Final Results

Ferrexpo PLC
01 April 2008


1 April 2008

Preliminary Results for the Twelve Months ended 31 December 2007

Financial highlights

>         Revenue up by 28% to US$698m
>         EBITDA up by 65% to US$246m
>         EBIT for the year up by 63% to US$187m
>         Underlying earnings(1) up by 128% to US$152m
>         Operating C1 costs increased 8.6% vs Ukrainian PPI of 23.3%
>         Strong balance sheet. Gearing reduced to 26% from 48%
>         Dividend of 3.2 cents per share

Operating highlights

>         9% increase in iron ore output to 28.9 million tonnes
>         19% increase in production of high quality (65% Fe) pellets from
          Company's own ore
>         Substantial savings in raw materials and energy per unit of output
>         Intensification of works in the northern extension of the current mine
          to increase the short-term iron ore output
>         Commencement of operations in Yeristovskoye deposit: infrastructure
          and site preparation works underway
>         Operations commenced at the TIS-Ruda port facility and established own
          fleet of railway cars

Financial and production highlights

(US$ '000, unless stated)     12 months ended 31 December 2007     12 months ended 31 December 2006      % Change
-----------------------------------------------------------------------------------------------------------------
Iron ore production (kt)                                28,934                               26,425           +9%
Pellet production from own ore (kt)                      8,793                                8,149           +8%
Of which 65% Fe content(kt)                              3,701                                3,112          +19%
Revenue                                                698,216                              547,310          +28%
EBITDA                                                 246,057                              149,142          +65%
EBIT                                                   186,935                              114,850          +63%
Pre-Tax Profit                                         160,760                               80,737          +99%
Underlying earnings(1)                                 151,545                               66,359         +128%
Basic EPS (US cents per share (Usc))                     20.41                                10.47          +95%
------------------------------------------------------------------------------------------------------------------

(1) 'Underlying earnings' is an alternative earnings measure, which the directors believe provides a clearer picture 
of the underlying financial performance of the Group's operations.  Underlying earnings is presented after minority 
interests and excludes adjusted items. 

 Adjusted items are those items of financial performance that the Group believes should be separately disclosed on 
the face of the income statement to assist in the understanding of the underlying financial performance achieved by 
the Group.  Adjusted items that relate to the operating performance of the Group include impairment charges and 
reversals and other exceptional items.  Non-operating adjusting items include profits and losses on disposal of 
investments and businesses.


Michael Abrahams, Chairman of Ferrexpo plc commented:


'2007 was a significant and successful year for Ferrexpo. We became the first
Ukrainian company to list on the London Stock Exchange. As such we are committed
to best practice in our operations, marketing and corporate governance, and we
are developing a significant and realistic growth programme. At a time of market
volatility, Ferrexpo is well positioned for profitable long term growth. We
continue to develop our existing operations and progress discussions with
potential strategic partners with the intention to quadruple our output over the
next 10 years.'


Mike Oppenheimer, CEO of Ferrexpo plc commented:


'We have delivered an excellent set of results, having increased volumes,
delivered further real cost reductions and operational improvements, taking full
advantage of the increasingly strong pricing environment for our products. Our
favourable location and commitment to product quality have resulted in further
progress towards our objective of being the supplier of choice for our major
customers; we have successfully moved our sales book to the desired level of
long term contracts with direct linkage to global pricing. As we look forward,
continued strong iron ore demand and pricing, tight cost control and an
accelerated development of our resources present us with significant
opportunities to create shareholder value.'



For further information, please contact:

Ferrexpo:                                                       [phone]
Mike Oppenheimer, CEO
Chris Mawe, CFO
Gavin Mackay, Manager Investor Relations & Corporate
              Communications

Finsbury:                                                       [phone]
Robin Walker
Alex Simmons


Notes to editors:


Ferrexpo plc is a Swiss headquartered resources company with assets in Ukraine,
principally involved in the production and export of iron ore pellets, used in
producing steel. Current output is over 9 million tonnes, approximately 85% of
which is exported to steelmakers around the world. The Ferrexpo Group listed on
the main market of the London Stock Exchange in June 2007 under the ticker FXPO.
For further information please visit www.ferrexpo.com.


Chairman's statement

A significant and successful year

I am pleased to report that Ferrexpo has achieved strong operational and
financial performance for its first full year reporting period as a publicly
listed company. The Group retained its leading position as the largest exporter
of iron ore pellets from the Ukraine and made considerable progress towards its
stated objective of becoming a world-class resources company. We are committed
to best practice in our operations, marketing and corporate governance, and we
are developing a significant and realistic growth programme.

At an operational level, we increased production from our existing mine for the
sixth year in a row, producing a total of 9.1mt of iron ore pellets, an increase
of 6% compared to 2006. Importantly, we produced 19% more high quality 65% Fe
pellets from our own ore. The increases in volume and product quality resulted
directly from continued improvements in operating efficiency and capital
investment.

This strong operational performance and the positive pricing that we have seen
over the year resulted in an excellent financial performance: revenues for 2007
were up 28% at US$698.2m (US$547.3m). pre-tax profit increased by 99% to
US$160.8m (US$80.7m); and Group EBITDA for the period increased by 65% to
US$246.1m (US$149.1m).

Positioned for accelerated growth

Our excellent operational and financial performance in 2007 has established a
strong foundation for the accelerated growth plans of the Group.

At the start of the year, we set out to achieve improvements in operating
efficiency, product quality and production growth. In marketing, we aimed to
become the iron ore supplier of choice in our key markets. We have succeeded in
all these endeavours, with substantial progress being made both at our existing
operations and with our growth projects.

We hold the exclusive licences to a world class iron ore resource, are
positioned close to our core markets, and operating in a global market
environment that is increasingly positive for our business. Among the world's
iron ore producers, we are very favourably positioned to take advantage of the
opportunities these circumstances present and have made significant progress in
developing the range of capabilities required to do so.

Our strategy is to maximise the value of the Group through the accelerated
commercialisation of our extensive undeveloped ore deposits, whilst ensuring
continuous production growth and cost competitiveness in our existing
operations. The Board continues to refine and develop this strategy, with an
overarching focus on management's priorities to establish the operational,
financial and risk management capabilities required for aggressive delivery on
our project pipeline.

Market environment

Globally, iron ore is currently in short supply, driven by demand from
developing nations, in particular China and India, and in our core Eastern
European markets, where per capita steel consumption continues to grow in line
with their strong economic growth. This demand and supply dynamic has led to
significant increases in international benchmark prices, and we anticipate
further uplifts to our product prices in the current year on the back of
continued demand growth. Our customers foresee continuing solid demand for steel
in 2008.

We believe that the existing positive market environment for our business is
likely to continue for the next two years and beyond. This is fundamentally due
to sustained strong demand for steel products and steel-making raw materials not
only in the developing economies of China and India, but also in Eastern Europe,
the former CIS and several other parts of the world. Strong iron ore pricing is
being underpinned by a slow supply response from the mining industry,
attributable to the acute execution difficulties being experienced by many of
the projects that have been launched to meet the demand surge, the need to
develop lower quality ore bodies and massive infrastructure investments required
for many of the new green field developments.

The global steel industry has also been subject to increased environmental
limits on sinter plant construction, a declining global supply of high quality
lump iron ore and heightened productivity targets in steel making. These factors
are likely to result in sustained higher consumption ratios of pellets versus
other forms of iron ore feed.

