESS
Considers market trends and demand for low-carbon steel and the industry’s shift towards decarbonisation,
including technological advancements and market implications.
POTENTIAL RESILIENCY RESPONSES:
SCENARIO RISK/OPPORTUNITY RATING:
? Risks
• Offset credibility
Opportunities:
• Transition to a low carbon economy.
• Ferrexpo market & product position
GEOGRAPHIC FOCUS:
Ukraine (direct operations), global
downstream customer markets
POTENTIAL BUSINESS IMPACT:
• In the short-to-medium term, the
demand for green steel remains low with
market prices approximately 40% higher
than traditional steel. However, there are
early signs of stakeholder perceptions
changing towards a greener outlook.
• Opportunity for Ferrexpo to upscale
production of iron ore pellet types that
are compatible with “Green Steel” to
capitalise on evolving market trends.
• Green steel demand is growing in
automotive and transport sectors,
driven by Lifecycle Assessment (“LCA”)
regulations in the EU and increasing
consumer sustainability awareness.
• Reliance on carbon offsets could risk
reputational damage and impact access
to capital.
High
Key:
Medium
Low
High
Key:
Medium
Low
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Task Force on Climate-Related Financial Disclosures (“TCFD”) continued
RISK RATING
Short
Medium
Long
2024–2030
2030–2040
2040+
IEA STEPS
IEA NZE
Current:
• Our current resilience on the ground, and
adaptation measures are focussed on
prioritising employees’ safety concerns
due to the ongoing war.
Longer-term (2030+):
• Identify vulnerable areas in operations,
supply chain, and workforce for targeted
climate resilience strategies.
• Research mitigation and adaptation
options for areas at-risk from physical
climate risks.
• Engage with third parties to improve
resilience in areas outside Ferrexpo’s
direct operations.
Near-term (2024-2030):
• Assess climate-induced conflict and political
instability by likelihood, Ferrexpo operating
and trading locations and Ferrexpo business
plan time frames.
• Implement water conservation & recycling
programmes.
PHYSICAL CLIMATE RISKS
Considers the impact of physical climate risks such as extreme weather events and long-term climate changes
on Ferrexpo’s direct operations, downstream operations (namely shipping), and infrastructure.
POTENTIAL RESILIENCY RESPONSES:
SCENARIO RISK/OPPORTUNITY RATING:
? Risks
• Increase in heatwaves
GEOGRAPHIC FOCUS:
Ukraine, UK, and Switzerland (corporate
offices), global downstream customer
markets
POTENTIAL BUSINESS IMPACT:
• Increased operational costs to ensure
facilities are sufficiently cooled and can
remain operational (e.g. via increased air
conditioning or purchasing additional
cooling equipment).
• Reductions in the well-being of our
employees, limiting their ability to work.
• Legal liabilities due to employee welfare
and workplace safety.
High
Key:
Medium
Low
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Strategic Report
For the 2024 reporting period, Ferrexpo has begun partially incorporating the core elements of IFRS S2,
reinforcing our commitment to climate-related transparency by leveraging robust data and established
processes, building on our existing TCFD-aligned disclosures.
Despite the unprecedented challenges presented by
the ongoing war, we have continued to demonstrate our
strong resilience through investing in refreshing our climate
scenario analysis. We seek to show our commitment to
transparency and sustainability through our climate-related
actions and disclosures:
• Governance: climate change remains a priority at Board
and committee meetings, supported by ongoing ESG
Engagement Sessions to enhance climate education for
our Board.
• Risk and opportunity assessment: improved
evaluation of climate-related risks and opportunities,
such as through the incorporation of our Double
Materiality Assessment results and in-depth climate
policy and regulatory review.
• Metrics and targets: collaborating with our
sustainability partner, Ricardo, to develop a feasible,
science-based roadmap to achieve Net Zero emissions
by 2050.
• Resilience: updated and refined our resilience strategies
to reflect current risks and opportunities, while providing
transparent updates on the implementation progress of
our strategic actions.
Ferrexpo recognises that full compliance with IFRS S2 is
something to be achieved progressively. Development
areas could include:
• Measure and improve data quality for comprehensive
Scope 3 emissions across all relevant categories.
• Evaluate options to develop an internal carbon price,
to guide investment decisions and capital allocation,
including consideration of the financial impact of
potential carbon regulations e.g. EU CBAM, EU ETS.
• Continue to advance the quantification of the financial
impacts of climate-related risks and opportunities in
detail and make this publicly available.
• Integrating industry-specific metrics and targets to
address material risks and opportunities.
Ferrexpo aims to achieve full IFRS S2 compliance by the end
of the year ending 2026. This phased approach ensures the
quality and reliability of disclosures while advancing the
integration of IFRS S2 into our reporting framework.
Consideration of IFRS S2
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Annual Report & Accounts 2024
80
Task Force on Climate-Related Financial Disclosures (“TCFD”) continued
Assessing and
managing risk
81
Financial Statements
Corporate Governance
Strategic Report
Risk Management
Ferrexpo identifies and
assesses risks based on
the probability of
occurrence and the
severity of impact. The
Group aims to mitigate
risks through a robust
governance framework
and risk management
process.
RISK IDENTIFICATION
Ferrexpo seeks to manage risks across the
business through the early identification of
risks before they emerge. Senior managers
and the Group’s executive management team
are responsible for maintaining and regularly
reviewing risk registers for each business
function.
The Group risk register, which operates on an
enterprise risk management platform (“ERM”),
records risks on the basis of the likelihood
of occurrence and level of any potential
impact on the business. A total of 55 risks
were included on the Group risk register as of
January 2025. Risks range from those related
to Ukraine, including the war and judicial
system, along with operating and health and
safety risks arising from the Group’s mining
and processing activities to broader societal
risks such as climate change. Operating
entities maintain their own local risk registers,
which feed into the Group risk register.
Not all the risks managed in the ERM are
presented in this section, rather only those
deemed by the Group’s management to be
Principal Risks.
Please see pages 84 to 94 for a detailed review
of Principal Risks.
RISK MITIGATION
Risks are inherent in operating a business
and it is through effective risk identification,
risk management, prudent decision making
and other risk mitigation measures that the
Group can understand and mitigate them. The
Group’s management team understands that
it cannot eliminate all risk.
RISK GOVERNANCE
FRAMEWORK
Risks are reported internally on a monthly
basis, as part of the Finance, Risk Management
and Compliance Committee (“FRMCC”),
with the Group’s senior leadership team
reviewing the Group-level risk matrix, which
plots the likelihood of occurrence against the
potential severity of impact, and identifying
material changes in either variable to all of the
risks listed. Each risk attributed a potential
monetary impact should an event occur. The
FRMCC reports to the Group’s Executive
Committee, which in turn reports to the
Board, which has the ultimate responsibility
for the Group’s approach to risk management.
The Audit Committee, a sub-committee of
the Board, assists the Board in its regular
monitoring of the risks faced by the Group.
The Group’s internal audit function also assists
with the process of risk review and conducts
ad-hoc reviews of risk management controls
and procedures.
For more information on the Audit
Committee’s monitoring and assessment of
the effectiveness of the risk management
and internal control systems, see the Audit
Committee Report on page 118.
RISK ASSESSMENT FOR 2024
The risk matrix depicts the principal risks
facing the Group as identified in the Group
Risk Register. More detailed information on
each risk on the following pages, including
a risk definition, any potential impact,
opportunities and risk management and
mitigation.
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82
Risk Management continued
Risk management process
Key
1.1
War risk
1.2 Ukraine country risk
1.3 Counterparty risk
2
Market and pricing risks
3.1
Health and safety risks
3.2 Production risks
3.3 Logistics risks
3.4 Operating costs risks
3.5 Information technology and
cybersecurity risks
4
Climate change risks
Principal risks materiality matrix
The Principal Risks identified in the heat map
to the right highlight which risks could have the
greatest severity of impact on the Group’s
operations and viability.
Please see pages 84 to 94 of this report
for a full summary of Principal Risks
Ferrexpo Board
–
Takes overall responsibility for maintaining
sound risk management and internal
control systems.
–
Sets strategic objectives and defines
risk appetite.
–
Monitors the nature and extent of risk
exposure, which includes principal and
emerging risks.
Audit Committee
–
Supports the Board in monitoring risk
exposure and risk appetites.
–
Reviews effectiveness of risk management
and control systems.
Executive Committee
–
Assesses and mitigates Group-wide risk.
–
Monitors internal controls.
Health, Safety, Environment and
Community (“HSEC”) Committee
–
Oversees corporate social responsibility-
related matters and performance.
–
Has specific focus on safety and climate
change-related risks.
Finance, Risk Management
and Compliance Committee (“FRMCC”)
–
Monitors centralised financial
risk management structures.
–
Monitors Group compliance.
Internal audit function
–
Supports the Audit Committee in
reviewing the effectiveness of risk
management.
–
Tests internal control systems and
recommends improvements.
Operational level
–
Risk management processes and internal
controls embedded across all Ferrexpo
operations.
1.2
1.1
3.3
3.4
3.5
2
1.3
3.1
3.2
4
LIKELIHOOD
LEVEL OF IMPACT
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Strategic Report
Understanding
risks and our
business model
Principal Risks are assessed on the basis of impact
and probability and are considered to have the
greatest potential effect on the business. Each
Principal Risk is linked to aspects of the Group’s
strategy that could be affected if an event were
to occur.
INTRODUCTION
This section outlines the Principal Risks facing
the Group, each of which have the potential
to negatively or positively affect the Group,
in isolation or in combination. Principal Risks
are defined as factors that may affect the
Group’s ability to operate in its normal course
of business, and may be internal, in the form
of risks derived through the Group’s own
operations and activities, or external, such as
political risks, market risks or climate change
related risks. The Principal Risks listed here
are neither exhaustive, nor are they mutually
exclusive, and therefore one risk may affect
another risk.
Principal Risks include, but are not necessarily
limited to, those that could result in events or
circumstances that might threaten the Group’s
business model, future performance, solvency
or liquidity, and reputation.
Risks are inherently unpredictable, and,
therefore, the risks outlined in this report are
considered the main risks facing the Group.
New risks may emerge during the course of
the coming year, and existing risks may also
increase or decrease in severity of impact and
likelihood of occurrence. This is why regular
reviews of the Group’s Risk Register are
conducted throughout the year. The Group’s
management team continually reviews and
updates its view on, and approach to, risks
facing the Group. This section of the Annual
Report and Accounts primarily covers risks
facing the Group in 2024, but also early in
2025, up until the publication date of this
report. A further update on the Principal
Risks will be provided in the Interim Financial
Results, which is due to be published in August
2025.
KEY THEMES
ONGOING WAR IN UKRAINE SINCE THE
FULL-SCALE INVASION IN FEBRUARY
2022
On 24 February 2022, Russia launched a
full-scale military invasion of Ukraine, with the
conflict continuing into its fourth year as at the
date of this report. The war has significantly
changed the operating environment for
businesses in Ukraine. Please see page 85 for
more information on this risk area.
UKRAINE COUNTRY RISK
This area has been listed as a Principal
Risk facing the Group since listing in 2007.
The Group has successfully navigated and
operated through challenging circumstances
for more than 17 years. The war in Ukraine has
served to escalate a number of risks relating to
Ukraine, including risks relating to the political
environment and the independence of the
judicial system. Please see page 86 for more
information on this risk area.
IRON ORE MARKET AND PRICES
The Group produces a variety of high grade
premium iron ore products that are sold to
steel mills around the world. The iron ore
market is competitive and dominated by four
large producers that supply over 50% of the
addressable market, and with Chinese demand
accounting for approximately two thirds of
the global market. During 2024, prices for iron
ore products decreased, which put pressure
on margins. Please see page 88 for more
information on this risk area.
CLIMATE CHANGE
In 2023, the Group completed a double
materiality assessment. The feedback from a
broad range of stakeholders demonstrated
that climate change is considered a significant
risk for the Group. Reflecting the interest in
this topic, the Group published its second
Climate Change Report in December 2024.
Please see pages 52 to 53 for a summary of the
Climate Change Report and page 94 for more
information on this risk area.
LINKS TO STRATEGY AREAS
Each Principal Risk is linked to the aspects
of the Group’s strategy that could be
impacted if an event were to occur.
Produce high quality pellets
Achieve low cost production
Maintain strong
relationships with a network
of premium customers
Conduct business in a safe
and sustainable manner
Retain a balanced approach
to capital allocation
For more detail on our strategy,
see pages 14 to 15.
Risk materiality key
Risk currently considered to be
materially increasing in significance
to the Group’s activities.
Risk currently considered to be
neither materially increasing nor
materially decreasing in significance
to the Group’s activities.
Risk currently considered to be
materially decreasing in significance
to the Group’s activities.
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84
Principal Risks
1. Country risk
It is over three years since the full-scale invasion of Ukraine. Ferrexpo’s
operations in the Poltava Region have not seen direct combat, however
missile and drone attacks in the region are frequent. The business has
remained relevant by adapting to the challenges it faces, keeping a full
workforce and continuing to produce and export.
RESPONSIBILITY
Board of Directors including Executive Chair
RISK APPETITE
Low
LINKS TO
STRATEGY
1.1. War risk (external risk)
RISK MANAGEMENT
AND MITIGATION
The Group has taken measures to ensure the
safety and wellbeing of its workforce and
preserve the integrity of its assets. Measures
include remote working, timing shift patterns
to curfews, constructing bomb shelters and
providing protective equipment for employees
in the Armed Forces. The Group also
supports communities through the Ferrexpo
Humanitarian Fund.
POTENTIAL IMPACT
At a national level the war is placing a strain
on the economy. Tax revenues have fallen
while spending on the military has increased.
Consequently, the government has sought to
increase revenues from business. Examples
include increasing railway tariffs and new laws on
the repatriation of funds and currency controls.
The war places unique challenges on the
business. At the end of December 2024,
8% of the workforce were serving in the
Armed Forces. Those at work are enduring
psychological stress. The working day is
frequently interruption by air raid alerts.
Damage to energy infrastructure has forced
the need to import electricity at higher tariffs.
Supply chain disruptions have limited the
variety of suppliers and increased costs for key
consumables. Access to logistics routes can be
blocked or disrupted.
OPPORTUNITIES
Ferrexpo has built resilience throughout
through the war to become nimbler and more
adaptive to the challenges it faces.
This is evident in 2024 as the business adjusted
its production and logistics strategies to
respond to workforce, energy, infrastructure
and logistics availability, while expanding
production and its customer base. The Group
has also strengthened its relationships with
the local community through its humanitarian
and CSR activities.
For more details about operating during
a time of war
See pages 6 to 9.
Corporate Governance
Financial Statements
85
Strategic Report
For more details about legal proceedings
See Note 30: Commitments, contingencies
and legal disputes to the Consolidated
Financial Statements.
Reflecting higher fiscal and political risk, Transparency International
Corruption Perceptions Index, an indicator of public sector corruption,
scores Ukraine 36 out of 100, which ranks 104 of 180 countries. The
Group is currently subject to legal proceedings in Ukraine, many of which
relate to circumstances concerning Mr Zhevago and attempts by state
agencies to recover funds from a collapsed bank he was associated with.
RISK MANAGEMENT
AND MITIGATION
In addition to defending itself in the courts,
it is important to understand that, as a
company quoted on the London Stock
Exchange, the Group is subject to high
standards of corporate governance, including
the UK Corporate Governance Code and UK
Market Abuse Regulation.
As the largest Ukrainian business on the
London Stock Exchange, Ferrexpo is a
uniquely positioned investment opportunity
for international investors. These investors,
and their stakeholders expect to see their
investments respected and protected. This is
considered important today, but also in the
future if international capital is to be attracted
to investing in Ukraine’s recovery.
POTENTIAL IMPACT
Legal proceedings are ongoing in Ukrainian
courts. The highest risk cases include: litigation
with The Deposit Guarantee Fund in relation
to corporate rights of three mining entities;
a case brought by the Ministry of Justice to
enforce and auction corporate rights in three
mining entities; a claim on FPM to recover
UAH4.7 billion (US$113 million) for contested
sureties; and litigation regarding share freezes
in all Ukrainian subsidiaries related to the
investigation in connection with Bank F&C.
Some other cases include claims related to
royalties, ecology, waste products, transfer
pricing and tax disputes.
An escalation in activities against the
Group have been noted after the reporting
period, including a new civil claim, and
media announcements from Ukrainian state
authorities concerning nationalisation of assets
and parts of the corporate rights of FPM.
Due to its association with Mr Zhevago,
the Group may also experience negative
media attention, operating challenges and
relationships with its stakeholder groups.
OPPORTUNITIES
The Group’s exposure to operating in Ukraine
can result in high velocity risks that could result
in a material financial loss for the Group and a
loss of control of the Group’s assets.
1. Country risk continued
RESPONSIBILITY
Board of Directors including Executive Chair
RISK APPETITE
Low
1.2. Ukraine country risk (external risk)
LINKS TO
STRATEGY
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Annual Report & Accounts 2024
86
Principal Risks continued
1. Country risk continued
As a business operating in Ukraine during a time of war, interactions
and relations with suppliers of goods and services, and other broader
stakeholders with whom the Group has relations, carry increased risks.
RESPONSIBILITY
Board of Directors including Executive Chair
RISK APPETITE
Low
LINKS TO
STRATEGY
1.3. Counterparty risk (external risk)
RISK MANAGEMENT
AND MITIGATION
To mitigate these risks, the Group employs
comprehensive governance and due diligence
measures. Regular compliance checks are
conducted, with 1,795 checks performed on
potential third parties in 2024, 10% fewer
than in 2023. High-risk entities undergo
further scrutiny by the FRMCC, which ensures
adherence to laws and ethical standards.
Staying close to critical suppliers is paramount,
as is diversification, where feasible, to reduce
supplier risk.
The FRMCC also monitors high-risk ownership
structures and ensures regulatory compliance
under frameworks like the UK Bribery Act
2010 and the Modern Slavery Act. The
HSEC Committee oversees governance on
community-related expenditures, further
strengthening accountability in broader
stakeholder engagements.
POTENTIAL IMPACT
Ukrainian businesses are operating in a
challenging war environment. This results
in increased risks relating to governance,
corruption, monopoly markets, business
failure, effective due diligence and
counterparties who are identified to have
exposure to Russia.
Counterparty risks may result in financial harm
and procurement issues. Indirectly, this could
result in reputational issues, affecting financial
market and customer stakeholders.
Counterparty risk may also be exacerbated
due to perceptions about the Group’s
connection to Mr Zhevago and influence that
certain agencies place on counterparties to
work (or not) with the Group.
OPPORTUNITIES
Despite the challenging environment, the
Group can strengthen its supplier governance
and diversify its supplier base.
The ongoing development of the Group’s Code
of Conduct for Suppliers, coupled with robust
compliance checks, helps enforce high ethical
standards. By maintaining sufficient cash
reserves and exploring alternative goods and
services, the Group can enhance its resilience
to supplier failures and ensure operational
continuity.
Additionally, the FRMCC and local compliance
teams provide opportunities to refine risk
management practices and improve oversight,
thus safeguarding the Group’s reputation and
long-term operational viability.
For more details about the groups
external stakeholders
See pages 56 to 61.
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Financial Statements
87
Strategic Report
The Group sells iron ore products, the principal feedstock for the
production of steel. The price of iron ore is set according to demand for
steel and global iron ore supply, with adjustments made for the type,
quality and specification of the iron ore product and the cost of delivery.
In line with industry standards, the Group is a price taker, not maker, and
therefore follows benchmark prices for pellet premiums set by its larger
peers. Pricing adjustments, in the form of premiums or discounts, are
also applied to account for differences in both chemical and physical
characteristics to the benchmark specifications.
OPPORTUNITIES
Ferrexpo is well positioned to meet growing
demand for products that improve efficiencies
and lower emissions in steel making, especially
in Europe and MENA.
This has been evident during 2024, with
a range of MoUs with premium steel mills
around the world, exploring opportunities to
secure supply of the Group’s DR pellets, used
in lower-emission steelmaking processes and
decarbonised logistics routes.
Since the Ukrainian Black Sea ports opened in
late 2023, the Group has resumed its seaborne
exports via Ukrainian ports. Shipping rates
and risk premiums have fallen over 2024 and
into 2025, as more shipowners returned to
the Black Sea and geopolitical risks in the Red
Sea have eased. Consequently, the Group no
longer recognises freight rates as a standalone
principal risk, due to improved vessel
availability and lower costs.
With owned and leased rail, river barges and
seaborne vessels, the Group has access to a
flexible and multi-nodal logistics network.
RISK MANAGEMENT
AND MITIGATION
During 2024, the marketing team met with
customers around the world and presented
at key industry events. This has resulted in
increased sales to more customers, including
new ones, in more geographies than at any
time since the full-scale invasion of Ukraine.
The Group has also continued to invest in its
operations. For example, customers have
reported that the new press filtration complex
has improved product quality, and a new
pellet coating facility has enabled the Group to
deliver customised pellets to specific buyers
with higher quality requirements.
The market outlook for iron ore prices,
however, remains uncertain. Ferrexpo regularly
reviews its options to hedge sales, however,
the Group’s current situation does not allow
this. The Group must therefore continue its
focus on premium customers for its high-
grade products while doing what it can to
lower costs.
POTENTIAL IMPACT
As a producer of high-grade iron ore products,
the Group prices its products referencing
the benchmark high-grade 65% Fe iron ore
fines price, which fell 26% in 2024. Therefore,
volatility in the benchmark iron ore indexes
has a corresponding impact on the Group’s
margins.
As a producer of iron ore pellets, a
metallurgically beneficiated form of iron ore,
the Group realises a premium for its products
compared to traditional iron ore products.
However, in line with industry standards,
the market premium for pellets is set by
the world’s largest producer, hence placing
Ferrexpo in a price-taking position. In 2024,
the premium for pellets saw sustained declines
across major markets.
To stay relevant, Ferrexpo will need to
continually improve the quality of its existing
products and develop new products to meet
market demands. This may involve capital
investments, which are difficult to secure
during a time of war.
For more details about the Group’s sales
and marketing activities
See page 46.
2. Market and pricing risks
RESPONSIBILITY
Board of Directors including Executive Chair
and Chief Marketing Officer
RISK APPETITE
Low
LINKS TO
STRATEGY
Ferrexpo plc
Annual Report & Accounts 2024
88
Principal Risks continued
3. Operating risks
The health, safety and wellbeing of the workforce is the Group’s priority,
particularly during a time of war. Risks arise in mining and processing
operations from hazardous activities such as drilling, blasting, and
excavation, as well as from using large-scale equipment and machinery
such as haul trucks, excavators, and bulldozers. Training, maintenance
and safety protocols are essential. It is also important that risk
assessments, workplace monitoring and the recording of safety
metrics are undertaken frequently to inform improvements.
RESPONSIBILITY
Board of Directors including Executive Chair
and Group Chief Human Resources Officer
and Chief Operating Officer
RISK APPETITE
Low
LINKS TO
STRATEGY
3.1. Health and safety risks (external and internal risk)
OPPORTUNITIES
The Group is constantly looking for ways to
improve its safety performance through the
adoption of technologies such as autonomous
equipment, which reduces human presence in
hazardous environments.
Assessing comprehensive risk registers,
monitoring safety indicators, and enhancing
training programmes for operators helps
to reduce the frequency of safety-related
incidents. These improvements can lead to
a safer working environment and improved
compliance with safety standards, as well as
efficiencies and lower costs.
RISK MANAGEMENT
AND MITIGATION
Health and safety is a fixed agenda item
at every Board and Executive Committee
meeting.
The Group takes a proactive approach to
health and safety by understanding the
root causes of safety incidents through risk
assessments and maintaining robust safety
protocols. Regular safety inspections, hazard
reports, and high-visibility safety tours by
senior managers ensure continuous monitoring
of the working environment.
Additionally, the use of leading indicators such
as the number of employees completing safety
training can reduce the risk of future incidents.
The Group places importance on learning from
past events to improve safety measures, and
tracks performance through lagging indicators
such as injury rates and fatalities.
POTENTIAL IMPACT
Health and safety risks at the most extreme
include serious injuries or fatalities, although all
injuries are taken seriously.
Health and safety events can result in financial
claims for personal injury and penalties by
regulators. They can also result in operational
disruptions and damaged equipment.
A poor health and safety performance reflects
poorly on a company and this can lead to
reputational issues and poor morale, making it
harder to attract and retain employees.
Activities are typically conducted around the
clock, making poor weather and low light
conditions an additional risk.
During a time of war, missile and drone attacks
are frequent and pose a significant threat.
For more details about the Group’s
approach to health and safety
See pages 26 to 29.
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Financial Statements
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Strategic Report
For more details about the Group’s operating
activities, see pages 20 to 23, how the Group
manages its workforce structure and composition
see pages 36 to 41 and plans to modernise and
electrify its mining activities see pages 24 to 25.
The mining, processing and transportation of iron ore is complex and
inherently risky. The production cycle requires the coordination of
technical activities such as blasting, excavation, haulage, beneficiation,
and pelletising. Careful planning is critical to ensure a smooth process,
especially as other factors such as equipment failures and repairs,
weather disruptions, workforce availability and the risk of missile and
drone attacks can hinder operations. Experience, careful management,
and risk management measures are necessary to reduce impacts on the
production cycle.
OPPORTUNITIES
There are opportunities to reduce risk
exposure through improved operational
planning, modernisation of equipment, and
enhanced risk monitoring.
The Group’s ability to adapt to the current
challenges, including managing logistics
and labour shortages, allows for continued
production, with potential to increase output
when feasible.
The Group’s proactive efforts to diversify
energy sources through solar power and
enhance workforce capabilities by expanding
recruitment and training programmes are also
positive steps toward risk reduction.
RISK MANAGEMENT
AND MITIGATION
An experienced management team, supported
by a robust risk management framework,
monitors and manages risks through frequent
assessments. The Group also invests in
maintaining and upgrading equipment,
stocking replacement parts, and progressing
plans to modernise and electrify the mining
fleet.
The Group actively manages skills availability
by expanding recruitment and training efforts,
helping to address the challenges posed by
conscription and emigration due to the war.
Despite these efforts, the risk of certain
factors, especially those related to external
geopolitical events, remains difficult to
eliminate entirely.
POTENTIAL IMPACT
Unforeseen operational risks can increase
costs through lost or delayed production.
There may also be costs related to repairing or
replacing damaged equipment and machinery.
In extreme cases, such as a pit wall failure
or tailings dam breach, financial losses and
reputational damage could occur, especially if
there are delays in shipping final products to
customers.
External factors such as the ongoing war have
the potential to indirectly impact operations
and production, due to workforce challenges,
supply chain disruptions, and restrictions on
certain operational practices.
The Group also faces long-term risks related
to climate change and geopolitical instability,
particularly in Ukraine.
3. Operating risks continued
RESPONSIBILITY
Board of Directors including Executive Chair
and Chief Operating Officer
RISK APPETITE
Low
3.2. Production risks (external and internal risk)
LINKS TO
STRATEGY
Ferrexpo plc
Annual Report & Accounts 2024
90
Principal Risks continued
For more details about the Group’s sales
and marketing activities
See pages 26 to 29.
3. Operating risks continued
The Group is dependent on a reliable and efficient logistics network for
transporting its products to its global customer base. Disruptions to
logistics, including capacity, availability, and unforeseen events such as
extreme weather, geopolitical risks and political interference, can
significantly affect the Group’s ability to operate and generate revenue.
The Group uses a variety of logistics networks, including railways, inland
waterways, and port facilities, using a combination of owned rail wagons,
barges and an ocean-going vessel, complemented by third-party providers.
3.3. Logistics risks (external and internal risk)
OPPORTUNITIES
The Group has made significant investments in
logistics infrastructure, including a fleet of over
3,000 rail wagons and a 49.9% stake in a port
facility, to enable greater control and reduced
dependency on third-party providers.
Owning a trans-shipment vessel and inland
waterway logistics company strengthens the
Group’s position in maintaining consistent
supply routes.
These efforts present opportunities for the
Group to better manage logistical risks and
optimise its transportation network, ultimately
improving customer service.
RISK MANAGEMENT
AND MITIGATION
The Group has proactively worked to mitigate
logistics risks by investing in its own railcars,
port facilities, and inland waterway operations.
By owning a stake in key infrastructure such
as shares in a Ukrainian Black Sea terminal,
and a trans-shipment vessel, the Group
has enhanced its ability to bypass potential
disruptions. The Sales and Marketing
team work closely with ocean-going vessel
providers, keeping them informed of Black Sea
developments. Encouragingly, more shipping
companies are returning to the Black Sea.
POTENTIAL IMPACT
Disruption to logistics networks can lead
to delays, resulting in increased costs. In
extreme cases, this could result in a temporary
suspension of shipments and delays in
supplying customers, which could have a
negative reputational impact.
Given the bulk nature of the Group’s products,
it can be difficult to stockpile and warehouse
products at short notice and find alternative
transport routes. This could affect cash flow
and the ability to maintain a stable financial
position.
Risks associated with weather, climate change,
or political instability could exacerbate the
situation and further hinder operations.
The war has affected access to logistics routes.
In 2024, access to Ukrainian Black Sea ports
was restored, allowing the Group to expand
seaborne sales. However, there is no guarantee
that Ukrainian Black Sea ports will be
permanently available while the war continues.
RESPONSIBILITY
Board of Directors including Executive Chair
and Chief Marketing Officer
RISK APPETITE
Low
LINKS TO
STRATEGY
Corporate Governance
Financial Statements
91
Strategic Report
For more details about the Group’s
operating costs
See pages 32 to 33.
The Group’s operations are energy-intensive and depend on inputs
including diesel, natural gas, and electricity. The costs of these are
influenced by market factors beyond the Group’s control, such as energy
price fluctuations and the availability of electricity. Additionally, the
Group faces broader inflationary pressures, affecting everything
from equipment and maintenance to wages. The war in Ukraine has
exacerbated these issues by preventing the Group from operating at
its full capacity, leading to higher unit costs and lower production.
with sunflower husks substituting natural gas
in the pelletiser and the commissioning of a
5MW solar farm. Longer term, the Group is
researching opportunities to replace natural
gas with bio-ethanol fuels, and through
the “Green Mine Initiative” it is looking at
opportunities to improve efficiencies and
lower costs by electrify the mining fleet.
The biggest near-term opportunity to lower
operating costs is an end to the war. However,
the Group must continue to plan on the basis
that the war continues.
RISK MANAGEMENT
AND MITIGATION
During 2024, the Group successfully brought
back idled production capacity. This resulted
in some economy of scale benefits such as
reducing fixed overheads on a unit basis,
and the use of larger seaborne vessels to
customers in MENA and Asia.
The Group is constantly looking for ways
to optimise energy consumption, develop
alternatives, and strengthen its supply chain
resilience. In wartime conditions, we have
implemented a special system that allows
additional equipment to be operated at night
to accumulate concentrate. This ensures
uninterrupted operations the following day
and helps avoid production losses due to
electricity shortages during daytime hours.
The Group works with peers and industry
associations to lobby against price increases
from state-owned suppliers. This approach
has been successful on occasion, for example
in 2024, in relation to domestic electricity
tariff proposals.
POTENTIAL IMPACT
Consumables and energy prices directly affect
profitability, and inflationary pressures can
further erode margins. Due to the war, these
impacts are greater as the Group is unable to
operate at full capacity and supply of certain
critical inputs is more difficult.
For example, due to attacks on the Ukrainian
energy grid in 2024, the Group was forced to
import electricity for up to 80% of its needs
at prices up to 26% higher than domestic
electricity tariffs. Experiencing its own cost
issues, the state railway provider is frequently
increasing freight rates at above inflation
levels.
The inability to source alternatives due to
war restrictions and monopoly markets has
resulted in significant cost pressures that
are outside of the Group’s control. This has
continued into 2025.
OPPORTUNITIES
Energy and fuel represent 45% of production
costs, which is why the Group is focussed
on diversifying and substituting its energy
sources. Progress is being made, for example
3. Operating risks continued
RESPONSIBILITY
Board of Directors including Executive Chair
and Chief Operating Officer
RISK APPETITE
Low
3.4. Operating costs risks (external and internal risk)
LINKS TO
STRATEGY
Ferrexpo plc
Annual Report & Accounts 2024
92
Principal Risks continued
3. Operating risks continued
As the Group’s activities rely increasingly on digital technology, IT security
is a critical area of concern. As the complexity of cyberattacks grows,
including threats such as malware, ransomware, phishing, and denial-of-
service attacks, the risk to the Group’s IT systems has increased.
Cyberattacks may compromise the availability and confidentiality of
infrastructure. The ongoing war, which has led to a shortage of skilled IT
personnel in Ukraine due to conscription, has exacerbated the situation,
whilst cyberattacks aimed at Ukrainian organisations and businesses are
increasing.
RESPONSIBILITY
Board of Directors including Executive Chair
RISK APPETITE
Low
LINKS TO
STRATEGY
3.5. Information technology and cybersecurity risks
(external and internal risk)
Additionally, the heightened focus on
cybersecurity can foster a culture of vigilance,
leading to better preparedness for evolving
threats.
The Group’s adaptation to the changing
landscape of cybersecurity may also create
opportunities for collaboration and innovation
in securing its digital assets.
RISK MANAGEMENT
AND MITIGATION
To mitigate these risks, the Group has
implemented a variety of measures. Regular
IT reviews and employee training ensure the
workforce is equipped to handle new threats.
Dynamic anti-malware policies allow for quick
adaptation to emerging risks, and cross-
backup infrastructure strengthens disaster
recovery capabilities. Efforts to upgrade global
network connectivity and enhance IT systems,
such as deploying power control systems and
upgrading IT infrastructure in bomb shelters,
help reduce vulnerability.
The Group also implements regular software
and hardware updates, ensuring that known
weaknesses are addressed promptly. These
proactive measures aim to minimise the risk
of cyberattacks and maintain operational
continuity
The shortage of IT personnel is addressed
by deployment of automation packages,
including cybersecurity control suites,
increased quantity of third-party security
audits, deployment of new off-site backup
policies for critical production and mining data.
POTENTIAL IMPACT
The potential impact of this risk is substantial,
as a successful cyberattack could disrupt
production, compromise sensitive data, and
damage the Group’s ability to operate.
Given the increasing sophistication of
cyberattacks and the broader geopolitical
context, the Group may face prolonged
operational disruptions, financial losses,
and reputational damage.
The shortage of skilled IT professionals in
Ukraine due to the war could also further delay
response times and remediation efforts.
OPPORTUNITIES
Despite these risks, the situation presents
opportunities to strengthen the Group’s
cybersecurity posture. The ongoing
development of IT infrastructure and regular
upgrades to systems provide a chance to
enhance resilience and reduce vulnerabilities.
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93
Strategic Report
Climate change poses physical and transition risks as the world shifts to a
low-emissions future. These include environmental threats like extreme
weather events, and societal shifts that could render existing technologies
obsolete. Ferrexpo faces risks in areas such as low-carbon iron ore and
steelmaking, shipping regulations, and carbon pricing, with increasing
stakeholder expectations of decarbonisation. Regulatory climate change
reporting is increasing, which requires increased time and costs.
Ferrexpo has already made progress in
reducing its own emissions and by setting
intermediate emissions targets for 2030 and
a pathway to achieve Net Zero by 2050.
The Group’s DR pellets, when used in a direct
reduced iron – electric arc furnace, result in a
37% reduction in carbon emissions compared
to the more traditional sinter-operated blast
furnace route. The market for DR pellets is
forecast to grow and outstrip traditional iron
ore products.
By advancing these measures, Ferrexpo can
reduce its environmental impact and align with
global trends, safeguarding its reputation and
viability.
RISK MANAGEMENT
AND MITIGATION
To mitigate these risks, Ferrexpo is proactively
working on reducing its emissions by
focusing on the activities with the greatest
environmental impact.
The company’s climate change strategy,
detailed in its Climate Change Report, outlines
a series of initiatives, including increasing
the production of DR pellets, investing in
cleaner energy sources, and exploring new
technologies to lower operational emissions.
The company has also established a Net Zero
goal for 2050 and is continuing to study ways
to reduce emissions further.
However, uncertainties stemming from the
ongoing war and its potential impact on
operations mean that some targets may need
to be reassessed. Continuous monitoring,
transparent communication of progress, and
adapting strategies to emerging conditions will
be essential for managing this risk effectively.
POTENTIAL IMPACT
The potential impact of climate change on
Ferrexpo’s operations could result in financial,
operational, and reputational challenges.
As stakeholders expect more from companies
in terms of decarbonisation efforts, failure
to meet these expectations could lead to
additional scrutiny and demands for faster or
more extensive action.
These risks could impact the Group’s market
position, create financial burdens, and damage
its reputation if it is seen as not doing enough
to reduce emissions.
At the present time, the Group is forced
to import power generated from carbon-
intensive fuels. This has temporarily increased
Scope 2 emissions because the power is
more carbon intensive compared to Ukrainian
power, which is generated from nuclear and
hydro sources.
OPPORTUNITIES
Opportunities to address climate change
include reducing the Group’s own
environmental footprint (Scope 1 emissions)
and providing customers with products that
reduce emissions in steelmaking (Scope 3
emissions).
4. Climate change risks
RESPONSIBILITY
Board of Directors including Executive Chair
and Chief Marketing Officer
RISK APPETITE
Low
LINKS TO
STRATEGY
For more details on climate change
please see the case study
on pages 52 to 53.
Ferrexpo plc
Annual Report & Accounts 2024
94
Principal Risks continued
Viability Statement
Review of planning process and outlook and
assessing the Principal Risks to our business model
and potential financial impact of an event occurring,
protecting the equity value of our business for the
benefit of all our stakeholders.
The Board monitors the Group’s risk
management and internal control systems on
an ongoing basis and confirms that during the
year it carried out a robust assessment of the
principal and emerging risks facing the Group,
their potential impact, and the risk mitigating
and management strategies in place, as
described on pages 84 to 94.
TIME HORIZONS
The Board has reviewed the long-term
prospects of the business, which remain
aligned with Ferrexpo’s life-of-mine
assumptions. For the purposes of assessing
the Group’s viability, the Board has elected to
look at the Ferrexpo business on a five-year
time horizon. The Group has historically
reviewed the viability of its business model
over a five year time period given the long life
nature of mining assets, including the period
required to invest in such assets and taking
into account the cash flows generated by
those assets, as well as the cyclical nature of
the commodities industry. However, the Board
has also elected to focus on a shorter-term
12-to-18-month horizon due to the ongoing
war and material uncertainties resulting from
operating in Ukraine.
FACTORS ASSOCIATED WITH
THE WAR IN UKRAINE
Specific attention has been applied in the
Group’s approach to assessing its viability
due to the ongoing war in Ukraine because it
represents a significant risk to the Group’s
ability to continue operating. Since the
full-scale Russian invasion on 24 February
2022, the Group has demonstrated resilience
that has enabled it to operate with a high
degree of flexibility, and to adapt its
operations to changing circumstances,
albeit at a reduced capacity.
Existing and emerging risks associated
with the war are reported to the Executive
Committee. Risk mitigations are discussed,
and the results are regularly reported to the
Group’s Board of Directors. Risks that have
been identified due to the war include risks to
the health, safety and wellbeing of the Group’s
workforce, the Group’s ability to operate its
assets, access to logistics routes to export
finished products and the supply of key
consumables. For more information, please
see the Principal Risks section on pages 84
to 94.
FACTORS ASSOCIATED WITH
OPERATING IN UKRAINE
The Group is also exposed to other risks
associated with operating in Ukraine which
may be exacerbated by the circumstances
surrounding Mr Zhevago. These include
political, legal and fiscal uncertainties which
represent other material uncertainties at the
time of the approval of these Consolidated
Financial Statements. These risks are detailed
in the Ukraine country risk on pages 85 to 87.
As disclosed in Note 30 Commitments:
contingencies and legal disputes to the
Consolidated Financial Statements, several
circumstances facing the Group have led to
an escalation of certain risks, including risks
relating to the political environment and the
independence of the Ukrainian legal system,
which could have a materially negative impact
on the Group’s business activities, reputation
and viability.
Legal proceedings are ongoing in Ukrainian
courts. The highest risk cases include: litigation
with The Deposit Guarantee Fund in relation to
corporate rights of three mining entities; a
case brought by the Ministry of Justice to
enforce and auction corporate rights in three
mining entities; a claim on FPM to recover
UAH4.7 billion (US$113 million) for contested
sureties; and litigation regarding share freezes
in all Ukrainian subsidiaries related to the
investigation in connection with Bank F&C.
An escalation in activities against the Group
has been noted after the reporting period,
including a new civil claim and media
announcements by Ukrainian state authorities
concerning nationalisation of assets and
certain corporate rights in FPM.
FACTORS ASSOCIATED WITH
CLIMATE CHANGE
The Group has considered a range of physical
and transition risks, as outlined on pages 74 to
79 of this report. The Group’s second Climate
Change Report, published in December 2024,
determined the following main climate risks
facing the Group: energy consumption and
emissions, the market demand for green steel,
circular economy principles, climate related
policy and legislation, stakeholder and climate
consciousness and physical climate. A range of
additional transition and physical risks were
considered as part of this review. The Board
understands that further reductions in carbon
emissions are required in the coming years,
however, due to a prolonged war there is no
certainty that this can be fully achieved. This
means that the Board will need to consider its
carbon emissions targets and has sought to
address this for now through the scenario
analysis presented in the 2024 Climate
Change Report.
BUSINESS PLANNING
PROCESS
Due to the ongoing war in Ukraine, the Group
has temporarily revised its business activities
and investment plans to generate cash needed
to employ its workforce, preserve the integrity
of its assets and sustain its business. As a
result, investments are currently focused on
affordable sustaining capital expenditure and
modernisation of existing equipment and
other development projects that add
production flexibility and immediate returns.
Prior to the full-scale invasion, to maintain a
clear strategic direction (see page 14), the
Group’s management team regularly assessed
the risks faced by the Group against the
ability of the Group to conduct business in
accordance with its business model (see page
10). This review is conducted regularly to
maintain a clear understanding of the risks
faced by the business and how these factors
influence the business. Throughout the war,
the Group’s management team has also
focused on constantly assessing the risks that
may directly, or indirectly, impair the Group’s
ability to manage business.
MODELLING PROCESS
As a normal course of business, the Group
operates a detailed business financial model.
The model considers potential impacts due to
the war, in addition to traditional factors such
as demand and the prices for the Group’s
products, and operational factors that
influence demand and product quality as
determined by the Group’s sales plan. At the
current time, the Group’s production is aligned
to logistics access and working capital
availability to maintain a solid net cash
position. As it is likely that the Group’s
subsidiaries in Ukraine will not receive VAT
refunds until the sanctions against Mr Zhevago
are lifted, the Group has adjusted its long-term
model to reflect the lower expected cash flow
generation caused by the potential absence of
VAT refunds in Ukraine to minimise the impact
on the available cash balance throughout the
period of the going concern assessment. The
updated base case assumes a pellet
production volume of approximately 36% of
the pre-war level for the financial year 2025,
before an increase to approximately 47% in
2026 and an expected recovery to almost the
pre-war levels in 2027. The update of the
long-term model resulted in a delay of the
expected ramp-up to almost the pre-war level
by one year, which was expected to be 2026 in
the previous model, and a significantly lower
cash flow generation, affecting also the
available cash balances throughout the period
of the going concern assessment.
In addition to logistical impacts, the Group’s
management team also assessed risks
associated with the potential disruption and
Corporate Governance
Financial Statements
95
Strategic Report
availability of key consumables, such as natural
gas, electricity and diesel fuel, in addition to
critical equipment supplies. The Group has also
considered external and internal analysis of the
short- and longer-term supply and demand
dynamics on the international market for iron
ore products, as well as more specific local
supply and demand balances affecting its
major customers to assess the expected pricing
of the Group’s iron ore products for the period
covered by the Group’s long-term model.
STRESS TESTING
In determining the viability of the business, the
Directors have stress tested the individual and
combinations of risks that could materially
affect the future viability of the business. At
the present time, the primary risks the Group
is exposed to are deemed to be the war and
legal actions in Ukraine against the Group
related to Mr Zhevago (see Ukraine country
risks on pages 85 to 87). Ferrexpo’s business
model also faces risks relating to the iron ore
prices, pellet premiums and cost inflation in
Ukraine, which are all factors that impact
Group’s profitability.
As highlighted, contingent on the war ending,
the Group is currently expected to resume full
capacity by 2027. A summary of the impacts of
operating during a time of war are provided on
pages 6 and 7.
The Group’s long-term financial model is
adjusted to reflect below full capacity
production. Future sales volumes will depend
on the availability of power and ability to
expand seaborne sales.
Assuming no mitigating actions, the Group’s
financial modelling indicates the following
sensitivities:
• A 10% reduction in the received price would
reduce the Group’s Underlying EBITDA by
US$11.0 per tonne in 2024 and US$6.0 per
tonne in 2025.
• A general 10% increase in the cost of
production would decrease the Group’s
Underlying EBITDA by US$6.1 per tonne in
2024 and US$3.4 per tonne in 2025.
• A 10% decrease in production volumes and
associated 5% increase in production costs,
would decrease Underlying EBITDA by
US$7.6 per tonne in 2024 and US$4.1 per
tonne in 2025.
Sensitivities beyond 2025 will depend on
production and sales volumes and costs,
realised prices and other unknown macro-
economic factors.
Due to the remaining material uncertainty
beyond the Group’s control, the Group has
also conducted more severe stress tests,
incorporating additional factors and
sensitivities. However, these scenarios are
considered less likely due to a natural hedge
between the price of iron ore and key
consumables, as well as the experience of a
prolonged period of lower production and
sales volumes from December 2022 to
February 2023. Considering the tight balances
of available cash under the base case and
realised price sensitivity, the available cash
balance is expected to be depleted earlier than
in late 2025, when combining the effects from
reasonable adverse changes (stress test). It is,
however, management’s position that such a
combination is unlikely to happen as a result of
the historical natural hedge between iron ore
prices and key consumables.
Following a negative decision from the court of
appeal in respect of a contested sureties claim
received, the Group recognised a full provision
in the amount of UAH4,727 million (US$112
million as at 31 December 2024) for this claim.
This case is currently being heard by the
Supreme Court of Ukraine. A negative decision
would have a significant impact on the Group’s
future cash flow generation, available liquidity
and viability. See also Note 2 Basis of
preparation and Note 30 Commitments,
contingencies and legal disputes to the
Consolidated Financial Statements for
further details.
In addition to stress testing associated with
the war in Ukraine, the additional stress test
scenarios performed include the following:
• operational incidents that could have affect
production volumes;
• a deterioration in the Group’s long-term cost
position on the industry cost curve; and
• operating constraints due to Ukrainian
country risk
Specific risk management and mitigations
relating to the war are detailed on page 85.
More generally, risk management and
mitigations may include (but not limited to): a
reduction or cancellation of discretionary
expenditure such as dividends, non-essential
capital investment and repairs and
maintenance, or other operating costs,
adjusting capital allocation, reducing working
capital requirements, altering mining
schedules and accessing additional funding.
The Directors take comfort in both the Group’s
historical cash generation ability, particularly in
2015 and 2016 at a time when the iron ore
price traded at historically low prices, and the
Group’s ability to repay its debt facilities, with
the early repayment of the Group’s principal
debt facility in June 2021.
This ability to repay debt facilities is derived
from the operational flexibility of the Group
and a level of cash generation, as
demonstrated through continued shipment of
Group’s products in 2022 despite the war in
Ukraine.
As a result of the Group’s flexibility and
resilience, the Group’s net cash position
remained relatively stable at US$101 million as
at 31 December 2024 compared to US$108 as
at 31 December 2023. As at the date of the
approval of the Group’s 2024 Consolidated
Financial Statements, the Group is in a net
cash position of approximately US$41 million
and has an available cash balance of
approximately US$45 million. Based on the
assessment performed, the Directors have a
reasonable expectation that the Group will be
able to continue to operate and meet its
liabilities as they fall due over the period of
their assessment. This is, however, dependent
on significant factors that are outside of the
Group’s control, and the Directors have
assumed the following when assessing the
Group’s resilience to the risks of war in Ukraine
and its viability:
• the continued ability to operate in Ukraine;
• the ability to adapt the Group’s production
facilities to changing circumstances;
• stable supply of electricity, key consumables
and equipment; and
• access to logistics networks and alternative
transport methods.
As disclosed in Note 2 Basis of preparation to
the Group’s Consolidated Financial
Statements, although the Group has managed
to continue its operations during wartime, this
continues to pose a significant threat to the
Group’s operations. Additionally, the risks of
operating in an adverse legal system in Ukraine
have also increased in 2024 and early 2025
representing material uncertainties for the
Group and its ability to continue as a going
concern. Detailed information on the ongoing
legal are provided in Note 30 Commitments,
contingencies and legal disputes to the
Consolidated Financial Statements and Note
35 Events after the reporting period in respect
of material judgements made relating to
specific events.
Having assessed the current situation,
including the war, the political environment
and Ukrainian legal system, all identified
available mitigating actions, with the results
of management’s assessment of the Group’s
going concern and long-term viability, a
material uncertainty still remains that may cast
significant doubt about the Group to continue
as a going concern in respect of the ongoing
war and legal disputes in Ukraine as some of
the uncertainties are outside of the Group
management’s control. An unfavourable
outcome in a contested sureties claim and a
longer than expected absence of VAT refunds
in Ukraine might have an adverse impact on
the Group’s cash flow generation, profitability
and liquidity.
In performing this assessment, the Directors
have also considered the Group’s resilience to
climate change risks (covering a range of
physical risks and transition risks).
The Strategic Report was approved by the
Board on 18 March and signed on behalf of the
Board by:
Lucio Genovese
Executive Chair
18 March 2025
Ferrexpo plc
Annual Report & Accounts 2024
96
Viability Statement continued
Corporate Governance
A strong
core helps
guide us
Strategic Report
01
Corporate Governance
97
Executive Chair’s Introduction
98
Governance at a Glance
100
Board of Directors
102
Executive Committee
104
Corporate Governance Compliance
105
Diversity
107
Corporate Governance Report
108
Audit Committee Report
118
Nominations Committee Report
126
Remuneration Report
130
Directors’ Report
152
Statement of Directors’ Responsibilities 159
Financial Statements
160
Additional Disclosures
239
Alternative Performance Measures
240
Glossary
242
Financial Statements
Corporate Governance
Strategic Report
97
DEAR SHAREHOLDER
On behalf of the Board, I am pleased to
present the Corporate Governance Report for
the year ended 31 December 2024.
This report provides details about the Board
and an explanation of our individual roles and
responsibilities. It also provides an insight into
the activities of the Board and its Committees
over the year and how we sought to ensure
that high standards of corporate governance
remain embedded throughout the Company,
underpinning and supporting our business and
the decisions we make.
At the time of writing, the war in Ukraine
has been ongoing for more than three years,
and so before reflecting on the commercial
progress made during 2024, it is important to
acknowledge the devastating impact the war
is having on Ukraine and its people.
I believe that strong governance is essential to
help see Ferrexpo through these exceptionally
challenging times. As you would expect,
the Board met regularly to discuss the war
in Ukraine, receiving regular updates from
the management team as to the Group’s
response and scenario planning for different
eventualities that could affect the business.
Protecting the Group’s workforce is our main
priority, as well as taking steps to preserve the
integrity of our assets to protect the business.
This will continue to be a priority for the
Board in 2025, as we also continue to focus on
exercising high standards of governance during
these unprecedented and difficult times.
This year’s Corporate Governance Report sets
out an overview of the means by which the
Company is directed and controlled, and our
governance structure, while highlighting some
of the governance activities of the Board and
its principal committees during the course of
the year.
The Board remains fully committed to
maintaining good corporate governance
practices throughout the Group which
underpin all of its actions. The structure,
policies and procedures we have adopted,
which are described in this report, the
Directors’ Report and reports from each of the
Board Committees, reflect our commitment.
We recognise the need to keep them under
review and make changes where necessary
to ensure that standards are maintained and
reflect ever-evolving best practice. This report
also explains how we have complied with the
principles of the UK Corporate Governance
Code during the year.
The Board’s role includes managing and
mitigating the risks facing the business.
This includes taking into account the risks
associated with operating in Ukraine,
counterparties, financial risks, operational
risks including health, safety, environmental
and climate change risks, together with iron
ore market risks such as prices and freight
rates. As new risks emerge, our approach to
evaluating risk appetite is reassessed. The
Board’s role is also to support and challenge
management and to ensure that the way we
operate promotes the long-term sustainable
success of Ferrexpo plc.
OPERATION OF THE BOARD
DURING THE WAR IN UKRAINE
AND GOVERNANCE
FRAMEWORK
Against the backdrop of the continuing war in
Ukraine, we remained focused on the health,
safety and wellbeing of our people globally,
who have continued to deliver for the Group,
our shareholders and stakeholders through
the testing times over the last few years. Our
people have helped ensure business continuity
and have safeguarded our operations, whilst
maintaining good corporate governance
practices and our system of internal control.
During the year, the Board has continued to
operate effectively and without disruption
notwithstanding the ongoing challenges facing
the Group. Some Board members attended
Board meetings virtually due to travel
restrictions. All scheduled Board meetings
were held and the Board continued to uphold
and maintain good corporate governance, the
corporate agenda and the flow of information
across the Group.
“Committed to upholding
high standards of
corporate governance
during exceptionally
challenging times and
delivering on our
promises.”
Lucio Genevese
Interim Executive Chair
We are committed to
strong and robust
corporate governance
practices
Ferrexpo plc
Annual Report & Accounts 2024
98
Introduction to Corporate Governance
We have also ensured Directors’ on-boarding
programmes continued as planned. The
format of hybrid (combination of physical
and virtual) Board meetings provided the
Board with greater opportunities to engage
with each other, and with management and
members of the workforce. In this year’s
report we have also provided a case study
on the Board’s nominated representative for
workforce engagement, Vitalii Lisovenko, and
his annual visit to our operations. Regrettably,
the Board site visit to our operations in
Horishni Plavni was once again deferred due
to the war. The Board site visit was replaced
with a Board Strategy Day.
We continued to enhance our shareholder
and stakeholder engagement and we consider
their interests at the centre of our decision-
making. Our Section 172 Statement set out on
pages 56 to 61 provides further details on how
the Board complied throughout the year.
The war in Ukraine has not adversely affected
the operation of the Board or its Committees.
SUPPORTING LOCAL
COMMUNITIES DURING THE
WAR IN UKRAINE
During the year, we continued our
humanitarian and CSR activities supporting
our workforce, communities and broader
Ukrainian society. We continue to support
our colleagues serving in the Armed Forces of
Ukraine and we have expanded our Veterans
Support Programme. The focus of our
community activities has shifted to supporting
mental health as the war prolongs. In addition,
the Board authorised donations to critical
national tragedies during the year, including a
UAH10 million (approximately US$230,000)
donation to Ohmatdyt Children’s Hospital
following Russian missile strikes (see the
Responsible Business section of the Strategic
Report on pages 44-55).
All donations were made within a Board-
approved framework agreed annually at
the time of setting the budget. All such
community support and donations are
subject to internal control and approval limits
applicable within the individual subsidiaries of
the Group, which are set by the Board.
The Board exercises control of the Ferrexpo
Humanitarian Fund and local charitable
spending via its Health, Safety, Environment
and Community (“HSEC”) Committee, which
oversees and directs these activities and
receives reports detailing the spend.
BOARD CHANGES
The issue of diversity, both in the Boardroom
and throughout the entire Group, is taken
very seriously by the Board as we believe
this improves effectiveness, encourages
constructive debate, delivers strong
performance and enhances the success of
the business. Ensuring that we have a culture
which promotes and values diversity, and one
which is maintained throughout the business,
is a continual prime focus and is underpinned
by our Diversity, Equity and Inclusion Policy,
which sets our objectives.
BOARD PERFORMANCE
REVIEW
In line with the UK Corporate Governance
Code, Board performance was assessed
internally both in 2023 and 2022. Therefore,
during the year, an externally assessed review
of the performance and effectiveness of
the Board, its Committees and each of the
Directors was undertaken. A report on the
process, activities, findings and actions of the
evaluation can be found on pages 114 to 116.
An internal Board performance evaluation will
take place in 2025.
KEY HIGHLIGHTS IN 2024 AND
EARLY 2025:
• supporting our workforce and the Group’s
operations throughout the war in Ukraine;
• health and safety and employee wellbeing;
• zero fatalities;
• continued with the search for a Director to
meet diversity and ethnicity targets;
• appointment of Audit Committee Chair;
• appointment of female Independent
Non-executive Director to Chair HSEC
Committee;
• updated Board’s skills matrix;
• succession planning at Board and
management level;
• strengthened cybersecurity; and
• focus on shareholder and key stakeholder
engagement.
KEY PRIORITIES FOR 2025:
• supporting our workforce and the Group’s
operations throughout the war in Ukraine;
• health and safety and employee wellbeing;
• continue to maintain high standards of
Corporate Governance;
• recruit an additional Director with relevant
finance skills;
• aim to improve Board diversity and meet
targets;
• succession planning at Board and diversity
at management level;
• continue focus on shareholder and key
stakeholder engagement; and
• continue to strengthen and broaden
cybersecurity.
I hope you find this report useful and
informative. I look forward to engaging with as
many of you as possible at our 2025 Annual
General Meeting in person and would like to
encourage you to vote your shares even if you
cannot attend in person, so that we gain a
better understanding of the views of our
shareholders as a whole.
Lucio Genovese
Interim Executive Chair
18 March 2025
In accordance with best practice requirements
of the UK Corporate Governance Code, the
Board keeps its balance of skills, knowledge,
experience, independence and diversity under
review, which is beneficial in bringing new
perspectives to the Board.
During the reporting year, there was the
following Board committee change:
• On 1 January 2024, Stuart Brown was
appointed as Chair of the Audit Committee.
• On 9 February 2024, Stuart Brown was
appointed as a member of the Committee
of Independent Directors.
Since the end of the reporting year, there were
the following Board and Board committee
changes:
• On 11 January 2025, due to personal reasons,
Natalie Polischuk resigned as an Independent
Non-executive Director and Chair of the
HSEC Committee, and as a member of both
the Audit Committee and the Committee of
Independent Directors (“CID”).
• On 12 January 2025, Fiona MacAulay, Senior
Independent Non-executive Director was
appointed on an interim basis a member of
the Audit Committee and as a member and
Chair of the HSEC Committee.
Throughout the year, the Board continued
to search for an Independent Non-executive
Director from an ethnic minority group, led by
the Nominations Committee and supported
by external consultants. Following Natalie
Polischuk’s departure, recruitment has been
prioritised to find a suitable replacement.
This search is at an advanced stage and it
is anticipated that an appointment of an
Independent Non-executive Director will be
made in the near future.
Following Ms. Polischuk’s departure from the
Board in January 2025, the Board’s gender
diversity fell further below the 40% target
set by the FTSE Women Leaders Review.
While the Board remains committed to
achieving this benchmark, its immediate
priority is ensuring it has the right mix of skills,
particularly sector expertise and geopolitical
experience, crucial for navigating the ongoing
crisis in Ukraine. The Board expects that
its current search for a new Non-executive
Director will help it restore gender balance on
the Board but, while recognising the Parker
Review deadline of 31 December 2024 for
FTSE 250 companies, it has decided to defer
the appointment of a director from an ethnic
minority group until the situation in Ukraine
stabilises. Nonetheless, the Board remains
fully committed to broadening its composition
and will continue to focus on both gender and
ethnic diversity targets for UK-listed boards as
part of the Board’s refreshment programme.
Strategic Report
Financial Statements
99
Corporate Governance
SHAREHOLDERS
BOARD
AUDIT
COMMITTEE
Responsibilities include:
• Monitoring integrity of financial
statements.
• Reviewing internal control and risk
management systems.
• Relationship with external auditor.
Read more
Pages 118 to 125
REMUNERATION
COMMITTEE
Responsibilities include:
• Reviewing and approving all aspects
of remuneration for Executive
Directors and members of the
Executive Committee.
• Aligning remuneration policy and
practices to support strategy.
• Engaging with shareholders to receive
feedback on remuneration policy and
outcomes.
Read more
Pages 130 to 151
NOMINATIONS
COMMITTEE
Responsibilities include:
• Considering and approving the
knowledge, skills and experience mix
required for the Board to best deliver
the Company’s objectives.
• Identifying and nominating (for Board
approval) candidates to fill Board
vacancies, having due regard to the
need to satisfy the Board’s skills
requirements.
Read more
Pages 126 to 129
COMMITTEE OF
INDEPENDENT
DIRECTORS (“CID”)
Responsibilities include:
• Ensuring compliance with related party
transaction rules and the Relationship
Agreement.
• Authorising (if appropriate) related
party transactions on behalf of the
Board.
• Conflicts of interest procedure under
the Companies Act 2006.
Read more
Page 110
HEALTH, SAFETY,
ENVIRONMENT
AND COMMUNITY
(“HSEC”) COMMITTEE
Responsibilities include:
• Formulating and monitoring the
implementation of the Group’s policy
on issues relating to health and safety,
environment and community as they
affect operations.
• Specific focus on safety and climate
change impacts.
Read more
Page 45
EXECUTIVE CHAIR AND
EXECUTIVE COMMITTEE1
Responsibilities include:
• Execution of Board-approved
strategies.
• Delegated authority levels for senior
management.
• Development and implementation of
Group policies.
• All material matters not reserved for
the entire Board.
Read more
Page 110
1.
The Finance, Risk Management and Compliance Committee, Investment Committee and the Executive Related
Party Matters Committee all report to the Executive Committee.
Our governance
at a glance
100
Ferrexpo plc
Annual Report & Accounts 2024
Introduction to Corporate Governance continued
Board balance
Age
Tenure
Ethinicty
Gender
Independent
4
Non-independent
0
Executive Chair
1
Executive
1
Female
2
Male
4
40-49
1
50-59
2
60+
3
White
6
Mixed/Multiple
Ethnic Group
0
0-5 years
3
5-9 years
2
9+ years
1
Expertise
100%
% of Board
members
Mining, Global Resource Industry
67%
Business leadership and strategy
75%
Corporate governance
67%
ESG/Sustainability
63%
Financial, Audit & Risk
92%
CIS geographical experience
88%
Government and international relations
67%
HSEC
71%
Human capital management/Remuneration
83%
Investor relations management
83%
Risk management
96%
BOARD DIVERSITY, TENURE
AND BALANCE
BOARD SKILLS MATRIX
Financial Statements
Corporate Governance
Strategic Report
101
Raffaele (Lucio) Genevese
Interim Executive Chair
Nikolay Kladiev
Executive Director, Group Chief Financial Officer
Fiona MacAulay
Senior Independent Non-executive Director
Date of appointment
1 July 2023 as Acting Executive Chair
24 August 2020 as Chair
13 February 2019 as Non-independent
Non-executive Director
Current external appointments
Since 2021, he has served as chair of CoTec Holdings,
listed on NEX Board of the TSVX; and chief executive
officer of Nage Capital Management AG, a Swiss
based investment and advisory firm, since 2004.
Previous appointments
Previously, he was non-executive director of Nevada
Copper Inc 2016–2023; non-executive director
of Mantos Copper SA, 2015–2022; independent
non-executive director of Ferrous Resources
Limited, 2014–2019; chair of Firestone Diamonds
Plc, 2012–2020; an Independent Non-executive
Director of Ferrexpo plc, 2007–2014; senior executive
officer, Copper Division, Glencore International,
1996–1999 and chief executive officer, CIS
Operations, Glencore International, 1992–1998.
Skills, expertise and contribution
Lucio contributes to Ferrexpo plc over 35
years of commercial experience in the metals
and mining industry. He worked at Glencore
International AG where he held several senior
positions including the CEO of the CIS region.
Lucio brings a deep knowledge across the Ferrous
and Non-Ferrous Mining sector, including in iron
ore. He has extensive experience of operating in
emerging markets, specifically in the CIS states.
As a previous Board member (from 2007 to 2014)
and as a Board member of Ferrexpo AG, Lucio has
in-depth knowledge of the Group which is extremely
valuable to the Company at a Board level.
Date of appointment
25 May 2023 as Executive Director
Nikolay was appointed Group Chief
Financial Officer on 4 August 2021.
Current external appointments
N/A.
Previous appointments
Nikolay joined the Group in 2005, and contributed
significantly to the Group’s IPO. Since 2007, Nikolay
has served on the Board of FPM as CFO. During his
19 years with Ferrexpo, Nikolay has overseen FPM’s
finance function, and has been directly responsible for
maintaining the Group’s position as a low cost pellet
producer during this time. Prior to Ferrexpo, Nikolay
held a number of audit positions with Arthur Andersen
and Ernst & Young in Ukraine and Eastern Europe.
Skills, expertise and contribution
Nikolay is a Chartered Accountant (UK) and has
a Masters in International Economic Relations
from Kyiv National Economic University.
Date of appointment
12 August 2019
10 February 2022 as Senior Independent Director
Current external appointments
Non-executive director of Dowlais Group plc since
April 2023; Non-executive director of Costain
Group Plc since April 2022; non-executive director
of Chemring Group plc since 2020 and appointed
Senior Independent Director on 1 February 2025
Previous appointments
Previously, she was non-executive chair of IOG Plc
2019–2023; non-executive director of AIM listed
Coro Energy, 2017–2022; chief executive officer
of Echo Energy plc, 2017–2018; non-executive
director, 2018–2019 and chief operating officer
of Rockhopper Exploration plc, 2013–2017.
Skills, expertise and contribution
Fiona contributes to Ferrexpo plc over 35 years’
experience in the upstream oil and gas sector, including
key roles in a number of leading oil and gas firms across
the large, mid and small cap space, including Mobil, BG
Group, Amerada Hess, Echo Energy and Rockhopper.
Fiona brings a strong focus on health, safety, climate
change and culture, with a deep understanding of the
factors influencing the management for safe, efficient
and commercial operations. In 2022, she completed a
Diligent Climate Leadership Certification programme. She
has extensive operational experience in emerging energy
which enables her to bring positive insight on a broad
range of issues to Board and Committee discussions.
Committee membership
C
Committee membership
N/A
Committee membership
C C
On 13 January 2025, Fiona was appointed as
Chair of the HSEC Committee on an interim basis
and as a member of the Audit Committee.
A board with
expertise
Ferrexpo plc
Annual Report & Accounts 2024
102
Board of Directors
Stuart Brown
Independent Non-executive Director
Vitalii Lisovenko
Independent Non-executive Director
Natalie Polischuk
Independent Non-executive Director
Date of appointment
22 October 2023
Current external appointments
He has served as Non-executive Chair of Lucapa
Diamond Company Limited since 2024.
Previous appointments
Previously, he was president and CEO of Mountain
Province Diamonds Inc 2018–2021; CEO of
Firestone Diamonds Plc 2013–2018; Group CFO
and Acting Joint CEO De Beers Group 2006–2011
Skills, expertise and contribution
Stuart is a seasoned mining executive with extensive
board-level experience. He previously held both
CFO and CEO roles at De Beers and its various
subsidiaries, where he played a central role in
reshaping the group and positioning it for the future.
Most recently, Stuart served as President and CEO
at Mountain Province Diamonds Inc., a company
listed on the Toronto Stock Exchange, and as CEO
of Firestone Diamonds Plc, formerly listed on AIM
where he established a track record of building
teams and leading business transformation to
develop lean, agile, high-performing organisations.
Date of appointment
28 November 2016
Current external appointments
Currently, he serves as a non-executive advisor to the
Minister of Finance of Ukraine, having previously served
as an executive counsellor to the Minister of Finance. He
also serves as a non-executive director of the Supervisory
Board of National Depositary of Ukraine since 2014.
Previous appointments
Previously, he was an executive director of Ukreximbank
(Ukraine), 2006–2010; an executive director of Alfa
Bank Ukraine, 2010–2014; a non-executive director
of Amsterdam Trade Bank, 2013–2014; and a non-
executive alternate director, Black Sea Trade and
Development Bank (Greece), 2014–2019; and since
1994 has held various positions in the Finance Ministry
of Ukraine. He also was an Associate Professor of
Finance at the Kyiv State Economic University.
Skills, expertise and contribution
Vitalii contributes to Ferrexpo plc over 25 years’
experience in government finance. In 2005, he
served as the head of the Trade and Economic
Mission at the Ukrainian Embassy in London.
He was an Associate Professor of Finance at
the Kyiv State Economic University.
Vitalii brings extensive experience in the field of
Ukrainian government finance together with a
deep understanding of geopolitical developments
in Ukraine, which is valuable to the Group.
Date of appointment
29 December 2021
Date of resignation
13 January 2025
Current external appointments
She has served as non-executive director
of Dobrobut (Ukraine) since 2018.
Previous appointments
Previously, she was non-executive director and
treasurer of Lycée Français Anne de Kyiv, 2014–2020.
Skills, expertise and contribution
Natalie brought over 25 years of private equity
experience in Eastern Europe, having held a number of
senior roles at private equity funds in the region and
having acted as an independent advisor on a number
of M&A and due diligence projects in Ukraine.
Committee membership
C
Stuart was appointed Chair of Audit Committee and a
member of the Remuneration Committee in January
2024. He was appointed a member of the Committee
of Independent Directors in February 2024.
Committee membership
C
Non-executive Director designate
for workforce engagement.
Committee membership
Until her resignation on 11 January 2025,
Natalie was the Chair of the HSEC Committee
and a member of the Audit Committee and
the Committee of Independent Directors
Audit Committee
Remuneration Committee
Nominations Committee
Committee of Independent Directors (“CID”)
Health, Safety, Environment and Community
(“HSEC”) Committee
Executive Chair and Executive Committee
Committee Chair
Female
33%
Male
67%
Key to committee membership
Previous Director
C
Gender breakdown
As at 31st of December 2024
Strategic Report
Financial Statements
103
Corporate Governance
Raffaele (Lucio) Genevese
Interim Executive Chair
Nikolay Kladiev
Executive Director, Chief Financial Officer
Viktor Lotous
FPM General Director and the
Chair of FPM Supervisory Board
For more information see page 102 for details.
For more information see page 102 for details.
Viktor brings to the Executive Committee more than
35 years of mining and processing experience as well as
deep understanding of Ferrexpo, its culture and context.
Skills and experience
Viktor began his career with FPM in 1986. In 1997, he
assumed the role of Chief Engineer and in 2007 was
appointed General Director and Chair of the Supervisory
Board of FPM. In this role, he is charged with leading and
ensuring safe and responsible operations, optimising
performance, executing future growth options and
delivering commercial value across the company’s
operational footprint in Ukraine. In 2023, Viktor
additionally assumed the position of Chief Operating
Officer, on an interim basis, with operational oversight
of the Group’s assets in Ukraine. He is a graduate of
Kryvyi Rih Mining and Ore Institute, and of the Kyiv
National Economic University, specialising in Finance.
Greg Nortje
Chief Human Resources Officer
Yaroslavna Blonska
Acting Chief Marketing Officer
Greg joined Ferrexpo in January 2014.
He previously held a variety of international
Human Resources leadership positions with Anglo
American and BHP Billiton before establishing
his own human resources consultancy firm
to a range of clients across the UK. Particular
specialisms include project management and
business change execution, organisational
effectiveness, talent management, governance
and compliance, and leadership development.
Skills and experience
He has Advanced Management qualifications from
the University of Stellenbosch Business School and
the Gordon Institute of Business Science, a Bachelor
of Arts degree and a postgraduate Diploma in
Education from the University of the Witwatersrand.
Yaroslavna was appointed the Acting Chief
Marketing Officer on 22 August 2022.
Yaroslavna joined Ferrexpo in 2002.
Since joining Ferrexpo, Yaroslavna has held a number of
key roles within the Group’s Marketing team, including
Head of Sales for customers in Europe and Turkey,
management of the Group’s Asian and European
customers, membership of the representative board
for the Group’s port loading subsidiary, TIS-Ruda.
Yaroslavna has been acting as a focal point for the
Group’s government and public relations within
Ukraine. She has also been managing Ferrexpo’s
office in Kyiv since 2006. Yaroslavna has been
helping to facilitate the Group’s Fe_munity Women in
Leadership programme as a speaker and a mentor.
Skills and experience
She holds a Master of Business Administration
degree from Kyiv State Economic University
and a post graduate Diploma in Law from Taras
Shevchenko National University, Kyiv.
An experienced and focused
Management Team
Ferrexpo plc
Annual Report & Accounts 2024
104
Executive Committee
Corporate Governance Compliance
As a company listed on the London Stock Exchange, the Company is subject
to the 2018 Corporate Governance Code. This section explains how we applied
the principles of the 2018 Corporate Governance Code. A copy of the Corporate
Governance Code can be found at frc.org.uk.
STATEMENT OF COMPLIANCE (IN ACCORDANCE WITH LISTING RULE 6.6.6R(6))
The Board considers the Company has complied throughout the year ended 31 December 2024 with all the provisions of the 2018 Corporate
Governance Code except as set out below:
• Provision 9: The Chair was not independent on appointment and the role of Chief Executive and Chairman is undertaken by one person –
Lucio Genovese, the Company’s Executive Chair.
• Provision 19: The Chair has remained in post for more than nine years since his first appointment to the Board in June 2007. Mr Genovese’s
tenure ran from 12 June 2007 to 1 August 2014, and he rejoined the Board on 13 February 2019. Therefore, whilst the total tenure exceeds nine
years there was a significant break in Mr Genovese’s tenure between 2014 and 2019.
Explanations for not complying with provisions 9 and 19 of the Corporate Governance Code as the Chair was not independent on appointment,
the role of Chief Executive and Chairman should not be undertaken by the same person and his tenure exceeds the recommended nine-year term
are provided below. The Corporate Governance Code sets out the governance principles and provisions that applied to the Company during 2024.
The Corporate Governance Code is not a rigid set of rules, and consists of principles and provisions. The Company complied with all the principles
and detailed provisions of the Corporate Governance Code in 2024 except for Provisions 9 and 19. Provision 9 recommends that the Chair be
independent on appointment and the role of the Chair and Chief Executive should not be undertaken by the same person. Provision 19
recommends that the Chair should not remain in post beyond nine years from the date of first appointment to the Board.
Explanations for non-compliance with Provision 9 and 19:
As explained in previous annual reports, the Chair was not independent on appointment. However, the Board was satisfied that Mr Genovese is
fully independent from all the Company’s shareholders and has been during his entire tenure as a Non-executive Director. Additionally, upon his
appointment as Chair, the members of the Nominations Committee were comfortable based on their own experiences that Mr Genovese conducts
himself with professional and personal integrity with an independent mindset and brings valuable challenge to the Board based on his in-depth
understanding of the key drivers and challenges faced by the Group.
Following the resignation of the Chief Executive Officer, the decision was taken to combine the roles of the Chair and Chief Executive Officer on an
interim basis, as with the ongoing war in Ukraine and the need for business continuity, it was not considered the right time to commence an external
search process for a new Chief Executive Officer.
Although the role of the Chair and Chief Executive are undertaken by the same person, the Board believes that there is sufficient separation of
responsibilities of the roles usually undertaken by the Chair and the Chief Executive Officer amongst the Executive Chair, the Chief Financial Officer,
the Senior Independent Director, the Committee of Independent Directors, the Group Company Secretary and the Company’s Senior Management
team. The Board, with assistance from the Nomination Committee, keeps this temporary arrangement under review.
