2017 FULL YEAR RESULTS PRESENTATION MARCH 2018 D I S C L A I M E R - PowerPoint PPT Presentation

2017 FULL YEAR RESULTS PRESENTATION MARCH 2018

D I S C L A I M E R This document is being supplied to you solely for your information and does not any discussion, correspondence or contact concerning the information in this document with any of the directors or employees of the Company or its subsidiaries nor with any of constitute or form part of any offer or invitation or inducement to sell or issue, or any their customers or suppliers, or any governmental or regulatory body without the prior solicitation of any offer to purchase or subscribe for, any shares in the Company or any written consent of the Company. other securities, nor shall any part of it nor the fact of its distribution form part of or be relied on in connection with any contract or investment decision relating thereto, nor Certain statements, beliefs and opinions in this document and any materials distributed does it constitute a recommendation regarding the securities of the Company. No in connection with this document are forward-looking. The statements typically contain information made available to you in connection with this document may be passed on, words such as “anticipate”, “assume”, “believe”, “estimate”, “expect”, “plan”, “intend” and copied, reproduced, in whole or in part, or otherwise disseminated, directly or indirectly, words of similar substance. By their nature, forward-looking statements involve a to any other person. number of risks, uncertainties and assumptions that could mean actual results or events differ materially from those expressed or implied by the forward-looking statements. Some of the information in this document is still in draft form and is subject to These risk, uncertainties and assumptions could adversely affect the outcome and verification, finalisation and change. Neither the Company nor its affiliates nor advisers financial effects of the plans and events described herein. Statements contained in the are under an obligation to correct, update or keep current the information contained in document regarding past trends or activities should not be taken as a representation or this document or to publicly announce the result of any revision to the statements made warranty (express or implied) that such trends or activities will continue in the future. No statement in this document is intended to be a profit forecast. You should not place herein except where they would be required to do so under applicable law. reliance on forward-looking statements, which speak only as of the date of this No reliance may be placed for any purpose whatsoever on the information contained in document. this document. No representation or warranty, expressed or implied, is given by or on behalf of the Company or any of the Company’s directors, officers or employees or any The information in this document may constitute non-public price sensitive information other person as to the accuracy or completeness of the information or opinions ('inside information'). You should not base any behaviour in relation to the Company's contained in this document and no liability whatsoever is accepted by the Company or securities, financial instruments related to the Company’s securities or any other any of the Company’s members, directors, officers or employees nor any other person securities and investments on information until after it is made publicly available by the for any loss howsoever arising, directly or indirectly, from any use of such information or Company. Any dealing or encouraging others to deal on the basis of such information opinions otherwise arising in connection therewith. may amount to insider dealing under the Criminal Justice Act 1993 and/or to market abuse under the Financial Services and Markets Act 2000. This presentation and its contents are confidential. By reviewing and / or attending this presentation you are deemed to accept that you are under a duty of confidentiality in relation to the contents of this presentation. You agree that you will not at any time have 2

Steve Lucas Chairman 3

SU C C ESSFU L 2017, W ELL POSITION ED FOR TH E FU TU R E FERREXPO IS WELL PLACED TO BENEFIT FROM DEMAND FOR HIGHER QUALITY IRON ORE – Large resource and good assets – Low cost – High value product – Quality customers EXCELLENT RESULTS – Continued strong financial performance – Significant debt reduction – Full year dividend per share 16.5 cents (2016: 6.6 cents) 4

2017 FINANCIAL PERFORMANCE Chris Mawe, CFO 5

S T R O N G B U S I N E S S P R O F I L E R E F L E C T S I N C R E A S E D D E M A N D F O R H I G H E R Q U A L I T Y P R O D U C T SUMMARY FINANCIALS REVENUE HIGHER (up 21%) $M (unless otherwise stated) 2017 2016 Change Pellet production (kt) 10,444 11,201 -7% – Lower sales volume production driven Sales volumes (kt) 10,467 11,697 -11% – Strong market environment for pellets (significant increase in premiums) Avg CFR 62% Fe fines price ($/t) 71.3 58.3 22% COSTS REFLECT STRONGER PRICE ENVIRONMENT (C1 cost up 17%) Avg C1 cost (US/t) 32.3 27.7 17% – Higher: commodity prices, maintenance & mining activity. Lower production Revenue 1,197 986 21% PROFIT IMPROVEMENT REFLECTS DEMAND FOR QUALITY Cost of sales -411 -400 3% – Gross profit $200M higher – reflecting improved prise realisations Gross profit 786 586 34% – EBITDA margin 46% vs. 38% in 2016 Selling & distribution -220 -210 5% – Profit for the year up 108% to $394M General & admin & other -83 -77 8% BALANCE SHEET CONTINUES TO STRENGTHEN Operating foreign exchange gains 7 14 -50% Operating profit 490 313 57% – $239M of debt repaid EBITDA 551 375 47% – Available liquidity up $167M to $312M Profit for the year 394 189 108% – Net debt to EBITDA comfortably below 1x Diluted EPS (cents) 66.85 31.91 109% – 2018 debt amortisations covered by cash & undrawn facilities Final dividend (ordinary + special) per share (cents) 9.9 6.6 50% DIVIDEND DECLARED Net debt -403 -589 -32% – Dividend reflects strong business profile & outlook Net debt to EBITDA (x) 0.73 1.57 -54% – Full year dividend 16.5 cents per share (FY 2016: 6.6 cents per share) 6