From a cost perspective, the industry has witnessed fundamental structural
changes in the past year. The production cost of the marginal tonne of iron ore
has risen substantially and, in the view of many market commentators,
permanently. We believe that this rebasing of production costs provides a new
floor for iron ore prices.

Marketing and logistics

We have had a very successful year in the crucial areas of marketing and
distribution, having extended one of our largest long term contracts to 2015,
and initiated a major new long term supply agreement in Ukraine.

To ensure access to world markets, the TIS-Ruda ocean-vessel port facility was
commissioned in May 2007 and formally recognised by the Port of Yuzhny in
October 2007. Ferrexpo owns 49% of TIS-Ruda, the first privately owned dry bulk
commodity terminal in the former CIS, and has access to its 5mtpa export
capacity. To enhance the reliability of supply, we are also in the process of
procuring up to 550 railcars for use on the state railway infrastructure.

We continue to develop the Group's logistical capabilities throughout the
delivery chain to allow further expansion of our global customer base in
anticipation of our growing production.

Investing activities

Operating cash flow for 2007 was US$188.8m, an increase of 176% over the
previous year (US$68.3m). Together with the proceeds from our listing in June,
this strong cash flow has allowed us to initiate investment in our accelerated
growth strategy. The Group invested US$104.4m in continuing to develop and
upgrade our existing operations in 2007, and, in November 2007, the Board
committed a further US$158m in development capital expenditure for this purpose.

In addition to the expansion and optimisation of the existing mine, we are
focusing our investment activities primarily on our major growth projects. The
Board has approved a new accelerated business plan which envisages the parallel
development of several of the Group's major expansion projects. The first of
these is Yeristovskoye, for which the Board committed US$47m in September 2007
for new draglines. This equipment will be used to commence stripping operations
at the Yeristovskoye deposit in 2008.

Health and safety

Considerable progress has been made in establishing health, safety and
environmental management ('HSE') systems at Ferrexpo Poltava Mining ('FPM') and
a culture of continuous improvement in HSE performance is evident. Sadly, we
suffered a fatality during 2007 and a further two in 2008. These tragedies are
totally unacceptable and have provided a rallying point for us to redouble our
efforts in continuing to introduce best practice in health and safety
management. We have now appointed Du Pont Safety Resources who has an
outstanding record of success in assisting companies to achieve a 'zero harm'
objective.

Management & people

We continued to strengthen our management and operational capability. We are
pleased to welcome to the Board Chris Mawe (previously Finance Director of UK
Coal plc) as Chief Financial Officer and Oliver Baring (Chairman of Mwana Africa
plc) as Senior Independent Non-executive Director.

Our strong performance in 2007 is a direct result of the quality and dedication
of our people and their enthusiastic support for the major change programmes
that are now underway across all facets of our business. We are committed to
building the additional capability required to implement our aggressive growth
plans in line with best practice, while containing costs and this is a critical
priority for our executive team. On behalf of the Board, I would like to thank
all our employees and our key partners for their ongoing support and
contribution.

Corporate governance and social responsibility

I am pleased to report that the Group has achieved substantial compliance with
the UK Combined Code on Corporate Governance within six months of its listing on
the London Stock Exchange, and our governance regime is now broadly in line with
best practice. The Board remains firmly committed to delivering high standards
of corporate governance in the future.

The Board has constituted a Corporate Social Responsibility ('CSR') Committee,
chaired by our Chief Executive, to monitor the management of the Group's health,
safety, environmental and community programmes. CSR remains a priority and we
are continuing to develop further initiatives to institutionalise safety
conscious behaviour, actively engage with local communities and to minimise our
impact on the environment.

Outlook

The current year has started strongly with substantial increases in global iron
ore prices being announced. This has created a very positive environment for the
annual price negotiations with our major customers and we expect the global
pricing trends to flow through to our new contract prices from 1 April 2008.

We continue to grow production as our improvement and efficiency programmes
impact positively upon operations. Whilst we expect cost inflation to remain a
factor, as a result of both industry wide issues and, in the short term,
domestic Ukrainian inflationary pressures, particularly affecting those costs
which are State-regulated, our continued focus on efficiency will serve to
mitigate this to some extent.

Overall, based on the fundamentals of our company and the market, the
substantial progress we are making with our existing mines and the execution of
our growth projects, the Directors believe the Group is well positioned for
continued profitable growth.

Dividend

The Directors recommend a dividend in respect of profits generated for the
Ferrexpo Group in 2007 of 3.2 cents per share, for payment on 19 May 2008 to
shareholders who were on the register of members at the close of business on 18
April 2008.

Operating and financial review

Operating performance review

Highlights


>         9% increase in iron ore output to 28.9 million tonnes
>         19% increase in production of high quality (65% Fe) pellets from 
          Company's own ore
>         Substantial savings in raw materials and energy per unit of output
>         Intensification of works in the northern extension of the current mine 
          to increase the short-term iron ore output
>         Commencement of operations in Yeristovskoye deposit: infrastructure
          and site preparation works underway
>         Operations commenced at the TIS-Ruda port facility and established own
          fleet of railway cars

Production

Operating statistics
------------------------------------------------------------------------------
                         UOM         FY2007        FY2006            Change 
                                                                 +/-         %
------------------------------------------------------------------------------

Iron ore mined          000't        28 934        26 425       2 509        9
    Fe content              %         29.91         29.72        0.19        1

Iron ore
processed               000't        29 024        26 507       2 517        9

Concentrate
produced (WMS)          000't        10 651         9 695         956       10
    Fe content              %         63.50         63.36        0.14        -

Floated
concentrate             000't         5 620         4 418       1 202       27
  High grade            000't         4 032         3 392         640       19
    Fe content              %         67.28         67.25        0.03        -

Purchased concentrate   000't           266           441       (175)     (40)
    Fe content              %         64.06         63.68        0.38        1
Purchased iron ore      000't           172            51         121      237

Pellets produced 
from own ore            000't         8 793         8 149         644        8
   Higher grade         000't         3 701         3 112         589       19
    Fe content              %         65,09         65,06        0,03        -
   Lower grade          000't         5 092         5 037          55        1
    Fe content              %         62.22         62.22        0.00        -
-------------------------------------------------------------------------------
 
                                                                
                         UOM           FY2007        FY2006           Change 
                                                                    +/-       %
-------------------------------------------------------------------------------
Pellets produced from
purchased concentrate
and ore                 000't             279           401       (122)    (30)
  Lower grade           000't             207           392       (185)    (47)
    Fe content              %           62.22         62.22       (0.0)     (0)

Total pellet 
production              000't           9 072         8 550         522       6

Pellet sales volume     000't           9 261         8 740         521       6
    ----------------      -------      --------      --------   --------  ------
Gravel output           000't           3 162         3 023         139       5

Stripping
volume                 000'm3          18 664        18 517         147       1


In 2007, the goals for our existing operations at FPM centred on continuing the
demonstrated trend of improvements across all areas of CSR, and in operating
efficiency, product quality and production growth.

FPM mined 28,934kt of iron ore in 2007, 9.5% more than in the previous year. FPM
currently mines two different types of iron ore; K22 which is a richer ore
containing a slightly higher percentage of iron, and K23 which is a leaner ore
containing slightly less iron. Improvements in mining conditions in the pit
meant that production growth was accompanied by a 17% increase in the proportion
of rich (K22) ore mined. This increase in the overall quality of the ore mined
resulted in a decrease in the proportion of lean (K23) ore used for processing
to 53.8% (compared to 56.7% in 2006), which assisted in increasing the
operational efficiency of the FPM concentrating plant and improving concentrate
quality.