Mr Genovese was first appointed to the Board as a Director in June 2007 and retired in August 2014. After a near five-year break, he re-joined the
Board in February 2019 as a non-Independent Non-executive Director. In August 2020 he was appointed as Chair of the Board, and most recently in
July 2023 he was appointed interim Executive Chair.
Mr Genovese has led the Board through the continuing Russian invasion of Ukraine, ensuring continuity of the Board agenda and meetings together
with ongoing corporate initiatives, whilst operating at a time of war.
The Board believes Mr Genovese is the right person to chair the Board and exercise executive leadership of the Group at this time. To provide
continuity of his sound leadership, the Board requests your support to re-elect Mr Genovese at the 2025 AGM.
Further details on the composition of the Board and its Committees are set out on page 108 and further details of the role of the Senior
Independent Director are set out on page 110.
Strategic Report
Financial Statements
105
Corporate Governance
The Board confirms that at the date of this report, unless otherwise explained above, the Company fully complied with all relevant provisions of the
Corporate Governance Code. Further information on the Company’s compliance with the Principles of the Corporate Governance Code can be
found on the following pages:
Board leadership and
Company purpose
Principle A:
Executive Chair’s Statement page 2, Stakeholder Engagement – Section 172 Statement pages 56 to 61, Skills
Matrix page 101
Principle B:
Executive Chair’s Statement page 2, Our Business Model pages 10 to 11, Understanding our Strategic Direction
pages 14 to 15, Stakeholder Engagement – Section 172 Statement pages 56 to 61
Principle C:
Key Performance Indicators pages 16 to 19, Risk Management pages 81 to 83, Principal risks pages 84 to 94,
Internal Controls page 124
Principle D:
Executive Chair’s Review page 2, Our Stakeholders page 56, Responsible Business: Safety and our People page
46, Operating during a time of war: Local communities page 7, Responsible Business: Governance pages 54 to
55, Stakeholder Engagement – Section 172 pages 56 to 61
Principle E:
Non-Financial Information Statement page 55, Our engagement activities in 2024 page 57, Stakeholder and
workforce engagement page 112, Whistleblowing Policy page 125
Division of
responsibilities
Principle F:
Executive Chair’s Introduction page 2, Statement of Compliance page 105, Role Descriptions page 110, Board
Leadership pages 111 to 113, Board Evaluation pages 114 to 116
Principle G:
Group Structure page 100, Board of Directors pages 102 to 103, Role Descriptions page 110
Principle H:
Corporate Governance At a Glance page 100, Board of Directors pages 102 to 103, Time Commitment page
109, Role Descriptions page 110
Principle I:
Skills Matrix page 101, Time commitment and Non-executive Director external appointments during 2024 page
109, Board Leadership pages 111 to 113
Composition,
succession, evaluation
Principle J:
Diversity page 101, Nominations Committee Report page 126
Principle K:
Board Diversity, tenure and balance page 101, Board Composition page 108, Skills Matrix page 101, Succession
Planning and Recruitment page 127
Principle L:
Board Evaluation pages 114 to 116
Audit, risk,
internal control
Principle M:
External Audit page 125, Internal Audit page 124
Principle N:
Audit Committee Report pages 118 to 125, Responsibility statement of the Directors in respect of the Annual
Reports and Accounts page 159
Principle O:
Risk Management pages 81 to 83, Principal Risks pages 84 to 94, Internal Control and Risk Management
page 124
Remuneration
Principle P:
Remuneration policy pages 130 to 151
Principle Q:
Our approach to remuneration page 130, Performance and Reward pages 130 to 133, Implementation of the
remuneration policy in 2024 page 131
Principle R:
Remuneration Report pages 130 to 151
DISCLOSURE GUIDANCE AND TRANSPARENCY RULES
By virtue of the information included in this Corporate Governance Report and the Directors’ Report, the Company complied with the corporate
governance statement requirements of the FCA’s Disclosure Guidance and Transparency Rules.
Ferrexpo plc
Annual Report & Accounts 2024
106
Corporate Governance Compliance continued
We report our Board and executive management diversity data as at 31 December 2024 in accordance with the UK Listing Rules disclosure
requirements, and our progress in meeting the UK Listing Rules board diversity targets.
There were no director changes during the year and as at 31 December 2024, women represented 33% of the Board see page 99 and accordingly
the target of 40% females on the Board has not been met. Fiona MacAulay is the Senior Independent Director, see page 102 and therefore one of
the senior Board positions was occupied by a woman; however, so far a Director from an ethnic minority background has not yet been appointed.
The Board remains committed to enhancing its gender and ethnic diversity and during the year, actively continued the search for a further
Independent Non-executive Director from an ethnic minority background, led by the Nominations Committee and supported by external
consultants, see page 127.
The gender diversity of the Board and executive management as at 31 December 2024:
Number of Board
members
Percentage of the
Board
Number of senior
positions on the
Board (CEO, CFO,
SID and Chair)*
Number in
executive
management
Percentage of
executive
management
Men
4
66.6%
2
5
83%
Women
2
33.3%
1
1
17%
Other categories
–
–
–
–
–
Not specified/prefer not to say
–
–
–
–
–
*
The role of Chair and CEO were combined on 1 July 2023 and counted as one position in order not to double count.
The ethnic diversity of the Board and executive management as at 31 December 2024:
Number of Board
members
Percentage of the
Board
Number of senior
positions on the
Board (CEO, CFO,
SID and Chair)
Number in
executive
management
Percentage of
executive
management
White British or other White (including minority-white groups)
6
100%
3
6
100%
Mixed/Multiple Ethnic Groups
–
–
–
–
–
Asian/Asian British
–
–
–
–
–
Black/African/Caribbean/Black British
–
–
–
–
–
Other ethnic group
–
–
–
–
–
Not specified/prefer not to say
–
–
–
–
–
*
The role of Chair and CEO were combined on 1 July 2023 and counted as one position in order not to double count.
Notes:
• Executive management for these purposes includes the Group Company Secretary but excludes administrative and support staff (as defined by the UK Listing Rules).
• The Company confirms that the approach to collecting data forming the basis of the gender and ethnic diversity of the Board and senior management of the Company was
consistent for the purposes of reporting under both LR 6.6.6R(9), (10) and (11) and was consistent across all individuals in relation to whom data was reported. Board members,
members of executive management and the Group Company Secretary were provided with a standard form questionnaire on a strictly confidential and voluntary basis to allow the
individual to self-report on their gender and ethnicity (or to specify that they do not wish to report such data). The questionnaire was fully aligned to the definitions set out in the
UK Listing Rules, with individuals asked to specify:
i. self-reported gender identity – selection from (a) male, (b) female, (c) other category/please specify and (d) not specified/prefer not to say; and
ii. self-reported ethnic background – selection from (a) White British or other White (including minority-white groups), (b) Mixed/Multiple Ethnic Groups, (c) Asian/Asian British,
(d) Black/African/Caribbean/Black British, (e) Other ethnic group and (f) not specified/prefer not to say.
• The Executive Committee includes the Group Company Secretary. For the purposes of the UK Corporate Governance Code, the gender balance of those in senior management
(i.e. the Executive Committee and their direct reports) was 67.4% male and 32.6% female.
Strategic Report
Financial Statements
107
Corporate Governance
Diversity
RELATIONSHIP AGREEMENT
The Company’s largest shareholder is Fevamotinico S.a.r.l., which as at date of this report holds 49.3% of the voting rights in Ferrexpo plc.
Fevamotinico S.a.r.l. is wholly owned by The Minco Trust. The Minco Trust is a discretionary trust that has three beneficiaries, consisting of
Kostyantin Zhevago and two other members of his family. Mr Zhevago, The Minco Trust and Fevamotinico S.a.r.l. entered into a Relationship
Agreement with the Company (the “Relationship Agreement”) to ensure that the Group is capable of carrying on its business independently,
that transactions and arrangements between the Group, Fevamotinico S.a.r.l., The Minco Trust and Mr Zhevago (and each of their associates)
are at arm’s length and on normal commercial terms, and that at all times a majority of the Directors of the Company shall be independent of
Fevamotinico S.a.r.l., The Minco Trust and Mr Zhevago. Under the Relationship Agreement, Mr Zhevago is entitled to appoint himself as a Director
or another person as his representative Director, in each case in a non-executive capacity. During the year, Mr Zhevago has not exercised this right.
The Relationship Agreement terminates if, inter alia, the shareholding of Mr Zhevago and his associates in the Company falls below 24.9%.
STATEMENT OF COMPLIANCE WITH UK LISTING RULES, RULE 6.6.1R(13)
The Board confirms that, as required by UK Listing Rule 6.6.1R(13), the Company is able to carry on the business it carries on as its main activity
independently from its controlling shareholders at all times.
THE BOARD
The Board is responsible for setting the Group’s objectives and policies, providing effective leadership within the framework of prudent and
effective controls required for a public company. The Board has a formal schedule setting out the matters requiring Board approval and specifically
reserved to it for decision. These include:
• approving the Group strategy and budget;
• annual and long-term capital expenditure plans;
• approving contracts for more than a certain monetary amount;
• monitoring financial performance and critical business issues;
• approval of major projects and contract awards;
• approval of key policies and procedures including for dividends, treasury, charitable donations and corporate social responsibility;
• approval of procedures for the prevention of fraud and bribery; and
• through the CID, monitoring and authorising related party transactions.
Certain aspects of the Board’s responsibilities have been delegated to the Committees shown in the chart on page 100 to ensure compliance with
the Companies Act 2006, FCA Listing Rules, and Disclosure Guidance and Transparency Rules and the UK Corporate Governance Code. The terms
of reference for each of the Audit Committee, Nominations Committee, Remuneration Committee and HSEC Committee are available on the
Company’s website at www.ferrexpo.com/about-ferrexpo/corporate-governance/board-committees.
It is the responsibility of the Executive Chair and Executive Committee to manage the day-to-day running of the Group.
BOARD COMPOSITION AND INDEPENDENCE
As at 31 December 2024, the Board comprised two Executive Directors and four Independent Non-executive Directors who are considered by the
Board to be independent in accordance with the UK Corporate Governance Code. This structure ensures that the Executive Directors are subject to
appropriate independent and constructive challenge by the Non-executive Directors, and that no single Director can dominate or unduly influence
decision-making.
Composition of the Board and Committees as of 31 December 2024 is presented in the table below:
Board member
Role
Audit
Remuneration
Nominations
CID
HSEC1
R L Genovese
Executive Chair
••
F MacAulay
Senior Independent Non-executive Director
••
•
•
N Kladiev
Executive Director/Chief Financial Officer
V Lisovenko
Independent Non-executive Director and
Designate for Employee engagement
•
•
•
••
N Polischuk
Independent Non-executive Director
•
•
••
S Brown
Independent Non-executive Director
••
•
•
1.
The HSEC Committee also includes some members of senior management.
•
Committee member.
•• Committee Chair.
Ferrexpo plc
Annual Report & Accounts 2024
108
Corporate Governance Report
The Board considers that it is of a sufficient size to ensure that the requirements of the business are met without placing undue reliance on any one
Director.
Biographical details of the Directors at the date of this report are set out on pages 102 and 103.
TIME COMMITMENT
It is expected that a Non-executive Director of the Company will normally spend at least two and a half days a month, on average, on Ferrexpo’s
affairs. The expected time commitment for the Senior Independent Director, the Committee Chairs and, in particular, the Executive Chair is
considerably more than that. The Non-executive Directors are required to confirm at least annually that they are able to commit sufficient time to
the affairs of the Company, and all of our Non-executive Directors have given this confirmation in respect of 2024.
All of the Non-executive Directors have been able to make themselves available for the majority of the ad-hoc Board and Committee meetings and
update calls held during the year, notwithstanding their external commitments. The attendance of the Directors at Board and Committee meetings
during 2024 is shown in the table below.
NON-EXECUTIVE DIRECTOR EXTERNAL APPOINTMENTS DURING 2024
During 2024, Stuart Brown was appointed as a Non-executive Chairman of Lucapa Diamond Company Limited, a company listed on the Australian
Stock Exchange, with effect from 8 April 2024. This appointment was considered a significant appointment for Mr Brown for the purposes of
the UK Corporate Governance Code, and, in advance of the appointment, Mr Brown sought the prior approval of the Board. As part of approving
this additional appointment, the Board considered a range of factors, including the existing appointments of Mr Brown, the time commitment
expected in the role as a Ferrexpo Director, attendance records at Ferrexpo Board and Committee meetings, institutional investor guidance on
the number of board roles in respect of over-boarding and the additional time commitment from the new role. The Board was satisfied having
regard to these matters that the additional role would not adversely impact the ability of Mr Brown to perform his existing role on the Ferrexpo
Board and its Committees.
BOARD AND COMMITTEE MEETING ATTENDANCE IN 2024
Attended/Eligible to attend
Board
Audit
Remuneration
Nominations
CID
HSEC4
Director
Scheduled
Ad hoc
Scheduled
Scheduled
Scheduled
Scheduled
Scheduled
R L Genovese
5/5
3/3
4/4
N Kladiev
5/5
3/3
V Lisovenko
5/5
3/3
4/5
5/5
4/4
5/5
F MacAulay
5/5
3/3
5/5
4/4
5/5
N Polischuk
5/5
3/3
5/5
5/5
4/4
S Brown1
5/5
3/3
5/5
5/5
4/4
1.
Mr Brown was appointed as Chair of the Audit Committee and a member of the Remuneration Committee with effect from 1 January 2024. Mr Brown was also appointed as a
member of the Committee of Independent Directors on 9 February 2024.
During the year, there were a number of ad-hoc Board and Committee meetings at short notice or update calls which dealt with (amongst other
things) the Russian invasion of Ukraine and other developments in Ukraine involving or impacting the Group.
Strategic Report
Financial Statements
109
Corporate Governance
ROLE DESCRIPTIONS
A summary of the roles of the Chair, the CEO, the Executive Chair, the Senior Independent Director, the Non-executive Directors and the Company
Secretary is set out in the following table. The table also includes an overview of the role of the Executive Committee and of the Committee of
Independent Directors. The roles of the Audit and Nominations Committees are set out later in this Corporate Governance Report, the role of the
HSEC Committee in the Strategic Report on page 45, and the role of the Remuneration Committee in the Remuneration Report on page 130.
Role
Description
Chair
The Chair is responsible for leadership of the Board, ensuring its effectiveness, setting its agenda, ensuring that it receives accurate,
clear and timely information, and ensuring effective communication with shareholders. The Chair also ensures that there is a
constructive relationship between the Executive and Non-executive Directors. At least once annually, the Chair holds meetings with
the Non-executive Directors without the Executive Director present. Mr Genovese’s other current responsibilities are set out in the
biographical notes on page 102. Due to the complexity of the jurisdictions in which the Group operates and in light of Russia’s current
invasion of Ukraine, the time commitment of the role significantly increased during the reporting period especially with the need to
engage proactively with the broad range of stakeholders.
CEO
The role of the CEO is to provide leadership of the executive team, implement Group strategy through executive committees, chair
the Executive Committee, and oversee and implement Board-approved actions.
Executive
Chair
With effect from 1 July 2023, the roles of Chair and Chief Executive Officer as described above have been combined on an interim
basis.
Senior
Independent
Director
The Senior Independent Director, in conjunction with the other Independent Non-executive Directors, assists in communications
and meetings with shareholders and other stakeholders concerning corporate governance matters. At least once a year, the Senior
Independent Director meets the Non-executive Directors, without the Chair present, to evaluate the Chair’s performance. The
Senior Independent Director is also available to discuss with shareholders any issues that the Chair has been unable to resolve to
shareholders’ satisfaction.
Non-executive
Directors
The Non-executive Directors provide an independent and objective viewpoint in Board discussions and bring experience from a
variety of industry backgrounds. Their role is to provide constructive support and challenge to executive management. Acting either
as the Board or as members of its Committees, the Non-executive Directors approve budgets; discuss and contribute to strategic
proposals and agree on corporate strategy; monitor the integrity, consistency and effectiveness of financial information, internal
controls and risk management systems; monitor management’s execution of strategy against agreed targets and determine their
remuneration accordingly (see the Remuneration Report on page 130); and monitor executive succession planning (for Board
succession planning, see the Nominations Committee Report on page 126). From time to time, where delegated by the Board,
individual Non-executive Directors may take on additional functions in areas in which they have particular knowledge or expertise.
Company
Secretary
The Company Secretary is responsible for ensuring that Board procedures are followed and that applicable rules and regulations are
complied with. The Company Secretary is also responsible for advising the Board on all governance matters and for ensuring, with
the Chair, that information reaches Board members in a timely fashion, so that they are alerted to issues and have time to reflect on
them properly before deciding how to address them. All Directors have access to the advice and services of the Company Secretary.
Executive
Committee
The Executive Committee is a key decision-making body of the Group, responsible for managing and taking all material decisions
relating to the Group, apart from those set out in the Schedule of Matters Reserved for the Board. It has delegated responsibility
from the Board for the execution of Board-approved strategies for the Group, for ensuring that appropriate levels of authority are
delegated to senior management, for the review of organisational structures and for the development and implementation of
Group policies. The Executive Committee meets regularly during the year.
Committee of
Independent
Directors
(“CID”)
The CID is composed of the Senior Independent Director and three other Independent Non-executive Directors. The CID considers
and, if appropriate, authorises on behalf of the Board, related party transactions and otherwise ensures compliance with the
related party transaction rules and the Relationship Agreement entered into between Fevamotinico S.a.r.l., Mr Zhevago, The
Minco Trust and the Company. The CID holds delegated authority to consider and, if appropriate, approve situations which give
rise to an actual or potential conflict of interest for any member of the Board in accordance with the Companies Act 2006. The
CID keeps under review the authorisation and approval process relating to related party transactions (which are also reviewed in
detail by the Executive Related Party Matters Committee (“ERPMC”)).
Ferrexpo plc
Annual Report & Accounts 2024
110
Corporate Governance Report continued
Before setting out the Board’s activities in
2025, it is important to note that since the
Russian invasion of Ukraine, the Board has
continued to meet regularly to discuss the
ongoing situation in Ukraine, the execution of
the Group’s business continuity plans, planning
for different eventualities and adjustments
to the corporate calendar. The Board receives
regular updates from the management team
as to the Group’s response and scenario
planning for different eventualities. Protecting
the Group’s workforce is a key priority, as
it taking steps to protect the business and
thereby the stakeholders of the business.
This will remain a key priority for the Board
during 2025.
BOARD ACTIVITY IN 2024
Five scheduled Board meetings were held
in 2024 (supplemented by other ad-hoc
meetings, telephone or video conferences and
written resolutions as required from time to
time). Although all scheduled Board meetings
were held in person, some ad-hoc meetings
and Board calls were held via video conference
with management team members and other
Group personnel joining to discuss matters
as appropriate. The Board intends to continue
to hold its scheduled meetings in person
during 2025.
The Board’s programme of meetings allows
key areas of focus to be established and
reviewed on a regular basis. A review of
the Board forward agenda was undertaken
early in the year to align key focus areas with
strategy. Rolling agendas have been developed
within the Board forward agenda for the
Board, Audit, Nominations and Remuneration
Committees to ensure the necessary standing
items are covered during the course of the
year, and sufficient time is allocated to
strategic discussions, with extra time factored
in for ad-hoc and additional items. Agendas
are agreed with the Chair (or with the Chair of
the relevant Committee) and timeframes set
in advance for the various meetings, thereby
ensuring that the full agenda can be covered
in the time allotted.
Board and Committee meeting packs are
prepared by management following input
on the agendas formulated by the Company
Secretary and the respective Chairs, and made
available electronically prior to the meeting via
a secure online Board portal, thereby allowing
the Directors adequate time to consider
the variety of issues to be presented and
discussed. In the minutes of the meetings,
issues identified for follow-up are set out,
ensuring that matters raised by the Directors
are actioned and reported back in a timely
manner.
Board Leadership
At each scheduled Board meeting, the
Directors receive a report from each of the
Executive Chair and the Chief Financial Officer
and will review and approve the minutes
from previous Board meetings and note
Board Committee minutes. There is also an
oral report from the Chair of each Board
Committee, providing an overview of the
matters discussed at the Committee meetings
which are held before the scheduled Board
meetings. The Board may also receive a report
from the Chief Marketing Officer relating to
updates on the Group’s marketing strategy,
product development and relationships with
the Group’s customers.
The Executive Chair’s report will include
matters relating to production and operations,
safety measures and performance against
targets, iron ore market conditions, growth
projects, implementation of diversity and
inclusion policies and updates on the position
in Ukraine. The Chief Financial Officer’s report
covers financial performance as compared
to budget, financial forecasts and cash flow
position, with a particular focus during 2024
on the going concern assessment given the
situation in Ukraine. The Executive Chair will
report on developments relating to investor
and stakeholder engagement (including
shareholder feedback), relevant corporate
governance matters and Board refreshment
and succession planning.
In addition to formal Board and Committee
meetings, the Senior Independent Director
holds meetings with the Independent Non-
executive Directors as required, enabling
open discussions without the Executive
Directors present.
The following sets out an overview of the key
areas of focus for the Board during the year.
RUSSIAN INVASION OF UKRAINE
The impact of the Russian invasion of Ukraine
remained the key area of focus during the year,
with the Board undertaking regular reviews
of the Group’s response to the invasion. The
Board received regular updates from the
management team on the Group’s response to
the invasion, including the safety, protection
and wellbeing of the workforce and details
of the support provided to those affected by
the invasion and their families. Updates on
safety measures put in place at the mine sites
and other locations to protect the Group’s
workforce and assets were also provided.
The Board also continued the Ferrexpo
Humanitarian Fund to support communities
across Ukraine. For further details see pages
6 to 9.
More information can be found throughout
this Annual Report and Accounts.
LEGAL AND OTHER ACTIONS AGAINST
THE GROUP IN UKRAINE
Throughout the year the Board continued to
address a number of legal and other actions
being taken against the Group in Ukraine,
some of which related to matters not directly
involving the Group.
These actions included a claim against
Ferrexpo Poltava Mining (“FPM”) in the
amount of UAH4.7 billion (US$113 million
as at 31 December 2024) regarding
contested sureties, an application to open
bankruptcy proceedings (“creditor protection
proceedings”) against the Group’s major
subsidiary in Ukraine filed by a supplier and a
related party of the Group, a freeze (“arrest”)
being placed on certain shares in all of the
Company’s Ukrainian subsidiaries, and further
bail payments having to be made by the
Group in connection with the arrest of senior
management personnel.
Further details can be found in Note 2 Basis
of preparation and Note 30 Commitments,
contingencies and legal disputes to the
Consolidated Financial Statements.
The Board has continued to take a number
of actions intended to protect the interests
and assets of the Group and all of its
shareholders, including pursuing legal actions
in Ukraine where possible, making appropriate
representations to Government officials both
in Ukraine and elsewhere about the need to
protect Ferrexpo’s interests, and seeking
to ensure that any private matters relating
to Mr Zhevago do not adversely impact the
Group. This has included emphasising that
as a Company with listed on the London
Stock Exchange the Company is required to,
and does, operate independently of all its
shareholders.
Strategic Report
Financial Statements
111
Corporate Governance
CLIMATE CHANGE AND
DECARBONISATION
Climate change has been a standing agenda
item at all scheduled Board meetings and
meetings of the HSEC Committee throughout
the year and will continue to be a standing
agenda item.
In February 2024, the final Double Materiality
and DR Pellet Life Cycle assessments
(prepared with Ricardo) were presented to and
approved by the Board, as published.
In December 2024, the Group published its
second Climate Change Report, outlining
climate-related risks and opportunities for
the Group, its greenhouse gas footprint,
and a potential pathway towards low carbon
production by 2050.
This publication marked an important
milestone in Ferrexpo’s decarbonisation plans
and enhancing stakeholder understanding of
climate-related issues. Similarly, the continued
work on climate scenario modelling and
decarbonisation initiatives, as explained in the
report, underscores the Group’s commitment
to sustainable development and addressing
the scourge of climate change, even in a
time of war. Due to the many uncertainties,
we recognised the importance of flexibility
in our Net Zero roadmap to account for
external events that affect our ability to
operate and invest effectively. To incorporate
this adaptability, we collaborated with our
sustainability partner, Ricardo, to assess
Ferrexpo’s pathway to Net Zero under three
potential scenarios.
The risks and opportunities relating to climate
change that are specific to Ferrexpo are
summarised in the Task Force for Climate-
related Financial Disclosures (“TCFD”) on pages
64 to 80 of the Strategic Report.
FINANCIAL POSITION AND LIQUIDITY
The Board continuously reviews the financial
position of the Group, including performance
against targets, balance sheet strength and
liquidity.
As at 31 December 2024, the Group had a
positive net cash position of US$101 million
(2023: US$108 million). The Group has no debt
facilities as at 31 December 2024.
The Company’s Preliminary and Interim results
and Annual Report were scrutinised and
approved by the Board.
CYBERSECURITY STRATEGY
In light of heightened cybersecurity risks facing
the business due to the ongoing war in Ukraine
and the rise in cybersecurity attacks globally,
maximum protection against cybersecurity
attack is a top priority for the Group. During
the year, additional resources was provided to
bolster cybersecurity and IT staff.
Board Leadership (continued)
STAKEHOLDERS AND WORKFORCE
ENGAGEMENT
Stakeholder considerations and culture are an
important part of the Board’s discussions and
decision making. The information on pages
56 to 61 provides a review of stakeholder
engagement activities during the year and
explains how the Board considers stakeholders
in decision making.
In September 2024, over three days,
Mr Lisovenko, Non-executive Director
Designate for workforce engagement, visited
our operations in Ukraine and hosted a
number of engagement sessions with a cross
section representing a range of stakeholder
groups within our workforce, including
operations personnel, a selection of middle
managers from all three business units, senior
female leaders, alumni of our “Fe_munity”
women in leadership programmes and people
with disabilities.
During the engagement sessions, members
of the workforce made comments and
suggestions on a range of matters and
posed questions for subsequent response
by the Board. In November 2024, the Board
considered the comments, concerns,
suggestions and questions and will provide
feedback to the workforce via established
communication channels. For example,
members of the workforce raised cost of
living and salaries. Further details see page 58
Employees and wider workforce, Section
172 Statement and a case study on pages 62
and 63.
The Group also engages with its workforce
through the biennial employee engagement
survey, which was last conducted in 2021. Due
the war in Ukraine, the survey unfortunately
could not be carried out in 2023 due to
variable staffing of operations imposed by
constraints brought about by the ongoing
war, where approximately one third of all
employees who manually complete the survey
using tablets were on furlough. However,
towards the end of 2024, an Employee
Engagement Survey was undertaken. The
response rate of 62% exceeded previous
surveys and represented a good cross-section
of business demographics. The Group’s overall
engagement score of 73% ranked well above
the industry average according to the third
party that managed the survey. It was pleasing
to learn from the survey that, despite the very
difficult conditions, our people are enduring,
they are committed to the business.
Additionally, the Group has employed other
ways of listening to the workforce, through the
Company’s intranet site and eliciting employee
feedback via the Rakuten Viber social media
app. These workforce listening channels
are an integral aspect of understanding the
priorities and concerns of our people, and help
to set priorities for the coming period. The
Board considers the results of the employee
listening programme and discusses feedback
with the Executive Chair and the Chief Human
Resources Officer, including plans for further
engagement by functional heads with their
teams to better understand the feedback
and to develop joint action points focusing on
areas of strength and areas for improvement.
BOARD BALANCE AND INDEPENDENCE
Ensuring the appropriate balance of skills,
independence and diversity on the Board
remains a key priority of the Group.
In line with best practice requirements of the
UK Corporate Governance Code, during the
year, the Board reviewed the balance of skills,
knowledge, experience, independence and
diversity and focused on improving and
rebalancing Independent Non-executive
Director Board and Board Committee roles.
To that end:
• Stuart Brown was appointed as Chair of
the Audit Committee and a member of the
Remuneration Committee with effect from
1 January 2024.
• Stuart Brown was appointed as a member of
the Committee of Independent Directors on
9 February 2024.
For further details see pages 126 to 129 of the
Nominations Committee Report.
GOVERNANCE AND RISK
Following on from the governance
improvement work carried out in 2020, during
the year the Board carried out a review of the
Articles of Association which were approved
by shareholders at the 2024 Annual General
Meeting.
At each of its scheduled meetings, the Board
considered any updates to the principal and
emerging risks of the Group, and in particular
during 2024 considered the new risks facing
the Group as a result of the ongoing Russian
invasion and also changes to country-related
risks. For further details, see pages 84 to 94 of
the Strategic Report.
The Board is supported by the Executive
Committee, which meets approximately
monthly. All information submitted to the Board
by management is reviewed and approved by
the Executive Committee prior to submission.
MODERN SLAVERY ACT STATEMENT
During the year, the Board reviewed and
approved the Group’s Modern Slavery Act
Statement for the year ended 31 December
2023 (a copy of which is available at
www.ferrexpo.com).
Ferrexpo plc
Annual Report & Accounts 2024
112
Corporate Governance Report continued
EXECUTIVE APPOINTMENTS AND
SUCCESSION PLANNING
There were no executive appointments during
the year.
For further details see page 126 of the
Nominations Committee Report.
Other matters discussed were:
• oral reports from the Chair of Board
Committee meetings held before the Board
meeting;
• diversity and inclusion;
• internal succession planning – talent review;
• succession planning for Non-executive
Director recruitment and appointments;
• review of agenda and approval of minutes
from previous Board meeting and note
Board Committee minutes;
• interactions with auditors;
• Executive Chair’s report including
production and operations, iron ore market
conditions, and updates on the Russian
invasion of Ukraine and the position in
Ukraine;
• logistics update;
• update on DR growth markets;
• Chief Financial Officer’s report including
status vs. budget, forecasts, cash flow
position, and funding update;
• related party matters (including Directors’
interests/conflicts);
• investor relations report (including
shareholder feedback);
• strategy, business plan and budget;
• formal risk review;
• compliance matters;
• HSEC Committee matters, including Health
and Safety, carbon reduction and
community spending; and
• Board refreshment, succession planning,
Director independence and Committee
composition.
Matters reviewed as required included:
• the Group’s continued response to the
Russian invasion of Ukraine and actions
taken to protect the Group and its
workforce;
• review of half-year or annual results, going
concern and viability, dividend policy and
considerations, investor presentation;
• geopolitical matters;
• external evaluation of the performance of
the Board, Executive Chair, Directors and
Company Secretary;
• review of the AGM statement, and proxy
agency comments and recommendations;
• annual review of bank relationships with the
Group within and outside Ukraine;
• annual review of the Treasury Policy;
• approval of the 2023 Modern Slavery
Statement; and
• the CSR budget.
During 2024, the Board also held sessions at
which the relevant executive heads of
department led detailed presentations on
operations, finance, HR and management
succession planning, sales and marketing,
investor relations and communications.
BOARD VIRTUAL SITE VISIT
AND STRATEGY DAY
Due to travel restrictions resulting from the
Russian invasion of Ukraine, the Board was
unable to conduct the planned visit of the
Group’s operations in Horishni Plavni, Ukraine.
The alternative arrangement was a Board
virtual site visit and Strategy Day.
The Board received a progress update on
actions taken from 2023 and noted the
achievements and completion of 15 out of 17
actions during the year.
The executive management were provided
with three scenarios upon which to base their
strategy reports:
Scenario 1, update on expected results for the
remainder of 2024;
Scenario 2, planning for an extended war; and
Scenario 3, planning post war to ramp up
production.
The Board received presentations from
executive management covering each of the
above scenarios and on the following:
• expected results for 2024 together with a
review of HSE metrics and measures for
2025;
• scenario planning for extended war and
post-war preparation for operations (Plant
and Mining) and group functions (Finance,
Marketing and Human Relations);
• Marketing scenario planning for growth
markets and alternative logistics;
• detailed review of ongoing group projects;
• Finance – working capital and cash
requirements for each scenario;
• Human resources – actions to support each
scenario;
• ESG – Decarbonisation projects and Green
Mining Electrification project update,
Climate Change Report and regulatory
requirements for 2025 and action plan; and
• Investor Relations – market engagement
plans for 2025 given in context of extended
war and post war scenario.
All matters discussed aligned with the
Ferrexpo strategic pillars: Health and Safety,
Financial Strength, Technology and Innovation,
Product Quality, Growth and Licence to
Operate.
The actions from the Strategy Day were
collated and disseminated to the relevant
executives for execution a few days after the
Strategy Day.
POST AGM ENGAGEMENT
During the year, we consulted with
shareholders in person and in writing on a
number of important corporate governance
issues, three of which were following
significant votes against Resolutions 9, 13
and 14 at the 2024 AGM (re-election of Vitalii
Lisovenko, to authorise the directors to allot
shares and to empower the directors to
disapply pre-emption rights). Based on an
analysis of the voting at the 2024 AGM and
the feedback received, the Board understands
that the votes against Vitalii Lisovenko’s
re-election were primarily from smaller
shareholders and their votes were in line with
AGM proxy advisor(s) recommendations, which
in part related to historic matters concerning
an internal review that was concluded in 2019.
Our largest shareholders have supported the
re-election of Mr Lisovenko, appreciating the
importance of his role on the Board.
The votes against resolutions 13 and 14 were
primarily as a result of the Company’s largest
shareholder not wanting to incur further
dilution to its voting interest in the Company.
The Company has since the AGM continued
to engage with its largest shareholder in the
ordinary course on a range of issues and will
consult with the largest shareholder ahead of
the 2025 AGM as to its position on the share
allotment and disapplication of pre-emption
rights resolutions.
Strategic Report
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113
Corporate Governance
Board evaluation cycle
2022
Internal
2023
Internal
2024
External
Action to be taken
Actions taken
Board composition
Improve Board diversity with a Director
from an ethnic minority background
During the year, the Board, with support from the Nominations Committee, continued its search for a
Director from an ethnic minority background. While the Board remains committed to achieving the
requirements of the Parker review, it has decided to defer the appointment of a minority ethnic
director until the situation in Ukraine stabilises.
During the year, female representation on the Board remained at 33%. Following Natalie Polischuk’s
departure, recruitment has been prioritised to find a suitable replacement. This search is at an
advanced stage and it is anticipated that an appointment of an independent Non-executive Director
will be made in the near future.
Succession planning
Embed sound succession planning within
the business and senior management
including diversity requirements
During the year, an update of the Board’s skills matrix was completed highlighting gaps to inform
current and future recruitment to be progressed in 2025.
A formal search launched for an additional Non-executive Director to meet the FTSE Women Leaders
Review target and the requirements of the Parker Review.
Initiatives in 2024 advanced women in leadership with more females promoted during the year to
22.9% (97 female managers) compared to 22.3% in 2023 (87 female managers); target for 2025
(towards target of 25% by 2030) set at 23.5% by the end of 2025. Total female representation as
percentage of the workforce is currently at 32.2% (2,145 female employees) compared to 30.9% in
2023 (2,130 female employees).
Board review conducted of the Group’s talent pipeline and succession plans for senior business critical
leadership roles, including identification of female candidates for accelerated development.
Balanced skill set
Ensure Non-executive Directors continue to
bring the right skill set and to balance the
workload of the Board Committees,
planning early for future skills and
experience for Board succession
During the year, the Nominations Committee undertook a thorough review of the Board’s skills matrix
to ensure it remains aligned with the Company’s evolving needs. This review plays a crucial role in
guiding both the recruitment and development of Board directors, ensuring the Board maintains the
expertise necessary to drive the company forward (for further details, see the Board’s skills matrix on
page 101).
Enhance workforce engagement
Explore different ways to further enhance
workforce engagement and bring findings
to the Boardroom and to monitor culture
and values in the organisation
Following the re-format of workforce engagement from large town hall sessions into smaller, more
intimate groups, Mr Lisovenko, Non-executive Director designate for workforce engagement, being
resident in Ukraine, visited the workforce in September 2024 over three days and provided feedback
at the scheduled Board meeting in November 2024. Members of the workforce welcomed the change
in format which was reflected in their feedback about the event.
Board efficiency and processes
Plan agenda to allow time for the most
important topics
Consider wash-up session on what went
well and what could have been done better
Agenda planning was re-visited with the Executive Chair to allow more time for the most important
topics and to facilitate deep dives on certain matters, which was well received by the Board. Wash-up
sessions between the Executive Chair and Group Company Secretary were held and used as a tool to
fine-tune agenda planning and time allocation.
Corporate resourcing
Ensure bolstered resourcing for Secretariat
Increased resourcing in Secretariat needs to be completed.
Long-term Incentive Plans
Continue to work on the LTIP measures and
appropriateness
As reported in the 2023 Annual Report, given the impact of the Russian invasion on the Company’s
energy usage and ability to invest in new technologies, the carbon reduction targets used in 2022 LTIP
were removed for 2023.
Board Evaluation
BOARD PERFORMANCE EVALUATION
Under the UK Corporate Governance Code, the Board is required to undertake annually a formal and rigorous
evaluation of its own performance and that of its Committees and individual Directors. This evaluation should
be externally facilitated every three years.
ACTIONS FROM THE REVIEW OF 2023 INTERNAL BOARD PERFORMANCE
The Board and its Committees consider their effectiveness regularly and the outcome and findings from the
2023 internal review were progressed throughout the year with the following actions taken:
Ferrexpo plc
Annual Report & Accounts 2024
114
Corporate Governance Report continued
2024 EXTERNAL BOARD PERFORMANCE REVIEW
In line with recognised best practice, an external evaluator was engaged to conduct the 2024 Board evaluation. Three different providers were
reviewed prior to confirming the appointment of Clare Chalmers Ltd. They have a strong track record of conducting board evaluations for FTSE350
companies and their distinctive review approach based on providing their own evidenced observations of the Board, triangulated with those of
Board Members and attendees, was one of the key considerations which informed this decision. Clare Chalmers Ltd conducted the Board evaluation
in 2021 and has no other connection with the Company. Initial meetings with the interim Executive Chair and Group Company Secretary were used
to agree the purpose, scope and timing of the evaluation. This facilitated the key themes for the Board performance review. The thematic evaluation
focus areas included:
• Board composition, succession, training and induction, leadership, dynamics and decision-making
• Board oversight, strategy, performance, risk, people and executive succession, purpose, values and culture
• Stakeholders, employee engagement, shareholders, customers and suppliers
• Board efficiency, agendas, minutes and secretariat support
• The effectiveness of Board Committees
Information gathering, interviews and meeting observation:
PREPARATION
• Held a scoping meeting with the interim Executive Chair and Group Company Secretary to understand context and
priorities
• Review of Board and Board Committee papers and other relevant documentation, including Strategy papers and the
Board and Board Committee Forward Agenda Planner
• Individual interviews were scheduled with the Executive Chair, Group Chief Financial Officer and Executive Director,
all the Non-executive Directors, the Group Company Secretary, Group Chief Human Resources Officer, Remuneration
Advisor and External Audit Partner.
FORMAL
INTERVIEWS
• One-to-one interviews were conducted with the six Directors, including the interim Executive Chair, who is also the
acting CEO, the Senior Independent Director and three further Independent Non-executive Directors, the Group
Company Secretary, Group Chief Financial Officer, Group Chief Human Resources Officer, Remuneration Advisor and
External Audit Partners.
BOARD
OBSERVATION
• The field work included observations of a Board meeting, as well as meetings of the Audit Committee, Nominations
Committee, the Remuneration Committee and the Health, Safety, Environment and Community Committee.
REPORTING
• Key findings and recommendations were shared with the interim Executive Chair and Group Company Secretary, and
a draft report was prepared for review.
• The final report was circulated to the full Board, with a presentation from Clare Chalmers Ltd at the February 2025
Board meeting to deliver the findings at which discussion were held and the outcomes and recommended actions
agreed.
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Corporate Governance
Board Evaluation (continued)
FEEDBACK AND REPORT FINDINGS
The Board has considered the findings of the evaluation and, overall, the review concluded that the Board is well-balanced in terms of Board
dynamics. The Board is very well led by a proactive and fully engaged interim Executive Chair. The environment in the boardroom encourages
appropriate challenge and debate with no single voice dominating discussions. The Board and its Committees are well chaired and run by
committed independent Non-executive Directors.
The report acknowledged the impact of the war, both strategic and operational and therefore the Board’s performance should be considered in the
light of the very extreme circumstances under which the business is operating. Unsurprisingly, the Board has been unable to act as forcefully as it
might otherwise have done on some of the suggestions made in the earlier reviews of its effectiveness. Nonetheless, good progress had been made
in a number of key areas including:
• bringing in a new Independent Non-executive Director and appointing new Committee chairs and a female SID;
• developing the skills matrix by adding more categories and nuance to the scoring system;
• introducing more effective risk management practices, creating a risk register and appointing a senior executive with overall responsibility for
risk; appointing an Acting Chief Marketing Officer to build relationships with managers and report to the Board on sales and marketing; and
• improvements in the quality of the information provided to Independent Non-executive Directors prior to meetings.
Beyond this, the Board continues to build on its strengths, among them capable and highly experienced Independent Non-executive Directors who
provide a good balance of support and challenge; committed Executives who are doing all in their power to keep the business running smoothly;
and a strong sense of common purpose and determination to do the best for organisation and its employees, come what may. For the time being,
the war is continuing to impose significant limitations on the Board’s ability to move forward in several important areas. However, given the hope
that it will come to an end in 2025, Independent Non-executive Directors and Executives should prepare to take action where they can.
The need to recruit more Independent Non-executive Directors to rebalance the Board’s composition was noted, to make it more diverse in terms
of gender and ethnicity. It is equally important to fill the Chief Executive Officer role. Beyond this, there is a more general requirement to add
capacity to the senior management team, including by appointing a Chief Operating Officer and if possible, a Chief Sustainability Officer. There is
also the potential to create more development opportunities and clearer career paths for those capable of rising to the top.
As well as strengthening the leadership of the organisation, there is a growing need to put in place a strategic plan for when hostilities cease,
including identifying ways to draw in new investment; putting in place a roadmap for returning to full capacity and re-establishing commercially
based decision-making when the time is right. Aside from this, there is scope to further embed risk management practices across the business and
oversee the implementation of the new reporting requirements on risk set out in the recent changes to the Corporate Governance Code. One
further suggestion is to review the assumptions underpinning the Risk Register in the light of the current situation, so as to introduce more nuance,
rather than scoring everything as high risk.
One further area where improvements can be made relatively easily is in how the Board and senior executive team communicate with the rest of the
organisation. In particular, senior leaders could look for more ways to provide feedback and encouragement to employees and celebrate successes.
In response to the main recommendations of the evaluation report, the Board has agreed that the following key areas for focus in 2025:
KEY AREAS FOR FOCUS IN 2025
Area
Actions to be taken
Board composition
• Proceed with plans to appoint a new Independent Non-executive Director ideally with Finance and
accountancy skills to add weight to the Audit Committee and, when the war in Ukraine ends,
continue the search for an Independent Non-executive Director to rebalance the gender and
ethnicity profile of the Board.
Succession planning
• Agree criteria and timing of a search for a CEO, so the interim Executive Chair can step back from
the day-to-day running of the business.
• Continue with sound succession planning within the business and senior management including
diversity requirements.
• Introduce more clearly defined development opportunities and career pathways, with the aim of
creating a talent pipeline for those with the capacity to rise to senior leadership positions in the future.
Balanced skill set
• Continue to ensure that Non-executive Directors bring the right skill set and to balance the workload
of the Board Committees, planning early for future skills and experience for Board succession.
Enhance workforce engagement
• Continue to explore different ways to further enhance workforce engagement and bring findings
into the Boardroom and to monitor culture and values in the organisation.
Board efficiency and processes
• Continue to plan the agenda, allowing appropriate time for the most important topics.
• Consider an agenda slot at the end of some Board meetings for a wash-up session focusing on what
went well and what could have gone better.
• Consider a lessons learned exercise for the Board as well as a deep dive.
Corporate resourcing
• Ensure bolstered resourcing for Secretariat.
Ferrexpo plc
Annual Report & Accounts 2024
116
Corporate Governance Report continued
TRAINING AND PROFESSIONAL
DEVELOPMENT
The interim Executive Chair is responsible
for agreeing training and development
requirements with each Director to ensure
they have the necessary skills and knowledge
to continue to contribute effectively to the
Board’s discussions. All Directors receive
updates given to the Board as a whole on
changes and proposed changes in laws and
regulations affecting the Group, as and when
necessary. The Group Company Secretary also
provides regular updates to the Board and
its Committees on regulatory and corporate
governance matters. The aim of the training
sessions is to refresh and expand the Board’s
knowledge and skills.
Usually, site visits are held for the whole Board
annually, so as to ensure that all Directors
are familiar with the Group’s operations, and
Directors may also visit the operations of the
Group independently to the extent they feel
this is necessary. Due to the ongoing conflict
in Ukraine, the physical Board site visit was
cancelled and replaced with a virtual site visit,
as set out on page 113.
All Directors may take independent
professional advice at the expense of the
Company in the furtherance of their duties.
Board Training and Development
INDUCTION
Following appointment, all Directors are
advised of their duties, responsibilities and
liabilities as a director of a public listed
company. In addition, an appropriate induction
programme is provided to each Director upon
appointment, taking into consideration the
individual qualifications, experience and
knowledge of the Director.
Induction training includes meeting senior
executives of the Executive Committee, a
detailed and structured site visit (or alternative
arrangements, where required as a result of
the ongoing conflict in Ukraine), meeting the
Group Company Secretary, necessary training
on corporate governance aspects, and
receiving various key Company documentation
and reports.
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117
Corporate Governance
FEBRUARY
• Considered assumptions used for the going
concern and viability assessments and
impairment testing, including those used for
the sensitivities and reverse stress tests.
• Received an update on the progress of the
2023 audit and analysed further work
required.
• Considered the draft Annual Report and
Accounts for 2023.
• Reviewed the questionnaire to be used to
assess the external auditor’s performance.
• Reviewed Compliance Report including
whistleblowing cases.
• Reviewed the Group’s risk matrix and register.
• Reviewed an update on the Directors’
Interests list.
• Received an update on Audit Reform.
• Received an update on the FRC’s Audit
Committee Minimum Standard consultation.
MARCH
• Received the report of the auditors to the
Committee.
• Reviewed the letter of representation.
• Reviewed the Audit Opinion.
• Reviewed the auditor’s Letter of
Independence.
• Reviewed the 2023 Annual Report and
Accounts.
• Reviewed the outcome of the going concern
assessment and impairment test.
• Considered the going concern and viability
statements.
• Discussed identified material uncertainties
and assessment of mitigating actions.
• Reviewed the Audit Committee Report.
• Update on audit partner rotation handover.
• Reviewed the auditor’s 2023 performance
(Statutory Audit Service Order) – analysis
of scores.
• Reviewed the Compliance Report, including
whistleblowing cases.
• Reviewed the Group’s risk matrix and register.
• Held a private meeting with the auditors.
MAY
• Received an update on 2023 audit follow up
matters, including management letter points.
• Reviewed the auditor’s 2023 performance
(Statutory Audit Service Order), including
detailed analysis of final scores.
• Reviewed 2024 audit planning, including key
dates and preliminary audit plan.
• Reviewed an update on 2023
recommendations from internal audit.
• Received an update on Audit Reform.
• Discussed the progress regarding the risk
assurance map
• Reviewed a Compliance Report, including
whistleblowing cases.
• Reviewed the Group’s risk matrix and register.
• Reviewed an update on Directors’ Interests
list.
• Received an update on the FRC’s Audit
Committee Minimum Standards.
KEY ACTIVITIES OF THE COMMITTEE IN 2024
Key activities of the Audit Committee during 2024 are set out below.
Focused on management’s going concern
assessment while continuing to monitor
the integrity of the financial results.
DEAR SHAREHOLDER,
On behalf of the Board, I am pleased to
present the Audit Committee Report for
the financial year ending 31 December
2024. The aim of this report is to provide
shareholders with insight into key areas that
have been considered, how the Committee
has discharged its responsibilities and lastly to
provide assurance on the integrity of the 2024
Annual Report and Accounts.
The situation for the Group during the financial
year 2024 continued to be strongly influenced
by the ongoing war in Ukraine, which also led
to a significantly increased involvement of the
Committee to timely identify and analyse the
additional risks in this unprecedented period
for the Group.
The matters requiring increased involvement
of the Committee were primarily the
assessment of the Group’s going concern
and viability in light of the existing material
uncertainties, but also the considerations
required when preparing the Group’s
impairment test for its non-current operating
assets as well as the escalation of a number
of legal matters, including events after the
reporting period, to be considered as a result
of the current political environment in Ukraine.
The Committee agenda focuses on audit,
compliance and risk management within
the Group, working closely with finance,
and management as well as with internal
and external auditors. During the year, the
Committee has robustly assessed the principal
and emerging risks facing the business. The
Committee throughout the year took into
account the regular financial and internal audit
reports made available to the Board, as well as
regularly discussing issues with management
and the external auditors.
As already disclosed for the Group Annual
Report and Accounts for the previous financial
years , a critical area of focus for the Committee
has been the going concern assessment itself
and consequently the consideration of the
preparation of the consolidated accounts on a
going concern basis, considering the ongoing
war in Ukraine and the circumstances under
which the Group has to operate, including the
current political environment and the fragile
legal system in Ukraine. As at the date of the
approval of these Consolidated Financial
Statements, the war in Ukraine is still ongoing.
Although the Group continued to demonstrate a
high level of commitment and resilience enabling
it to operate at a steady, but still lower capacity,
the war continues to pose a significant threat
to the Group’s mining, processing and logistics
operations within Ukraine and represents a
material uncertainty in terms of the Group’s
ability to continue as a going concern.
In addition to the war-related material
uncertainty, the Group is also exposed to the
risks associated with operating in challenging
environment in Ukraine, which may or may not
be exacerbated by the war and/or the current
circumstances facing Mr Zhevago (see Ukraine
Scheduled meetings
Committee member
Eligible
to attend
Attended
Stuart Brown
5
5
Vitalii Lisovenko
5
4
Natalie Polischuk
5
5
Membership and
meeting attendance
Stuart Brown
Chair of the Audit Committee
Ferrexpo plc
Annual Report & Accounts 2024
118
Audit Committee Report
country risk on page 86). As a result, the Group
is exposed to a number of risk areas that are
heightened compared to those expected in a
developed economy, such as an environment
of political, fiscal and legal uncertainties, which
represents another material uncertainty as at
the date of the approval of these consolidated
financial statements. As for the year-end 2024,
the Committee had to address and assess
the risks related to a contested sureties claim
in the amount of UAH4,727 million (US$112
million as at 31 December 2024) and a claim
in relation to an accused illegal mining and
selling subsoil (minerals other than iron ore) in
the amount of UAH157 billion (approximately
US$3.8 billion as at 14 March 2025. An
unfavourable outcome in these two cases
might affect the Group’s ability to continue
as a going concern. In addition to the claim
in relation to the accused illegal mining and
selling of subsoil, there are a number of events
after the reporting period to be assessed by
the management and the Committee. See
Note 35 Events after the reporting periods for
details of significant judgement to be made,
also in terms of the Group’s ability to continue
as a going concern. Further information is also
provided in Note 2 Basis of preparation and
Note 30 Commitments, contingencies and
legal disputes.
As a result of the ongoing war, the local audit
team in Ukraine could not be on-site and
the required audit procedures have been
performed remotely as it was done already for
the 2023 and 2022 year-end audits. In terms
of the audits on Group level, our external
auditor MHA was on-site at our office in Baar
and was able to complete its annual audit
procedures for the preliminary and year-end
audits as planned. Likewise, the Committee
has been able to physically meet with both
management and the audit partners of MHA
involved in the audit. The current situation in
Ukraine required additional work from our
external auditors, primarily in terms of the
material uncertainty surrounding the Group’s
going concern and viability assessment mainly
in light of the ongoing war, but also in relation
to the escalation of the number of legal
proceedings and disputes, including a number
of events after the reporting period, mainly
due to current political environment in Ukraine,
which is also affected by continued Martial Law
in Ukraine.
During the year, the Committee reviewed
evolving corporate governance and reporting
requirements, particularly relating to ESG
assurance and non-financial reporting.
Additionally, time was spent preparing for the
long-awaited corporate governance changes.
Audit reform has been a standing agenda
item for a long time. Although the Government
withdrew the secondary legislation establishing
some of these arrangements, they remain
committed to plans to establish ARGA (the
Audit, Reporting and Governance Authority)
as successor to the Financial Reporting Council
(“FRC”). Accordingly, Audit reform will remain
a standing agenda item for 2025
The Committee also continued to consider
the evolving risk management and internal
control landscape due to enhancements made
to reporting requirements, particularly the
future impact of the updated Provision 29 of
the UK Corporate Governance Code.
Increased TCFD disclosure requirements
were also a focus for the Committee and
environmental consultants Ricardo plc were
involved to assist in enhancing the Group’s
existing climate change reporting, scenario
analysis and potential pathways to Net
Zero iron ore pellet production. Through
this work, Ricardo plc’s analysis has helped
to enhance the Group’s carbon reduction
targets, as announced in the Group’s Climate
Change Report in December 2024. However,
considering the current situation in Ukraine
and the challenging circumstances that are
both outside of our control, the Group may
need to revise its 2030 CO2 emissions targets,
however, the 2050 Net Zero pathway, based
on current modelling, remains in tact.
In 2024 the Group published its second
Climate Change Report, which summarises
our work and efforts during the financial year
2024 to deepen our understanding of climate-
related risks and opportunities in relation to
the Group’s ongoing commitment to reduce
carbon emission. This includes our efforts
to decarbonise, our approach to managing
climate risks and opportunities, monitoring
regulatory developments, and the impact of
the war on our Net Zero pathway. A Climate
Change Report case study is provided in this
report on pages 52 to 53.
Detailed below is further information on
the role, structure and key activities of the
Committee and significant judgements it has
considered and assessed in 2024. I hope this
additional information about the Committee
and its activities is useful.
For the 2024 Annual Report and Accounts,
we also engaged our auditors to perform a
limited assurance on certain non-financial
reporting criteria.
This engagement was in accordance with the
requirements of the International Standard
on Assurance Engagements ISAE (UK) 3000
Assurance Engagements and complied with
the independence requirements of the FRC’s
Ethical Standard and the ICAEW Code of
Ethics and applied the International Standard
on Quality Management (UK) 1 (“ISQM (UK) 1”),
issued by the Financial Reporting Council,
and maintained а comprehensive system of
JULY
• Presentation and review of half-year accounts.
• Reviewed the going concern assessment and
impairment test.
• Considered the going concern statement.
• Received auditor’s Review Report to the Audit
Committee.
• Received an update on proposed Audit
Reform.
• Received an update on Cyber Security and IT
Security audit with proposed actions.
• Received an update on the ESG disclosure
audit.
• Reviewed the Group’s risk matrix and register.
• Reviewed the Directors’ Interests list.
• Reviewed a Compliance Report, including
whistleblowing cases.
• Received an update on the FRC’s Audit
Committee Minimum Standards.
NOVEMBER
• Received an update on the regulatory
reporting landscape, covering TCFD, CSRD and
ESG double materiality reporting.
• Received an update on the assurance of ESG
metrics in preparation for CSRD reporting.
• Received a report on the outcome of the 2023
internal audit plan.
• Received a progress update on the 2024
internal audit matters.
• Reviewed the preliminary internal audit plan
for 2025.
• Considered the Group’s work plan for the
2024 year end closing.
• Considered a report from the external
auditors on progress of the preliminary audit
for 2024.
• Reviewed an external audit planning report.
• Received an update on the planned process
for the viability and going concern assessment.
• Received an update on proposed Audit Reform.
• Received an update on the 2024 Corporate
Governance Code.
• Received an update on the FRC’s Audit
Committee Minimum Standards.
• Reviewed a Compliance Report, including
whistleblowing cases.
• Reviewed the Directors’ Interests list.
• Reviewed the Group’s risk matrix and register.
• Reviewed the Audit Committee 2025 Forward
Planner.
Strategic Report
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119
Corporate Governance
quality including documented policies and
procedures regarding compliance with ethical
requirements, professional standards and
applicable legal and regulatory requirements.
Limited assurance was conducted for the
following ten reporting criteria, an increase
from the three reporting criteria in the
previous year:
• Scope 1 emissions on an absolute basis;
• Scope 2 emissions on an absolute basis;
• Scope 3 emissions on an absolute basis;
• LТIFR (Lost-time Injury Frequency Rate);
• total health and safety inspection in the
year;
• total training hours for employees in
operations in safety, technical and
functional skills;
• total number of employees who have annual
training and development reviews;
• total number of employees who underwent
safety skills or other functional training;
• number of women as а proportion of the
workforce; and
• number of female managers percentage of
total managers (grade 10 and above).
The annual Board Effectiveness evaluation was
conducted externally this year, which assessed
our performance as a Committee. I am pleased
that this concluded that the Committee
operates effectively and that the Board takes
assurance from the quality of our work.
I would like to thank the members of
the Committee, the Management team,
Internal Audit and MHA for their continued
commitment throughout the year, for the
transparent discussions that take place during
the meetings and for the contribution they all
provide in support of the Committee’s work.
Stuart Brown
Chair of the Audit Committee
ROLE OF THE COMMITTEE
The Committee’s objectives and
responsibilities are set out in its terms of
reference which are available to view on the
Company’s website at www.ferrexpo.com.
The Committee’s main responsibilities are:
• Monitoring the integrity of the annual and
interim financial statements and the
accompanying reports to shareholders.
• Making recommendations to the Board
concerning the approval of the annual and
interim financial statements.
• Reviewing and monitoring the adequacy
and effectiveness of the Group’s risk
management framework and internal
control system as well as in terms of the
disclosures on the Group’s Principal Risks
as contained on pages 84 to 94.
• Approving the terms of reference of the
internal audit function and assessing its
effectiveness.
• Approving the internal audit plan and
receiving regular reports from the Group’s
Head of Internal Audit.
• Overseeing the Group’s relations with the
external auditor, including an assessment
of their independence, effectiveness and
objectivity.
• Overseeing completion of the Group’s going
concern and viability assessment and
statements and the conclusions thereon.
• Reviewing and monitoring the Group’s
whistleblowing procedures and the Group’s
systems and controls for the prevention of
bribery and corruption.
During the year ended 31 December 2024, the
Committee ensured that it has had oversight
of all these areas listed above. The Board also
asked the Committee to advise it as to
whether the Annual Report and Accounts are
fair, balanced and understandable and provide
the information necessary for shareholders to
assess the Group’s position, performance,
business model and strategy.
COMMITTEE MEMBERSHIP
AND ATTENDANCE
On 1 January 2024 Stuart Brown was
appointed Chair of the Committee.
As at the year end, the Committee comprised
three Independent Non-executive Directors:
• Stuart Brown (Chair of the Committee);
• Vitalii Lisovenko; and
• Natalie Polischuk.
On 11 January 2025, Natalie Polischuk
resigned from the Board of Ferrexpo with
immediate effect and Fiona MacAulay, Senior
Independent Non-executive Director, has
been appointed as a member of the Audit
Committee on an interim basis.
In addition to the five meetings held in 2024,
the Audit Committee has met twice to date
in 2025. All members of the Committee are
considered to possess appropriate knowledge
and skills relevant to the activities of the
Group, and Stuart Brown has recent and
relevant financial experience. See page 103 of
the Corporate Governance section regarding
his skills, expertise and contributions.
In addition to its members, other individuals
and external advisers, and the Executive
Chair of the Board, may be invited to attend
meetings of the Committee at the request
of the Committee Chair. Regular attendees
at meetings include the Chief Financial
Officer, Group Financial Controller, Group
Company Secretary and audit partners of
our external auditor MHA. The Committee
has an opportunity to meet with the
external auditors at the end of its scheduled
meetings, without the Executive Directors or
management being present.
Ferrexpo plc
Annual Report & Accounts 2024
120
Audit Committee Report continued
SIGNIFICANT ISSUES AND JUDGEMENTS
The significant issues and judgements considered by the Committee in respect of the 2024 Annual Report and Accounts are set out below:
Judgements/actions taken
GOING CONCERN CONSIDERATIONS
The war in Ukraine is still ongoing and the Group continued to demonstrate its resilience and flexibility from an operating perspective, although the
ongoing war continues to affect its financial results. The situation in Ukraine is unpredictable and continues to require the Group to be extremely
flexible, as mining operations and production have to be adapted to the prevailing conditions. Regaining access to Ukrainian Black Sea ports enabled
the Group to expand its sales activities and increase its production to the highest level since the full-scale invasion of Ukraine in February 2022.
The challenging and unpredictable environment in which the Group has been operating since the beginning of the invasion and the ongoing war, whose
duration and impact on the Group’s activities in future periods are difficult to predict, continues to represent a material uncertainty in terms of the
Group’s ability to continue as a going concern.
The war-related material uncertainty is predominantly related to on a constant power supply in Ukraine, which was affected during 2024 by Russian
attacks on power generation and transmission infrastructure in Ukraine, which has, together with higher than expected prices for input material,
especially for electricity imported from EU countries, had an impact on the Group’s cash flow generation and profitability.
The Group’s net cash position decreased from US$108 million at the beginning of the year to US$ 101 million as at 31 December 2024. As at the date
of the approval of these Consolidated Financial Statements, the Group is in a net cash position of approximately US$41 million with an available
cash balance of approximately US$45 million. In addition to the available cash balance, the Group has an outstanding trade receivable balance of
approximately US$43 million from its pellet and concentrate sales in January and February 2025, which are expected to be collected in the next months.
In addition to the war related uncertainties, the Group is exposed to a number of risk areas that are heightened compared to those expected in a
developed economy, such as an environment of political, fiscal and legal uncertainties, which require a significant portion of critical judgements to be made
by the management, mainly in respect of a contested sureties claim in the amount of UAH4,727 million (US$112 million as at 31 December 2024) and a
claim in the amount of UAH157 billion (approximately US$3.8 billion) in favour of the Ukrainian state related to alleged illegal mining and selling of subsoil
(minerals other than iron ore). See Note 30 Commitments, contingencies and legal disputes to the Consolidated Financial Statements for further details.
The Audit Committee has reviewed:
• the key assumptions used for the Group’s long-term model, which forms the basis for the management’s going concern assessment;
• the sensitivities prepared for reasonable adverse changes and available mitigating actions under control of the Group, if needed;. the reverse
stress tests performed for more severe adverse changes;
• the legal merits in terms of the ongoing legal disputes mentioned above and potential future actions available to protect the interests of the
Group;
• management’s assessment of the impact of the war and ongoing legal actions in Ukraine on the Group’s going concern and viability; and
• management’s assessment of a number of events after the reporting period with regard to their treatment as adjusting or non-adjusting post
balance sheet events from an accounting perspective.
The Committee concurs with management’s conclusion that, notwithstanding all of the available mitigating actions, a material uncertainty in respect of
the ongoing war and the legal disputes, including events after the reporting period, still remains as some of the identified uncertainties are outside of
Group Management’s control. See Note 2 Basis of preparation to the Consolidated Financial Statements on pages 178 to 181 and the Viability Statement
on pages 95 to 96 for further information.
The Group’s Principal Risks section on pages 84 to 94 provided further information on the Ukrainian country risk to which the Group is seriously
exposed, including the conflict risk and the risks related to operating in a challenging environment in Ukraine.
Strategic Report
Financial Statements
121
Corporate Governance
Judgements/actions taken
IMPAIRMENT CONSIDERATIONS OF THE GROUP’S NON-CURRENT OPERATING ASSETS AS A RESULT OF THE ONGOING WAR
(NOTE 13 TO THE CONSOLIDATED FINANCIAL STATEMENTS)
As at the date of the approval of these consolidated financial statements, the war in Ukraine is still ongoing and the duration is difficult to predict.
During the financial year 2024, the Group continued to demonstrate resilience and flexibility from an operating perspective, although the ongoing war
continues to affect its financial results.
A number of significant judgements and estimates are used when preparing the Group’s financial long-term model, which are, together with the
key assumptions used, reviewed by the Audit Committee. The Group’s long-term model is based on management’s best estimate of reasonably
conservative key assumptions, which also take account of the current circumstances in which the Group has to operate.
According to the base case of the Group’s impairment test prepared for the 2024 year-end accounts, the value in use of the Group’s single cash-
generating unit’s operating non-current assets, including property, plant and equipment as well as other intangibles assets and other non-current
assets, was US$72 million below the carrying value of these assets, reflecting the impairment loss recorded in this amount as at 31 December 2024.
The Committee concurs with management’ conclusion that potential impact of the personal sanctions imposed on Mr. Zhevago after the reporting
period may have an impact on the Group’s future cash flow generation, which would in turn negatively impact the carrying value of the Group’s assets
in future periods. This event is treated as a non-adjusting post balance sheet event and Note 35 Events after the reporting period to the Consolidated
Financial Statements provides further information on the possible financial impact.
In addition, the Committee also concurs with management’s conclusion that, due to the lack of information available at the date of approval of these
consolidated financial statements, it is impossible to estimate the possible financial impact in future periods from a nationalisation of 49.5% of shares
in FPM and certain of its assets, and that the event is treated as a non-adjusting post balance sheet event as further disclosed in Note 35 Events after
the reporting period
The Committee is aware that the level of judgement significantly increased, compared to the years before the war commenced. Beside the normal
judgement in terms of production and sales volumes, anticipated prices for iron ore products and costs for input material, the outcome of the
impairment test is also heavily dependent on when the war is expected to end.
The Committee concurs with management’s conclusion on the impairment test prepared and the high sensitivity of potential adverse changes in key
assumptions on the value in use of the Group’s non-current operating assets. Detailed information on the sensitivities prepared are provided in Note 13
Property, plant and equipment to the Consolidated Financial Statements.
TAXATION IN GENERAL AND TAX LEGISLATION IN UKRAINE (NOTE 11 TO THE CONSOLIDATED FINANCIAL STATEMENTS)
The Group operates across a number of jurisdictions through its value chain, and prices its sales between its subsidiaries using international benchmark
prices for comparable products covering product quality and applicable freight costs. The Group judges these to be on terms which comply with
applicable legislation in the jurisdictions in which the Group operates.
As disclosed in the Group Annual Report and Accounts for the 2023 financial year, the Group’s two major subsidiaries in Ukraine received tax audit
reports on completed tax audits stating potential claims for underpayment of corporate profit taxes in Ukraine of UAH2,162 million (US$51 million as at
31 December 2024), including fines and penalties, and UAH259 million (US$6 million as at 31 December 2023), respectively. Both subsidiaries filed the
objections against the potential claims stated in the tax audit reports received.
Despite the two claims received, it is still management’s view that the Group has complied with the applicable legal provisions in all its cross-border
transactions based on the relevant technical grounds, including those during the financial years 2015 to 2017 for which substantial claims have been
received.
Having considered the background of the claims, the Committee shares management’s view that the Group has complied with applicable legislation
for its cross-border transactions based on the relevant technical grounds. As a consequence, no specific provisions have been recognised as at
31 December 2024 for the two claims received, as these claims will still have to be heard by the courts in Ukraine. However, the Committee is aware
that there is a risk that the independence of the judicial system and its immunity from economic and political influences in Ukraine is not upheld and, if
so, the Group could be subject to material financial exposures relating to the claims received and potential claims from future tax audits.
Ferrexpo plc
Annual Report & Accounts 2024
122
Audit Committee Report continued
Judgements/actions taken
COMPLETENESS OF CONTINGENCIES AND LEGAL DISPUTES (NOTE 30 TO THE CONSOLIDATED FINANCIAL STATEMENTS)
The Committee is aware that the Group is, in addition to the war-related uncertainties, also exposed to the risks associated with operating in a
challenging environment in Ukraine, which may or may not be exacerbated by the war and/or the current circumstances facing Mr Zhevago. As a result,
the Group is exposed to a number of risk areas that are heightened compared to those expected in a developed economy, including an environment of
political, fiscal and legal uncertainties.
The Group is currently involved in several ongoing legal proceedings and disputes. Detailed information on the status and associated risks are disclosed
in Note 30 Commitments, contingencies and legal disputes to the Consolidated Financial Statements:
• civil claim for damages amounting to UAH157 billion (approximately US$3.8 billion as at 14 March 2025) in favour of the Ukrainian state related to alleged
illegal mining and selling of subsoil (minerals other than iron ore), which was received subsequent to the year-end 2024 and is related to investigations
that commenced in 2023;
• a claim in the amount of UAH4,727 million (US$112 million as at 31 December 2024) in respected of contested sureties;
• various share freezes in relation to claims from the Ukrainian Deposit Guarantee Fund (“DGF”), the National Bank of Ukraine (“NBU”) and the Bank F&C;
• share dispute related to the Group’s major subsidiary in Ukraine;
• royalty-related investigation and claim;
• currency control measures imposed in Ukraine;
• ecological claims; and
• cancellation of the mining licence for Galeschynske deposit.
As mentioned above, the Group is operating in a challenging environment in Ukraine and most of the matters to be considered by the Committee
are seen to be a result of operating in such an environment. The claims and court decision received are examples of operating a dynamic and adverse
political landscape in Ukraine, which creates additional challenges for the Group’s subsidiaries in Ukraine, but also for the Group itself.
As disclosed in Note 35 Events after the reporting period, there are a number of events after the reporting period, which had to be assessed by the
management and the Committee. The Committee concurs with management’s conclusion that these events are treated as non-adjusting post balance
sheet events from an accounting perspective as well as with the disclosure of the critical judgements made.
Following the thorough review of management’s position and independent legal advice received for the matters listed above, the Committee concluded
that the disclosures made in Note 30 Commitments, contingencies and legal disputes to the Consolidated Financial Statements provide an adequate
level of detail to allow the reader of the accounts to understand the potential consequences and the related exposure. The Committee also concurs with
management’s view that no additional provisions have to be recognised for other ongoing legal proceedings and disputes in the consolidated statement
of financial position as at 31 December 2024.
The Committee concurs with management’s conclusion that a material uncertainty in respect of the ongoing legal disputes still remains as some of the
identified uncertainties are outside of Group Management’s control. See Note 2 Basis of preparation to the Consolidated Financial Statements on pages
178 to 181 and the Viability Statement on pages 95 to 96 for further information.
EVENTS AFTER THE REPORTING PERIOD (NOTE 35 TO THE CONSOLIDATED FINANCIAL STATEMENTS)
The following event after the reporting period are summarised below.
As announced on 5 March 2025, the SBI also made a media statement that the Pecherskyi District Court of Kyiv has granted a request of the Prosecutor
General’s Office of Ukraine to transfer 49.5% of the corporate rights of FPM to Ukraine’s Asset Recovery and Management Agency (“ARMA”), together
with corporate rights in another 15 undisclosed legal entities. This transfer of corporate rights is in connection with on-going proceedings relating to Bank
F&C. Based on independent legal advice, the only purpose for which management of property may be transferred to the ARMA is for preservation of real
evidence relevant to a criminal proceeding.
On 20 February 2025, the State Bureau of Investigation (the “SBI”) made a media announcement regarding a potential claim to the High Anti-Corruption
Court of Ukraine (the “HACC”) to nationalise 49.5% of shares in FPM and certain of its assets. The SBI stated that it is working with the Ministry of Justice
of Ukraine to prepare the claim. As at the date of approval of these consolidated financial statements, FPM has not received a formal notification of such
claim.
On 12 February 2025, the Group became aware that the National Security and Defence Council of Ukraine (the “NSDC”) adopted the decision later
enacted by the Presidential Decree No. 81/2025, to impose personal special economic and other restrictive measures (“sanctions”) on certain individuals,
including Mr. Zhevago. These sanctions imposed on Mr. Zhevago are personal in nature and have not been imposed on Ferrexpo plc, Ferrexpo AG (“FAG”),
Ferrexpo Poltava Mining (“FPM”) or any other member of the Ferrexpo Group.
As announced on 4 February 2025, the Group’s subsidiary Ferrexpo Poltava Mining (“FPM”) has received a civil claim seeking joint liability of FPM and its
General Director for damages amounting to UAH157 billion (approximately US$3.8 billion as at 14 March 2025) in favour of the Ukrainian state.
The events after the reporting period had to be assessed by the management and the Committee when preparing the consolidated financial statements
for the year ended 31 December 2024. The primary focus was on the impact on the Group’s ability to continue as a going concern and on the Group’s
impairment test, but also in respect of the completeness of contingencies and legal disputes. Further information on the significant issues and
judgements considered by the Committee are provided in the sections above.
See also Note 2 Basis of preparation, Note 30 Commitments, contingencies and legal disputes and Note 35 Events after the reporting period to the
Consolidated Financial Statements for further details on the events listed above.
Strategic Report
Financial Statements
123
Corporate Governance
INTERNAL CONTROL AND RISK
MANAGEMENT
INTERNAL CONTROLS – GENERAL
The Board, with assistance from the
Committee, regularly reviews the policies and
procedures making up the risk management
framework and internal control system, and
any significant matters reported by the
Executive Committee. The risk register is
considered at every scheduled Board and
Committee meeting, with specific risks
discussed in detail as and when required.
The Board has delegated its responsibility
for reviewing the effectiveness of the risk
management framework and internal control
system to the Committee. In making its
assessment, the Committee considers the
reporting provided to it during the year in
relation to internal control systems and
procedures, including the risk matrix and
register, and may request more detailed
investigations into specific areas of concern
if appropriate.
Key elements of the risk management
framework and internal control system include:
• The Group has in place a series of policies,
practices and controls in relation to the
financial reporting and consolidation
processes, which are designed to address
key financial reporting risks, including risks
arising from changes in the business or
accounting standards and to provide
assurance of the completeness and
accuracy of the content of the Annual
Report and Accounts.
• Regular review of risk and identification of
key risks at the Executive Committee which
are reviewed by the Committee and by the
Board.
• The Finance, Risk Management and
Compliance Committee (“FRMCC”), an
executive sub-committee, is charged, on
behalf of the Executive Committee or
Committee, as appropriate, with ensuring
that, inter alia, systems and procedures are
in place to comply with laws, regulations and
ethical standards. The Group Compliance
Officer attends FRMCC meetings for
compliance related matters, and, as
necessary, local compliance officers from
the Group’s operations attend and present
regular reports to ensure that the FRMCC is
given prior warning of regulatory changes
and their implications. The FRMCC enquires
into the ownership of potential suppliers
deemed to be “high risk”, and oversees the
management of conflicts of interests below
Board level and general compliance activities
(including under the UK Bribery Act, the
Modern Slavery Act, the Criminal Finances
Act, and the EU General Data Protection
Regulation). The FRMCC also reviews
financial information, management
accounts, taxation, cash management,
and the Group’s risk matrix and register,
including counterparty risk. The FRMCC
met nine times in 2024.
• Clearly defined organisational and reporting
structure and limits of authority for
transaction and investment decisions,
including any with related parties.
• Clearly defined processes for the review
and approval of related party listings and
appropriate review and approval of
transactions from the Committee of
Independent Directors and the Executive
Related Party Matters Committee
(“ERPMC”). Additional procedures are in
place locally to ensure the completeness
and the arm’s length nature of related party
transactions, such as background checks
and tender processes. The ERPMC met
nine times in 2024 and decisions taken in
between regular ERPMC meetings were
taken by written resolution.
• Clearly defined information and financial
reporting systems, including regular
forecasts and an annual budgeting process
with reporting against key financial and
operational milestones.