S T R O N G M A R G I N S U N D E R P I N N E D B Y H I G H Q U A L I T Y P R O D U C T EBITDA 2017 VS. 2016 ($M) FOREX / OTHER MARKET +$213M OPERATIONS -$24M -$14M 700 EBITDA margin 48 72 600 46% 48 14 140 EBITDA 500 64 margin 137 38% 400 300 551 375 200 100 0 FY 2016 EBITDA Platts 62% Fe fines C3 freight Atlantic pellet Improved price Sales volume C1 cost of Operating forex & FY 2017 EBITDA index premium realisations production other OPERATIONS MARKET FOREX / OTHER • $7/t increase in price due to improved product quality • Platts 62% Fe fines price up $13.0/t • Local currency more stable • Higher commodity price environment • Pellet premiums up $13.4/t • Production impacted by maintenance • Freight up $6.0/t 7

L O W C O S T P R O D U C E R ; C 1 C O S T I M PA C T E D B Y L O W E R V O L U M E S & H I G H E R M A I N T E N A N C E C1 COST 2016 VS. 2017 COST PERFORMANCE $ per tonne – Commodity price inflation reflects higher diesel, gas, steel prices 40 – Ukrainian inflation reflects higher electricity tariffs & wages 35 0.9 0.7 1.3 1.7 30 – UAH relatively stable 25 32.3 27.7 – Lower production volumes 20 15 – Higher maintenance costs 10 – $5 per tonne of low grade ore stockpiled in 2017 (2016: $3.75 per tonne) 5 0 C1 cost 2016 Commodity Local inflation Lower volumes Other incl. C1 cost 2017 price increases Maintenance costs BREAKDOWN OF C1 CASH COST – C.60% COMMODITY RELATED HISTORIC CASH COST & IRON ORE FINES PRICE 5% 2% Explosives $ per tonne 9% Royalities Grinding bodies 166 136 129 Electricity 28% 97 8% Personnel 71 60 60 58 56 51 46 8% Maintenance 32 28 32 Fuel 9% 2011 2012 2013 2014 2015 2016 2017 C1 cash cost 62% Fe iron ore fines price 7% spare Materials Gas 10% 14% parts 8

S T R O N G C A S H F L O W G E N E R AT I O N F U RT H E R S T R E N G T H E N I N G B A L A N C E S H E E T CASH FLOW 2017 VS. 2016 WORKING CAPITAL (-$110M) $M (unless otherwise stated) 2017 2016 Change EBITDA 551 375 47% – Low grade ore $53M or $5 per tonne Working capital movements -57 50 – Normalisation of working capital Working capital change – stockpiled ore -53 -42 – Increased spare parts & raw materials Interest paid -49 -59 – Higher trade receivables Tax paid -14 24 Other (incl. non-cash operating FX) -26 -16 – 2016 reflects refund of corporate profit tax Net cash flow from operating activities 353 332 6% CAPEX INCREASED IN LINE WITH IMPROVED LIQUIDITY Capex -103 -48 115% – Development capex of $24M Dividend paid -58 - – Sustaining capex incl’s $21M of capitalised stripping at FYM Other 6 3 Net cash flow 198 287 RESUMED DIVIDEND PAYMENTS -31% Proceeds from new borrowings - 19 REDUCED DEBT & HIGHER LIQUIDITY Repayment of borrowings -239 -196 – Repaid $239M of debt Cash balance at end of period 98 145 – Available liquidity of $312M vs. $145M as of 31 December 2016 Available facilities 214 - – Strong credit metrics Net debt -403 -589 -32% Net debt to EBITDA (x) 0.73 1.57 9