FPM produced 10,651kt of concentrate in 2007, a 10% increase compared to 2006.
Emphasis was placed on achieving higher quality concentrate. Upgrades to FPM's
beneficiation technology resulted in improvements in magnetic iron yield to
92.4% (91.8% in 2006). The quality of concentrate in the year under review
increased to 63.50% Fe, continuing the improving trend seen in previous years
(63.36% and 62.63% in 2006 and 2005 respectively).

Total pellet production in 2007 increased by 6% to 9,072kt (8,550kt in 2006).
Production of pellets from own ore increased by 8%, while production of pellets
from purchased ore and concentrate declined as a result of concentrate market
tightness and the consequent inability of the Group to realise sufficient
margins from this business. As a result of FPM's efficiency and mining volume
improvements in 2007, the decline in production of pellets from purchased raw
materials was more than offset by the increase in production of pellets from
FPM's own produced concentrate.

The improvements in concentrate quality and increases in flotation volumes
enabled FPM to substantially increase its production of higher quality 65% Fe
pellets. Production of 65% Fe pellets from own ore increased by 19% to 3,701kt,
and now constitutes 42% of FPM's total production (38% in 2006), consistent with
the Group's commitment to quality enhancement and its 'value in use' marketing
strategy.

As a result of international iron ore benchmark price increases in 2007 and
success in our continued efforts to increase prices to appropriate levels on a
delivered, 'value in use' basis, the Group achieved an average Delivery at
Frontier ('DAF')/ Free on board ('FOB') price of US$72.3 per tonne of pellets
sold in 2007, a 17% increase over the average achieved price in the previous
year (US$61.8 per tonne). At year end, the Group was selling approximately 85%
of its output to established clients on the basis of long term supply
agreements.

Business improvement programme

We have continued to see positive results from our Business Improvement
Programme ('BIP'), which remains a priority for FPM management. We have
committed to an intensification of the BIP programme at FPM to accelerate the
shift towards best in class operational performance assisted by GPR Dehler, a
consultant widely used in the mining industry to facilitate improvement
initiatives. FPM is now two years into a four-year programme which aims to
introduce global best operating practice across its different areas of
operation. Following BIP recommendations, FPM concentrated on implementing
various improvements to its mining facility in 2007, principally around the
planning and organisation of maintenance and repairs. This resulted in
substantial improvements in the availability and utilisation of mining
equipment. It also enabled FPM to increase the operating efficiency of its
existing mining equipment, allowing it to scale down plans to increase its
equipment fleet and thereby avoid unnecessary capital expenditure.

As part of the BIP, the Group also implemented a range of training sessions for
managers and employees, and set up an initial team of FPM employees with
responsibility for implementing and monitoring the ongoing BIP initiatives. The
Group has implemented various management changes, aimed at creating a culture of
continuous improvement.

Costs

The Group's cash cost of pellet production ('C1') in 2007 was US$31.79 per
tonne, an increase of 8.6% over 2006 (US$29.26 per tonne). The Ukrainian
Producer Price Index ('PPI'), however, increased by 23.3% over the year.
Relative to PPI, the Group therefore achieved a significant (approximately 15
percentage points) real term reduction in costs compared to 2006. The challenge
facing the Group in 2007 was to sustain operating efficiency under these
inflationary conditions. Management efforts were focused on implementing
measures aimed at reducing the rates of consumption of energy and raw materials
through efficiency initiatives and improvements in technology.

Electricity consumption per tonne of pellets produced from own ore, the largest
single cost item, declined by 3.3% to 190.9KWHr per tonne of pellets produced
from own ore during 2007. Gas consumption reduced by 8.5% requiring 18.44
thousand cubic metres per tonne of pellets compared to 2006. There was also a
decline of approximately 4% in the consumption of steel grinding bodies in 2007.
More efficient use of machinery was also a factor mitigating against
inflationary increases.

Efficiency programmes resulted in a reduction of the average number of employees
by 11% in 2007. Overall, 9,188 people were employed as at 31 December 2007. This
was due to more efficient operations and improved organisation.

Total payroll costs were US$5.78 per tonne of pellets in 2007, an increase of 4%
compared to 2006, significantly below the prevailing inflation rate of 16.6%.
FPM has achieved a reduction in its labour cost in real terms, given the 11%
reduction in personnel and the fact that Ukrainian CPI increased by 16.6% in
2007. Total payroll cost in 2007 was US$42.6m (2006: US$38.3m), or US$4.70 per
tonne of pellets produced (2006: US$4.48 per tonne).

The Group's costs are principally denominated in Ukrainian Hryvnia, which is a
managed currency currently maintained at UAH5.05 to the US dollar.

Distribution costs per tonne of pellets increased by 9.9%, from US$9.88 per
tonne in 2006 to US$10.86 per tonne in 2007. This resulted from increases in
railway tariffs and port charges imposed by the Ukrainian authorities. The Group
has begun to implement a series of measures to minimise the effect of rising
distribution costs. These include railcar purchases, renegotiating freight terms
with customers, using transhipment ports with lower charges, using its own barge
port on the Dnieper River more intensively and investment in the TIS-Ruda port
facility.

Capital expenditure

The Group's total capital expenditure in 2007 was US$104.4m, 114% more than in
2006 (US$48.8m). The major part of this, US$56.9m, was invested in the mining
complex. The Group announced the commitment of US$47m of capital expenditure for
six draglines to be used for stripping operations at the new Yeristovskoye mine
in September 2007, and a further US$158m for the expansion and extension of the
current GPL mine. In March 2008 the Group announced US$55m for initial mining
equipment for Yeristovskoye.

Growth projects

Mine expansion and life extension at existing operations

We carried out extensive engineering work on the Gorishne - Plavninskoye -
Lavrikovskoye (GPL) mine in 2007, in the course of fulfilling our commitment to
optimising our existing facilities. The work was undertaken in conjunction with
Turgis Consulting (Proprietary) Limited ('Turgis'), the company's South
Africa-based mining engineering partner. This work revealed the potential to
expand and improve the mine beyond what was thought feasible at the time of our
listing on the London Stock Exchange. The culmination of this came in November
2007 when the Group announced the commencement of a project to expand production
at its current GPL mining operation to approximately 32mtpa by 2011 and to
extend the life of the mine at these higher production levels for at least the
period to 2032. The design of the pit expansion is such that the incremental ore
mined will consist entirely of richer (K22) ore, all of which will be used to
produce FPM's higher quality pellets.

This project is currently underway, with the additional ore production allowing
the Group to take advantage of currently under-utilised processing capacity.
This will increase high quality pellet production by approximately 15%, or
1.3mtpa. We expect this project to deliver meaningful and capital-efficient
growth as we continue to pursue opportunities for extracting greater value from
our current operations.

The capital expenditure committed to this project in 2007 will be spent on
stripping works over the next three years, with the remainder to be spent on
additional mining equipment.

Major growth projects

At the time of our listing on the London Stock Exchange, in June 2007, we
informed the market that we planned to double our production by 2014. We
proposed to do this by commissioning a second open-cut mine immediately to the
north of our existing GPL mine, on the Yeristovskoye deposit. We now believe
that further accelerated development of the deposits to the north of the GPL
mine is feasible. Studies underway on the Yeristovskoye and Belanovskoye
deposits indicate that they can be developed essentially in parallel. Work is
also proceeding on plans to develop Galeshchinskoye, the deposit to the north of
Belanovskoye. Given the positive conditions prevailing in the global iron ore
market and our enhanced operational and project execution capability, this
acceleration will be of great benefit to Ferrexpo.