• Investment appraisal underpinned by the
budgetary process, where capital
expenditure limits are applied to delegated
authority limits.
• The Investment Committee (an executive
sub-committee) meets as required in
order to consider and approve capital
expenditures within limits delegated by
the Executive Committee and the Board.
However, since the start of the war in
Ukraine, the monthly meetings of the
Investment Committee ceased as there
was relatively little capital expenditure. The
meetings resumed in September 2024 to
enhance the process of investment decision
and evaluation. The Committee met three
times in 2024.
• A budgetary process and authorisation
levels to regulate capital expenditure. For
expenditure beyond specified levels,
detailed written proposals are submitted to
the Investment Committee and Executive
Committee and then, if necessary, to the
Board for approval.
• Clearly defined Treasury Policy (details
of which are given in Note 27 Financial
instruments to the Consolidated Financial
Statements on pages 212 to 219), which
is monitored and applied in accordance
with pre-set limits for investment and
management of the Group’s liquid
resources, including a separate treasury
function.
• Internal audit by our in-house audit team
based in Ukraine (see below), which
monitors, tests and improves internal
controls operating within the Group at all
levels and reports directly to the Chair of
the Committee, and to the Group CFO for
line management purposes.
• A Group accounting manual is used by the
finance teams throughout the Group, which
ensures that information is gathered and
presented in a consistent way that facilitates
the production of the Consolidated Financial
Statements.
• A framework of transaction and entity-level
controls to prevent and detect material
error and loss.
• Anti-fraud measures through an internal
security department operating in the
Company’s key operating subsidiaries.
• A whistleblowing policy is in place under
which staff may in confidence, via an
independent, secure website, raise concerns
about financial or other impropriety, which
are followed up by Internal Audit and
reported on to the Board.
The Committee and the Board continued to
review ongoing litigation affecting the Group
throughout the year (see Note 30
Commitments, contingencies and legal
disputes to the Consolidated Financial
Statements on pages 221 to 226), and received
regular update reports and presentations from
legal counsel.
Full details of the Group’s policy on credit,
liquidity and market risks and associated
uncertainties are set out in Note 27 Financial
instruments to the Consolidated Financial
Statements on pages 212 to 219. See also the
Principal Risks section of the Strategic Report
on page 86.
INTERNAL AUDIT
The internal audit function has a Group-wide
remit, and the Head of Internal Audit, who has
significant mining experience; reports directly
to the Chair of the Committee and to the
Group CFO.
The Committee reviews at least annually the
effectiveness of the internal audit function by
assessing outcomes against plan targets, and
is satisfied, following its 2024 assessment,
with the rigour of the internal audits and with
management’s response to the audit findings
and recommendations. The resources of
internal audit are also monitored to ensure
appropriate expertise and experience. An
Internal Audit plan for 2025 was approved by
the Committee in November 2024.
The Internal Audit plan for 2024 was approved
by the Audit Committee. The full scope audits
focused on Group Compliance Audit, Group
Sales Audit, Outbound Logistics Audits for
FPM and FYM and Fuel Management Audits
for FPM and FYM, as well as audits in respect
of CSR and Donations and IT Policies. A
limited scope review of Diversity, Equity and
Inclusion in Ukraine. The Committee received
a report from the Head of Internal Audit twice
during the year, and reviewed the progress
of the Internal Audit plan with the external
auditors and the Head of Internal Audit. The
reports include the Head of Internal Audit’s
assessment of the operation and effectiveness
of relevant elements of the Company’s
internal control systems, and formed part
of the Committee’s ongoing monitoring and
assessment of such systems.
Ferrexpo plc
Annual Report & Accounts 2024
124
Audit Committee Report continued
EXTERNAL AUDITOR
The Committee has primary responsibility
for overseeing the relationship with the
external auditors, including assessing their
performance, effectiveness and independence
annually, and making a recommendation to
the Board in respect of their reappointment or
removal.
Audit firm, MHA LLP were appointed in July
2019 with lead audit partner Rakesh Shaunak
in post since the start of the 2019/20 audit
to 2023/24. The current lead audit partner is
Andrew Moyser in post from the start of the
2024/25 audit.
PARTNER ROTATION
Rakesh Shunak had been lead audit partner
since the start of the 2019 audit. At the end
of the 2023 audit Rakesh Shunak had been
in post for five years, meeting the term limit
according to the Auditing Practices Board’s
Ethical Standards. Following the completion
of the 2023 audit in 2024, Rakesh Shunak
was replaced by Andrew Moyser as lead
audit partner.
EXTERNAL AUDIT
AUDITOR INDEPENDENCE AND
ASSESSMENT OF AUDIT PROCESS
EFFECTIVENESS
The Audit Committee and the Board place
great emphasis on the independence and
objectivity of the Company’s external auditors
when performing their role in the Company’s
reporting to shareholders.
The effectiveness of the audit process and
the overall performance, independence
and objectivity of the external auditors are
reviewed annually at the end of the annual
reporting cycle by the Committee, taking
into account the views of management. This
review is undertaken through a structured
questionnaire, assessing the auditor’s
performance under various headings: the
robustness of the audit, the quality of delivery,
the calibre of the audit team and value added
advice. The results of the survey indicated that,
overall, the external auditor’s performance was
considered very good by the respondents with
significant improvement in the scores from
respondents in Ukraine. A couple of areas for
improvement were noted but none impacted
on the effectiveness of the audit. The outcome
of the 2024 review in respect of the 2023
Annual Report and Accounts was discussed
with the relevant partners of MHA.
The auditors also provide to the Committee
information about policies and processes
for maintaining independence and
monitoring compliance with relevant current
requirements, including those regarding
the rotation of audit partners and staff, and
the level of fees that the Company pays in
proportion to the overall fee income of the
firm. The Committee concluded that the
auditors are providing the required quality
in relation to the audit and that they have
constructively challenged management where
appropriate.
Taking into account the review of
independence and performance of
the external auditor, the Committee
has recommended to the Board the
reappointment of MHA. Resolutions
reappointing MHA as external auditor and
authorising the Directors to set the auditor’s
will be proposed at the 2025 AGM. The
Company notes that as of the end of the
financial year 2024, the Company has engaged
MHA as external auditor for six consecutive
financial years. In light of the material
uncertainty related to the ongoing war in
Ukraine, the Committee does not consider it
to be the right time, or in the best interests
of the Company’s shareholders, to conduct a
competitive tender process for the external
audit. The Company proposes that it will next
complete a competitive tender process during
financial year 2027, subject to the situation
in Ukraine having stabilised by that time. The
Committee will continue to keep this position
under review.
The Committee has complied with the
Statutory Audit Services Order issued by
the UK Competition and Markets Authority
Authority.
The Committee reviewed all the Standards set
out in the FRC’s Audit Committee Minimum
Standard as applicable. The Committee has
complied with the Audit Committees and the
External Audit: Minimum Standard published
by the FRC in May 2023 for the financial year
ended 31 December 2024.
There is regular open communication between
the Committee and the external auditor, and
the Committee met five times during the
year. The Committee meets regualry with the
external auditors without any representation
from management being present.
NON-AUDIT SERVICES
The Committee operates policies in respect
of the provision of non-audit services and
the employment of former employees of
the auditors. These policies ensure that the
external auditors are restricted to providing
only those services which do not compromise
their independence under applicable guidance
and the FRC’s Ethical Standards.
The policy on the provision of non-audit
services prohibits the use of the auditors
for the provision of transaction or payroll
accounting, outsourcing of internal audit
and valuation of material financial statement
amounts. Any assignment that is proposed
to be given to the auditors above a value of
US$20 thousand must first be approved
by the Committee (and the Committee is
routinely notified of all non-audit services).
Fees for audit-related and non-audit-related
services performed by the external auditors
during the financial years 2024 and 2023 are
shown in Note 7 Operating expenses to the
Consolidated Financial Statements on page
187. For the financial 2024, non-audit services
totalling US$138 thousand were performed
by MHA.
The total of audit-related assurance services
of US$309 thousand as at 31 December
2024 include US$132 thousand regarding
ESG-related disclosures in the Annual Report
and Accounts under International Standard
on Assurance Engagements ISAE (UK) 3000
(Revised) in respect of the process for reporting
of selected safety and emissions data.
FINANCIAL REPORTING
The Board has asked the Committee to
advise whether it considers the 2024 Annual
Report and Accounts, taken as a whole, to
be fair, balanced and understandable and
whether it provides the information necessary
for shareholders to assess the Company’s
position, performance, business model and
strategy.
In providing its advice, the Committee
noted that the factual content of the Annual
Report and Accounts has been carefully
checked internally, and that the document
has been reviewed by senior management
in order to ensure consistency and overall
balance. The Committee has also conducted
its own detailed review of the disclosures
in the Annual Report and Accounts, taking
into account its own knowledge of Group’s
strategy and performance, the consistency
between different sections of the report, the
accessibility of the structure and narrative of
the report, and the use of key performance
indicators.
The Committee is satisfied that, taken as a
whole, the 2024 Annual Report and Accounts
is fair, balanced and understandable and
that it provides the information necessary
for shareholders to assess the Company’s
position, performance, business model
and strategy, and has advised the Board
accordingly.
The Committee has also advised the Board
on the process which has been undertaken in
the year to support the Viability Statement
required under the UK Corporate Governance
Code. The Viability Statement is set out in
the Strategic Report on pages 95 to 96 and a
statement setting out the Board’s assessment
of the Company as a going concern is
contained in the Directors’ Report on pages
156 to 158 and Note 2 Basis of preparation
to the Consolidated Financial Statements on
pages 178 to 181.
WHISTLEBLOWING POLICY
In accordance with the UK Corporate
Governance Code, the Board is responsible
for reviewing the Company’s whistleblowing
arrangements, and receives regular
reports from the Audit Committee and
the Head of Internal Audit which detail any
new whistleblowing incidents and, where
appropriate, steps taken to investigate such
incidents.
Stuart Brown
Chair of the Audit Committee
18 March 2025
Strategic Report
Financial Statements
125
Corporate Governance
DEAR SHAREHOLDER,
I am pleased to present the Nominations
Committee Report for 2024 and provide a
summary of the work that the Committee
completed in the reporting year. The role of
the Nominations Committee is to assist the
Board in regularly reviewing its composition
and those of its Committees, to lead the
process for Board appointments, and ensure
effective succession planning for the Board
and senior management. The key activities
undertaken in the year are described in more
detail in this report. The Committee’s terms of
reference are available to view online on the
Company’s website (www.ferrexpo.com).
In 2024, the Committee was formally
convened four times (2023: four) and
considered the following:
• training and developing needs to ensure
Board effectiveness;
• the composition and size of the Board, and
its Committees in order to maintain a diverse
Board with the appropriate mix of skills,
experience, independence and knowledge;
• the criteria for Non-executive and Executive
Director appointments;
• the required skills matrix for the
composition of the Board;
• the current and future leadership needs of
the organisation, including succession
planning for Executive Directors and Group
Executive Committee roles;
• the composition and diversity of the
Executive Committee and direct reports to
Executive Committee members;
• the engagement of executive search
agencies to assist with Board appointments;
• the recommendations of the Parker Review
relating to the appointment of ethnic
minority directors on Boards;
• recommendations to the Board in respect
of candidates for appointment as
Non-executive Directors;
• recommendation that the Board support
the election or re-election of each of the
directors standing at the Annual General
Meeting in 2024;
• actions to be taken in 2024 in support of
the achievement of the Group’s diversity
and inclusion goals; and
• the results of the Group’s annual talent
review and succession plans for business-
critical roles.
The Committee also agreed to undertake an
external performance evaluation for the year
to 31 December 2024 (for further information
see the Board’s Performance Evaluation on
pages 114 to 116). The Company will conduct
an internal performance evaluation in 2025.
On 11 January 2025, Natalie Polischuk stood
down for personal reasons from the Board as
an independent Non-executive Director and
as Chair of the Health, Safety, Environment
and Communities (“HSEC”) Committee, as
a member of the Audit Committee and as a
member of the Committee of Independent
Directors (“CID”). I would like to take this
opportunity to acknowledge and thank
Natalie for the contribution she made to the
work of the Board and the HSEC, Audit and
CID Committees while she served on them.
Following Natalie Polischuk’s departure,
recruitment has been prioritised to find a
suitable replacement. This search is at an
advanced stage and it is anticipated that
an appointment of an independent Non-
executive Director will be made in the near
future. In the interim, Ms Polischuk’s workload
on the Board will be undertaken by other
Board members.
Following Ms. Polischuk’s departure from the
Board in January 2025, the Board’s gender
diversity fell further below the 40% target set
by the FTSE Women Leaders Review. While
the Board remains committed to achieving this
benchmark, its immediate priority is ensuring
it has the right mix of skills, particularly sector
expertise and geopolitical experience, crucial
for navigating the ongoing crisis in Ukraine.
The Board expects that its current search
for Ms. Polischuk’s replacement will help it
restore gender balance on the Board but, while
recognising the Parker Review deadline of
31 December 2024 for FTSE 250 companies,
it has decided to defer the appointment of
a minority ethnic director until the situation
in Ukraine stabilises. Nonetheless, the Board
remains fully committed to broadening its
composition and will continue to focus on
meeting both gender and ethnic diversity
targets for UK-listed boards as part of the
Board’s refreshment programme.
In 2024, the Committee conducted a
comprehensive review of the Board’s
skills matrix to ensure it remains relevant
and aligned with the Company’s evolving
needs in guiding both the recruitment and
development of Board directors (for further
details, see the Board’s Skills Matrix on
page 101).
The Committee is chaired by Lucio Genovese.
The Committee consists of three Independent
Non-executive Directors and, by invitation, is
also attended by the Group Chief Human
Resources Officer.
Read the Committee’s full objectives and
responsibilities online:
www.ferrexpo.com/about-ferrexpo/
corporate-governance/board-committees/
Scheduled meetings
Committee member
Eligible
to attend
Attended
Lucio Genovese
4
4
Vitalii Lisovenko
4
4
Fiona MacAulay
4
4
Membership and
meeting attendance
Lucio Genevese
Chair of the Nominations Committee
Ferrexpo plc
Annual Report & Accounts 2024
126
Nominations Committee Report
Following its review, the Committee identified
key areas requiring reinforcement and
launched a targeted search for candidates with
expertise in legal affairs and cybersecurity.
Given the escalating cyber threats arising
from the war in Ukraine and the complex
legal landscape the Company faces,
strengthening the Board in these areas is
essential. Additionally, the Board recognised
the need for candidates with deep sector
expertise and geopolitical experience which
are seen as critical attributes for steering
the Company through the ongoing crisis
in Ukraine. By proactively enhancing its
leadership with specialised knowledge, the
Board is ensuring it remains resilient, agile,
and well-prepared to navigate an increasingly
complex risk environment while safeguarding
the Company’s long-term strategic objectives.
This search remains a top priority, and an
appointment is expected soon.
The Group remains committed to fostering
equality of opportunity across its workforce,
regardless of gender, ethnicity, religion,
disability, age, or sexual orientation. To
support this commitment, the Group has
established formal policies that promote
inclusivity and equal access to career growth.
In support of this commitment, the Group
runs a variety of programmes designed to
foster workplace diversity, equity and inclusion
(“DEI”) and at the same time accelerate the
development of senior female managers and
encourage more women to pursue careers in
roles traditionally dominated by men within
Ferrexpo. These initiatives not only support
gender diversity within the Company but also
contribute to broader societal progress by
empowering women in Ukraine’s workforce.
Through training, mentorship, and career
development programmes, Ferrexpo is
actively helping to break barriers and create
opportunities for women, reinforcing its
role as a driver of gender equality and social
change in the region.
As a result of the Group’s DEI programme,
the Committee was pleased to note that in
2024, progress continued to be made towards
achieving gender balance across the Group.
The proportion of managerial roles held by
women rose from 22.3% in 2023 (87 female
managers) to 22.9% in 2024 (97 female
managers), with this upward trend expected
to continue into 2025, despite the war in
Ukraine. This trend means that the Group is
on track to achieve its published target of at
least 25% of managerial roles to be held by
women by 2030.
The Committee was pleased to note that,
despite the ongoing challenges posed by the
war in Ukraine, the representation of women
in the workforce continued to improve.
Below the managerial level, the percentage
of women increased from 30.9% in 2023
to 32.2% in 2024. Notably, while the overall
number of employees declined due to the
difficult circumstances, the number of
female employees rose from 2,130 in 2023
to 2,145 in 2024.
This upward trend reflects the Group’s
unwavering commitment to fostering a
more inclusive workplace, even in the face of
adversity. By actively promoting opportunities
for women across all levels of the organisation,
the Group is not only strengthening its
own workforce but also playing a vital role
in advancing gender equality in Ukraine’s
broader labour market.
As at 31 December 2024, the Committee
was composed of two Independent Non-
executive Directors, Vitalii Lisovenko and
Fiona MacAulay. I would like to thank the
members of the Committee for all their
work during the year.
Lucio Genovese
Chair of the Nominations Committee
18 March 2025
MEMBERSHIP AND MEETINGS
The Committee is chaired by Lucio Genovese
and as at 31 December 2024 its other
members were Vitalii Lisovenko and Fiona
MacAulay. A further review of Committee
membership will be conducted in 2025.
The Committee is required by its terms of
reference to meet at least once a year and
met on four scheduled occasions in 2024.
All meetings were held face-to-face. All Non-
executive Directors have a standing invitation
to attend all Committee meetings, with the
consent of the Committee Chair. In practice,
most Directors generally attend all meetings.
Discussions at the meetings covered the
responsibilities outlined earlier, with particular
focus on Board skills development and Non-
executive and Executive succession planning
and recruitment.
SUCCESSION PLANNING
AND RECRUITMENT
The Committee is responsible for overseeing
the composition, structure, and size of the
Board and its Committees, as well as the
appointment of Directors and executive
management. A key part of its mandate is
ensuring robust succession planning for
both the Board and other critical leadership
roles, securing the talent needed to drive the
organisation forward.
Beyond its governance responsibilities, the
Committee plays a vital role in upholding
the high standards of corporate governance
that stakeholders rightly expect. By carefully
planning for future recruitment, it ensures
the Board continues to have the right mix of
diversity, skills, and experience to execute the
Group’s strategy and drive long-term success.
In an evolving business landscape, especially
with the ongoing war in Ukraine, the
Committee remains proactive in identifying
and addressing leadership needs, ensuring
that the Board remains well-equipped to
navigate challenges, seize opportunities,
and deliver sustainable value. The roles of all
Directors are summarised on page 108.
In 2024, the Committee undertook a thorough
review of the Board’s Skills Matrix to ensure it
remains aligned with the Company’s evolving
needs. This review plays a crucial role in guiding
both the recruitment and development of
Board directors, ensuring the Board maintains
the expertise necessary to drive the company
forward (for further details, see the Board’s
Skills Matrix on page 101).
Additionally, the Board received in-
depth briefings on key developments in
corporate governance, including updates
to the UK Corporate Governance Code,
ESG considerations, and other emerging
governance trends. By staying informed
of these critical areas, the Board remains
well positioned to uphold best practices,
adapt to regulatory changes, and respond
proactively to shifts in the market.
Strategic Report
Financial Statements
127
Corporate Governance
In 2024, the Committee played an important
role in the decision to extend Lucio Genovese’s
term as interim Executive Chair for another
year, recognising that his leadership
remains essential during this critical period.
Mr. Genovese initially assumed the role in
2023, following the resignation of the CEO,
Jim North, stepping in to provide stability
and strategic direction amid unprecedented
challenges. The Committee carefully evaluated
the timing of a formal CEO search and
determined that the ongoing war in Ukraine
continues to present significant obstacles
to attracting top-tier external candidates.
Given the complexities of operating in such
an environment, postponing the search until
the war ends remains the most prudent
course of action. As a result, the Committee
unanimously recommended that Mr. Genovese
continue leading the Group on an interim
basis. His deep industry expertise, proven
leadership, and in-depth understanding
of both the business and the geopolitical
landscape make him the best person to
steer the Company through this period of
uncertainty. His steady guidance ensures
continuity, resilience, and strategic focus,
positioning the Company for long-term
success once conditions allow for a permanent
CEO appointment.
Ms. Natalie Polischuk stepped down as an
independent Non-Executive Director in
January 2025. In response, the Committee
initiated a rigorous search process to identify
a suitable replacement, recognising the urgent
need to reinforce the Board’s expertise in key
areas. To assist with the search, the Committee
engaged Stonehaven International, a leading
global search firm accredited under the UK
Government’s Enhanced Code of Conduct
for Executive Search Firms and the Voluntary
Code of Conduct on diversity best practices.
Stonehaven has no other connection with the
Company.
Before commencing the search, the
Committee carefully defined the skills and
experience required for the role, emphasising
the need for candidates with legal expertise
and cybersecurity knowledge—two areas of
growing importance given the complex legal
challenges the Group is currently confronting,
and heightened cyber threats arising from
the war in Ukraine. Strengthening the Board’s
capabilities in these areas is essential to
safeguarding the Company’s operations
and ensuring robust risk management in an
increasingly volatile environment. In addition,
the Committee prioritised candidates with
deep sector expertise and geopolitical
experience, recognising that the war in
Ukraine continues to present unprecedented
challenges for the Group. Navigating this crisis
demands not only strong leadership but also
a profound understanding of the geopolitical
landscape, regulatory complexities, and
sector-specific risks. A director with this
specialised knowledge would be invaluable in
helping the Board make informed, strategic
decisions that support the Company’s long-
term resilience and stability.
Stonehaven compiled an initial list of potential
candidates, which was reviewed by the
Committee, and shortlisted candidates were
then interviewed by Committee members and,
where practical, other Board directors. The
search remains ongoing, but an appointment is
expected to be made soon, ensuring the Board
continues to have the right expertise to steer
the company through this challenging period.
When progressing recruitment, including
drawing up shortlists for prospective Board
members, the Board seeks to ensure that
a broad range of diverse candidates are
considered and will only engage executive
search consultants who have signed up to
the Voluntary Code of Conduct for executive
search firms. The final decision to make
appointments to the Board is, however, made
on merit against objective criteria, to ensure
that the strongest possible candidate for the
role is appointed. However, the Committee
will continue to ensure that the Diversity,
Equity and Inclusion policy is considered when
conducting all searches for Board positions
and will take account of the recommendations
of the Parker Review.
ELECTION AND RE-ELECTION
In accordance with the UK Corporate
Governance Code, all Directors will stand for
re-election by shareholders at the Company’s
AGM scheduled for May 2025. The range of
skills and experience offered by the current
Board is set out on pages 102 to 103. The
Committee and the Board consider the
performance of each of the Directors standing
for re-election to be fully satisfactory, with
each demonstrating commitment to their
respective roles. The Board, therefore, strongly
supports the re-election of all Directors and
recommends that shareholders vote in favour
of the relevant resolutions at the AGM.
BOARD DIVERSITY POLICY
The Board places great importance on having
an inclusive and diverse Board and workforce
and recognises the leadership role the Board
needs to play in creating an environment in
which all contributions are valued, different
perspectives are embraced, and so far
as possible biases are acknowledged and
mitigated. In support of this goal, the Board
adopted a DEI Policy in 2019 which is kept
under review by the Committee. The DEI Policy
aims to promote equality of opportunity
across the whole organisation, regardless of
gender, ethnicity, religion, disability, age or
sexual orientation as well as address gender
diversity imbalances in the workforce while
also delivering sustainable talent pipelines
for succession to senior leadership roles. The
Board shares ownership the DEI Policy with
the Executive Committee, and updates are
presented to the Board for review every six
months to assess progress against the targets
and enable adjustments to be made to the
programme where necessary. A summary of
the Board’s diversity information can be found
on page 107.
A key initiative in Ferrexpo’s work to foster
diversity, equity, and inclusion across the
organisation is the Fe_munity programme,
designed to accelerate the career growth of
senior female talent while addressing gender
biases that may hinder their professional
advancement. Although the 2024 edition of
the programme faced disruptions due to the
ongoing war in Ukraine – preventing external
facilitators from traveling – a mentorship
initiative was launched. Alumni from previous
Fe_munity cohorts stepped in to mentor
women identified for the postponed
programme, a practice that will now continue
alongside future Fe_munity cohorts and other
DEI-related initiatives in 2025.
Despite the challenges of war, 2024 saw
continued momentum in Ferrexpo’s DEI
initiatives. Regular talks were hosted by
senior female leaders from both inside and
outside the business, while the Fe_munity
Teens programme provided young people
with insights and mentorship modelled
on the full-scale Fe_munity experience.
This initiative is part of Ferrexpo’s broader
corporate social responsibility strategy,
which not only supports the advancement of
Ukrainian society but also encourages young
people to consider careers in the mining
industry. The Group received an external
award for this programme, being voted the
best social initiative for young people by
Delo UA, Ukraine’s leading online business
news platform.
In 2024, the Group also launched the Iron
Women initiative, strengthening outreach
within the local community by encouraging
local women to pursue careers in traditionally
male-dominated roles. Ferrexpo’s efforts to
promote gender diversity through training,
mentorship, and career development
initiatives not only drive gender balance within
Ferrexpo, but also contribute to broader
societal progress.
Ferrexpo was proud to be recognised
internationally in 2024, when Olena Neroda-
Nikolaichuk, a haul truck driver at the Yeristovo
mine, was honoured as one of the Top 100
Women in Mining at the prestigious awards
ceremony held in London in November. This
milestone marks a historic first – not only
for Ferrexpo but for Ukraine as a whole,
highlighting the country’s growing presence in
the global mining industry and the Company’s
dedication to advancing gender diversity.
In 2024, the Committee reviewed the talent
pipeline and succession plans for key business
roles, ensuring development strategies
addressed critical skill gaps. Priority was
given to securing succession coverage for
the Group CFO, Group CMO, and Group
Treasurer at the corporate level, as well as the
Production Director, Capital Construction
Director, and IT Director at the operational
level. Acknowledging that the war poses
a particular challenge to attract skills, the
Committee tasked the Chief Human Resources
Officer with formulating targeted succession
strategies to strengthen leadership continuity
in early 2025 for implementation in the latter
half of the year, ensuring sustained business
stability and growth.
Ferrexpo plc
Annual Report & Accounts 2024
128
Nominations Committee Report continued
BOARD DIVERSITY POLICY UPDATE
Board objective
Progress in 2024
Foster a diverse and inclusive
workplace culture aligned
with the Company’s Values,
Purpose and Strategy
• Upgrading of facilities and access points continued at operations to enable accommodation of people with
disabilities, particularly considering veterans returning from the war with physical injuries.
• The Fe_munity Teens programme was run in the local community to foster the recruitment of young people into
the workforce.
• Unconscious bias training continued to be implemented for junior and middle managers at operations to enhance
diversity awareness at leadership levels.
• A returning Veterans’ Support Service was established to assist both employees and community members who
have sustained physical disabilities and psychological trauma from serving in the military.
Increase Board gender
diversity and women in
management below the
Board
• An update of the Board’s skills matrix was completed, highlighting gaps to inform current and future recruitment
to be progressed in 2025.
• A formal search was launched for an additional Non-executive Director to meet the FTSE Women Leaders Review
target and the requirements of the Parker Review.
• Initiatives in 2024 advanced women in leadership to 22.9% (97 female managers) (2023: 22.3% (87 female
managers)); the target for 2025 (towards the target of 25% by 2030) was set at 23.5% by the end of 2025.
• Total female representation as a percentage of the workforce is currently at 32.2% (2,145 female employees)
(2023: 30.9% (2,130 female employees).
• The Board reviewed the Group’s talent pipeline and succession plans for senior, business-critical leadership roles,
including identification of female candidates for accelerated development.
Monitor diversity programme
outcomes and make
adjustments to ensure overall
objectives are met
New and ongoing activities planned for 2025, subject to any restrictions imposed by the war in Ukraine, will include:
• Unconscious bias training for senior management.
• Science, technology, engineering and mathematics (“STEM”) ambassador visits to local schools and colleges.
• Breakfast with a senior women leader initiative to enhance mentorship of young women in the workforce.
• Establishment of two Employee Resource Groups to foster inclusion.
• Continuation of the Iron Women initiative to encourage female applicants for traditionally male-dominated roles.
• Fe_munity programme for potential women leaders at operations.
• Selection of bursary award school leavers.
• Teens Hub initiative to break down stereotypes regarding roles, provide career guidance, and address topics
relevant to young people.
WORKFORCE DIVERSITY
Ferrexpo’s policy is to employ a diverse
workforce and thought is given to recruit as
widely as possible, taking into account,
amongst other things, gender, race, social
background, education and disability. In 2019,
the Board set a diversity target of 25% women
in leadership to be achieved by 2030.
Achieving this target remains a challenge in
view of there being historically a very limited
number of female applicants for technical jobs
in the natural resources sector.
Gender diversity targets were included in
the Executive Business Scorecard for the first
time in 2021 to provide additional focus and
attention on the achievement of this strategic
imperative. A diversity target has again been
included in the scorecard for 2025 of 23.5%.
This target represents the appointment of an
additional three women in senior leadership
positions by the end of 2025.
Ferrexpo is committed to fostering an inclusive
workplace, proudly employing registered
disabled staff, who make up over 4% of our
Ukrainian workforce. This not only reflects
the diversity of the wider society but also
underscores our dedication to providing equal
opportunities beyond legal compliance.
Recognising the profound impact of the war,
Ferrexpo runs a Veterans Support Service
to assist both employees and community
members who have sustained physical
disabilities in service to their country. Through
tailored initiatives – including workplace
accommodations, rehabilitation support, and
skills development – the Group is dedicated to
empowering veterans as they rebuild their lives
and careers. By championing accessibility and
support, Ferrexpo strives to create a workforce
where every individual, regardless of physical
ability, can thrive.
The Corporate Governance Report was
approved by the Board on 18 March 2025.
Lucio Genovese
Chair of the Nominations Committee
18 March 2025
Strategic Report
Financial Statements
129
Corporate Governance
MAIN OBJECTIVE
To establish and maintain on behalf of the
Board a policy on executive remuneration
to deliver the Company’s strategy and
value for shareholders; to agree, monitor
and report on the remuneration of
Directors and senior executives; and to
review wider workforce remuneration and
other policies in accordance with the UK
Corporate Governance Code.
A STATEMENT TO
SHAREHOLDERS
FROM THE CHAIR OF THE
REMUNERATION COMMITTEE
As Chair of the Remuneration Committee,
I am pleased to present the Directors’
Remuneration Report1 for the year ended
31 December 2024.
This report is split into the following sections:
1. this Statement to shareholders from the
Chair of the Remuneration Committee
– summarising the decisions taken by the
Committee;
2. an “At a glance” overview of remuneration;
3. a summary of the Directors’
Remuneration Policy approved by
shareholders at the 2024 AGM; and
4. the Annual Report on Remuneration,
setting out how we have paid Directors in
2024 and how we intend to operate the
policy in 2025.
OUR APPROACH TO
REMUNERATION
The Committee strives to align the interests
of the executives with shareholders, and
the Board keeps under review the structure
and level of remuneration afforded through
short and long-term incentive schemes. It is
the policy of the Board to align executive and
shareholder interests by linking a substantial
proportion of executive remuneration to
performance, basing short-term rewards on
a balanced portfolio of financial, operational,
and ESG performance targets with long-term
alignment with shareholders through the
operation of multi-year share-based plans.
Our policy is purposefully weighted towards
short-term performance targets given the
Company’s focus on operational excellence
and the fact that Ferrexpo does not control
the price of iron ore, which is dictated by
market conditions. As a result, setting
performance targets that align to the factors
directly within the control of the executive
team is considered appropriate.
In this period of war, we have ensured that
our approach enables us to evaluate the
extraordinary efforts of our teams when
assessing the outcome of our business
scorecard. We ensure that remuneration
packages are competitive through assessing
remuneration packages against the relevant
market comparables to ensure that Ferrexpo
can attract, motivate and retain talented
executives. We align remuneration with
shareholders through the performance
conditions we set, share-based pay normally
delivered through partial deferral of annual
bonus into shares and the operation of annual
awards under a share plan and through
market consistent share ownership guidelines.
This approach applies across the executive
leadership team and has resulted in a robust
link between pay and performance to date.
BUSINESS CONTEXT AND 2024
EMPLOYEE REMUNERATION
The year 2024 marked the third consecutive
year in which Ferrexpo operated under the
challenges of war, a reality that continues to
shape our business environment. Despite
these adversities, our leadership’s strategic
adaptability and the dedication of our
workforce enabled us to achieve our strongest
annual production performance since the
full‑scale invasion of Ukraine in February
2022. This success reflects not only our ability
to adjust to evolving market conditions but
also our capacity to produce a diverse range
of high-quality products and expand our
customer base globally.
A key driver of this performance was the
resumption of exports via Ukrainian Black
Sea ports, allowing us to once again serve
customers not only in Europe, but also in
MENA and Asia. The agility embedded in our
business model enabled us to respond quickly
to changing logistics and market conditions,
positioning Ferrexpo as a reliable supplier
amid ongoing uncertainty.
The Committee is chaired by Fiona MacAulay.
The Committee consists of three independent
Non‑executive Directors as required by the UK Corporate
Governance Code and is also attended, by invitation,
by the Executive Chair of the Board, the Chief Human
Resources Officer, and a representative from Korn
Ferry, the Committee’s independent advisor.
Scheduled
meetings
Ad hoc meetings
Committee
member
Eligible
to attend Attended
Eligible
to attend Attended
Fiona
MacAulay
5
5
1
1
Vitalii
Lisovenko
5
5
1
1
Stuart
Brown
5
5
1
1
1.
This report has been prepared by the Remuneration Committee (the “Committee”) on behalf of the Board in
accordance with the requirements of the Financial Conduct Authority’s Listing Rules, Schedule 8 of the Large and
Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (as amended in 2013, 2018 and
2019) and the UK Corporate Governance Code. The elements subject to audit are highlighted throughout.
Read the Committee’s full objectives and
responsibilities online:
https://www.ferrexpo.com/about-
ferrexpo/corporate-governance/board-
committees/
Membership and
meeting attendance
Fiona MacAulay
Chair of the Remuneration Committee
Ferrexpo plc
Annual Report & Accounts 2024
130
Remuneration Report
The above performance resulted in the
bonus targets set in relation to production,
total mining movement, sales volume and
environmental plan compliance (collectively
totalling 50% of the total bonus) being
exceeded (at the stretch performance level)
and the targets set in relation to EBITDA,
LTIFR and diversity (collectively totalling the
remaining 50% of the total bonus) being
missed. As a result, a formulaic testing of
the revised bonus structure and scorecard
introduced as part of the 2024 Directors’
Remuneration Policy resulted in 50% of
the total bonus being earned. However,
having had regard to the level of profitability
achieved in 2024 and the Group-wide focus
on cash conservation, the Committee used
its discretion to reduce the bonus scorecard
outcome by 10%. As a result, the bonus
outcome was limited to 67.5% of salary (from
the originally scored 75% of salary), which
resulted in a bonus of 45% of the maximum
being payable (from 50%). The Committee
was comfortable with this outcome having had
regard to the unique challenges presented by
the war which materially impacted the ability
to achieve against the targets originally set at
the start of the year, the overall performance
of the Company and the wider stakeholder
experience.
Bonuses are normally paid 75% in cash
and 25% in deferred shares that vest after
two years. However, at the same time as
determining that bonuses would be reduced
in light of the circumstances created by the
war, the Committee concluded that bonuses
should be paid wholly in cash in relation to
the 2024 bonus year for all participants.
The factors that resulted in the Committee
determining this was appropriate included
(i) the volatility in the Company’s share price
arising from the ongoing war, and (ii) the
discretionary reduction to the bonus driven
from cash conservation as a result of the war.
Full details of the performance assessment are
set out on page 145. The Executive Chair was
not eligible for the 2024 Short-term Incentive
Plan (“STIP”).
2022 LONG-TERM INCENTIVE PLAN
With regard to the 2022 Long-term Incentive
Plan (“LTIP”), vesting was based on the TSR
outperformance of a tailored comparator
group (75% weighting) tested over the
period from 1 June 2022 to 31 May 2025,
and production of 67% Fe pellets (12.5%
weighting) and carbon emissions reductions
(12.5% weighting), with both of these
targets tested over the three-year period
to 31 December 2024.
With regard to the TSR performance
condition, at year end with five months of the
performance period to run, there is no forecast
vesting as a result of the Russian invasion of
Ukraine on 24 February 2022 continuing to
weigh heavily on the Company’s share price.
TSR performance is measured based on our
relative performance against a bespoke Index
of comparable Iron Ore and Composite Miners.
Actual vesting will be confirmed in the 2025
Directors’ Remuneration Report.
A major achievement of 2024 was the record
production of Direct Reduction (“DR”) pellets,
a premium-grade product that commands
higher market value and aligns with the
global steel industry’s decarbonisation
goals. Unlike traditional blast furnace pellets,
DR pellets offer superior iron content and
lower impurities, making them significantly
more efficient in steelmaking. Their use in
direct reduction-based processes leads to
lower carbon emissions, reinforcing Ferrexpo’s
role in the transition toward greener, more
sustainable steel production. This milestone
was reached despite external pressures,
including lower iron ore prices and rising input
costs, compounded by higher electricity tariffs
due to sustained attacks on Ukraine’s energy
infrastructure.
At the heart of Ferrexpo’s success are our
people. Our near 8,500 strong workforce
– from mine excavator operators to port
workers – have demonstrated unwavering
commitment, enduring harsh winter
conditions, air raids, and power shortages
to achieve outstanding production results.
This collective effort, particularly during
the first quarter of the year, allowed us to
capitalise on the highest iron ore prices of
2024 and maximise output despite operational
constraints. Our ability to optimise production
efficiency while navigating these challenges
reflects the resilience of our people and
strategic foresight of our leaders.
Throughout 2024, Ferrexpo continued to
operate under difficult and unpredictable
conditions, with production levels fluctuating
in response to customer demand. Despite
operating on average at half capacity, the
Group made a conscious decision to continue
to protect jobs, recognising the unwavering
dedication of our employees who continued
to work under extraordinarily challenging
circumstances.
To align with the variable production profile,
we adjusted workforce deployment month
by month, as we did in 2022 and 2023.
While more than 98% of production-related
personnel remained on full pay, their variable
monthly earnings – linked to production
output – were unfortunately impacted.
Employees in roles above immediate
production needs were placed on furlough,
receiving two-thirds of their salary, while
administrative and support staff transitioned
to a shorter seven-hour workday, with pay
adjusted accordingly.
Understanding the financial strain caused by
the ongoing cost-of-living crisis in Ukraine,
the Group took proactive measures to
mitigate the impact on employee earnings.
A special annual bonus was introduced
for non‑management employees, paid
in three equal instalments in January,
February, and March 2025. Additionally,
the Group has budgeted for a general salary
increase averaging 10% from April 2025,
with adjustments based on organisational
level. Annual management bonuses, tied to
production performance, are also scheduled
for payment in April 2025.
Ferrexpo remains deeply committed to
supporting our employees, ensuring their
financial well-being, and recognizing their
resilience and dedication during yet another
challenging year.
Tragically, the war continues to take a toll.
In 2024, we mourned the loss of 10 employees
who died while serving in the Ukrainian Armed
Forces, bringing the total number of fallen
colleagues to 45 since the full-scale invasion
began. Their bravery and sacrifice will always
be honoured, and Ferrexpo remains steadfast
in supporting their families and communities.
With an average of 700 employees actively
serving in the military, our Humanitarian
Fund has provided essential aid, including
food, shelter for displaced individuals, and
medical assistance. Additionally, our veterans’
rehabilitation programme continues to
expand, offering physical and psychological
support, prosthetic services, and reintegration
assistance for returning employees.
As we move forward, our focus remains on
optimizing production levels, strengthening
our global market presence, and ensuring
the long-term sustainability of our business.
The resilience we have demonstrated under
extraordinary circumstances is a testament
to our agility today and our potential for
the future. Ferrexpo continues to stand as a
symbol of Ukraine’s strength, determination,
and ability to thrive in adversity.
It was in the above context that the
Remuneration Committee operated the
Remuneration Policy that was approved by
shareholders at the 2024 AGM, ensuring
that the Group’s remuneration practices
fulfilled their original intent in challenging
circumstances in aligning pay and performance
in an affordable way. The Committee also
spent time overseeing Group-wide pay
decisions in our exceptional operating
circumstances.
2024 EXECUTIVE
REMUNERATION
2024 ANNUAL BONUS
As detailed above, 2024 saw a marked increase
in production and sales, particularly of DR
pellets. However, higher input costs and lower
market prices reduced margins, resulting in a
lower Group cash EBITDA of US$39.9m (2023:
US$63m) which fell below the annual bonus
target for 2024, despite targets for production
volume, total mining movement, and sales all
being exceeded.
Beyond financial and operational goals,
the Group achieved strong compliance with
environmental plans and while our Lost Time
Injury Frequency Rate (“LTIFR”) at 0.54 was
slightly above the five-year average of 0.52,
we marked a fourth consecutive year without
fatalities. Additionally, the Group’s diversity
ratios improved with the participation of
women below managerial levels rising to
32.2% in 2024 from 30.9% in 2023. This
resulted from nearly balanced hiring with
356 men and 315 women recruited in 2024,
achieving an almost 50:50 hiring ratio (1.13
men per woman). However, the number of
women in leadership remained below the
target for 2024, highlighting an area for
continued focus.
Strategic Report
Financial Statements
131
Corporate Governance
With regard to the other targets, the
Committee assessed the performance of the
Company over the full three-year performance
period. Given the record year of production for
DR pellets in 2024 (67% Fe), we achieved the
target in part with production of DR pellets
as a proportion of total production across
2022, 2023 and 2024 totalling 5.3%. With the
targets set to require DR pellet production
to be between 3% and 7%, this resulted in
66% of this part of the award vesting (8.2%
of 12.5% available for this part of the award).
Over the same period, our carbon emissions
intensity, which takes into account emissions
relative to the production delivered, reduced
marginally as a result of an increase in Scope
2 emissions as the Group had to import
electricity from Europe due to Russia’s attacks
on Ukraine’s energy generating infrastructure.
This resulted in performance falling below the
threshold and, consequently, this part of the
award will not vest.
Overall, the Remuneration Committee
currently expects the 2022 LTIP award to
vest at 8.2% of the maximum based on the
production and carbon emissions reduction
targets, with no vesting forecast under the TSR
portion of the award. The Committee will have
regard to the performance delivered over the
performance period and the wider context,
when making its final determination on the
vesting of the 2022 award with 8.2% of the
total award currently forecast to vest.
With remuneration outcomes aligned across
the executive leadership of the Group, and
after considering wider stakeholder experience
through the year, and the additional
achievements that were delivered outside of
the bonus plan targets, the Committee was
comfortable with remuneration outcomes and
that the policy was operating as intended.
ADJUSTMENT TO EXECUTIVE CHAIR
REMUNERATION
The Executive Chair was appointed on 1 July
2023 on a one-year contract to 30 June 2024
following Jim North, the former Chief
Executive Officer (“CEO”), stepping down from
his role. His salary and fees were set on
appointment at a fixed amount for his role as
Executive Chair at US$1,000,000, made up of
his current fee of US$525,000 as Board Chair,
and an additional US$475,000 on an interim
basis while he serves as Executive Chair. This
salary and fee was set to reflect his expected
future time commitment of the role in addition
to his non-participation in the Company’s
incentive plans which was not considered
appropriate given the interim nature of his
appointment.
In connection with the expiry of the Executive
Chair’s one year contract, the Remuneration
Committee undertook a review of the scope
of his role and the actual time commitment
that the role involved versus the original
expectations of the role.
The conclusion of the review was that the
role required considerably more time than
originally envisaged, often being required
to work significantly more than a standard
working week with the original fee having been
set to reflect a part time role. As a result, to
reflect the higher time commitment, his
combined salary and fees were increased from
1 July 2024 to a total of US$1,350,000, made
up of his pre-existing Board Chair fee of
US$525,000 and an additional salary, in
recognition of the extra time commitment, of
US$825,000. This was agreed in connection
with the renewal of his contract.
Having worked through the extra time spent
during his initial one-year term, the Committee
also resolved to recognise the exceptional time
commitment through that period with a top-
up to his total salary and fees with a further
payment of USD$325,000 to take his total
base salary and fees for the first year of his
role as Executive Chair to USD$1,325,000. The
additional fee aligned the 2023/24 fee with
the fee set for 2024/25. Having rebased the
base salary for the executive function with a
better understanding of the time commitment
of the role, there is no expectations of any
future adjustments for the role beyond a cost
of living related adjustment. The Committee
also does not intend to introduce incentive
pay to the role. Should the role revert to a
more traditional Non-Executive Board Chair
role, or should the time commitment of the
role materially reduce, remuneration would be
adjusted accordingly. The Board is committed
to the appointment of a permanent CEO once
the war is over.
2025 APPLICATION OF
REMUNERATION POLICY
The Company’s 2024 Remuneration Policy
received 99% support at the 2024 AGM. The
changes made to the policy included a
simplification of the annual bonus structure
such that there were fewer measures used for
2025, with targets continuing to be set with
reference to the Company’s budget each year,
but with greater flexibility included for the
Committee to assess performance given the
dynamic external environment caused by the
ongoing Russian invasion of Ukraine.
The other key change made was the
introduction of restricted shares to replace
performance shares in our LTIP, with this change
expected to last for the duration of the Russian
invasion of Ukraine, given the challenges of
forward forecasting considering the operational
challenges associated with the war. The move
to restricted stock included a reduction to the
headline quantum of awards vis-à-vis previous
award levels of performance shares.
For 2025, in light of the changes to the
Remuneration Policy, the key implementation
highlights are as follows:
• In line with the wider corporate executives,
any potential increase to the CFO’s salary
effective 1 January 2025 was deferred until
1 July 2025. This was in recognition of the
corporate focus on effective cost
management.
• The annual bonus opportunity for the CFO
will remain at 150% of salary. Performance
will be measured against similar simplified
performance measures as per the 2024
bonus scorecard of financial, operational
and ESG targets which are summarised on
page 145. The performance targets set for
the 2025 STIP have been agreed to reflect
FEBRUARY
• Consulting on FY 2024 Directors’
Remuneration Policy with both shareholders
and advisory bodies.
• Determining the preliminary 2023 bonus
outturn.
• Determining vesting of the 2021 Long-term
Incentive Plan awards.
• Determining the preliminary 2024 annual
bonus targets.
• Reviewing changes to the UK Corporate
Governance Code.
MARCH
• Finalising the 2024 Directors’ Remuneration
Policy having considered final investor
feedback.
• Approving the 2023 annual bonus outcomes.
• Approving the 2024 annual bonus scorecard.
• Approving the application of the
Remuneration Policy for 2023.
• Signing off the 2023 Remuneration Report.
MAY
• Approving 2024 restricted share awards.
• Consideration of Executive Chair
remuneration.
KEY ACTIVITIES OF THE COMMITTEE IN 2024
The Committee’s key activities during the 2024 financial year were:
Ferrexpo plc
Annual Report & Accounts 2024
132
Remuneration Report continued
the current operating environment. The
framework continues to include targets set
with reference to the Company’s budget
each year and the ability for the Committee
to take a rounded view of performance when
determining payouts having had regard to
the dynamic external environment caused
by the ongoing Russian invasion of Ukraine.
Full details are included on page 146.
• The Committee intends to again make
bonus payments wholly in cash as opposed
to a combination of cash and deferred
shares as a result of the ongoing volatility in
the Company’s share price. A final decision
on this will be taken at the time of making
bonus awards in 2026.
• The Committee intends to grant the CFO a
Restricted Share award with a face value of
25% of his salary, mirroring the award
granted in 2024. In line with Remuneration
Policy, the award will vest three years after
grant, subject to continued service, with any
shares vesting subject to a two-year holding
period. The award will also be subject to a
performance underpin with further details
on page 148.
CONSIDERATION OF
SHAREHOLDERS
AND EMPLOYEES
We consulted with shareholders in late 2023
and early 2024 in relation to the renewal
of the Directors’ Remuneration Policy and
shareholders were understanding of the
rationale for the proposed changes and
so were overwhelmingly supportive of the
proposal as noted above. The Committee
welcomes feedback provided by shareholders
and considers it in full prior to taking final
decisions.
The Committee also noted feedback on
remuneration from the annual employee
engagement survey and from feedback
received by the Employee Engagement Non-
executive Director, Vitalii Lisovenko, which
was elicited directly from employees during a
series of employee engagement sessions held
with a cross section of employees covering
all levels in late 2024. These sessions, like the
annual employee engagement survey, tested
a range of employee engagement elements
including the effectiveness of remuneration
and benefits policies and the understanding
of the alignment between executive
remuneration and wider Company pay policy.
Understandably, employees raised concerns
about the impact on pay resulting from
the decrease in the level and variability of
production. The reasons for the current
situation were explained with more frequent
communication sessions planned throughout
2025, with the timing dependent on market
developments.
The announcement of a general salary increase
of 10% planned for April 2024 was welcomed
and employees were appreciative that there
had been no layoffs as has been the case at
other companies in Ukraine that are operating
within the same challenging business
environment.
It was also noted that, while the approach to
remuneration is understood and is generally
considered to be working effectively, work
remains ongoing to improve the alignment
between remuneration with individual
performance to ensure differentiated
outcomes. The progress made to date will
be progressed further in 2025 by the Chief
Human Resources Officer (“CHRO”). The
CHRO will also work with the designated
Employee Engagement Non-executive
Director, Vitalii Lisovenko, to further develop
two-way feedback in relation to remuneration
policies and practices.
I hope you are able to support the rationale for
the decisions we have taken during the year
and support the resolution for the approval
of the Remuneration Report at the 2025
AGM. If you have any questions or comments,
please feel free to reach out through the
Chief Human Resources Officer
(email: g.nortje@ferrexpo.ch).
Fiona MacAulay
Chair of the Remuneration Committee
18 March 2025
OCTOBER
• Considering performance to date against
2024 annual bonus targets.
• Reviewing senior leadership team
performance.
• Approving Executive Chair remuneration.
NOVEMBER
• Review of updated IA Principles of
Remuneration.
• Discussion of preliminary 2025 annual bonus
scorecard measures.
• Consideration of 2025 salary review
proposals.
• Review of Remuneration Committee
annual cycle.
ANTICIPATED KEY ACTIVITIES OF THE
COMMITTEE IN 2025
• Consider 2025 AGM feedback.
• Application of Remuneration Policy in 2025.
• Consider the evolution of performance targets
in line with the implementation of the
business strategy through the current
challenging operating environment.
• Monitor senior management remuneration.
• Ensure remuneration decisions are taken in
the context of the wider stakeholder
experience through the period.
Strategic Report
Financial Statements
133
Corporate Governance
0
25
50
75
100
125
150
31 Dec
2021
31 Dec
2022
31 Dec
2024
31 Dec
2023
Value (£)
Ferrexpo
2023 LTIP Index
FTSE 250 Index
FTSE All-Share Index
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
110%
120%
130%
140%
150%
Group
EBITDA
Safety –
LTIFR
Diversity
ratio
Environmental
compliance
Total
mining
movement
Production
volume
Sales
volume
Total
Bonus payment (% of salary)
Business scorecard (100% of bonus)
Total Shareholder Return
At a glance (not subject to audit)
Element
Operation
Time-horizon
2024
2025
2026
2027
2028
Salary:
To attract and retain
talent by ensuring base
salaries are
competitive in the
market in which the
individual is employed
• Annual review by the Committee
• Increases typically in line with wider workforce
Pension and benefits:
To provide market
competitive benefits
• Aligned with pension and benefits offered to local workforce
Short-term Incentive
Plan (“STIP”):
To focus management
on delivery of annual
business priorities
which tie into the
long-term strategic
objectives of the
business
• Maximum opportunity of 150% of salary
• Target opportunity of 75% of salary
• Performance conditions based on a scorecard of financial, operational
and ESG targets
• Targets set to reflect the Company’s 2025 budget with Committee
judgement to be used to assess the extent of under or over
performance so that there is flexibility to take into account the
dynamic environment caused by the ongoing war in Ukraine
• Safety underpin
• 25% of bonus normally deferred into shares for two years
Long-term Incentive
Plan (“LTIP”):
To motivate
participants to deliver
appropriate longer-
term returns to
shareholders by
encouraging them to
see themselves not
just as managers, but
as part-owners of the
business
• Restricted Share award with a maximum of 100% of salary (150% in
exceptional circumstances)
• Vesting period of three years with a two-year post-vesting holding
period
• Performance underpin: the Committee will consider the Company’s
performance relative to its mid- to long-term financial, operational and
sustainability plans as well as individual performance and may reduce
the vesting level, including to zero, if performance is not considered
consistent with the Board’s plans. This assessment will take into
account the dynamic operating environment that currently prevails as
a result of the Russian invasion of Ukraine.
Share ownership
guideline:
To provide alignment
of interests between
Executive Directors
and shareholders
• Executive Directors are required to build and maintain a shareholding
of 200% of salary
• Applies for two years post-cessation of employment
200% of salary
Ferrexpo plc
Annual Report & Accounts 2024
134
Remuneration Report continued
Part A: policy section (not subject to audit)
The Directors’ Remuneration Policy was approved by 99% of shareholders at the 2024 AGM on 23rd May 2024 and will remain in effect
until the 2027 AGM.
A summary of the Policy is set out below. The full Policy can be found on our website in the 2023 Annual Report (https://www.ferrexpo.com/
investors/results-reports-and-presentations/)
The Remuneration Committee is responsible for the operation of the Remuneration Policy and its terms of reference comply with the provisions of
the UK Corporate Governance Code and are available for inspection on the Group’s website (https://www.ferrexpo.com/about-ferrexpo/corporate-
governance/governance-framework-structure/).
KEY PRINCIPLES OF THE REMUNERATION POLICY
Ferrexpo’s remuneration policy is designed to help attract, motivate and retain talented executives to help drive the future growth and
performance of the business. The Policy aims to:
• align executive and shareholder interests;
• link an appropriate proportion of remuneration to performance;
• reward based on a balanced portfolio of performance conditions, where appropriate (e.g. annual business priorities, financial and operational
targets and individual performance); and
• provide rewards that are competitive in the relevant markets to help attract, motivate and retain talented executives.
The Remuneration Policy was set to take into account the particular business context of the Group, the industry segment, the geography of its
operations, the relevant talent market for each executive, the location of the executive and remuneration in that local market and best practice
guidelines set by institutional shareholder bodies. The Policy was also designed having had regard to the following factors:
• Clarity – the policy is well understood by our management team and has been clearly articulated to our shareholders. A key part of our Chief
Human Resources Officer’s role is engaging with our wider employee base on all our people matters (including remuneration) and we monitor the
effectiveness of this process through the feedback received. The Board is comfortable that our remuneration policy is clearly understood by our
employees.
• Simplicity – the Committee is very mindful of the need to avoid overly complex remuneration structures which can be misunderstood and deliver
unintended outcomes. Therefore, one of the Committee’s objectives is to ensure that our executive remuneration policies and practices are as
simple to communicate and operate as possible, while also supporting our strategy.
• Risk – For Executive Directors, our remuneration policy is designed to ensure that inappropriate risk-taking is not encouraged and will not be
rewarded via: (i) the use of a balanced scorecard in STIP which employs a blend of financial, operational and non-financial metrics; (ii) the use of
equity via our LTIP (together with shareholding requirements); and (iii) malus/clawback provisions included in scheme documentation which the
Executive Directors are required to accept to receive payments under the STIP and awards under the LTIP and which would normally be enforced
by reducing the number of shares and/or cash subject to outstanding and unvested awards in the first instance. For the Executive Chair, given the
interim nature of the role, our remuneration policy is designed to ensure that inappropriate risk-taking is not encouraged and will not be
rewarded by making the Executive Chair ineligible to receive variable remuneration.
• Predictability – our incentive plans are subject to individual caps, with our share plans also subject to market standard dilution limits. The
scenario charts on page 140 illustrate how the rewards potentially receivable by our executives vary based on performance delivered and share
price growth.
• Proportionality – there is a clear link between individual awards, delivery of strategy and our long-term performance. In addition, the significant
role played by incentive/at-risk pay, together with the structure of Executive Directors’ service contracts, ensures that poor performance is not
rewarded.
• Alignment to culture – Ferrexpo has a strong operational focus which is reflected in its incentives with safety at the heart of its activities and this
is supported through the use of a specific safety measure in the annual bonus and the ability to reduce the formula-based outcomes based on
safety performance. Similarly, incentives may also include climate-related performance targets (as primary targets or as underpins) linked to the
Company’s strategic climate goals.
Strategic Report
Financial Statements
135
Corporate Governance
EXECUTIVE DIRECTOR POLICY TABLE
Purpose and link to strategy
Operation
Opportunity
Performance metrics
Fixed pay
Base salary
To attract and retain talent by
ensuring base salaries are
competitive in the market in
which the individual is
employed.
Base salaries are typically reviewed annually, with
reference to: the individual’s role, experience and
performance; business performance; salary levels for
equivalent posts at relevant comparators; cost of
living and inflation (taking account of the location
of the executive); and the range of salary increases
applying across the Group.
Base salary increases are applied in
line with the outcome of reviews,
which will not exceed 5% p.a. (or, if
higher, the applicable inflation rate)
on an annualised basis over the
period over which this policy applies.
Increases above this level may be
applied where appropriate to reflect
changes in the scale, scope and
responsibility attaching to the role
and market comparability (including
following appointment to the Board
on a on a below market base salary).
Business and, where
relevant, for current
Executive Directors,
individual performance
are considerations in
setting base salary.
Pension
To provide retirement
benefits.
Executive Directors will, as appropriate, be offered
membership of a scheme which complies with
relevant legislation (where necessary, additional
pension entitlements will be provided) or cash in
lieu of pension.
For information, pension for UK-based employees
is currently set at a maximum of 5% of salary while
pension for Swiss-based employees is differentiated
by age and is set at up to 8% of salary.
Statutory lump sums and/or end of service gratuities
may be accrued each year and may be payable on
termination in line with the relevant legislation where
this exists.
Executive Directors will receive a
pension that is aligned with the
typical (i.e. most common) practice
for employees in the location that
the executive is based.
The employer contribution will
normally be limited to a percentage
of base salary. Associated benefits
and variable pay will only be
included where there is a statutory
requirement to do so.
The employer contribution will be
limited to 10% of salary or higher
subject to compliance with local
statutory requirements to reflect
actual practice in the Company.
Not performance related.
Benefits
Competitive in the market
in which the individual is
employed.
Benefits are paid to comply with local statutory
requirements and as applicable to attract or retain
executives of a suitable calibre. They include life
insurance, personal accident, travel and medical
insurance. Where appropriate, additional benefits
may be offered, including, but not limited to,
accommodation allowances, travel, enhanced sick
pay, relocation/expatriate relocation benefits, tax
and legal advice.
Benefits’ values vary by role and
eligibility and costs are reviewed
periodically. Increases to the existing
benefits will not normally exceed
applicable inflation. Increases above
this level may be applied, where
appropriate, to reflect changes in
role, scope, location and
responsibility.
Not performance related.
Ferrexpo plc
Annual Report & Accounts 2024
136
Remuneration Report continued
Purpose and link to strategy
Operation
Opportunity
Performance metrics
Variable pay
Short-term Incentive Plan
(“STIP”)
To focus management on
delivery of annual business
priorities which tie into the
long-term strategic objectives
of the business, which
include, but are not limited
to, developing the resource
base, increasing production,
reducing costs, reducing the
risk profile of the business,
expanding the customer
portfolio, and expanding
geographically.
Targets are set at the start of the year against
which performance is measured. The Committee
determines the extent to which these have been
achieved. The Committee can exercise judgment in
determining an appropriate outcome at
performance levels both below and above the target
level of performance for each performance measure.
The Committee also has the ability to adjust bonus
outcomes based on its assessment of individual
contribution. Furthermore, the Committee can
exercise discretion to adjust the formulaic outcome
or amount of bonus payable (upwards and
downwards), taking into account such factors as it
determines to be relevant, including factors outside
of management control or where it believes the
outcome is not truly reflective of individual
performance or in line with overall Company
performance.
Normally paid as a mixture of cash and deferred
shares with the cash portion paid following the
publication of the audited results. The deferred
share portion will normally be a minimum of 25% of
the total bonus (with after tax bonus used to acquire
shares or the deferral taking place through a
deferred share award) with the shares eligible for
release after a period of two years. Dividend
equivalents may accrue on deferred bonus shares.
Malus and clawback provisions will apply in the case
of individual gross misconduct, an error in assessing
performance against the condition, corporate failure
(for which the individual was partly or wholly
responsible) and/or in the event that the individual is
found legally responsible for:
• a material misstatement of the Annual Accounts;
or
• a failure of risk management or reputational
damage to the Company.
Maximum opportunity of 150% of
salary.
The target opportunity is 50% of
maximum and the threshold
opportunity is up to one-third of
maximum.
Performance related.
Performance targets
can include financial,
non-financial and
personal achievement
criteria measured over
one financial year.
The Committee has
discretion to make
changes in future years
to reflect the evolving
nature of the strategic
imperatives that may be
facing the Company.
Long-term Incentive Plan
(“LTIP”)
To motivate participants to
deliver appropriate longer-
term returns to shareholders
by encouraging them to see
themselves not just as
managers, but as part-
owners of the business.
Enables the award of both Performance Share
Awards and Restricted Share Awards.
In 2025, and for the duration of the Russian invasion
of Ukraine, it is not anticipated that Performance
Share Awards will be granted due to the challenges
with forward forecasting in the dynamic
environment created by the war.
To the extent that an LTIP award vests, this will
include the applicable dividends on the shares
earned during the vesting period. Subsequent
dividends on shares held by participants are paid
in shares.
Vesting of Restricted Share awards is normally
subject to a three-year continued employment
requirement and consideration of a performance
underpin.
A two-year holding period applies to shares vesting
under the LTIP.
Malus and clawback provisions will apply in the case
of individual gross misconduct, an error in assessing
performance against the condition or underpin,
corporate failure (for which the individual was partly
or wholly responsible) and/or in the event that the
individual is found legally responsible for:
• a material misstatement of the Annual Accounts;
or
• a failure of risk management or reputational
damage to the Company.
The LTIP provides annual Restricted
Share Awards up to an aggregate
limit of 100% of salary in normal
circumstances.
This limit may be exceeded in
exceptional circumstances but will
not exceed 150% of salary.
Restricted Share Awards
are subject to a
performance underpin.
The Committee will
consider the Company’s
performance relative to
its mid- to long-term
financial, operational and
sustainability plans as well
as individual performance
and may reduce the
vesting level, including to
zero, if performance is not
considered consistent
with the Board’s plans.
This assessment will take
into account the dynamic
operating environment
that currently prevails as
a result of the Russian
invasion of Ukraine.
Strategic Report
Financial Statements
137
Corporate Governance
Purpose and link to strategy
Operation
Opportunity
Performance metrics
Share ownership guideline
To provide alignment of
interests between Executive
Directors and shareholders.
The Company operates a shareholding requirement
which is subject to periodic review.
As a minimum, Executive Directors are expected to
retain 50% of the post-tax shares vesting under the
LTIP and shares deferred under the annual bonus
(on an after tax basis) until the shareholding
requirement is met.
Following cessation of employment, Executive
Directors are expected to hold the lower of 200%
of salary and the value of shares held on cessation
for two years.
The Committee maintains discretion to disapply the
policy as it considers appropriate in exceptional
circumstances (e.g. death). The post-cessation
guideline will apply to shares deferred under the
annual bonus (on an after tax basis) and shares which
vest under existing and future LTIP awards (after tax)
during the Executive Director’s tenure.
Executive Directors are required to
build and maintain a shareholding to
the value of at least 200% of salary.
Executive Directors are required to
hold the lower of 200% of salary
and the value of shares held on
cessation for two years post
cessation.
The share ownership guideline does
not apply to the Executive Chair
Not performance related.
RATIONALE FOR PERFORMANCE TARGETS
The STIP is based on performance categories that are key to delivering on our long-term strategy. Performance targets are set at the beginning
of the financial year to reflect business priorities and other corporate objectives, and can include financial, non-financial and personal
achievement criteria.
Performance targets are set at such a level as to be stretching but achievable, with regard to the particular strategic priorities and economic
environment in a given performance period. The STIP targets are set with reference to the annual budget approved by the Board and the
Committee uses its judgement to determine appropriate stretch in targets from threshold to maximum performance levels. The Committee
believes that using multiple targets for the purposes of the STIP provides for a balanced assessment of performance over the year.
Restricted Share Awards for Executive Directors granted under the LTIP will be subject to an underpin whereby the Committee will consider the
Company’s performance relative to its mid to long-term financial, operation and sustainability plans as well as individual performance and may
reduce the vesting level, including to zero, if performance is not considered consistent with the Board’s plans. This assessment will take into account
the dynamic operating environment that currently prevails as a result of the Russian invasion of Ukraine and will consider the extent to which the
value delivered on vesting is as a result of windfall gains.
RATIONALE FOR EXECUTIVE CHAIR NOT RECEIVING VARIABLE PAY
Given the interim nature of the Executive Chair role, and the expectation that the Executive Chair will return to his position as Non-executive Chair
following the end of his tenure, the Committee has determined that it would not currently be appropriate for the Executive Chair to receive variable
remuneration.
REMUNERATION OF SENIOR EXECUTIVES BELOW THE BOARD
The policy and practice with regard to the remuneration of senior executives below the Board is broadly aligned with that of the Executive Directors.
PAYMENTS RESULTING FROM EXISTING AWARDS
Executive Directors are eligible to receive payment resulting from the vesting of any award made prior to the approval and implementation of the
remuneration policy detailed in this report.
Ferrexpo plc
Annual Report & Accounts 2024
138
Remuneration Report continued
NON-EXECUTIVE DIRECTOR POLICY TABLE
This section of our report summarises the policy for each component of Non-executive Director remuneration.
Purpose and link to strategy
Operation
Opportunity
Performance metrics
Fees
To attract and retain talent
by ensuring fees are market
competitive and reflect the
time commitment required
of Non-executive Directors
in different roles.
Annual fee for the Chair.
Annual base fee for Non-executive Directors.
Additional fees are paid for additional
responsibilities including to the Senior Independent
Director and the Chairs of the Committees and/or
in relation to the Non-executive Director who will
be a representative of employees as well as for
representation on subsidiary Boards, where
appropriate.
Fees are reviewed from time to time, taking into
account the time commitment, responsibilities and
fees paid by comparable companies, and also taking
into consideration geography and risk profile.
Changes to Non-executive Director
fees are applied in line with the
outcome of the review undertaken
by the Chair and Executive
Directors.
Additional remuneration may be
provided in connection with fulfilling
the Company’s business (e.g. any
expenses incurred fulfilling Company
business may be reimbursed
including any associated tax).
The maximum aggregate fees, per
annum, for all Non-executive
Directors allowed by the Company’s
Articles of Association is £5 million.
For the avoidance of doubt,
additional remuneration received by
the Chair by way of salary under his
service contract while he serves as
Executive Chair shall not count
towards these limits.
Not performance related.
PAY-FOR-PERFORMANCE: SCENARIO ANALYSIS
The graph on the following the page illustrates estimates of the potential future reward opportunity and the potential split between the different
elements of remuneration under four different performance scenarios: “Below threshold”, “On-target” and “Maximum” and “Maximum assuming
50% share price growth”. The Executive Chair only receives a fixed fee in respect of his duties and therefore receives the same remuneration in all
scenarios. The assumptions for the CFO are summarised in the table below.
Scenario
Fixed pay
STIP
LTIP
Below threshold
Base salary, pension
and benefits as
applicable for 2025
financial year1
No STIP (0% of salary)
Full vesting of the Restricted Share Plan (“RSP”)
Award – assumed normal maximum policy of
100% of salary, although, in practice, awards to
Executive Directors are significantly lower
On-target
On-target STIP (75% of salary)
Maximum
Maximum STIP (150% of salary)
Maximum, assuming 50%
share price growth
Maximum STIP (150% of salary)
As above, but modelling the impact of a 50%
increase to share price
1.
Benefits have been included at CHF47,172 based on the 2024 benefit provision to the CFO.
Strategic Report
Financial Statements
139
Corporate Governance
Executive Chair US$ (' 000)
0
Maximum
Target
Minimum
500
1,000
1,500
2,000
2,500
1,418
1,418
100%
100%
100%
1,418
Maximum
with 50%
share price
growth
100%
1,418
Fixed Pay
STIP
LTIP
LTIP value with 50% share price growth
CFO US$ ('000)
0
Maximum
Target
Minimum
1,334
983
52%
48%
39%
26%
35%
30%
41.7%
27.8%
1,685
Maximum
with 50%
share price
growth
27%
37%
24%
12%
1,919
500
1,000
1,500
2,000
2,500
Fixed Pay
STIP
LTIP
LTIP value with 50% share price growth
REMUNERATION POLICY FOR NEW APPOINTMENTS
The Committee’s approach to setting remuneration for new Executive Directors is to ensure that the Company’s pay arrangements are in the
best interests of Ferrexpo and its shareholders. To do this, the Company takes into account internal pay levels, the external market, location of the
executive and remuneration received at their previous employment. The Committee reserves discretion to offer appropriate benefit arrangements,
which may include the continuation of benefits received in a previous role. Variable pay awards (excluding any potential “buy-out” awards, described
below) for a newly appointed Executive Director will be as described in the Executive Director Policy table earlier in this report, subject to the same
maximum opportunities. Different performance targets and conditions may be set initially for incentives in the first year of appointment to
recognise the timing of their appointment during the year. The rationale will be clearly explained in each case.
In addition, the Committee may make an award in respect of a new appointment to “buy out” existing incentive awards forfeited on leaving a
previous employer. In such cases, the compensatory award would typically be on a like-for-like basis with similar time to vesting, performance
conditions and likelihood of the targets being met. The fair value of the buy-out award would not be greater than the awards being replaced.
To facilitate such a buy-out, the Committee may grant a bespoke award under the Listing Rules exemption available for this purpose.
In cases of appointing a new Executive Director by way of internal promotion, the Group will honour any contractual commitments made prior to
his or her promotion to Executive Director.
In every case, the Board will pay both the appropriate, but also the necessary, rate of pay to attract an executive who in the view of the Board will
contribute to shareholder value.
The approach to setting Non-executive Director fees on appointment is in line with the approach taken for the fee review set out in the
Non-executive Director Policy table earlier in this report and will also take into account fee levels for existing Non-executive Directors.
Ferrexpo plc
Annual Report & Accounts 2024
140
Remuneration Report continued
DETAILS OF EXECUTIVE DIRECTORS SERVICE CONTRACTS
The Chief Financial Officer, Nikolay Kladiev is employed under a contract of employment with Ferrexpo AG, a Group company (the “employer”), as is
Lucio Genovese in respect of the executive function of his role. The principal terms of their service contracts not otherwise set out in this report are
as follows: save in circumstances justifying summary termination, Mr Kladiev’s service contract with the employer is terminable on not less than six
months’ notice to be given by the employer or not less than six months’ notice to be given by Mr Kladiev. Given the interim nature of Mr Genovese’s
role, these periods are three months respectively and the contract is for a fixed-term of twelve months, which can be extended by mutual
agreement. Neither contract has any special provisions in the event of a change of control.
Notice period
Executive Director
Position
Date of contract
Length of current contract
From employer
From employee
Lucio Genovese
Executive Chair
1 July 2023
12 months (renewable)
3 months
3 months
Nikolay Kladiev
CFO
7 July 2021
Indefinite
6 months
6 months
Under their service contracts, Mr Genovese and Mr Kladiev are entitled to 25 working days’ paid holiday per year plus public holidays and other
forms of leave in accordance with applicable legislation. The Executive Director’s service contracts contain a provision exercisable at the option of
the employer to pay an amount on early termination of employment equal to the respective notice period. If the employer elects to make such a
payment (which in practice it will do if the speed and certainty afforded by this provision are thought to be in the best interests of shareholders),
the Executive Directors will be entitled under their contracts to receive all components of their base salaries, and accrued but untaken holiday
where applicable and required under law for the extent of the notice period. In addition to the contractual rights to a payment on loss of office, any
employee, including the Executive Directors, may have additional statutory and/or common law rights to certain additional payments, for example,
in a redundancy situation.
POLICY FOR LOSS OF OFFICE PAYMENTS
The following principles apply when determining payments for loss of office for the Executive Directors and any new Executive Directors.
The employer will take account of all relevant circumstances on a case-by-case basis including (but not limited to): the sums stipulated in the service
contract (including base salary during his or her notice period, accrued but untaken holiday, and allowances/benefits); whether the Executive
Director has presided over an orderly handover; the contribution of the Executive Director to the success of the Company during his or her tenure;
and the need to compromise any claims that the Executive Director may have. The Company may, for example, if the Committee considers it to be
appropriate:
• enter into agreements with Executive Directors which may include the provision of legal fees or the settlement of liabilities in return for a single
one-off payment or subsequent payments subject to appropriate conditions;
• reimburse reasonable relocation costs where an Executive Director (and, where relevant, their family) had originally relocated to take up the
appointment;
• terminate employment other than in accordance with the terms of the contract (bearing in mind the potential consequences of doing so); or
• enter into new arrangements with the departing Executive Director (for example, confidentiality, restrictive covenants and/or consultancy
arrangements).
If the individual is considered a “good” leaver (e.g. for reasons of death, ill-health, injury or disability, retirement, redundancy, their employing
company ceasing to be a member of the Group, the business (or part) of the business in which they are employed being transferred to a transferee
which is not a member of the Group, or any other reason which the Committee in its absolute discretion permits) any outstanding LTIP awards will,
except in the case of death, be pro-rated for time and any performance conditions will be measured (in the case of Performance Share Awards)
and any performance underpins considered (in the case of Restricted Share Awards). The Committee retains discretion to alter these provisions (as
permitted by the relevant plan rules) on a case-by-case basis following a review of circumstances, in order to ensure fairness to both shareholders
and participants with any amended conditions to be similarly challenging having had regard to the relevant circumstances. In considering the
exercise of discretion as set out above, the Committee will take into account all relevant circumstances which it considers are in the best interests
of the Company, for example, ensuring an orderly handover, performance of the executive during his or her tenure as Director, performance of the
Company as a whole and perception of the payment amongst the shareholders, general public and employee base.
The Committee has discretion
to determine that an annual bonus should remain payable under the STIP notwithstanding termination of office or employment.
In the event of a change of control, the vesting period under the LTIP ends and awards may be exercised or released to the extent to which the
performance conditions attaching to Performance Share Awards and any conditions under any performance underpin attaching to Restricted Share
Awards have, in the Committee’s opinion, been achieved up to that time. Pro-rating for time applies but the Committee has discretion to allow
awards to be exercised or released to a greater extent if it considers it appropriate having regard to the circumstances of the transaction and the
Company’s performance up to the date of the transaction.
It is the Committee’s policy to review contractual arrangements prior to new appointments in light of developments in best practice. The Executive
Director’s service contracts are available to view at the Company’s registered office.
Strategic Report
Financial Statements
141
Corporate Governance
EXTERNAL APPOINTMENTS
It is the Board’s policy to allow the Executive Directors to accept directorships of other quoted companies, provided that they have obtained the
consent of both the CEO and Chair of the Board (i.e. the Executive Chair only while he remains in post) and which should be notified to the Board.
