STRONG RESULT IN 2017 AS FULL-YEAR EBITDA MORE ...

07:00 London, 09:00 Helsinki, 22 February 2018 - Afarak Group Plc ("Afarak" or "the

Company") (LSE: AFRK, NASDAQ: AFAGR)

STRONG RESULT IN 2017 AS FULL-YEAR EBITDA MORE THAN TRIPLED TO EUR 18.0 MILLION

HIGHLIGHTS IN THE FOURTH QUARTER OF 2017

Afarak's fourth-quarter EBITDA amounted to EUR 2.6 million, compared to the historically high EUR 4.3 million a year earlier. Despite strong revenue growth on the back of the improved market conditions, profitability was affected by mostly non-operational factors.

• Revenue increased strongly by 14.0% to EUR 50.6 (Q4/2016: 44.4) million, driven by our improved production levels
• Processed material sold increased by 6.1% to 25,371 (Q4/2016: 23,906) tonnes supported by stronger market demand and higher prices
• Tonnage mined increased significantly to 154,646 (Q4/2016: 114,898) tonnes, due to increased ore sales activity to China
• Capital expenditure for the fourth quarter of 2017 totalled EUR 3.4 (0.7) million
• EBITDA stood at EUR 2.6 (Q4/2016: 4.3) million, with the EBITDA margin of 5.2% (Q4/2016: 9.6%) and was negatively impacted by mostly non-operational factors
• EBIT was EUR 1.2 (Q4/2016: 2.7) million, with the EBIT margin at 2.3% (Q4/2016: 6.1%)
  
  

HIGHLIGHTS FOR THE FULL YEAR OF 2017

 2017 was a record year for Afarak. EBITDA more than tripled to EUR 18.0 million, from EUR 5.5 million in 2016. Management's focus on productivity and efficiency gains throughout the Group, especially in South Africa, supported by stronger market conditions, resulted in significant operational and financial gains for the year

• Revenue increased by 29.5% to EUR 198.8 (FY/2016: 153.6) million, reflecting both higher production and sales volumes as well as prices
• Processed material sold increased by 4.6% to 101,598 (FY/2016: 97,095) tonnes
• Tonnage mined nearly doubled to 503,914 (FY/2016: 262,266) tonnes, primarily due to the increased activity and operational efficiency in South Africa
• The Company increased its investment substantially, particularly in South Africa, with capital expenditure for the full year 2017 standing at EUR 6.9 (2.8) million. This trend is expected to continue over the next two years.
• EBITDA stood at EUR 18.0 (FY/2016: 5.5) million and the EBITDA margin was        9.0% (FY/2016: 3.6%)
• EBIT was EUR 11.4 (FY/2016: -1.0) million, with the EBIT margin at 5.7% (FY/2016: -0.7%)

Key Group figures

		Q4/17	Q4/16	FY2017	FY2016
Revenue	EUR million	50.6	44.4	198.8	153.6
EBITDA	EUR million	2.6	4.3	18.0	5.5
EBIT	EUR million	1.2	2.7	11.4	-1.0
Earnings before taxes	EUR million	1.8	1.5	4.2	-3.1
Profit from continuing operations	EUR million	3.5	1.7	5.2	-2.8
Profit from discontinued operations	EUR million	0.0	0.4	1.5	1.9
Profit	EUR million	3.5	2.0	6.7	-0.9
Earnings per share	EUR	0.01	0.01	0.02	0.00
EBITDA margin	%	5.2	9.6	9.0	3.6
EBIT margin	%	2.3	6.1	5.7	-0.7
Earnings margin	%	3.5	3.4	2.1	-2.0
Personnel (end of period)		1,017	813	1,017	813

MARKET SENTIMENT FOR THE FIRST QUARTER 2018

The charge chrome benchmark price dropped from USD 1.39/lb in the fourth quarter 2017, to USD 1.18/lb for the first quarter 2018. The current benchmark is significantly lower than the exceptionally high price registered during the corresponding quarter in 2017. Additionally, increased raw materials; graphite electrodes and ferrosilicon; and a weakening of the US dollar combined with a strengthening of the South African Rand are expected to have a significantly negative impact on profitability. Recent developments, both in chrome ore and ferrochrome prices, have been more positive again.