We are now contemplating a fourfold increase in ore production within the next
10 years. We are planning to accelerate the development of the Yeristovskoye
mine by one year, and then to develop a mine at the Belanovskoye deposit soon
thereafter. First ore from the Yeristovskoye mine is now expected in 2011, with
infrastructure and site preparation works already underway. Six new draglines
were ordered in September to assist in the stripping of Yeristovskoye at a cost
of US$47m. The Yeristovskoye mine is currently in detailed feasibility study,
and the Board expects to consider final investment commitment to the entire
project during Q3 2008. Belanovskoye is currently at the pre-feasibility study
stage, and development option studies for the Galeshchinskoye deposit are now in
progress.

We have made significant progress in developing the capability to execute these
expansion projects. A new operating entity, separate from FPM, is being
established to develop and ultimately operate the new assets and key senior
managers have been appointed. This will facilitate the immediate introduction of
best practice into these assets. We are developing our mining alliance with DTP
Terassement S.A. (France) ('DTP') and project management alliance with Worley
Parsons Europe Limited, and these are gathering momentum and have been
instrumental in enabling us to aggressively pursue these growth projects with
confidence.

Our growth projects are brownfield expansions of our existing business,
supported by our existing transport and logistics infrastructure, and as, such
represent substantially lower risk additions of new iron ore capacity than many
of the iron ore projects that have been announced worldwide.

The Group formed the separate operating entity to administer the three major
growth projects separately from the GPL operation. The Group has appointed
George Mover as Director General (designate) for this entity, and Nikolay
Goroshko, the former Acting Chief Financial Officer for the Group, has moved to
become Chief Commercial Officer with responsibility for all financial and
commercial aspects of the projects. Dave Webster has moved from Chief Projects
Officer for the Group to Interim Chief Operating Officer with oversight of the
major growth projects and the GPL expansion project. It is intended that this
separate operational entity will have best practice operations from the outset.
The Group is actively recruiting quality employees for these projects, and has
signed a Memorandum of Understanding with DTP in respect of the planned contract
mining alliance for Yeristovskoye.

We are confident in our capacity to fund and execute our growth plans from our
own resources. However, we are actively discussing the mutual benefits of
investments in our growth assets with a range of strategic investors to provide
the additional funding and execution capability that will be required if we are
to progress our plans as aggressively as possible in order to take advantage of
the extremely positive outlook for our products.

Marketing

Ferrexpo is a well established producer and has been supplying iron ore pellets
to some of its key customers for more than 20 years. Several of the Group's
traditional customers within Central and Eastern Europe operate steel plants
that were designed specifically to use its iron ore pellets, giving the Group an
unrivalled position within these markets.

Our marketing strategy aims to develop a portfolio of customers in a range of
market destinations that will enable us to achieve full value for our products
and provide sales volume growth commensurate with the pace of development of our
new producing assets.

The Group currently views its markets in three main categories, Traditional,
Natural, and Growth.

The Group's 'Traditional Markets' are those markets that the Group has supplied
historically, and in which it enjoys a competitive advantage based on its
location. These include Austria, Ukraine, Poland, Slovakia, Romania, Bulgaria
and Russia. Serbia is a more recent addition to this segment.

'Natural Markets' are relatively new markets for the Group in regions where the
Board believes it has a competitive advantage which is yet to be exploited. This
segment includes Western Europe, Turkey and the Middle East.

'Growth Markets' are those which offer to add new and significant tonnage
expansion potential to the Group's customer portfolio. Currently China is the
major target, where five long term contracts are in place providing a solid base
for future sales growth.

The Group's products are mainly sold in the international markets. Export sales
are handled by its specialist sales and marketing arm, Ferrexpo AG, which is
based in Switzerland with additional offices in Kyiv, Shanghai and Hong Kong.
The Group exported more than 80% of its production in 2007. Historically, the
Group has principally supplied pellets to iron and steel plants in Central and
Eastern Europe, although it is now increasingly supplying customers in Asia.
18.4% of the Group's total sales in 2007 was sold into China.

The share of pellet sales to Ukrainian customers increased from 14% in 2006 to
19% in 2007, as a result of more reliable domestic demand from the expanding
Ukrainian steel industry. Domestic sales are made directly through FPM on an
ex-works basis.

The following table shows the Group's principal export markets for iron ore
pellets for the years ended 31 December 2007 and 2006 (by volume):

                                                    2007                 2006
                                                 ('000t)              ('000t)
Traditional Markets                              5,900.7              5,641.9
Natural Markets                                    187.9                390.7
Growth Markets                                   1,576.0              1,419.5
                              Total              7,664.6              7,452.1


We seek to maximise the proportion of our production sold on long term contracts
and to strengthen our relationships with our key customers, while also
participating in a low level of short term sales. We have had a successful 2007,
with a major new long-term contract in Ukraine, as well as the extension of our
contract with VoestAlpine AG to 2015 and the extension of our contracts in
Slovakia and Serbia. At the end of 2007, approximately 85% of our sales were
made under long-term supply agreements, against 77% in 2006, most of which are
directly or indirectly linked to benchmark prices, and the balance subject to
annual pricing based on market supply-demand fundamentals.

Sales in 2007 reached 9,261kt and included growth in our highest return core
markets of Eastern Europe and Ukraine. We were successful in establishing long
term business into Turkey, resuming sales to Russia and we delivered our first
trial cargo to Japan.

In addition, the Group completed its first long-term contract with a Chinese
steel mill in 2006, and has subsequently entered into four more such agreements
in China. The Group's expansion into China demonstrates its track record in
creating and building solid customer relations. It has increased its sales into
China from 1.8% of total sales in 2004 to 15.0% in 2007. The Group sold its
remaining iron ore pellets on shorter term contracts consistent with the terms
of trade in certain markets, or on the spot market as trials to new customers.
The Board expects that the proportion of sales that will be made under long-term
contracts in 2008 will be broadly similar to that seen in 2007.

Our focus on long term contracts links together with our aim of achieving higher
prices through enhanced pellet quality and a better understanding of our
customers' requirements of its products. This is necessary in order to capture
the maximum price relative to its competitors' delivered cost to the customer on
a 'value to the customer' basis.

The Group continued to significantly reduce third party agents in various
historic marketing arrangements, and now has direct commercial and technical
relationships with the majority of its end-users. This strategy will continue in
2008.

Pricing

The Group achieved an average DAF/FOB price for the pellets it sold in 2007 of
US$72.3 per tonne, an increase of 17% over the average achieved price for 2006
(US$61.8 per tonne). Most of the Group's export sales are based on annually
negotiated prices contained in supplements to long-term supply contracts. A
proportion of sales tonnage is directly tied to the international seaborne
traded iron ore benchmark price ('Benchmark Price') movement agreed between the
major iron ore producers and specific western European or Asian steel producers
for a given year. Historically, the Group has often realised a discount to the
prevailing Benchmark Price, but after adjustments for freight, quality,
proximity and logistics impacts, this is no longer the case. Variations in the
Group's achieved price stem from price variations of pellets sold into different
jurisdictions, as well as the mix between our 62% Fe pellets and our 65% Fe
pellets (which attract a premium). Domestic sales have historically taken place
using quarterly prices, but the Group has successfully moved a substantial
proportion of Ukrainian sales to annual or long term contracts from 2007.