No external directorships of quoted companies are currently held by the Executive Directors.
DETAILS OF NON-EXECUTIVE DIRECTORS’ LETTERS OF APPOINTMENT
The Chair and Non-executive Directors have each entered into a letter of appointment with the Company. The Non-executive Directors are each
appointed subject to their election and annual re-election by shareholders. Their appointments may be terminated by either party giving not less
than three months’ notice. The key terms of current letters of appointment are as follows:
Non-executive Director
Position
Date of first appointment
Date of election/re-election
L Genovese1
Chair
12 February 2019
2025 AGM
S Brown
Non-executive Director
22 October 2023
2025 AGM
V Lisovenko
Non-executive Director
28 November 2016
2025 AGM
F MacAulay
Non-executive Director
12 August 2019
2025 AGM
N Polischuk
Non-executive Director
29 December 2021
2024 AGM
1.
Details of the service contract which governs the additional services which Mr Genovese has agreed to provide while he serves as Executive Chair are set out in the section headed
‘Details of Executive Directors service contracts’ above.
EMPLOYEE CONTEXT
In making remuneration decisions, the Committee also considers the pay and employment conditions throughout the Group. Prior to the annual
pay review and throughout the year, the Committee receives reports from the CEO, or Executive Chair, setting out the circumstances surrounding,
and potential changes to, broader employee pay. The CEO, or Executive Chair, consults as appropriate with key employees and the relevant
professionals throughout the Group. This forms part of the basis for determining changes in Executive Director and senior executive remuneration
which also takes into consideration factors detailed earlier in this report.
CONSIDERATION OF SHAREHOLDER VIEWS
The Committee takes into consideration views expressed by shareholders and their proxy advisers regarding remuneration, either at the AGM, or by
correspondence, or at one-to-one or Group meetings and shareholder events or otherwise by considering these views at the relevant Committee
meetings which are subsequently reported to and considered by the Board as a whole. The Committee takes shareholder and their proxy adviser’s
feedback into careful consideration when reviewing remuneration and regularly reviews the Directors’ Remuneration Policy in the context of key
institutional shareholder guidelines and best practice. It is the Committee’s policy to consult with major shareholders prior to making any major
changes to its executive remuneration structure.
Ferrexpo plc
Annual Report & Accounts 2024
142
Remuneration Report continued
Part B: Annual Report on Remuneration (audited)
The following section provides details of how the remuneration policy was implemented during the year. Throughout this report, the
remuneration of Directors who are paid in foreign currencies are disclosed in local currencies to facilitate year-on-year comparisons,
uninfluenced by exchange rate fluctuations.
COMMITTEE MEMBERSHIP IN 2024
The Committee currently comprises three Independent Non-executive Directors. Fiona MacAulay is Chair of the Remuneration Committee, with the
other members of the Committee being Stuart Brown and Vitalii Lisovenko. Stuart Brown was appointed to the Committee in February 2024.
The Committee met on five scheduled occasions and also held one ad-hoc meeting in 2024. Attendance at meetings by individual members,
together with a summary of the topics discussed at meetings in 2024 is set out in the Chair’s Introductory Letter on pages 130 to 133.
The Executive Chair, and the Chief Human Resources Officer (the “CHRO”) attended meetings of the Committee at the invitation of the Chair
of the Committee, and the Company Secretary acts as secretary to the Committee. The other Non-executive Directors and other members of
management may also attend meetings by invitation where appropriate. No Director is present when their own remuneration is being discussed.
ADVISORS
Following a competitive tender, the Committee appointed Korn Ferry in October 2019 to provide advice to the Committee. Korn Ferry is a member
of the Remuneration Consultants Group and adheres to its code of conduct.
Korn Ferry’s fees for services provided to the Committee in 2024 totalled £53,275 which were charged based on the time spent advising the
Committee. Korn Ferry also provides general remuneration advice to management in respect of remuneration elsewhere in the Group. The
Committee evaluates the support provided by its advisors periodically and is satisfied that the advice received is independent and objective and
that the advisors did not have any connections with Ferrexpo or any individual Directors which may impair their independence.
The Executive Chair, and the CHRO provide guidance to the Committee on remuneration packages of senior executives employed by the Group
(but not in respect of their own remuneration).
SINGLE TOTAL FIGURE OF REMUNERATION – AUDITED
The table below sets out in a single figure for each currency of payment the total remuneration received by each Executive Director during the year
ending 31 December 2024 and the prior year.
Salary / fee1
Benefits2
STIP3
LTIP4 & 5
Pension6
Other8
Total
Total fixed
remuneration
(single figure)
Total variable
remuneration
(single figure)
Executive Chair
L Genovese
(2024)7
US$650,000
–
–
–
US$67,790
US$325,000 US$1,042,790 US$1,042,790
–
L Genovese
(2023)7
US$237,500
–
–
–
US$11,819
–
US$249,319
US$249,319
–
Chief Financial Officer
N Kladiev
(2024)
CHF468,000
–
CHF308,310
CHF2,995
CHF47,172
–
CHF826,477
CHF515,172
CHF311,305
N Kladiev
(2023)
CHF283,862
–
CHF335,000
CHF4,648
CHF11,354
–
CHF634,864
CHF295,216
CHF339,648
The figures have been calculated as follows:
1.
Base salary: amount earned for the year. Mr Kladiev’s salary for 2023 is from the date he joined the Board on 25 May 2023 to 31 December 2023.
2. Benefits: the taxable value of benefits received in the year (accommodation allowance/provision and healthcare).
3. STIP: the total bonus earned based on performance during the year. Further details are provided on pages 145 to 146.
4. LTIP: the market value of shares that vested based on performance of the relevant year (2024: anticipated 8.2% to vest; 2023: 16.78% vested). The 2021 LTIP value for N Kladiev
includes dividends of CHF2,477 paid over the performance period from 1 January 2021 to 31 December 2023. The 2022 LTIP for N Kladiev includes dividends of CHF348 paid in the
period 1 June 2022 to 31 December 2024 with the value based on the three-month average share price to 31 December 2024 of 76.63 pence. The actual vesting outcome of the
2022 LTIP award will be confirmed in the 2025 Directors’ Remuneration Report.
5. Average exchange rates used for LTIP value: 2024 – £1=CHF1.1252; 2023 – £1 = CHF1.1169.
6. Pension: N Kladiev receives an employer pension contribution of 7% of salary which is in line with the Swiss employee pension arrangement which is differentiated by age in
Switzerland. Mr Genovese receives an employer pension contribution of 8% of his salary as Executive Chair which is in line with the Swiss employee pension arrangement in
Switzerland. On top of this contribution, the pension provider levies a risk premium to cover disablement and/or death of a member and provision of a survivor pension.
This additional risk premium increases the employer pension contribution in the case of Mr Kladiev to 10.1% and for Mr Genovese to 10.4%.
7.
Mr Genovese assumed the role of Executive Chair on 1 July 2023 following Mr North stepping down as CEO. The remuneration included in the table above reflects the amounts
paid to Mr Genovese in respect of this role. Remuneration earned prior to this date and currently in respect of his role as Non-executive Chair of the Company is detailed in the
table on the following page. As indicated in the letter from the Chair of the Remuneration Committee, Mr Genovese’s base salary was increased on 1 July 2024 from US$475,000
per annum to US$825,000 per annum. Consequently, from 1 January to 30 June Mr Genovese received a salary of US$237,500 and from 1 July to 31 December 2024 a salary of
US$412,500 totalling US$650,000 for the reporting year.
8. Other: Mr Genovese received a top-up to his executive salary as a result of the additional time commitment of the role as explained on page 132 of the Remuneration Committee
Chair’s Introductory Letter.
Strategic Report
Financial Statements
143
Corporate Governance
The table below sets out in a single figure the total remuneration received by each Non-executive Director for the year ending 31 December 2024
and the prior year.
All figures shown in currency of payment, US$’000
2024
2023
Fees
Benefits
Pension
Total
Fees
Benefits
Pension
Total
Non-executive Directors
L Genovese (Chair)1
525
–
–
525
578
–
–
578
V Lisovenko2
203
–
–
203
196
–
–
196
F MacAulay (Senior Independent Director)3
208
–
–
208
200
–
–
200
S Brown4
178
–
–
178
27
–
–
27
Former Non-Executive Directors
N Polischuk5
211
–
–
211
153
–
–
153
AC Andersen6
–
–
–
–
80
–
–
80
G Dacomb7
–
–
–
–
176
–
–
176
1.
Mr Genovese assumed the role of Executive Chair from 1 July 2023. The above table reflects his fee as Board Chair. The portion of remuneration earned for his role as Executive
Chair is disclosed in the Executive Director table on the previous page. In 2023, in addition to his base fee, Mr Genovese received a one-off payment of US$57,292 for additional
time spent on Board matters in the first quarter of 2023. This payment was in relation to the exceptional time commitment required as a result of the ongoing impact of the
Russian invasion of Ukraine. Mr Genovese also serves as a Non-executive Director of Ferrexpo AG and, in 2024, received a fee of US$80,000 p.a. (2023: US$80,000).
2. Mr Lisovenko was appointed the Employee Engagement Non-executive Director with effect from 10 February 2022.
3. Ms MacAulay is the SID and Chair of the Remuneration Committee.
4. Mr Brown was appointed to the Board and served as Chair of the Audit Committee from 1 January 2024.
5. Ms Polischuk was formerly Chair of the Health, Safety, Environment and Community Committee. She ceased to be a Director on 11 January 2025.
6. Ms Andersen ceased to be a Director on 25 May 2023.
7.
Mr Dacomb ceased to be a Director on 31 December 2023.
IMPLEMENTATION OF REMUNERATION POLICY
SALARY
Base salaries are reviewed annually with reference to the individual’s role, experience and performance; business performance; salary levels at
relevant comparators; and the range of salary increases applying across the Group. Given the focus on corporate costs within the business, the
salary review process for FY 2025 has been deferred until mid-year. Any increase awarded with effect from 1 July 2025 will be set out in next year’s
Directors’ Remuneration Report.
Base salary at:
Executive Director
Position
1 January 2025
1 January 2024
N Kladiev
CFO
CHF468,000
CHF468,000
The Executive Chair was appointed on 1 July 2023 on a one-year contract to 30 June 2024 following Jim North, the former CEO, stepping down from
his role. His base salary and fee was set on appointment at US$1,000,000 made up of his current fee of US$525,000 as Board Chair and an
additional US$475,000 on an interim basis while he serves as Executive Chair. This fee was set to reflect his expected future time commitment in
the role in addition to his non-participation in the Company’s incentive plans which was not considered appropriate given the interim nature of his
appointment.
As detailed in the Committee Chair’s Introductory Letter, in connection with the expiry of the Executive Chair’s one year contract on 30 June 2024,
the Remuneration Committee undertook a review of the scope of his role and the actual time commitment that the role involved versus the original
expectations of the role and as a result reset his remuneration to better reflect the actual time commitment of the role. As a result, to reflect the
higher time commitment, his base salary and fee from 1 July 2024 was increased to a combined total of US$1,350,000 made up of his pre-existing
Board Chair fee of US$525,000 and an additional allowance, in recognition of the extra time commitment, of US$825,000.
Having rebased the remuneration for the time commitment of the role, there is no expectation of any future adjustments for the role beyond a cost
of living related adjustment. The Committee also does not intend to introduce incentive pay to the role.
Should the role revert to a more traditional Non-executive Board Chair role, or the time commitment of the role materially reduce or increase,
remuneration would be adjusted accordingly.
PENSIONS AND OTHER BENEFITS – AUDITED
The Group does not operate a separate pension scheme for Executive Directors. In line with other employees, under the rules of the Zurich pension
scheme that is mandatory as a condition of service for employees in Switzerland, Mr Kladiev receives a company pension contribution of 7% of
salary and Mr Genovese receives a 8% pension contribution in respect of the salary he receives in relation to the executive function of his role.
Additionally, a mandatory risk premium is paid to the insurer to cover disablement and/or death of a member and the provision of a survivor’s
pension. In 2024, this additional risk premium increased the employer pension contribution for Mr Kladiev and Mr Genovese to 10.1% and 10.4%
of salary respectively.
Ferrexpo plc
Annual Report & Accounts 2024
144
Remuneration Report continued
2024 STIP OUTCOME – AUDITED
The Company, as a single product producer of iron ore pellets with a focused customer portfolio, sets its performance targets to ensure that the
Executive Directors and senior executives are motivated to enhance shareholder value both in the short term and over the longer term.
The performance targets were set against our key operational and financial priorities that included production, total mining movement including
stripping, Group cash EBITDA (normalised for realised sales prices within a +/-5% band), sales volume and safety, diversity and environmental
compliance. The choice of performance metrics aligned with sustainable profitable mining in a safe environment.
The specific targets were set with reference to the budgeted performance for each metric, with the Committee retaining judgment on the extent of
under or over performance versus budget in light of the dynamic operating environment created by the war. Where targets are exceeded, an above
target bonus for that portion of the bonus may be paid (the Committee set this at 75% of the maximum for each part of the bonus), where the
budget is missed, a below target bonus for that element may only be paid (the committee set this at 25% of the maximum for each part of the
bonus). The overall bonus earned based on a testing of the targets was also to be subject to Committee discretion to make an adjustment if there
was a disconnect between overall performance, reward and affordability. This structure is as set out in the 2024 Directors’ Remuneration Policy and
reflects the inherent challenges in operating in a dynamic war environment (e.g. availability of electricity, distribution routes to market etc.).
Only the CFO was eligible for a bonus in 2024, at a maximum of 150% of salary with on-target set at 75% of salary. Performance against the targets
set and the bonus achieved is set out below.
The targets set, actual performance against the targets and the testing of those targets and the associated out-turn are detailed in the table below.
Performance in relation to 50% of the total bonus exceeded the targets set and were scored at 75% of the maximum for each part of the bonus.
Performance in relation to the remaining 50% of the total bonus was below the targets set and were scored at 25% of the maximum for each part
of the bonus. This resulted in an overall bonus outcome of 50% of maximum (75% of salary). The Committee then used its discretion, as detailed in
the Chair’s Introductory Letter to reduce the bonus by 7.5% in light of the Group-wide focus on cash conservation. This resulted in a final bonus of
45% of the maximum (67.5% of salary). A full analysis of the factors considered by the Committee when assessing targets and its use of discretion is
set out below the Business Scorecard below.
BUSINESS SCORECARD (100% OF STIP)
KPI
Measure/target
Weighting
%
Target
75%
Scorecard
outcome
Outcome
for each
element %
Assessment
Max as a %
of salary
Weighted
outcome
as a % of
salary
Financial
Group Cash EBITDA (US$, million)1
30.0%
80.7
39.9
49.4%
Below target
45.0%
11.25%
ESG
LTIFR (% < FXPO 5YR average (0.52))
10.0%
-20%
1.9%
-9.4%
Below target
15.0%
3.75%
Diversity Ratio (% Women in leadership
(grade 10+))
10.0%
23.3%
22.9%
98.3%
Below target
15.0%
3.75%
Environmental plan compliance
10.0%
100%
155.3%
155.3%
Stretch
15.0%
11.25%
Operational
Production volume (pellets only) (kt)
15.0%
4,960
6,071
122.4%
Stretch
22.5%
16.88%
Total mining movement including stripping (kt)
15.0%
54,039
64,774
119.9%
Stretch
22.5%
16.88%
Sales &
Marketing
Sales volume (pellets only) (kt)
10.0%
5,150
6,010
116.7%
Stretch
15.0%
11.25%
Total
100.0%
150.0%
75.0%
Scorecard outcome as a percentage of salary
75.0%
Committee discretion applied
-7.5%
Outcome as a percentage of salary
67.5%
1.
restated for realised price within a +/-5% band as per the bonus plan targets set at the start of the year.
When assessing the business scorecard targets set at the beginning of the year, the Committee acknowledged that 2024 had been an exceptionally
challenging year, despite an overall improvement in performance compared to 2023. The ongoing war in Ukraine, now in its fourth year, continued
to constrain operations. Against this backdrop, demand for the Group’s products remained sluggish among steelmakers, while the iron ore market
faced volatility and declining prices. Additionally, input costs rose sharply, particularly for electricity, which had to be imported from Europe due to
Russian attacks on Ukraine’s energy infrastructure. The global surge in energy prices, exacerbated by the war and inflation, further impacted the
Group’s input costs.
Although Black Sea export routes reopened, allowing for increased shipping, this led to higher expenses due to elevated insurance premiums and
freight costs. As a result, despite increased mining activity, pellet production, and sales being all ahead of budget, the Group fell short of its cash
EBITDA target.
The Committee also reviewed the Group’s progress on ESG targets. Due to disruptions from the war, two out of three ESG targets were missed,
though only marginally. However, environmental compliance exceeded expectations, achieving stretch. While the diversity target was not met, the
Committee noted that the Group continued to make significant strides toward gender balance. In 2024, the proportion of managerial roles held
by women increased from 22.3% in 2023 (87 female managers) to 22.9% (97 female managers), with this positive trend expected to continue into
2025, despite the war. The Group remains on track to meet its goal of at least 25% female representation in managerial roles by 2030.
Strategic Report
Financial Statements
145
Corporate Governance
Further, overall female representation in the workforce improved, rising from 30.9% in 2023 to 32.2% in 2024. Notably, despite a reduction in
total workforce numbers due to operational challenges, the number of female employees increased from 2,130 in 2023 to 2,145 in 2024 which
represented a recruitment ratio of 0.8 women for every man. The Committee recognised this as a significant achievement, particularly given the
complexities of maintaining a variable workforce while advancing diversity and talent management strategies.
On workplace safety, the Committee noted that the Group’s Lost-Time Injury Frequency Rate (“LTIFR”) remained ahead of industry peers. However,
it expressed concern over a rise in workplace accidents in 2024. While the increase was understandable given the ongoing conflict and the
psychological strain it imposes—potentially affecting workers’ focus and mental well-being—it is a key area for improvement. The Committee
emphasised the need for continued vigilance and enhanced measures to safeguard employees in such a difficult environment.
Beyond the scorecard results, the Committee recognised management’s relentless efforts to safeguard the Group’s assets despite the challenges
of war. Their commitment ensured the continued production and sale of high-grade pellets, even in highly adverse conditions. The swift execution
of a right-sizing strategy, along with the development of a more diverse product range, particularly record production of DR pellets, tailored to
shifting market demands, allowed the Group to remain agile and responsive to uncertainty.
By optimising available logistics capacity, management minimised disruptions, maintaining a steady supply to European customers while also
protecting the Group’s long-term stability. As a result, the business remained cash flow positive, upheld a strong cash position, and carried no
financial debt. Notably, the Group closed the year with a cash balance exceeding US$100 million.
Given the challenging year for the business, the Committee carefully reviewed the scorecard outcome and determined that an on-target bonus
would not accurately reflect the missed key targets. Most notably, the Group fell short of its EBITDA target, and while rising costs were partly driven
by external factors, certain controllable cost elements could have been managed more effectively.
Additionally, safety remains a fundamental priority, and the increase in workplace accidents was a serious concern. The Committee emphasised the
need for greater management focus on improving safety performance in 2025 to prevent further incidents.
Taking these factors into account—along with the overall affordability for the business—the Committee exercised downward discretion, reducing
the bonus outcome by 7.5%. As a result, it was determined that the CFO earned a bonus of 45.0% of the maximum, 67.5% of salary. In determining
that the final bonus amount was appropriate, the Committee had regard to the wider stakeholder experience during the year, including the returns
generated for shareholders and the bonus awards made across the executive leadership team which were calculated on the same basis.
As detailed in the Chair’s Introductory Letter, the Committee also considered the policy requiring the CFO to defer 25% of the bonus (net of tax)
into shares, with a two-year holding period in normal circumstances. In light of the Committee’s use of negative discretion, the volatility of the
Company’s share price as a result of the war, and the exceptional pressure on bonus plan participants arising from the war, the Committee
concluded that the bonus should be paid solely in cash.
STIP FRAMEWORK FOR 2025
The CFO’s 2025 STIP opportunity will remain at 150% of salary for maximum performance, calculated as a percentage of salary earned during
the year.
Given the continuing dynamic nature of operating during a war, the Committee is to retain the same bonus structure for 2025.
The measures used for the 2025 bonus which are aligned with the Group’s priorities remain as per 2024 and are as set out in the table below.
KPI
Weighting
Financial
Underlying cash EBITDA
30.0%
ESG
Safety
Diversity
Environmental compliance
25.0%
Operational
Production
Total mining movement
30.0%
Sales and Marketing
Sales volume
15.0%
Total
100.0%
Ferrexpo plc
Annual Report & Accounts 2024
146
Remuneration Report continued
LTIP AWARD VESTING (AUDITED)
The 2022 LTIP award is subject to TSR outperformance of a tailored comparator group (75% weighting) tested over the period from 1 June 2022 to
31 May 2025, and Production of 67% Fe pellets (12.5% weighting) and carbon emissions reductions (12.5% weighting) with both of these targets
tested over the three-year period to 31 May 2025.
With regard to the TSR performance period, this was set to run from the grant date as the award was delayed as a result of the Russian invasion of
Ukraine in February 2022. The Russian invasion had a negative impact on the Company’s share price and so the starting point for measuring relative
TSR performance (based on an average share price) was June 2022. With the impact of the invasion continuing to weigh heavily on the Company’s
share price, with five months of the performance period to run as at 31 December 2024, no vesting is anticipated arising from the TSR portion of the
award. The TSR test is based on our relative performance to date against a bespoke Index of comparable Iron Ore and Composite Miners. Actual
vesting will be confirmed in the 2025 Directors’ Remuneration Report.
With regard to the production and carbon emissions reduction targets, actual performance against the targets set and the proportion of the award
vesting is set out in the table below.
Performance condition
Weighting
Threshold target
(20% vests)
Maximum target
(100% vests)
Result
TSR1
75.0%
Index
Index + 8.0% p.a.
With 31 of the 36
months completed,
Ferrexpo’s
performance suggests
0% out of 75% vesting
Straight line vesting
takes place between
performance points
Production of 67% Fe pellets2
12.5%
3.0% over period
7.0% over period
5.28% over the period,
so vesting at 8.2% out
of 12.5%
Carbon emissions reduction
12.5%
3.0% p.a.
5.0% p.a.
Reduction of 0.142%
p.a. over the period, so
this part of the award
will not vest
1.
TSR is measured against an index of iron ore and diversified miners.
2. Subject to the cessation of the war in Ukraine and the re-opening of export port facilities enabling delivery to DR-pellet customers
The Committee will confirm final vesting in the 2025 Directors’ Remuneration Report with the current estimate being 8.2% of the total award.
The estimate of vesting for the purposes of the Single Figure Table is based on the above assessment and the award details set out below and
will be restated in the 2025 Directors’ Remuneration Report.
Details of the number of shares expected to vest under the 2022 Award are set out in the table below.
Date of grant
Number of
shares
Award share
price1
Value
awarded
based on
grant price
Estimated
vesting
percentage
Number of
shares
estimated to
vest
Value vesting
based on
grant price
Share price at
date of
vesting2
Value based
on vesting
Price2
Impact of
share price
appreciation/
depreciation
N Kladiev
01.06.22
37,440
164.23p
£61,488
8.2%
3,070
£5,042
76.63p
£2,353
-53%
1.
Based on the average share price over the three-month period from 1 March to 30 May 2022 preceding the start of the TSR performance period.
2. Based on the three-month average share price to 31 December 2024 of 76.63 pence. Value figures exclude dividends received over the vesting period of CH348.
3. Excludes value of shares in lieu of dividends (2024: nil) in the reporting year.
Strategic Report
Financial Statements
147
Corporate Governance
LTIP GRANTED IN 2024 (AUDITED)
Mr Kladiev was granted a 2024 LTIP award in respect of 166,000 shares as shown in the table below.
Executive Director
Date of grant
Number of shares
Face value1
Face value
(% of salary)
End of vesting
period
N Kladiev
01.06.24
166,000
£102,123
25%
01.06.27
1.
Based on the volume weighted average share price over the three-month period prior to grant (ending 7 May 2024) of 61.59pence.
The 2024 LTIP award, in line with the 2024 Remuneration Policy was granted as a Restricted Share Award. The above shares will be eligible to vest
three years from grant subject to remaining in employment and satisfaction of a performance underpin.
The performance underpin requires the Committee to consider the Company’s performance relative to its mid- to long-term financial, operational
and sustainability plans as well as individual performance and it may reduce the vesting level, including to zero, if performance is not considered
consistent with the Board’s plans. This assessment will take into account the dynamic operating environment that currently prevails as a result of
the Russian invasion of Ukraine. The Committee also retains the ability to adjust the number of shares vesting in the event that there is to be a
perceived windfall gain.
LTIP FRAMEWORK FOR 2025
The same approach will operate in relation to 2025 as in 2024. The Committee intends to grant Mr Kladiev a Restricted Share Award which is
expected to have a face value of 25% of his salary.
The number of shares under the award will be based on the average share price over such period as the Committee determines is appropriate prior
to grant (currently expected to be the volume-weighted average share price for up to 5 dealing days), and the Committee will retain the ability to
adjust the number of shares vesting in the event that there is to be a perceived windfall gain.
The award will vest three years after grant, subject to continued service, with any shares vesting subject to a two-year holding period. An underpin
will also apply. The Committee will consider the Company’s performance relative to its mid- to long-term financial, operational and sustainability
plans as well as individual performance and may reduce the vesting level, including to zero, if performance is not considered consistent with the
Board’s plans. This assessment will take into account the dynamic operating environment that currently prevails as a result of the Russian invasion
of Ukraine.
Any shares vesting from these awards will be subject to recovery provisions (as detailed in this Remuneration Report).
NON-EXECUTIVE DIRECTORS (INCLUDING THE CHAIR)
As set out above, the Board Chair currently receives a combined executive and non-executive fee of $1,350,000. The Non-executive portion of
US$525,000 has not been increased vis-à-vis 2024.
The wider Non-executive Directors’ fees were also eligible for review at the end of 2024 with the decision taken, as per the wider corporate
employee base as noted earlier, to defer any review until July 2025. For completeness, current fees as at 1 January 2025 are as set out below:
Role
Current fee levels
Change
Chair fee
US$525,000
+0%
Non-executive Director base fee
US$148,000
+0%
Committee Chair fee1
US$20,000
+0%
Senior Independent Director fee
US$35,000
+0%
Audit Chair fee
US$30,000
+0%
Remuneration Chair fee
US$25,000
+0%
Employee Engagement Director fee
US$35,000
+0%
1.
The fee applies to the Chairs of Committee of Independent Directors, Health, Safety, Environment and Community Committee and Nominations Committee.
In addition to his fee as Executive Chair of the Board, Mr Genovese serves as a Non-executive Director of Ferrexpo AG for which he receives a fee of
US$80,000 p.a.
Ferrexpo plc
Annual Report & Accounts 2024
148
Remuneration Report continued
DIRECTORS’ SHAREHOLDINGS (AUDITED)
Total interests of the Directors in office (and connected persons) as at 31 December 2024:
At 31 December
2024
At 31 December
2023
L Genovese
233,651
233,651
N Kladiev1
129,789
127,574
F MacAulay
3,536
3,536
V Lisovenko
–
–
S Brown
–
–
Former Directors
AC Andersen2
–
–
G Dacomb3
–
–
N Polischuk4
–
–
1.
N Kladiev joined the Board on 25 May 2023.
2. AC Andersen stood down as a Non-executive Director on 25 May 2023 and her 2023 shareholding is as of that date.
3. G Dacomb stepped down as a Director on 31 December 2023 and his 2024 shareholding is as of that date.
4. N Polischuk stepped down as a Director on 11 January 2025.
Executive Directors are subject to shareholding requirements under which they are required to build up a holding of shares of equivalent value to
200% of salary. Executive Directors will be expected to retain half their vested LTIP shares on an after-tax basis. Shares deferred under the annual
bonus and shares that have vested under the LTIP but which are still subject to the two-year holding period will also count towards the guideline, on
a net of tax basis, if applicable.
A post-employment share ownership guideline applies under which departing Executive Directors will be expected to retain the lower of their share
ownership at cessation of employment and 200% of salary for a minimum period of two years. Only shares deferred under the annual bonus (from
2022, on an after-tax basis) and all shares which vest under awards granted to an Executive Director from 2022 (after tax) during an Executive
Director’s tenure will count for the purposes of the post-cessation guideline. The Committee will retain discretion to disapply the guideline in
exceptional circumstances (e.g. death).
Mr Kladiev’s shareholding against the guideline as at 31 December 2024 was as follows:
Shareholding
requirement
(% salary)
Owned
outright
Subject to
performance1
Current
shareholding2
(% salary)
Requirement
met?
N Kladiev
200%
129,789
268,040
101.2%
In progress
1.
Performance awards are conditional awards. Further details of shares subject to performance are provided below.
2. Based only on shares owned outright at 31 December 2024 and a share price of 105.8 pence on 31 December 2024 and an exchange rate of £1=CHF1.1252
Details of LTIP awards held by Mr Kladiev are provided below.
Award
At 1 January
2024
Granted
(2024 award)
Estimated to
vest
Estimated to
lapse
Total at
31 December
2024
Award
share price
(pence)1
End of
performance
period2
N Kladiev
2022 Award3
37,440
3,070
34,370
0
164.2
31.05.25
2023 Award
64,600
64,600
136.8
31.12.25
2024 Award
166,000
166,000
0.62
31.12.27
Total
102,040
166,000
3,070
34,370
230,600
1.
Based on the average share price over the three-month period preceding the start of the performance period. For the 2022 Award, based on the three-month volume weighted
average price prior to 1 June 2022. For the 2023 Award, based on the three-month volume weighted average price prior to 3 January 2023 of 136.8 pence. For the 2024 Award the
three-month average volume weighted share price prior to grant of 62 pence.
2. The 2024 award was granted as a Restricted Share Award and so vests based on continued employment through to the vesting date on 1 June 2027 and satisfaction of the
performance underpin that the Committee will assess over the three years to 31 May 2027 (as above).
3. The vesting of the 2022 Award is set out on page 147.
There have been no changes in the interests of the Directors from the end of the period under review to 18 March 2025 being a date not more than
one month prior to the date of notice of the AGM. Total outstanding (i.e. awarded but not yet vested) awards granted under the LTIP as at the end
of 2024 are equivalent to 0.046% of issued share capital.
Strategic Report
Financial Statements
149
Corporate Governance
PAYMENTS TO PAST DIRECTORS AND FOR LOSS OF OFFICE (AUDITED)
Mr Wolfram Kuoni retired from Ferrexpo plc Board on 28 November 2016 and serves as Chair of Ferrexpo AG. In 2024, he received a fee of
US$100,000 for his role as Chair and an additional US$113,636 for additional time spent on shareholder engagement and travel to Ukraine.
The Group entered into an offset agreement with Mr Kostyantin Zhevago relating to amounts potentially owing to Mr Zhevago under his previous
CEO contract. See Note 34 Related Party Disclosures to the Consolidated Financial Statements.
In 2024, there were no payments made for loss of office and no other payments made to past Directors that have not been previously disclosed.
PERCENTAGE CHANGE IN DIRECTORS’ REMUNERATION COMPARED TO EMPLOYEES
The table below sets out the percentage change in salary, taxable benefits and annual bonus between 2024 and 2023, and prior periods for the
Directors of the Company and the average for an all-employee population.
2024 vs 2023
2023 vs 2022
2022 vs 2021
2021 vs 2020
2020 vs 2019
Change
in salary/
fees
Change
in
benefits
Change
in bonus
Change in
salary/
fees
Change in
benefits
Change in
bonus
Change in
salary/
fees
Change in
benefits
Change in
bonus
Change in
salary/
fees
Change in
benefits
Change in
bonus
Change in
salary/
fees
Change in
benefits
Change in
bonus
All employee
average1
-4.6%
0%
-0.9%
7.6%
0% -29.7%
3.0%
0% -16.8%
13.4%
0%
37.1%
24.0%
0%
2.9%
N Kladiev (CFO)2
6.2%
0%
-8.0%
N/A
N/A
N/A
–
–
–
–
–
–
–
–
–
L Genovese (Exec.
Chair)3
310.5%
0%
0%
90%
0%
0%
0%
0%
0%
0%
0%
0% 400.0%
0%
0%
V Lisovenko (EED)4
0%
0%
0%
5%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
F MacAulay5 (SID)
0%
0%
0%
5%
0%
0%
0%
0%
0%
0%
0%
0%
35.0%
0%
0%
S Brown6
0%
0%
0%
–
–
–
–
–
–
–
–
–
–
–
–
Former Directors
AC Andersen7
–
–
–
5%
0%
0%
0%
0%
0%
–
–
–
–
–
–
G Dacomb8
–
–
–
5%
0%
0%
9.7%
0%
0%
0%
0%
0%
35.0%
0%
0%
N Polischuk9
0%
0%
0%
5%
0%
0%
0%
0%
0%
–
–
–
–
–
–
1.
The All Employee population is based on the remuneration for the Executive Committee. This population is being used as Ferrexpo plc does not have any employees. The chosen
population is considered the most relevant employee comparative group given the Group-wide nature of roles performed by incumbents.
2. N Kladiev was appointed to the Board as CFO with effect from 25 May 2023.
3. Mr Genovese was appointed to the Board in February 2019 and appointed Chair in August 2020. He assumed the role of Executive Chair with effect from 1 July 2023.
4. Mr Lisovenko served as SID from August 2019 until February 2022 when he was appointed Employee Engagement Director (“EED”) and received the same additional fee as when
he served as SID.
5. Ms MacAulay was appointed to the Board in August 2019, and was appointed SID in February 2022.
6. Mr Brown was appointed to the Board on 22 October 2023.
7.
Ms Andersen was appointed to the Board in March 2021 and stood down as a Non-executive Director on 25 May 2023.
8. Mr Dacomb was appointed to the Board on 10 June 2019. In August 2022, his fee was increased as a Chair of the Audit Committee. Mr Dacomb resigned as a Non-executive
Director on 31 December 2023.
9. Ms Polischuk was appointed to the Board on 29 December 2021 and stepped down as a Non-executive Director on 11 January 2025.
RELATIVE IMPORTANCE OF SPENDING ON PAY
The table below shows Ferrexpo’s dividend and total employee pay expenditure (this includes pension and variable pay, including STIP and fair value
of LTIP, but not social security) for the financial years ended 31 December 2024 and 31 December 2023, and the percentage change.
US$ million
2024
2023
Year-on-year
change
All-employee remuneration
79
68
15.2%
Distributions to shareholders1
0.47
456
-89.7%
1.
Includes dividends and share buy-backs.
Ferrexpo plc
Annual Report & Accounts 2024
150
Remuneration Report continued
COMPARISON OF COMPANY PERFORMANCE AND EXECUTIVE DIRECTOR PAY
The graph below shows the value, at 31 December 2024, of £100 invested in Ferrexpo’s shares on 31 December 2014 compared with the current
value of the same amount invested in the FTSE 250 and All-Share indices and in the shares of the LTIP comparator group. The FTSE 250 and
All-Share indices are chosen because Ferrexpo was a constituent member of the FTSE 250 for the majority of the period.
0
300
600
1,200
1,100
1,00
800
700
500
400
200
100
900
31 Dec
2014
31 Dec
2015
31 Dec
2016
31 Dec
2017
31 Dec
2018
31 Dec
2019
31 Dec
2020
31 Dec
2024
31 Dec
2021
31 Dec
2022
31 Dec
2023
Value (£)
Ferrexpo
2023 LTIP Index
FTSE 250 Index
FTSE All-Share Index
HISTORICAL TSR PERFORMANCE
Growth in the value of a hypothetical £100 holding over the ten years to 31 December 2024.
CHIEF EXECUTIVE OFFICER’S PAY
2015
2016
2017
2018
2019
2020¹
2021
2022
2023²
2024
KZ
KZ
KZ
KZ
KZ
CM/JN
JN
JN
JN/LG
LG
Single figure total remuneration
(US$’000)
243
243
255
251
257 595/1,147
2,473
2,147
540/249
1,043
STIP vesting (% max)
K Zhevago did not participate in the STIP
36/67
67
50
0/ N/A
0
LTIP vesting (% max)
K Zhevago did not participate in the STIP
0/0
100
72
17/ N/A
0
1.
2020 single figure remuneration total based on the total for Mr Mawe in the period from 1 January to 28 May 2020 and for Mr North in the period between 28 May and
31 December 2020.
2. 2023 single figure remuneration total based on the total for Mr North as CEO in the period from 1 January to 30 June 2023 and for Mr Genovese as Executive Chair in the period
from 1 July to 31 December 2023.
STATEMENT OF SHAREHOLDER VOTING
The following table shows the results of the binding vote on the Remuneration Policy and the advisory vote on the 2023 Remuneration Report at the
2024 AGM.
For
Against
Withheld
Shares
(millions)
%
Shares
(millions)
%
Shares
(millions)
Remuneration Policy (at 2024 AGM)
431
99.0%
4
1.0%
37,376
2023 Remuneration Report (at 2024 AGM)
421
97.7%
10
2.3%
33,171
This report was approved by the Board on 18 March 2025.
Signed on behalf of the Board
Fiona MacAulay
Chair of the Remuneration Committee
18 March 2025
Strategic Report
Financial Statements
151
Corporate Governance
INTRODUCTION
The Company was incorporated under the name Ferrexpo plc as a public company limited by shares on 22 April 2005. Ferrexpo plc listed on the
London Stock Exchange in June 2007 and is a member of the FTSE 250 Index.
The Directors present their Annual Report and Accounts on the affairs of the Group, together with the financial statements and auditor’s report,
for the year ended 31 December 2024.
The ongoing war in Ukraine continues to have an adverse impact on the Group’s cash flow generation and profitability as the access to logistics
network required for the Group’s seaborne sales, although open remains restricted. The war poses a material uncertainty in respect of the Group’s
going concern assessment (see Note 2 Basis of preparation to the Consolidated Financial Statements on page 178 for further details).
The Group is also exposed to the risks associated with operating in a developing economy, which may or may not be exacerbated by the war and/or
the current circumstances facing Mr Zhevago (see Ukraine country risk on page 86). As a result, the Group is exposed to a number of risk areas that
are heightened compared to those expected in a developed economy, such as an environment of political, fiscal and legal uncertainties, which
represents another material uncertainty as at the approval of these consolidated financial statements. Note 30 Commitments, contingencies
and legal disputes provides further information on ongoing legal proceedings and disputes, including a contested sureties claim in the amount
of UAH4,727 million (US$113 million as at 31 December 2024), for which the Group recognised a full provision in accordance with the relevant
accounting standard. Information about the use of financial instruments by the Group is given in Note 27 Financial instruments to the Consolidated
Financial Statements on page 212.
DIVIDENDS
Results for the year are set out in the Consolidated Income Statement on page 173.
Like the financial year 2023, the Group did not make any dividend payments during the financial year 2024
The Group announced on 18 January 2024 an Interim Dividend of 3.3 US cents, which was due for payment to shareholders on 23 February 2024.
Following subsequent and unexpected events in Ukraine relating to a claim against one of the Group’s Ukrainian subsidiaries (see Note 30
Commitments, contingencies and legal disputes for further information), the Group announced on 20 February 2024 that the Board had
reconsidered the Interim Dividend and decided to withdraw it.
In view of the on-going war in Ukraine, the Board has decided not to declare an interim dividend in conjunction with the Group’s full year results for
2024. The Board will continue to assess the situation and, when appropriate, will make a decision in relation to shareholder returns.
DIRECTORS
The Directors of the Company who served during the year and up to the date of approval of this Directors’ Report were:
• Lucio Genovese
• Nikolay Kladiev
• Vitalii Lisovenko
• Fiona MacAulay
• Natalie Polischuk (resigned 11 January 2024)
• Stuart Brown
Except for Natalie Polischuk who resigned on 11 January 2024, all of the Directors will retire at the forthcoming AGM and, being eligible, will offer
themselves for re-election.
Further details about the Directors and their roles within the Group are set out in the Directors’ biographies on pages 102 to 103. Details of the
remuneration of the Directors, their interests in shares of the Company and their service contracts or letters of appointment are contained in the
Remuneration Report on pages 130 to 151.
APPOINTMENT AND REPLACEMENT OF DIRECTORS
Directors may be elected by the shareholders (by ordinary resolution) or appointed by the Board. A Director appointed by the Board holds office
only until the next AGM and is then eligible for election by the shareholders.
POWERS OF THE DIRECTORS
Subject to the Articles, the Act and any directions given by special resolution, the business of the Company will be managed by the Board which may
exercise all the powers of the Company.
DIRECTORS’ AND OFFICERS’ INSURANCE
The Company maintains Directors’ and Officers’ Liability Insurance in respect of legal action that may be brought against its Directors and Officers.
DIRECTORS’ INDEMNITY PROVISION
During the period under review, the Group had in force a qualifying third party indemnity provision in favour of each of the Directors of Ferrexpo plc
against liability in respect of proceedings brought by third parties, subject to the conditions set out in the Act.
Ferrexpo plc
Annual Report & Accounts 2024
152
Directors’ Report
ADDITIONAL DISCLOSURES
Additional disclosures which are incorporated by reference into this Directors’ Report, including any information required in accordance with UK
Listing Rule 6.6.1R of the UK Listing Rules, where applicable to the Company, or the Act can be located as set out in the following table:
Page
Capitalised interest (UKLR 6.6.1R (1))
See Note 10 Net finance expense to the Consolidated Financial
Statements
188
Details of long-term incentive schemes (UKLR 6.6.1R (3))
Remuneration Report
130
Contracts of significance (UKLR 6.6.1R (9))
See Note 30 Commitments, contingencies and legal disputes and
Note 34 Related party disclosures to the Consolidated Financial
Statements. Transactions with FC Vorskla are considered to be
contracts of significance under the UK Listing Rules
221
229
Details of waivers of dividends by shareholders
(UKLR 6.6.1R (11) and (12))
As at 14 March 2025, the Employee Benefit Trusts contain
9,766,759 Ferrexpo Ordinary Shares for satisfying existing and
future awards under management incentive schemes. A dividend
waiver is in place in respect of these shares.
–
Board statement on carrying on business independently
from controlling shareholders (LR 6.6.1R (13)).
Corporate Governance Report
97
Disclosures concerning greenhouse gas emissions
Strategic Report
49
Engagement with suppliers, customers and others
Strategic Report and pages
56
Financial instruments
The Group does not hold any derivative financial instruments.
Group policy on financial instruments is set out in Note 27
Financial instruments to the Consolidated Financial Statements
212
Events since the balance sheet date
See Note 35 Events after the reporting period to the
Consolidated Financial Statements
231
Likely future developments in the business
Strategic Report
13
Statement of Directors’ responsibilities in respect of the
Annual Report and Accounts
Corporate Governance Report
159
Information that fulfils the requirements of DTR 7.2
(other than DTR 7.2.6)
Corporate Governance Report
97
DISCLOSURES REQUIRED BY STATUTE
EMPLOYEES
Information on the Group’s employment policies can be found in the Strategic Report on pages 47 to 48. Employee numbers are stated in Note 29
Employees to the Consolidated Financial Statements on page 220. The Group employs fewer than 250 staff in the United Kingdom and therefore it
does not disclose its policies on employee involvement or employing disabled people. However, the Group gives fair consideration to applications
for employment from disabled people.
POLITICAL DONATIONS
The Group made no political donations, political expenditure or political contributions during the year.
ENERGY CONSUMPTION AND GREENHOUSE GAS EMISSIONS REPORTING
In the UK, our energy consumption is less than 40,000kWh, which is below the threshold for energy and greenhouse gas emissions disclosure.
The Group does report on its global energy consumption and greenhouse gas emissions and this information can be found in the Strategic Report
on page 49. UK energy consumption was the equivalent of less than 0.001% (2023: 0.001%) of the Group’s energy consumption in 2024 and UK
greenhouse gas emissions were the equivalent of less than 0.001% (2023: 0.001%) of the Group’s greenhouse gas emissions in 2024.
SHARE CAPITAL AND RIGHTS ATTACHING TO THE COMPANY’S SHARES
The Company has a single class of Ordinary Shares of 10 pence each.
Subject to applicable statutes and other shareholders’ rights, shares may be issued with such rights and restrictions as the Company may by
ordinary resolution decide, or (if there is no such resolution or so far as it does not make specific provision) as the Board may decide. At each AGM,
the Board proposes resolutions to the shareholders seeking authority for the Company’s Directors to allot new shares in accordance with relevant
institutional investor guidelines.
Details of the issued share capital of the Company are shown in Note 31 Share capital and reserves to the Consolidated Financial Statements on
page 226.
Strategic Report
Financial Statements
153
Corporate Governance
VARIATION OF RIGHTS
Subject to the provisions of the Act, the rights attached to a class of shares may be varied or abrogated either with the consent in writing of the
holders of at least three-quarters of the nominal amount of the issued shares of that class (excluding any shares of that class held as treasury
shares) or with the sanction of a special resolution passed at a separate meeting of the holders of the issued shares of that class validly held in
accordance with the Articles.
In accordance with the Articles, unless otherwise expressly provided by the rights attached to any class of shares, those rights shall be deemed not
to be varied by the purchase by the Company of any of its own shares or the holding of such shares as treasury shares.
TRANSFER OF SHARES
Any share in the Company may be held in uncertificated form and, subject to the Articles, title to uncertificated shares may be transferred by
means of a relevant system. Registration of a transfer of an uncertificated share may be refused in the circumstances set out in the Uncertificated
Securities Regulations 2001 and where, in the case of a transfer to joint holders, the number of joint holders to whom the uncertificated share is to
be transferred exceeds four.
Subject to the Articles, any member may transfer all or any of their certificated shares by an instrument of transfer in any usual form or in any other
form which the Board may approve. The Board may decline to register a transfer of a certificated share:
• if it is not in the approved form;
• which is not fully paid, provided that if the share is listed on the Official List of the Financial Conduct Authority such refusal does not prevent
dealings in the shares from taking place on an open and proper basis;
• on which the Company has a lien;
• by a person with a 0.25% or greater interest if such a person has been served with a notice and has failed within 14 days to provide the Company
with information concerning interests in those shares required to be provided under the Act, unless the transfer is shown to the Board to be
pursuant to an arm’s length sale.
The Company is not aware of any agreements between holders of securities that may result in restrictions on the transfer of securities or that may
result in restrictions on voting rights.
REPURCHASE OF SHARES
Subject to authorisation by shareholder resolution, the Company may purchase its own shares in accordance with the Act. Any shares which have
been bought back may be held as treasury shares or cancelled immediately upon completion of the purchase.
The Company was given authority to make market purchases of up to approximately 10% of its existing Ordinary Share capital by a resolution
passed on 23 May 2024. This authority will expire at the conclusion of the Company’s 2025 AGM. A special resolution to renew the authority will be
proposed at the forthcoming AGM. Details of the resolution renewing the authority to purchase Ordinary Shares will be set out in the Notice of
AGM.
The Company did not make use of the authority mentioned above during 2024.
DIVIDENDS AND DISTRIBUTIONS
Subject to the provisions of the Act, the shareholders may by ordinary resolution, from time to time, declare dividends not exceeding the amount
recommended by the Board. The Board may pay interim dividends and also any fixed rate dividends whenever the financial position of the Group,
in the opinion of the Board, justifies their payment.
Under the Company’s Articles, the Board may withhold payment of all or any part of any dividends or other monies payable in respect of the
Company’s shares from a person with a 0.25% or greater interest if such person has been served with a notice under Section 793 of the Act and
has failed within 14 days to provide the Company with information concerning interests in those shares required to be provided under the Act.
VOTING
At a general meeting of the Company, every member has one vote on a show of hands and, on a poll, one vote for each share held. Under the Act,
members are entitled to appoint a proxy or proxies to exercise all or any of their rights to attend, speak and vote at a general meeting. Subject to
the Act, a member that is a corporation may appoint one or more individuals to act on its behalf at a general meeting as a corporate representative.
Ferrexpo plc
Annual Report & Accounts 2024
154
Directors’ Report continued
RESTRICTIONS ON VOTING
No member is entitled to vote at any general meeting in respect of any shares held by them if any call or other sum outstanding in respect of that
share remains unpaid. Currently, all issued shares are fully paid. In addition, subject to the Articles, no member shall be entitled to vote if they have
failed to provide the Company with information concerning interests in those shares required to be provided under the Act.
SHARES HELD IN THE EMPLOYEE BENEFIT TRUST (“EBT”)
The trustees of the Company’s EBT may vote or abstain from voting on shares held in the EBT as they think fit and in doing so may take into account
both financial and non-financial interests of the beneficiaries of the EBT or their dependants.
DEADLINE FOR VOTING RIGHTS
The Articles provide a deadline for submission of proxy forms of not less than 48 hours before the meeting. The Directors will also specify in the
notice of any general meeting a time, being not more than 48 hours before the meeting, by which a person must be entered in the register of
members in order to have the right to attend and vote at the meeting. The Directors may decide, at their discretion, that no account should be
taken of any day that is not a working day when calculating the 48-hour period.
SUBSTANTIAL SHAREHOLDINGS
As at 31 December 2024, the Company had been advised, in accordance with the Disclosure Guidance and Transparency Rules, of the following
notifiable interests in its voting rights.
Name of shareholder
Ordinary Shares
Number of voting rights
% of the Company’s total
voting rights at date of notification
Fevamotinico S.a.r.l.1
294,993,686
294,993,686
49.32%
As at 14 March 2025, the latest practicable date prior to publication of the Annual Report and Accounts, the following interests in voting rights had been
notified to the Company.
Name of shareholder
Ordinary Shares
Number of voting rights
% of the Company’s total
voting rights at date of notification
Fevamotinico S.a.r.l.1
294,993,686
294,993,686
49.32%
1.
Fevamotinico S.a.r.l. is a wholly owned subsidiary of The Minco Trust of which Kostyantin Zhevago and two other members of his family are the beneficiaries.
SIGNIFICANT AGREEMENTS – CHANGE OF CONTROL
The Company does not have any agreements with Directors or employees that would provide for compensation for loss of office or employment
resulting from a takeover. There are no circumstances connected with any other significant agreements to which the Company is a party that would
take effect, alter or terminate upon a change of control following a takeover bid, except those referred to below:
LTIP
The rules of the Company’s LTIP set out the consequences of a change of control of the Company on employee rights under the plan. Generally,
such rights will vest on a change of control to the extent that the performance conditions have been satisfied and on a time pro-rated basis, subject
to the discretion of the Remuneration Committee. Participants will become entitled to acquire shares in the Company, or in some cases, to the
payment of a cash sum of equivalent basis.
RELATIONSHIP AGREEMENT
Details of the Relationship Agreement entered into between Fevamotinico S.a.r.l., Kostyantin Zhevago, The Minco Trust and the Company can be
found in the Corporate Governance Report on page 108. The Relationship Agreement ceases to apply if Ferrexpo’s shares cease to be listed and
traded on the London Stock Exchange, or if the holding of Fevamotinico S.a.r.l., The Minco Trust or Mr Zhevago individually or collectively falls below
24.9% of the issued share capital of the Company and they are no longer a controlling shareholder for the purposes of the UK Listing Rules.
Strategic Report
Financial Statements
155
Corporate Governance
GOING CONCERN
As at the date of the approval of these consolidated financial statements, the war in Ukraine is still ongoing and, during the financial year, the Group
continued to demonstrate its resilience and flexibility from an operating perspective, although the ongoing war continues to affect its financial
results. The situation in Ukraine is unpredictable and continues to require the Group to be extremely flexible, as mining operations and production
have to be adapted to the prevailing conditions. The regained access to Ukrainian Black Sea ports enabled the Group to expand its sales activities
and increase its production to the highest level since the full-scale invasion of Ukraine in February 2022.
The challenging and unpredictable environment in which the Group has been operating since the beginning of the invasion and the ongoing war,
whose duration and impact on the Group’s activities in future periods are difficult to predict, continues to represent a material uncertainty in terms
of the Group’s ability to continue as a going concern. In addition to the war-related material uncertainty, the Group is also exposed to the risks
associated with operating in a dynamic and adverse political landscape in Ukraine, which may or may not be exacerbated by the war and/or the
current circumstances facing Mr Zhevago (see Ukraine country risk in the Principal Risks section). As a result, the Group is exposed to a number of
risk areas that are heightened compared to those expected in a stable economy, such as an environment of political, fiscal and legal uncertainties,
which represents another material uncertainty as at the date of the approval of these consolidated financial statements.
The Group’s production volume is dependent on a constant power supply in Ukraine, which was affected during 2024 by Russian attacks on
power generation and transmission infrastructure in Ukraine, which has, together with higher than expected prices for energy and input materials,
especially for electricity imported from EU countries, an impact on the Group’s cash flow generation and profitability. The Group’s ability to operate
its assets also depends on sustainable and sufficient supply of other key input materials required for the mining and production processes as well
as maintaining an adequate number of experienced and skilled members of the workforce in Ukraine.
Despite the continued challenging situation during the financial year 2024, the Group increased its total commercial production to 6,890 thousand
tonnes of iron ore pellets and concentrate, representing an increase of 66% compared to 4,152 thousand tonnes during the financial year 2023.
While the Group’s net cash position benefited from the higher production and sales volumes in 2024, the weaker market resulted in a turbulent
price environment for iron ore products and higher prices for input materials and energy started in the second half of the year to deteriorate the
Group’s margin and cash flow generation. As a result, the Group’s net cash position decreased from US$108,293 thousand at the beginning of the
year to US$ 100,726 thousand as at 31 December 2024. Despite lower margins realised, the Group continued investment in sustaining and
development capital expenditure projects to ensure asset integrity and future efficiency gains.
As at the date of the approval of these consolidated financial statements, the Group is in a net cash position of approximately US$41,017 thousand
with an available cash balance of approximately US$45,471 thousand. In addition to the available cash balance, the Group has an outstanding trade
receivable balance of approximately US$43,421 thousand from its pellet and concentrate sales, which are expected to be collected in the next few
months, and finished goods already stockpiled of 412 thousand tonnes at different ports or storage locations other than the plant.
As disclosed in the Group’s 2023 Annual Report & Accounts, the ongoing war in Ukraine and other circumstances facing the Group have led to an
escalation of a number of risks, including risks relating to the political environment and the independence of the legal system in Ukraine, which
could have a material negative impact on the Group’s business activities and reputation. In addition to the material uncertainties related to the
ongoing war in Ukraine and the legal disputes in Ukraine, there are number of events after the reporting period that could have an impact on the
Group’s business activities and its ability to continue as a going concern. For further details, see Note 35 Events after the reporting period.
The court proceedings before the Supreme Court of Ukraine in respect of contested sureties (see Note 30 Commitments, contingencies and legal
disputes for further details) continued throughout the financial year 2024 and the first months of 2025. Although the management is of the opinion
that this claim is without merit, the full provision in the amount of UAH4,727 million (US$112,457 thousand as at 31 December 2024), which was
recorded as at the end of the previous year, was not released, considering the magnitude of this specific claim and the risks associated with the
judicial system in Ukraine. The outcome of this ongoing legal dispute represents a material uncertainty in terms of the Group’s ability to continue
as a going concern. A future cash outflow, which also depends on the details and technicalities of a possible enforcement in the event of a negative
decision by the Supreme Court, is likely to have a significant impact on the Group’s future cash flow generation and available liquidity. In addition
to this claim and as announced on 4 February 2025, the Group’s subsidiary Ferrexpo Poltava Mining (“FPM”) has received a civil claim seeking joint
liability of FPM and its General Director for damages amounting to UAH157 billion (approximately US$3.8 billion as at 14 March 2025) in favour of the
Ukrainian state (see Note 30 Commitments, contingencies and legal disputes for further details). This claim is related to an initial accusation on the
illegal sale of waste products, which have transformed into accusations that FPM is illegally mining and selling subsoil (minerals other than iron ore),
which is said to have caused damage to the environment. FPM rejects these allegations in their entirety on the basis that there was no illegal
extraction of the subsoil. FPM mines and extracts iron ore according to its mining licence and provides for the removal of rock and its storage as a
waste in addition to the extraction of iron ore. The management is of the opinion that these accusations and the claim are without merit and FPM
has started the vigorous defence of its position in the Ukrainian courts.
As disclosed in Note 35 Events after the reporting period, on 12 February 2025, personal sanctions have been imposed on Mr Zhevago by Ukrainian
authorities. Although, no sanctions have been imposed on any member of the Group, the personal sanctions on Mr Zhevago might have implications
on the Group’s operation, such as additional challenges with taxes, including refusal of VAT refunds, which could have an impact on the Group’s
ability to continue as a going concern. As it is likely that the Group’s subsidiaries in Ukraine will not receive VAT refunds until the sanctions against
Mr Zhevago are lifted, the Group has adjusted its long-term model to reflect the lower expected cash flow generation caused by the potential
absence of VAT refunds in Ukraine to minimise the impact on the available cash balance throughout the period of the going concern assessment.
In addition and connected with the personal sanctions on Mr Zhevago, on 20 February 2025, the State Bureau of Investigation (the “SBI”) made a
media announcement regarding a potential claim to the High Anti-Corruption Court of Ukraine (the “HACC”) to nationalise 49.5% of shares in FPM
and certain of its assets. As at the approval of these consolidated financial statements, FPM has not received a formal notification of such a claim.
Further to that, under Ukrainian laws, the SBI has no authority to petition, bring claims or make proposals (both on nationalisation or application of
any asset-confiscation sanction) to the HACC and the proper authority should be the Ministry of Justice of Ukraine. A nationalisation of 49.5% of
shares in FPM and certain of its assets is expected to have a significant impact on the Group’s ability to continue as a going concern as FPM could
lose key assets required for the production of iron ore pellets and concentrate. In addition, a nationalisation of 49.5% of shares in FPM will have
an impact on the equity attributable to the shareholders of Ferrexpo plc and its future distributable reserves because Ferrexpo AG would not be
entitled to dividends in relation to the nationalised 49.5% of shares in FPM. See Note 12 Earnings per share and dividends paid and proposed for
further details.
Ferrexpo plc
Annual Report & Accounts 2024
156
Directors’ Report continued
As disclosed in Note 35 Events after the reporting period, on 4 March 2025, the SBI also made a media statement that the Pecherskyi District Court
of Kyiv has granted a request of the Prosecutor General’s Office of Ukraine to transfer 49.5% of the corporate rights in Ferrexpo Poltava Mining
(“FPM”) held by Ferrexpo AG (“FAG”) to Ukraine’s Asset Recovery and Management Agency (“ARMA”). This transfer is in connection with ongoing
proceedings against Mr Zhevago relating to Bank F&C, as disclosed in detail on page 222 of Note 30 Commitments, contingencies and legal
disputes. Under the Ukrainian Criminal Procedure Code, the ARMA can accept into its management a piece of property that has been arrested only
to preserve real evidence. Corporate rights in a Ukrainian company cannot constitute real evidence as they cannot be treated as material objects.
Therefore, based on independent legal advice from Ukrainian counsel, the transfer of these corporate rights into the ARMA’s management is illegal.
As at the date of the approval of these consolidated financial statements, the Group has not been provided with a copy of the relevant court
decision of the Pecherskyi District Court of Kyiv and therefore the precise details of the court decision are not known to the Group. However, based
on independent legal advice from Ukrainian counsel, management understands that FAG remains the 100% owner of FPM and management does
not expect that the transfer of 49.5% of the corporate rights in FPM to ARMA will affect FPM’s operations or the Group’s ability to continue as a
going concern. Asset management is carried out on the basis of the management agreement concluded between ARMA and a selected manager.
Based on article 21 of the Law on ARMA, in those cases where the temporary management is established over shares, the manager is obliged to
coordinate the exercise of assumed powers at the shareholders meeting with the owner of the shares. This rule suggests that the manager cannot
vote at the shareholders meeting on its own, but only with the consent of the owner, Ferrexpo AG. However, a transfer of 49.5% of the corporate
rights in FPM to ARMA for management of these corporate rights will have an impact on the equity attributable to the shareholders of Ferrexpo plc
and its future distributable reserves. See Note 12 Earnings per share and dividends paid and proposed for further details.
As part of management’s going concern assessment, the Group continuously adjusts its financial long-term model to reflect the latest
developments in terms of possible production and sales volumes as well as latest market prices and production costs, which are still adversely
affected by production volumes lower than those before the war commenced. Considering the expected impact caused by the sanctions imposed
on Mr Zhevago, the Group updated its long-term model by significantly reducing its operation in 2025 and 2026, compared to the model in place
before the sanctions have been imposed on Mr Zhevago on 12 February 2025.
The updated base case of the financial long-term model shows that the Group has reasonably sufficient liquidity to continue its operations at a
reduced level throughout the entire period of the management’s going concern assessment, covering a period of 18 months from the date of the
approval of these consolidated financial statements. The updated base case assumes a pellet production volume of approximately 36% of the
pre-war level for the financial year 2025, before an increase to approximately 47% in 2026 and an expected recovery to almost the pre-war levels in
2027. The update of the long-term model resulted in a delay of the expected ramp-up to almost the pre-war level by one year, which was expected
to be 2026 in the previous model, and a significantly lower cash flow generation, affecting also the available cash balances throughout the period of
the going concern assessment. In addition, the production and sales volumes are also dependent on a constant power supply, the logistics network
available to the Group and other potential negative effects on the Group’s business activities as a result of the ongoing war.
The Group’s cash flow generation is most sensitive to price changes. The sensitivities prepared for reasonable adverse changes, with a focus on the
expected realised prices, show negative available liquidity balances under some scenarios in late 2025, before any actions taken, such as a further
reduction of the operating expenditures and the Group’s mining activities. With the significant reduction of the Group’s operation in the updated
long-term model, the available mitigating actions also reduced significantly. The mitigating actions under the control of the management are
estimated to be approximately US$14,000 thousand for the first 12 months and US$47,000 thousand until 31 December 2026 and are considered
to be sufficient to offset negative effects from reasonable adverse changes. There are further potential mitigating actions, which are however not
fully under the control of the management, which are further explored. Considering the tight balances of available cash under the base case and
realised price sensitivity, the available cash balance is expected to be depleted earlier than in late 2025, when combining the effects from
reasonable adverse changes (stress test). However, it is management’s position that, as in the past, a combination of all reasonably possible or
plausible adverse changes in respect of realised prices and production costs is unlikely to happen in combination as a result of the historical natural
hedge between iron ore prices and prices for key input materials. However, the Group’s available cash balance for the period twelve months after
the approval of these consolidated financial statements also depends on the time at which the VAT refund is resumed.
The claims and certain decisions received by the courts in Ukraine are another example of the risk of operating in a dynamic and adverse political
landscape in Ukraine, which creates additional challenges for both the Group’s subsidiaries in Ukraine and, also for the Group itself
The Group has assessed that, taking into account:
i) its available cash and cash equivalents;
ii) its cash flow projections, adjusted for the effects caused by the war in Ukraine and potential absence of VAT refunds, for the period of
management’s going concern assessment covering a period of 18 months from the date of the approval of these consolidated financial
statements;
iii) the feasibility and effectiveness of all available mitigating actions within the management’s control for identified uncertainties; and
iv) the legal merits in terms of the ongoing legal dispute regarding the above mentioned contested sureties and potential future actions available to
protect the interests of the Group in case of a negative decision from the Supreme Court,
there remains a material uncertainty in respect of the ongoing war and legal disputes in Ukraine, including contested sureties claim and the risk of
nationalisation 49.5% of shares in FPM and certain of its assets, which are outside of management’s control, with the duration and the impact of
the war still unable to be predicted, and the uncertainty in relation to the independence of the judicial system and its immunity from economic and
political influences in Ukraine, which could have an impact on the outcome of the ongoing legal disputes.
In respect of the contested sureties claim mentioned above, the next hearing before the Supreme Court is scheduled for 21 March 2025. As at the
date of the approval of these consolidated financial statements, no decision has been made by the Supreme Court in the contested sureties claim.
If the Supreme Court rules in favour of the claimants in this case, the commencement of the enforcement procedures could potentially have a
material negative impact on the Group’s business activities and its ability to continue as a going concern. In terms of the claim received for the
accused illegal mining and selling subsoil (minerals other than iron ore), the next hearing is scheduled for 19 March 2025 and it can be assumed
that this will be a lengthy process. However, considering the magnitude of the subsoil claim, a final decision by the Supreme Court, after potential
negative decisions in the lower courts in Ukraine, could have a negative impact on the Group’s ability to continue as a going concern. See Note 30
Commitments, contingencies and legal disputes for further information, which should be read in conjunction with this note.
Strategic Report
Financial Statements
157
Corporate Governance
As at the date of the approval of these consolidated financial statements, the Group’s operations, located adjacent to the city of Horishni Plavni,
have not been directly affected by the ongoing war, but this remains a risk. Should the area surrounding the Group’s operations become subject to
the armed conflict, there would be a significant risk posed to the safety of the Group’s workforce and the local community, as well as a significant
risk to key assets and the infrastructure required for the Group to operate effectively. See the Principal Risks section for further information.
Considering the current situation of the ongoing war and legal disputes in Ukraine and the events after the reporting period described above, the
Group continues to prepare its consolidated financial statements on a going concern basis. This conclusion is based on the Group’s ability to swiftly
adapt to changing circumstances cause by the war and the independent legal advice received for the ongoing legal disputes in Ukraine However, as
explained above, many of the identified uncertainties in respect of the ongoing war and legal disputes are outside of the management’s control,
and are unpredictable, which may cast significant doubt upon the Group’s ability to continue as a going concern. For more information on critical
judgements made by management in preparing these consolidated financial statements, see also Note 30 Commitments, contingencies and legal
disputes in respect of other ongoing legal proceedings and disputes and Note 35 Events after the reporting period.
If the Group is unable to continue to realise assets and discharge liabilities in the normal course of business, it would be necessary to adjust the
amounts in the statement of financial position in the future to reflect these circumstances, which may materially change the measurement and
classification of certain figures contained in these consolidated financial statements.
STATEMENT ON DISCLOSURE OF INFORMATION TO AUDITORS
The Directors who held office at the date of approval of this Directors’ Report confirm that, so far as they are each aware, there is no relevant audit
information (as defined in the Act) of which the Group’s auditors are unaware, and that each Director has taken all steps that they ought to have
taken as a Director in order to make themselves aware of any relevant audit information (as defined in the Act) and to establish that the Group’s
auditors are aware of that information.
A resolution to reappoint MHA MacIntyre Hudson as the Group’s independent auditor will be proposed at the next Annual General Meeting.
AMENDMENTS TO ARTICLES OF ASSOCIATION
The Articles may be amended by special resolution in accordance with the Act.
AGM
The Board intends to hold the AGM of the Company on Thursday 22 May 2025 at 11.00am. Further information will be sent to shareholders in a
separate letter from the Chair summarising the business of the meeting together with the Notice convening the AGM.
The Strategic Report on pages 2 to 96 and this Directors’ Report have been drawn up and presented in accordance with, and in reliance upon,
applicable English company law, and any liability of the Directors in connection with these reports shall be subject to the limitations and restrictions
provided by such law.
The Directors’ Report was approved by the Board on 18 March 2025.
For and on behalf of the Board
Lucio Genovese
Interim Executive Chair
18 March 2025
Ferrexpo plc
Annual Report & Accounts 2024
158
Directors’ Report continued
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 that give a true and fair view of the state of affairs
of the Group and the Company as at the end of the financial year, and of the profit or loss of the Group for the financial year. Under that law the
Directors have elected to prepare the Group financial statements in accordance with International Financial Reporting Standards as adopted in the
United Kingdom (“UK adopted IFRS”) and have also chosen to prepare the Parent Company financial statements in accordance with the United
Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 101 Reduced Disclosure Framework,
and applicable law).
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 financial statements, the Directors are required to:
• select suitable accounting policies and apply them consistently;
• make judgements and estimates that are reasonable and prudent;
• state whether applicable UK adopted IFRS have been followed for the Group financial statements and United Kingdom Accounting Standards,
comprising FRS 101 Reduced Disclosure Framework have 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.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s and Parent Company’s
transactions and disclose with reasonable accuracy at any time the financial position of the Group and Parent Company and enable them to ensure
that its financial statements and Directors’ Remuneration Report comply with the Companies Act 2006. The Directors are also responsible for
safeguarding the assets of the Group and Parent Company and 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
The Directors consider that the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and provides the information
necessary for shareholders to assess the Group’s and Company’s position and performance, business model and strategy.
Each of the Directors, whose names and functions are listed on pages 102 to 103 of the Corporate Governance Report, confirms that to the best
of their knowledge:
(a) the Group financial statements, prepared in accordance with UK adopted IFRS, give a true and fair view of the assets, liabilities, financial position
and profit of the Company and the subsidiary undertakings included in the consolidation taken as a whole and attention is drawn to the material
uncertainty in terms of the Group’s ability to continue as a going concern on page 156 of the Directors’ Report and Note 2 Basis of preparation of
the Consolidated Financial Statements on page 178;
(b) the Parent company financial statements, which have been prepared in accordance with United Kingdom Accounting Standards, comprising FRS
101 Reduced Disclosure Framework, give a true and fair view of the Company’s assets, liabilities and financial position of the Parent Company;
(c) the Strategic Report and Directors’ Report includes a fair review of the development and performance of the business and the position of the
Company and the subsidiary undertakings included in the consolidation taken as a whole, together with a description of the Principal Risks and
uncertainties that they face; and
(d) the Annual Report and financial statements, taken as a whole, is fair, balanced and understandable, and provides the information necessary for
shareholders to assess the Group’s and Company’s position, performance, business model and strategy.
The Directors’ Report (including Corporate Governance Report) comprises the information on pages 97 to 159.
This responsibility statement was approved by the Board of Directors on 18 March 2025 and is signed on its behalf by:
Lucio Genovese
Interim Executive Chair
Nikolay Kladiev
Executive Director/Chief Financial Officer
18 March 2025
Strategic Report
Financial Statements
159
Corporate Governance
Ferrexpo plc
Annual Report & Accounts 2024
160
Financial contents
Independent
Auditor’s Report
161
Primary Statements
173
Consolidated Income Statement
173
Consolidated Statement of
Comprehensive Income
174
Consolidated Statement
of Financial Position
175
Consolidated Statement
of Cash Flows
176
Consolidated Statement
of Changes in Equity
177
Notes to the Consolidated
Financial Statements
178
Notes
Section 1: Basis of Preparation
Corporate information
1
178
Basis of preparation
2
178
New accounting policies
3
182
Use of critical estimates
and judgements
4
182
Notes
Section 2: Results for the Year
Segment information
5
183
Revenue
6
184
Operating expenses
7
186
Other income
8
187
Foreign exchange gains and losses 9
187
Net finance expense
10
188
Taxation
11
189
Earnings per share and
dividends paid and proposed
12
194
Section 3: Assets and Liabilities
Property, plant and equipment
13
195
Leases
14
199
Intangible assets
15 200
Other non-current assets
16
202
Inventories
17
202
Trade and other receivables
18
203
Prepayments and other
current assets
19
204
Other taxes recoverable
and payable
20
204
Trade and other payables
21 206
Pension and post-employment
obligations
22 206
Provisions
23
210
Accrued and contract liabilities
24
211
Notes
Section 4: Financial Instruments
and Financial Risk Management
Cash and cash equivalents
25
211
Lease liabilities
26
211
Financial instruments
27
212
Section 5: Other
Share-based payments
28
219
Employees
29
220
Commitments, contingencies
and legal disputes
30
221
Share capital and reserves
31
226
Consolidated subsidiaries
32
227
Investments in associates
33
228
Related party disclosures
34
229
Events after the reporting period 35
231
Parent Company
Financial Statements
233
Additional Disclosures
239
Alternative Performance Measures 240
Glossary
242
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Corporate Governance
161
Financial Statements
For the purpose of this report, the terms “we” and “our” denote MHA in relation to UK legal, professional and regulatory responsibilities and
reporting obligations to the members of Ferrexpo plc. For the purposes of the table on pages 163 to 166 that sets out the key audit matters
and how our audit addressed the key audit matters, the terms “we” and “our” refer to MHA. The Group financial statements, as defined below,
consolidate the accounts of Ferrexpo plc and its subsidiaries (the “Group”) and include the Group’s share of associates. The “Parent Company”
is defined as Ferrexpo plc, as an individual entity. The relevant legislation governing the Parent Company is the United Kingdom Companies Act
2006 (“Companies Act 2006”).
OPINION
We have audited the financial statements of Ferrexpo plc for the year ended 31 December 2024 which comprise:
• the Consolidated Income Statement;
• the Consolidated Statement of Comprehensive Income;
• the Consolidated Statement of Financial Position;
• the Consolidated Statement of Cash Flows;
• the Consolidated Statement of Changes in Equity;
• the Notes to the Consolidated Financial Statements, including significant accounting policies;
• the Parent Company Statement of Financial Position;
• the Parent Company Statement of Changes in Equity; and
• the Notes to the Parent Company Financial Statements, including significant accounting policies.
The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law and International
Financial Reporting Standards adopted for use in the United Kingdom (“UK adopted IFRS”). The financial reporting framework that has been
applied in the preparation of the Parent Company financial statements is applicable law and United Kingdom Accounting Standards, including
FRS 101 “Reduced Disclosure Framework” (United Kingdom Generally Accepted Accounting Practice).
In our opinion:
• the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31 December 2024 and
of the Group’s loss for the year then ended;
• the Group financial statements have been properly prepared in accordance with UK adopted IFRS;
• the Parent Company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting
Practice; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Our opinion is consistent with our reporting to the Audit Committee.
BASIS FOR OPINION
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities
under those standards are further described in the Auditor Responsibilities for the Audit of the Financial Statements section of our report.
We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the
UK, including the FRC’s Ethical Standard as applied to listed public interest entities, and we have fulfilled our ethical responsibilities in accordance
with those requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
MATERIAL UNCERTAINTY RELATING TO GOING CONCERN
We draw your attention to Note 2 of the Group financial statements on page 178 and Note 2 of the Parent Company financial statements on page
235, which indicate that the ongoing war in Ukraine poses a threat to the Group’s mining, processing and logistics operations within Ukraine and
may cast significant doubt on the ability of the Group to continue as a going concern. As stated in Note 2, management has assessed that the
duration and severity of the impact of the war in Ukraine on the Group’s activities are difficult to predict and indicate that a material uncertainty
exists as some of the uncertainties identified are outside of the Group management’s control.
In addition, a further material uncertainty exists, as disclosed in Note 2, relating to a number of legal disputes in Ukraine due to the application
of local legislation and the outcomes of proceedings involving the Group. In particular, the decision by the Ukraine Court of Appeal to uphold the
award in favour of the claimant in the contested sureties claim, and the potential enforcement of this decision, may place significant demands on
the Group’s future cash resources availability.
Additionally, as disclosed in Note 2 and Note 35, on 12 February 2025, personal sanctions were imposed by the Ukrainian authorities on Mr Zhevago,
one of three owners of The Minco Trust, which fully owns Fevamotinico, the largest shareholder of the Group. Although no sanctions have been
imposed directly on any Group entities, these personal sanctions could result in indirect consequences for the Group, such as heightened
challenges in relation to tax matters, including the potential refusal to issue VAT refunds, and nationalisation of 49.5% of the shares of FPM and
certain assets which may further impact the Group’s ability to continue as a going concern.
