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Ferrexpo will allocate 30% of free cash flow for dividend payments

Ukraine / Mining industry

Free cash flow includes net cash flows from operating activities less net cash flows from investing and financing activities. Consequently, the new dividend policy will ensure continued investment by Ferrexpo in Ukraine.

Ferrexpo will allocate 30% of free cash flow for dividend payments

Ferrexpo plc (LSE: FXPO), the world's third largest exporter of high quality iron ore pellets to the global steel industry, has announced the approval of a formal share return policy by the Group's Board of Directors.

The approved policy provides for the payment as dividends of at least 30% of the free cash flow received as a result of the group's activities in the reporting financial year.

The Board of Directors will continue to assess additional shareholder returns in the form of special dividends during periods of strong financial and operational performance of the group. Ferrexpo's shareholder return policy, as well as the declaration and payment of dividends, remain at the discretion of the Board of Directors and will be subject to the Group's financial performance, cash requirements, financial outlook, economic conditions both locally in Ukraine and globally, and others. factors that the Council considers important.

The Ferrexpo Board of Directors believes that free cash flow is the most appropriate financial metric that the group uses in its shareholder return policy, given that it does not include capital expenditures and financing activities, and therefore does not restrict investment in Ukraine. The Management Board believes that the adoption of a formal policy at this stage is a clear demonstration of the Group's strong commitment to delivering value to shareholders throughout the entire product cycle.

Ferrexpo will continue to invest in product growth and quality, as well as in the modernization of the group's businesses, and therefore the Board of Directors will continue to regularly assess cash flows to determine shareholder returns.

The policy, in effect to date, was implemented following audit by Ferrexpo's financial advisors and is in line with the policies of other metallurgical and mining companies in the peer group, especially those that specialize in the same commodity sector.

Ferrexpo is a Swiss iron ore company with assets in Ukraine. Produces and exports high quality iron ore pellets for steel production. The group is the largest producer and exporter of pellets in the post-Soviet space.

Production assets - Poltava and Eristovsky GOKs (100% of shares owned each).

At the end of 2020, Ferrexpo increased the production of salable pellets by 7% compared to 2019 - to 11.2 million tonnes of salable pellets. Pellet sales for the year amounted to about 12.1 million tonnes, which is 17% more than in 2019.

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