Logistics

We are committed to managing the fullest extent of our delivery chain to assure
our customer service, to maximise overall sales margins and to ensure that our
growth plans are not frustrated by logistics constraints. This will be achieved
by developing world class customer delivery chain logistics management as an
integral function of our sales and marketing activities. Selected investments in
barge, rail and port facilities will also be required to overcome logistics
bottlenecks in Ukraine and Eastern Europe and these are being contemplated with
key partners.

Significant progress was made in 2007. Our investment in the TIS-Ruda ocean
vessel terminal provides us with access to a private port on the Black Sea with
a capacity of 5mtpa. This facility has significant expansion potential and
provides the base from which we can grow our seaborne trade as we expand our
producing assets. In terms of rail freight, we acquired 110 rail cars in 2007,
with a further 440 planned for delivery in 2008. This will allow us to benefit
from lower rail tariffs afforded to users of own rolling stock and to enhance
reliability. We also have major rail and waterway assessments underway in
Ukraine to determine future needs.

FINANCIAL REVIEW

Highlights

>         Revenue up by 28% to US$698m
>         EBITDA up by 65% to US$246m
>         EBIT for the year up by 63% to US$187m
>         Underlying earnings* up by 128% to US$152m
>         Operating C1 costs increased 8.6% vs Ukrainian PPI of 23.3%
>         Free cash flow of $139.0m
>         Strong balance sheet: gearing reduced to 26% from 48%
>         Dividend of 3.2 cents per share

Revenues

The Group achieved overall revenue growth of 27.6% compared with the prior year.
The Group's revenue for the year increased by US$150.9m to US$698.2m. This
strong performance was principally due to improved average DAF/FOB pellet prices
(including applicable distribution costs) which rose by 17% to US$72.3 per tonne
compared with US$61.8 per tonne in 2006. Sales volumes for the year increased to
9,261kt (8,740kt in 2006) as did growth in the proportion of sales of higher
priced high-grade '65% pellets' which increased to 40.7% for 2007 from 35.1% in
2006.

Costs & margins

A principal measure of operating performance of the business is C1 cost per
tonne of pellets produced. This is defined as the cash production cost from own
ore divided by the total volume of production. In 2007 the Group achieved C1
cash cost of production from own ore of US$31.79 per tonne compared with
US$29.26 per tonne in 2006.

This excellent performance was achieved in the face of Ukrainian PPI inflation
of 23.3%. It is pleasing to report that the group was able to contain its C1
costs significantly below general inflation due to reduced energy consumption
per tonne of pellets, improved operating efficiency and tight cost control of
other general production expenses.

Higher sales prices principally improved the gross margin in the year which was
51.9% (2006: 45.8%). Gross profit increased by 44.6% to US$362.3m (2006:
US$250.6m).

The Group pays distribution costs principally to deliver pellets to the border
of Ukraine or within Ukraine to supply domestic customers. Total distribution
costs per tonne of pellets sold increased to US$10.86 per tonne for the year
compared with US$9.88 per tonne in 2006. This increase was primarily driven by
higher rail tariffs.

General and Administration costs relate to the operations within Ukraine and at
the Swiss sales and holding Company, including Group costs. These amounted to
US$44.3m in 2007 compared with US$41.1m for the prior year. In 2006 General and
Administration costs included US$3.9m in relation to Vostok Ruda. The majority
of the Group's holding in Vostok Ruda was disposed of in 2006. Underlying
General and administration costs now reflect an appropriate level which is
required for the Groups operation as a large public company.

Initial public offering costs amounted to US$65.9m in the year, of which
US$34.0m was expensed and US$31.9m offset against the share premium account
reserve.

Ukrainian inflation

Ukraine has experienced high inflation in 2007 as a result of high government
spending and rapid economic growth. Inflation accelerated in the fourth quarter
of 2007, particularly for electricity and natural gas, two of the Group's key
cost inputs. We expect Ukrainian inflation will be high again in 2008. Whilst
this inflationary environment is a challenge to the cost base of the Group we
have a number of initiatives underway to assist us in managing our cost
structure over the medium to long term and continue to focus on business inputs
cost control.

Finance costs

Net finance costs reflected lower overall debt levels post IPO and reduced to
US$22.7m from US$30.3m in 2006. This was due to strong operational cash
generation and the receipt of IPO proceeds during the year.

In December 2006 the Group restructured its bank debt, extending the maturity
dates of its outstanding indebtedness and decreasing its cost of borrowings. As
part of this restructuring, the Group raised a bank syndicated loan in an
initial amount of US$275.0m. This successful transaction was later increased to
US$335.0m as a result of oversubscription. This allowed the Group to reduce its
weighted average interest rate to 7.6% from 8.3% and to 8.2% from 9.2% on
floating and fixed interest rate financial liabilities, respectively.

Taxation

The Group derives taxable income mainly in Switzerland and Ukraine. The
effective tax rate was 16.6% compared with 18.3% in 2006.

Earnings

As a result of the strong operational performance described above, the Group was
able to achieve an increase in underlying earnings of 128.4% to US$151.5m (2006:
US$66.4m) and improve earnings per share ('EPS') significantly. Fully diluted
EPS rose strongly to 20.33 USc in 2007 (2006: 10.47 USc). Underlying EPS was
similarly higher at 24.93USc in 2007 (2006: 10.92USc).

Dividend

The Directors recommend a dividend in respect of profits generated for the
Ferrexpo Group in 2007 of 3.2 US cents per share, for payment on 19 May 2008 to
shareholders who were on the register of members at the close of business on 18
April 2008.

Balance sheet and cash flow

The cash flow of the business is summarised in the table below:

                                                                      Year ended
US$ millions                                                            31.12.07
--------------------------------------------------------------------------------
                                                         
EBITDA                                                                     246.1

Working capital movements                                                  (1.8)
Net financial payments                                                    (24.0)
Income tax paid                                                           (32.0)
Movement in provisions and other non-cash items                              0.5
--------------------------------------------------------------------------------
Net cash flow from operating activities                                    188.8
Sustaining capital expenditure                                            (49.8)
--------------------------------------------------------------------------------
Free cash flow                                                             139.0

(Paid for) / Received from:
Expansionary projects                                                     (54.6)
Purchase of available-for-sale investments                                (12.1)
Loans to Associates                                                        (5.0)
Distributions                                                             (69.8)
Net IPO proceeds                                                           153.4
Other receipts                                                               9.7
Reduction in debt                                                          160.6
--------------------------------------------------------------------------------


The strong operating results increased EBITDA by 65.0% to US$246.1m increasing
EBITDA margin to 35.2% in 2007 from 27.2% in 2006.

Net cash flow from operating activities amounted to US$188.8m in 2007 (2006:
US$68.3m). This strong performance and the proceeds of our recent IPO have
enabled the Group to strengthen the Balance Sheet significantly. As a result,
Net Financial Indebtedness has decreased to US$117.9m at 31 December 2007 (31
December 2006: US$278.5m).

Overall this cash flow was invested partly in the modernisation of plant and
equipment for existing operations and partly in investments which lay the
foundations for the development of the unexploited ore body. Expenditure on
capital was US$104.4m in 2007 compared with US$48.8m in 2006. Of this
expenditure US$54.6m related to expansionary projects and US$49.8m was applied
in replacement or modernisation of plant in the existing operations.

Our increased financial strength is apparent in our debt to equity gearing
ratio. This was 26% at 31 December 2007 compared to 48% at 31 December 2006.

During the year the Group continued its phased disposal of Vostok Ruda,
disposing of 6.2% to an entity under common control for $5,613,000, resulting in
a gain of $4,714,000. The remainder of the Vostok Ruda investment representing
3.2% of the share capital is available for sale.