These circumstances indicate the existence of a material uncertainty that may cast significant doubt upon the Group and Company’s ability to
continue as a going concern. Our opinion is not modified in respect of this matter.
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation of the
financial statements is appropriate.
Independent Auditor’s Report
To the members of Ferrexpo plc
Ferrexpo plc
Annual Report & Accounts 2024
162
Independent Auditor’s Report continued
To the members of Ferrexpo plc
Our evaluation of the Directors’ assessment of the Group’s and the Parent Company’s ability to continue to adopt the going concern basis of
accounting, having considered the impact of the war and of the general risks related to the political, fiscal and legal uncertainties of operating
in Ukraine, included:
• challenging management’s assessment of the potential risks and uncertainties relevant to the Group as a result of the ongoing war and the
likelihood and outcome of the various legal cases. This assessment extended to considering the impact of the possible rejection of the VAT
refunds in management’s revised base case model and their plans to mitigate the impact;
• challenging whether the Group’s further mitigating actions are reasonable and within the Group’s control;
• assessing for reasonableness the assumptions applied in the going concern assessment cash flow forecast, evaluating the potential future impact
of the war on the cash available to the Group, including the ability to continue its operations in case of disruption to supplies and to its logistics
network, as well as assessing management’s downside scenarios;
• reviewing recent production and trading activity to verify the operational results following the year end, to verify the underlying data on which the
going concern assessment is based;
• testing the mathematical accuracy and appropriateness of the model used to prepare the forecasts;
• evaluating management’s assessment on the expected outcome of the contested sureties claim and the assumptions regarding the impact of
various scenarios relating to the timing and quantum of economic outflows and any consequences of potential actions that may be taken by the
claimant, in conjunction with the feasibility and impact of mitigating actions planned by the Group;
• considering the impact on available cash resource under sensitised and stress tested models together with consideration of potential cash
outflows in respect of contingency matters and challenge of management’s plans to mitigate any impact;
• evaluating management’s assessment of the legal proceedings in which the Group is involved, including the probability of outflows of resources,
as detailed in the key audit matter “Contingencies and completeness of litigations and claims”;
• we have discussed the ongoing legal proceedings, including those arising after the reporting date, with the Group’s external legal advisors to
understand the likelihood and impact of these proceedings on the going concern and the sufficiency of the disclosure;
• we have used component auditors internal legal expert in respect of certain legal proceedings to assist us in evaluating management’s
assessment of the impact and potential outcome of those cases in the relevant local jurisdictions; and
• assessing the Group’s going concern and other related financial statement disclosures.
In relation to the Group’s reporting on how it has applied the UK Corporate Governance Code, we have nothing material to add or draw attention
to in relation to the Directors’ Statement in the financial statements about whether the Directors considered it appropriate to adopt the going
concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.
OVERVIEW OF OUR AUDIT APPROACH
Scope
Our audit was scoped by obtaining an understanding of the Group, including the Parent Company, and its environment, including
the Group’s system of internal control, and assessing the risks of material misstatement in the financial statements. We also
addressed the risk of management override of internal controls, including assessing whether there was evidence of bias by the
directors that may have represented a risk of material misstatement.
We, and our component auditors acting on specific group instructions, undertook full scope audits on the complete financial
information of 7 components, specified audit procedures on particular aspects and balances on another 6 components and
analytical procedures were undertaken on the remaining 15 components.
Materiality
The materiality that we used for the Group financial statements was US$15 million (2023: US$15.6 million). This represents 1.6%
of net assets (2023: 3.2% of the three-year average of adjusted profit before tax and 1.4% of net assets).
The materiality used for the Parent Company financial statements was US$8.3 million (2023: US$8.8 million), which was
determined as 2.1% of the Company’s net assets (2022: 2%).
Key audit matters
The key audit matters that we identified in the current year relating to the Group and parent Company are:
Recurring:
• Treatment and likelihood of contingencies, litigations & claims (Group and parent Company)
• Taxation – IFRIC 23 and critical judgements of transfer pricing and the international structure (Group only)
• Impairment of PPE and other intangible assets (Group only)
• Completeness of related party transactions (Group and parent Company)
Our assessment of the Group’s key audit matters is consistent with 2023 with the exception of Management override of controls,
which is no longer considered a key audit matter. However, many of the procedures previously undertaken in this area are now
incorporated within our procedures for identifying and assessing potential risks arising from irregularities, including fraud.
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Financial Statements
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the
current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These
matters included those which had the greatest effect on:
• the overall audit strategy;
• the allocation of resources in the audit; and
• directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters. In addition to the matter described in the Material Uncertainty related to going concern section, we
have determined the matters described below to be the key audit matters to be communicated in our report.
TREATMENT AND LIKELIHOOD OF CONTINGENCIES, LITIGATION & CLAIMS
Key audit matter
description
As indicated in Note 30, the Group is subject to a number of legal proceedings. Management has assessed the probability of an
outflow of resources in the various proceedings and considered how to account and/or disclose the claims in accordance with
IAS 37.
The Group has disclosed the legal cases for which it has provided amounts in the financial statements. Our procedures have
focused on management’s assessment of these claims in line with IAS 37 to conclude as to whether these are deemed probable
rather than possible or remote. The two key cases provided for by management are the contested sureties claim and the
squeeze-out of minority shareholders which we have directed our attention to.
The Group has disclosed the contingencies which exist as a result of past transactions or events in Note 30. Our audit focused on
these five key legal claims due to their material impact on the financial statements, being the share freezes, share dispute, the
royalty related investigation , the currency control measures imposed in Ukraine and Investigations on use of waste product.
Management judgement is involved in assessing the accounting for contingencies and claims. Particular judgement is required in
considering the probability of any claim against the Group being successful and we have accordingly designated this as a key audit
matter of the audit.
The key risk related to the claims and contingencies is mainly associated with the completeness of the disclosure and provisions in
the financial statements.
We draw attention to Note 30 to the consolidated financial statements which describes the uncertainty in the application of local
legislation in Ukraine in respect of the outcome of the proceedings in which the Group is involved. Our opinion is not modified in
respect of this matter.
How the scope
of our audit
responded to the
key audit matter
Our work included, but was not restricted to:
• We enquired directly and obtained documentation from the Group’s internal and external legal advisors and counsel about
their assessment of the various claims to evaluate the appropriateness of management’s judgements and subsequent
conclusions.
• We discussed the cases with management, and reviewed correspondence and other documents exchanged between the Group
and the other parties involved.
• We considered and assessed the likelihood of an outflow of resources arising as a result of each individual claim on the basis of
the information obtained.
• We used the component auditor’s in-house legal expert to review certain cases and conclude on the likelihood of the claims’
outcome.
• We reviewed the minutes of the board meetings and inspected the Group’s legal expenses, in order to ensure all cases have
been identified.
• We discussed and challenged the disclosures for completeness and accuracy of any financial impact based on our procedures
detailed above.
Key observations
communicated to
the Group’s Audit
Committee
Based on the procedures performed, nothing has come to our attention that would indicate that the disclosures related to
contingencies, litigation and claims are materially misstated and that the recorded provisions in relation to ongoing legal
proceedings are not materially appropriate.
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Annual Report & Accounts 2024
164
Independent Auditor’s Report continued
To the members of Ferrexpo plc
TAXATION – IFRIC 23 AND CRITICAL JUDGEMENTS OF TRANSFER PRICING AND THE
INTERNATIONAL STRUCTURE
Key audit matter
description
A key area in which the Group has applied critical judgement is transfer pricing and international taxation.
The Group conducts significant business across the globe through a complex value chain and prices its sales between its
subsidiaries using international benchmark prices for comparable products covering product quality and applicable freight costs.
The Group judges these to be on terms that comply with applicable legislation.
The State Tax Service of Ukraine (STS) launched two additional tax audits into the cross-border pricing arrangements with other
Group subsidiaries for periods from 2013 to 2017. In addition to the above cases, the State Bureau of Investigations (“SBI”) has
launched a pre-trial investigation into the sale of iron ore products between Group subsidiaries for the financial years 2013 to 2017.
The STS made formal claims for US$51.4million and US$6.2m, against two of the Ukrainian subsidiaries.
Due to complexity of the cross-border transactions and the adverse Supreme Court ruling in 2022 regarding the 2015 period,
significant judgement is required in applying the transfer pricing and international taxation rules, with the interpretation of the
taxpayer differing from that of the tax authorities which leads to uncertainty in the correct tax treatment. It is therefore necessary
to determine the probability of any loss particularly in connection with the Ukrainian tax audits in accordance with the IFRIC 23
reporting standard.
This matter is described in Note 11 to the financial statements and considered by the Audit Committee on page 122 of the
Annual Report.
The IFRIC 23 framework can be challenging to apply in the context of international taxation and contentious transfer pricing
matters, in particular regarding the fact that the treatment of transfer pricing cases will typically shift from matters of policy
and application in an enquiry to matters of evidence and jurisprudence in an adjudication by a court.
In an enquiry, a tax authority has the disadvantage of not knowing the full facts and circumstances upfront in the same way as a
taxpayer. The framework therefore asks the taxpayer to equalise this dynamic by basing any IFRIC 23 analysis on the assumption
that there is no information asymmetry between the taxpayer and the tax authority. Further, in an enquiry, it is accepted that any
disagreement will likely be settled by a negotiation in the first instance. There will be many factors to account for in predicting the
outcome of a negotiation such as the nature of the dispute as well as wider commercial and policy pressures. The nature of court
proceedings is that there is a need for clear adjudication on matters of law and jurisprudence.
This means that negotiation does not come into it at all, albeit the parties are free to settle the dispute at any time. Rather the
court process is an impartial evidence-based process that involves judges applying the law to the facts. The lower courts will
usually resolve points of fact, and the higher courts will usually address points of law. Adjudication of points of law tends to be
a more technically involved process whose outcome is extremely difficult to predict. Consequently, the higher the level of court
hearing a matter, the more difficult it becomes to apply the IFRIC 23 framework. This is because the highest courts operate at
the highest levels of discretion.
How the scope
of our audit
responded to the
key audit matter
Our work included, but was not restricted to:
•
We have involved transfer pricing and international tax specialists to assess appropriateness of various international matters
potentially impacting the Group. In particular, this included the key risk regarding the transfer pricing policies and
documentation in place prepared by management.
•
We have reviewed key correspondence and calculation of the assessed risk with assistance from international tax and
transfer pricing specialists. In addition, we have reviewed recent similar cases in Ukraine and the results of the court
proceedings. We have relied on experts to assess the risk of an adverse ruling taking place based on their knowledge of the
Ukrainian legal system.
•
The consideration of IFRIC 23 requires the Group to consider the position at each financial year end based upon the
information as at that date. We have challenged management and considered a sensitivity analysis upon the application of
IFRIC 23 to consider the significant judgements made in relation to both transfer pricing and international taxation matters
impacting the Group. This included a detailed IFRIC 23 assessment for the inherent risks in relation to the transfer pricing
claims and the international structure.
Key observations
communicated to
the Group’s Audit
Committee
Based on the procedures performed, nothing has come to our attention that would indicate that the disclosures related tax
provisions are materially misstated and that the results of our audit regarding transfer pricing and international taxation were
satisfactory.
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165
Financial Statements
IMPAIRMENT OF PPE
Key audit matter
description
Due to the ongoing war in Ukraine, management does not expect the Group to be operating and trading at full capacity for an
uncertain period in the future, resulting in reduced expected cash flows from the Group’s assets over the period of uncertainty.
The calculation of the value in use to assess the recoverable amount of the Group’s cash generating unit (“CGU”) as at the year-end
date is derived from management long-term model and is driven by a number of key inputs which are obtained either from
external sources or management’s best estimates. Therefore, this is an area subject to a high level of estimation uncertainty and
judgement.
We draw attention to Note 13 to the consolidated financial statements which describes the uncertainty related to the estimate of
the recoverable amount of the Group’s Cash Generating Unit. Our opinion is not modified in respect of this matter.
How the scope
of our audit
responded to the
key audit matter
Our work included, but was not restricted to:
•
Reviewed the mathematical accuracy of the value in use calculation to identify any computational errors that may have fed
into the forecasts.
•
We have challenged management as to the source and selection of the data used in the Group’s Long-Term cash flow model
forecasts to ensure that these are relevant and reasonable in light of the Group’s circumstances and the ongoing war in
Ukraine.
•
We have challenged the key judgements and assumptions underpinning the forecasts to ensure that these are appropriate
and reasonable based on our understanding of the Group’s circumstances and the ongoing war in Ukraine.
•
We have reviewed, with the help of our external valuation expert, the determination of the discount rate applied in the value
in use calculation and considered whether it is reasonable in the Group’s circumstances.
•
We have considered whether the value in use calculation has considered all available relevant information and verified
whether it is mathematically accurate.
•
We have considered whether the assets included in the carrying amount of the GCU were accurate and verified the amount
of the impairment loss.
We have considered whether, in light of the current situation in Ukraine, any of the previously recorded impairment loss should be
reversed in line with IAS 36.
We considered in detail whether the events reported in Note 35 Events after the reporting period were adjusting or non-adjusted
events for the purpose of the impairment review.
We have reviewed the disclosures in respect of the impairment assessment including the appropriateness of the sensitivities
detailed and the accuracy of their financial impact.
Key observations
communicated to
the Group’s Audit
Committee
Based on the procedures performed, nothing has come to our attention that would indicate that the disclosures related to
impairment of PPE are materially misstated and we concur with managements conclusions to recognise an impairment in the
year of $71,170 thousand in the consolidated financial statements. We also concur with management’s assessment that events
occurring after the reporting period were non-adjusting.
Ferrexpo plc
Annual Report & Accounts 2024
166
Independent Auditor’s Report continued
To the members of Ferrexpo plc
COMPLETENESS OF RELATED PARTY RELATIONSHIPS AND TRANSACTIONS
Key audit matter
description
The Group enters into a number of related party transactions and has reported an expense of US$29.9 million (2023: US$17.2
million) and other income of US$0.3 million (2023: US$0.3 million) in 2024.
Our risk assessment and audit approach reflected the identification of a significant risk in respect of the existence of unidentified
or undisclosed related parties and transactions, including the risk relating to significant transactions outside the normal course of
business that could involve related parties.
We therefore considered completeness of related party transactions to be a key audit matter in light of the potential for
unidentified or undisclosed related party transactions. This risk was considered greatest in respect of transactions outside the
normal course of business.
The related party disclosures are set out in Note 34 to the Financial Statements and the Group’s controls are described in the
Report of the Audit Committee on page 124.
How the scope
of our audit
responded to the
key audit matter
Our work included, but was not restricted to:
•
We reviewed and evaluated management’s process for identifying and recording related parties into its register and
recording transactions with those related parties.
•
We reviewed the minutes of meetings of the Board of Directors and relevant sub-committees to assess whether there are
new related party transactions entered into in 2024 that are significant or outside the normal course of business.
•
We used our data analytics tool to search for transactions with related parties which had not been included in the related
party disclosures.
•
We completed a reconciliation of related party transactions extracted from management’s system for the related party
disclosures to ensure that it was complete.
•
We tested a sample of suppliers in Ukraine to establish whether they are genuine businesses against information held on
public record.
•
We performed independent searches of the Board of Directors’ other appointments and shareholdings and to identify any
counterparties on the list which were not included in the related party disclosures.
•
We obtained representation from the Board of Directors as to the completeness of the list of related parties and
transactions with those related parties.
•
We reviewed the Related Party disclosures in the Financial Statements against the relevant reporting requirements and the
results of our work.
Key observations
communicated to
the Group’s Audit
Committee
Based on the procedures performed, nothing has come to our attention that would indicate that the disclosures related to
related party transactions are materially misstated.
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167
Financial Statements
OUR APPLICATION OF MATERIALITY
Our definition of materiality considers the value of error or omission on the financial statements that, individually or in aggregate, would change
or influence the economic decision of a reasonably knowledgeable user of those financial statements. Misstatements below these levels will not
necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their
occurrence, when evaluating their effect on the financial statements as a whole. Materiality is used in planning the scope of our work, executing
that work and evaluating the results.
Performance materiality is the application of materiality at the individual account or balance level, set at an amount to reduce, to an appropriately
low level, the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality for the financial statements as
a whole.
The determination of performance materiality reflects our assessment of the risk of undetected errors existing, the nature of the systems and
controls and the level of misstatements arising in previous audits.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Group financial statements
Parent Company financial statements
Overall
materiality
Group materiality
(US$ Million)
0
5
10
15
20
2024
2023
15
15.6
Overall Materiality amounting to US$15 million
(2023: US$15.6 million)
Parent Company materiality
(US$ Million)
0
2
4
6
8
10
2024
2023
8.3
8.8
Overall Materiality amounting to US$8.3 million
(2023: US$8.8 million)
Performance
materiality
We set our 2024 performance materiality at 60% of overall
materiality (2023: 60%), amounting to US$9 million
(2023: US$9.4 million)
We set our 2024 performance materiality at 60% of overall
materiality (2023: 60%), amounting to US$4.9 million
(2023: US$5.3 million)
How we
determined it
We have applied our revised approach to determining materiality
which is based on the net assets balance sheet metric. We then
verified whether the calculated overall materiality was in a
suitable range under our global audit methodology in respect of
the three-year average of adjusted profit before tax benchmark
We have determined materiality of US$15 million on the basis of
our professional judgement which represents:
• 1.6% of net assets
• (2023: 3.2% of a three-year average of adjusted profit before
tax & 1.4% of net assets)
2.1% of Parent Company’s net assets (2023: 2% of Parent
Company’s net assets)
Rationale for
the benchmark
applied
In determining materiality, we have selected net assets as the
benchmark, ensuring alignment with stakeholder focus on
long-term profitability, asset recoverability, and valuation. The
materiality level calculated based on net assets falls within the
thresholds set under our global audit methodology and has been
assessed as appropriate.
Net assets benchmark
The war in Ukraine has led to an overall reduction in the Group’s
activity and profitability. However, the Group’s asset base
remains reflective of pre-war business levels, and stakeholders’
focus has shifted towards long-term profitability, asset
recoverability, and valuation, which are not adequately captured
by a short-term profit-based benchmark.
The resumption of higher activity levels in the future is also likely
to require strategic decisions regarding access to additional
capital, whether in the short or long term.
Given these factors, materiality has been determined based on
net assets, as this best reflects stakeholder priorities and the
expected scale of the Group’s business.
We consider the chosen benchmark to be appropriate due to the
nature of Parent Company’s operations being a holding company
of the Group.
We agreed to report any corrected or uncorrected adjustments exceeding US$0.8 million (2023: US$0.8 million) and US$0.4 million
(2023: US$0.4 million) in respect of the Group and Parent Company respectively to the Audit Committee as well as differences below this
threshold that in our view warranted reporting on qualitative grounds.
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168
Independent Auditor’s Report continued
To the members of Ferrexpo plc
OVERVIEW OF THE SCOPE OF THE GROUP AND PARENT COMPANY AUDITS
Our Group audit was scoped by obtaining an understanding of the Group and the Parent Company and their environments, including internal
control, and assessing the risks of material misstatement. The Group’s Parent entity and finance companies are in the UK, while the head office
and marketing companies are based in Switzerland and the primary mining operations are located in Ukraine.
Considering operational and financial performance and risk factors, we assessed risks of material misstatement at Group Classes of Transactions,
Account Balances, and Disclosures (COTABD’s) level and determined how those risks are associated with the assertions in a component’s financial
information. We performed audits of the entire financial information of the Ukrainian Ferrexpo Poltava Mining, Ferrexpo Yeristovo Mining and
Ferrexpo Belanovo components; the sales and marketing entities Ferrexpo AG and Ferrexpo Middle East; Ferrexpo Finance plc; and Ferrexpo plc
entity; along with the audit of specified COTABD’s over six entities, including two in Hungary, one in Ukraine, two in Austria, and one in the Marshall
islands, covering material revenue, expenses, and asset balances. Our full scope and audit of specified COTABD’s cover revenue (99% of Group
total), loss before tax (99% of Group total) and net assets (95% of Group total).
The remaining 15 components collectively represent 5% of the Group’s net assets, with each individual component contributing no more than
1% of the Group’s net assets. The work performed by the component audit teams is guided by the Group audit team and is executed at levels
of materiality applicable to each individual entity, which were lower than Group materiality and ranged from US$1.25 million to US$7.1 million
(2023: US$1.1 million to US$5.5 million).
95
4
1
94
5
1
85
5
10
Full scope
Specified audit procedures
Analytical procedures
Revenue (%)
Profit before tax (%)
Net assets (%)
The Group audit team was involved in the audit work performed by the component auditor in Ukraine through a combination of our Group planning
meetings and calls, provision of Group instructions (including detailed supplemented procedures), review and challenge of related component
interoffice reporting and of findings from their work (which included the audit procedures performed to respond to risks of material misstatement),
attendance at component audit closing conference calls and weekly interaction on audit and accounting matters which arose. As a visit to the
Ukrainian team was not practicable due to the ongoing war in Ukraine, the Group audit team intensified the interaction with that local team through
video conferences to review and direct the audit approach taken in respect of significant risks and a number of other relevant risks of material
misstatement.
Ferrexpo plc and Ferrexpo Finance plc are registered in the UK; hence the audits were carried out by the Group audit team.
The Swiss and Middle East sales and marketing entities have a common finance function with the Group finance team and as such the audits of
these components were carried out by the Group audit team.
At the Parent entity level, we also tested the consolidation process and carried out analytical procedures to confirm our conclusion that there were
no significant risks of material misstatement of the aggregated financial information of the remaining components not subject to audit or audit of
specified account balances.
Strategic Report
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Financial Statements
THE CONTROL ENVIRONMENT
We evaluated the design and implementation of those internal controls of the Group which are relevant to our audit, such as those relating to the
financial reporting cycle. We also tested operating effectiveness, but did not place reliance on certain controls over several of the key business
cycles.
We deployed our internal IT audit specialists to gain an understanding of general IT controls and perform walkthroughs of the key operating cycles.
CLIMATE-RELATED RISKS
In planning our audit and gaining an understanding of the Group, we considered the potential impact of climate-related risks on the business
and its financial statements. A number of financial risks could arise from both physical and transition risks due to climate change. We obtained
management’s climate-related risk assessment relating to these, along with relevant documentation and reports. We evaluated management’s
assessment and held discussions with management to understand its process for identifying and assessing the related risks.
We engaged internal specialists to assess, amongst other factors, the benchmarks used by management, the nature of the Group’s business
activities, its processes and the geographic distribution of its activities.
We critically reviewed management’s assessment and challenged the assumptions underlying its assessment. We made enquiries to understand
the extent of the potential impact of climate change risks on the Group’s financial statements. This has included a review of critical accounting
estimates and judgements, and the effect on the MHA audit approach. As part of audit, we understood managements process to support
disclosures within the sustainability section (including group TCFD & CFD Disclosures) and its assessment of impact on the financial statements.
We also considered the ongoing viability of the business in respect both direct physical climate risks and transition risks, such as changes in
legislation, as nations grapple with their commitments to reduce emissions.
The future financial impacts are clearly uncertain given their association with governments, independent regulators, global markets and society
to respond to the issue of climate change. Financial statements cannot capture all potential outcomes as they are not known.
REPORTING ON OTHER INFORMATION
The other information comprises the information included in the Annual Report and Accounts other than the financial statements and our auditor’s
report thereon. The Directors are responsible for the other information contained within the Annual Report and Accounts. Our opinion on the
financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any
form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information
is materially inconsistent with the financial statements, or our knowledge obtained in the course of the audit, or otherwise appears to be materially
misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise
to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
STRATEGIC REPORT AND DIRECTOR’S REPORT
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial statements are prepared is
consistent with the financial statements; and
• the Strategic Report and the Directors’ Report have been prepared in accordance with applicable legal requirements. In the light of the
knowledge and understanding of the Group and the Parent Company and their environment obtained in the course of the audit, we have not
identified material misstatements in the Strategic Report or the Directors’ Report.
CORPORATE GOVERNANCE STATEMENT
We have reviewed the Directors’ Statement in relation to going concern, longer-term viability and that part of the Corporate Governance Statement
relating to the entity’s compliance with the provisions of the UK Corporate Governance Code specified for our review by the Listing Rules.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance Statement
is materially consistent with the financial statements and our knowledge obtained during the audit:
• Directors’ statement with regard to the appropriateness of adopting the going concern basis of accounting and any material uncertainties
identified set out on page 156-158;
• Directors’ explanation as to its assessment of the Group’s prospects, the period this assessment covers and why they period is appropriate set
out on page 95;
• Directors’ statement on whether it has a reasonable expectation that the Group will be able to continue in operation and meets its liabilities set
out on page 96;
• Directors’ statement on fair, balanced and understandable set out on page 159;
• Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on page 95;
• Section of the Annual Report and Accounts that describes the review of effectiveness of risk management and internal control systems set out
on page 124; and
• Section describing the work of the Audit Committee set out on pages 118-120.
Ferrexpo plc
Annual Report & Accounts 2024
170
Independent Auditor’s Report continued
To the members of Ferrexpo plc
MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from
branches not visited by us; or
• the Parent Company financial statements are not in agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• certain disclosures of Directors’ Remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit; or
• a corporate governance statement has not been prepared by the Parent Company.
DIRECTOR’S REMUNERATION REPORT
Those aspects of the Director’s Remuneration Report which are required to be audited have been prepared in accordance with applicable legal
requirements.
OPINIONS ON OTHER MATTERS PRESCRIBED BY THE COMPANIES ACT 2006
In our opinion, based on the work undertaken in the course of the audit:
•
the information about internal control and risk management systems in relation to financial reporting processes and about share capital
structures, given in compliance with rules 7.2.5 and 7.2.6 in the Disclosure Rules and Transparency Rules sourcebook made by the Financial
Conduct Authority (the FCA Rules), is consistent with the financial statements and has been prepared in accordance with applicable legal
requirements; and
•
information about the company’s corporate governance code and practices and about its administrative, management and supervisory bodies
and their committees complies with rules 7.2.2, 7.2.3 and 7.2.7 of the FCA Rules.
In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit,
we have not identified material misstatements in:
•
the information about internal control and risk management systems in relation to financial reporting processes and about share capital
structures, given in compliance with rules 7.2.5 and 7.2.6 of the FCA Rules.
RESPONSIBILITIES OF DIRECTORS
As explained more fully in the Directors’ responsibilities statement set out on page 159, the Directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary
to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial
statements, the Directors are responsible for assessing the Group’s and the Parent Company’s ability to continue as a going concern, disclosing
as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the
Group or the Parent Company or to cease operations, or have no realistic alternative but to do so.
AUDITOR RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is
not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the financial statements is located on the FRC’s website at: www.frc.org.uk/auditorsresponsibilities.
This description forms part of our auditor’s report.
EXTENT TO WHICH THE AUDIT WAS CONSIDERED CAPABLE OF DETECTING IRREGULARITIES,
INCLUDING FRAUD
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities,
outlined above, to detect material misstatements in respect of irregularities, including fraud. These audit procedures were designed to provide
reasonable assurance that the financial statements were free from fraud or error. The risk of not detecting a material misstatement due to fraud
is higher than the risk of not detecting one resulting from error and detecting irregularities that result from fraud is inherently more difficult than
detecting those that result from error, as fraud may involve collusion, deliberate concealment, forgery or intentional misrepresentations. Also, the
further removed non-compliance with laws and regulations is from events and transactions reflected in the financial statements, the less likely we
would become aware of it.
Strategic Report
Corporate Governance
171
Financial Statements
IDENTIFYING AND ASSESSING POTENTIAL RISKS ARISING FROM IRREGULARITIES,
INCLUDING FRAUD
The extent of the procedures undertaken to identify and assess the risks of material misstatement in respect of irregularities, including fraud,
included the following:
• We considered the nature of the mining industry and sector on the control environment, business performance including remuneration policies
and the Company’s own risk assessment that irregularities might occur as a result of fraud or error. From our sector experience and through
discussion with the Directors and legal advisors, we obtained an understanding of the legal and regulatory frameworks applicable to the
Company focusing on laws and regulations that could reasonably be expected to have a direct material effect on the financial statements, such
as provisions of the Companies Act 2006, Listing Rules, Corporate Law in Ukraine and international tax legislation. In addition, we considered
compliance with the UK Bribery Act, employee legislation, terms of the Group’s mining licences and environmental regulations as fundamental
to the Group’s operations;
• We enquired of the Directors and management, including the in-house legal counsel and Audit Committee concerning the Company’s policies
and procedures relating to:
– identifying, evaluating and complying with the laws and regulations and whether they were aware of any instances of non-compliance;
– detecting and responding to the risks of fraud and whether they had any knowledge of actual or suspected fraud; and
– the internal controls established to mitigate risks related to fraud or non-compliance with laws and regulations.
• We assessed the susceptibility of the financial statements to material misstatement, including how fraud might occur by evaluating
management’s incentives and opportunities for manipulation of the financial statements. This included utilising the spectrum of inherent risk and
an evaluation of the risk of management override of controls. We determined that the principal risks were related to posting inappropriate journal
entries to increase revenue or reduce costs, creating fictitious transactions to hide losses or to improve financial performance, and management
bias in accounting estimates, particularly in the value in use calculation for the Group’s assets, and in significant accounting judgements in respect
of the assessment of contingencies and legal claims and uncertain tax treatments. The Group engagement team shared this risk assessment with
the significant subsidiaries auditors so that they could include appropriate audit procedures in response to such risks in their work.
AUDIT RESPONSE TO RISKS IDENTIFIED
In respect of the above procedures:
• We corroborated the results of our enquiries through our review of the minutes of the Company’s board, Finance and Risk Committee and Audit
Committee meetings;
• Audit procedures performed by the engagement team in connection with the risks identified included:
– reviewing legal correspondence and documentation from the Group’s lawyers in addition to discussions on the ongoing legal matters;
– reviewing financial statement disclosures and testing supporting documentation to assess compliance with applicable laws and regulations
expected to have a direct impact on the financial statements;
– testing journal entries, including those processed late for financial statements preparation, and those posted by infrequent or unexpected
users, those posted to unusual account combinations;
– evaluating the business rationale of significant transactions outside the normal course of business, and reviewing accounting estimates for
bias;
– enquiry of management and legal advisors around actual and potential litigation and claims;
– challenging the assumptions made by management in measuring significant accounting estimates, in particular those included in the Group’s
value in use calculation, and the going concern long-term model, as well as the judgments made in respect of contingencies and legal claims
and IFRIC 23 assessment of tax liabilities;
– obtaining confirmations from third parties to confirm existence of a sample of transactions and balances;
– the audit team in Ukraine visiting the mines in December 2024 and observing the progress of key capital projects, the mining operations, and
physical verification of the inventory; and
– the use of data analytics software to interrogate the journals posted in the year and to review areas where the incentive to override controls
may be greatest. We also used our data analytics tool to identify potential transactions with related parties.
• The Group operates in a specialised mining industry. As such, the Senior Statutory Auditor considered the experience and expertise of the
engagement team to ensure that the team had the appropriate competence and capabilities; and
• We communicated relevant laws and regulations and potential fraud risks to all engagement team members, including experts, and remained
alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
Ferrexpo plc
Annual Report & Accounts 2024
172
Independent Auditor’s Report continued
To the members of Ferrexpo plc
OTHER MATTERS WHICH WE ARE REQUIRED TO ADDRESS
We were re-appointed by the Directors on 23 May 2024. The period of total uninterrupted engagement including previous renewals and
reappointments of the firm is 6 years.
We did not provide any non-audit services which are prohibited by the FRC’s Ethical Standard to the Group or the Parent Company, and we remain
independent of the Group and the Parent Company in conducting our audit.
USE OF OUR REPORT
This report is made solely to the Parent Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the Parent Company’s members those matters we are required to state to them
in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other
than the Parent Company and the Parent Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
As required by the Financial Conduct Authority (“FCA”) Disclosure Guidance and Transparency Rule (“DTR”) 4.1.14R, these financial statements form
part of the European Single Electronic Format (“ESEF”) prepared Annual Financial Report filed on the National Storage Mechanism of the UK FCA
in accordance with the ESEF Regulatory Technical Standard ((“ESEF RTS”). This auditor’s report provides no assurance over whether the annual
financial report has been prepared using the single electronic format specified in the ESEF RTS.
Andrew Moyser FCA FCCA
Senior Statutory Auditor
For and on behalf of MHA
Statutory Auditor
London, United Kingdom
18 March 2025
MHA is the trading name of MacIntyre Hudson LLP, a limited liability partnership in England and Wales (registered number OC312313)
Strategic Report
Corporate Governance
173
Financial Statements
Consolidated Income Statement
US$000
Notes
Year ended
31.12.24
Year ended
31.12.23
Revenue
6
933,263
651,795
Operating expenses
5/7
(1,004,445)
(616,107)
Other operating income
8
5,475
4,067
Operating foreign exchange gains
9
83,321
31,371
Operating profit
17,614
71,126
Recognition of provisions for legal disputes
30
−
(131,117)
Share of profit/(loss) from associates
33
2,314
(372)
Profit/(loss) before tax and finance
19,928
(60,363)
Net finance expense
10
(993)
(104)
Non-operating foreign exchange losses
9
(39,355)
(7,934)
Loss before tax
(20,420)
(68,401)
Income tax expense
11
(29,610)
(16,352)
Loss for the year
(50,030)
(84,753)
Loss attributable to:
Equity shareholders of Ferrexpo plc
(50,046)
(84,775)
Non-controlling interests
16
22
Loss for the year
(50,030)
(84,753)
Loss per share:
Basic (US cents)
12
(8.51)
(14.41)
Diluted (US cents)
12
(8.51)
(14.41)
The accompanying notes are an integral part of the consolidated financial statements.
Ferrexpo plc
Annual Report & Accounts 2024
174
Consolidated Statement of Comprehensive Income
US$000
Notes
Year ended
31.12.24
Year ended
31.12.23
Loss for the year
(50,030)
(84,753)
Items that may subsequently be reclassified to profit or loss:
Exchange differences on translating foreign operations
(136,926)
(54,855)
Income tax effect
11
3,972
1,479
Net other comprehensive loss that may be reclassified to profit or loss in subsequent periods
(132,954)
(53,376)
Items that will not be reclassified subsequently to profit or loss:
Remeasurement (losses)/gains on defined benefit pension liability
22
(7,040)
899
Net other comprehensive (loss)/income not being reclassified to profit or loss in subsequent
periods
(7,040)
899
Other comprehensive loss for the year, net of tax
(139,994)
(52,477)
Total comprehensive loss for the year, net of tax
(190,024)
(137,230)
Total comprehensive loss attributable to:
Equity shareholders of Ferrexpo plc
(190,016)
(137,244)
Non-controlling interests
(8)
14
(190,024)
(137,230)
The accompanying notes are an integral part of the consolidated financial statements.
Strategic Report
Corporate Governance
175
Financial Statements
Consolidated Statement of Financial Position
US$000
Notes
As at
31.12.24
As at
31.12.23
Assets
Property, plant and equipment
13
723,918
826,034
Right-of-use assets
14
5,029
6,852
Intangible assets
15
5,568
6,368
Investments in associates
33
6,350
4,616
Inventories
17
5,185
5,883
Other non-current assets
16
32,456
38,104
Deferred tax assets
11
2,258
10,149
Total non-current assets
780,764
898,006
Inventories
17
192,508
201,429
Trade and other receivables
18
39,792
82,321
Prepayments and other current assets
19
24,648
21,380
Income taxes recoverable and prepaid
11
7,026
2,432
Other taxes recoverable and prepaid
20
36,296
26,291
Cash and cash equivalents
25
105,919
115,241
Total current assets
406,189
449,094
Total assets
1,186,953
1,347,100
Equity and liabilities
Issued capital
31
121,628
121,628
Share premium
185,112
185,112
Other reserves
31
(2,808,904)
(2,676,294)
Retained earnings
3,425,751
3,482,883
Equity attributable to equity shareholders of Ferrexpo plc
923,587
1,113,329
Non-controlling interest
73
81
Total equity
923,660
1,113,410
Lease liabilities
5/26
419
1,009
Defined benefit pension liability
22
22,806
16,518
Provision for site restoration
23
3,118
2,780
Deferred tax liabilities
11
4,346
2,729
Total non-current liabilities
30,689
23,036
Lease liabilities
5/26
4,665
5,939
Trade and other payables
21
55,781
35,310
Provisions
30
115,694
128,050
Accrued and contract liabilities
24
29,415
17,328
Income taxes payable
11
13,561
15,202
Other taxes payable
20
13,488
8,825
Total current liabilities
232,604
210,654
Total liabilities
263,293
233,690
Total equity and liabilities
1,186,953
1,347,100
The accompanying notes are an integral part of the consolidated financial statements.
The financial statements were approved by the Board of Directors and authorised for issue on 18 March 2025 and signed on behalf of the Board.
Lucio Genovese
Nikolay Kladiev
Executive Chair
Chief Financial Officer and Executive Director
Ferrexpo plc
Annual Report & Accounts 2024
176
Consolidated Statement of Cash Flows
US$000
Notes
Year ended
31.12.24
Year ended
31.12.23
Loss before tax
(20,420)
(68,401)
Adjustments for:
Depreciation of property, plant and equipment, right-of-use assets and amortisation of intangible
assets
60,281
57,669
Net finance income
10
(1,440)
(2,536)
Losses on disposal and liquidation of property, plant and equipment
7
231
11
Write-offs and impairments
7
71,871
978
Share of (profit)/loss from associates
33
(2,314)
372
Movement in allowance for doubtful receivables
18
(1,731)
4,403
Movement in site restoration provision
23
611
(1,377)
Employee benefits
22
3,381
3,518
Share-based payments
28
320
830
Recognition of provisions for legal disputes
30
−
131,117
Operating foreign exchange gains
9
(83,321)
(31,371)
Non-operating foreign exchange losses
9
39,355
7,934
Operating cash flow before working capital changes
66,824
103,147
Changes in working capital:
Decrease/(increase) in trade and other receivables
36,136
(71,946)
(Increase)/decrease in inventories
(10,856)
15,930
Increase in trade and other payables (including accrued and contract liabilities)
36,922
6,724
(Increase)/decrease in other taxes recoverable and payable (including VAT)
20
(10,658)
62,554
Cash generated from operating activities
118,368
116,409
Interest paid
(815)
(223)
Income tax paid
11
(23,278)
(12,779)
Post-employment benefits paid
(2,373)
(2,238)
Net cash flows from operating activities
91,902
101,169
Cash flows used in investing activities
Purchase of property, plant and equipment and intangible assets
13/15
(101,688)
(101,247)
Proceeds from disposal of property, plant and equipment and intangible assets
70
91
Interest received
3,960
4,608
Dividends from associates
131
−
Net cash flows used in investing activities
(97,527)
(96,548)
Cash flows used in financing activities
Principal elements of lease payments
26
(5,616)
(5,410)
Dividends paid to equity shareholders of Ferrexpo plc
12
(46)
(456)
Net cash flows used in financing activities
(5,662)
(5,866)
Net decrease in cash and cash equivalents
(11,287)
(1,245)
Cash and cash equivalents at the beginning of the year
115,241
112,945
Currency translation differences
1,965
3,541
Cash and cash equivalents at the end of the year
25
105,919
115,241
The accompanying notes are an integral part of the consolidated financial statements.
Strategic Report
Corporate Governance
177
Financial Statements
Consolidated Statement of Changes in Equity
Attributable to equity shareholders of Ferrexpo plc
US$000
Issued capital
(Note 31)
Share premium
(Note 31)
Other reserves
(Note 31)
Retained earnings
Total capital and
reserves
Non-controlling
interests
(Note 32)
Total equity
At 1 January 2023
121,628
185,112
(2,636,891)
3,580,329
1,250,178
67
1,250,245
Loss for the year
−
−
−
(84,775)
(84,775)
22
(84,753)
Other comprehensive loss
−
−
(53,368)
899
(52,469)
(8)
(52,477)
Total comprehensive loss for
the year
−
−
(53,368)
(83,876)
(137,244)
14
(137,230)
Share-based payments (Note 28)
−
−
830
−
830
−
830
Equity dividends paid to
shareholders of Ferrexpo plc
(Note 12)
−
−
−
(435)
(435)
−
(435)
Effect from transfer of treasury
shares (Note 31)
−
−
13,135
(13,135)
−
−
−
At 31 December 2023
121,628
185,112
(2,676,294)
3,482,883
1,113,329
81
1,113,410
Loss for the year
−
−
−
(50,046)
(50,046)
16
(50,030)
Other comprehensive loss
−
−
(132,930)
(7,040)
(139,970)
(24)
(139,994)
Total comprehensive loss for
the year
−
−
(132,930)
(57,086)
(190,016)
(8)
(190,024)
Share-based payments (Note 28)
−
−
320
−
320
−
320
Equity dividends paid to
shareholders of Ferrexpo plc
(Note 12)
−
−
−
(46)
(46)
−
(46)
At 31 December 2024
121,628
185,112
(2,808,904)
3,425,751
923,587
73
923,660
The accompanying notes are an integral part of the consolidated financial statements.
Although accounts are published in US dollars and dividends are declared in US dollars, the shares are denominated in UK pounds sterling and
dividends are therefore paid in UK pounds sterling. See Note 12 Earnings per share and dividends paid and proposed for dividends paid for
further information.
Ferrexpo plc
Annual Report & Accounts 2024
178
Notes to the Consolidated Financial Statements
NOTE 1: CORPORATE INFORMATION
Ferrexpo plc (the “Company”) is incorporated and registered in England and Wales, of which England is considered to be the country of
domicile, with its registered office at 55 St James’s Street, London SW1A 1LA, UK. The Company is listed on the London Stock Exchange and it
is a member of the FTSE 250 Index. Ferrexpo plc and its subsidiaries (the “Group”) operate two mines and a processing plant near Kremenchuk
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. 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
Kremenchuk Magnetic Anomaly and are currently being extracted at the Gorishne-Plavninske-Lavrykivske (“GPL”) and Yerystivske deposits.
Despite the ongoing war in Ukraine, the Group has managed to continue its operations throughout the financial year 2024 in a difficult and
challenging business environment. The continued Russian attacks on power generation and distribution facilities in Ukraine during the financial
year 2024 has had a negative impact on the Group’s production costs and volumes. The higher production costs at lower realised prices meant that
the Group had to further optimise its production volumes to manage the working capital outflow to maintain its liquidity. Although the availability
of certain logistics networks improved during the 2024 financial year, costs remained significantly higher than before the start of the war. As a
result of these ongoing challenges, the mining and processing plans still had to be aligned with the currently possible sales in the various markets,
taking also into account the different realisable margins. As at the date of the approval of these consolidated financial statements, the war is still
ongoing and continues to pose a significant threat to the Group’s mining, processing and logistics operations within Ukraine. In addition to the
war-related material uncertainty, the Group is also exposed to the risks associated with operating in a dynamic and adverse political landscape
in Ukraine, which may or may not be exacerbated by the war and the current circumstances facing the Group in Ukraine. See Note 2 Basis of
preparation, Note 13 Property, plant and equipment and Note 30 Commitments, contingencies and legal disputes for further information.
The largest shareholder of the Group is Fevamotinico S.a.r.l. (“Fevamotinico”), a company incorporated in Luxembourg. Fevamotinico
is ultimately wholly owned by The Minco Trust, of which Kostyantin Zhevago (“Mr Zhevago”) and two other members of his
family are the beneficiaries. At the time this report was published, Fevamotinico held 49.3% (49.3% as at the time of publication
of the 2023 Annual Report and Accounts) of Ferrexpo plc’s issued voting share capital (excluding treasury shares).
NOTE 2: BASIS OF PREPARATION
The consolidated financial statements of Ferrexpo plc and its subsidiaries have been prepared in accordance with International Financial Reporting
Standards adopted for use in the United Kingdom (“UK adopted IFRS”) and with the Companies Act 2006, as applicable to companies reporting
under international accounting standards. Entities are included in the consolidated financial statements from the date of obtaining control and the
inclusion in the consolidated financial statements is consequently ceased when the control over an entity is lost. For the definition of control see
Note 32 Consolidated subsidiaries.
The consolidated financial statements have been prepared on a historical cost basis, except for post-employment benefits measured in accordance
with IAS 19 revised Employee benefits and revenues related to provisionally priced sales recognised in accordance with IFRS 15 Contracts with
customers. The consolidated financial statements are presented in thousands of US dollars and all values are rounded to the nearest thousand
except where otherwise indicated.
The material accounting policy information are included in the disclosure notes to the specific financial statement accounts.
GOING CONCERN
As at the date of the approval of these consolidated financial statements, the war in Ukraine is still ongoing and, during the financial year, the Group
continued to demonstrate its resilience and flexibility from an operating perspective, although the ongoing war continues to affect its financial
results. The situation in Ukraine is unpredictable and continues to require the Group to be extremely flexible, as mining operations and production
have to be adapted to the prevailing conditions. The regained access to Ukrainian Black Sea ports enabled the Group to expand its sales activities
and increase its production to the highest level since the full-scale invasion of Ukraine in February 2022.
The challenging and unpredictable environment in which the Group has been operating since the beginning of the invasion and the ongoing war,
whose duration and impact on the Group’s activities in future periods are difficult to predict, continues to represent a material uncertainty that
may cast significant doubt on the Group’s ability to continue as a going concern. In addition to the war-related material uncertainty, the Group is
also exposed to the risks associated with operating in a dynamic and adverse political landscape in Ukraine, which may or may not be exacerbated
by the war and/or the current circumstances facing Mr Zhevago (see Ukraine country risk in the Principal Risks section). As a result, the Group is
exposed to a number of risk areas that are heightened compared to those expected in a stable economy, such as an environment of political, fiscal
and legal uncertainties, which represents another material uncertainty as at the date of the approval of these consolidated financial statements.
The Group’s production volume is dependent on a constant power supply in Ukraine, which was affected during 2024 by Russian attacks on
power generation and transmission infrastructure in Ukraine, which has, together with higher than expected prices for energy and input materials,
especially for electricity imported from EU countries, an impact on the Group’s cash flow generation and profitability. The Group’s ability to operate
its assets also depends on sustainable and sufficient supply of other key input materials required for the mining and production processes as well
as maintaining an adequate number of experienced and skilled members of the workforce in Ukraine.
Despite the continued challenging situation during the financial year 2024, the Group increased its total commercial production to 6,890 thousand
tonnes of iron ore pellets and concentrate, representing an increase of 66% compared to 4,152 thousand tonnes during the financial year 2023.
While the Group’s net cash position benefited from the higher production and sales volumes in 2024, the weaker market resulted in a turbulent
price environment for iron ore products and higher prices for input materials and energy started in the second half of the year to deteriorate the
Group’s margin and cash flow generation. As a result, the Group’s net cash position decreased from US$108,293 thousand at the beginning of the
year to US$ 100,726 thousand as at 31 December 2024. Despite lower margins realised, the Group continued investment in sustaining and
development capital expenditure projects to ensure asset integrity and future efficiency gains.
As at the date of the approval of these consolidated financial statements, the Group is in a net cash position of approximately US$41,017 thousand
with an available cash balance of approximately US$45,471 thousand. In addition to the available cash balance, the Group has an outstanding trade
receivable balance of approximately US$43,421 thousand from its pellet and concentrate sales, which are expected to be collected in the next few
months, and finished goods already stockpiled of 412 thousand tonnes at different ports or storage locations other than the plant.
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Financial Statements
NOTE 2: BASIS OF PREPARATION CONTINUED
As disclosed in the Group’s 2023 Annual Report & Accounts, the ongoing war in Ukraine and other circumstances facing the Group have led to an
escalation of a number of risks, including risks relating to the political environment and the independence of the legal system in Ukraine, which
could have a material negative impact on the Group’s business activities and reputation. In addition to the material uncertainties related to the
ongoing war in Ukraine and the legal disputes in Ukraine, there are number of events after the reporting period that could have an impact on the
Group’s business activities and its ability to continue as a going concern. For further details, see Note 35 Events after the reporting period.
The court proceedings before the Supreme Court of Ukraine in respect of contested sureties (see Note 30 Commitments, contingencies and legal
disputes for further details) continued throughout the financial year 2024 and the first months of 2025. Although the management is of the opinion
that this claim is without merit, the full provision in the amount of UAH4,727 million (US$112,457 thousand as at 31 December 2024), which was
recorded as at the end of the previous year, was not released, considering the magnitude of this specific claim and the risks associated with the
judicial system in Ukraine. The outcome of this ongoing legal dispute represents a material uncertainty in terms of the Group’s ability to continue
as a going concern. A future cash outflow, which also depends on the details and technicalities of a possible enforcement in the event of a negative
decision by the Supreme Court, is likely to have a significant impact on the Group’s future cash flow generation and available liquidity. In addition
to this claim and as announced on 4 February 2025, the Group’s subsidiary Ferrexpo Poltava Mining (“FPM”) has received a civil claim seeking joint
liability of FPM and its General Director for damages amounting to UAH157 billion (approximately US$3.8 billion as at 14 March 2025) in favour of the
Ukrainian state (see Note 30 Commitments, contingencies and legal disputes for further details). This claim is related to an initial accusation on the
illegal sale of waste products, which have transformed into accusations that FPM is illegally mining and selling subsoil (minerals other than iron ore),
which is said to have caused damage to the environment. FPM rejects these allegations in their entirety on the basis that there was no illegal
extraction of the subsoil. FPM mines and extracts iron ore according to its mining licence and provides for the removal of rock and its storage as a
waste in addition to the extraction of iron ore. The management is of the opinion that these accusations and the claim are without merit and FPM
has started the vigorous defence of its position in the Ukrainian courts.
As disclosed in Note 35 Events after the reporting period, on 12 February 2025, personal sanctions have been imposed on Mr Zhevago by
Ukrainian authorities. Although, no sanctions have been imposed on any member of the Group, the personal sanctions on Mr Zhevago might
have implications on the Group’s operation, such as additional challenges with taxes, including refusal of VAT refunds, which could have
an impact on the Group’s ability to continue as a going concern. As it is likely that the Group’s subsidiaries in Ukraine will not receive VAT
refunds until the sanctions against Mr Zhevago are lifted, the Group has adjusted its long-term model to reflect the lower expected cash
flow generation caused by the potential absence of VAT refunds in Ukraine to minimise the impact on the available cash balance throughout
the period of the going concern assessment. In addition and connected with the personal sanctions on Mr Zhevago, on 20 February 2025,
the State Bureau of Investigation (the “SBI”) made a media announcement regarding a potential claim to the High Anti-Corruption Court
of Ukraine (the “HACC”) to nationalise 49.5% of shares in FPM and certain of its assets. As at the approval of these consolidated financial
statements, FPM has not received a formal notification of such a claim. Further to that, under Ukrainian laws, the SBI has no authority to
petition, bring claims or make proposals (both on nationalisation or application of any asset-confiscation sanction) to the HACC and the
proper authority should be the Ministry of Justice of Ukraine. A nationalisation of 49.5% of shares in FPM and certain of its assets is expected
to have a significant impact on the Group’s ability to continue as a going concern as FPM could lose key assets required for the production
of iron ore pellets and concentrate. In addition, a nationalisation of 49.5% of shares in FPM will have an impact on the equity attributable to
the shareholders of Ferrexpo plc and its future distributable reserves because Ferrexpo AG would not be entitled to dividends in relation
to the nationalised 49.5% of shares in FPM. See Note 12 Earnings per share and dividends paid and proposed for further details.
As disclosed in Note 35 Events after the reporting period, on 4 March 2025, the SBI also made a media statement that the Pecherskyi District Court
of Kyiv has granted a request of the Prosecutor General’s Office of Ukraine to transfer 49.5% of the corporate rights in Ferrexpo Poltava Mining
(“FPM”) held by Ferrexpo AG (“FAG”) to Ukraine’s Asset Recovery and Management Agency (“ARMA”). This transfer is in connection with ongoing
proceedings against Mr Zhevago relating to Bank F&C, as disclosed in detail on pages 222 and 223 of Note 30 Commitments, contingencies and
legal disputes. Under the Ukrainian Criminal Procedure Code, the ARMA can accept into its management a piece of property that has been arrested
only to preserve real evidence. Corporate rights in a Ukrainian company cannot constitute real evidence as they cannot be treated as material
objects. Therefore, based on independent legal advice from Ukrainian counsel, the transfer of these corporate rights into the ARMA’s management
is illegal. As at the date of the approval of these consolidated financial statements, the Group has not been provided with a copy of the relevant
court decision of the Pecherskyi District Court of Kyiv and therefore the precise details of the court decision are not known to the Group. However,
based on independent legal advice from Ukrainian counsel, management understands that FAG remains the 100% owner of FPM and management
does not expect that the transfer of 49.5% of the corporate rights in FPM to ARMA will affect FPM’s operations or the Group’s ability to continue as
a going concern. Asset management is carried out on the basis of the management agreement concluded between ARMA and a selected manager.
Based on article 21 of the Law on ARMA, in those cases where the temporary management is established over shares, the manager is obliged to
coordinate the exercise of assumed powers at the shareholders meeting with the owner of the shares. This rule suggests that the manager cannot
vote at the shareholders meeting on its own, but only with the consent of the owner, Ferrexpo AG. However, a transfer of 49.5% of the corporate
rights in FPM to ARMA for management of these corporate rights will have an impact on the equity attributable to the shareholders of Ferrexpo plc
and its future distributable reserves. See Note 12 Earnings per share and dividends paid and proposed for further details.
As part of management’s going concern assessment, the Group continuously adjusts its financial long-term model to reflect the latest
developments in terms of possible production and sales volumes as well as latest market prices and production costs, which are still adversely
affected by production volumes lower than those before the war commenced. Considering the expected impact caused by the sanctions imposed
on Mr Zhevago, the Group updated its long-term model and plans to mitigate the impact of the likely absence of VAT refunds in Ukraine by
significantly reducing its operation in 2025 and 2026, compared to the model in place before the sanctions have been imposed on Mr Zhevago on
12 February 2025.
The updated base case of the financial long-term model shows that the Group has reasonably sufficient liquidity to continue its operations at a
reduced level throughout the entire period of the management’s going concern assessment, covering a period of 18 months from the date of the
approval of these consolidated financial statements. However, the Group’s available cash balance for the period twelve months after the approval
of these consolidated financial statements also depends on the time at which the VAT refund is resumed The updated base case assumes a pellet
production volume of approximately 36% of the pre-war level for the financial year 2025, before an increase to approximately 47% in 2026 and an
expected recovery to almost the pre-war levels in 2027. The update of the long-term model resulted in a delay of the expected ramp-up to almost
the pre-war level by one year, which was expected to be 2026 in the previous model, and a significantly lower cash flow generation, affecting also
the available cash balances throughout the period of the going concern assessment. In addition, the production and sales volumes are also
dependent on a constant power supply, the logistics network available to the Group and other potential negative effects on the Group’s business
activities as a result of the ongoing war.
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Notes to the Consolidated Financial Statements continued
NOTE 2: BASIS OF PREPARATION CONTINUED
The Group’s cash flow generation is most sensitive to price changes. The sensitivities prepared for reasonable adverse changes, with a focus on the
expected realised prices, show negative available liquidity balances under some scenarios in late 2025, before any actions taken, such as a further
reduction of the operating expenditures and the Group’s mining activities. With the significant reduction of the Group’s operation in the updated
long-term model, the available mitigating actions also reduced significantly. The mitigating actions under the control of the management are
estimated to be approximately US$14,000 thousand for the first 12 months and US$47,000 thousand until 31 December 2026 and are considered
to be sufficient to offset negative effects from reasonable adverse changes. There are further potential mitigating actions, which are however not
fully under the control of the management, which are further explored. Considering the tight balances of available cash under the base case and
realised price sensitivity, the available cash balance is expected to be depleted earlier than in late 2025, when combining the effects from
reasonable adverse changes (stress test). However, it is management’s position that, as in the past, a combination of all reasonably possible or
plausible adverse changes in respect of realised prices and production costs is unlikely to happen in combination as a result of the historical
natural hedge between iron ore prices and prices for key input materials.
The claims and certain decisions received by the courts in Ukraine are another example of the risk of operating in a dynamic and adverse political
landscape in Ukraine, which creates additional challenges for both the Group’s subsidiaries in Ukraine and, also for the Group itself
The Group has assessed that, taking into account:
i) its available cash and cash equivalents;
ii) its cash flow projections, adjusted for the effects caused by the war in Ukraine and potential absence of VAT refunds, for the period of
management’s going concern assessment covering a period of 18 months from the date of the approval of these consolidated financial
statements;
iii) the feasibility and effectiveness of all available mitigating actions within the management’s control for identified uncertainties; and
iv) the legal merits in terms of the ongoing legal dispute regarding the above mentioned contested sureties and potential future actions available to
protect the interests of the Group in case of a negative decision from the Supreme Court,
there remains a material uncertainty that may cast significant doubt about the Group to continue as a going concern in respect of the ongoing
war and legal disputes in Ukraine, including the contested sureties claim, the assumption that VAT refunds will be no longer withheld and will be
available to the Group over the course of 2026 and the risk of nationalisation 49.5% of shares in FPM and certain of its assets, which are outside of
management’s control, with the duration and the impact of the war still unable to be predicted, and the uncertainty in relation to the independence
of the judicial system and its immunity from economic and political influences in Ukraine, which could have an impact on the outcome of the
ongoing legal disputes.
In respect of the contested sureties claim mentioned above, the next hearing before the Supreme Court is scheduled for 21 March 2025. As at the
date of the approval of these consolidated financial statements, no decision has been made by the Supreme Court in the contested sureties claim.
If the Supreme Court rules in favour of the claimants in this case, the commencement of the enforcement procedures could potentially have a
material negative impact on the Group’s business activities and its ability to continue as a going concern. In terms of the claim received for the
accused illegal mining and selling subsoil (minerals other than iron ore), the next hearing is scheduled for 19 March 2025 and it can be assumed
that this will be a lengthy process. However, considering the magnitude of the subsoil claim, a final decision by the Supreme Court, after potential
negative decisions in the lower courts in Ukraine, could have a negative impact on the Group’s ability to continue as a going concern. See Note 30
Commitments, contingencies and legal disputes for further information, which should be read in conjunction with this note.
As at the date of the approval of these consolidated financial statements, the Group’s operations, located adjacent to the city of Horishni Plavni,
have not been directly affected by the ongoing war, but this remains a risk. Should the area surrounding the Group’s operations become subject to
the armed conflict, there would be a significant risk posed to the safety of the Group’s workforce and the local community, as well as a significant
risk to key assets and the infrastructure required for the Group to operate effectively. See the Principal Risks section for further information.
Considering the current situation of the ongoing war and legal disputes in Ukraine and the events after the reporting period described above, the
Group continues to prepare its consolidated financial statements on a going concern basis. This conclusion is based on the Group’s ability to swiftly
adapt to changing circumstances cause by the war and the independent legal advice received for the ongoing legal disputes in Ukraine However, as
explained above, many of the identified uncertainties in respect of the ongoing war and legal disputes are outside of the management’s control, and
are unpredictable, which may cast significant doubt upon the Group’s ability to continue as a going concern. For more information on critical
judgements made by management in preparing these consolidated financial statements, see also Note 30 Commitments, contingencies and legal
disputes in respect of other ongoing legal proceedings and disputes and Note 35 Events after the reporting period.
If the Group is unable to continue to realise assets and discharge liabilities in the normal course of business, it would be necessary to adjust the
amounts in the statement of financial position in the future to reflect these circumstances, which may materially change the measurement and
classification of certain figures contained in these consolidated financial statements.
IMPACT OF CLIMATE CHANGE ON THE GROUP’S FINANCIAL STATEMENTS
The Group acknowledges the potential impact of climate change on its operations and recognises that climate change could have direct and indirect
financial implications in the future.
Despite the ongoing war in Ukraine, the Group remains committed to reduce its Scope 1 and Scope 2 carbon emissions by 50% by 2030, compared
to the baseline year of 2019, and is targeting a net zero production for Scope 1 and Scope 2 carbon emissions by 2050.
In terms of the Group’s net zero pathway, it is important to acknowledge that the Group is still operating in a challenging environment, which
requires the fast adaption to new circumstances and uncertainties that are outside of the Group’s control. As a result, there is a risk that the Group
may also need to adapt its carbon emission reduction and net zero targets, depending on the duration and impact of the ongoing war in Ukraine.
Further information is provided in the Group’s 2023 Responsible Business Report and 2023 Climate Report, both published in December 2024.
The ongoing war in Ukraine continues to have an impact on the Group’s cash flow generation and profitability. As a result, certain projects related to
the Group’s Scope 1 and Scope 2 carbon emission targets and the net zero pathway were stopped since the beginning of the war in February 2022.
See Going concern on pages 178 to 180 for further information. As a consequence of the ongoing war in Ukraine, the Group has not entered into any
significant commitments for the renewal and replacement of processing and mining equipment in its operations, mainly in Ukraine.
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NOTE 2: BASIS OF PREPARATION CONTINUED
Physical risks
The Group is aware of the potential increased risks that climate change could pose to its assets in Ukraine. However, there is no immediate risk at
this time and the Group will continue to monitor and consider these risks when planning the renewal and replacement of its existing operating
assets.
Transition risks
The Group is aware of a potential shift towards a low-carbon economy and the potential implications for its business models, which could affect
market demand for its iron ore products in the medium to long term. The Group is already in the position to produce Direct Reduction (“DR”) pellets
and continues to monitor the market and invest in customer relationships in order to secure fixed supply volumes in the short, medium and long
term. The shift does not affect the Group’s finished goods on stock as at 31 December 2024 as these are still in demand and expected to be sold in
the coming months.
The transition risks, as well as the Group’s Scope 1 and Scope 2 carbon emission targets and the net zero pathway, could also have an impact on the
Group’s processing and mining equipment required in the future. In absence of any significant commitments for processing and mining equipment
as at 31 December 2024, there is no significant impact on the expected remaining useful lives of the Group’s operating assets at this time.
Furthermore, the Group assumes that its critical operating assets will continue to be an essential part of the Group’s business activities in the
future. However, the Group will continue to monitor these risks and take them into account when planning the renewal and replacement of its
existing operating assets.
At the time of approval of these consolidated financial statements, no significant changes to the Group’s mine plan are expected that could have a
material impact on the Group’s operating assets, which are either amortised based on the expected remaining useful life or the unit of production
method, and on the recognised site restoration provisions.
There are a number of work streams underway to develop the Group’s decarbonisation pathway and create a structure on which to plan and
prioritise future investments. This pathway is, however, also dependent on the duration and impact of the ongoing war in Ukraine. The Group’s
business model will be updated as soon as there is more clarity about the current situation in Ukraine and the exact path of decarbonisation of the
Group, including commitments made for the renewal and replacement of processing and mining equipment.
For further information on ongoing workstreams and the Group’s climate-related financial disclosures, see the Responsible Business section in the
Strategic Report on pages 44 to 55. See also the Group’s Principal Risk section on page 94 for further information on risks relating to climate change.
BASIS OF CONSOLIDATION
The consolidated financial statements comprise the financial statements for Ferrexpo plc and its subsidiaries as at 31 December each year.
The financial statements of the subsidiaries are prepared as at the same reporting date as Ferrexpo plc’s, using consistent accounting policies.
Subsidiaries are fully consolidated from the date the Group obtains control, which exists from the point of time when the Group is exposed to,
or has rights to, variable returns from an entity and the Group has the ability to affect those returns through its power to direct the activities of
an entity. Similarly, subsidiaries disposed of are deconsolidated from the date on which the Group ceases to hold control. A change in the ownership
interest of an entity without obtaining or losing control is accounted for as an equity transaction.
All intercompany balances and transactions, including unrealised profits arising from intra-group transactions, have been eliminated in full.
Unrealised losses are eliminated unless costs cannot be recovered.
BUSINESS COMBINATIONS
On the acquisition of a subsidiary, the business combination is accounted for using the acquisition method. The cost of an acquisition is measured
as the aggregated amount of the fair value of the consideration transferred, measured at the date of acquisition. The consideration paid is allocated
to the assets acquired and liabilities (including contingent liabilities) assumed on the basis of fair values at the date of acquisition.
Acquisition costs are expensed when incurred and included in general and administrative expenses.
FUNCTIONAL AND PRESENTATIONAL CURRENCIES
Based on the economic substance of the underlying business transactions and circumstances relevant to the parent, the functional currency of
the parent has been determined to be the US dollar, with each subsidiary determining its own functional currency based on its own circumstances.
The Group has chosen the US dollar as its presentational currency. The functional currency of Ukrainian subsidiaries, which is where the Group’s
main operations are based, is the Ukrainian hryvnia.
FOREIGN CURRENCY TRANSLATION
For individual subsidiary company accounts, transactions in foreign currencies (i.e. other than the functional currency) are recorded at the rate
ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated to the functional currency at
the rate of exchange ruling at the reporting date and non-monetary assets and liabilities at the historic rate. Foreign exchange differences arising
on translation are recognised in the consolidated income statement.
For presentation of the Group’s consolidated accounts, if the functional currency of a subsidiary is different to the presentational currency as at the
reporting date, the assets and liabilities of this entity are translated into the presentational currency at the rate ruling at the reporting date and the
consolidated income statement is translated using the average exchange rate for the year based on the officially published rates by the National
Bank of Ukraine (“NBU”). The foreign exchange differences arising are recognised in other comprehensive income and taken directly to a separate
component of equity. On disposal of a foreign entity, the deferred cumulative amount of exchange differences recognised in equity relating to the
particular foreign operation is recognised in the consolidated income statement.
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Notes to the Consolidated Financial Statements continued
NOTE 3: NEW ACCOUNTING POLICIES
NEW STANDARDS AND INTERPRETATIONS ADOPTED
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 2023 except for the adoption of new
standards, interpretations and amendments to UK adopted IFRS effective as at 1 January 2024.
NEW STANDARDS, INTERPRETATIONS AND AMENDMENTS ADOPTED WITHOUT AN IMPACT ON THE GROUP’S
CONSOLIDATED FINANCIAL STATEMENTS
Amendments to IAS 1 Presentation of Financial Statements provide guidance on the classification of liabilities with covenants, and further clarify
the classification criteria for liabilities as either current or non-current.
Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures clarify the characteristics of supplier finance
arrangements and require additional disclosure of such arrangements to understand the effects of supplier finance arrangements on an entity’s
liabilities, cash flows and exposure to liquidity risk.
Amendments to IFRS 16 Leases specify the requirements that a seller-lessee uses in measuring the lease liability arising in a sale and leaseback
transaction, to ensure the seller-lessee does not recognise any amount of the gain or loss that relates to the right of use it retains.
NEW STANDARDS, INTERPRETATIONS AND AMENDMENTS NOT YET ADOPTED
The Group has elected not to adopt early any revised and amended standards or interpretations that are not yet mandatory in the UK.
The standards and interpretations below could have an impact on the consolidated financial statements of the Group in future periods.
Amendments to IAS 21 Lack of Exchangeability were issued in August 2023 and are effective for annual reporting periods beginning on or after
1 January 2025. The amendments specify how to assess whether a currency is exchangeable and how to determine a spot exchange rate if it is not.
The Group does not expect a material impact on its financial statements because of these amendments.
Amendments to IFRS 7 and IFRS 9 Classification and Measurement of Financial Instruments were issued in May 2024 and are effective for annual
reporting periods beginning on or after 1 January 2026. The amendments provide further clarification and requirements for the recognition and
derecognition criteria for financial assets and liabilities, the classification requirements for financial assets, particularly those containing contingent
features (such as ESG-linked targets) and non-recourse features or contractually linked instruments. It also requires disclosures related to the
amendments to the classification requirements and also for investments in equity instruments designated at fair value through other
comprehensive income. The Group does not expect a material impact on its financial statements because of these amendments.
New standard IFRS 18 Presentation and Disclosure in Financial Statements was published by the International Accounting Standards Board (IASB)
on 9 April 2024. The new standard will be effective for annual reporting periods beginning on or after 1 January 2027. It requires the presentation
of two new defined subtotals in the income statement a) operating profit and profit before financing and income taxes as well as the disclosure
of management-defined performance measures (MPMs) and b) subtotals of income and expenses not specified by IFRS Accounting Standards
that are used in public communications to communicate management’s view of an aspect of a company’s financial performance. It also requires
a reconciliation between the MPMs and the most directly comparable totals or subtotals specified by IFRS Accounting Standards is also required
to provide transparency on the entity-specific performance measures. Beyond that, there are limited changes to IAS 7 Statement of Cash Flows
to improve comparability by specifying a consistent starting point for the indirect method of reporting cash flows from operating activities and
eliminating options for the classification of interest and dividend cash flows. The new standard also enhances the general and specific requirements
for aggregation and disaggregation to help a company to provide useful information. The specific requirements include those for disaggregation of
‘other’ balances, such as the presentation of operating expenses in the income statement and disclosure of specified operating expenses by nature
included in each function line item. The Group is currently examining the effects of this new standard on its annual financial statements.
New standard IFRS 19 Subsidiaries without Public Accountability: Disclosures was published by the International Accounting Standards Board (IASB)
on 9 May 2024. The new standard will be effective for annual reporting periods beginning on or after 1 January 2027. IFRS 19 is a new voluntary
reduced disclosure framework that sets out reduced disclosure requirements that is intended to maintain the usefulness of the financial
statements for users. It will permit subsidiaries with a parent that applies IFRS Accounting Standards in its consolidated financial statements to
apply IFRS Accounting Standards with reduced disclosure requirements. The Group is currently examining the effects of this new standard on its
annual financial statements.
The Group expects that all other standards, interpretations and amendments issued at the reporting date, but not yet to be adopted for these
financial statements, are not relevant to the Group as they do not have a material impact on its consolidated financial statements and are therefore
not listed above.
NOTE 4: 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:
CRITICAL ESTIMATES
• Note 13 Property, plant and equipment – impairment consideration as a result of the ongoing war in Ukraine
The most critical estimate made by the management is in respect of the timing of when the Group’s operation is expected recover to pre-war levels.
As disclosed in Note 13 Property, plant and equipment, there is a risk of material adjustments in future periods in case of a delay of the recovery to
pre-war levels. In addition, the duration and impact of the ongoing war in Ukraine could pose a further risk for significant adjustments in future
periods.
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Financial Statements
NOTE 4: USE OF CRITICAL ESTIMATES AND JUDGEMENTS CONTINUED
The consideration of the impact of climate change on the Group’s financial statements did not require critical estimates and judgements when
preparing the consolidated financial statements as at 31 December 2024.
CRITICAL JUDGEMENTS
• Note 2 Basis of preparation – going concern assumption
• Note 11 Taxation – transfer pricing claims, tax legislation in Ukraine and development in international tax environment
• Note 30 Commitments, contingencies and legal disputes – assessment of matters in an environment of political, fiscal and legal uncertainties
• Note 35 Events after the reporting period – non-adjusting post balance sheet events
NOTE 5: 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 consolidated 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 cash.
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 amended its definition of Underlying EBITDA during the financial year 2024 by excluding operating foreign exchange gains and losses.
The full definition of Underlying EBITDA and details in respect of the amended definition are provided in the Alternative Performance Measures
(“APMs”) section.
US$000
Notes
Year ended
31.12.24
Restated
Year ended
31.12.23
Profit/(loss) before tax and finance
19,928
(60,363)
Losses on disposal and liquidation of property, plant and equipment
231
11
Share-based payments
28
320
830
Write-offs and impairments
7
71,871
978
Recognition of provisions for legal disputes
30
−
131,117
Depreciation and amortisation
60,281
57,669
Operating foreign exchange losses
(83,321)
(31,371)
Underlying EBITDA
69,310
98,871
US$000
Notes
Year ended
31.12.24
Year ended
31.12.23
Revenue
6
933,263
651,795
Cost of sales
7
(597,438)
(362,495)
Gross profit
335,825
289,300
NET CASH
Net cash as defined by the Group comprises cash and cash equivalents less lease liabilities.
US$000
Notes
As at
31.12.24
As at
31.12.23
Cash and cash equivalents
25
105,919
115,241
Lease liabilities – current
26
(4,665)
(5,939)
Lease liabilities – non-current
26
(419)
(1,009)
Net cash
100,835
108,293
Net cash is an APM. Further information on the APMs used by the Group, including the definitions, is provided on pages 240 and 241.
DISCLOSURE OF REVENUE AND NON-CURRENT ASSETS
The Group does not generate significant revenues from external customers attributable to the UK, the Company’s country of domicile. The
information on the revenues from external customers attributed to the individual foreign countries is given in Note 6 Revenue. 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.
Ferrexpo plc
Annual Report & Accounts 2024
184
Notes to the Consolidated Financial Statements continued
NOTE 6: REVENUE
ACCOUNTING POLICY
Revenue recognition
Revenue is recognised to the extent that it is probable that the Group will collect the consideration to which it expects to be entitled in exchange for
transferring promised goods or services to a customer. The following specific recognition criteria are to be met before revenue is recognised.
Sale of goods including sales of pellets and fuel from bunker business
Revenue is recognised when the control of the goods has passed to the buyer and can be reliably measured.
Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods provided in the
normal course of business, net of discounts, customs duties and sales taxes. The Group does not have any material variable considerations, such as
retrospective volume rebates and rights of returns, in the contracts with its customers. Revenues related to provisionally priced sales are initially
recognised at the estimated fair value of the consideration receivable based on the forward price at each reporting date for the relevant period
outlined in the different contracts. In terms of the associated commodity risk, see Note 27 Financial instruments for further information.
The control of goods passes when title for the goods passes to the customer as determined by the contractual sales terms based on the
International Commercial Terms (“Incoterms”). The sales are typically made under CIF (“Cost Insurance and Freight”), CFR (“Cost and Freight”,
DAP (“Delivery At Place”) and FOB (“Free on Board”) terms.
Under DAP Incoterms, revenue is recognised when goods arrive at the agreed destination or at the border crossing, whereas under the other
above-mentioned terms the title passes on the date of the bill of lading. If the sales agreement allows for adjustment of the sales prices based
on survey of the goods by the customer (e.g. ore content) the revenue is recognised based on the most recent determined product specification.
The Group enters into long-term contracts with some of its customers, which become subject to either renewal or extension when about to expire.
As the performance obligations under the old contracts are not affected by the renewal or extension, the new modified contracts are accounted for
as separate contracts.
The Group has no unsatisfied or partially unsatisfied performance obligations relating to contracts with customers with original expected duration
of more than one year. The Group has therefore taken advantage of the practical expedient provided in IFRS 15 and needs not disclose the
transaction price allocated to the remaining performance obligations.
Freight services related to sales of pellets and concentrate
For CIF and CFR contracts the Group must contract for and pay the freight necessary to bring the goods to the named port of destination.
Consequently, the freight services under CIF and CFR Incoterms meet the criteria of a separate performance obligation and the corresponding
revenue is shown separate from the revenue from sales of iron ore pellets and concentrate.
Freight revenue is recognised over time, as the obligation to perform freight services is fulfilled, along with the associated costs.
For the separate presentation of the freight revenue as required under IFRS 15 Revenue from contracts with customers, the Group measures
freight revenue based on the average freight rates of the relevant pricing period for specific shipments as outlined in the contracts with its
customers. In case the relevant pricing period is after the end of the reporting period (normally within 60 days), revenue is measured based on
forward freight rates at the reporting date.
