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

07:00 London, 09:00 Helsinki, 10 November 2015 - Afarak Group Plc ("Afarak" or "the Company") (LSE: AFRK, OMX: AFAGR) Interim Report

AFARAK GROUP PLC'S INTERIM REPORT FOR 1 JULY - 30 SEPTEMBER 2015

Q3 HIGHLIGHTS (July-September 2015):
- Revenue increased by 10.3% to EUR 44.8 (Q3/2014: 40.6) million
- Processed material sold decreased by 23.9% to 20,059 (Q3/2014: 26,347) tonnes
- EBITDA was EUR 1.3 (Q3/2014: 2.1) million and the EBITDA margin was 2.8% (Q3/2014: 5.1%)
- Adjusted EBITDA was EUR 1.6 (Q3/2014: 0.9) million; adjusted EBITDA margin was 3.6%  (Q3/2014: 2.2%)
- EBIT was EUR -0.7 (Q3/2014: 0.5) million and the EBIT margin was -1.5% (Q3/2014: 1.3%)
- Profit for the period totalled EUR -1.0 (Q3/2014: -0.7) million
- Production of processed material decreased by 4.0% to 19,348 (Q3/2014: 20,163) tonnes
- Tonnage mined increased by 154.0% to 127,004 (Q3/2014: 50,005) tonnes
- Cash flow from operations was EUR 9.9 (Q3/2014: 1.2) million and liquid funds at 30 September was
  EUR 22.3 (30 September 2014: 21.4) (30 June 2015: 10.5) million

KEY FIGURES (EUR million)	Q3/15	Q3/14	Change	Q1-Q3/15	Q1-Q3/14	Change	FY2014
Revenue	44.8	40.6	10.3%	138.5	131.1	5.7%	172.7
EBITDA	1.3	2.1	-39.7%	13.5	8.4	60.3%	8.4
EBITDA margin	2.8%	5.1%		9.8%	6.4%		4.9%
EBIT	-0.7	0.5		8.1	2.9		1.7
EBIT margin	-1.5%	1.3%		5.8%	2.2%		1.0%
Earnings before taxes	-2.0	-1.3		6.1	1.7		0.5
Earnings margin	-4.5%	-3.3%		4.4%	1.3%		0.3%
Profit from continuing operations	-1.0	-0.7		7.0	0.8		0.5
Profit from discontinued operations	0	0		0	0		1.8
Profit	-1.0	-0.7		7.0	0.8		2.2
Earnings per share, basic, EUR	0.00	-0.00		0.03	0.00		0.01

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

"The commodity market in general is experiencing pressures due to the slowdown of the global economy which as a result had an impact on sales prices as well as demand. Afarak is not immune to market volatility.


Afarak has reduced planned ferrochrome production volumes in the Speciality Alloys segment to mitigate the risk of straining its working capital. The tonnages mined increased significantly when compared to the previous year as a result of having all mines in operation. Vlakpoort mine has continued bulk sampling throughout the quarter which contributed positively to the increase in volumes.
 
The Group's revenue in the quarter under review continued at  higher levels as reported in H1. This was due to all our mines being in operation, and increased volumes of traded specialised third party material. Lower production levels, planned plant maintenance, and high energy costs in South Africa led to an increase in the cost of production per tonne. This had an impact on the Group's performance in this quarter.


Theresults do not reflect the underlying quarterly performance of Afarak. When excluding the effects of extraordinary items such as the  recent disposal of  an associate and the sale of land in Turkey in the equivalent quarter last year, the adjusted EBITDA for this quarter would be EUR 1.6 million. This is approximately 75% better than the comparative adjusted EBITDA of 2014.


We continue to focus on our core business and the production of special grade material. At Mogale Alloys we are promoting the increased production of  specialised material to generate enhanced returns. We continue to evaluate initiatives to strengthen our position in the industry with our main focus  on generating cash and increasing profits. Our ability to generate cash from operations remains strong.

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.

 

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 Q3/2015 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.afarak.com.

Investor Conference Call

Management will host an investor conference call in English on 10 November 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).

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

Q3 Interim Report English

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This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients.
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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