Also during the year the Group acquired a stake of 9.91% in OJSC Stahanov, a
rail car construction plant, from an entity under common control. This is to
help secure supplies of rail cars for our expanding logistic operations.



Consolidated income statement

                                                     Year ended       Year ended
US$ 000                              Notes             31.12.07         31.12.06
--------------------------------------------------------------------------------
Revenue                                  3              698,216          547,310
Cost of sales                            4            (335,936)        (296,720)
--------------------------------------------------------------------------------
Gross profit                                            362,280          250,590
--------------------------------------------------------------------------------
Selling and distribution expenses                     (100,614)         (86,376)
General and administrative expenses                    (44,308)         (41,140)
Other income                                              4,844            2,583
Other expenses                                          (5,096)          (5,078)
--------------------------------------------------------------------------------
Operating profit from continuing operations
before adjusted items                                   217,106          120,579
--------------------------------------------------------------------------------
Write-offs and impairment losses                        (1,568)          (2,205)
Share of gains of associates                                687                -
Net loss on disposal of subsidiary                            -          (3,524)
Gain on disposal of available for sale investment         4,714                -
Initial public offering costs                          (34,004)                -
--------------------------------------------------------------------------------
Profit before tax and finance                           186,935          114,850
-----------------------              -------            -------          -------
Finance income                           5                3,242            2,326
Finance expense                          5             (25,950)         (32,655)
Foreign exchange loss                    5              (3,467)          (3,784)
--------------------------------------------------------------------------------
Profit before tax                                       160,760           80,737
--------------------------------------------------------------------------------
Tax                                      6             (26,725)         (14,758)
Profit for the year                                     134,035           65,979
--------------------------------------------------------------------------------
Attributable to:
Equity shareholders of Ferrexpo plc                     124,076           63,578
Minority interest                                         9,959            2,401
                                                        134,035           65,979

Earnings per share:
Basic                                    7                20.41            10.47
Diluted                                  7                20.33            10.47

Dividends:
Proposed ordinary dividend per share 
(US cents)                               7                  3.2                -
Proposed ordinary dividend (US$ 000)     7               19,449                -



Consolidated balance sheet

US$ 000                                      As at 31.12.07       As at 31.12.06
--------------------------------------------------------------------------------
Assets 
Property, plant and equipment                       364,545              301,343
Goodwill and other intangible assets                156,827              156,534
Investments in associates                            17,637               16,950
Available-for-sale financial assets                  47,134               34,641
Other non-current assets                             15,179                  916
Deferred tax asset                                    8,107                    -
--------------------------------------------------------------------------------
Total non-current assets                            609,429              510,384
--------------------------------------------------------------------------------
Inventories                                          56,545               48,487
Trade and other receivables                          43,575               58,284
Prepayments and other current assets                 10,773               17,118
Income taxes recoverable and prepaid                  5,350                1,424
Other taxes recoverable and prepaid                  52,362               42,489
Available-for-sale financial assets                   2,941                1,451
Short term deposits with banks         10                 -               11,043
Cash and cash equivalents              10            86,966               16,236
--------------------------------------------------------------------------------
Total current assets                                258,512              196,532
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Total assets                                        867,941              706,916
--------------------------------------------------------------------------------

Equity and liabilities
Share capital                                       121,628                    -
Share Premium                                       188,566                    -
Other reserves                                       14,258              137,482
Retained earnings                                   216,616              163,164
--------------------------------------------------------------------------------
Equity attributable to equity shareholders
of the parent                                       541,068              300,646
--------------------------------------------------------------------------------
Minority interest                                    45,854               36,146
--------------------------------------------------------------------------------
Total equity                                        586,922              336,792
--------------------------------------------------------------------------------
Interest-bearing loans and
borrowings                            10            146,091              204,732
Trade and other payables                              2,583               10,484
Defined benefit pension liability                    16,169               14,501
Shares redemption liability                               -                9,062
Provision for site restoration                        1,746                  402
Deferred tax liability                                1,025                2,535
--------------------------------------------------------------------------------
Total non-current liabilities                       167,614              241,716
--------------------------------------------------------------------------------
Interest-bearing loans and
borrowings                           10              54,537               81,243
Trade and other payables                             25,127               21,492
Accrued liabilities and deferred
income                                               13,812               17,986
Shares redemption liability                          10,036                    -
Income taxes payable                                  7,717                4,646
Other taxes payable                                   2,176                3,041
--------------------------------------------------------------------------------
Total current liabilities                           113,405              128,408
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Total liabilities                                   281,019              370,124
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Total equity and liabilities                        867,941              706,916
--------------------------------------------------------------------------------

Consolidated cash flow statement

                                                          Year ended  Year ended
US$ 000                                          Notes      31.12.07    31.12.06
--------------------------------------------------------------------------------
Net cash flows from
operating activities                                 9       188,846      68,300
Cash flows from investing activities
Purchase of property, plant and equipment                  (104,352)    (48,760)
Proceeds from sale of property, plant and
equipment                                                      1,896         374
Purchase of intangible assets                                  (435)       (745)
Deposits lodged at banks                                       9,011       8,732
Purchases of available for sale securities                  (12,126)     (3,119)
Proceeds from sale of financial assets                         5,704       2,408
Interest received                                              4,805       1,473
Dividends received                                                 -          17
Acquisition of minority interest in subsidiaries                   -   (231,945)
Acquisition of associates                                          -    (16,950)
Loans provided to related parties                                  -    (16,674)
Loans provided to associates                                 (5,000)           -
Loans repaid by related parties                                    -     123,457
Proceeds from disposal of subsidiaries                             -       4,338
--------------------------------------------------------------------------------
Net cash flows used in investing activities                (100,497)   (177,394)
--------------------------------------------------------------------------------
Cash flows from financing activities
Proceeds from borrowings and finance                         175,244     565,593
Repayment of borrowings and finance                        (276,084)   (512,819)
Dividends paid to minority interest                            (786)       (245)
Distribution under 50/50 tax ruling                          (5,000)    (31,521)
Proceeds from issue of share capital in Ferrexpo AG                -     109,329
Proceeds from issue of share capital in Ferrexpo plc:
Initial public offering proceeds                             202,072           -
Non-initial public offering proceeds                              99           -
Initial public offering costs                               (48,648)     (7,503)
Share buyback in previous parent                            (64,055)           -
--------------------------------------------------------------------------------
Net cash flows from financing activities                    (17,158)     122,834
--------------------------------------------------------------------------------
Net increase in cash and cash equivalents                     71,191      13,740
Cash and cash equivalents at the beginning of the year        16,236       2,496
Currency translation differences                               (461)           -
--------------------------------------------------------------------------------
Cash and cash equivalents at the end of the year              86,966      16,236
--------------------------------------------------------------------------------




Notes to the Consolidated Financial Information

Note 1: General information

The financial information for the year ended 31 December 2007 does not constitute 
statutory accounts as defined in section 240 of the Companies Act 1985. Statutory 
accounts for the year ended 31 December 2006 have been delivered to the Registrar 
of Companies and those for 2007 will be delivered following the Company's annual 
general meeting convened for Thursday 15 May 2008. This preliminary announcement 
is based on unaudited results for the year ended 31 December 2007.

Note 2: Summary of significant accounting policies

Whilst the preliminary announcement has been prepared in accordance with
International Financial Reporting Standards ('IFRS') and International Financial
Reporting Interpretation Committee ('IFRIC') interpretations adopted for use by
the European Union and with those parts of the Companies Act 1985 applicable to
companies reporting under IFRS, this announcement does not itself contain
sufficient information to comply with IFRS. The Board approved the full
financial statements that comply with IFRS in March 2008. The financial
statements have been prepared under the historical cost convention as modified
by the recording of pension assets and liabilities and the revaluation of
certain financial instruments.

