AFARAK GROUP SE: FINANCIAL STATEMENTS RELEASE 2022

07:45 London, 09:45 Helsinki, 24 February 2023 - Afarak Group SE ("Afarak" or "the Company") (LSE: AFRK, NASDAQ: AFAGR)

FINANCIAL STATEMENTS RELEASE 202 2

A RECORD YEAR FOR AFARAK

		H2/2 2	H2/2 1	FY202 2	FY202 1
Revenue	EUR million	106.6	42.9	198.7	80.3
EBITDA	EUR million	29.2	6.8	53.7	5.9
EBIT	EUR million	28.2	5.9	52.3	6.8
Earnings before taxes	EUR million	26.6	3.4	49.2	2.9
Profit from continuing operations	EUR million	23.5	1.5	44.7	0.6
Profit from discontinued operations	EUR million	0.0	8.4	2.9	8.4
Profit for the period	EUR million	23.5	9.9	47.6	9.0
Earnings per share	EUR	0.09	0.04	0.19	0.04
EBITDA margin	%	27.4	15.9	27.1	7.4
EBIT margin	%	26.5	13.8	26.3	8.5
Earnings margin	%	24.9	7.8	24.8	3.6
Personnel (end of period)		600	503	600	503

SECOND HALF 202 2 HIGHLIGHTS

Revenue for the second half of 2022 increased sharply to EUR 106.6 (H2/2021: 42.9) million driven by stronger market demand and higher prices;
Speciality Alloys processed material sold decreased by 14.4%, to 9,997 (H2/2021: 11,680) tonnes;
Tonnage mined increased by 88.7%, to 93,253 (H2/2021: 49,428) tonnes;
Group’s EBITDA increased to EUR 29.2 (H2/2021: 6.8) million and the EBITDA margin stood at 27.4% (H2/2021: 15.9%);
EBIT was EUR 28.2 (H2/2021: 5.9) million and the EBIT margin stood at 26.5% (H2/2021: 13.8%);
Profit for the period from continuing operation totalled EUR 23.5 (H2/2021: 1.5) million;
Cash flow from operations during H2 2022 was EUR 21.1 (H2/2021: 15.0) million.
The interest-bearing debt of the Group reduced significantly to EUR 2.2 (31 December 2021: 38.5) (30 June 2022: 26.4) million;
Cash and cash equivalents at 31 December totalled EUR 12.4 (31 December 2021: 6.3) (30 June 2022: 5.0) million.

FULL YEAR 202 2 HIGHLIGHTS

The Group revenue has grown substantially during the reporting period, reflecting both higher sales volumes as well as improved prices;
Speciality Alloys Processed material sold increased by 11.3%, to 26,085 (FY/2021: 23,442) tonnes;
Tonnage mined increased by 28.5%, to 132,362 (FY/2021: 102,970) tonnes;
EBITDA during the year increased to EUR 53.7 (FY/2021: 5.9) million. EBIT stood at EUR 52.3 (FY/2021: 6.8) million;
The result of the discontinued operation was EUR 2.9 (FY/2021: 8.4) million;
Profit for the full year 2022 totalled EUR 47.6 (FY/2021: 9.0) million.

MARKET SENTIMENT FOR 202 3

CRU Monitor expects the global demand for Stainless Steel to increase by 3% in 2023, which is an improvement compared to 2022, even though the purely European demand is set to decline during the same period.

The demand for regular grades of low carbon ferro-chrome, after being very sustained during the first 3 quarters of 2022, showed some decline during Q4. As a consequence, prices dropped during Q4, mainly due to the pressure of Chinese imports.

A good portion of Afarak’s specialty alloys is widely used for more specific applications (aeronautics, medical, energy).

Plane makers reported a sharp jump in both new plane deliveries and new orders during 2022. This came during a time where strategic raw material supply chains were stretched and inventories low. This resulted in a rapid recovery in price and demand for raw materials used in aerospace grades of steel.
The forecast for new plane builds is positive for the next several years as is demand for other high temp alloys used in the medical and energy sectors.

The main global factor will be the speed of recovery of the Chinese economy, as well as the evolution of the Russian war in Ukraine.

CEO GUY KONSBRUCK

Dear Shareholders,

I am proud to present to you the results of AFARAK’s second HY 2022, which reflects the excellent achievements of our teams.

The safety of our staff will always remain our top priority. We had to deplore 1 fatal accident in one of our Turkish mines in 2022. Although the investigation showed no major deficiencies in our set-up, our clear goal remains to provide secure working conditions to all our colleagues.

The terrible earthquake in Turkey did not impact our mining operations directly, but we were all shocked by the magnitude of the casualties. Several of our teams went into the affected area helping to search for survivors. I wish to thank them for their courageous commitment.

During H2/22, AFARAK continued to perform exceedingly well, although the business conditions remained challenging. The unlawful and ruthless Russian attack on Ukraine and all its economic consequences on the Western world have created a new layer of complexity to all businesses shortly after the pandemic crisis. This is particularly true for the commodities used in steel making which has a strong dependence on Russian products.
Afarak is not producing in Russia and does not use any raw materials from Russia.

After initial spikes, the market prices for regular grades saw downwards corrections after the summer holiday, and we had to face increasing energy and raw material cost. Afarak adapted the output of regular grades, and concentrated more on high quality alloys.
We are further developing new efficiencies and working on various solutions to reduce our exposure to fluctuating energy cost.

Afarak has resumed a more sustained mining activity in South Africa during H2 2022, which showed first positive results.

AFARAK will also maintain a strong focus on sustainability, where we pursue several projects of waste reduction, and further reduction of our CO2 foot print.

The main message to take home, though, is that 2022 has seen the best result in the history of AFARAK, which has allowed us to repay all of our long term debt. AFARAK can now count on a strong balance sheet to pursue future growth and diversification opportunities.

Helsinki, February 24, 2023

Afarak Group SE

Board of Directors

For additional information, please contact:

Guy Konsbruck, CEO, +356 2122 1566, guy.konsbruck@afarak.com

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

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