AFARAK GROUP PLC'S INTERIM REPORT FOR 1 APRIL -...

07:00 London, 09:00 Helsinki, 14 August 2015 - Afarak Group Plc ("Afarak" or "the Company") (LSE: AFRK, NASDAQ: AFAGR) Interim Report

AFARAK GROUP PLC'S INTERIM REPORT FOR 1 APRIL - 30 JUNE 2015

Q2 HIGHLIGHTS (April - June 2015):

- The Group updates its outlook for 2015
- Revenue increased by 12.2% to EUR 53.1 (Q2/2014: 47.3) million
- Processed material sold increased by 33.4% to 30,556 (Q2/2014: 22,901) tonnes
- EBITDA was EUR 7.6 (Q2/2014: 3.3) million and the EBITDA margin was 14.4% (Q2/2014: 7.1%)
- EBIT was EUR 5.8 (Q2/2014: 1.4) million
- Profit for the period totalled EUR 5.7 (Q2/2014: 1.2) million
- Ferrochrome production increased by 27.5% to 27,856 (Q2/2014: 21,854) tonnes
- Tonnage mined increased by 54.4% to 122,081 (Q2/2014: 79,058) tonnes
- Cash flow from operations was EUR 5.0 (Q2/2014: -0.3) million and liquid funds at 30 June were
  EUR 10.5 (30 June 2014: 17.0) (31 March 2015:11.5) million

KEY FIGURES (EUR million)	Q2/15	Q2/14	Change	H1/15	H1/14	Change	FY2014
Revenue	53.1	47.3	12.2%	93.8	90.5	3.6%	172.7
EBITDA	7.6	3.3	127.6%	12.3	6.4	93.2%	8.4
EBITDA margin	14.4%	7.1%		13.1%	7.0%		4.9%
EBIT	5.8	1.4		8.8	2.4		1.7
EBIT margin	11.0%	3.0%		9.3%	2.6%		1.0%
Earnings before taxes	5.4	1.7		8.1	3.1		0.5
Earnings margin	10.2%	3.7%		8.6%	3.4%		0.3%
Profit from continuing operations	5.7	1.2		8.0	1.5		0.5
Profit from discontinued operations	0	0		0	0		1.8
Profit	5.7	1.2		8.0	1.5		2.2
Earnings per share, basic, EUR	0.02	0.01		0.03	0.01		0.01

Commenting on the second quarter results, Alistair Ruiters, CEO, said:

"Both the Speciality Alloys and FerroAlloys segment performed well during the second quarter with sales volumes for standard grade material being higher than last year.  In the Speciality Alloys segment there was a slight reduction in sales volume as a result of not compromising our prices for more volume. Despite the lower volumes it still contributed well to the Group's results and achieved better margins.

The higher sales volumes in the FerroAlloys segment led production levels of processed material to be 27.5% higher than the same quarter last year. The tonnage mined volumes also increased by 54.4% as a result of having all mines operating at normal levels during this quarter. At the end of the second quarter we commenced the bulk sampling at Vlakpoort mine, which is expected to be a good contributor to the Group's results in the medium term when the open pit mine is ramped up.

Following the slow start seen in the beginning of this year the Group's revenue during the second quarter recovered the lost ground of the first quarter with an increase of 12.2% higher than same period last year. We also achieved better margins as a result of a stronger US dollar on conversion of revenue. However our cost base was not significantly affected as it is primarily denominated in Euro and South African Rand.

We aim to continue focusing on our core business and the production of special grade material. At Mogale Alloys we have addressed the challenges in the supply of medium carbon ferrochrome and we are seeing interest by new customers for the material. We have also continued evaluating initiatives to strengthen our position in the industry with our main focus remaining on generating cash and increasing profits.

Finally, I would like to conclude by highlighting that we continued the positive trend started this year with a significantly higher profit from prior years. This result is a clear indication that our business, even when the market is weak, performs well and manages to achieve sustainable profits."

 

2015 OUTLOOK

The global growth in stainless steel production is expected to lead an increase in demand for chrome products in 2015. However, as occurred in 2014 where the chrome industry has not been able to increase chrome product prices it is unclear whether this upswing in prices will occur in 2015.

At Mogale Alloys, part of the FerroAlloys division, the Company started production of medium carbon ferrochrome during the fourth quarter of 2014, this is expected to make a positive contribution towards the Company's profit margins in 2015. In the Speciality Alloys division Afarak expects to continue to see an increase in raw materials costs. In addition, the strengthening of the US dollar is also expected to improve the financial performance of the Company as compared to 2014. In 2015, Afarak's revenue is expected to remain at the same levels of 2014 and EBIT is expected to significantly improve as compared to 2014.

Fluctuations of exchange rates between the Euro, the South African Rand, the Turkish Lira and the US Dollar can significantly impact the Company's financial performance.

The previous outlook, published in the full year results of 2014 on 16 February 2015, was:

The global growth in stainless steel production is expected to lead an increase in demand for chrome products in 2015. However, as occurred in 2014 where the chrome industry has not been able to increase chrome product prices it is unclear whether this upswing in prices will occur in 2015.

At Mogale Alloys, part of the FerroAlloys division, the Company started production of medium carbon ferrochrome during the fourth quarter of 2014, this is expected to make a positive contribution towards the Company's profit margins in 2015. In the Speciality Alloys division Afarak expects to continue to see an increase in raw materials costs. In addition, the strengthening of the US dollar is also expected to improve the financial performance of the Company as compared to 2014. In 2015, Afarak's revenue is expected to remain at the same levels of 2014 and EBIT is expected to improve as compared to 2014.

Fluctuations of exchange rates between the Euro, the South African Rand, the Turkish Lira and the US Dollar can significantly impact the Company's financial performance.

Disclosure procedure

Afarak follows the disclosure procedure enabled by Disclosure obligation of the issuer (7/2013) published by the Finnish Financial Supervision Authority, and hereby publishes its Q2/2015 interim report enclosed to this stock exchange release. The Interim Report is attached to this release and is also available on the Company's website at www.afarakgroup.com.

Investor Conference Call

Management will host an investor conference call in English on 14 August 2015 at 14.00 Finnish time, 12.00 UK time. Please dial-in at least 10 minutes beforehand, quoting the reference: 38313.          

Finnish number [phone]
UK number [phone]

AFARAK GROUP PLC
Alistair Ruiters
CEO


For additional information, please contact:

Afarak Group Plc
Alistair Ruiters, CEO, [phone], [e-mail]
Melvin Grima, Finance Director, [phone], [e-mail]

Financial reports and other investor information are available on the Company's website: www.afarak.com.

Afarak Group is a chrome mining and minerals producer focused on delivering sustainable growth with a Speciality Alloys business in southern Europe and a FerroAlloys business in South Africa. The Company is listed on NASDAQ Helsinki (AFAGR) and the Main Market of the London Stock Exchange (AFRK).
www.afarak.com

Distribution:
NASDAQ Helsinki
London Stock Exchange
main media
www.afarak.com

AG Q2 2015 EN

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The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Afarak Group via Globenewswire

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