The accounting policies applied are consistent with those adopted and disclosed
in the Group's annual financial statements for the year ended 31 December 2006.

Note 3: Revenue

Revenue for the year ended 31 December 2007 consisted of the following:

                                                      Year ended      Year ended
US$ 000                                                 31.12.07        31.12.06
--------------------------------------------------------------------------------
Revenue from sales of ore pellets:
Export                                                   560,805         467,099
Ukraine                                                  128,731          73,089
--------------------------------------------------------------------------------
                                                         689,536         540,188
--------------------------------------------------------------------------------

Revenue from services provided                             3,005           3,158
Revenue from other sales                                   5,675           3,964
--------------------------------------------------------------------------------
                                                         698,216         547,310
--------------------------------------------------------------------------------


Export sales by geographical destination were as follows:

                                                    Year ended        Year ended
 US$ 000                                              31.12.07          31.12.06
--------------------------------------------------------------------------------

Austria                                                160,324           140,286
China                                                  103,223            83,258
Slovakia                                                81,516            54,143
Serbia                                                  83,708            64,015
Czech Republic                                          55,617            52,775
Bulgaria                                                27,389            15,587
Poland                                                  23,766            15,571
Romania                                                  7,038            23,838
Germany                                                      -             4,183
Turkey                                                   9,777            12,302
Japan                                                    5,029                 -
Italy                                                    3,418                 -
Other                                                        -             1,141
--------------------------------------------------------------------------------
                                                       560,805           467,099
--------------------------------------------------------------------------------



During the year ended 31 December 2007 sales made to three customers accounted
for approximately 53.9% of the net sales revenue (2006: 55.3%).

Note 4: Cost of sales

Cost of sales for the year ended 31 December 2007 consisted of the following:
                                                     Year ended       Year ended
US$ 000                                                31.12.07         31.12.06
--------------------------------------------------------------------------------
Materials                                                92,449           62,002
Purchased ore and concentrate                            17,587           16,703
Electricity                                              74,621           65,535
Personnel costs                                          47,402           46,231
Spare parts and consumables                              14,663           27,072
Depreciation and amortisation                            25,635           24,895
Fuel                                                     28,086           25,798
Gas                                                      25,576           20,806
Royalties and levies                                      8,570            7,678
Other                                                     1,347                -
--------------------------------------------------------------------------------
                                                        335,936          296,720
--------------------------------------------------------------------------------


Cost of sales is reconciled to 'C1' costs in the following manner:

                                                  Year ended          Year ended
US$ 000                                             31.12.07            31.12.06
--------------------------------------------------------------------------------

Cost of sales                                       335,936              296,720

Depreciation and amortisation                      (25,635)             (24,895)
Purchased ore and concentrate                      (19,911)             (19,396)
Production cost of gravel                           (2,101)              (2,728)
Stock movement in the period                        (6,284)              (9,930)
Pension current service cost                        (1,877)              (1,784)
Other                                                 (555)                  484
--------------------------------------------------------------------------------
C1 Cost                                            279,573               238,471
-------------------------------------------------------------------------------

Own ore produced tonnes                          8,793,000             8,149,000
C1 cash cost per tonne $                             31.79                 29.26


'C1' costs represent the cash costs of production of own ore divided by
production volume of own ore, and excludes non cash costs such as depreciation,
pension costs and stock movement, and costs of purchased ore, concentrate and
the production cost of gravel.

Note 5: Financing income/expense

Finance revenue and costs for the year ended 31 December 2007 consisted of the
following:
                                                      Year ended      Year ended
US$ 000                                                 31.12.07        31.12.06
--------------------------------------------------------------------------------
Finance income
Interest income on bank deposits                           2,457           2,326
Other finance revenue                                        785               -
--------------------------------------------------------------------------------
                                                           3,242           2,326
--------------------------------------------------------------------------------
Finance expense
Interest expense on financial
liabilities measured at amortised cost                  (21,493)        (27,425)
Interest on defined benefit plans                        (1,462)         (1,269)
Bank charges                                             (1,642)         (3,870)
Other finance costs                                      (1,353)            (91)
--------------------------------------------------------------------------------
                                                        (25,950)        (32,655)
--------------------------------------------------------------------------------

Foreign exchange loss                                    (3,467)         (3,784)
--------------------------------------------------------------------------------
Net finance expense                                     (26,175)        (34,113)
--------------------------------------------------------------------------------


Note 6: Income tax expense

Major components of income tax expense for the year ended 31 December 2007
consisted of the following:
                                                     Year ended       Year ended
US$ 000                                                31.12.07         31.12.06
--------------------------------------------------------------------------------
Current income tax                                       31,163           16,371
Deferred income tax                                     (4,438)          (1,613)
--------------------------------------------------------------------------------
                                                         26,725           14,758
--------------------------------------------------------------------------------


The Group's income was subject to taxation in Ukraine, Switzerland and the
United Kingdom. During the year ended 31 December 2007 the corporate income tax
was levied on taxable income less allowable expenses at the following rates:

- Ukraine 25% (2006: 25%)

- Switzerland 9.8 - 16.2% (2006: 9.3%)

- UK 30% (2006: 30%)

The effective income tax rate differs from the corporate income tax rates. The
weighted average of the statutory rates was 17.6% for 2007 (2006: 13.9%). This
is calculated as the average of the statutory tax rates applicable in the
countries in which the Group operates, weighted by the profit/(loss) before tax
of the subsidiaries in the respective countries as included in the consolidated
historical financial information. The effective tax rate is 16.6% (2006: 18.3%)

The changes in the weighted average statutory income tax rate are largely due to
a change in the weighting of profit/ (loss) before tax in the various
jurisdictions in which the Group operates.

A reconciliation between the income tax charged in the accompanying historical
financial information and income before taxes multiplied by the weighted average
statutory tax rate for the year ended 31 December 2007 is as follows:

                                                     Year ended       Year ended
US$ 000                                                31.12.07         31.12.06
--------------------------------------------------------------------------------
Profit before tax                                       160,760           80,737

Notional tax computed at the weighted average 
statutory tax rate of 17.6% (2006: 13.9%)                28,234           11,186
50/50 Swiss tax ruling                                    (472)          (1,991)
(Recognition)/derecognition of deferred tax assets            -              791
Tax indexation of fixed assets                          (6,084)                -
Expenses not deductible for tax purposes                  4,675            4,759
Prior year items                                             32               13
Other                                                       340                -
--------------------------------------------------------------------------------
Income tax expense                                       26,725           14,758
--------------------------------------------------------------------------------

Note 7: Earnings per share and dividends paid and proposed

The earnings per share ('EPS') calculation has assumed that the number of
ordinary shares issued pursuant to the share exchange agreements in relation to
the acquisition of Ferrexpo AG by Ferrexpo plc have been in issue throughout
2006 and 2007 which is consistent with the pooling of interests method used to
account for combinations of businesses under common control. The directors
believe that this measure of EPS provides a more meaningful comparison with the
Group's ongoing business than using the statutory EPS which would only reflect
shares issued based on the actual date of issue. Furthermore this approach
provides the same results as if the Ferrexpo AG shares, outstanding between 2006
and 2007, have been multiplied by the exchange ratio shares in Ferrexpo plc.