Actual freight costs recognised for specific shipments might differ from the presented freight revenue due to movements in market rates between
the timing of fixture of vessels and the relevant pricing periods outlined in the contracts with customers.
Logistic services
Revenue from logistic services rendered is measured at the transaction price contractually agreed between the parties based on applicable market
rates for the specific freight services to be provided. The timing of satisfaction of the performance obligation is over time as services are completed.
Where services are invoiced in advance of discharge, amounts attributable to the time between the end of the reporting period and the discharge
date are deferred as contract liabilities.
Other sales
Other sales and services provided include predominantly the revenue generated from the sale of other materials and repair and maintenance works
provided to third parties. The revenues are recognised when the title passes for material sold or services provided are completed.
Revenue for the year ended 31 December 2024 consisted of the following:
US$000
As at
31.12.24
As at
31.12.23
Revenue from sales of iron ore pellets and concentrate
831,807
598,909
Freight revenue related to sales of iron ore pellets and concentrate
49,691
652
Total revenue from sale of iron ore pellets and concentrate
881,498
599,561
Revenue from logistics and bunker business
46,139
45,343
Revenue from other sales and services provided
5,626
6,891
Total revenue
933,263
651,795
Strategic Report
Corporate Governance
185
Financial Statements
NOTE 6: REVENUE CONTINUED
The Group’s sales of iron ore pellets and concentrate are still impacted by the ongoing war in Ukraine as it was also the case for the comparative year
ended 31 December 2023. As a result of the ongoing war in Ukraine, the Group’s seaborne sales through the Ukrainian Black Sea ports had been
suspended since the beginning of the war, but resumed again in January 2024, albeit still at a significantly lower level and at higher costs due to
war-related risk premiums to be paid.
Revenue for the comparative year ended 31 December 2023 includes the effect from the derecognition of contract liabilities of US$75 thousand
that were deferred as revenue in the previous year ended 31 December 2022, as the performance obligations were not fulfilled. There is no such
effect for the year ended 31 December 2024 due to the absence of sales under the Incoterm CFR as at 31 December 2023. As at 31 December 2024,
freight-related revenue in the amount of US$2,799 thousand (2023: nil) was deferred as the performance obligations were not fulfilled and included
in the balance of the contract liabilities. See Note 24 Accrued and contract liabilities for further information.
Total sales of iron ore pellets and concentrate by geographical destination showing separately countries that individually represented 10% or more
of total sales in either the current or prior year were as follows:
US$000
Year ended
31.12.24
Year ended
31.12.23
Europe, including Turkey
668,425
599,869
Austria
237,092
258,853
Czech Republic
97,612
115,873
Turkey
123,615
122,556
Germany
127,500
64,981
Others
82,606
37,606
China & South East Asia
148,363
(83)
China
138,551
(83)
Others
9,812
−
Middle East & North Africa
64,710
(225)
Total revenue from sale of iron ore pellets and concentrate
881,498
599,561
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 on pages 242 and 243. The Group’s sales of iron
ore pellets and concentrate were still significantly impacted by the ongoing war in Ukraine during the financial years 2024 and 2023. The Group’s
seaborne sales through the Ukrainian Black Sea ports had been suspended since the beginning of the war, but resumed again during the financial
year 2024, albeit still at a significantly lower level and at higher costs due to war-related risk premiums to be paid.
During the year ended 31 December 2024, sales made to four customers accounted for 62% of the revenues from sales of iron ore pellets and
concentrate (2023: 90%).
Sales to customers that individually represented more than 10% of total sales in either current or prior year are as follows:
US$000
Year ended
31.12.24
Year ended
31.12.23
Customer A
237,092
258,853
Customer B
123,615
109,661
Customer C
97,612
115,873
Customer D
92,354
57,288
Considering the constraints imposed by the ongoing war, the Group has not been able to fulfil the demands from all its customers since the
beginning of the war in Ukraine in February 2022, and sales volumes were therefore allocated to markets and customers based on logistics and
market considerations. Relationships with long-standing customers are maintained and the Group expects to be able to meet their demand again
as soon as the geopolitical situation in Ukraine improves.
Ferrexpo plc
Annual Report & Accounts 2024
186
Notes to the Consolidated Financial Statements continued
NOTE 7: OPERATING EXPENSES
ACCOUNTING POLICY
Operating expenses arise in the course of the ordinary activities of the Group and are recognised in the consolidated income statement when
a decrease in future economic benefits related to a decrease in an asset or an increase of a liability has arisen that can be measured reliably.
Expenses are recognised in the consolidated income statement on the basis of a direct association between costs incurred and specific items
of income. When economic benefits are expected to arise over several accounting periods and the association with income can only be broadly
or indirectly determined, expenses are systematically allocated to the accounting period in which the economic benefits are expected to arise.
Royalties are outflows of resources embodying economic benefits and imposed by governments on entities, in accordance with legislation.
The obligating event that gives rise to a liability to pay royalties is the activity, identified by the legislation, that triggers the payment of royalties.
The liability to pay royalties is recognised as the obligating event occurs. Mining royalties payable are presented within operating expenses.
Operating expenses for the year ended 31 December 2024 consisted of the following:
US$000
Year ended
31.12.24
Year ended
31.12.23
Cost of sales
597,438
362,495
Selling and distribution expenses
246,300
161,315
General and administrative expenses
68,974
63,509
Other operating expenses
91,733
28,788
Total operating expenses
1,004,445
616,107
Total operating expenses include:
US$000
Year ended
31.12.24
Year ended
31.12.23
Inventories recognised as an expense upon sale of goods
566,526
339,349
Employee costs (excl. logistics and bunker business)
85,435
73,924
Inventory movements
4,961
3,910
Depreciation of property, plant and equipment and right-of-use assets
59,392
56,294
Amortisation of intangible assets
889
1,375
Royalties
32,187
24,693
Costs of logistics and bunker business
54,991
57,739
Audit and non-audit services
2,239
1,924
Community support donations
4,319
3,781
Write-offs and impairments
71,871
978
Losses on disposal and liquidation of property, plant and equipment
231
11
US$000
Notes
As at
31.12.24
As at
31.12.23
Write-off of inventories
81
177
Write-off of property, plant and equipment
13
155
606
Write-off of receivables and prepayments
−
195
Total write-offs
236
978
Impairment of property, plant and equipment
13
71,635
−
Total impairments
71,635
−
Total write-offs and impairments
71,871
978
Strategic Report
Corporate Governance
187
Financial Statements
NOTE 7: OPERATING EXPENSES CONTINUED
AUDITOR REMUNERATION
US$000
Year ended
31.12.24
Year ended
31.12.23
Audit services
Ferrexpo plc Annual Report and Accounts
1,464
1,334
Subsidiary entities
328
317
Total audit services
1,792
1,651
Audit-related assurance services
309
273
Total audit and audit-related assurance services
2,101
1,924
Non-audit services
Other services
138
−
Total non-audit services
138
−
Total auditor remuneration
2,239
1,924
Auditor remuneration paid is in respect of the audit of the financial statements of the Group and its subsidiary companies and, when applicable,
for the provision of other services not in connection with the audit.
NOTE 8: OTHER INCOME
ACCOUNTING POLICY
Other income mainly includes lease income generated from rail cars, mining equipment and premises, and the proceeds from the sale of spare
parts, scrap metal and fuel, and compensation received from insurance companies. Lease income is recognised based on the underlying contractual
basis over the term of the lease. Other income from the sale of consumable materials is recognised as revenue when the title passes.
Other income for the year ended 31 December 2024 consisted of the following:
US$000
Year ended
31.12.24
Year ended
31.12.23
Gains on sale of current assets
2,566
1,086
Compensation from insurances
1,286
725
Lease income
837
637
Other income
786
1,619
Total other income
5,475
4,067
NOTE 9: FOREIGN EXCHANGE GAINS AND LOSSES
ACCOUNTING POLICY
Foreign exchange gains and losses are reported on a net basis. Operating foreign exchange gains and losses are those resulting directly from the
Group’s operating activities. Non-operating gains and losses are predominantly those associated with the Group’s financing and treasury activities,
including the translation of interest-bearing loans and borrowings denominated in currencies different from the respective functional currencies
and transactional gains and losses from the conversion of cash balances in currencies different from the local functional currencies at exchange
rates different from those at the initial recognition date.
Foreign exchange gains and losses for the year ended 31 December 2024 consisted of the following:
US$000
Year ended
31.12.24
Year ended
31.12.23
Operating foreign exchange gains/(losses)
Conversion of trade receivables
83,588
31,685
Conversion of trade payables
(283)
(177)
Others
16
(137)
Total operating foreign exchange gains
83,321
31,371
Non-operating foreign exchange gains/(losses)
Conversion of interest-bearing loans
(37,591)
(11,740)
Conversion of cash and cash equivalents
673
1,895
Others
(2,437)
1,911
Total non-operating foreign exchange losses
(39,355)
(7,934)
Net foreign exchange gains
43,966
23,437
Ferrexpo plc
Annual Report & Accounts 2024
188
Notes to the Consolidated Financial Statements continued
NOTE 9: FOREIGN EXCHANGE GAINS AND LOSSES CONTINUED
Operating foreign exchange gains and losses are those items that are directly related to the production and sale of pellets (e.g. trade receivables,
trade payables on operating expenditure) whereas non-operating gains and losses are those associated with the Group’s financing and treasury
activities and with local income tax payables.
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 and the outstanding US dollar denominated receivable balances in Ukraine. A devaluation of the local
currency has generally a positive effect on the Group’s production costs and results in operating foreign exchange gains on the conversion of
the Ukrainian subsidiaries’ trade receivables denominated in US dollar. The effect arising on the translation of non-US dollar functional currency
operations, mainly in Ukrainian hryvnia, are included in the translation reserve. See Note 31 Share capital and reserves for further details.
The Ukrainian hryvnia devalued from 37.982 to 42.039 compared to the US dollar during the year ended 31 December 2024. The local currency
was unchanged at 36.568 from 21 July 2022 to 30 September 2023, before depreciating to 37.982 during the last quarter of 2023. A devaluation of
the local currency can result in significant foreign exchange gains on US dollar denominated receivable balances, depending on the underlying net
balances, and a reduction of the Group’s net assets as a significant portion of assets and liabilities of the Ukrainian subsidiaries are denominated in
the local currency.
The table below shows the closing and average rates of the most relevant currencies of the Group compared to the US dollar.
Average exchange rate
Closing exchange rate
Against US$
As at
31.12.24
As at
31.12.23
Year ended
31.12.24
Year ended
31.12.23
UAH
40.152
36.574
42.039
37.982
EUR
0.924
0.925
0.963
0.906
NOTE 10: NET FINANCE EXPENSE
ACCOUNTING POLICY
Finance expense
Finance expense is expensed as incurred with the exception of interest on loans and borrowings measured at amortised cost, which is recognised in
the consolidated income statement using the effective interest method. Finance expense includes interest on defined benefit plans.
Borrowing costs incurred in respect of the financing of construction or production of a qualifying asset are capitalised up to the date when the asset
is ready for its intended use. See also Note 13 Property, plant and equipment for further details.
Finance income
Finance income comprises interest income on funds invested and the effect of unwinding discounts recorded in previous years. Interest income
is recognised as it accrues using the effective interest method.
Finance expense and income for the year ended 31 December 2024 consisted of the following:
US$000
Notes
Year ended
31.12.24
Year ended
31.12.23
Finance expense
Net interest on defined benefit plans
22
(2,432)
(2,640)
Bank charges
(1,304)
(1,118)
Interest expense on lease liabilities
(191)
(85)
Other finance costs
(1,052)
(859)
Total finance expense
(4,979)
(4,702)
Finance income
Interest income
3,979
4,602
Other finance income
7
(4)
Total finance income
3,986
4,598
Net finance expense
(993)
(104)
With the exception of lease liabilities, the Group does not have any outstanding interest-bearing loans and borrowings, and borrowing costs are
therefore no longer capitalised.
Strategic Report
Corporate Governance
189
Financial Statements
NOTE 11: TAXATION
ACCOUNTING POLICY
Current income tax
Current income taxes are computed based on enacted or substantively enacted local tax rates and laws at the reporting date and the expected
taxable income of the entities of the Group for the respective period.
Current income taxes are recognised as an expense or income in the consolidated income statement unless related to items directly recognised
in other comprehensive income or equity or if related to the initial accounting for a business combination.
Deferred income tax
Deferred income tax is provided using the liability method on temporary differences at the reporting date between the tax bases of assets and
liabilities and their carrying amounts for financial reporting purposes.
Deferred tax liabilities are generally recognised for taxable temporary differences that will become taxable. Deferred income tax assets are
generally recognised for deductible temporary differences, carry forwards of available unused tax credits and tax losses, to the extent that it
is more likely than not that they will be recovered in a future period against taxable profit.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realised or the liability
is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
No deferred assets or liabilities are recognised if the temporary differences arise from the initial recognition of assets and liabilities in a transaction,
other than in a business combination, which affects neither the accounting profit nor taxable profit or loss.
Deferred tax liabilities are recognised in respect of taxable temporary differences associated with investments in subsidiaries, associates
and interests in joint ventures, except where the Group is able to control the reversal of the temporary differences and it is probable that the
temporary difference will not reverse in the foreseeable future. Deferred tax assets in relation to temporary differences on such investments
and interests are recognised to the extent that it is probable that there are sufficient taxable profits available against which the benefits of the
temporary differences can be utilised and that they are expected to reverse in the foreseeable future.
The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that
sufficient taxable profit will be available to allow the deferred income tax assets to be utilised. Additionally, unrecognised deferred income tax
assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the
deferred tax assets to be recovered
Income tax effects on items directly recognised in other comprehensive income or equity are also recognised in other comprehensive income
or equity, respectively.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities
and the deferred taxes relate to the same taxable entity and the same taxation authority.
In terms of BEPS Pillar Two, the Group makes use of the temporary exception issued by the IASB in May 2023 in respect of the accounting
requirements for deferred taxes under IAS 12. As a result, the Group neither recognises nor discloses any information on deferred tax assets and
liabilities related to Pillar Two income taxes in its consolidated financial statements for the financial year 2024, which is consistent with the
application during the comparative financial year 2023.
CRITICAL JUDGEMENTS
Tax legislation
The Group operates across a number of jurisdictions through its value chain and prices its sales between its subsidiaries using international
benchmark prices for comparable products covering product quality and applicable freight costs. Despite two claims received in Ukraine in 2023,
the Group is still of the opinion that the terms of the cross-border transactions between the subsidiaries of the Group comply with the legislation
applicable in the jurisdictions in which it operates.
In connection with two audits initiated by the State Tax Service of Ukraine (“STS”) , formerly known as State Fiscal Service of Ukraine (“SFS”), on
18 February and on 14 June 2021, the Group’s two major subsidiaries in Ukraine received tax audit reports on 13 September 2023 and 8 November
2023, stating potential claims for underpayment of corporate profit taxes in Ukraine of UAH2,162 million (US$51,428 thousand as at 31 December
2024), including fines and penalties, and UAH259 million (US$6,161 thousand as at 31 December 2024), respectively.
The two claims received are in relation to cross-border transactions for iron ore products between the two Ukrainian subsidiaries of the Group and
two subsidiaries of the Group outside of Ukraine during the financial years 2015 to 2017. Based on previous experience, no agreements could be
reached with the tax authorities and the claims are to be heard by the courts in Ukraine. As a result, both subsidiaries filed the objections against
the potential claims stated in the tax audit reports received. After various preparatory meetings in 2024 for both cases, the hearings on the merits
before the court of first instance took place in November 2024, followed by several hearings later in 2024 and in 2025. The hearings are still ongoing
and, as a result, no final decisions have been made for the claims received as at the date of the approval of these consolidated financial statements.
A partially negative verdict of the Supreme Court was received by one of the Group’s subsidiaries in respect of claims made by the STS as a result of
a tax audit of cross-border transactions for the period from 1 September 2013 to 31 December 2015. It is the Group’s position that the STS used the
verdict of the Supreme Court on the claims for the period from 1 September 2013 to 31 December 2015 as a precedent for the claims made for
cross-border transactions during the financial years 2015 to 2017, although the Supreme Court did not appropriately consider relevant technical
grounds and the applicable legislation when ruling on this specific case.
In terms of the claims received, the Group will continue to defend its methodology applied to determine the prices between its subsidiaries in the
Ukrainian courts, but there is a risk that the independence of the judicial system and its immunity from economic and political influences in Ukraine
is not upheld. As at the date of the approval of these consolidated financial statements, no final court decisions have been made for the claims
received by the two Ukrainian subsidiaries of the Group totalling UAH2,162 million (US$51,428 thousand as at 31 December 2024) and UAH259
million (US$6,161 thousand as at 31 December 2024) and, as a consequence, no specific provisions have been recorded as at 31 December 2024,
neither for the two claims received nor for any potential claims for subsequent years, which might also be material, as it is impossible to reasonably
quantify the potential exposure. See Note 30 Commitments, contingencies and legal disputes for further information.
Ferrexpo plc
Annual Report & Accounts 2024
190
Notes to the Consolidated Financial Statements continued
NOTE 11: TAXATION CONTINUED
Separate from the cases mentioned above, on 23 June 2020 Ferrexpo Poltava Mining (“FPM”) received a court ruling which grants access to
information and documents to the State Bureau of Investigation in Ukraine (“SBI”) in relation to the sale of iron ore products to two subsidiaries
of the Group outside of Ukraine during the years 2013 to 2019. FPM cooperated with the SBI and provided the requested information as per the
court ruling to support these investigations. On 20 October 2023, the SBI raided the FPM offices with the intention of collecting documents and
information for ongoing transfer pricing investigations. In October 2024, FPM became aware of a new transfer pricing investigation by the SBI in
connection with the financial years 2014 to 2017, but there had been no actions or any new requests from the SBI as at the date of the approval of
these consolidated financial statements.
In accordance with the provisions of IFRIC 23 Uncertainty over income tax treatments, the Group reviewed and reassessed its exposure in
respect of all uncertain tax positions, including the claims received and for cross-border transactions in subsequent years. It is the position of the
management of the Group and the Group’s external tax advisors that the Ukrainian legislation and regulations on taxation are not always clearly
written and are therefore subject to varying interpretations and inconsistent enforcement by local, regional and national tax authorities.
Considering the uncertainties in terms of the legal and tax framework in Ukraine, the Group will continue to defend its pricing methodology applied
during all the years in the courts in Ukraine. An unfavourable outcome of any future court proceedings would have an adverse impact on the Group’s
total income tax expense and effective tax rate in future periods. See also the Principal Risks section for further information on the Ukraine country
risk.
Except for the matters in Ukraine mentioned above, the Group is not aware of any significant challenges by local tax authorities in any jurisdictions
in which the Group operates. However, the application of international and local tax legislation and regulations can be complex and requires
judgement to assess possible associated risks, particularly in relation to the Group’s cross-border operations and transactions.
The income tax expense for the year ended 31 December 2024 consisted of the following:
US$000
Year ended
31.12.24
Year ended
31.12.23
Current income tax
Current income tax charge
18,784
12,672
Amounts related to previous years
2,374
(1,601)
Total current income tax
21,158
11,071
Deferred income tax
Origination and reversal of temporary differences
8,452
5,281
Total deferred income tax
8,452
5,281
Total income tax expense
29,610
16,352
Tax effects on items recognised in other comprehensive income consisted of the following for the year ended 31 December 2024:
US$000
Notes
Year ended
31.12.24
Year ended
31.12.23
Tax effect of exchange differences arising on translating foreign operations
31
(3,972)
(1,479)
Total income tax effects recognised in other comprehensive credit
(3,972)
(1,479)
Strategic Report
Corporate Governance
191
Financial Statements
NOTE 11: TAXATION CONTINUED
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 for the financial year 2024 was 15.0% before the effect from
the recognised impairment loss of US$71,635 thousand in the consolidated income statement (2023: 11.7% before the effect of the recognised
provisions for legal disputes of US$131,177 thousand). The 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 2024 is as follows:
US$000
Year ended
31.12.24
Year ended
31.12.23
Loss before tax
(20,420)
(68,401)
Notional tax credit computed at the weighted average statutory tax rate of 15.0% (2023: 11.7%)
(3,070)
(8,031)
Derecognition of deferred tax assets1
7,344
10,505
Expenses not deductible for local tax purposes2
3,014
1,721
Income exempted for local tax purposes3
(941)
(1,560)
Effect from non-recognition of deferred taxes4
18,497
23,601
Effect from non-recognition of deferred taxes on current year losses5
1,911
732
Effect of different tax rates6
(1,487)
(8,530)
Withholding tax on interest7
1,528
−
Prior year adjustments to current tax8
2,374
(1,601)
Effect from share of profit from associates9
(416)
67
Other (including translation differences)
856
(552)
Total income tax expense
29,610
16,352
1.
The derecognition in 2024 and 2023 includes the effect from allowances of US$4,418 thousand and US$10,145 thousand, respectively, on deferred tax assets recognised by two of
the Group’s subsidiaries in Ukraine as a result of uncertainties as some of the temporary differences are not expected to unwind in the near future. A further effect is related to the
derecognition of deferred tax assets recognised in 2019 in light of the change of the tax law in Switzerland and the available transitional measures for companies losing the special
tax status. The recognised deferred tax assets are utilised on a straight-line basis with a potential positive effect from the amortisation of the step-up goodwill for tax purposes,
depending on the profitability of the subsidiaries. Whilst the initial recognition is considered of a non-recurring nature, the utilisation occurred for the last time during the financial
year 2024.
2. The effects predominantly relate to expenses not deductible in Ukraine. This effect is expected to be of a recurring nature as a portion of operating expenses in Ukraine is
historically not deductible for tax purposes according to the enacted local tax legislation.
3. The effects in 2024 and 2023 relate to income expected to be tax exempted in the United Kingdom as primarily related to the adoption of IFRS 9. This effect is considered to be of
a recurring nature.
4. The effect in 2024 relates to an impairment loss of US$71,635 thousand and the different treatment of low-grade ore in the amount of US$36,317 thousand in the consolidated
accounts and the local statutory accounts of one of the Group’s subsidiaries in Ukraine. The effect in 2023 relates to the recognition of provisions totalling US$128,050 thousand
for legal disputes in Ukraine. The effect in 2024 is of a potentially recurring nature whereas the one in 2023 is considered to be of a non-recurring nature. In the case that the
situation in Ukraine will significantly improve, there is a chance that the impairments losses recorded will reverse in a future period. Such potential positive effects are expected to
be tax exempted.
5. The effect relates mainly to a subsidiary in Ukraine. Due to the uncertainty in respect of the timing of the subsidiary becoming profitable for local tax purposes, no deferred tax
asset has been recognised. This effect was considered to be of a recurring nature until this subsidiary becomes operative and profitable.
6. The effects relate to the different tax rates applying to different income streams in Swiss subsidiaries as a result of their specific tax status and to those caused by the difference
between the local statutory tax rates and the notional tax rate applied for the tax rate reconciliation, mainly in respect of the significant effects in Ukraine. The effects are of a
recurring nature.
7.
The effect in 2024 relates to effects of interest paid by subsidiaries in Ukraine, which are subject to withholding tax. No such effects in 2023 as no interest payments were possible
under Martial Law imposed in Ukraine. The effect in future years depends on the level of interest payments made.
8. The effect in 2024 primarily relates to additional tax charges in Switzerland related to previous years. The effect in 2023 primarily relates to the reversal of a tax provision recorded
in the accounts of one of the Swiss subsidiaries, which was not required as a result of an impairment loss recorded on the Ukrainian subsidiaries in the statutory accounts and the
tax treatment was not confirmed at the time of the approval of the Group’s consolidated financial statements. This effect is partially offset by withholding tax on a dividend paid
by one subsidiary in 2023, which were declared already in 2022. Similar effects, irrespective of the jurisdiction, can also occur in future years.
9. Share of loss or profit from associates is generally recognised net of taxes of the associates. This effect is of a recurring nature.
The Group operates across a number of jurisdictions and its effective tax rate is subject to various factors outside of the Group’s control.
This includes the volatility in the global iron ore pellet market and foreign exchange rate movements, primarily between the Ukrainian hryvnia and
the US dollar. The effective tax rate of the financial year 2024 and 2023 was 33.7% and 26.1%, respectively, after the elimination of exceptional
items resulting in losses before tax in both financial years and distorting the effective tax rate. For the financial year 2024, the effects from the
impairment loss of US$71,635 thousand and from the extracted low-grade ore of US$36,317 thousand are excluded in order to get a meaningful
effective tax rate, compared to the effect of the recognised provisions for legal disputes in the amount of US$131,177 thousand for the comparative
year ended 31 December 2023. The excluded items are not tax deductible in Ukraine and no associated deferred tax assets have been recognised.
Without excluding these effects, the effective tax rate for the financial year 2024 would have been 145.0% and 23.9%, both negative due to the
losses before tax. Further information is provided in tax rate reconciliation above.
Ferrexpo plc
Annual Report & Accounts 2024
192
Notes to the Consolidated Financial Statements continued
NOTE 11: TAXATION CONTINUED
The net balance of income tax payable changed as follows during the financial year 2024:
US$000
Year ended
31.12.24
Year ended
31.12.23
Opening balance
(12,770)
(15,890)
Charge in the consolidated income statement
(21,158)
(11,071)
Booked through other comprehensive (loss)/income
3,972
1,479
Tax paid
23,278
12,779
Translation differences
143
(67)
Closing balance
(6,535)
(12,770)
The net income tax payable as at 31 December 2024 consisted of the following:
US$000
As at
31.12.24
As at
31.12.23
Income tax receivable balance
7,026
2,432
Income tax payable balance
(13,561)
(15,202)
Closing balance
(6,535)
(12,770)
Temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting
purposes and the recognition of available tax loss carry forwards result in the following deferred income tax assets and liabilities at
31 December 2024:
Consolidated statement
of financial position
Consolidated
income statement
US$000
As at
31.12.24
As at
31.12.23
Year ended
31.12.24
Year ended
31.12.23
Property, plant and equipment
235
6,720
(5,740)
(4,747)
Right-of-use assets
−
−
−
(519)
Intangible assets
168
2,050
(1,883)
(1,905)
Inventories
173
648
(416)
462
Trade and other receivables
1,423
1,794
(199)
742
Defined benefit pension liability
863
608
255
149
Other
454
647
117
550
Tax losses recognised
207
262
(55)
7
Total deferred tax assets/change
3,523
12,729
(7,921)
(5,261)
Thereof netted against deferred tax liabilities
(1,264)
(2,578)
−
−
Total deferred tax assets as per the statement of financial position/change
2,259
10,151
(7,921)
(5,261)
Property, plant and equipment
191
(327)
334
(1,717)
Intangible assets
(465)
(415)
(91)
(47)
Financial assets
(4,186)
(4,127)
(59)
(50)
Lease obligations
−
−
−
592
Inventories
(515)
−
(519)
1,315
Pension assets
(636)
(439)
(196)
(96)
Other
−
−
−
(17)
Total deferred tax liabilities/change
(5,611)
(5,308)
(531)
(20)
Thereof netted against deferred tax assets
1,264
2,578
−
−
Total deferred tax liabilities as per the statement of financial position/change
(4,347)
(2,730)
(531)
(20)
Net deferred tax (liabilities)/assets and net change
(2,088)
7,421
(8,452)
(5,281)
Strategic Report
Corporate Governance
193
Financial Statements
NOTE 11: TAXATION CONTINUED
The movement in the deferred income tax balance is as follows:
US$000
Year ended
31.12.24
Year ended
31.12.23
Opening balance
7,421
13,124
Charge in consolidated income statement
(8,452)
(5,281)
Translation differences
(1,057)
(422)
Closing balance
(2,088)
7,421
The net deferred tax liability balance of US$2,088 thousand (2023: net deferred tax asset of US$7,420 thousand) includes net deferred tax
liabilities totalling US$3,804 thousand (2023: US$2,529 thousand) related to temporary differences of the Group’s corporate entities and
net deferred tax assets totalling US$1,799 thousand (2023: US$9,524 thousand) related to temporary differences of the Group’s two major
subsidiaries in Ukraine. The net deferred tax asset balances of the Ukrainian subsidiaries as at 31 December 2024 and 2023 are after allowances
totalling US$22,956 thousand and US$20,577 thousand, respectively. The allowance increased by US$4,387 thousand as at 31 December
2024 and the allowances recorded in previous years was affected by the devaluation of the local currency in Ukraine. The recoverability of the
deferred tax assets depends on the level of taxable profits realised by the two subsidiaries in future periods and the duration of the unwind of
the temporary differences. Considering the material uncertainty in terms of the Group’s going concern, the relevant period for the recovery of
the recognised net balance of deferred tax assets has been aligned to the period of the going concern assessment. The level of taxable profits
in Ukraine depends on many factors, such as the volatility in the global iron pellet market and foreign exchange rate changes, but also on the
implications of the ongoing war in Ukraine, mainly in terms of a constant power supply and the logistics network available to the Group.
As at 31 December 2024, the Group had available tax loss carry forwards in the amount of US$83,912 thousand (2023: US$71,405 thousand) for
which no deferred tax assets were recognised. Of this balance, US$41,266 thousand (2023: US$42,762 thousand) do not expire and US$40,004
thousand (2023: US$41,513 thousand) are related to losses incurred in Austria and US$1,261 thousand (2023: US$1,249 thousand) in Ukraine.
US$27,981 thousand (2023: US$19,802 thousand) expire after seven years or more, of which US$27,979 thousand (2023: US$19,798 thousand)
are related to losses incurred in Ukraine and US$2 thousand (2023: US$4 thousand) in Hungary. The remaining balance of US$14,665 thousand
(2023: US$8,841 thousand) expires in less than seven years of which US$14,665 thousand (2023: US$8,418 thousand) are related to losses incurred
in Hungary and US$423 thousand in the comparative year 2023 in Ukraine.
No deferred tax liabilities have been recognised on temporary differences in the amount of US$315,170 thousand (2023: US$517,838 thousand)
arising from undistributed profits from subsidiaries as no distributions are planned.
Other temporary differences of US$491,909 thousand have not been recognised as at 31 December 2024 (2023: US$439,125 thousand). Of those
temporary differences, US$67,699 thousand relate to impairments recorded as at the end of the financial year ended 31 December 2024, mainly in
respect of the Group’s non-current operating assets in Ukraine and US$115,694 thousand (2023: US$128,050 thousand) relate to provisions for legal
disputes recorded in Ukraine during the comparative year ended 31 December 2023 and US$175,088 thousand (2023: US$ 186,575 thousand) related
to impairments recorded mainly in Ukraine during the financial year ended 31 December 2022; The remaining balance of US$133,429 thousand
(2023: US$124,500 thousand) relates to temporary differences for which allowances for recognised deferred tax assets have been recorded.
BEPS – Pillar Two
The Group is in the scope of the BEPS Pillar Two Model Rules as the consolidated revenues for the financial years 2024, 2022 and 2021 were above
the threshold set by the OECD rules.
The Group makes use of the temporary exception issued by the IASB in May 2023 in respect of the accounting requirements for deferred taxes
under IAS 12. As a result, the Group does neither recognise nor disclose any information on deferred tax assets and liabilities related to Pillar Two
income taxes in its consolidated financial statements for the financial year 2024, which is consistent with the application during the comparative
financial year 2023.
Based on the BEPS Pillar Two Global Anti-Base Erosion (“GloBE”) Model Rules, the parent company of the Group, Ferrexpo plc with its tax
domicile in Switzerland, is the Ultimate Parent Entity (“UPE”) and, as a result, the enacted legislation in Switzerland is most relevant for the Group.
On 22 December 2023, the Swiss government enacted the Pillar Two income taxes legislation effective from 1 January 2024. The legislation in
Switzerland currently only provides for the Qualifying Domestic Minimum Top-up Tax (“QDMTT”). On 4 September 2024, the Swiss government
decided to implement the Income Inclusion Rule (“IIR”) as of 1 January 2025 and the implementation of the Undertaxed Profits Rule (“UTPR”) is
still postponed.
Although the Group’s effective tax rate for the financial year 2024 is well above the minimum tax rate of 15.0%, there are two jurisdictions where
the Group is operating with enacted statutory tax rates below the minimum tax rate of 15.0% set under the BEPS Pillar Two Model Rules. As a result
of the legislation enacted in Switzerland, the Group’s subsidiaries in Switzerland are potentially subject to the QDMTT for taxable profits from the
financial year 2024, whereas those of the Group’s subsidiary in the U.A.E. (Dubai) are neither subject to IIR in any jurisdiction or QDMTT in the
U.A.E., as not implemented by the relevant tax jurisdictions. The profits of this subsidiary will potentially become subject to taxation under the
IIR in Switzerland as of 1 January 2025, depending on the GloBE Effective Tax Rate (‘GloBE ETR’).
There was no impact from the QDMTT, the IIR and the UTPR under the BEPS Pillar Two GloBE Model Rules on the Group’s income tax expense and
did therefore not have an impact on the Group’s effective tax rate.
Taking also into account the implementation of the IIR in Switzerland and the QDMTT in the U.A.E., the Group’s future effective tax rate, before
any special items included in the profit before tax for the period and the income tax expense, is expected to be in a range of 18.0% to 20.0%.
The Group’s effective tax rate is also dependent on the volatility in the global iron ore pellet market and on foreign exchange rate movements,
primarily between the Ukrainian hryvnia and the US dollar, and any one-off events, such as impairment losses that might not be tax deductible
in some jurisdictions.
Ferrexpo plc
Annual Report & Accounts 2024
194
Notes to the Consolidated Financial Statements continued
NOTE 12: EARNINGS PER SHARE AND DIVIDENDS PAID AND PROPOSED
ACCOUNTING POLICY
Basic number of Ordinary Shares outstanding
The basic number of Ordinary Shares is calculated by reducing the total number of Ordinary Shares in issue by the weighted average of shares
held in treasury and employee benefit trust reserve. The basic earnings per share (“EPS”) are calculated by dividing the net profit for the year
attributable to ordinary equity shareholders of Ferrexpo plc by the weighted average number of Ordinary Shares.
Dilutive potential Ordinary Shares
The dilutive potential Ordinary Shares outstanding are calculated by adjusting the weighted average number of Ordinary Shares in issue on the
assumption of conversion of all potentially dilutive Ordinary Shares. All share awards that are potentially dilutive are considered in the calculation
of diluted earnings per share.
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 at 31 December 2024.
Year ended
31.12.24
Year ended
31.12.23
Loss for the year attributable to equity shareholders – per share in US cents
Basic
(8.51)
(14.41)
Diluted
(8.51)
(14.41)
Loss for the year attributable to equity shareholders – US$000
Basic and diluted loss
(50,046)
(84,775)
Weighted average number of shares – thousands
Basic number of ordinary shares outstanding
588,363
588,274
Effect of dilutive potential ordinary shares
11,061
8,847
Diluted number of ordinary shares outstanding
599,424
597,121
DIVIDENDS PROPOSED AND PAID
Taking into account the provisions of the Companies Act 2006 and relevant thin capitalisation rules, the total available distributable reserves of
Ferrexpo plc is US$77,500 thousand as at 31 December 2024 (2023: US$119,520 thousand). During the comparative year ended 31 December 2023,
the Group announced on 18 January 2024 an interim dividend of 3.3 US cents, which was due for payment to the shareholders on 23 February 2024.
Following subsequent and unexpected events in Ukraine relating to a claim against one of the Group’s Ukrainian subsidiaries (see Note 30
Commitments, contingencies and legal disputes for further information), the Group announced on 20 February 2024 the decision to withdraw the
interim dividend.
Future distributable reserves at the Ferrexpo plc level are also dependent on the payment of dividends by the subsidiaries to the respective parent
companies within the Group. Distributable profits at subsidiaries’ level are also subject to potential impairment losses to be or already recorded in
the respective stand-alone statutory financial statements as a result of war-related uncertainties. Certain Group companies are currently restricted
from paying dividends outside of Ukraine as a result of Ukrainian currency control measures imposed under Martial Law. Furthermore, the
uncertainties related to the political environment and the independence of the legal system and other circumstances facing the Group (see Note 30
Commitments, contingencies and legal disputes) could also have a negative impact on Ferrexpo plc’s ability and potential for future dividend
payments. As at the comparative year ended 31 December 2023, one of the Group’s subsidiaries in Ukraine recognised provisions for legal disputes
totalling US$128,050 thousand, reducing the distributable profits of this subsidiary by this amount. The provisions in Ukrainian hryvnia remained
unchanged as at 31 December 2024, but the amount in US dollars decreased to US$115,694 thousand as a result of the devaluation of the local
currency in Ukraine. Although this subsidiary still has a considerable amount of distributable profits, an outflow of funds in this amount would
have an adverse impact on the Group’s available liquidity for potential future dividend payments. As disclosed in Note 2 Basis of preparation, a
nationalisation of 49.5% of shares in Ferrexpo Poltava Mining (“FPM”) or a transfer of 49.5% of the corporate rights in FPM to Ukraine’s Asset
Recovery and Management Agency (“ARMA”) for management of these corporate rights will have an impact on the equity attributable to the
shareholders of Ferrexpo plc and its future distributable reserves.
US$000
Year ended
31.12.24
Dividends paid during the year
Dividends on vested awards
46
Total dividends paid during the year
46
US$000
Year ended
31.12.23
Dividends paid during the year
Dividends on vested awards
456
Total dividends paid during the year
456
Strategic Report
Corporate Governance
195
Financial Statements
NOTE 12: EARNINGS PER SHARE AND DIVIDENDS PAID AND PROPOSED CONTINUED
Dividends paid during the financial years 2024 and 2023 related to the Group’s share-based scheme. Further information is provided in the
remuneration report.
Although accounts are published in US dollars and dividends are declared in US dollars, the shares are denominated in UK pounds sterling and
dividends are therefore paid in UK pounds sterling.
NOTE 13: PROPERTY, PLANT AND EQUIPMENT
ACCOUNTING POLICY
Property, plant and equipment
Property, plant and equipment is stated at cost, net of accumulated depreciation and accumulated impairment losses. Such cost includes the
cost of replacing part of the property, plant and equipment and borrowing costs for qualifying assets (see below) if the recognition criteria are met.
The cost of self-constructed assets includes the cost of materials, direct labour and an appropriate proportion of production overheads.
Major spare parts, stand-by and servicing equipment qualify as property, plant and equipment when they are expected to be used during more
than one period. Expenditure incurred after the assets have been put into operation, such as repairs and maintenance and overhaul costs, are
charged to the consolidated income statement in the period the costs are incurred unless it can be demonstrated that the expenditure results in
future economic benefits, when the expenditure is capitalised as an additional cost.
Upon recognition, items of property, plant and equipment are divided into components, which represent items with a significant value that have
different useful lives. Assets included in property, plant and equipment are depreciated over their estimated useful life taking into account their
own physical life limitations and the present assessment of economically recoverable reserves of the mine property at which the assets are located.
The remaining useful lives for major assets are reassessed on a regular basis, but at least annually. Mining assets are depreciated using the unit of
production method. Changes in expected resources, which affect the unit of production calculations, are accounted for prospectively.
Except for mining assets, which are depreciated using the unit of production method, depreciation is calculated on a straight-line basis over
the estimated useful life of the asset, as follows:
• Buildings:
20–50 years
• Vessels:
8–40 years
• Plant and equipment:
3–15 years
• Vehicles:
7–15 years
• Fixtures and fittings:
2.5–10 years
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from
the continued use of the asset. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal
proceeds and the carrying amount of the item) is included in the consolidated income statement in the period the item is derecognised.
Assets in the course of construction are initially recognised in assets under construction. Assets under construction are not depreciated.
On completion of the asset and when available for use, the cost of construction is transferred to the appropriate asset category in property,
plant and equipment and depreciation commences.
Freehold land is not depreciated.
Deferred and capitalised stripping costs
Rock, soil and other waste materials are typically to be removed to access an ore body, which is known as stripping activity. Stripping work
comprises overburden removal at pre-production, mine extension and production stages.
Stripping costs are deferred and capitalised if related to gaining improved access to an identified component of an ore body to be mined in future
periods. The capitalised amount is determined based on the volume of waste extracted, compared with expected ore volume in the identified
component of the ore body.
Pre-production stripping costs incurred in the development of a component of a mine before commercial production commences are capitalised as
part of assets under construction. After the commencement of commercial production, the respective capitalised pre‑production stripping costs
are transferred to mining assets and depreciated over the life of the respective component of the ore body on a unit of production (“UOP”) basis.
Production stripping costs are generally charged to the consolidated income statement as variable production costs unless these costs are related
to gaining improved access to an identified component of the ore body to be mined in future periods. Such production stripping costs
are capitalised within mining assets provided all the following conditions are met:
• it is probable that the future economic benefit associated with the stripping activity will be realised;
• the component of the ore body for which access has been improved can be identified; and
• the costs relating to the stripping activity associated with the improved access can be reliably measured.
Once the commercial production of the specific component of the ore body commences, the capitalised production stripping costs are depreciated
on a UOP basis over the life of the respective identified component.
Mining assets
Any capitalised stripping activities, either of a pre-production or production nature, are reclassified to mining assets at the point of time when
the extraction of the ore body of the specific component starts. Mining assets are depreciated using the UOP method based on the estimated
economically recoverable reserves to which they relate.
Ferrexpo plc
Annual Report & Accounts 2024
196
Notes to the Consolidated Financial Statements continued
NOTE 13: PROPERTY, PLANT AND EQUIPMENT CONTINUED
Exploration and evaluation assets
Costs incurred in relation to the exploration and evaluation of potential iron ore deposits are capitalised and classified as tangible or intangible
assets depending on the nature of the expenditures. Costs associated with exploratory drilling, researching and analysing of exploration data
and costs of pre-feasibility studies are included in tangible assets whereas those associated with the acquisition of licences are included
in intangible assets.
Capitalised exploration and evaluation expenditures are carried forward as an asset as long as these costs are expected to be recouped in full
through successful development and exploration in a future period.
Exploration and evaluation assets are measured at cost and are neither amortised nor depreciated but monitored for indications of impairment.
To the extent that the capitalised expenditures are not expected to be recouped, the excess is fully provided for in the financial year in which this
is determined.
Upon reaching the development stage, exploration and evaluation assets are either transferred to assets under construction or other intangible
assets, if those costs were associated with the acquisition of licences.
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time
to get ready for its intended use or sale (“qualifying asset”) are capitalised as part of the cost of the respective asset. All other borrowing costs
are expensed in the period they occur. Borrowing costs consist of interest and other costs incurred in connection with the borrowing of the funds.
In the case of general borrowings used to fund the acquisition or construction of a qualifying asset, the borrowing costs to be capitalised are
calculated based on a weighted average interest rate applicable to the relevant general borrowings of the Group during a specific period.
Impairment testing
Property, plant and equipment is considered to be part of a single cash-generating unit (“CGU”). The recoverable amount of the CGU is determined
to be the fair value less cost of disposal. The Group assesses at each reporting date whether there are indications that assets may be impaired or
previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the assets’
recoverable amounts. If the carrying amount of an asset exceeds its recoverable amount, the asset is considered to be impaired and is written
down to its recoverable amount. Impairment losses are recognised in the consolidated income statement.
A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable
amount since the last impairment loss was recognised. In this case, the carrying amount of the asset is increased to its recoverable amount but not
exceeding the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in
prior years. Such reversal is recognised in the consolidated income statement and the basis for future depreciation is adjusted accordingly.
CRITICAL ESTIMATES
As at the date of the approval of these consolidated financial statements, the war in Ukraine is still ongoing and the duration is difficult to predict.
During the financial year 2024, the Group continued to demonstrate resilience and flexibility from an operating perspective, although the ongoing
war continues to affect its financial results.
The situation in Ukraine is unpredictable and continues to require the Group to be extremely flexible, as mining operations and production have to
be adapted to the prevailing conditions. The regained access to Ukrainian Black Sea ports enabled the Group to expand its sales activities and
increase its production by 66% to the highest level since the full-scale invasion of Ukraine in February 2022. While the Group’s cash flow generation
benefited from the higher production and sales volumes in 2024, the pressure on prices for iron ore products and higher prices for input material as
a result of the ongoing war are expected to adversely affect the Group’s cash flow generation in the near future.
The Group’s impairment test is based on cash flow projections over the remaining estimated lives of the GPL and the Yerystivske deposits, which
are expected to expire in 2058 and 2048, respectively, according to the current approved mine plans. The cash flow projection is based on a
financial long-term model approved by senior management and the effects of expected future mine life extension programmes are take into
account the estimated future production volumes. Several significant judgements and estimates are used when preparing the financial long-term
model of the Group, which are, together with the key assumptions used, reviewed by the Audit Committee with specific consideration given to the
realistically plausible production volumes in light of the current situation in the country, sales price and production cost forecasts as well as the
discount rate used to discount the cash flows.
The financial long-term model was updated in January 2025 using management’s best estimate of reasonably conservative key assumptions,
taking also into account the current circumstances the Group has to operate in. In terms of the key assumptions used, an average iron ore price of
US$107 per tonne of 65% Fe fines CFR North China was used in the assumptions for the cash flow projection for the next five years. When assessing
its expected future long-term selling price, the Group considers external and internal analysis of the short-term and longer-term supply and demand
dynamics on the international market for iron ore products as well as more specific local supply and demand balances affecting its major customers.
The level of the Group’s production remains predominantly dependent on a constant power supply and the logistics network available to the Group
as well as other potential adverse effects on the Group’s operation due to the ongoing war. As a result, the production capacity used for the
base-case cash flow projection is expected to be approximately 55% of the pre-war level for the financial year 2025, before an increase to
approximately 90% in 2026 and an expected recovery to pre-war levels in 2027. There is no perpetual growth rate applied for the cash flow
projections beyond the last year covered by the Group’s long-term model. The Group’s expected major cost components, such as production and
shipping costs, are determined taking into account local inflationary pressure, major exchange rate developments between the Ukrainian hryvnia
and the US dollar, the short-term and longer-term trends in energy supply and demand and the expected movements in steel-related commodity
prices, which could have a material effect on the cost of certain production input materials.
Strategic Report
Corporate Governance
197
Financial Statements
NOTE 13: PROPERTY, PLANT AND EQUIPMENT CONTINUED
An average devaluation of the hryvnia of 4.3% per year was assumed over the next five years in the Group’s cash flow projection, with the expected
local inflation having an offsetting effect.
The key assumptions used for the preparation of the Group’s long-term model are:
Key assumptions
Basis
Future sales and production
Proved and probable reserves and available logistics capacity and power supply
Commodity prices
Contract prices and longer-term price estimates
Capital expenditures
Future sustaining capital expenditures
Cost of raw materials and other production/distribution costs
Expected future cost of production
Exchange rates
Longer-term predictions of market exchange rates
Nominal pre-tax discount rate
Cost of capital risk adjusted for the resource concerned
The outcome of the Group’s impairment test is predominantly dependent on the forecasted cash flow generation and the nominal pre-tax discount
rate to be applied. The WACC of 23.1% (31 December 2023: 23.0%) is still significantly higher than the pre-war WACC of 13.8% as at 31 December
2021 and reflects the current situation in the country as underlying macro-economic data is still adversely affected by the war in Ukraine.
According to the base case of the Group’s impairment test prepared for the 2024 year end accounts, the value in use of the Group’s single cash-
generating unit’s operating non-current assets, including property, plant and equipment as well as other intangibles assets and other non-current
assets, was US$71,170 thousand below the carrying value of these assets, reflecting the impairment loss recorded in this amount as at 31 December
2024 and allocated to various asset categories within property, plant and equipment. The key assumptions in respect of production and sales
volumes, and of production costs, are largely dependent on the easing of the war-related risks facing the Group’s business in Ukraine, and therefore
a wide range of alternative outcomes are possible, reflecting a high level of uncertainty.
A delay of the recovery of the production and sales volumes to a pre-war level by another year, with all other assumptions remaining unchanged,
would reduce the value in use of the Group’s non-current operating assets by approximately US$339,200 thousand. A reduction of the realised
price by 10% in 2025 and 5% for each year until 2048 would reduce the value in use by approximately US$227,600 thousand and a decrease of
the production and sales volume by 10%, combined with an increase of the production costs by 5%, again for the entire period of the assessment,
would reduce the value in use by approximately US$270,900 thousand whereas every 1.0% increase of the nominal pre-tax discount rate would
impact the value in use by approximately US$43,100 thousand, with all other assumptions remaining unchanged.
The impairment loss of US$71,170 thousand is in addition to the impairment loss of US$254,477 thousand recorded during the financial year 2022,
of which an amount of US$219,931 thousand was allocated to various asset categories within property, plant and equipment. The impairment losses
recorded will be re-assessed at the end of any future reporting periods.
If there are positive developments in the Group’s future cash flow generation and the relevant macro-economic data, the impairment loss or a
portion of it might reverse in future periods. Conversely, an adverse change in the above key assumptions might further reduce the value in use of
the Group’s operating non-current assets.
As disclosed in Note 2 Basis of preparation and Note 30 Commitments, contingencies and legal disputes, the Group announced on 29 January 2024
that a Ukrainian court of appeal has confirmed a claim against Ferrexpo Poltava Mining (“FPM”) in the amount of UAH4,727 million (US$112,457
thousand as at 31 December 2024), in respect of contested sureties. FPM appealed this decision to the Supreme Court of Ukraine and the court
proceedings were continued during the financial year 2024 and the first months of 2025. Despite the fact that it was management’s view that
FPM has compelling arguments to defend its position in the Supreme Court of Ukraine, given the magnitude of this specific claim and the
underdeveloped and fragile judicial system in Ukraine, the Group recorded a full provision for this claim as at the end of the comparative year ended
31 December 2023 in accordance with IAS 37 Provisions, contingent liabilities and contingent assets. If the ruling of the Supreme Court is not in
favour of FPM, there is a risk that some of the Group’s property, plant and equipment will be seized or subject to a forced sales process as part
of the enforcement proceedings. Although the Group has recognised a provision for the full amount of the contested sureties claim, there is a
risk that any assets subject to seizure or a forced sales process are valued at an amount which is different than their current carrying values as at
31 December 2024. Note 2 Basis of preparation provides further information in terms of the possible implications on the Group’s ability to continue
as a going concern.
Non-adjusting post balance sheet events
As disclosed in Note 35 Events after the reporting period, the sanctions imposed on Mr Zhevago are personal in nature and have not been imposed
on any member of the Ferrexpo Group. However, a tax authority may apply an adverse interpretation of sanctions rules and no longer make VAT
refunds to any the Group’s subsidiaries in Ukraine. It is likely that the Group’s subsidiaries in Ukraine will not receive any VAT refunds until these
sanctions against Mr Zhevago are lifted. As a consequence, the Group adjusted its long-term model to reflect the lower cash flow generation
caused by potential absence of VAT refunds in Ukraine, which would in turn negatively impact the carrying value of the Group’s assets in future
periods. This event is treated as a non-adjusting post balance sheet event and Note 35 Events after the reporting period provides further
information on the possible financial impact.
In addition, as disclosed in Note 35 Events after the reporting period, there is a risk of nationalisation of 49.5% of shares in FPM and certain of its
assets, which could potentially affect the availability of FPM’s property, plant and equipment and, as a consequence, the carrying value of these
assets included in the Group’s consolidated financial statements. This event is treated as a non-adjusting post balance sheet event and was not
considered in the Group’s impairment test as at 31 December 2024. Due to the lack of information available at the date of the approval of these
consolidated financial statements, it is impossible to estimate the possible financial impact in future periods.
Ferrexpo plc
Annual Report & Accounts 2024
198
Notes to the Consolidated Financial Statements continued
NOTE 13: PROPERTY, PLANT AND EQUIPMENT CONTINUED
As at 31 December 2024, property, plant and equipment comprised:
US$000
Exploration
and
evaluation
Land
Mining
assets
Buildings
and tailings
dam
Vessels
Plant and
equipment
Vehicles
Fixtures and
fittings
Assets
under
construction
Total
Cost:
At 1 January 2023
1,499
8,068
207,615
217,206
132,577
387,030
225,863
8,868
413,193 1,601,919
Additions
−
171
−
118
−
1,416
2,901
48
107,439
112,093
Transfers
−
73
121,058
49,253
2,439
29,168
2,749
174
(204,914)
−
Disposals
−
−
(2,453)
(1,714)
5
(1,000)
(162)
(94)
(1,366)
(6,784)
Translation differences
(56)
(306)
(12,329)
(9,240)
2,870
(13,577)
(6,484)
(233)
(12,237)
(51,592)
At 31 December 2023
1,443
8,006
313,891
255,623
137,891
403,037
224,867
8,763
302,115 1,655,636
Additions
−
86
(157)
29
636
617
1,173
44
119,348
121,776
Transfers
−
99
−
17,131
4,358
22,548
3,624
162
(47,922)
−
Disposals
−
−
−
(261)
(107)
(620)
(33)
(44)
(11,950)
(13,015)
Translation differences
(139)
(776)
(30,289)
(24,811)
(5,918)
(35,287)
(16,370)
(669)
(33,290)
(147,549)
At 31 December 2024
1,304
7,415
283,445
247,711
136,860
390,295
213,261
8,256
328,301 1,616,848
Accumulated depreciation and impairment:
At 1 January 2023
−
36
89,578
118,593
89,130
247,228
168,156
5,650
75,687
794,058
Depreciation charge
−
3
1,554
9,271
4,433
28,302
14,509
816
−
58,888
Disposals
−
(16)
−
(1,593)
−
(733)
(132)
(90)
(4)
(2,568)
Write-offs and impairments
−
−
−
262
−
28
248
(2)
1,361
1,897
Transfers of impairments
−
−
21,576
8,951
−
5,388
532
35
(36,482)
−
Translation differences
−
−
(3,890)
(4,891)
1,614
(8,766)
(4,712)
(144)
(1,884)
(22,673)
At 31 December 2023
−
23
108,818
130,593
95,177
271,447
178,601
6,265
38,678
829,602
Depreciation charge
−
3
8,802
14,112
4,577
23,922
7,162
679
−
59,257
Disposals
−
−
−
(172)
(71)
(573)
(21)
(42)
−
(879)
Write-offs and impairments
−
191
15,383
9,847
3,471
10,008
3,110
−
30,074
72,084
Transfers of impairments
−
−
−
3,063
−
4,131
855
28
(8,077)
−
Translation differences
−
(3)
(11,127)
(13,320)
(3,457)
(23,009)
(12,190)
(462)
(3,566)
(67,134)
At 31 December 2024
−
214
121,876
144,123
99,697
285,926
177,517
6,468
57,109
892,930
Net book value:
At 31 December 2023
1,443
7,983
205,073
125,030
42,714
131,590
46,266
2,498
263,437
826,034
At 31 December 2024
1,304
7,201
161,569
103,588
37,163
104,369
35,744
1,788
271,192
723,918
Amortisation profile (in
years)
n/a
n/a
UOP
20 to 50
8 to 40
3 to 15
7 to 15
2.5 to 10
n/a
Assets under construction consist of ongoing capital projects amounting to US$232,773 thousand (2023: US$227,206 thousand) and capitalised
pre-production stripping costs of US$38,420 thousand (2023: US$36,231 thousand) for components of ore bodies expected to be put into
operation in future periods only. Once the extraction of ore commences in relation to these ore bodies, the capitalised stripping costs are
transferred to mining assets and the depreciation commences.
Deferred pre-production stripping costs in the amount of US$214,682 thousand relate to components of the ore bodies put into operation and are
included in mining assets (2023: US$243,767 thousand). No production stripping costs are capitalised as of this point in time.
Property, plant and equipment includes a total of capitalised borrowing costs on qualifying assets of US$25,073 thousand (2023: US$32,110
thousand). With the exception of lease liabilities, the Group does not have any outstanding interest-bearing loans and borrowings, and borrowing
costs are therefore no longer capitalised.
The gross value of fully depreciated property, plant and equipment that is still in use is US$165,746 thousand (2023: US$146,917 thousand).
See Note 2 Basis of preparation in respect of the impact of climate change on the Group’s financial statements.
Strategic Report
Corporate Governance
199
Financial Statements
NOTE 14: LEASES
ACCOUNTING POLICY
The Group leases buildings and land not used for the direct extraction of ore. The leases for land used for the extraction of ore are not within the
scope of IFRS 16 according to the scope exemptions set out in the standard.
The right-of-use assets and corresponding lease liabilities recognised as at 31 December 2024 primarily refer to long-term rental contracts for
several of the Group’s office premises with rental periods of five to ten years, leased equipment and land not used for the direct extraction of ore.
The lease agreements for land in Ukraine are with the Ukrainian government and have typically a duration of up to 49 years requiring land lease
payments in the form of rental taxes based on annually determined rates by the government. Consequently, related right-of-use assets and lease
liabilities are recognised over a lease term of 12 months only, reflecting the period over which substantially fixed lease payments are expected.
Beyond this period, payments are subject to non-market driven changes in either the normative value of land and/or in the rental tax rate and
are disclosed as commitments as they cannot be considered in-substance fixed payments or as variable lease payments that depend on an index
or a rate.
Right-of-use assets
The right-of-use asset is recognised at the commencement date of the lease (when the asset is ready for use) and initially measured at cost.
The cost includes the balance of the lease liability recognised, initial direct costs and lease payments made at or before the commencement date.
In subsequent periods, the value of the right-of-use assets is adjusted for accumulated depreciation, impairment losses and remeasurement
of the lease liability, if any. The depreciation is on a straight-line basis over the shorter of the estimated useful life of the underlying asset and
the lease term.
Payments for short-term leases or leases for assets of a low value are recognised as an expense on a systematic basis over the lease term.
Lease liabilities
At the commencement date, lease liabilities are measured at the net present value of the remaining lease payments, discounted using the interest
rate implicit in the lease or, when not available, the incremental borrowing rate computed for a group of leases with similar characteristics as
regards to type of asset, lease term, contract currency and economic environment.
The carrying amount of the lease liabilities is subsequently increased to reflect the interest on the lease liability and decreased by the lease
payments made during the period. Lease payments are split between principal elements and interest and are allocated to net cash flows from
financing activities and operating activities, respectively. The carrying amount is subject to remeasurement in subsequent periods to reflect any
lease modifications.
Commitments
Future minimum rental payments
These commitments relate to leases under the scope of IFRS 16 to which the lessee is committed but not commenced.
Future commitments for contingent rental payments
These commitments include future cash flows dependent on non-fixed rates related to the long-term portion of leases of land not used for the
direct extraction of ore and accounted for under IFRS 16, whereas the short-term portion is recognised as a lease liability in the statement of
financial position.
As at 31 December 2024, the right-of-use assets comprised:
US$000
Land
Buildings and
tailings dam
Total
Net book value:
At 1 January 2023
4,375
1,967
6,342
Additions
5,185
639
5,824
Depreciation
(4,401)
(729)
(5,130)
Translation differences
(184)
−
(184)
At 31 December 2023
4,975
1,877
6,852
Additions
3,878
296
4,184
Depreciation
(4,473)
(1,100)
(5,582)
Translation differences
(424)
−
(424)
At 31 December 2024
3,956
1,073
5,029
Leased assets and assets under hire purchase contracts are pledged as security for the related finance leases and hire purchase liabilities.
Ferrexpo plc
Annual Report & Accounts 2024
200
Notes to the Consolidated Financial Statements continued
NOTE 14: LEASES CONTINUED
As at 31 December 2024, the carrying amount of the lease liabilities consisted of the following:
US$000
Notes
Year ended
31.12.24
Year ended
31.12.23
Current
26
4,665
5,939
Non-current
26
419
1,009
The total cash outflow for leases falling under the scope of IFRS 16 Leases during the year ended 31 December 2024 was US$5,755 thousand
(2023: US$5,562 thousand). During the year ended 31 December 2024, US$722 thousand was recognised as an expense in the consolidated
income statement in respect of short-term leases with a corresponding impact on the net cash flows from operating activities
(2023: US$740 thousand). Furthermore, interest expense on lease liabilities in the amount of US$191 thousand was recognised in the
consolidated income statement during the year ended 31 December 2024 (2023: US$85 thousand).
Lease-related commitments for future contingent rental payments were US$112,780 thousand as at 31 December 2024 (2023: US$118,124
thousand).
NOTE 15: INTANGIBLE ASSETS
ACCOUNTING POLICY
Goodwill
If the cost of acquisition in a business combination exceeds the identifiable net assets attributable to the Group, the difference is considered
as purchased goodwill, which is not amortised. After initial recognition, goodwill is measured at cost less any accumulated impairment losses.
For the detailed accounting policy on impairment testing see Note 13 Property, plant and equipment.
IMPAIRMENT TESTING
The goodwill acquired through business combinations in previous periods has been allocated for impairment purposes to a single cash-generating
unit, as the Group only has one operating segment, being the production and sale of iron ore products. This represents the lowest level within the
Group at which goodwill is monitored for internal management purposes. See Note 13 Property, plant and equipment for information on key
assumptions used when preparing the Group’s long-term model used for the impairment test.
Goodwill is subject to an annual impairment review and a further review is made when indicators of impairment arise following the initial review.
An impairment loss recognised for goodwill is never reversed in a subsequent period. In the case that the identifiable net assets attributable to the
Group exceed the cost of acquisition, the difference is recognised in profit and loss as a gain on bargain purchase. For each business combination,
the Group measures the non-controlling interest in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net
assets. If the initial accounting for a business combination cannot be completed by the end of the reporting period in which the combination occurs,
only provisional amounts are reported, which can be adjusted during the measurement period of 12 months after acquisition date.
Exploration and evaluation assets
See the policy disclosed in Note 13 Property, plant and equipment.
Patents and licenses, computer software and other intangible assets
Patents and licenses, computer software and other intangible assets acquired separately are measured on initial recognition at cost and the
useful lives are assessed as either finite or indefinite. Following the initial recognition, the intangible assets are carried at cost less accumulated
amortisation and accumulated impairment losses. If amortised, the intangible assets are amortised on a straight-line basis over the estimated
useful life of the asset, ranging between one and three years. Capitalised mineral licences are amortised on a unit of production basis.
The cost of other intangible assets acquired in a business combination is its fair value as at the date of acquisition.
Strategic Report
Corporate Governance
201
Financial Statements
NOTE 15: INTANGIBLE ASSETS CONTINUED
As at 31 December 2024, intangible assets comprised:
US$000
Exploration and
evaluation
Patents and
licences
Computer
software
Assets
in progress
Total
Cost:
At 1 January 2023
3,634
3,934
9,683
497
45,088
Additions
−
−
5
116
121
Disposals
−
(11)
(21)
(386)
(418)
Transfers
−
8
47
(55)
−
Translation differences
(138)
(124)
(268)
(10)
(1,322)
At 31 December 2023
3,496
3,807
9,446
162
43,469
Additions
−
−
5
687
692
Disposals
−
(3)
(131)
(36)
(170)
Transfers
−
−
584
(583)
1
Translation differences
(345)
(355)
(887)
(26)
(3,572)
At 31 December 2024
3,151
3,449
9,017
204
40,420
Accumulated amortisation and impairment:
At 1 January 2023
1,242
1,717
6,540
−
36,839
Amortisation charge
−
284
1,091
−
1,375
Write-off and impairments
−
−
−
−
−
Disposals
−
(13)
(26)
−
(39)
Translation differences
(50)
(52)
(190)
−
(1,074)
At 31 December 2023
1,192
1,936
7,415
−
37,101
Amortisation charge
−
224
665
−
889
Write-off and impairments
−
−
−
−
−
Disposals
−
(1)
(164)
−
(165)
Translation differences
(123)
(186)
(705)
−
(2,973)
At 31 December 2024
1,069
1,973
7,211
−
34,852
Net book value:
At 31 December 2023
2,304
1,871
2,031
162
6,368
At 31 December 2024
2,082
1,476
1,806
204
5,568
Amortisation profile (in years)
n/a
2 to 10
2 to 5
n/a
IMPAIRMENT TESTING
The impairment losses recorded during the financial year 2022 as a result of the war in Ukraine will be re-assessed at the end of any future reporting
periods. If there are positive developments in the Group’s future cash flow generation and the relevant macro-economic data, the impairment loss
or a portion of it might reverse in future periods. Conversely, an adverse change in the above key assumptions might further reduce the value in use
of the Group’s operating non-current assets.
The impairment test performed as at 31 December 2024 resulted in an additional impairment loss of US$71,170 thousand, which was fully allocated
to property, plant and equipment. An impairment loss of US$29,103 thousand was recorded during the financial year 2022, of which US$27,340
thousand related to an existing goodwill from the acquisition of one of the Group’s subsidiaries in Ukraine. There is no partial or full reversal of the
impairment loss to be recorded as at 31 December 2024. The impairment loss recognised for goodwill is not subject to a reversal in a subsequent
period.
SENSITIVITY TO CHANGES IN ASSUMPTIONS
See Note 13 Property, plant and equipment on pages 196 and 197 in terms of the impact of changes in key assumptions on the impairment in future
periods.
Ferrexpo plc
Annual Report & Accounts 2024
202
Notes to the Consolidated Financial Statements continued
NOTE 16: OTHER NON-CURRENT ASSETS
As at 31 December 2024, other non-current assets comprised:
US$000
As at
31.12.24
As at
31.12.23
Prepayments for property, plant and equipment
27,221
32,871
Other non-current assets
5,235
5,233
Total other non-current assets
32,456
38,104
Prepayments for property, plant and equipment net of a total impairment loss of US$5,443 thousand, which is the result of a proportional
allocation of the total impairment loss to this asset category during the financial year 2022. This impairment was caused by the Russian invasion into
Ukraine in February 2022, resulting in a significant lower cash flow generation of the Group. The impairment test performed as at 31 December
2024 resulted in an additional impairment loss of US$71,170 thousand, which was fully allocated to property, plant and equipment.
Other non-current assets include a prepayment of US$5,000 thousand in relation to an investment in a joint venture. The closing of this transaction
is only possible once the Martial Law in Ukraine is lifted.
NOTE 17: INVENTORIES
ACCOUNTING POLICY
Inventories are stated at the lower of cost and net realisable value.
Costs incurred in bringing each product to its present location and condition are accounted for as follows:
• Raw materials – at cost on a first-in, first-out basis.
• Finished goods and work in progress – at cost of direct materials and labour and a proportion of manufacturing overheads based on normal
operating capacity but excluding borrowing costs.
• Low-grade and weathered ore – at cost, if lower than net realisable value.
The net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion (conversion into pellets
or concentrate) and the estimated costs necessary to sell the product or goods.
Major spare parts and servicing equipment that meet the definition of property, plant and equipment are, in accordance with IAS 16, included
in property, plant and equipment and not in inventory.
At 31 December 2024, inventories comprised:
US$000
As at
31.12.24
As at
31.12.23
Raw materials and consumables
43,540
47,302
Spare parts
85,076
88,000
Finished ore pellets
49,740
45,040
Work in progress
12,115
18,844
Other
2,037
2,243
Total inventories – current
192,508
201,429
Weathered ore
5,185
5,883
Total inventories – non-current
5,185
5,883
Total inventories
197,693
207,312
Historically, inventories classified as non-current comprised low-grade and weathered ore that were, based on the Group’s processing plans, not
planned to be processed within the next 12 months. The balance of US$5,185 thousand as at 31 December 2024 is net of impairment losses of
US$231,111 thousand recorded as of 31 December 2021, as it was not possible to reliably predict when required additional processing capabilities
will be available to specifically process the stockpiled low-grade and weathered ore. The stockpiled low-grade ore is still considered as an asset for
the Group and a portion of or all of the impairment losses might reverse in the future, once changed facts and circumstances can be considered in
the net realisable value test of this asset. Due to the ongoing war in Ukraine, it is currently impossible to accelerate the commenced engineering
studies for the exploration of possible options for new processing capabilities required to specifically process low-grade ore, so that there are still
no changes in facts and circumstances to be considered as at 31 December 2024.
During the financial year ended 31 December 2024, 3,684 thousand tons of low-grade ore in the amount of US$36,317 thousand was extracted
and stockpiled, but directly recognised in the consolidated financial statements, included in cost of sales, due to the uncertainties in respect of the
expected time of processing. No such ore was extracted during the comparative period ended 31 December 2023 as a result of the lower mining
activity due to the ongoing war and the reduced operating activity.
As disclosed in Note 2 Basis of preparation and Note 30 Commitments, contingencies and legal disputes, there is a risk that some of the Group’s
inventories are seized or subject to a forced sales process, if enforcement procedures in respect of an ongoing legal dispute commence. Although
the Group has recognised a provision for the full amount of the contested sureties claim during the comparative year ended 31 December 2023,
there is a risk that the future net realisable value of potentially seized finished goods subject to a potential seizure or forced sales process is
different than the value recognised at cost in the consolidated financial statements as at 31 December 2024.
Strategic Report
Corporate Governance
203
Financial Statements
NOTE 18: TRADE AND OTHER RECEIVABLES
ACCOUNTING POLICY
Trade receivables are non-derivative financial assets initially measured at fair value. Due to their short maturity, the fair value of trade receivables
approximates their carrying amount, which is stated at original invoice amount less an allowance for expected credit losses. The Group applies the
simplified approach to measure the loss allowance at an amount equal to the lifetime expected credit losses of its customers based on publicly
available default risk ratings adjusted for current observable circumstances, forecast information and past history of credit losses. All of the Group’s
receivable balances are classified as current based on the agreed terms and conditions and the Group has no history of credit losses. Therefore, the
Group measures the lifetime expected credit losses of its customers using the 12-month probability of default. Individual balances are written off
when management deems that there is no possibility of recovery. Fully written off trade and other receivable balances could still be subject to
enforcement activities.
Trade receivables include provisionally priced sales which are open at the end of the reporting period. Certain contracts have embedded provisional
pricing mechanisms, which have the character of commodity derivatives that are carried at fair value through profit and loss. For further information
on the Group’s contracts with customers see Note 6 Revenue. Revenues on these contracts are initially recognised at the estimated fair value of
consideration receivable, based on the contractual price, and adjusted at the end of each subsequent reporting period on the basis of changes in
iron ore prices and the specific underlying contract terms. Final prices based on the relevant index are normally known within 60 days after the
reporting period. Further information on the fair value of the embedded provisional pricing mechanism at 31 December 2024 is disclosed in Note 27
Financial instruments.
At 31 December 2024, trade and other receivables comprised:
US$000
As at
31.12.24
As at
31.12.23
Trade receivables
32,274
76,586
Other receivables
17,841
18,765
Expected credit loss allowance
(10,323)
(13,030)
Total trade and other receivables
39,792
82,321
As trade receivables are non-interest bearing and final invoices are generally settled within 90 days after delivery, contracts with customers are not
deemed to contain a significant financing component.
Trade receivables at 31 December 2024 include US$2,571 thousand (2023: US$3,196 thousand) owed by related parties. The detailed related party
disclosures are made in Note 34 Related party disclosures.
The movement in the expected credit loss allowance for trade and other receivables during the year under review was:
US$000
Year ended
31.12.24
Year ended
31.12.23
Opening balance
13,030
8,698
Increase
4,506
4,585
Release
(6,237)
(182)
Translation differences
(976)
(71)
Closing balance
10,323
13,030
During the financial years 2024 and 2023, there was no movement in the expected credit loss allowance for trade and other receivables relating to
lifetime expected credit losses and credit impaired assets.
The following table shows the Group’s receivables at the reporting date that are subject to credit risk using a provision matrix:
As at 31.12.24
Days past due
US$000
Current
Less than 45 days
45 to 90 days
Over 90 days
Total
Expected loss rate
2.0%
22.8%
25.2%
33.4%
20.6%
Trade receivables – gross carrying amount
18,838
2,770
693
9,973
32,274
Other receivables – gross carrying amount
428
1
29
17,382
17,841
Expected credit loss allowance
382
631
182
9,128
10,323
The expected credit loss allowance decreased due to the lower outstanding receivable balances as at 31 December 2024 and the generally lower
default risk ratings of the Group’s customers. The expected loss rate is however affected by the effect from outstanding receivable balances in
Ukraine and the Ukrainian country risk.
Ferrexpo plc
Annual Report & Accounts 2024
204
Notes to the Consolidated Financial Statements continued
NOTE 18: TRADE AND OTHER RECEIVABLES
CONTINUED
As at 31.12.23
Days past due
US$000
Current
Less than 45 days
45 to 90 days
Over 90 days
Total
Expected loss rate
0.8%
1.6%
3.3%
76.7%
13.7%
Trade receivables – gross carrying amount
52,014
11,542
1,808
11,222
76,586
Other receivables – gross carrying amount
3,815
2
10,533
4,415
18,765
Expected credit loss allowance
442
179
408
12,001
13,030
The change of the balance of impairment losses on trade receivables recognised in the consolidated income statement as at 31 December 2024 and
2023 was not material and therefore not disclosed separately in the consolidated income statement. For further information see the table above.
The Group’s exposures to credit, currency and commodity risks are disclosed in Note 27 Financial instruments.
NOTE 19: PREPAYMENTS AND OTHER CURRENT ASSETS
As at 31 December 2024, prepayments and other current assets comprised:
US$000
As at
31.12.24
As at
31.12.23
Prepayments to suppliers:
Electricity and gas
3,482
6,013
Materials and spare parts
3,556
4,385
Services
5,390
7,075
Other prepayments
220
185
Freight related prepayments
9,276
1,456
Prepaid expenses
2,693
2,142
Other
31
124
Total prepayments and other current assets
24,648
21,380
Prepayments at 31 December 2024 include US$93 thousand (2023: US$513 thousand) made to related parties. The detailed related party
disclosures are made in Note 34 Related party disclosures.
Freight costs in the amount of US$1,456 thousand were included in the balance of freight related prepayments at the beginning of the year and
recognised in the consolidated income statement during the year ended 31 December 2024 (2023: US$465 thousand).
NOTE 20: OTHER TAXES RECOVERABLE AND PAYABLE
ACCOUNTING POLICY
Value added tax
Revenues, expenses and assets are recognised net of the amount of value added tax (“VAT”), except:
• where VAT incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case VAT is recognised as part of
the cost of acquisition of the asset or as part of the expense item as applicable; and
• receivables and payables are stated with the amount of VAT included.
VAT receivable balances are not discounted unless the overdue balances are expected to be received after more than 12 months following the
year end.
As at 31 December 2024, other taxes recoverable comprised:
US$000
As at
31.12.24
As at
31.12.23
VAT receivable
35,270
25,639
Other taxes prepaid
1,026
652
Total other taxes recoverable and prepaid
36,296
26,291
Strategic Report
Corporate Governance
205
Financial Statements
NOTE 20: OTHER TAXES RECOVERABLE AND PAYABLE CONTINUED
The table below provides a reconciliation of the VAT receivable balance in Ukraine:
US$000
Year ended
31.12.24
Year ended
31.12.23
Opening balance, gross
27,104
76,387
Net VAT incurred
111,020
66,987
VAT refunds received
(100,224)
(115,348)
Translation differences
(3,916)
(922)
Closing balance, gross
33,984
27,104
Allowance
(2,146)
(3,188)
Closing balance, net
31,838
23,916
The Group’s subsidiaries in Ukraine generally received regular refunds throughout the financial year 2024 and there were no VAT balances overdue
as at 31 December 2024 and 2023. The vast majority of the outstanding VAT balance as of 31 December 2024 was collected in full in January and
February 2025. Regular refunds in future periods do also depend on the situation in Ukraine and how the country is going to cope with the state
budget constraints as a result of the ongoing war.
