AFARAK GROUP PLC'S INTERIM REPORT FOR 1 JANUARY...

07:00 London, 09:00 Helsinki, 8 May 2015 - Afarak Group Plc ("Afarak" or "the Company") (LSE: AFRK, NASDAQ: AFAGR) Interim Report

AFARAK GROUP PLC'S INTERIM REPORT FOR 1 JANUARY - 31 MARCH 2015

Q1 HIGHLIGHTS (January - March 2015):

- Revenue decreased by 5.7% to EUR 40.7 (Q1/2014: 43.2) million
- Processed material sold decreased by 7.4% to 22,826 (Q1/2014: 24,638) tonnes
- EBITDA was EUR 4.6 (Q1/2014: 3.0) million and the EBITDA margin was 11.4% (Q1/2014: 7.0%)
- EBIT was EUR 2.9 (Q1/2014: 0.9) million and the EBIT margin was 7.2% (Q1/2014: 2.1%)
- Profit for the period totalled EUR 2.3 (Q1/2014: 0.3) million
- Ferrochrome production decreased by 4.8% to 27,449 (Q1/2014: 28,823) tonnes
- Tonnage mined decreased by 1.3% to 108,773 (Q1/2014: 110,261) tonnes
- Cash flow from operations was EUR -2.7 (Q1/2014: 3.0) million and liquid funds at 31 March were
  EUR 11.5 (31 March 2014: 16.8) (31 December 2014: 13.3) million
 

KEY FIGURES (EUR million)	Q1/15	Q1/14	Change	FY2014
Revenue	40.7	43.2	-5.7%	172.7
EBITDA	4.6	3.0	54.8%	8.4
EBITDA margin	11.4%	7.0%		4.9%
EBIT	2.9	0.9		1.7
EBIT margin	7.2%	2.1%		1.0%
Earnings before taxes	2.7	1.3		0.5
Earnings margin	6.5%	3.1%		0.3%
Profit from continuing operations	2.3	0.3		0.5
Profit from discontinued operations	0	0		1.8
Profit	2.3	0.3		2.2
Earnings per share, basic, EUR	0.01	0.00		0.01

Commenting on the first quarter results, Danko Koncar, CEO, said:

"Our Speciality Alloys segment continues the positive trend seen in 2014 with higher demand for our special grade material. In the FerroAlloys segment trading volumes were lower than last year as a result of weaker market conditions for our standard grade material. Despite these lower sales volumes Afarak still managed to achieve better results during the first quarter.

Ferrochrome production was lower during the first quarter to reduce our inventory levels that have been increasing over the last months. Tonnages mined were at the same level of the first quarter last year, with mining activity at Kavak mine in Turkey restarted in March 2015 following the end of the strike.

The Group's revenue during the first quarter was affected by lower volumes, but did not have a major impact on our results as we attained better margins as a result of a stronger US dollar on conversion of revenue. The strengthening of US dollar did not have a major effect on our cost as they were mainly denominated in Euro and South African Rand, this led the gains on the revenue conversion to Euro to flow through EBITDA and EBIT.

We aim to continue focusing on our core business and the production of special grade material. At Mogale Alloys we still had some challenges in the supply of medium carbon ferrochrome but we expect that there will be an increase in demand as a result of lower future market capacity. We have also continued evaluating initiatives to strengthen our position with our main focus remaining on generating cash and increasing profits.

I would like to conclude by highlighting that profit from continuing operations in the first quarter are higher than those achieved in the full year 2014, this is a sign that the positive trend started last year has improved with the strengthening of the US dollar."

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 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 Q1/2015 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.

For additional information, please contact:

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

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 FerroAlloys business in  South Africa. The Company is listed on NASDAQ Helsinki (AFAGR) and the Main Market of the London Stock Exchange (AFRK).
www.afarakgroup.com

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

AG_Q1_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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