AFARAK GROUP PLC'S FINANCIAL STATEMENTS REVIEW ...

07:00 London, 09:00 Helsinki, 14 February 2014 - Afarak Group Plc ("Afarak" or "the Company") (LSE: AFRK, OMX: AFAGR) Financial Statement Review

AFARAK GROUP PLC'S FINANCIAL STATEMENTS REVIEW FOR 1 JANUARY - 31 DECEMBER 2013

FULL YEAR HIGHLIGHTS (January-December 2013):

- Revenue increased by 5.4% to EUR 135.5 (FY/2012: 128.6) million
- Sales from processed products decreased by 14.7% to 56,676 (FY/2012: 66,449) tonnes
- EBITDA improved significantly and was EUR 14.0 (FY/2012: 9.2) million. EBITDA margin was 10.4% (FY/2012: 7.2%)
- EBIT was EUR -8.0 (FY/2012: -16.8) million
- Profit for the period totalled EUR -4.4 (FY/2012: -16.6) million
- Full year production increased by 97.3% to 568,279 (FY/2012: 288,095) tonnes
- Cash flow from operations was EUR 13.8 (FY/2012: 6.2) million

Q4 HIGHLIGHTS (October - December 2013):

- Revenue increased by 72.5% to EUR 41.8 (Q4/2012: 24.2) million
- Sales from processed products increased by 96.1% to 19,635 (Q4/2012: 10,014) tonnes
- EBITDA was EUR 0.8 (Q4/2012: 6.8) million and the EBITDA margin was 1.9% (Q4/2012: 27.9%)
- EBIT was EUR -2.9 (Q4/2012: 0.6) million
- Profit for the period totalled EUR -0.7 (Q4/2012: -6.2) million
- Production increased by 189.6% to 174,702 (Q4/2012: 60,329) tonnes
- Cash flow from operations was EUR 2.7 (Q4/2012: -6.7) million and liquid funds at 31 December were
 EUR 13.8 (31 December 2012: 14.2) (30 September 2013:13.1) million

Dividend proposal

The Board of Directors proposes to the Annual General Meeting which will be held on 8 May 2014 that no dividend would be distributed but that a capital redemption of EUR 0.01 per share would be paid out of the paid-up unrestricted equity fund.

KEY FIGURES (EUR million)	Q4/13	Q4/12	Change	FY2013	FY2012	Change
Revenue	41.8	24.2	72.5%	135.5	128.6	5.4%
EBITDA	0.8	6.8	-88.3%	14.0	9.2	52.2%
EBITDA margin	1.9%	27.9%		10.4%	7.2%
EBIT	-2.9	0.6		-8.0	-16.8
EBIT margin	-6.9%	2.4%		-5.9%	-13.0%
Earnings before taxes	-3.1	-4.0		-11.2	-19.6
Earnings margin	-7.4%	-16.4%		-8.2%	-15.2%
Profit	-0.7	-6.2		-4.4	-16.6
Earnings per share, basic, EUR	0.00	-0.03		-0.02	-0.06

Commenting on the full year and fourth quarter results, Dr Danko Koncar, CEO, said:

"Early in the year we have seen positive signals and consequently delivered good results in the first half of the year which were followed by, the seasonal market slowdown during the summer period.  Higher trading volumes led revenue in the fourth quarter to improve significantly by 73% compared to the same period last year.  Despite this improvement we were not able to achieve better results compared to the fourth quarter of 2012 due to more difficult market conditions that led to lower sales prices, higher raw material costs and extraordinary year-end adjustments. Additionally there were also extraordinary items that positively impacted our results in the Ferro Alloys segment during the last quarter of 2012.  
Processing volumes improved in the fourth quarter compared to the equivalent period last year as a result of having Mogale Alloys in full operation.  We increased our mining production in both segments due to the demand for chrome ore during this quarter.

I firmly believe that ferrochrome, particularly the Speciality Alloys segment, will be in high demand in the long-term. We are not waiting for the market to change and we are continuously evaluating different initiatives that could strengthen our position and provide new growth opportunities.  A reflection of this is our resolution to invest in the ferroalloy refining and granulation equipment at Mogale Alloys so that part of the current ferrochrome production can be converted to granulated medium carbon ferrochrome.  Once completed, we are expecting that this project will improve our profitability in the Ferro Alloys segment as we will be able to achieve a higher profit margin.

The cost saving initiatives and restructuring of functions that took place in 2013 brought material cost benefits in comparison to the previous financial year.  We have significantly restructured our organisation and the way we work to streamline costs.  Our focus remains on generating cash and profits.

Finally, I would like to conclude by saying that when assessing our results over the years we managed to show a constant growth with 2013 being our best year since entering into mining and metal business in 2008."

2014 outlook

The global economic outlook is showing signs of recovery with western industrial nations issuing positive economic indicators.  Demand for commodities is also showing recovery with increase in demand for speciality alloys in United States. The ferroalloy market is expected to continue the positive trend of 2013 during which consumption reached record levels. To date, however, pricing has not responded to the increased demand. The Group continues to be prepared for significant price fluctuations and will continue to adapt its production levels accordingly. At Mogale Alloys, part of the Ferro Alloys division, the Company expects to start production of medium carbon ferrochrome during the third quarter of 2014, which is expected to have a positive impact on our profit margins. In the Speciality Alloys division we are expecting to see an increase in our raw materials cost due to current market conditions.  As a result the Group expects its financial performance for the full year 2014 to marginally improve compared to 2013.

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 Financial Statements Review for 2013 enclosed to this stock exchange release. The Financial Statements Review 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 February 2014 at 14:00 Finnish time, 12:00 UK time. Please dial-in at least 10 minutes beforehand, quoting the reference: 44732.       

Finnish number [phone]

UK number [phone]

AFARAK GROUP PLC
Danko Koncar
CEO


For additional information, please contact:

Afarak Group Plc
Danko Koncar, CEO, [phone], [e-mail]

Investec Bank Plc
Jeremy Wrathall, [phone]

Financial reports and other investor information are available on the Company's website: www.afarakgroup.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 ferro alloys business in southern Africa. The Company is listed on NASDAQ OMX Helsinki (AFAGR) and the Main Market of the London Stock Exchange (AFRK).
www.afarakgroup.com

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

Financial_Statement_Review_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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