The recorded allowance of US$2,146 thousand (2023: US$3,188 thousand) is related to uncertainties in terms of the timing of the recovery of VAT
receivable balances for the Group’s Ukrainian subsidiaries.
As at 31 December 2024, other taxes payable comprised:
US$000
As at
31.12.24
As at
31.12.23
Environmental tax
819
341
Royalties
8,174
3,695
VAT payable
201
253
Other taxes
4,294
4,536
Total other taxes payable
13,488
8,825
Ferrexpo plc
Annual Report & Accounts 2024
206
Notes to the Consolidated Financial Statements continued
NOTE 21: TRADE AND OTHER PAYABLES
ACCOUNTING POLICY
Trade and other payables are not interest-bearing, being generally short-term, and are stated at their original invoice amount.
As at 31 December 2024, trade and other payables comprised:
US$000
As at
31.12.24
As at
31.12.23
Materials and services
47,039
25,898
Payables for equipment
8,354
9,182
Other
388
230
Total current trade and other payables
55,781
35,310
Trade and other payables at 31 December 2024 include US$1,085 thousand (2023: US$1,219 thousand) due to related parties. See Note 34 Related
party disclosures for further information.
The Group’s exposure to currency and liquidity risk related to trade and other payables is disclosed in Note 27 Financial instruments.
NOTE 22: PENSION AND POST-EMPLOYMENT OBLIGATIONS
ACCOUNTING POLICY
The defined benefit costs relating to the plans operated by the Group in the different countries are determined and accrued in the consolidated
financial statements using the projected unit credit method for those employees entitled to such payments. The underlying assumptions are
defined by management and the defined benefit pension liability is calculated by independent actuaries at the end of each annual reporting period.
Remeasurements, comprising actuarial gains and losses, are immediately reflected in the statement of financial position. The corresponding charge
or credit is recognised in the other comprehensive income of the period in which it occurred and immediately reflected in retained earnings as not
reclassified to the consolidated income statement in subsequent periods.
The costs of managing plan assets are deducted from the return on plan assets reflected in other comprehensive income. All other scheme
administration costs are charged to the consolidated income statement. The net interest is calculated by applying the discount rate to the net
defined benefit pension liability or plan assets. Any past service costs are recognised in the consolidated income statement at the earlier of
when the plan amendment occurs or when related restructuring costs are recognised.
The service costs (including current and past) are included in cost of sales, selling and distribution expenses and general and administrative
expenses in the consolidated income statement whereas the net finance expenses are included in finance expenses. The effects from
remeasurements are recognised in other comprehensive income.
The defined benefit pension liability is the aggregate of the defined benefit obligation less plan assets of funded schemes. The Group operates
funded and unfunded schemes.
The Group’s expenses in relation to defined contribution plans are charged directly to the consolidated income statement.
The Group mainly operates defined benefit plans for qualifying employees of its subsidiaries in Ukraine and Switzerland. All local defined benefit
pension liabilities are calculated by independent actuaries applying accepted actuarial techniques. In addition to the aforementioned schemes,
the Group operates a defined benefit scheme in Austria and contribution plans for qualifying employees in the UK and in Singapore.
Details of the major defined benefit schemes in Ukraine and Switzerland are provided below:
Ukraine
The Group’s subsidiaries in Ukraine make defined contributions to the Ukrainian State Pension Scheme at statutory rates based on the gross salary
payments made to the employees. PJSC Ferrexpo Poltava Mining (“FPM”) and LLC Ferrexpo Yeristovo Mining (“FYM”) also have a legal obligation to
compensate the Ukrainian State Pension Fund for additional pensions paid to certain categories of its current and former employees. All pension
schemes in Ukraine are unfunded.
At 31 December 2024, the pension schemes in Ukraine covered 2,610 current employees (2023: 2,743 people) and there are 664 former employees
currently in receipt of pensions (2023: 681 people).
Switzerland
The employees of the Group’s Swiss operations are covered under a collective pension plan (multi-employer plan), which is governed in accordance
with the requirements of Swiss law. The funding, of which two-thirds is contributed by the employer and one-third by the employees, is based on
the regulations of the pension scheme and Swiss law. The pension scheme in Switzerland is funded and the assets of the pension scheme are held
separately from those of the Group and are invested with an insurance company. The accumulated capital of the employees is subject to interests
determined by the local legislation and defined in the regulations of the pension scheme. The accumulated capital is converted into a lifelong
pension or withdrawn as a lump sum at the time of retirement.
Strategic Report
Corporate Governance
207
Financial Statements
NOTE 22: PENSION AND POST-EMPLOYMENT OBLIGATIONS CONTINUED
On retirement, employees are entitled to receive either a lump sum or an annual proportion of their accumulated capital as a pension underpinned
by certain guarantees. The Group and the employees make contributions to the pension scheme as a percentage of the insured salaries depending
on the age of the employees.
At 31 December 2024, the Swiss pension scheme covered 22 people (2023: 20 people).
The principal assumptions used in determining the defined benefit obligation are shown below:
Year ended 31.12.24
Year ended 31.12.23
Ukrainian
schemes
Swiss scheme
Ukrainian
schemes
Swiss scheme
Discount rate
15.7%
1.0%
18.0%
1.5%
Retail price inflation
5.2%
0.8%
8.7%
1.5%
Expected future salary increase
9.0%
1.3%
8.5%
2.0%
Expected future benefit increase
9.0%
−
8.5%
−
Female life expectancy (years)
79.8
89.7
79.8
89.6
Male life expectancy (years)
75.6
88.0
75.6
87.8
US$000
As at
31.12.24
As at
31.12.23
Present value of funded defined benefit obligation
5,659
5,011
Fair value of plan assets
(4,231)
(3,697)
Funded status
1,428
1,314
Present value of unfunded defined benefit obligation
21,378
15,204
Defined benefit pension liability
22,806
16,518
Thereof for Ukrainian schemes
21,236
15,064
Thereof for Swiss scheme
1,427
1,314
Thereof for schemes in other jurisdictions
143
140
Amounts recognised in the consolidated income statement or in other comprehensive income are as follows:
US$000
Year ended
31.12.24
Year ended
31.12.23
Defined benefit cost charged in the consolidated income statement:
Current service cost
981
887
Past service cost
(45)
(26)
Interest cost on defined benefit obligation
2,488
2,711
Interest income on plan assets
(56)
(71)
Administration cost
13
17
Total defined benefit costs charged in the consolidated income statement
3,381
3,518
Remeasurement costs/(gains) in consolidated statement of other comprehensive income:
Remeasurement effect from demographic assumptions
(122)
43
Remeasurement effect from financial assumptions
4,742
1,469
Experience adjustment
2,611
(2,346)
Return on plan assets
(191)
(65)
Total remeasurement costs/(gains) in other comprehensive income
7,040
(899)
Total defined benefit losses
10,421
2,619
Thereof for Ukrainian schemes
9,812
1,980
Thereof for Swiss scheme
599
627
Thereof for schemes in other jurisdictions
10
12
Ferrexpo plc
Annual Report & Accounts 2024
208
Notes to the Consolidated Financial Statements continued
NOTE 22: PENSION AND POST-EMPLOYMENT OBLIGATIONS CONTINUED
The remeasurement costs for the year ended 31 December 2024 are primarily the effect from the remeasurement of financial assumptions and
experience adjustments, with a higher effect related to the financial assumptions and an opposite effect related to the experience adjustments
than in the comparative year ended 31 December 2023. The remeasurement costs from financial assumptions as at 31 December 2024 are primarily
attributable to the decrease in the discount rate and the future salary increase assumption, both in Ukraine, partially offset by the decrease in the
inflation rate in Ukraine. The remeasurement costs as at the end of the comparative year ended 31 December 2023 were mainly related to the
increase of the inflation rate and the future salary increase assumption, both in Ukraine. The costs from experience adjustments as at 31 December
2024 result from a higher effective salary increase in Ukraine than expected as at the end of the comparative year ended 31 December 2023, with
the opposite effect as at 31 December 2023.
Changes in the present value of the defined benefit obligation are as follows:
US$000
Year ended
31.12.24
Year ended
31.12.23
Opening defined benefit obligation
20,199
19,326
Current service cost
979
886
Interest cost on defined benefit obligation
2,488
2,711
Remeasurement losses/(gains)
7,230
(834)
Contributions paid by employer
(1,829)
(1,798)
Contributions paid by employees
158
134
Benefits paid and net transfers through pension assets
40
(50)
Plan amendments
(45)
(26)
Translation differences
(2,200)
(150)
Closing defined benefit obligation
27,020
20,199
Thereof for Ukrainian schemes
21,236
15,064
Thereof for Swiss scheme
5,659
5,011
Thereof for schemes in other jurisdictions
125
124
Thereof for active employees
12,869
10,060
Thereof for vested terminations
8,583
5,264
Thereof for pensioners
5,568
4,875
The durations of the defined benefit obligation for the different schemes as at 31 December 2024 are 8.8 years in Ukraine (2023: 8.9 years)
and 19.9 years in Switzerland (2023: 19.6 years).
Contributions to the defined benefit plans, including benefits paid by employer and employee contributions, are expected to be US$1,883
thousand for the schemes in Ukraine and US$208 thousand in Switzerland in the next financial year.
The expenses in relation to the defined contribution plan in the UK totalled US$54 thousand (2023: US$47 thousand).
Changes in the fair values of the plan assets are as follows:
US$000
Year ended
31.12.24
Year ended
31.12.23
Opening fair value of plan assets
3,697
2,870
Interest income
56
71
Contributions paid by employer
388
305
Contributions paid by employees
158
134
Benefits paid and net transfers through pension assets
40
(50)
Return on plan assets
191
65
Administration cost
(16)
(16)
Translation differences
(283)
318
Closing fair value of plan assets
4,231
3,697
Thereof for Swiss scheme
4,231
3,697
Strategic Report
Corporate Governance
209
Financial Statements
NOTE 22: PENSION AND POST-EMPLOYMENT OBLIGATIONS CONTINUED
The asset allocation of the plan assets of the Swiss scheme is as follows:
%/US$000
As at
31.12.24
As at
31.12.24
As at
31.12.23
As at
31.12.23
Scheme assets at fair value
Equities
32.8
1,386
32.0
1,182
Bonds
29.6
1,254
28.7
1,061
Properties
16.7
705
17.9
661
Other
20.9
886
21.4
793
Fair value of scheme assets
100.0
4,231
100.0
3,697
The pension assets are included in a multi-employer plan and no information in respect of the split of the investments into quoted and
non-quoted assets are available. Taking into account the requirements of Swiss law, it is assumed that equities and bonds reflect investments
into quoted assets with a portion of the other assets in the portfolio assumed to be investments into non-quoted assets.
Changes to interest rates and future salary increases in Ukraine are considered to be the main pension-related risks for the Group, as such
changes are likely to affect the balance of the Group’s defined benefit obligation. The percentage used to calculate the sensitivities was set under
consideration of the volatility for these assumptions for the Ukrainian schemes and has also been applied for the Group’s less material schemes
in other jurisdictions.
Changes to the significant assumptions would have the following effects on the defined benefit obligation in the different jurisdictions:
Year ended 31.12.24
US$000
Ukrainian
schemes
Swiss scheme
Other
jurisdictions
Ukrainian
schemes
Swiss scheme
Other
jurisdictions
Increase by
Decrease by
Change
1.0% or 1 year
1.0% or 1 year
1.0% or 1 year
1.0% or 1 year
1.0% or 1 year
1.0% or 1 year
Discount rate (%)
(1,550)
(874)
(5)
1,757
1,217
6
Future salary increases (%)
611
165
5
(664)
(147)
(4)
Local inflation (%)
343
−
n/a
(487)
−
n/a
Indexation of pension (%)
n/a
476
n/a
n/a
n/a
n/a
Life expectancy (years)
403
73
n/a
(484)
(73)
n/a
Year ended 31.12.23
US$000
Ukrainian
schemes
Swiss scheme
Other
jurisdictions
Ukrainian
schemes
Swiss scheme
Other
jurisdictions
Increase by
Decrease by
Change
1.0% or 1 year
1.0% or 1 year
1.0% or 1 year
1.0% or 1 year
1.0% or 1 year
1.0% or 1 year
Discount rate (%)
(956)
(751)
(7)
1,072
1,047
4
Future salary increases (%)
543
158
6
(500)
(137)
(6)
Local inflation (%)
22
4
n/a
(33)
−
n/a
Indexation of pension (%)
n/a
403
n/a
n/a
n/a
n/a
Life expectancy (years)
257
57
n/a
(309)
(55)
n/a
Based on the Ukrainian pension legislation, the pension indexation is defined by the future salary increases and the local inflation rate. As a result of
this, no sensitivity for the indexation of pension is calculated for the Ukrainian schemes, but the sensitivity for local inflation is used instead.
For the presentation of the effects of the changes of the significant assumptions shown in the table above, the present value of the defined benefit
obligation has been calculated based on the projected unit credit method at the end of the reporting period, which is the same as the one applied
for the calculation of the defined benefit obligation recognised in the statement of financial position as at the end of the respective reporting
period. The methods and assumptions used for the sensitivity analysis for the prior year are unchanged.
Ferrexpo plc
Annual Report & Accounts 2024
210
Notes to the Consolidated Financial Statements continued
NOTE 23: PROVISIONS
ACCOUNTING POLICY
General
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event and it is probable that an
outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount
of the obligation.
The provisions are classified in the Group’s consolidated financial statements either as non-current or current, depending on the expected timing
of the outflow of resources.
Site restoration
Site restoration provisions are made in respect of the estimated future costs of closure and restoration and for environmental rehabilitation costs
(determined by an independent expert) in the accounting period when the related environmental disturbance occurs. The provision is discounted,
if material, and the unwinding of the discount is included in finance costs. At the time of establishing the provision, a corresponding asset is
capitalised where it gives rise to a future benefit and is depreciated over future production from the mine to which it relates. The provision is
reviewed on an annual basis for changes in cost estimates, discount rates or the life of operations.
As at 31 December 2024, the provisions are classified as either non-current or current and comprised:
As at 31.12.24
As at 31.12.23
US$000
Legal
Site restoration
Total
Legal
Site restoration
Total
Opening balance
128,050
2,780
130,830
−
4,284
4,284
Unwind of the discount
−
436
436
−
771
771
Additions
−
311
311
128,050
224
128,274
Releases
−
(136)
(136)
−
(2,372)
(2,372)
Translation differences
(12,356)
(273)
(12,629)
−
(127)
(127)
Closing balance
115,694
3,118
118,812
128,050
2,780
130,830
Current
115,694
−
115,694
128,050
−
128,050
Non-Current
−
3,118
3,118
−
2,780
2,780
Site restoration
The costs of restoration of the different deposits in the Group’s open pit mines are based on amounts determined by an independent and credited
institute, taking into account the codes of practice and laws applicable in Ukraine. The useful lives of the different pits and mines are determined by
the same institute based on expected annual stripping and production volumes, having taken into account the expected timing and effect of future
mine-life extension programmes. It is expected that the restoration works of the GPL mine will start after the years 2050, 2055 and 2065 for the
different areas within the mine. The first minor restoration work of the Yerystivske mine is expected to start for some dump areas after 2026,
whereas the removal of equipment and the flooding of the pit will only begin at the end of the mine’s life in 2048.
The provision represents the discounted value of the estimated costs of decommissioning and restoring the mines at the dates when the deposits
are expected to be depleted in the relevant areas within the mine. The present value of the provision has been calculated in Ukrainian hryvnia using
nominal pre-tax discount rates taking into account the beginning of the restoration work in the different areas of the mines, averaging at 14.4%
(2023: 17.2%).
Uncertainties in estimating the provision include potential changes in regulatory requirements, decommissioning and reclamation alternatives, and
the discount and inflation rates to be used in the calculations.
See Note 2 Basis of preparation in respect of the impact of climate change on the Group’s financial statements.
Legal
In respect of ongoing court proceedings in Ukraine in respect of contested sureties, the Group recorded a full provision in the amount of UAH4,727
million (US$112,457 thousand as at 31 December 2024) at the end of the comparative year ended 31 December 2023. Although the management is
of the opinion that this claim is without merit, a full provision was recorded, considering the magnitude of this specific claim and the risks associated
with the judicial system in Ukraine. As at the date of the approval of these consolidated financial statements, the court proceedings are ongoing. The
next hearing is scheduled for 21 March 2025. The Group is subject to various ongoing legal proceedings and disputes, which require management to
make significant estimates and judgements. Further details are provided in Note 30 Commitments, contingencies and legal disputes.
Strategic Report
Corporate Governance
211
Financial Statements
NOTE 24: ACCRUED AND CONTRACT LIABILITIES
ACCOUNTING POLICY
Accrued expenses are recognised for amounts to be paid in a future period for goods or services received, which have not been billed to the Group
as at the end of the reporting period.
Contract liabilities consist of the portion of freight revenues under CIF and CFR Incoterms, which is deferred and recognised over time as the
performance obligation is fulfilled, and released at the point of time when the freight services are completed. Contract liabilities are normally
derecognised within 60 days after the reporting period.
As at 31 December 2024, accrued and contract liabilities comprised:
US$000
As at
31.12.24
As at
31.12.23
Accrued expenses
3,642
2,833
Accrued employee costs
14,897
12,580
Contract liabilities
4,436
1,915
Customer prepayments
6,440
−
Total accrued and contract liabilities
29,415
17,328
For further information on the change in contract liabilities during the year ended 31 December 2024, see Note 6 Revenue.
NOTE 25: CASH AND CASH EQUIVALENTS
ACCOUNTING POLICY
Cash and cash equivalents include cash at bank and on hand and short-term deposits with original maturity of 90 days or less from inception. Cash
at bank and on hand and short-term deposits are recorded at their nominal amount as these present an insignificant risk of changes in value.
As at 31 December 2024, cash and cash equivalents comprised:
US$000
As at
31.12.24
As at
31.12.23
Cash at bank and on hand
105,919
115,241
Total cash and cash equivalents
105,919
115,241
The debt repayments net of proceeds during the period ended 31 December 2024 totalled US$5,755 thousand (31 December 2023: US$5,562
thousand) affecting the balance of cash and cash equivalents.
Further information on the Group’s gross debt is provided in Note 26 Interest-bearing loans and borrowings.
The balance of cash and cash equivalents held in Ukraine amounts to US$4,041 thousand as at 31 December 2024 (31 December 2023: US$11,175
thousand). Despite the foreign exchange control measures imposed under Martial Law in Ukraine (see Note 30 Commitments, contingencies and
legal disputes), this balance is fully available to the Group for its operations in Ukraine and is therefore not considered restricted.
NOTE 26: LEASE LIABILITIES
ACCOUNTING POLICY
Lease liabilities are initially measured at the present value of future lease payments, discounted using the interest rate implicit in the lease or, if
unavailable, the lessee’s incremental borrowing rate for similar leases. Over time, the liability increases due to accrued interest and decreases as
lease payments are made, with principal repayments classified under financing activities and interest under operating activities. The carrying
amount is subject to remeasurement in subsequent periods to reflect any lease modifications.
See also Note 14 Leases and Note 27 Financial instruments for more details in respect of the accounting policies applied. This note provides
information about the contractual terms of the Group’s major finance facilities.
US$000
Notes
As at
31.12.24
As at
31.12.23
Current
Lease liabilities
14
4,665
5,939
Total current lease liabilities
4,665
5,939
Non-current
Lease liabilities
14
419
1,009
Total non-current lease liabilities
419
1,009
Total lease liabilities
27
5,084
6,948
Ferrexpo plc
Annual Report & Accounts 2024
212
Notes to the Consolidated Financial Statements continued
NOTE 26: LEASE LIABILITIES CONTINUED
The table below shows the movements in the interest-bearing loans and borrowings:
US$000
Year ended
31.12.24
Year ended
31.12.23
Opening balance of lease liabilities
6,948
6,548
Cash movements:
Principal and interest elements of lease payments
(5,755)
(5,562)
Total cash movements
(5,755)
(5,562)
Non-cash movements:
Additions to lease liabilities
4,161
5,812
Others (incl. translation differences)
(270)
150
Total non-cash movements
3,891
5,962
Closing balance of lease liabilities
5,084
6,948
The interest expense on lease liabilities in the amount of US$191 thousand was recognised in the consolidated income statement during the year
ended 31 December 2024 (2023: US$85 thousand). Furthermore, the interest elements of lease payments are included in the cash flows from
operating activities and not in the cash flows used in financing activities.
Further information on the Group’s exposure to interest rate, foreign currency and liquidity risk is provided in Note 27 Financial instruments.
NOTE 27: FINANCIAL INSTRUMENTS
ACCOUNTING POLICY
Financial assets and liabilities are recognised when the Group becomes a party to the contractual provisions of the financial instrument.
NON-DERIVATIVE FINANCIAL INSTRUMENTS
Non-derivative financial instruments comprise trade and other receivables, cash and cash equivalents, loans and borrowings (including lease
liabilities) and trade and other payables.
DERIVATIVE FINANCIAL INSTRUMENTS
Except for the provisionally priced receivables disclosed in Note 18 Trade and other receivables, the Group does not hold any derivative financial
instruments.
For more information about the provisionally priced receivables see Commodity risk within this Note.
INITIAL MEASUREMENT
Non-derivative financial instruments
Financial assets and financial liabilities (excluding lease liabilities) are initially measured at fair value. Any transaction costs that are directly
attributable to the acquisition or issue of financial assets or financial liabilities are added or deducted from its fair value except for financial assets
and financial liabilities at fair value through the consolidated income statement. For those financial assets and financial liabilities, the transaction
costs are recognised immediately in the consolidated income statement.
All regular way purchases and sales of financial assets are recognised on the trade date (i.e. the date that the Group commits to purchase or sell the
asset). Regular way purchases or sales are those that require delivery of assets within the period generally established by regulation or convention in
the marketplace.
The subsequent measurement is based on the classification of the financial instruments.
SUBSEQUENT MEASUREMENT
Financial assets
Financial assets measured at amortised cost
Except for the provisionally priced receivables disclosed in Note 18 Trade and other receivables, the Group’s financial assets are non-derivative with
fixed or determinable payments that are not quoted in an active market. Such assets are carried at amortised cost using the effective interest
method. Gains and losses are recognised in the consolidated income statement when the financial assets are derecognised or impaired along with
the amortisation process.
Financial liabilities
Trade and other payables
Trade and other payables are subsequently measured at amortised cost using the effective interest method.
Interest-bearing loans and borrowings
Interest-bearing loans and borrowings (excluding lease liabilities) are subsequently measured at amortised cost using the effective interest method.
Gains and losses are recognised in the consolidated income statement when the liabilities are derecognised as well as through the amortisation
process. For the accounting policy of lease liabilities see Note 14 Leases.
Strategic Report
Corporate Governance
213
Financial Statements
NOTE 27: FINANCIAL INSTRUMENTS CONTINUED
IMPAIRMENT OF FINANCIAL ASSETS
In addition to the individual assessment at each reporting date as to whether a financial asset or group of financial assets is impaired, the Group
also assesses the expected credit losses on financial assets carried at amortised cost in accordance with the general approach. As all of the Group’s
financial assets carried at amortised cost are classified as current based on the agreed terms and conditions, the loss allowance is measured
at an amount equal to the lifetime expected credit losses based on publicly available credit default ratings adjusted for current observable
circumstances, forecast information and past history of credit losses. This assessment is performed individually for all financial assets that are
individually significant and collectively for those that are not individually significant and have similar credit risk characteristics. The carrying amount
of the financial assets is reduced by an allowance account with the change of the allowance being recognised in the consolidated income statement.
Individual balances are written off when management deems that there is no possibility of recovery.
The accounting classification of each category of financial instruments and their carrying amounts are set out below:
As at 31.12.24
US$000
Financial assets
measured at
amortised cost
Financial
liabilities
measured at
amortised cost
Lease liabilities
Total
Financial assets
Cash and cash equivalents
25
105,919
−
−
105,919
Trade and other receivables
18
39,792
−
−
39,792
Other financial assets
5,215
−
−
5,215
Total financial assets
150,926
−
−
150,926
Financial liabilities
Trade and other payables
21
−
55,781
−
55,781
Accrued liabilities
24
−
18,539
−
18,539
Interest-bearing loans and borrowings
26
−
−
5,084
5,084
Total financial liabilities
−
74,320
5,084
79,404
As at 31.12.23
US$000
Financial assets
measured at
amortised cost
Financial liabilities
measured at
amortised cost
Lease liabilities
Total
Financial assets
Cash and cash equivalents
25
115,241
−
−
115,241
Trade and other receivables
18
82,321
−
−
82,321
Other financial assets
5,245
−
−
5,245
Total financial assets
202,807
−
−
202,807
Financial liabilities
Trade and other payables
21
−
35,310
−
35,310
Accrued liabilities
24
−
15,387
−
15,387
Interest-bearing loans and borrowings
26
−
−
6,948
6,948
Total financial liabilities
−
50,697
6,948
57,645
FAIR VALUES AND IMPAIRMENT TESTING
Financial assets and other financial liabilities
The fair values of cash and cash equivalents, trade and other receivables and payables are approximately equal to their carrying amounts due
to their short maturity.
Interest-bearing loans and borrowings
The fair values of interest-bearing loans and borrowings are based on the discounted cash flows using market interest rates (Level 2) and are
approximately equal to their carrying amounts.
FAIR VALUE MEASUREMENTS RECOGNISED IN THE STATEMENT OF FINANCIAL POSITION
Except for the provisionally priced trade receivables (Level 2) disclosed in Note 18 Trade and other receivables, the Group does not have any
financial instruments that are measured subsequent to initial recognition at fair value, grouped into Level 1 to Level 3 based on the degree to which
the fair value is observable. There were no transfers between Level 1 and Level 2 during the financial year 2024 and the comparative year ended
31 December 2023.
Ferrexpo plc
Annual Report & Accounts 2024
214
Notes to the Consolidated Financial Statements continued
NOTE 27: FINANCIAL INSTRUMENTS CONTINUED
FINANCIAL RISK MANAGEMENT
Overview
The Group has exposure to the following risks from its use of financial instruments:
• credit risk;
• liquidity risk; and
• market risk – including currency and commodity risk.
This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes for measuring
and managing risk, and the Group’s management of capital. Further quantitative disclosures are included throughout these consolidated financial
statements. The Board has overall responsibility for the establishment and oversight of the Group’s risk management framework.
The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and
controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market
conditions and the Group’s activities. The Group, through its training and management standards and procedures, aims to develop a disciplined and
constructive control environment in which all employees understand their roles and obligations.
The Audit Committee oversees how management monitors compliance with the Group’s risk management policies and procedures and reviews
the adequacy of the risk management framework in relation to the risks faced by the Group. The Audit Committee is assisted in its oversight role
by Internal Audit. Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are
reported to the Audit Committee and the CFO.
The Group operates a centralised financial risk management structure under the management of the Executive Committee, accountable to
the Board.
The Executive Committee delegates certain responsibilities to the CFO. The CFO’s responsibilities include authority for approving all new physical,
commercial or financial transactions that create a financial risk for the Group. Additionally, the CFO controls the management of treasury risks
within each of the business units in accordance with a Board-approved treasury policy.
FINANCIAL INSTRUMENT RISK EXPOSURE AND MANAGEMENT
Natural hedges that can be identified and their effectiveness quantified are used in preference to financial risk management instruments.
Derivative transactions may be executed for risk mitigation purposes only – speculation is not permitted under the approved treasury policy – and
are designed to have the effect of reducing risk on underlying market or credit exposures. Appropriate operational controls ensure operational risks
are not increased disproportionately to the reduction in market or credit risk.
The Group has not used any financial risk management instruments that are derivative in nature, or other hedging instruments, in this or the
comparative year.
CREDIT RISK
Trade and other receivables
The Group, through its trading operations, enters into binding contracts, which contain obligations that create exposure to credit, counterparty and
country risks. It is the primary objective of the Group to manage such risks to reduce uncertainty of collection from buyers. A secondary objective is
to minimise the cost of reducing risks within acceptable parameters.
Credit risk is the risk associated with the possibility that a buyer will default, by failing to make required payments in a timely manner or to comply
with other conditions of an obligation or agreement. Where appropriate, the Group uses letters of credit to assist in mitigating such risks.
Counterparty risk crystallises when a party to an agreement defaults. Where letters of credit are used to minimise this risk, the Group uses a
confirming bank with a similar or higher credit rating to mitigate country and/or credit risk of the issuing bank.
Country risk is the potential volatility of foreign assets, whether receivables or investments, that is due to political and/or financial events in a given
country.
Group Treasury monitors the concentration of all outstanding risks associated with any entity or country, and reports to the Group CFO on a timely basis.
Investment securities
Outside Ukraine, the Group limits its cash exposure to credit, counterparty and country risk by only investing in liquid securities and with
counterparties that are incorporated in an A+ or better “S&P” rated OECD country. A ratings approach is used to determine maximum exposure to
each counterparty. Cash not required for production, distribution or capital expenditures is invested with counterparties rated by S&P or Moody’s
at a level of long-term B “S&P” or short-term A3 “S&P” or better with any exceptions subject to approval by the Board.
Recognising that the principal activities of the Group are predominantly in Ukraine, special consideration is given to Ukrainian transactional banking
counterparties where the sector is small and constrained by the sovereign credit rating. Exceptions may be made under the following conditions:
• the counterparty is resident in Ukraine; and
• the counterparty is included in the top 15 financial institutions in Ukraine based on the Group’s assessment of the financial institution.
Irrespective of the counterparty risk assessment above, the Group only uses subsidiaries of Western banks for transactional purposes unless
required differently by law.
The Group is currently working with three banks in Ukraine, two of which are subsidiaries of Western banks, and is therefore exposed to Ukraine
country and banking sector risk in this respect.
Strategic Report
Corporate Governance
215
Financial Statements
NOTE 27: FINANCIAL INSTRUMENTS CONTINUED
Guarantees
The Group’s policy is to provide financial guarantees under limited circumstances only for the benefit of wholly owned or substantially wholly owned
subsidiaries.
Exposure to credit risk
The carrying amount of financial assets at 31 December 2024 was US$150,926 thousand (2023: US$202,807 thousand) and represents the
maximum credit exposure. See page 213 for further information.
Of the total maximum exposure to credit risk, US$25,887 thousand (2023: US$34,635 thousand) related to Ukraine.
The total outstanding receivables balance relating to the Group’s top customers was US$13,870 thousand as at 31 December 2024 (2023:
US$45,666 thousand), accounting for 35% (2023: 55%) of the total amounts receivable outstanding. The top customers are customers whose sales
accounted for more than 10% of total sales in the current or the previous year. For more information on the Group’s sales to top customers see Note
6 Revenue.
The Group’s credit risk related to its customers depends primarily on the state of the global steel industry. In times of lower prices for steel
products, the margins and cash flows of steel producers also fall, which could have an adverse impact on the Group’s credit risk. The Group has not
had any significant bad debts in the past and outstanding amounts are thoroughly reviewed and evaluated to mitigate the risk for such losses. The
credit risk related to suppliers of equipment and services in Ukraine is still impacted by the heightened Ukrainian country risk due to the ongoing
war. See the Principal Risks section on page 87 for additional information on the counterparty risks.
Impairment profile
The Group writes off individual balances when evidence indicates that the debtor is experiencing significant financial distress and there is no
possibility of recovery.
The Group’s exposure to credit risk relating to trade and other receivables is disclosed in Note 18 Trade and other receivables.
LIQUIDITY RISK
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach is to ensure that it will
always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring losses for the different
counter parties or risking damage to the Group’s reputation by holding an adequate balance of cash and cash equivalents. As at the date of the
approval of these consolidated financial statements, the Group does not have any drawn or undrawn committed credit facilities, mainly due to the
current situation in Ukraine. The ongoing war in Ukraine has had a significant impact on the cash flow generation of the Group during the financial
years 2023 and 2024 and the war is expected to continue during the financial year 2025 and to adversely affect the Group’s cash flow generation.
For further information see also the Group’s going concern statement in Note 2 Basis of preparation.
The Group prepares detailed rolling cash flow forecasts, which assist it in monitoring cash flow requirements and planning the allocation of cash.
Typically, the Group intends to ensure that it has sufficient cash on demand to meet expected operational expenses. In normal times, the Group
also makes use of uncommitted trade finance facilities to manage its short-term liquidity requirements. Trade finance generally refers to the
financing of individual transactions or a series of revolving transactions and is often self-liquidating, whereby the lending bank stipulates that all
sales proceeds to be collected are applied to settle the loan, with the remainder returned to the Group. Trade finance transactions are approved
by the Group CFO and Group Treasurer. As at 31 December 2024, no trade finance facilities are available to the Group as a result of the ongoing war
in Ukraine.
The Group maintains adequate cash reserves intended to cover unexpected cash flow shortfalls. As of 31 December 2024, the Group’s cash and
cash equivalents amounted to US$105,919 thousand (2023: US$115,241 thousand), representing 50% of total current liabilities (2023: 54%).
The Group actively monitors the sustaining and development capital expenditure, by allocating resources only to essential major projects. For
further information see the Financial Review section on page 34.
For further information see Note 26 Interest-bearing loans and borrowings and the Group’s Viability Statement on pages 95 and 96.
Ferrexpo plc
Annual Report & Accounts 2024
216
Notes to the Consolidated Financial Statements continued
NOTE 27: FINANCIAL INSTRUMENTS CONTINUED
The following are the contractual maturities of financial liabilities:
As at 31.12.24
US$000
Less than 1 year
Between 1 to 2
years
Between 2 to 3
years
Between 3 to 4
years
Between 4 to 5
years
More than 5
years
Total
Interest-bearing
Lease liabilities
4,666
335
78
2
2
1
5,084
Total financial assets
4,666
335
78
2
2
1
5,084
Non-interest-bearing
Trade and other payables
55,781
−
−
−
−
−
55,781
Accrued liabilities
18,539
−
−
−
−
−
18,539
Future interest payable
−
−
−
−
−
−
−
Total non-interest-bearing
74,320
−
−
−
−
−
74,320
Total financial liabilities
78,986
335
78
2
2
1
79,404
As at 31.12.23
US$000
Less than 1 year
Between 1 to 2
years
Between 2 to 3
years
Between 3 to 4
years
Between 4 to 5
years
More than 5 years
Total
Interest-bearing
Lease liabilities
6,092
832
245
5
−
−
7,174
Total financial assets
6,092
832
245
5
−
−
7,174
Non-interest-bearing
Trade and other payables
35,310
−
−
−
−
−
35,310
Accrued liabilities
15,387
−
−
−
−
−
15,387
Future interest payable
−
−
−
−
−
−
−
Total non-interest-bearing
50,697
−
−
−
−
−
50,697
Total financial liabilities
56,789
832
245
5
−
−
57,871
CURRENCY RISK
The Group is exposed to currency risk on financial assets and liabilities resulting from sales, purchases and borrowings that are denominated in a
currency other than the respective functional currencies of the Group’s subsidiaries. While the reporting currency of the Group is the US dollar, the
functional currencies of the Group’s subsidiaries are the Ukrainian hryvnia, US dollars, euro and Swiss francs, with the largest exposure in respect of
the Ukrainian hryvnia.
The National Bank of Ukraine (“NBU”) manages and determines the official exchange rates. An interbank market for the exchange of currencies
exists in Ukraine and is monitored by the NBU. The Group, through financial institutions, exchanges currencies at bank offered market rates. Since
the start of the conflict in Ukraine, the foreign exchange market in Ukraine is tightly managed by the NBU and there is currently a currency-control
framework in place that limits the size and type of allowed foreign currency transactions.
The Group’s currency risk can be split into three distinct categories: structural, transactional and translational risks.
Structural risk
The Group’s revenues are structurally denominated in US dollars as the iron ore market is priced in US dollars based on daily indices, while the
Group’s production is located in Ukraine, with the Ukrainian hryvnia as the local currency.
Transactional risk
As mentioned above, the iron ore market is priced in US dollars. As a result, the Group’s subsidiaries that sell to third party customers have the US
dollar as reporting currency, so that the currency risk on these transactions are not relevant.
However, as the iron ore market is priced in US dollars, the Group’s producing subsidiaries in Ukraine sell their products also in US dollars to the
Group’s sales subsidiaries. Due to the different local functional currency in Ukraine, the US dollar denominated receivable balances from these sales
are subject to exchange rate fluctuations of foreign currencies, which can be material. See Note 9 Foreign exchange gains and losses for further
information.
With regards to purchase transactions, the legal entities within the Group face transactional currency risk, although in smaller value per transaction.
The Group manages the risk through regular spot conversions rather than with derivatives that would cover in advance longer-periods. The rationale
for the chosen approach is based on market studies and concrete experience, which show that hedging does not result in a significant economic
advantage over non-hedging in the long-term.
A depreciation of the Ukrainian hryvnia decreases the Group’s operating costs in US dollar terms.
As at 31 December 2024, the Group does not have any outstanding interest-bearing loans and borrowings. In the past, the Group’s external debt
facilities were denominated in US dollars, which corresponded to the reporting currency of the Group’s financial subsidiary and was therefore not
exposed to any exchange rate fluctuations of foreign currencies. The Group’s intercompany loans are generally denominated in US dollars and are
subject to foreign currency exchange rate fluctuations. See Note 9 Foreign exchange gains and losses for further information.
Strategic Report
Corporate Governance
217
Financial Statements
NOTE 27: FINANCIAL INSTRUMENTS CONTINUED
Translational risk
The Group has foreign operations which do not have the US dollar as their functional currency. When the results and the statement of financial
position of these operations are consolidated into the Group’s accounts, the translated balances are exposed to changes of the local currencies to
the US dollar.
The Group does not enter into any hedging transactions, which is in line with market practice for international companies.
The Group’s exposure to foreign currency risk was as follows as of 31 December 2024:
US$000
As at
31.12.24
As at
31.12.23
Total financial assets
150,926
202,807
Thereof exposed to Ukrainian hryvnia
−
−
Thereof exposed to US dollar
127
255
Thereof exposed to euro
504
2,737
Thereof exposed to Swiss franc
1,093
1,124
Thereof exposed to other currencies
800
1,170
Total exposures to currencies other than local functional currencies
2,524
5,286
Total financial liabilities
(79,404)
(57,645)
Thereof exposed to Ukrainian hryvnia
−
−
Thereof exposed to US dollar
(5,395)
(631)
Thereof exposed to euro
(449)
(7,626)
Thereof exposed to Swiss franc
(369)
(461)
Thereof exposed to other currencies
(900)
(682)
Total exposures to currencies other than local functional currencies
(7,113)
(9,400)
No other subsidiaries of the Group, apart from the Ukrainian subsidiaries, have financial assets and liabilities denominated in the Ukrainian
hryvnia. The functional currency of the Ukrainian subsidiaries is the Ukrainian hryvnia and the translation of financial assets and financial liabilities
denominated in the Ukrainian hryvnia does therefore not pose a foreign currency risk exposure in the consolidated income statement of the Group
as translation differences are reflected in the translation reserve (see Note 31 Share capital and reserves).
INTEREST RATE RISK
Historically, the Group has borrowed bank funds that were predominantly at floating interest rates and was therefore exposed to interest rate
movements. As at 31 December 2024, the Group does not have any significant balances of interest-bearing loans and borrowings. No interest rate
swaps have been entered into in the current and prior years.
COMMODITY RISK
Revenues related to provisionally priced sales are initially recognised at the estimated fair value of the consideration receivable based on the
forward price at each reporting date for the relevant period outlined in the different contracts. Consequently, the receivable balance may change
in a future period when final invoices can be issued based on final iron ore prices to be applied according to the specific underlying contract terms.
The provisionally priced iron ore exposure as at 31 December 2024 was 573,291 tonnes (none at the comparative period ended 31 December 2023)
and gave rise to a fair value loss relating to the embedded provisional pricing mechanism of US$1,065 thousand as at 31 December 2024 (none at
the comparative period ended 31 December 2023). Final iron ore prices based on the relevant index are normally known within 60 days after the
reporting period. The difference between the provisionally priced receivable balance recognised as at 31 December 2024 and the receivable balance
taking into account known final and latest forward prices is US$760 thousand (none at the comparative period ended 31 December 2023) and
would have decreased the consolidated loss and increased the shareholders’ equity by this amount
Where pricing terms deviate from the index-based pricing model, derivative commodity contracts may be used to swap the pricing terms to the
iron ore index price.
Finished goods are held at cost without revaluation to a spot price for iron ore pellets at the end of the reporting period, as long as the recoverable
amount exceeds the cost basis.
Ferrexpo plc
Annual Report & Accounts 2024
218
Notes to the Consolidated Financial Statements continued
NOTE 27: FINANCIAL INSTRUMENTS CONTINUED
SENSITIVITY ANALYSIS
Foreign currency sensitivity analysis
A 20% weakening of the US dollar against the following currencies at 31 December would have decreased the consolidated result and equity by the
amounts shown below. The percentage applied to the sensitivity analysis of the Group’s foreign currency exposure is based on the average change
of the Ukrainian hryvnia, the Group’s most relevant foreign currency, compared to the US dollar in past years, which might repeat again in the near
future. This percentage was also applied for the Group’s less relevant foreign currencies and does not have a significant effect on the total effect of
this sensitivity analysis. This assumes that all other variables, in particular interest rates, remain constant.
Year ended
31.12.24
Year ended
31.12.23
US$000
Income
statement/
equity
Income
statement/
equity
Ukrainian hryvnia
(878)
(63)
Euro
9
(815)
Swiss franc
121
111
Other
(17)
81
Total
(765)
(686)
A 20% strengthening of the US dollar against the above currencies would have an opposite effect totalling US$1,147 thousand on the consolidated
result and equity, on the basis that all the other variables remain constant.
US dollar denominated intercompany receivable and payable balances are not considered in the Group’s sensitivity analysis as eliminated in
the Group’s consolidated financial statements. However, the possible exposure on these US dollar denominated balances held by the Ukrainian
subsidiaries can be material, depending on the change of the Ukrainian hryvnia to the US dollar. Based on these net intercompany balances
outstanding as at 31 December 2024, a 20% weakening of the Ukrainian hryvnia against the US dollar would have a positive impact of
approximately US$69,000 thousand (2023: approximately US$90,000 thousand) on the consolidated result and equity. A 20% strengthening
would have a negative impact of approximately US$46,000 thousand (2023: approximately US$60,000 thousand) on the consolidated result
and equity. Further information on the actual foreign exchange gains and losses during the financial years 2023 and 2024, including those on
US dollar denominated intercompany balances, are provided in Note 9 Foreign exchange gains and losses.
Fair value sensitivity analysis for fixed rate instruments
The Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss and the Group does not
hold any derivatives (e.g. interest rate swaps). Therefore, a change in interest rates at the reporting date would not affect the consolidated income
statement.
Cash flow sensitivity for variable rate instruments
The Group’s syndicated revolving pre-export facility was repaid in full during the financial year 2021, meaning the Group no longer has any
borrowings at floating interest rates. As the Group is no longer exposed to interest rate fluctuations, the cash flow sensitivity for variable rate
instruments is no longer prepared and disclosed.
CAPITAL MANAGEMENT
The Board’s policy is to maintain a strong capital base. The Board of Directors monitors both the demographic spread of shareholders, as well as
the return on capital, which the Group defines as the level of dividends to ordinary shareholders over the total shareholders’ equity, excluding
non-controlling interests. Please refer to the statement of changes in equity for details of the capital position of the Group.
A key measure in respect of the Group’s capital management is the level of net cash/(debt). The net cash position has decreased from US$108,293
thousand at the beginning of the year to US$100,559 thousand as at 31 December 2024. The slightly higher net cash position reflects the Group’s
resilience through these unprecedented and challenging times, demonstrating the management ability to focus on adequately balancing the
available liquidity, working capital requirements and overall business operation.
The capital base of the Group can be adversely affected by falls in the price of iron ore reducing reported revenues and profitability. The price that
the industry earns for iron ore products is cyclical in nature and the Board of Directors continues to review its capital base in line with industry
trends. The Board seeks to maintain a balance between the higher net returns that might be achievable through leverage and advantages and
security provided by a low gearing and strong capital position.
Growth projects are approved under consideration of potential future market constraints, liabilities management across the Group’s balance sheet
and expected returns to shareholders.
The Board maintains a dividend policy consistent with the Group’s profile, reflecting the investment activities the Group has made supporting
current and future production growth and the cash generated by existing operations, while maintaining a prudent level of dividend distributions
after an appropriate level of liquidity is ensured on an ongoing basis.
The Group has been subject to the currency control measures implemented by the National Bank of Ukraine (“NBU”) under Martial Law since
24 February 2022, which limits the ability of the local Group companies to convert local currency into US dollars and settle cash flows between
onshore and offshore accounts of the Group. The Group has implemented various measures to reduce the risk of fines that may arise from the
currency control measures, but there exists legal uncertainty in the application of the currency control regulations during Martial Law in Ukraine.
See Note 30 Commitments, contingencies and legal disputes for further information.
Strategic Report
Corporate Governance
219
Financial Statements
NOTE 27: FINANCIAL INSTRUMENTS CONTINUED
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 and on the available liquidity above the minimum ongoing buffer requirements
determined by management and the Board. The Group’s consolidated retained earnings shown in the consolidated statement of changes in equity
do not reflect the profits immediately available for distribution in the Group as of 31 December 2024. See Note 12 Earnings per share and dividends
paid and proposed for further information.
For more information about the Group’s interest-bearing loans and borrowings see Note 26 Interest-bearing loans and borrowings.
NOTE 28: SHARE-BASED PAYMENTS
ACCOUNTING POLICY
Equity-settled transactions
The cost of equity-settled transactions with employees is measured by reference to the fair value of the award at the grant date using modelling
techniques consistent with the mathematics underlying the Black-Scholes option pricing model extended to allow for the performance conditions.
The fair value is determined by reference to the quoted closing share price on the grant date. The cost is recognised as an expense over the vesting
period, which ends on the date on which the relevant employees become fully entitled to the award. In valuing equity-settled transactions, no
account is taken of any vesting conditions, except for market conditions, such as the relative Total Shareholder Return (“TSR”).
Where the vesting of awards is subject to the satisfaction of certain market conditions, a vesting charge is recognised irrespective of whether or not
the market condition is satisfied, provided that all other performance conditions are satisfied. Where awards terminate before the performance
period is complete, any unamortised expense is recognised immediately.
At each reporting date, the cumulative expense of outstanding awards is calculated, representing the extent to which the vesting period has expired
and management’s best estimate of the achievement or otherwise of non-market conditions and of the number of equity instruments that will
ultimately vest. The movement in cumulative expense since the previous reporting date is recognised in the consolidated income statement, with
a corresponding entry in the employee benefit trust reserve in equity.
Long-term incentive plan (“LTIP”)
The LTIP is a share-based scheme whereby certain senior management and executives receive rewards based on the relative TSR. The LTIP is subject
to a performance condition based on the TSR compared to a comparator group, which operates in a similar environment, measured over the vesting
period. Further description is provided in the Remuneration Report. The cost of equity-settled awards is measured as described above together
with an estimate of future social security contributions payable in respect of this value.
The following number of share awards were granted under the LTIP in the previous financial years. The LTIP vesting period is three years.
Thousand
2024
2023
2022
LTIP
LTIP
LTIP
Total
Year ended 31.12.24
837
−
−
837
Year ended 31.12.23
−
595
−
595
Year ended 31.12.22
−
−
453
453
The following expenses have been recognised during the financial years ended 31 December 2024 and 2023 in respect of the LTIP:
US$000
2024
2023
2022
2021
2020
LTIP
LTIP
LTIP
LTIP
LTIP
Total
Year ended 31.12.24
85
125
67
43
−
320
Year ended 31.12.23
−
203
48
103
476
830
The expenses recognised in the comparative year 2023 include the effect of lapsed awards resulting from the departure of one member of the key
management. No such departure occurred during 2024 (2023: one).
Year ended
31.12.24
Year ended
31.12.23
Year ended
31.12.24
Year ended
31.12.23
US$000
WAFV (US$)
WAFV (US$)
No. (000)
No. (000)
LTIP
Beginning of the year
1.80
1.98
941
1,040
Awards granted during the year
0.53
1.12
837
595
Awards vested during the year
4.77
2.38
(35)
(289)
Awards lapsed during the year
0.88
1.40
(205)
(405)
Outstanding unvested awards at 31 December
0.84
1.80
1,538
941
All share awards that are potentially dilutive are considered in the calculation of diluted earnings per share. See Note 12 Earnings per share and
dividends paid and proposed for further details. The weighted average remaining contractual life for the awards outstanding as at 31 December
2024 is 1.6 years (2023: 1.4 years).
Ferrexpo plc
Annual Report & Accounts 2024
220
Notes to the Consolidated Financial Statements continued
NOTE 28: SHARE-BASED PAYMENTS CONTINUED
The main inputs to the valuation of the 2024 LTIP awards were the share price at date of grant of US$0.53 (2023 LTIP awards: US$1.65). The 2024
awards do not have any performance conditions other than remaining in employment, so that the volatility of the share price and the risk-free
interest rate are no longer relevant. In terms of the 2023 LTIP awards, volatility of the share price of 68% p.a. and a risk-free interest rate 5.1% p.a.
was applied for the valuation of the awards. The assumptions have been based on historical volatility and correlation of the relevant stocks over a
period based on the expected term of the awards.
As at 31 December 2023, 16.8% of the 2021 awards under the LTIP vested as the vesting conditions were partially met (31 December 2022: 71.6%
of the 2020 awards). As a result, the beneficiaries of this plan at the date of exercise received 34,884 shares for the 2021 awards during the financial
year 2024 (2023: 288,727 shares for the 2020 awards). The share price at the date of exercise of these awards was US$1.12 (2023: US$1.44). As at
the date of authorising the consolidated financial statements for issue, all awards from previous years have been exercised.
NOTE 29: EMPLOYEES
Employee benefits expenses for the year ended 31 December 2024 consisted of the following:
US$000
Notes
Year ended
31.12.24
Year ended
31.12.23
Wages and salaries
73,438
63,577
Social security costs
13,337
11,346
Post-employment benefits
22
998
887
Other employee costs
4,048
3,087
Share-based payments
28
320
830
Total employee benefits expenses
92,141
79,727
The table above includes compensation for Non-executive Directors, Executive Directors and other key management personnel as outlined below:
US$000
Year ended 31.12.24
Year ended 31.12.23
Non-executive
and Executive
Directors
Other key
management
Total
Non-executive
and Executive
Directors
Other key
management
Total
Wages and salaries
3,319
2,249
5,568
3,769
2,068
5,837
Social security costs
188
66
254
122
48
170
Post-employment benefits
131
66
197
91
48
139
Other employee costs
−
−
−
155
−
155
Share-based payments
73
105
178
107
264
371
Total compensation for key management
3,711
2,486
6,197
4,244
2,428
6,672
The total of shared-based payments for employees and for key management recognised in the comparative year 2023 include the effect of lapsed
awards resulting from the departure of one member of the key management. No such effect in the financial year 2024.
The average number of employees during the financial year 2024 is detailed in the table below:
Average number of employees
Year ended
31.12.24
Year ended
31.12.23
Production
4,598
4,939
Marketing and distribution
559
409
Administration
1,216
1,214
Other
296
328
Total average number of employees
6,669
6,890
Strategic Report
Corporate Governance
221
Financial Statements
NOTE 30: COMMITMENTS, CONTINGENCIES AND LEGAL DISPUTES
ACCOUNTING POLICY
Contingencies
Contingent liabilities are not recognised in the consolidated financial statements. They are disclosed unless the possibility of an outflow of resources
embodying economic benefits is remote. A contingent asset is not recognised in the consolidated financial statements but disclosed when an inflow
of economic benefits is probable.
Commitments for the lease of mining land
These commitments relate to the agreements for the use of mining land, which fall out of the scope of IFRS 16 Leases.
COMMITMENTS
Commitments as at 31 December 2024 consisted of the following:
US$000
Year ended
31.12.24
Year ended
31.12.23
Total commitments for the lease of mining land (out of the scope of IFRS 16)
54,948
52,739
Total capital commitments on purchase of property, plant and equipment
115,190
128,934
Commitments for investment in a joint venture
6,064
6,064
For further information on lease-related commitments see Note 14 Leases.
LEGAL
In the ordinary course of business, the Group is subject to various legal actions and ongoing court proceedings. There is a risk that the independence
of the judicial system and its immunity from economic and political influences in Ukraine is not upheld, and consequently Ukrainian legislation might
be inconsistently applied to resolve the same or similar disputes. See also the Principal Risks section on pages 85 to 87 for further information on the
Ukraine country risk and Note 35 Events after the reporting period in terms of another court order received.
CRITICAL JUDGEMENTS
The Group is exposed to the risks associated with operating in a dynamic and adverse political landscape in Ukraine, which may or may not be
exacerbated by the war and/or the current circumstances facing Mr Zhevago (see Ukraine country risk on pages 85 to 87). As a result, the Group
is exposed to a number of risk areas that are heightened compared to those expected in a stable economy, such as an environment of political,
fiscal and legal uncertainties, which require a significant number of critical judgements to be made by the management team, mainly in respect
of the contested sureties claim, for which the provision recorded as at the end of the comparative year ended 31 December 2023 still exists as at
31 December 2024, and the other matters listed under critical judgements below.
See Note 35 Events after reporting period relating to an event that could lead to litigation and contingencies in a future period.
CRITICAL JUDGEMENTS FOR ONGOING LEGAL PROCEEDINGS AND DISPUTES WITH CORRESPONDING PROVISIONS
Contested sureties claim
On 7 December 2022, Ferrexpo Poltava Mining (“FPM”) received a claim in the amount of UAH4,727 million (31 December 2024: US$112,443
thousand; 31 December 2023: US$124,450 thousand) in respect of contested sureties.
The claimant alleges that it acquired rights under certain loan agreements originally concluded between Bank F&C and various borrowers by
entering into an assignment agreement with the State Guarantee Fund on 6 November 2020. The claimant further claims that FPM provided
sureties to Bank F&C to secure performance under these loan agreements.
The court of first instance in Ukraine made an award in favour of the claimant on 9 August 2023, which was upheld by the court of appeal on
26 January 2024. As at the date of the approval of these consolidated financial statements, the case is under review by the Supreme Court of
Ukraine. Whilst several hearings have already been held no substantive decision on the merits of the case has yet been made by the Supreme Court.
The next hearing is scheduled for 21 March 2025.
On 1 April 2024, the Supreme Court suspended the possible enforcement of the decision of the court of appeal against FPM. No enforcement
procedures have commenced and cannot be initiated by the claimant until a final decision is made by the Supreme Court, or the suspension order
is lifted.
Notwithstanding the two negative court decisions of the lower courts, based on independent legal advice obtained management remains of
the view that the claim is without merit and FPM has compelling arguments to continue to defend its position in the Supreme Court. However,
considering the magnitude of this claim and the risks associated with the judicial system in Ukraine as further described above, the full provision
in the amount of UAH4,727 million (US$112,457 thousand as at 31 December 2024), which was recorded as at the end of the previous year, was
not released as at 31 December 2024.
If the final ruling of the Supreme Court is not in favour of FPM, the claimant may start the enforcement proceedings, which could have a material
negative impact on the Group’s business activities and its ability to continue as a going concern, as the assets of FPM could be seized or subject to
a forced sale. The potential seizure or forced sale of FPM’s assets, including moveable, immovable and financial assets, may have a material adverse
impact on the Group’s cash flow generation, profitability and available liquidity in future periods.
As at the date of the approval of these consolidated financial statements, it is not reasonably possible to assess the implications of a potential
seizure or forced sale of assets on the Group’s business activities, as the timing, scope and impact are unknown and outside of the Group’s control.
However, the Group is considering and has prepared a number of mitigating actions and responses within its control in order to seek to ensure
continuation of production and generation of revenue streams. Beyond that, in case of an enforcement, FPM will challenge orders and enforcement
actions in the court where possible, in order to seek to allow the Group to continue to trade and generate resources to meet its other liabilities as
they fall due. See Note 2 Basis of preparation, Note 13 Property, plant and equipment and Note 17 Inventories for further information.
Ferrexpo plc
Annual Report & Accounts 2024
222
Notes to the Consolidated Financial Statements continued
NOTE 30: COMMITMENTS, CONTINGENCIES AND LEGAL DISPUTES CONTINUED
CRITICAL JUDGEMENTS FOR ONGOING LEGAL PROCEEDINGS AND DISPUTES WITHOUT CORRESPONDING PROVISIONS
Creditor protection application against Ferrexpo Poltava Mining (“FPM”)
In February 2024, a supplier and related party to the Group filed an application to open bankruptcy proceedings (“creditor protection
proceedings”) against FPM, which was accepted by the relevant court in Ukraine for further consideration. The amount of debt claimed by the
supplier was initially UAH2.2 million (US$52 thousand as at 31 December 2024) and subsequently increased to UAH4.6 million (c. US$109 thousand
as at 31 December 2024).
On 18 July 2024, FPM settled the outstanding debt to the supplier. On 24 September 2024, the court rejected the supplier’s application. The supplier
appealed and the court of appeal refused to open the appeal proceedings on 16 January 2025. This means that the proceedings are now over.
Legal proceedings relating to Bank F&C
Shares freeze in relation to claim from the Ukrainian Deposit Guarantee Fund (“DGF”)
On 3 March 2023, the court of first instance in Ukraine while hearing the dispute between the DGF and Mr Zhevago in relation to the liquidation of
Bank F&C in 2015 (“the main dispute”), ordered the arrest (freeze) of 50.3% of the shareholding of Ferrexpo AG (“FAG”) in each of Ferrexpo Poltava
Mining (“FPM”), Ferrexpo Yeristovo Mining (“FYM”) and Ferrexpo Belanovo Mining (“FBM”). In addition to the restriction covering 50.3% of FAG’s
shareholding in each of FPM, FYM and FBM, the court order also contains a prohibition on Fevamotinico S.a.r.l. disposing of its shares in Ferrexpo
plc and Ferrexpo plc disposing of any of its shares in FAG. As at the date of the approval of these consolidated financial statements, the Group has
no intention, and never has had any intention, of disposing of its shares in FPM, FYM, FBM or FAG. The Group does not expect an impact on its
operations because of this court order.
The Group’s subsidiaries affected by this court order, including FAG, filed appeals to remove the restrictions. The court of appeal dismissed the appeals
and the decision of the court of appeal was upheld by the Supreme Court of Ukraine on 10 January 2024. Therefore, the restrictions remain effective.
On 31 July 2024, the court of first instance agreed to commence economic examination to be performed by an independent expert institution to
assess the amount of damages of Bank F&C in the main dispute. The proceedings in the main dispute are suspended until an expert opinion is received.
Based on advice from Ukrainian legal counsel, management considers that the court order dated 3 March 2023 to arrest (freeze) 50.3% of FAG’s
shareholding in each of FPM, FYM and FBM contravened Ukrainian law because the restricted 50.3% of corporate rights in the three Ukrainian
subsidiaries are the property of FAG and not of any other person as a matter of Ukrainian law.
Shares freeze in relation to claim from the National Bank of Ukraine (“NBU”)
In addition to the case initiated by the Ukrainian Deposit Guarantee Fund (“DGF”) as described above, there is a commercial litigation in Ukraine
between the NBU and Mr Zhevago in relation to a personal surety given by Mr Zhevago for a loan provided by the NBU to Bank F&C prior to Bank
F&C’s insolvency.
In the context of this commercial litigation, in September 2023 the Chief State Bailiff of the Ministry of Justice of Ukraine (“State Bailiff”) issued
a resolution to arrest (freeze) property of Mr Zhevago. This was stated to include 50.3% of the issued share capital of Ferrexpo Yeristovo Mining
(“FYM”) and of Ferrexpo Bellanovo Mining (“FBM”), which are owned by Ferrexpo AG (“FAG”). Such decision was made based on the incorrect
assumption that these corporate rights are owned by Mr Zhevago.
In October 2023, FAG filed a civil claim seeking to cancel the arrest order in relation to FAG’s shares in FYM and FBM and the motion to block the
enforcement procedure initiated by the State Bailiff in relation to potential sale of shares.
On 30 November 2023, the court of first instance in Ukraine granted FAG’s motion and suspended the enforcement procedure, prohibiting the
State Bailiff from taking any further actions to forcefully sell FAG’s corporate rights in FYM and FBM (the “interim measures”). On 1 July 2024,
the court of appeal lifted the interim measures. As a result, the State Bailiff may proceed with the sale. FAG subsequently filed an appeal to the
Supreme Court and on 8 August 2024, the Supreme Court opened the review of the case. In parallel, the court of first instance is considering FAG’s
claim. The next hearing of the court of first instance is scheduled for 1 April 2025.
In addition, in August 2024 the Group became aware that the Department of State Enforcement Service of the Ministry of Justice of Ukraine
(the “State Enforcement Service”) had issued a resolution arresting certain corporate rights relating to 49.3% of shares in Ferrexpo Poltava Mining
(“FPM”) held by FAG. On 15 August 2024, FAG filed a claim to remove this arrest. Initially, the court of first instance refused to open the case, but
this decision was overturned on 5 February 2025 following a successful appeal by FAG to the court of appeal. The case has therefore been returned
to the court of first instance which shall decide again on the issue of opening proceedings.
On 17 September 2024, a new arrest of the same 49.3% of shares in FPM was imposed by the State Enforcement Service. On 16 October 2024,
FAG filed a claim to lift the arrest. On 23 October 2024, the court of first instance refused to open the case, but this decision was also overturned
on 16 January 2025 following a successful appeal by FAG to the court of appeal. The case has been returned to the court of first instance which shall
again decide on the issue of opening proceedings.
If the above enforcement processes are not interrupted, this could ultimately lead to a potential sale of shares representing 50.3% of the issued
shares in each of FYM and FBM and 49.3% of the issued shares in FPM.
Shares freeze in relation to investigation in connection with Bank F&C
On 25 March 2024, the Group became aware of a court order dated 18 January 2024 regarding further restrictions on certain corporate rights
concerning all of the Group’s Ukrainian subsidiaries. According to the January 2024 court order these restrictions were imposed in September 2023
on 49.5% of the shares in all of the Group’s Ukrainian subsidiaries, except for Nova Logistics LLC and TIS-Ruda LLC, an associated company of the
Group, where the relevant percentages restricted are 25.2% and 24.7%, respectively. The Group understands the restrictions have been imposed
in connection with ongoing court actions relating to Bank F&C.
The restrictions do not affect ownership of the relevant shares, but prohibit their transfer and restrict the right to exercise corporate rights
otherwise attaching to such shares, including the right to vote. On 21 May 2024, FAG filed an appeal against the court order. On 30 January 2025,
the court of appeal rejected FAG’s appeal. FAG plans to file another claim to the court of first instance.
Strategic Report
Corporate Governance
223
Financial Statements
NOTE 30: COMMITMENTS, CONTINGENCIES AND LEGAL DISPUTES CONTINUED
On 4 March 2025, the State Bureau of Investigation in Ukraine (“SBI”) made a media statement that the Pecherskyi District Court of Kyiv has
granted a request of the Prosecutor General’s Office of Ukraine to transfer 49.5% of the corporate rights in Ferrexpo Poltava Mining (“FPM”) held
by Ferrexpo AG (“FAG”) to Ukraine’s Asset Recovery and Management Agency (“ARMA”). The statement also makes reference to the transfer to
ARMA of corporate rights in a further 15 undisclosed legal entities.
The SBI statement notes that the transfer of the corporate rights in FPM is in connection with on-going legal cases in Ukraine relating to the alleged
embezzlement of funds from Bank F&C, a Ukrainian bank previously owned by Mr Zhevago which was declared insolvent in 2015. Bank F&C has
never been part of the Ferrexpo Group.
As at the date of the approval of these consolidated financial statements, no member of the Ferrexpo Group has received any official documents or
requests from the Ukrainian authorities with regards to the decision of the Pecherskyi District Court of Kyiv and have not seen a copy of the court
decision. The details of the court decision are therefore unclear at this stage and the Group is working with its independent legal advisors to further
understand the situation.
Based on independent legal advice from Ukrainian counsel, management understands that FAG remains the 100% owner of FPM. Further to that,
ARMA may enter into an agreement with a third party manager who might manage 49.5% of the corporate rights in FPM, but according to the
current Ukrainian legislation such manager will need to obtain consent from FAG for any corporate actions. Based on article 21 of the Law on ARMA,
the manager is obliged to coordinate the exercise of assumed powers at the shareholders meeting with the owner of the shares. This rule suggests
that the manager cannot vote at the shareholders meeting on its own, but only with the consent of the owner, Ferrexpo AG.
Currency control measures imposed in Ukraine
With the start of the Russian invasion of Ukraine on 24 February 2022, the Ukrainian government introduced Martial Law affecting, among other
things, matters relating to lending agreements, foreign exchange and currency controls and banking activities.
As a result, the National Bank of Ukraine (“NBU”) has introduced significant currency and capital control restrictions in Ukraine. These measures are
affecting the Group in terms of its cross-border payments, which are restricted and may be made only in exceptional cases. The maximum period
for settlement of invoices under export and import contracts was decreased as of 1 April 2022 from what was previously 360 days to 180 days.
Despite the partial relaxation of Ukrainian hryvnia controls in May 2024 around the regulatory framework specific to foreign currency transactions,
intercompany settlements and transfers offshore for international Groups, the NBU maintains tight capital controls in Ukraine. These measures
put additional pressure on the Group’s liquidity management as the Ukrainian subsidiaries are currently not in a position to make significant cash
transfers outside of Ukraine. As it is essential to the Group that sufficient liquidity is held outside of Ukraine to ensure that the Group’s liabilities
can be settled when falling due, intercompany receivable balances due to the Ukrainian subsidiaries have historically only been paid when falling
due and after considering the local cash requirements for operating activities and capital expenditure programmes.
The lower operating activities and reduced capital expenditure programmes due to the ongoing war have reduced the local cash requirements
and consequently increased the imbalance between payments to be made into Ukraine and local cash requirements. As a result of the imposed
currency control measures, the Group has to carefully manage the payments to be made into Ukraine, as the local subsidiaries cannot transfer any
surplus funds back to Group entities outside of Ukraine, if required.
Failure to comply with the currency control regulations can result in fines of 0.3% per day calculated on the cumulative overdue receivable balances.
The Group has implemented various measures to mitigate the impact of the currency control regulations and reduce the risk of material fines, but
there exists legal uncertainty in the application of the currency control regulations during the application of Martial Law in Ukraine. The currency
control regulations may also be subject to change in the future (including with retrospective effect). Therefore, there is a risk that the Group may
become subject to challenges from regulatory authorities in connection with the application of the regulations.
Given the amount of outstanding receivable balances between Group companies, there is a risk of material fines becoming payable in the future.
However, because of different interpretations of the currency control regulations during the application of Martial Law and the measures initiated
by the Group to mitigate the risk of potential fines, it is currently not possible to reliably estimate the amount of a potential exposure.
Share dispute
In 2020, the Kyiv Commercial Court reopened court proceedings in relation to an old shareholder litigation.
This old shareholder litigation started in 2005, when a former shareholder in Ferrexpo Poltava Mining (“FPM”) brought proceedings in the Ukrainian
courts seeking to invalidate a share sale and purchase agreement concluded in 2002 pursuant to which a 40.19% stake in FPM was sold to nominee
companies that were previously ultimately controlled by Mr Zhevago, amongst other parties (the “2002 SPA”). After a long period of litigation, all
old claims were fully dismissed in 2015 by the Higher Commercial Court of Ukraine.
In January and February 2021, claims were filed by former shareholders in FPM seeking to invalidate the 2002 SPA. Those claims were similar to the
previous claims made back in 2005. In May 2021, the Kyiv Commercial Court ruled in favour of FAG but this decision was subsequently overturned
by the court of appeal which ruled in favour of the claimants. On 19 April 2023, the Grand Chamber of the Supreme Court ruled in favour of FAG.
In May 2023, the National-Anti-Corruption Bureau of Ukraine (“NABU“) and the Specialised Anti-Corruption Prosecutor’s Office (“SAPO“) accused
the Head of the Supreme Court of bribery. These allegations made reference to the ruling made by the Supreme Court on 19 April 2023 and
Mr Zhevago. Investigations by NABU and SAPO are underway into the conduct of the former Head of the Supreme Court and a lawyer who allegedly
acted as the intermediary in the alleged bribery. On 3 August 2023, NABU announced that Mr Zhevago had been issued with a notice of suspicion
in NABU’s and SAPO’s investigation. If the Ukrainian Anti-Corruption Court concludes that a judge received a bribe for the favourable decision
in the share dispute case, and such verdict of the Anti-Corruption Court remains valid after any potential appeal, then the claimants in the share
dispute case may apply to the Supreme Court to review the ruling made by the Supreme Court on 19 April 2023. In February 2024, all four claimants
were dissolved according to the records at the UK Companies House. As at the date of the approval of these consolidated financial statements,
no allegations have been made against the Group in connection with the alleged bribery and it is currently not possible to anticipate future
developments in this case with any certainty.
If the share dispute case were to be reviewed by the Grand Chamber of the Supreme Court once again, based on advice from Ukrainian legal
counsel, management remains of the view that FAG has compelling legal arguments to defend its position. However, more general concerns
surrounding the independence of the judicial system and its immunity from economic and political influences in Ukraine means there remains
a residual risk of a negative outcome.
Ferrexpo plc
Annual Report & Accounts 2024
224
Notes to the Consolidated Financial Statements continued
NOTE 30: COMMITMENTS, CONTINGENCIES AND LEGAL DISPUTES CONTINUED
A hypothetical reversal of the 19 April 2023 decision by the Grand Chamber of the Supreme Court would result in the loss of a significant proportion
of the shareholding in the Group’s main operating subsidiary in Ukraine, which holds approximately 65% of the Group’s non-current operating
assets, and would have a material adverse impact on the shareholders’ equity attributable to the shareholders of Ferrexpo plc. Due to the various
uncertainties, it is currently not possible to reliably estimate the financial impact, but it could be material. A negative decision could also have an
impact on potential future dividends from FPM to FAG and, as result, on the distributable reserves of Ferrexpo plc.
See Note 12 Earnings per share and dividends paid and proposed for further details.
No non-controlling interest has been recognised as of 31 December 2024 because FPM remains wholly owned by FAG as at the date of the
approval of these consolidated financial statements. It is management’s view that a hypothetical reversal of the decision by the Grand Chamber of
the Supreme Court will not cast significant doubt on the Group’s ability to continue as a going concern. However, such a decision might complicate
the daily business of the Group’s major subsidiary in Ukraine.
OTHER ONGOING LEGAL PROCEEDINGS AND DISPUTES
OTHER ONGOING LEGAL PROCEEDINGS AND DISPUTES WITH CORRESPONDING PROVISIONS
Challenge of squeeze-out of minority shareholders
Following the completion of squeeze-out procedures in 2019 in respect of Ferrexpo Poltava Mining (“FPM”), two former minority shareholders of
FPM challenged the valuation of the shares of FPM. This valuation formed the basis for a mandatory buy-out of minority shareholders according to
Ukrainian law.
On 19 September 2023, a court of first instance ruled in favour of the two former minority shareholders and decided that FPM should pay UAH136
million (31 December 2024: US$3,235 thousand; 31 December 2023: US$3,720 thousand) in aggregate to the claimants. The court of appeal upheld
the decision of the court of first instance. The Supreme Court cancelled both decisions and referred the case back to the court of first instance for
a new hearing.
As at the date of the approval of these consolidated financial statements, the claim is therefore before the court of first instance. On 15 November
2024 the court of first instance suspended proceedings. After FPM’s initial appeal of this decision to suspend was rejected, FPM appealed to the
Supreme Court on a point of law (a “cassation” appeal). On 27 January 2025, the Supreme Court commenced its review of this matter.
In accordance with the requirements of IAS 37 Provisions, contingent liabilities and contingent assets, the Group recorded a full provision for the
claimed compensations as at the end the comparative year ended 31 December 2023. No additional provision has been recorded as at 31 December
2024 as the court did not accept the motions of the two former minority shareholders to increase the amount of the claims.
Other ongoing legal proceedings and disputes without corresponding provisions
Royalty-related investigation and claim
On 8 February 2022, FPM received a tax audit report, which claims the underpayment of iron ore royalty payments during the period April 2017
to June 2021 in the amount of approximately UAH1,042 million (US$24,787 thousand as at 31 December 2024), excluding fines and penalties.
The Group objected to the claims made in the tax audit report. On 11 August 2023, FPM received a tax notification decision, which claims the
underpayment of royalty payments in the amount of UAH1,233 million (US$29,330 thousand as at 31 December 2024), which is higher than the
amount initially stated in the tax audit report due to imposed fines and penalties. FPM challenged this notification decision as part of administrative
procedures with the tax authorities. On 20 October 2023, the tax authorities decided that the amount in the notification decision is final and not
subject to change. In November 2023, FPM filed a lawsuit to challenge the tax authorities’ decision. On 15 April 2024, the court suspended
proceedings until the review of another case on challenge of individual tax consultation issued by the tax authority in another matter which is
connected with royalty proceedings.
The Bureau of Economic Security of Ukraine started a royalty-related investigation and on 16 November 2022 conducted searches at FPM and FYM.
On 3 February 2023, a notice of suspicion was delivered to a senior manager of FPM, which claimed underpayment of royalty payments in the
amount of approximately UAH2,000 million (US$47,575 thousand as at 31 December 2024). Bail of UAH20 million (US$547 thousand as at date of
the payment) was approved by the court on 9 February 2023. Although the Group had no obligation to do so the bail amount was subsequently
paid by the Group.
On 6 February 2023, the court arrested the bank accounts of FPM. Following a motion to change the scope of the arrest filed by FPM, the court
on 8 February 2023 and on 16 February 2023 added exceptions to the original arrest order to allow FPM to make payments for salaries, local taxes,
social security charges, payments for utilities as well as payments to state and municipal companies. FPM’s appeal to cancel the arrest of bank
accounts was not granted.
On 31 October 2023, a notice of suspicion was delivered to another senior manager of FPM. On 13 November 2023, a court of first instance approved
the bail in the amount of approximately UAH800 million (US$21,993 thousand as at that date) which was reduced by the court of appeal to UAH650
million (US$15,462 thousand as at 31 December 2024). Although the Group had no obligation to do so, the Group subsequently made a partial
payment of the bail in the amount of UAH50 million (US$1,259 thousand as at date of the payment) and the case was transferred to a local court.
On 26 November 2024, the court cancelled the arrest of FPM’s bank accounts at one of its Ukrainian banks. The next court hearing is scheduled for
2 April 2025.
Based on independent legal advice obtained, it is management’s view that FPM and FYM have compelling arguments to defend their positions
in court and, as a consequence, no associated liabilities have been recognised in relation to the royalty claims in the consolidated statement of
financial position as at 31 December 2024. However, as with other ongoing legal proceedings, more general concerns surrounding the independence
of the judicial system and its immunity from economic and political influences in Ukraine means there remains a residual risk of a negative outcome.
Investigations on use of waste product and asset freeze
On 10 January 2023, the State Bureau of Investigations (“SBI”) in Ukraine conducted several searches in respect of investigations on alleged illegal
extraction of minerals (“rubble”). The National Police of Ukraine also carried out investigations on the same matter and searched and collected
samples of the rubble on 17 January 2023 at Ferrexpo Poltava Mining (“FPM”).