Basic EPS is calculated by dividing the net profit for the year attributable to
ordinary equity shareholders of Ferrexpo plc by the number of ordinary shares as
defined above.
                                                           Year ended Year ended
                                                             31.12.07   31.12.06
--------------------------------------------------------------------------------
Profit for the period attributable to equity shareholders

Basic earnings per share (US cents)                             20.41      10.47
Diluted earnings per share (US cents)                           20.33      10.47

Underlying earnings for the period

Basic earnings per share (US cents)                             24.93      10.92
Diluted earnings per share (US cents)                           24.84      10.92

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

                                                     Year ended       Year ended
Thousands                                              31.12.07         31.12.06
--------------------------------------------------------------------------------

Number of shares
Basic number of ordinary shares outstanding             607,796          607,471
Effect of dilutive potential ordinary shares              2,403                -
--------------------------------------------------------------------------------
Diluted number of ordinary shares outstanding           610,199          607,471
--------------------------------------------------------------------------------


The number of ordinary shares in issue excludes the shares held by the Ferrexpo
AG Employee Benefit Trust. Diluted earnings per share is calculated by adjusting
the number of ordinary shares in issue on the assumption of conversion of all
potentially dilutive ordinary shares. All share awards are potentially dilutive
and have been included in the calculation of diluted earnings per share.

'Underlying earnings' is an alternative earnings measure, which the directors
believe provides a clearer picture of the underlying financial performance of
the Group's operations. Underlying earnings is presented after minority
interests and excludes adjusted items. The calculation of underlying earnings
per share is based on the following earnings data:

                                                      Year ended      Year ended
US$ 000                                                 31.12.07        31.12.06
--------------------------------------------------------------------------------

Profit attributable to Equity
holders                                                  124,076          63,578

Writeoffs/impairments                                      1,568           2,205
Loss on disposals                                              -           3,524
IPO costs                                                 34,004               -
Gain on sale of available for sale investment            (4,714)               -
Tax on adjusting items                                   (3,217)         (1,432)
Minority interests                                         (220)         (1,213)
Tax on Minority interests                                     48           (303)
--------------------------------------------------------------------------------
Underlying earnings                                      151,545          66,359
--------------------------------------------------------------------------------


Adjusted items are those items of financial performance that the Group believes
should be separately disclosed on the face of the income statement to assist in
the understanding of the underlying financial performance achieved by the Group.
Adjusted items that relate to the operating performance of the Group include
impairment charges and reversals and other exceptional items. Non-operating
adjusting items include profits and losses on disposal of investments and
businesses.

Dividends paid and proposed

                                                      Year ended      Year ended
US$ 000                                                 31.12.07        31.12.06
--------------------------------------------------------------------------------
Dividends proposed
Dividend proposed by subsidiary to
minority $0.015 (2006: $0.01)                                251             563
--------------------------------------------------------------------------------
                                                             251             563
--------------------------------------------------------------------------------

                                                      Year ended      Year ended
US$ 000                                                 31.12.07        31.12.06
--------------------------------------------------------------------------------

Dividends paid during the period
Final dividend paid by parent company proposed in 2004         -             108
Final dividend proposed in previous years to minority
interest                                                     786             178
--------------------------------------------------------------------------------
                                                             786             286
--------------------------------------------------------------------------------


The directors are proposing a dividend in respect of profits generated by the
Ferrexpo Group in 2007 of 3.2 US cents per ordinary share. Based on shares
eligible for dividends as at 31 December 2007 this will result in a distribution
of US$ 19,449,000 of shareholders' funds. These financial statements do not
reflect this dividend payable, in accordance with UK Companies Act and IFRS, as
it is still subject to shareholder approval.

The Ferrexpo AG Employee Benefit Trust, has waived the right to receive
dividends on the shares it holds.

Note 8: EBITDA

The Group calculates EBITDA as profit from continuing operations before tax and
finance, adjusted for depreciation and amortisation, non-recurring items
included in other income & other costs, and the net gain/loss on disposal of
subsidiaries and associates. The Group presents EBITDA because it believes that
EBITDA is a useful measure for evaluation of its ability to generate cash and of
its operating performance.

                                                      Year ended      Year ended
US$ 000                                                 31.12.07        31.12.06
--------------------------------------------------------------------------------

Profit before tax and finance                            186,935         114,850

Write-offs and impairment losses                           1,568           2,205
Net loss on disposal of subsidiary                             -           3,524
Net gain on disposal of available
for sale investment                                      (4,714)               -
Initial public offering costs                             34,004               -
Depreciation and amortisation                             28,264          28,563
--------------------------------------------------------------------------------
EBITDA                                                   246,057         149,142
--------------------------------------------------------------------------------


The Group has changed how it defines EBITDA from that used in prior periods
which now excludes the effect of foreign exchange gains/losses because the Group
believe this is a more appropriate reflection of its ability to generate cash
and of its operating performance.

Note 9: Reconciliation of profit before income tax to net cash flow from
operating activities

                                                         Year ended   Year ended
US$ 000                                                    31.12.07     31.12.06
--------------------------------------------------------------------------------

Profit before income tax                                    160,760       80,737
Adjustments for:
Depreciation of property, plant and equipment and
amortisation of intangible assets                            28,265       28,563
Interest expense                                             24,488       27,425
Interest income                                             (3,242)      (2,326)
Dividend income                                                   -         (17)
Movement in allowance for doubtful receivables                  336          183
Loss on disposal of property, plant and equipment                 -          601
Write off and impairment losses                               1,568        2,021
Site restoration provision                                    1,269            -
(Gains)/ losses on disposal of
investments available for sale                              (4,714)           31
Losses from disposal of subsidiaries and associates               -        3,524
Initial public offering costs                                34,004            -
Share of income from associates                               (687)            -
Defined benefit plan expense                                  3,915        3,163
Foreign exchange loss                                         3,467          645
--------------------------------------------------------------------------------
Operating cash flow before working capital changes          249,429      144,550
--------------------------------------------------------------------------------

Changes in working capital
Decrease / (increase) in trade accounts receivable and 
other receivables                                            13,951     (38,658)
(Increase) / decrease in inventories                        (7,840)        9,237
Increase / (decrease) in trade and other accounts payables    6,534      (2,467)
(Increase) / decrease in other taxes receivable            (14,411)            -
--------------------------------------------------------------------------------
Operating cash flows after working capital changes          247,663      112,662
--------------------------------------------------------------------------------

Interest paid                                              (24,525)     (28,119)
Income tax paid                                            (32,018)     (14,562)
Post employment benefits paid                               (2,274)      (1,681)
--------------------------------------------------------------------------------
Net cash flows from operating
activities                                                  188,846       68,300
--------------------------------------------------------------------------------


Note 10: Net financial indebtedness

                                                   Year ended         Year ended
US$ 000                                              31.12.07           31.12.06
--------------------------------------------------------------------------------

Cash and cash equivalents                              86,966             16,236
Term deposits                                               -             11,043

Current borrowings                                   (54,537)           (81,243)
Non-current borrowings                              (146,091)          (204,732)

Short term due for equipment                          (1,664)            (9,300)
Long term due for equipment                           (2,569)           (10,462)
--------------------------------------------------------------------------------
Net financial indebtedness                          (117,895)          (278,458)
--------------------------------------------------------------------------------


Net financial indebtedness as defined by the Group comprises cash and cash
equivalents, term deposits, interest bearing loans and borrowings and amounts
payable for equipment.

Payables for equipment comprised balances due to foreign suppliers for mining
equipment denominated in USD and EURO which are interest bearing but included
within trade payables.







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