CEO GUY KONSBRUCK

"2017 was a milestone for Afarak both financially and operationally. With respect to health and safety, we continued implementing various measures and investments across the Group and it is a satisfaction to note that we successfully reduced the number of lost days due to injury. In addition, no fatalities were reported across our operations. We remain committed to continue improving our safety track record across the Group.

Afarak's full-year EBITDA increased more than three-fold, from EUR 5.5 million to EUR 18.0 million with sales of EUR 198.8 million. While the robust performance was supported by improved market conditions, including higher ferrochrome prices, I am particularly proud of our persistent focus on enhancing the Company's position as a vertically-integrated producer and on its transformation to a more resilient and adaptable organisation. Through various initiatives, the Company weathered the challenges and more importantly, reaped the benefits of the market upswing.

In the speciality alloys segment, Afarak registered a very strong performance on the back of increased production, strong market demand and improved prices. The ferroalloys segment in South Africa, also performed well. In addition, the mines continued to register positive performance, increasing efficiency and productivity. The resumption of opencast mining at Mecklenburg played a key role in the results of the Group. Throughout 2017, Afarak also took initiatives to extend the opencast mining at Stellite by increasing the high wall. Work has also started on introducing additional cycles of beneficiation and the expansion of the product mix through the introduction of higher value-add products. These projects are still in the initial stages of development and the first production results could be expected during 2018.

The acquisition of the Zeerust Chrome Mine will further extend Afarak's production capacity towards the second half of the year and will make it the only South African producer of high carbon ferrochrome.

On behalf of management, I would like to thank all the teams across our operations for their important contribution to registering these results. The adaptability and flexibility of the Group reflects the work ethic of our employees who rise to the challenges. I am confident that our actions and interventions to enhance the Company's operations and structures continue to pay off.

The Company continued to care about community initiatives, particularly in South Africa. Afarak supports the daily life of various communities close to our assets and we are committed to continue to improve their quality of life. Apart from education and social projects, we are also supporting local entrepreneurship, enhancing water supply and local infrastructure development, as well as continuing our environmental rehabilitation activity.

We are installing a 2.8 MW heat recovery unit in Mogale. This energy saving investment will contribute towards a proportional reduction of our CO2 emissions and a respective increase of our productivity. We look forward to extending our investment in other sustainability and community initiatives.

Moving forward, the markets remain volatile. The decrease in the first quarter benchmark is expected to impinge on our results. During the coming year, management continues to consolidate Afarak's positive performance, while focusing on capital investments, production capacity growth, specialised products development and market expansion. We are currently finalising a review of our resources & reserves statement that will be published in due course.

During 2018, the Board, as instructed by shareholders, will be preparing a plan for delisting from the Helsinki Stock Exchange. This will develop the need to increase market liquidity in London and management is working to attract new institutional and industrial investors who believe in the long-term growth prospects of the Company."

INVESTOR PRESENTATION

Management will host an investor presentation on Thursday 1^st March, 2018 at 10.30 am Finnish time at Union Square Auditorium (Floor K1) Unioninkatu 22, 00130 Helsinki, Finland.

FINANCIAL REPORTING IN 2018

The Interim Report for Q1 will be published on Friday 11^th May, 2018 and the closed period will be between 11^th April and 11^th May 2018.

AFARAK GROUP PLC

Guy Konsbruck

CEO

For additional information, please contact:

Afarak Group Plc

Guy Konsbruck, CEO, [phone], [e-mail]

Jean Paul Fabri, [phone], [e-mail]

Financial reports and other investor information are available on the Company's

website: www.afarak.com.

Afarak Group is a specialist alloy 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).

Distribution:

NASDAQ Helsinki

London Stock Exchange

Main media

www.afarak.com

Annual release 2017

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Source: Afarak Group via Globenewswire