Strategic Report
Corporate Governance
225
Financial Statements
NOTE 30: COMMITMENTS, CONTINGENCIES AND LEGAL DISPUTES CONTINUED
FPM’s position is that it has complied with the relevant legislation in respect of its mining license. The minerals in question were not a separate
mineral resource, but rather a waste product resulting from the crushing of iron ore during the technical process for the production of iron ore
pellets. Sales of the rubble by FPM were subject to inspection by the State Service for Geology and Subsoil of Ukraine for many years and in any
event sales were suspended by the Group in September 2021 when the State Service for Geology and Subsoil of Ukraine requested to suspend
the sales.
On 29 June 2023, the SBI issued notices of suspicion to three representatives of FPM’s senior management and the head of one division for
allegedly selling the rubble without the appropriate permit. These FPM employees were detained by the SBI and subsequently released after FPM
paid bails totalling UAH122 million (US$3,336 thousand as at date of the payment).
On 22 September 2023, the National Police of Ukraine searched the private residence of a senior manager of FPM and issued a further notice of
suspicion. The senior manager was detained by the National Police of Ukraine and released following payment of bail by the Group in the amount
of UAH400 million (US$11,063 thousand as at date of the payment).
In the pre-trial investigation of the rubble case and following an application from the prosecutor to arrest (“freeze”) all rail cars and railway access
tracks owned by FPM, a court of first instance in Ukraine issued an order to freeze the rail cars and the railway access tracks. FPM filed an appeal
and at a hearing of the court of appeal on 30 October 2023 the arrest of assets was upheld. However, the court of appeal refused to clarify the
exact scope of the order which was interpreted as a restriction on the use of one type of FPM’s rail cars. On 22 April 2024, the court of first instance
cancelled the prohibition to use rail cars and the railway access tracks, thereby permitting FPM to continue using rail cars (of any type) and railway
access tracks.
In the same pre-trial investigation, some of the real estate assets and transport vehicles of FPM were also arrested, but this arrest does not restrict
the use of these assets in FPM’s operations.
On 5 March 2024, FPM’s bank accounts were arrested by the National Police of Ukraine with exemptions allowing FPM to pay salaries, local taxes,
social security charges, payments for utilities as well as payments to state and municipal companies. FPM’s appeal against the arrest of the bank
accounts was rejected by the court of appeal.
On 29 April 2024, a court placed a restriction on the sale of the mining license of FPM. This restriction does not affect the use of the mining license
and FPM continues its mining operations as planned. FPM’s appeal against the restriction on the sale of the mining license was rejected by the court
of appeal.
On 15 January 2025, the Office of the Prosecutor General announced that the National Police of Ukraine had completed the pre-trial investigation
and the case was sent to a court of the first instance. On 4 February 2025, FPM received information that a civil claim was filed seeking joint liability
of FPM and its General Director for damages amounting to UAH157 billion (approximately US$3.8 billion as at 14 March 2025) in favour of the
Ukrainian state. This claim was initially based on an allegation that FPM and the General Director participated in the illegal sale of waste products.
This has since transformed into allegations that FPM is illegally mining and selling subsoil (minerals other than iron ore), which is said to have caused
damage to the environment. FPM rejects these allegations in their entirety on the basis that there was no illegal extraction of the subsoil. FPM
mines and extracts iron ore according to its mining license and provides for the removal of rock and its storage as waste.
In terms of the case initiated by the National Police of Ukraine, the next hearing is scheduled for 19 March 2025 and it is expected that the
proceedings in this case will be a lengthy process. In terms of the criminal case initiated by the SBI, a preparatory court hearing was rescheduled
from 4 February 2025 to 5 March 2025. This hearing took place and the next hearing is scheduled for 15 May 2025. Based on independent legal
advice from Ukrainian counsel, the trial in the court of first instance may last several years.
As at the date of approval of these consolidated financial statements, the claim received does not constitute a legal obligation according to the local
legislation. Further to that, even if a court in Ukraine would conclude that there was a damage to the environment, the magnitude of this claim is in
no way comprehensible and it is management’s position that no reliable estimate of the potential future outflow and assessment of the merits can
be made as at the date of approval of these consolidated financial statements. As a consequence, no provision was recorded as at 31 December
2024 in accordance with IAS 37 Provisions, contingent liabilities and contingent assets. See Note 2 Basis of preparation for potential impacts on the
Group’s ability to continue as going concern.
Ecological claims
As described in detail in the 2023 Annual Report & Accounts, the State Ecological Inspection carried out an inspection of Ferrexpo Yeristovo Mining
(“FYM”) and on 1 October 2021 issued an order to remove a number of alleged violations of environmental rules. After the court of first instance ruled
in favour of FYM on 19 July 2022, the State Ecological Inspection filed an appeal. The court of appeal returned the appeal claim to the State Ecological
Inspection on 20 March 2023 due to procedural errors when filing the claim and the State Ecological Inspection subsequently requested an extension
of the deadline for the filing of their next appeal. The State Ecological Inspection subsequently filed another appeal and on 20 July 2023 the court of
appeal returned the appeal claim back to the State Ecological Inspection. There had been no actions in respect of this dispute until 5 October 2023,
when the National Police of Ukraine reviewed land plots of FYM. On 5 November 2024, a court authorised a review of FYM’s land plots and new
investigations.
There have been no further developments since then and it is not possible at present to anticipate future developments in this case.
Based on independent legal advice obtained, it is management’s view that FYM has compelling arguments to defend its position in the court and,
as a consequence, no associated liabilities have been recognised in relation to these matters in the consolidated statement of financial position as at
31 December 2024.
Cancellation of licence for Galeschynske deposit
On 24 June 2021, an Order of the President of Ukraine was published on the official website of the President (the “Order”), which enacted the
Decision of the National Security and Defence Council of Ukraine on the application of personal special economic and other restrictive measures
and sanctions (the “Decision”). Ferrexpo Belanovo Mining (“FBM”) is included in the list of legal entities which are subject to sanctions pursuant to
the Decision. The Order and the Decision do not provide any legal ground for the application of sanctions. The sanction imposed on FBM is the
cancellation of the mining license for the Galeschynske deposit, which is one of two licenses held by FBM.
Ferrexpo plc
Annual Report & Accounts 2024
226
Notes to the Consolidated Financial Statements continued
NOTE 30: COMMITMENTS, CONTINGENCIES AND LEGAL DISPUTES CONTINUED
On 15 November 2021, FBM filed a lawsuit with the Supreme Court of Ukraine partially to annul the Order. On 28 November 2024, the appeal was
filed and the Grand Chamber of the Supreme Court subsequently opened the proceedings. Based on information available on the website of the
Supreme Court, the Grand Chamber of the Supreme Court rejected FBM’s appeal on 28 January 2025.
The Galeschynske deposit is a project in the exploration phase that is situated to the north of the Group’s active mining operations. Following the
cancellation of this license, all capitalised costs associated with this license totalling US$3,439 thousand, were written off in the financial year 2021.
TAXATION
Tax legislation
As disclosed in Note 11 Taxation, following the completion of tax audits in respect of its cross-border transactions, the Group’s major subsidiaries,
Ferrexpo Poltava Mining (“FPM”) and Ferrexpo Yeristovo Mining (“FYM”), received tax claims in the amount of UAH2,162 million (US$51,428
thousand as at 31 December 2024), including fines and penalties, and UAH259 million (US$6,161 thousand as at 31 December 2024). The Group’s
subsidiaries filed objections to be considered by the tax authorities, although these were rejected. Subsequently, the Group’s subsidiaries filed
claims with the courts. As at the date of the approval of these consolidated financial statements, the hearings on the merits before the court of
first instance are still ongoing. As a consequence, no provisions have been recorded as at 31 December 2024, either for the claims received or for
any subsequent years. If FPM and FBM are ultimately unsuccessful, the tax claims may be material, although it is not possible at present to reliably
quantify the potential exposure. An unfavourable outcome would have an adverse impact on the Group’s cash flow generation, profitability and
liquidity. See Note 11 Taxation and also the Principal Risks section on pages 85 to 87 in terms of the Ukraine country risk.
NOTE 31: SHARE CAPITAL AND RESERVES
ACCOUNTING POLICY
Ordinary Shares
Ordinary Shares are classified as equity. Incremental costs directly attributable to the issue of Ordinary Shares and share options are recognised as
a deduction from equity, net of any tax effects.
Employee benefit trust reserve
Ferrexpo plc shares held by the Group are recognised at cost and classified in reserves. Consideration received for the sale of such shares is also
recognised in equity, with any difference between the proceeds from the sale and the original cost to be recorded in reserves. No gain or loss is
recognised in the consolidated income statement on the purchase, issue or cancellation of equity shares.
Treasury shares
Own equity instruments, which are reacquired (treasury shares), are recognised at cost and deducted from equity and represent a reduction in
distributable reserves. No gain or loss is recognised in the consolidated income statement on the purchase, sale, issue or cancellation of the Group’s
own equity instruments. Any difference between the carrying amount and the consideration is recognised in reserves.
Translation reserve
The translation reserve represents exchange differences arising on the translation of non-US dollar functional currency operations within the Group,
mainly those in Ukrainian hryvnia, into US dollars.
SHARE CAPITAL
Share capital represents the nominal value on issue of the Company’s equity share capital, comprising £0.10 Ordinary Shares. The fully paid share
capital of Ferrexpo plc at 31 December 2024 was 613,967,956 Ordinary Shares (2023: 613,967,956) at a par value of £0.10 paid for in cash, resulting
in share capital of US$121,628 thousand (2023: US$121,628 thousand) per the statement of financial position. The interest of the Group’s largest
shareholder, Fevamotinico S.a.r.l., in voting rights of Ferrexpo plc is 49.3% as at the date of this report (49.3% as at the time of publication of the
2023 Annual Report and Accounts).
Further information in terms of rights, preferences and restrictions associated with the Company’s ordinary shares are provided in the Directors’
Report on pages 154 and 155.
As at 31 December 2024, other reserves attributable to equity shareholders of Ferrexpo plc comprised:
US$000
Uniting of interest
reserve
Treasury share
reserve
Employee benefit
trust reserve
Translation
reserve
Total other
reserves
At 1 January 2023
31,780
(77,260)
(1,189)
(2,590,222)
(2,636,891)
Foreign currency translation differences
−
−
−
(54,847)
(54,847)
Tax effect
−
−
−
1,479
1,479
Total other comprehensive loss for the year
−
−
−
(53,368)
(53,368)
Share based payments
−
−
830
−
830
Effect from transfer of treasury shares
−
29,000
(15,865)
−
13,135
At 31 December 2023
31,780
(48,260)
(16,224)
(2,643,590)
(2,676,294)
Foreign currency translation differences
−
−
−
(136,902)
(136,902)
Tax effect
−
−
−
3,972
3,972
Total other comprehensive loss for the year
−
−
−
(132,930)
(132,930)
Share based payments
−
−
320
−
320
Effect from transfer of treasury shares
−
−
−
−
−
At 31 December 2024
31,780
(48,260)
(15,904)
(2,776,520)
(2,808,904)
Strategic Report
Corporate Governance
227
Financial Statements
NOTE 31: SHARE CAPITAL AND RESERVES CONTINUED
UNITING OF INTEREST RESERVE
The uniting of interest reserve represents the difference between the initial investment by Ferrexpo AG in Ferrexpo Poltava Mining to gain control
of the subsidiary in 2005 and the net assets acquired, which under the pooling of interests method of accounting are consolidated at their historic
cost, less non-controlling interests.
TREASURY SHARE RESERVE
In September 2008, Ferrexpo plc completed a buy-back of 25,343,814 shares for a total cost of US$77,260 thousand. During the comparative year
ended 31 December 2023, the Group transferred 9,513,000 shares from the treasury shares reserve to the Group’s employee benefit trust reserve,
resulting in 15,830,814 shares remaining in the treasury share reserve as of 31 December 2024 (2023: 15,830,814 shares). These shares are currently
held as treasury shares by the Group. The Companies Act 2006 forbids the exercise of any rights (including voting rights) and the payment of
dividends in respect of treasury shares.
EMPLOYEE BENEFIT TRUST RESERVE
This reserve represents the treasury shares held to satisfy future grants for senior management incentive schemes. Information on the Group’s
share-based payments is provided in Note 28 Share-based payments. As at 31 December 2024, the employee benefit trust reserve includes
9,766,759 (2023: 9,801,643 shares), after the transfer of 9,513,000 shares on 10 March 2023 from the treasury share reserve.
TRANSLATION RESERVE
The Ukrainian hryvnia devalued from 37.982 to 42.039 compared to the US dollar during the year ended 31 December 2024. In the comparative year
ended 31 December 2023, the local currency was unchanged at 36.568 from 1 January to 30 September 2023, before depreciating to 37.982 as at
31 December 2023. A devaluation of the local currency can result in significant reduction of the Group’s net assets as assets and liabilities of the
Ukrainian subsidiaries are denominated in the local currency and the effect from the translation is reflected in the translation reserve. See also the
consolidated statement of comprehensive income on page 174.
NOTE 32: CONSOLIDATED SUBSIDIARIES
ACCOUNTING POLICY
Entities are included in the consolidated financial statements from the date of obtaining control and the inclusion in the consolidated financial
statements is consequently ceased when the control over an entity is lost. Control is obtained when the Group is exposed, or has the rights, to
variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee that gives the
current ability to direct the relevant activities. Control can be obtained through voting rights, but also through agreements, statutes, contracts,
trust deeds or other schemes.
Non-controlling interests in the net assets of consolidated subsidiaries are shown separately in the Group’s consolidated statement of financial
position and consolidated statement of changes in equity. The share of the profit attributable to non-controlling interests is shown in the
consolidated income statement and the consolidated statement of comprehensive income. The carrying amount of the non-controlling interests
is adjusted for any change in ownership interest to reflect the relative controlling and non-controlling interests in the subsidiary. Any difference
between the amount of the adjustment to non-controlling interests and any consideration paid or received is recognised in the equity attributable
to equity shareholders of Ferrexpo plc.
The Group comprises Ferrexpo plc and its consolidated subsidiaries. The Group’s interests in the entities are held indirectly by the Company, with
the exception of Ferrexpo AG, which is directly held. All of the Group’s major subsidiaries are wholly owned. The interests that non-controlling
interests have in the Group’s operations are not material and no significant judgements and assumptions were required to determine that the
Group has control over these entities. The Group’s consolidated subsidiaries are listed on page 239.
The Group does not have any other interests of 20% or more in undertakings that are not disclosed on page 239, except for the investment in
the associate mentioned in Note 33 Investments in associates.
Ferrexpo plc
Annual Report & Accounts 2024
228
Notes to the Consolidated Financial Statements continued
NOTE 33: INVESTMENTS IN ASSOCIATES
ACCOUNTING POLICY
The Group’s investments in associates are accounted for using the equity method of accounting. An associate is an entity in which the Group has
significant influence and which is neither a subsidiary nor a joint venture.
Under the equity method, the investment in the associate is carried in the statement of financial position at cost plus any post-acquisition
changes in the Group’s share of net assets of the associate. Goodwill relating to an associate is included in the carrying amount of the investment
and is not amortised nor individually tested for impairment. After application of the equity method, the Group determines whether it is necessary
to recognise any additional impairment loss with respect to the Group’s investment in the associate.
The share of profit from an associate is shown on the face of the consolidated income statement. This is the profit attributable to the Group and is
therefore the profit after tax and non-controlling interests in the subsidiaries of the associate. The reporting dates of the associates and the Group
are identical and the associates’ accounting policies are generally in conformity with those applied by the Group.
The Group holds an interest of 49.9% (2023: 49.9%) in TIS Ruda LLC, operating a port on the Black Sea, which the Group uses as part of its
distribution channel.
US$000
Year ended
31.12.24
Year ended
31.12.23
Opening balance
4,616
5,167
Share of profit/(loss)
2,314
(372)
Translation adjustments
(580)
(179)
Closing balance
6,350
4,616
For the year ended 31 December 2024 the summarised financial information for the associate was as follows:
Revenue
Net profit/ (loss)
US$000
Year ended
31.12.24
Year ended
31.12.23
Year ended
31.12.24
Year ended
31.12.23
TIS Ruda LLC1
16,409
773
4,637
(745)
1.
Based on preliminary and unaudited financial information.
The sales through the Black Sea port of Pivdennyi to the markets outside of Europe represented approximately half of the Group’s sales prior to the
Russian invasion into Ukraine in February 2022. As a result of the ongoing war in Ukraine, the Group’s seaborne sales through the Ukrainian Black
Sea ports had been suspended since the beginning of the war, but resumed again during in January 2024, albeit still at a significantly lower level.
The situation remains very volatile and the level of TIS Ruda’s operations is still difficult to reliably predict.
The figures in the table above represent 100% of the associate’s revenue and net profit and not the Group’s share based on its ownership. As at
31 December 2024, the associate’s total assets were US$16,498 thousand (2023: US$14,345 thousand) and the total liabilities were US$3,773
thousand (2023: US$5,094 thousand) based on preliminary and unaudited statutory accounts. Any deviations from the Group’s associate’s equity
based on the audited financial statements is adjusted subsequent to the year end once the audited financial statements are available.
The Group became aware that during the comparative year ended 31 December 2023, a governmental body in Ukraine tried to confiscate UAH355
million (US$8,445 thousand as at 31 December 2024) of TIS Ruda’s available liquidity. The intention of the governmental body was not successful as
the bank refused to confiscate the amount without a valid court order. The case was closed on 2 August 2024, following the cancellation of the act
of forced alienation by the Ministry of Defence of Ukraine.
Strategic Report
Corporate Governance
229
Financial Statements
NOTE 34: RELATED PARTY DISCLOSURES
During the years presented, the Group entered into arm’s length transactions with entities under the common control of Mr 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 Mr Zhevago. Associated companies refer to TIS Ruda LLC, in which the Group holds
an interest of 49.9% (2023: 49.9%). See Note 33 Investments in associates for further details. This is the only associated company of the Group.
The Group entered into a settlement agreement with Mr Zhevago on 23 July 2024 relating to amounts potentially owing to Mr Zhevago under
his CEO contract. Mr Zhevago stepped down from his role as CEO of the Group in October 2019, and subsequently entered into contractual
arrangements with the Group in December 2020 (as more particularly detailed in the 2020 Annual Report & Accounts). At the time of entering
into these new contractual arrangements, the Group did not make any payments to Mr Zhevago for amounts outstanding under the CEO contract,
including accrued vacation leave and payments in connection with the notice period. The total amount potentially owed to Mr Zhevago was US$714
thousand and was settled on 17 July 2024 with an amount owed by Mr Zhevago to the Group. As a benefit under the CEO contract, Mr Zhevago was
entitled to receive fully furnished accommodation at the Group’s expense and this arrangement continued until December 2023. Mr Zhevago has
agreed to fully set-off the cost of the accommodation paid for by the Group against the sum potentially owed by the Group to him under the
settlement agreement for the CEO contract.
Information on the Directors’ fee payments made to the Non-executive Directors and Executive Directors is provided in the Remuneration Report
on pages 143 to 151.
Related party transactions entered into by the Group during the years presented are summarised in the following tables:
REVENUE, EXPENSES, FINANCE INCOME AND EXPENSE
Year ended 31.12.24
Year ended 31.12.23
US$000
Entities
under
common
control
Associated
companies
Other
related
parties
Entities under
common
control
Associated
companies
Other related
parties
Other sales
302
−
−
271
−
1
Total related party transactions within revenue
302
−
−
271
−
1
Materials and servicesa
7,943
−
−
6,473
−
−
Spare parts and consumablesb
3,151
−
−
1,730
−
−
Other expensesc
−
−
−
1,289
−
−
Total related party transactions within cost of sales
11,094
−
−
9,492
−
−
Selling and distribution expensesd
5,683
11,950
−
5,825
20
−
General and administration expensese
121
−
844
200
−
691
Other operating expensesf
203
11
−
1,019
−
−
Finance expense
1
−
−
3
−
−
Total related party transactions within expenses
17,102
11,961
844
16,539
20
691
Total related party transactions
17,404
11,961
844
16,810
20
692
A description of the most material transactions, which are in aggregate over US$200 thousand in the current or comparative year, 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
Purchases of oxygen, scrap metal and services from Kislorod PCC for US$1,048 thousand (2023: US$1,020 thousand);
a
Purchases of cast iron balls from OJSC Uzhgorodsky Turbogas for US$5,506 thousand (2023: US$4,552 thousand); and
a
Purchase of maintenance and construction services from FZ Solutions LLC for US$1,257 thousand (2023: US$779 thousand).
b
Purchases of spare parts from CJSC Kyiv Shipbuilding and Ship Repair Plant (“KSRSSZ”) in the amount of US$210 thousand (2023: US$218 thousand);
b
Purchases of spare parts from OJSC Uzhgorodsky Turbogas in the amount of US$1,153 thousand (2023: US$746 thousand);
b
Purchases of spare parts from FZ Solutions LLC of US$469 thousand (2023: US$372 thousand);
b
Purchases of spare parts from Kislorod PCC in the amount of US$329 thousand (2023: US$256 thousand); and
b
Purchases of spare parts from Valsa GTV of US$982 thousand (2023: US$137 thousand).
c
Insurance premiums paid to ASK Omega for insurance cover in respect of mining equipment and machinery in the amount of US$1,289 thousand during the comparative period
ended 31 December 2023. No such insurance premiums paid during the period ended 31 December 2024.
d
Purchases of advertising, marketing and general public relations services from FC Vorskla of US$5,681 thousand (2023: US$5,823 thousand).
f
Insurance premiums paid to ASK Omega for workmen’s insurance and other insurances of US$804 thousand during the comparative period ended 31 December 2023. No such
insurance premiums paid during the period ended 31 December 2024;
f
Purchase of marketing services from TV & Radio Company of US$201 thousand (2023: US$210 thousand).
Ferrexpo plc
Annual Report & Accounts 2024
230
Notes to the Consolidated Financial Statements continued
NOTE 34: RELATED PARTY DISCLOSURES CONTINUED
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 (see Note 33 Investments in associates).
d
Purchases of logistics services in the amount of US$11,950 thousand (2023: US$20 thousand) relating to port operations, including port charges, handling costs, agent
commissions and storage costs. The scope of the services procured from TIS Ruda is heavily affected by the ongoing war in Ukraine as the Group’s seaborne sales through the port
of Pivdennyi were suspended since the beginning of the war and resumed again in January 2024. See Note 33 Investments in associates for further information.
Other related parties
The Group entered into various transactions with related parties other than those under the control of Mr Zhevago. All transactions were carried out on an arm’s length basis in the
normal course of business.
e
Legal and administrative services in the amount of US$657 thousand (2023: US$510 thousand) provided by Kuoni Attorneys at Law Ltd., which is controlled by a member of the
Board of Directors of one of the subsidiaries of the Group. The Directors’ fees paid totalled US$214 thousand for the financial year 2024 (2023: US$100 thousand).
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 years presented.
Year ended 31.12.24
Year ended 31.12.23
US$000
Entities
under
common
control
Associated
companies
Other
related
parties
Entities
under
common
control
Associated
companies
Other related
parties
Purchases in the ordinary course of business
3,109
−
−
3,499
−
−
Total purchases of property, plant and equipment
3,109
−
−
3,499
−
−
During the year ended 31 December 2024, the Group purchased major spare parts and equipment from FZ Solutions LLC totalling US$3,109
thousand (2023: US$3,499 thousand) in respect of the continuation of the Wave 1 pellet plant expansion and hydrogen projects.
The FPM Charity Fund owns 75% of the Sport & Recreation Centre (“SRC”) in Goryshnye Plavnye/Horishni Plavni and made contributions totalling
US$100 thousand during the year ended 31 December 2024 (2023: US$69 thousand) for the construction and maintenance of the building,
including costs related to electricity, gas and water consumption.
BALANCES WITH RELATED PARTIES
The outstanding balances, as a result of transactions with related parties, for the years presented are shown in the table below:
Year ended 31.12.24
Year ended 31.12.23
US$000
Entities
under
common
control
Associated
companies
Other
related
parties
Entities
under
common
control
Associated
companies
Other related
parties
Other non-current assetsg
517
−
−
3,001
−
−
Total non-current assets
517
−
−
3,001
−
−
Trade and other receivablesh
155
2,416
−
71
3,125
−
Prepayments and other current assetsi
93
−
−
124
389
−
Total current assets
248
2,416
−
195
3,514
−
Trade and other payablesj
1,085
−
−
1,219
−
−
Total current liabilities
1,085
−
−
1,219
−
−
A description of the balances over US$200 thousand in the current or comparative year is given below.
Entities under common control
g
Other non-current assets include prepayments for property, plant and equipment totalling US$517 thousand (2023: US$2,990 thousand) made to FZ Solutions LLC mainly in
relation to the Wave 1 expansion project of the processing plant.
j
Trade and other payables of US$549 thousand (2023: US$703 thousand) relate to the purchase of spare parts and services from FZ Solutions LLC; and
j
Trade and other payables of US$316 thousand (2023: US$317 thousand) relate to the purchase of spare parts from Uzhgorodsky Turbogas, OJSC.
Associated companies
h
Trade and other receivables of US$2,416 thousand (2023: US$3,125 thousand) relate to dividends declared by TIS Ruda LLC prior to the beginning of the war in Ukraine.
The outstanding balance is net of an allowance of US$278 thousand (2023: nil).
i
Prepayments and other current assets relate to cargo storage services from TIS Ruda LLC in the amount of US$389 thousand in the comparative year ended 31 December 2023.
No such prepayments as at 31 December 2024.
PAYMENTS ON BEHALF OF A KEY MANAGEMENT MEMBER
As disclosed in Note 30 Commitments, contingencies and legal disputes, the Group is subject to various legal actions and ongoing court
proceedings initiated by certain governmental bodies in Ukraine. It is current practice of these governmental bodies to issue notices of suspicion
to members of the senior management of the Group’s subsidiaries in Ukraine, requesting significant bail payments.
Strategic Report
Corporate Governance
231
Financial Statements
NOTE 34: RELATED PARTY DISCLOSURES CONTINUED
During the financial years ended 31 December 2024, the Group made additional bail payments totalling UAH53 million (US$1,325 thousand at
the applicable exchange rates) on behalf of three members of the senior management of one of the Group’s subsidiaries in Ukraine, compared to
UAH540 million (US$14,901 thousand at the applicable exchange rates) for four members during the comparative year ended 31 December 2023.
Due to their roles as key management members of the Group, the payments made are considered to be related party transactions under the Listing
Rules as the payments were made to their benefit. As a result, and as required by the Listing Rules, the Group consulted its sponsor before making
any of these payments.
One bail payment made during the comparative year ended 31 December 2023 in the amount of UAH400 million (US$11,062 thousand at the
applicable exchange rate on date of payment) was a smaller related party transaction for the purposes of UK Listing Rules and, in accordance
with the prevailing UK Listing Rules, the Group has obtained written confirmation from its sponsor that the terms of the transaction are fair and
reasonable as far as the shareholders of Ferrexpo plc are concerned. Further to that, the Group made an announcement in accordance with UK
Listing Rules on 2 November 2023.
NOTE 35: EVENTS AFTER THE REPORTING PERIOD
As announced on 4 February 2025, the Group’s subsidiary Ferrexpo Poltava Mining (“FPM”) has received a civil claim seeking joint liability of FPM
and its General Director for damages amounting to UAH157 billion (approximately US$3.8 billion as at 14 March 2025) in favour of the Ukrainian
state. This claim is in respect of investigations that commenced already in 2023 and resulted in a criminal claim. Further information on the criminal
and civil claims received is provided on page 225 of Note 30 Commitments, contingencies and legal disputes, including the critical judgement made
in respect of a potential recognition of a provision under IAS 37 Provisions, contingent liabilities and contingent assets.
On 12 February 2025, the National Security and Defence Council of Ukraine (the “NSDC”) adopted the decision later enacted by the Presidential
Decree No. 81/2025, to impose personal special economic and other restrictive measures (“sanctions”) on certain individuals, including Mr Zhevago.
These sanctions imposed on Mr Zhevago are personal in nature and have not been imposed on Ferrexpo plc, Ferrexpo AG (“FAG”), Ferrexpo Poltava
Mining (“FPM”) or any other member of the Ferrexpo Group.
The sanctions regime in Ukraine is primarily governed by the Law of Ukraine ‘On Sanctions’ (“Sanctions Law”), which strictly requires that the
application of sanctions be based on the principles of legality, transparency, objectivity, proportionality to the intended purpose, and effectiveness.
As interpreted by the Ukrainian Supreme Court, the NSDC’s decision on personal sanctions, along with the enacting presidential decree, constitutes
an act of individual application. In other words, personal sanctions have an inherently individual character and apply strictly to the persons named
in the NSDC’s decision (i.e., the sanctioned individual). Under the Sanctions Law, a sanctioned person may be subject to an asset confiscation
sanction, provided certain conditions are met. The law states that a sanctioned person may only be subject to asset confiscation if one of the
following conditions are met:
• the assets being confiscated are directly owned by the sanctioned person; or
• the sanctioned person can directly or indirectly perform actions equivalent in substance to the right of disposal (i.e. the person can control the
disposal of the assets)
In the case of Mr Zhevago, none of these conditions are met with respect to the assets of FPM. In particular, Mr Zhevago:
• has no ownership over any of the assets or corporate rights in FPM; and
• does not have any right of disposal or similar over any of Ferrexpo plc’s subsidiaries (including FPM) or their assets.
Therefore, based on independent legal advice received by the Group, there is no legal basis under Ukrainian law to confiscate the assets or
corporate rights in FPM. However, due to the lack of established clear rules on application of personalized sanctions, the Group remains exposed
to the risks described below. See the section below on the critical judgement of this event.
On 20 February 2025, the State Bureau of Investigation (the “SBI”) made a media announcement regarding a potential claim to the High Anti-
Corruption Court of Ukraine (the “HACC”) to nationalise 49.5% of shares in FPM and certain of its assets. The SBI stated that it is working with the
Ministry of Justice of Ukraine to prepare the claim. As at the date of the approval of these consolidated financial statements, FPM has not received a
formal notification of such claim. Under Ukrainian laws, the SBI has no authority to petition, bring claims or make proposals (both on nationalisation
or on application of any asset-confiscation sanction) to the HACC. The proper authority should be the Ministry of Justice of Ukraine. The Group
together with its legal advisors are assessing any potential implications. Such potential implications might include, but are not limited to:
• a claim by the Ministry of Justice of Ukraine to the HACC to apply for the asset-confiscation sanctions;
• enhanced checks on the Ferrexpo Group’s Ukrainian entities by Ukrainian banks and potentially other commercial counterparties;
• challenges with taxes, including but not limited to complete refusal of VAT refunds; and/or
• restrictions on dividend distributions.
See the section below on the critical judgement of this event.
As announced on 5 March 2025, the SBI also made a media statement that the Pecherskyi District Court of Kyiv has granted a request of the
Prosecutor General’s Office of Ukraine to transfer 49.5% of the corporate rights in FPM to Ukraine’s Asset Recovery and Management Agency
(“ARMA”), together with corporate rights in another 15 undisclosed legal entities. This transfer of corporate rights is in connection with on-going
proceedings relating to Bank F&C. Based on independent legal advice, the only purpose for which management of property may be transferred to
the ARMA is for preservation of real evidence relevant to a criminal proceeding. FAG’s corporate rights, which, as it has been announced, have been
transferred to the ARMA pursuant to the Transfer Order, cannot constitute real evidence and therefore cannot be legally transferred to the ARMA.
See pages 222 and 223 of Note 30 Commitments, contingencies and legal disputes for further details on the ongoing case regarding the Shares
freeze in connection with Bank F&C. See the section below on the critical judgement of this event.
Ferrexpo plc
Annual Report & Accounts 2024
232
Notes to the Consolidated Financial Statements continued
NOTE 35: EVENTS AFTER THE REPORTING PERIOD CONTINUED
CRITICAL JUDGEMENTS
The events after the reporting period described above require critical judgement from the Group’s management when preparing the consolidated
financial statements for the year ended 31 December 2024 as certain information is unavailable to the Group.
With regard to the sanctions imposed against Mr Zhevago, these sanctions are personal in nature and have not been imposed on any member of
the Ferrexpo Group. However, a tax authority may apply an adverse interpretation of sanctions rules and no longer make VAT refunds to any the
Group’s subsidiaries in Ukraine. It is likely that the Group’s subsidiaries in Ukraine will not receive any VAT refunds until these sanctions against
Mr Zhevago are lifted. As a consequence, the Group adjusted its long-term model to reflect the lower expected cash flow generation caused by
the potential absence of VAT refunds in Ukraine, which would in turn negatively impact the carrying value of the Group’s assets in future periods.
This event is treated as a non-adjusting post balance sheet event. Based on the Group’s updated long-term model, an additional impairment of
approximately US$122,900 thousand, in addition to the US$71,170 thousand recorded as at 31 December 2024, would have to be recorded on
the Group’s assets to be tested for impairment. However, the actual impairment to be recorded in the Group’s consolidated financial statements
as at 30 June 2025 will also depend on the successful implementation of the initiatives planned in the Group’s latest long-term model. See Note 13
Property, plant and equipment for further information on the Group’s impairment test performed. In addition to the expected impact on the value
in use of the Group’s assets in future periods, the lower expected cash flow generation during the going concern period is expected to lead to lower
available cash balances during this period. See Note 2 Basis of preparation for potential impacts on the Group’s ability to continue as going concern.
With regard to the risk of nationalisation of 49.5% of shares in FPM and certain of its assets, which could potentially affect the availability of FPM’s
property, plant and equipment and, as a consequence, the carrying value of these assets included in the Group’s consolidated financial statements,
the event is treated as a non-adjusting post balance sheet event. Based on the information available at the date of approval of these consolidated
financial statements, it is impossible to estimate the possible financial impact in future periods. As at the date of the approval of these consolidated
financial statements, no legal actions have been initiated by the Ministry of Justice of Ukraine. See Note 2 Basis of preparation for potential impacts
on the Group’s ability to continue as going concern.
With regard to possible transfer of 49.5% in the corporate rights of FPM to ARMA, as at the date of the approval of these consolidated financial
statements, no member of the Ferrexpo Group has received any official documents or requests from the Ukrainian authorities with regards to the
possible transfer of corporate rights of FPM. Based on independent legal advice from Ukrainian counsel, the management understands that FAG
remains the 100% owner of FPM, and the management does not expect that the transfer of 49.5% of the corporate rights in FPM to ARMA will
affect FPM’s operations or affect the Group’s ability to continue as a going concern.
No other material adjusting or non-adjusting events have occurred subsequent to the period-end other than the event disclosed above.
Strategic Report
Corporate Governance
233
Financial Statements
Parent Company Statement of Financial Position
Ferrexpo plc (the “Company”) is required to present its separate Parent Company statement of financial position and certain notes to the
statement of financial position on a standalone basis as at 31 December 2024 and 2023, which have been prepared in accordance with Financial
Reporting Standard 101 Reduced Disclosure Framework (“FRS 101”). Information on the principal accounting policies is outlined in Note 3 Material
accounting policies.
Ferrexpo plc is exempt from presenting a standalone Parent Company profit and loss account and statement of comprehensive income in
accordance with Section 408 of the UK Companies Act 2006.
US$000
Notes
As at 31.12.24
As at 31.12.23
Fixed assets
Investment in subsidiary undertakings
4
129,907
163,276
Total fixed assets
129,807
163,276
Current assets
Debtors: amounts falling due within one year
5
13,875
10,577
Debtors: amounts falling due more than one year
5
263,484
275,653
Cash at bank and in hand
138
340
Total current assets
277,497
286,570
Creditors: amounts falling due within one year
7,378
8,636
Net current assets
270,119
277,934
Total assets less current liabilities
400,026
441,210
Net assets
400,026
441,210
Capital and reserves
Called up share capital
6
121,628
121,628
Share premium account
185,112
185,112
Treasury share reserve
6
(48,260)
(48,260)
Employee benefit trust reserve
6
(15,904)
(16,224)
Retained earnings
6
157,450
198,954
Total capital and reserves
400,026
441,210
The loss after taxation for the Company, registration number 05432915, was US$41,418 thousand for the financial year ended 31 December 2024
(2023: profit of US$16,640 thousand).
The financial statements were approved by the Board of Directors and authorised for issue on 18 March 2025 and signed on behalf of the Board.
Lucio Genovese
Nikolay Kladiev
Executive Chair
Chief Financial Officer and Executive Director
Ferrexpo plc
Annual Report & Accounts 2024
234
Parent Company Statement of Changes in Equity
US$000
Issued capital
Share premium
Treasury
share reserve
Employee benefit
trust reserve
Retained earnings
Total capital and
reserves
At 1 January 2023
121,628
185,112
(77,260)
(1,189)
195,884
424,175
Profit for the year
–
–
–
–
16,640
16,640
Total comprehensive income for the year
–
–
–
–
16,640
16,640
Equity dividends paid to shareholders
–
–
–
–
(435)
(435)
Share-based payments
–
–
–
830
–
830
Effect from transfer of treasury shares
–
–
29,000
(15,865)
(13,135)
–
At 31 December 2023
121,628
185,112
(48,260)
(16,224)
198,954
441,210
Loss for the year
–
–
–
–
(41,418)
(41,418)
Total comprehensive loss for the year
–
–
–
–
(41,418)
(41,418)
Equity dividends paid to shareholders
–
–
–
–
(86)
(86)
Share-based payments
–
–
–
320
–
320
At 31 December 2024
121,628
185,112
(48,260)
(15,904)
157,450
400,026
Strategic Report
Corporate Governance
235
Financial Statements
Notes to the Parent Company Financial Statements
NOTE 1: CORPORATE INFORMATION
The Company is incorporated and registered in England and Wales, which is considered to be the country of domicile, with its registered office at
55 St James’s Street, London SW1A 1LA, UK. The Company’s Ordinary Shares are traded on the London Stock Exchange and it is a member of the
FTSE 250 Index.
The majority shareholder of the Company is Fevamotinico S.a.r.l. (“Fevamotinico”), a company incorporated in Luxembourg and ultimately
owned by The Minco Trust, of which Kostyantin Zhevago and two other members of his family are the beneficiaries. At the time this report was
published, Fevamotinico held 49.3% (49.3% at the time of publication of the 2023 Annual Report and Accounts) of the Company’s issued voting
share capital (excluding treasury shares).
NOTE 2: BASIS OF PREPARATION
The financial statements are prepared under the historical cost convention and in accordance with Financial Reporting Standard 101 Reduced
Disclosure Framework (“FRS 101”).
The financial statements are presented in US dollars (US$), the Company’s functional currency, and all values are rounded to the nearest thousand,
except where otherwise indicated. The functional currency is determined as the currency of the primary economic environment in which the
Company operates. The majority of the Company’s operating activities are conducted in US dollars.
The Company has taken advantage of the following disclosure exemptions under FRS 101 as the Company is included in publicly available
consolidated financial statements, which include disclosures that comply with the standards listed below:
• the requirements of paragraphs 45(b) and 46–52 of IFRS 2 Share-based payments;
• the requirements of IFRS 7 Financial instruments: Disclosures;
• the requirements of paragraphs 91–99 of IFRS 13 Fair value measurements;
• the following paragraphs of IAS 1 Presentation of financial statements:
– 10 (d) (statement of cash flows);
– 16 (statement of compliance with all IFRS);
– 38A (requirement for minimum of two primary statements, including cash flow statements);
– 38B-D (additional comparative information);
– 111 (cash flow statement information); and
– 134–136 (capital management disclosures).
• the requirements of IAS 7 Statement of cash flows;
• the requirements of paragraphs 30 and 31 of IAS 8 Accounting policies, changes in accounting estimates and errors; and
• the requirements of paragraph 17 of IAS 24 Related party disclosures and the requirements to disclose related party transactions entered
into between two or more members of a group, provided that any subsidiary, which is a party to the transaction, is wholly owned by such
a member of the same standard.
The Company does not have any employees other than the Directors. The requirement to give employee numbers and costs information under
Section 411 of the Companies Act 2006 is addressed in the Directors’ Remuneration Report of the Group on pages 143 to 151.
GOING CONCERN
As at the date of the approval of these financial statements, the war in Ukraine is still ongoing and, during the financial year, the Group continued
to demonstrate its resilience and flexibility from an operating perspective, although the ongoing war continues to affect its financial results. The
situation in Ukraine is unpredictable and continues to require the Group to be extremely flexible, as mining operations and production have to be
adapted to the prevailing conditions. The regained access to Ukrainian Black Sea ports enabled the Group to expand its sales activities and increase
its production to the highest level since the full-scale invasion of Ukraine in February 2022.
The challenging and unpredictable environment in which the Group has been operating since the beginning of the invasion and the ongoing war,
whose duration and impact on the Group’s activities in future periods are difficult to predict, continues to represent a material uncertainty in terms
of the Group’s ability to continue as a going concern. In addition to the war-related material uncertainty, the Group is also exposed to the risks
associated with operating in a dynamic and adverse political landscape in Ukraine, which may or may not be exacerbated by the war and/or the
current circumstances facing the Mr Zhevago (see Ukraine country risk in the Principal Risks section). As a result, the Group is exposed to a number
of risk areas that are heightened compared to those expected in a stable economy, such as an environment of political, fiscal and legal uncertainties,
which represents another material uncertainty as at the date of the approval of these consolidated financial statements.
Considering the current situation of the ongoing war and legal disputes in Ukraine and the events after the reporting period described in Note
2 Basis of preparation to the consolidated financial statements, the Company continues to prepare its financial statements on a going concern
basis. This conclusion is based on the Group’s ability to swiftly adapt to changing circumstances cause by the war and the independent legal advice
received for the ongoing legal disputes in Ukraine. However, as explained above, many of the identified uncertainties in respect of the ongoing war
and legal disputes are outside of the management’s control, and are unpredictable, which may cast significant doubt upon the Group’s and, as a
consequence, the Company’s ability to continue as a going concern.
For more information on critical judgements made by management in preparing these consolidated financial statements, see also Note 2 Basis of
preparation in respect of the Group’s ability to continue as a going concern, Note 30 Commitments, contingencies and legal disputes in respect of
other ongoing legal proceedings and disputes and Note 35 Events after the reporting period. These notes should be read in conjunction with this
note.
If the Group, and, as a consequence, the Company is unable to continue to realise assets and discharge liabilities in the normal course of business, it
would be necessary to adjust the amounts in the statement of financial position in the future to reflect these circumstances, which may materially
change the measurement and classification of certain figures contained in these financial statements.
Ferrexpo plc
Annual Report & Accounts 2024
236
Notes to the Parent Company Financial Statements continued
NOTE 3: MATERIAL ACCOUNTING POLICIES
FOREIGN CURRENCIES
The accounting policy is consistent with the Group’s policy set out in Note 2 Basis of preparation to the Group’s consolidated financial statements.
INVESTMENTS IN SUBSIDIARY UNDERTAKINGS
Equity investments in subsidiaries are carried at cost less any provision for impairments. Investments are reviewed for impairment at each reporting
date. If indication exists that investments may be impaired, the investments’ recoverable amounts are estimated. If the carrying amount of an
investment exceeds its recoverable amount, the investment is considered impaired and is written down to its recoverable amount, which is the
higher of its fair value less costs of disposal and its value-in-use. Impairment losses are recognised in the income statement.
AMOUNTS OWED BY SUBSIDIARY UNDERTAKINGS
Amounts owed by subsidiary undertaking are interest-bearing loans provided to entities of the Group. These loans are recognised at cost, being the
fair value of the consideration transferred. After initial recognition, interest-bearing loans are subsequently measured at amortised cost using the
effective interest method. In addition to the individual assessment at each reporting date whether a financial asset or group of financial assets
is impaired, the Company also assesses the expected credit losses on financial assets carried at amortised cost in accordance with the general
approach. The loss allowance is measured at an amount equal to the lifetime expected credit losses. On consideration of the fact that the Group
has a fully integrated organisational structure with no history of default of its subsidiaries, the calculation of the allowance for amounts owed by
subsidiary undertakings is based on the default risk and recovery ratings of the Group adjusted for current observable circumstances and forecast
information. This assessment is performed individually for all financial assets that are individually significant and collectively for those that are
not individually significant and have similar credit risk characteristics. The carrying amount of the financial assets is reduced by an allowance
account with the change of the allowance being recognised as a component of the profit after taxation. Individual balances are written off when
management deems that there is no possibility of recovery.
FINANCIAL GUARANTEES
Financial guarantee liabilities issued by the Company, including guarantees issued in favour of subsidiary undertakings, are those contracts that
require a payment to be made to reimburse the holder for a loss, which is incurred because the specified debtor fails to make a payment when due
in accordance with the terms of a debt instrument.
Financial guarantees provided are initially recognised at fair value and subsequently measured at the higher of the loss allowances determined
under IFRS 9 Financial instruments and the amount initially recognised less, when appropriate, cumulative fees recognised as revenue under IFRS
15 Contracts with customers.
TREASURY SHARE RESERVE
Own equity instruments, which are reacquired (treasury shares), are recognised at cost and deducted from equity shown in the treasury
share reserve. No gain or loss is recognised in the income statement on the purchase, sale, issue or cancellation of the Group’s own equity
instruments. Any difference between the carrying amount and the consideration is recognised in reserves.
SHARE-BASED PAYMENTS
The accounting policy is consistent with the Group’s policy set out in Note 28 Share-based payments to the Group’s consolidated financial
statements.
Employee benefit trust reserve
Ferrexpo plc shares held by the Company are classified in capital and reserves as employee benefit trust reserves and recognised at cost.
Consideration received for the sale of such shares is also recognised in equity, with any difference between the proceeds from sale and the
original cost taken to revenue reserves. No gain or loss is recognised on the purchase, sale issue or cancellation of equity shares.
DIVIDEND INCOME
Dividend income is recognised to the extent that the Company has the right to receive payment, typically upon declaration by the subsidiary.
TAXATION
The accounting policy is consistent with the Group’s policy set out in Note 11 Taxation to the Group’s consolidated financial statements.
CHANGES IN ACCOUNTING POLICIES
The accounting policies adopted and applied in the preparation of the financial statements are consistent with those of the previous year,
except for the adoption of new and amended IFRS and IFRIC interpretations effective as of 1 January 2024. The new and amended IFRS
and IFRIC interpretations adopted are consistent with the Group’s new accounting policies set out in Note 3 New accounting policies to the
Group’s consolidated financial statements and have not had a significant impact on these financial statements.
USE OF CRITICAL ESTIMATES AND JUDGEMENTS
Critical judgements made by management in preparing the separate Parent Company financial statements predominantly relate to the basis
of preparation of these financial statements in respect of the going concern assumption (see previous page).
Further to that, as disclosed in Note 35 Events after the reporting period to the consolidated financial statements of the Group, there are a number
of events after the reporting requiring critical judgement from the Group’s management when preparing the consolidated financial statements for
the year ended 31 December 2024, which could also have an impact on the Company’s financial statements. See Note 4 Investment in subsidiary
undertaking for further information.
The Company has not identified any area involving the use of critical estimates.
Strategic Report
Corporate Governance
237
Financial Statements
NOTE 4: INVESTMENT IN SUBSIDIARY UNDERTAKINGS
Investment in subsidiary undertakings as at 31 December 2024 relates to the Company’s investment in Ferrexpo AG, which is domiciled in
Switzerland and wholly owned by the Company. The subsidiary’s registered office is at Bahnhofstrasse 13, 6340 Baar, Switzerland.
See Additional Disclosures on page 237 for principal activities of subsidiaries.
US$000
As at 31.12.24
As at 31.12.23
Investment in subsidiary undertakings
129,907
163,276
Total investment in subsidiary undertakings
129,907
163,276
The impairment test performed as at 31 December 2024 resulted in an impairment loss of US$33,689 thousand (2023: nil) for the Company’s
investment in subsidiary undertakings.
See Note 32 Consolidated subsidiaries to the Group’s consolidated financial statements for further information on subsidiaries indirectly held by
the Company.
Non-adjusting post balance sheet event
As disclosed in Note 7 Events after the reporting period, the sanctions imposed on Mr. Zhevago are personal in nature and have not been imposed
on any member of the Ferrexpo Group. However, a tax authority may apply an adverse interpretation of sanctions rules and no longer make VAT
refunds to any the Group’s subsidiaries in Ukraine. It is likely that the Group’s subsidiaries in Ukraine will not receive any VAT refunds until these
sanctions against Mr. Zhevago are lifted. As a consequence, the Group adjusted its long-term model to reflect the lower cash flow generation
caused by potential absence of VAT refunds in Ukraine, which would in turn negatively impact the carrying value of the Company’s investment in
subsidiary undertakings in future periods.
In addition, as disclosed in Note 7 Events after the reporting period, there is a risk of nationalisation of 49.5% of shares in FPM and certain of its
assets, which could potentially affect the availability of FPM’s property, plant and equipment and, as a consequence, the carrying value of the
Company’s investment in subsidiary undertakings.
NOTE 5: DEBTORS
Debtors as at 31 December 2024 related to the following:
US$000
As at 31.12.24
As at 31.12.23
Amounts falling due within one year
Prepaid Expenses
584
942
Accrued Interest owed by subsidiary undertakings
13,291
9,635
Total amount falling due within one year
13,875
10,577
Amounts falling due after more than one year
Amounts owed by subsidiary undertakings
263,484
275,045
Deferred tax asset
–
608
Total revenue
263,484
275,653
Total debtors
277,359
286,230
Amounts owed by subsidiary undertakings falling due after more than one year include loans and dividend receivable balances contractually
payable on demand but having assessed the expected repayment profile and payment date, this balance is presented as falling due after more than
one year.
The table above includes the impact from the application of the expected credit loss impairment model under IFRS 9 Financial instruments.
The effect from the change of impairment losses on debtors included in the profit after taxation was a loss of US$1,337 thousand for the year ended
31 December 2024 (2023: gain of US$830 thousand). The total expected credit loss allowance booked on the statement of financial position was
US$1,941 thousand as at 31 December 2024 (2023: US$604 thousand).
Ferrexpo plc
Annual Report & Accounts 2024
238
Notes to the Parent Company Financial Statements continued
NOTE 6: SHARE CAPITAL AND RESERVES
SHARE CAPITAL
Share capital represents the nominal value on issue of the Company’s equity share capital, comprising £0.10 Ordinary Shares. The fully paid share
capital of the Company as at 31 December 2024 was 613,967,956 Ordinary Shares (2023: 613,967,956 Ordinary Shares) at a par value of £0.10 paid
for in cash, resulting in share capital of US$121,628 thousand (2023: US$121,628 thousand) per the statement of financial position.
TREASURY SHARE RESERVE
In September 2008, the Company completed a buy-back of 25,343,814 shares for a total cost of US$77,260 thousand. These shares are currently
held as treasury shares by the Group. The Companies Act 2006 forbids the exercise of any rights (including voting rights) and the payment of
dividends in respect of treasury shares. During the comparative year ended 31 December 2023, the Group transferred 9,513,000 shares on
10 March 2023 from the treasury shares reserve to the Group’s employee benefit trust reserve, resulting in 15,830,814 shares remaining in the
treasury share reserve as of 31 December 2024 (2023: 15,830,814 shares).
EMPLOYEE BENEFIT TRUST RESERVE
This reserve represents the treasury shares used to satisfy future grants for senior management incentive schemes. The employee benefit trust
reserve includes 9,766,759 shares as at 31 December 2024 (2023: 9,801,643 shares), including 9,513,000 shares transferred on 10 March 2023 from
the treasury shares reserve to the employee benefit trust reserve.
Distributable reserves
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 Company’s retained earnings shown in the statement of changes in equity as
of 31 December 2024 do not reflect the profits that are available for distribution by the Company as of this date. Taking into account relevant thin
capitalisation rules and provisions of the Companies Act 2006, the total available distributable reserves of Ferrexpo plc is US$77,500 thousand
as of 31 December 2024 (2023: US$119,520 thousand). Details on dividends are disclosed in Note 12 Earnings per share and dividends paid and
proposed of the Group’s consolidated financial statements.
NOTE 7: EVENTS AFTER THE REPORTING PERIOD
As announced on 4 February 2025, and disclosed in Note 30 Commitments, contingencies and legal disputes to the consolidated financial
statements of the Group, the Group’s subsidiary Ferrexpo Poltava Mining (“FPM”) has received a civil claim seeking joint liability of FPM and its
General Director for damages amounting to UAH 157 billion (approximately US$3.8 billion as at 4 March 2025) in favour of the Ukrainian state.
On 12 February 2025, the National Security and Defence Council of Ukraine (the “NSDC”) adopted the decision later enacted by the Presidential
Decree No. 81/2025, to impose personal special economic and other restrictive measures (“sanctions”) on certain individuals, including Mr. Zhevago.
These sanctions imposed on Mr. Zhevago are personal in nature and have not been imposed on Ferrexpo plc, Ferrexpo AG (“FAG”), Ferrexpo Poltava
Mining (“FPM”) or any other member of the Ferrexpo Group. The event is treated as a non-adjusting post balance sheet event.
On 20 February 2025, the State Bureau of Investigation (the “SBI”) made a media announcement regarding a potential claim to the High Anti-
Corruption Court of Ukraine (the “HACC”) to nationalise 49.5% of shares in FPM and certain of its assets. The SBI stated that it is working with the
Ministry of Justice of Ukraine to prepare the claim. As at the date of approval of these consolidated financial statements, FPM has not received a
formal notification of such claim. The event is treated as a non-adjusting post balance sheet event.
As announced on 5 March 2025, the SBI also made a media statement that the Pecherskyi District Court of Kyiv has granted a request of the
Prosecutor General’s Office of Ukraine to transfer 49.5% of the corporate rights of FPM to Ukraine’s Asset Recovery and Management Agency
(“ARMA”), together with corporate rights in another 15 undisclosed legal entities. This transfer of corporate rights is in connection with on-going
proceedings relating to Bank F&C. Based on independent legal advice, the only purpose for which management of property may be transferred to
the ARMA is for preservation of real evidence relevant to a criminal proceeding. The event is treated as a non-adjusting post balance sheet event.
More detailed information on the critical judgements required in relation to these events can be found in Note 35 Events after the balance sheet
date and Note 2 Basis of preparation relating to the Group’s ability to continue as a going concern, both of which form part of the consolidated
financial statements.
No other material adjusting or non-adjusting events have occurred subsequent to the period-end other than the event disclosed above.
Strategic Report
Corporate Governance
239
Financial Statements
Additional Disclosures
See Note 32 Consolidated subsidiaries for further information on the Group.
Unless otherwise stated, the equity interest disclosed includes ordinary or common shares, which are owned by subsidiaries of the Group.
Equity interest owned
Name
Address of consolidated subsidiary’s registered office
Principal activity
31.12.24
%
31.12.23
%
Consolidated subsidiaries
Ferrexpo AG
Bahnhofstrasse 13, 6340 Baar, Switzerland
Holding company and sale of
iron ore pellets and
concentrate
100.0
100.0
PJSC Ferrexpo Poltava Mining
Budivelnykiv Street 16, 39802 Horishni Plavni, Poltava Region, Ukraine
Iron ore mining and
processing
100.0
100.0
LLC Ferrexpo Yeristovo Mining
Budivelnykiv Street 15, 39802 Horishni Plavni, Poltava Region, Ukraine
Iron ore mining
100.0
100.0
LLC Ferrexpo Belanovo Mining
Budivelnykiv Street 16, 39802 Horishni Plavni, Poltava Region, Ukraine
Iron ore mining
100.0
100.0
Ferrexpo Middle East FZE
Office A2207, Jafza One, Jebel Ali Free Zone, Dubai, U.A.E., P.O. Box 18341
Sale of iron ore pellets and
concentrate
100.0
100.0
Ferrexpo Finance plc
55 St James’s Street, London SW1A 1LA, United Kingdom
Finance
100.0
100.0
Ferrexpo Services Limited
Patris Lumumba Street 4/6, 01042 Kyiv, Ukraine
Management services and
procurement
100.0
100.0
Universal Services Group Ltd.
Naberezna Street 2, 39800 Horishni Plavni, Poltava Region, Ukraine
Asset holding company
100.0
100.0
DP Ferrotrans
Portova Street 65, 39802 Horishni Plavni, Poltava Region, Ukraine
Trade, transportation services
100.0
100.0
LLC FerroLocoTrans
Portova Street 65, 39802 Horishni Plavni, Poltava Region, Ukraine
Trade, transportation services
100.0
100.0
United Energy Company LLC
Budivelnykiv Street 16, 39802 Horishni Plavni, Poltava Region, Ukraine
Holding company
100.0
100.0
Nova Logistics Limited
Budivelnykiv Street 16, 39802 Horishni Plavni, Poltava Region, Ukraine
Service company
51.0
51.0
Ferrexpo Singapore PTE Ltd.
1 Fullerton Road, One Fullerton #02-01, Singapore 049213, Singapore
Marketing services
100.0
100.0
Ferrexpo Shipping International
Ltd.
Ajeltake Road, MH-96960 Ajeltake Island – Majuro, Marshall Islands
Holding company
100.0
100.0
Iron Destiny Ltd.
Ajeltake Road, MH-96960 Ajeltake Island – Majuro, Marshall Islands
Shipping company
100.0
100.0
First-DDSG Logistics Holding GmbH
Handelskai 348, 1020 Wien, Austria
Holding company
100.0
100.0
Erste Donau-Dampfschiffahrt
Gesellschaft GmbH in Liqu.
Handelskai 348, 1020 Wien, Austria
Barging company
100.0
100.0
DDSG Tankschiffahrt GmbH in Liqu.
Handelskai 348, 1020 Wien, Austria
Barging company
100.0
100.0
DDSG Services GmbH
Handelskai 348, 1020 Wien, Austria
Service company
100.0
100.0
DDSG Mahart Kft.
Sukorói út 1., 8097 Nadap, Hungary
Barging company
100.0
100.0
Pancar Kft.
Sukorói út 1., 8097 Nadap, Hungary
Barging company
100.0
100.0
Ferrexpo Port Services GmbH
Handelskai 348, 1020 Wien, Austria
Bunker business
100.0
100.0
Transcanal SRL
Ecluzei Street 1, Agigea, Constanta, Romania
Port services
77.6
77.6
Helogistics Asset Leasing Kft.
Sukorói út 1., 8097 Nadap, Hungary
Asset holding company
100.0
100.0
LLC DDSG Ukraine Holding
Patris Lumumba Street 4/6, 01042 Kyiv, Ukraine
Holding company
100.0
100.0
LLC DDSG Invest
Building 4/6, Ioanna Pavla II Street, 01042 Kyiv, Ukraine
Asset holding company
100.0
100.0
LLC DDSG Ukraine Shipping
Management
Patris Lumumba Street 4/6, 01042 Kyiv, Ukraine
Barging company
100.0
100.0
LLC DDSG Ukraine Shipping
Radhospna Street 18, 39763 Kamiani Potoky, Kremenchuk District, Poltava
Region, Ukraine
Asset holding company
100.0
100.0
Ferrexpo Poltava Mining Charity
Fund1
Heroiv Dnipra Street 23-a, 39802 Horishni Plavni, Poltava Region, Ukraine
Charity fund
100.0
100.0
Associate
TIS Ruda LLC
Oleksiya Stavnitzera Street 50, 67543 Vizirka Village, Odesa Region, Ukraine
Port development
49.9
49.9
Fair value through OCI 2
PJSC Stakhanov Railcar Company
Rail car producer
1.1
1.1
Vostok Ruda LLC
Iron ore mining
1.1
1.1
LLC Atol
Gas
9.9
9.9
CJSC AMA
Gas
9.0
9.0
CJSC Amtek
Gas
9.0
9.0
1.
Charity fund controlled by the Group through its HSEC Committee.
2. All investments relate to companies incorporated in Ukraine and are fully impaired.
Ferrexpo plc
Annual Report & Accounts 2024
240
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 2024 Annual Report.
C1 CASH COST OF PRODUCTION
Definition: Non-financial measure which represents the cash cost 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.
US$000
Notes
Year ended
31.12.24
Year ended
31.12.23
C1 cash costs
509,146
294,213
Non-C1 cost components
57,380
45,136
Inventories recognised as an expense upon sale of goods
7
566,526
339,349
Own ore produced (tonnes)
6,070,541
3,845,325
C1 cash cost per tonne (US$)
83.9
76.5
UNDERLYING EBITDA
Definition: The Group calculates the Underlying EBITDA as profit before tax and finance plus depreciation and amortisation, net gains and losses
from disposal of investments and property, plant and equipment, effects from share-based payments, write-offs and impairment losses, operating
foreign exchange gains/losses and 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.
Historically and in agreement with the Group’s definition of the Underlying EBITDA at that time, the Group’s Underlying EBITDA included operating
foreign exchange gains and losses, which could be material depending on the devaluation of the Ukrainian hryvnia compared to the US dollar.
During the financial year 2024, the Group amended its definition of the Underlying EBITDA by excluding the operating foreign exchange gains and
losses. The vast majority of the Group’s operating foreign exchange gains or losses are expected to incur on intercompany trade receivable balance
of the Ukrainian subsidiaries, which are denominated in US dollar. For practicability reasons, the entire balance of the operating foreign exchange
gains and losses are excluded from the Group’s Underlying EBITDA. It is management’s view that the amended definition better reflects the Group’s
ability to generate cash and to evaluate its operating performance.
See Note 5 Segment information to the consolidated financial statements 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. Also it aids comparability across peer groups as it is a measurement that is often used.
Reconciliation to closest IFRS equivalent:
US$000
Notes
Year ended
31.12.24
Restated
Year ended
31.12.23
Underlying EBITDA
69,310
98,871
Losses on disposal and liquidation of property, plant and equipment
7
(231)
(11)
Share-based payments
28
(320)
(830)
Write-offs and impairments
7
(71,871)
(978)
Recognition of provisions for legal disputes
30
−
(131,117)
Depreciation and amortisation
(60,281)
(57,669)
Operating foreign exchange losses
83,321
31,371
Profit/(loss) before tax and finance
19,928
(60,363)
Strategic Report
Corporate Governance
241
Financial Statements
NET CASH/(DEBT)
Definition: Cash and cash equivalents net of interest-bearing loans and borrowings.
Closest equivalent IFRS measure: Cash and cash equivalents.
Rationale for adjustment: Net cash/(debt) is a measurement of the strength of the Group’s balance sheet. It is presented as it is a useful measure
to evaluate the Group’s financial liquidity.
Reconciliation to closest IFRS equivalent:
US$000
Notes
Year ended
31.12.24
Year ended
31.12.23
Cash and cash equivalents
25
105,919
115,241
Lease liabilities – current
26
(4,665)
(5,939)
Lease liabilities – non-current
26
(419)
(1,009)
Net cash
100,835
108,293
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:
US$000
Notes
As at
31.12.24
As at
31.12.23
Purchase of property, plant and equipment and intangible assets (net cash flows used in investing
activities)
13/15
101,688
101,247
TOTAL LIQUIDITY
Definition: Sum of cash and cash equivalents, available committed facilities and undrawn uncommitted facilities. No committed facilities are
outstanding as at 31 December 2024, or at the end of the comparative year ended 31 December 2023. Uncommitted facilities include trade finance
facilities secured against receivable balances related to these specific trades. See Note 26 Interest-bearing loans and borrowings and Note 27
Financial instruments for further information.
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:
US$000
Notes
As at
31.12.24
As at
31.12.23
Cash and cash equivalents
25
105,919
115,241
Ferrexpo plc
Annual Report & Accounts 2024
242
Glossary
References to Ferrexpo plc
References in this report to “Ferrexpo”, the
“Company”, the “Group”, “we”, “us” and
“our” are all references to Ferrexpo, Ferrexpo
subsidiaries and those that work for Ferrexpo,
albeit not a singular entity or person. Such
terms are provided as a writing style in this
report, and are not indicative of how Ferrexpo
or its subsidiaries are structured, managed or
controlled.
Act
The Companies Act 2006
AGM
The Annual General Meeting of the Company
Articles
The Articles of Association of the Company
Audit Committee
The Audit Committee of the Company’s Board
Bank F&C
Bank Finance & Credit
Belanovo or Bilanivske
An iron ore deposit located immediately to the
north of Yeristovo
Benchmark price
International seaborne traded iron ore pricing
mechanism used by market participants,
including Ferrexpo.
Beneficiation process
A number of processes whereby intermediate
iron ore products are upgraded to higher value
iron ore products, such as iron ore pellets.
BIP
Business Improvement Programme, a
programme of projects to increase production
output and efficiency at FPM
Blast furnace pellets
Used in Basic Oxygen Furnace (“BOF”)
steelmaking and constitute about 70%
of the traded pellet market
Board
The Board of Directors of the Company
BT
Billion tonnes
C1 unit costs
Represents the cash costs of production of
iron ore concentrates and pellets from own
ore, divided by production volume from own
ore, and excludes non-cash costs such as
depreciation, pension costs and inventory
movements, costs of purchased ore,
concentrate and production cost of gravel
Capesize
Capesize vessels are typically above 150,000
tonnes deadweight. Ships in this class include
oil tankers, supertankers and bulk carriers
transporting coal, ore and other commodity
raw materials. Standard capesize vessels are
able to transit through the Suez Canal
Capex
Capital expenditure for the purchase of
property, plant and equipment and intangible
assets
Capital employed
The aggregate of equity attributable to
shareholders, non-controlling interests and
borrowings
CFR
Delivery including cost and freight
CHF
Swiss franc, the currency of Switzerland
China & South East Asia
This segmentation for the Group’s sales
includes China and Vietnam
CID
Committee of Independent Directors
CIF
Delivery including cost, insurance and freight
CIS
The Commonwealth of Independent States
CODM
The Executive Committee is considered to be
the Group’s Chief Operating Decision-Maker
Company
Ferrexpo plc, a public company incorporated in
England and Wales with limited liability
Controlling shareholder
Fevamotinico S.a.r.l. holds 49.3% of the voting
rights in Ferrexpo plc as at the date of this
report. The Minco Trust is a discretionary
trust that has three beneficiaries, consisting
of Mr Zhevago and two other members of
his family. For the purposes of the UK Listing
Rules, each of the beneficiaries of The Minco
Trust is considered a controlling shareholder
of Ferrexpo plc
Corporate Governance Code
2018 UK Corporate Governance Code
CPI
Consumer Price Index
CRU
The CRU Group provides market analysis and
consulting advice in the global mining industry
(see www.crugroup.com)
CSR
Corporate Social Responsibility
DAP
Delivery at place
DFS
Detailed feasibility study
Directors
The Directors of the Company
Direct reduction
Used in Direct Reduction Iron (“DRI”)
production
“DR” pellets
A feedstock, in addition to scrap steel for the
production of steel in Electric Arc Furnace
(“EAF”) steelmaking. DR pellets are a niche,
higher quality product with Fe content of 67%
or above, and a combined level of silica and
alumina of <2%
EBT
Employee benefit trust
EPS
Earnings per share
ERPMC
Executive Related Party Matters Committee
Europe
This segmentation for the Group’s sales
includes countries across Europe and includes
Turkey
Executive Committee
The Executive Committee of management
appointed by the Board
Executive Directors
The Executive Directors of the Company
FBM
LLC Ferrexpo Belanovo Mining, a company
incorporated under the laws of Ukraine
Fe
Iron
Ferrexpo
The Company and its subsidiaries
Ferrexpo AG Group
Ferrexpo AG and its subsidiaries, including
FPM, FYM and FBM
Fevamotinico
Fevamotinico S.a.r.l., a company incorporated
with limited liability in Luxembourg
First-DDSG
First-DDSG Logistics Holding GmbH
(formerly Helogistics Holding GmbH) and its
subsidiaries, an inland waterway transport
group operating primarily on the Danube
River corridor
Strategic Report
Corporate Governance
243
Financial Statements
FOB
Delivered free on board, which means that the
seller’s obligation to deliver has been fulfilled
when the goods have passed over the ship’s
rail at the named port of shipment, and all
future obligations in terms of costs and risks
of loss or damage transfer to the buyer from
that point onwards
FPM
Ferrexpo Poltava Mining, also known as PJSC
Ferrexpo Poltava Mining, a company
incorporated under the laws of Ukraine
FRMCC
Finance, Risk Management and Compliance
Committee, a sub-committee of the Executive
Committee
FTSE 250
An index of the 101st to 350th largest
companies by market-capitalisation quoted on
the London Stock Exchange
FYM
LLC Ferrexpo Yeristovo Mining, a company
incorporated under the laws of Ukraine
GPL
Gorishne-Plavninske-Lavrykivske, the iron ore
deposit being mined by FPM
Group
The Company and its subsidiaries
HSE
Health, safety and environment
HSEC Committee
The Health, Safety, Environment and
Community Committee
IAS
International Accounting Standards
IASB
International Accounting Standards Board
IFRIC interpretations
IFRS interpretations as issued by the IFRS
Interpretations Committee
IFRS
International Financial Reporting Standards
IPO
Initial public offering
Iron ore concentrate
Product of the beneficiation process with
enriched iron content
Iron ore pellets
Balled and fired agglomerate of iron ore
concentrate, whose physical properties are
well suited for transportation to and reduction
within a blast furnace
Iron ore sinter fines
Fine iron ore screened to -6.3mm
IRR
Internal Rate of Return
JORC
Australasian Joint Ore Reserves Committee
– the internationally accepted code for ore
classification
K22
GPL ore has been classified as either K22 or
K23 quality, of which K22 ore is of higher
quality (richer)
KPI
Key Performance Indicator
KT
Thousand tonnes
LLC
Limited Liability Company (in Ukraine)
LSE
London Stock Exchange
LTI
Lost time injury
LTIFR
Lost time injury frequency rate, the number of
lost time injuries that occurred divided by the
number of hours worked for a reporting period
LTIP
Long-term incentive plan
m3
Cubic metre
MENA
This segmentation for the Group’s sales
includes customers in the Middle East and
North Africa region
mm
Millimetre
MT
Million tonnes
mtpa
Million tonnes per annum
NBU
National Bank of Ukraine
Nominations Committee
The Nominations Committee of the Board
Non-executive Directors
Non-executive Directors of the Company
NOPAT
Net operating profit after tax
North America
This segmentation for the Group’s sales
includes the United States
North East Asia
This segmentation for the Group’s sales
includes Japan and Korea
OHSAS 18001
International safety standard “Occupational
Health & Safety Management System
Specification”
Ordinary Shares
Ordinary Shares of 10 pence each in the
Company
Ore
A mineral or mineral aggregate containing
precious or useful minerals in such quantities,
grade and chemical combination as to make
extraction economic
Panamax
Modern panamax ships typically carry a weight
of between 65,000 and 90,000 tonnes of
cargo and can transit both the Panama and
Suez canals
PPE
Personal protective equipment
PPI
Ukrainian producer price index
Probable Reserves
Those Measured and Indicated Mineral
Resources which are not yet “proved”, but of
which detailed technical and economic studies
have demonstrated that extraction can be
justified at the time of determination and
under specific economic conditions
Proved Reserves
Measured Mineral Resources of which
detailed technical and economic studies have
demonstrated that extraction can be justified
at the time of determination and under
specific economic conditions
PXF
Pre-export finance
Rail car
Railway wagon used for the transport of iron
ore concentrate or pellets
Relationship Agreement
The relationship agreement entered into
among Fevamotinico S.a.r.l., Kostyantin
Zhevago, The Minco Trust and the Company
Remuneration Committee
The Remuneration Committee of the Board
Ferrexpo plc
Annual Report & Accounts 2024
244
Glossary
Reserves
Those parts of Mineral Resources for which
sufficient information is available to enable
detailed or conceptual mine planning and for
which such planning has been undertaken.
Reserves are classified as either proved or
probable
Resources
Concentration or occurrence of material of
intrinsic economic interest in or on the earth’s
crust in such form, quality and quantity that
there are reasonable prospects for eventual
economic extraction
Sinter
A porous aggregate charged directly to the
blast furnace which is normally produced by
firing fine iron ore and/or iron ore concentrate,
other binding materials and coke breeze as the
heat source
Spot price
The current price of a product for immediate
delivery
Sterling/£
Pounds sterling, the currency of the United
Kingdom
STIP
Short-term Incentive Plan
Tailings
The waste material produced from ore after
economically recoverable metals or minerals
have been extracted. Changes in metal
prices and improvements in technology can
sometimes make the tailings economic to
process at a later date
Tolling
The process by which a customer supplies
concentrate to a smelter and the smelter
invoices the customer with the smelting
charge, and possibly a refining charge, and
then returns the metal to the customer
Ton
US short ton, equal to 0.9072 metric tonnes
Tonne or t
Metric tonne
Treasury shares
A company’s own issued shares that it has
purchased but not cancelled
TSF
Tailings storage facility
TSR
Total Shareholder Return. The total return
earned on a share over a period of time,
measured as the dividend per share plus
capital gain, divided by initial share price
UAH
Ukrainian hryvnia, the currency of Ukraine
UK adopted IFRS
International Financial Reporting Standards
adopted for use in the United Kingdom
Ukr SEPRO
The quality certification system in Ukraine,
regulated by law to ensure conformity with
safety and environmental standards
Underlying EBITDA
The Group calculates the underlying EBITDA as
profit before tax and finance plus depreciation
and amortisation, adjusted for net gains and
losses from disposal of investments property,
plant and equipment, effects from share-
based payments, write-offs and impairment
losses and exceptional items
Underlying EBITDA margin
Underlying EBITDA (see definition above) as a
percentage of revenue
US$/t
US dollars per tonne
Value-in-use
The implied value of a material to an end
user relative to other options, e.g. evaluating,
in financial terms, the productivity in the
steelmaking process of a particular quality
of iron ore pellets versus the productivity of
alternative qualities of iron ore pellets
VAT
Value added tax
WACC
Weighted average cost of capital
WAFV
Weighted average fair value
WMS
Wet magnetic separation
Yeristovo or Yerystivske
The deposit being developed by FYM
Mr Zhevago/Kostyantin Zhevago
Kostyantin Zhevago, one of three beneficiaries
of The Minco Trust. The Minco Trust is the
indirect parent undertaking of Fevamotinico
S.a.r.l. which in turn holds 49.3% of the voting
rights in Ferrexpo plc as at the date of this
report.
245
Useful contact information
REGISTERED OFFICE
55 St James’s Street
London SW1A 1LA
COMPANY SECRETARY’S OFFICE
COMPANY SECRETARY
Ferrexpo Plc
55 St James’s Street
London SW1A 1LA
Tel: +44 (0) 20 7389 8300
Email: info@ferrexpo.com
SHARE REGISTRAR
EQUINITI GROUP LIMITED
Aspect House
Spencer Road
Lancing
West Sussex BN99 6DA
Tel: 0371 384 2030 (+44 121 415 7047 from outside UK)
https://equiniti.com/uk/
ADVISERS
AUDITOR
MHA
2 London Wall Place London EC2Y 5AU
SOLICITORS
Herbert Smith Freehills
Exchange House
Primrose Street
London EC2A 2EG
CORPORATE BROKER
Panmure Liberum Ltd
25 Ropemaker Street
London EC2Y 9LY
SPONSOR
BDO LLP
55 Baker Street
London W1U 7EU
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