Afarak Group Plc - Half Year financial report

AFARAK GROUP PLC'S INTERIM REPORT FOR 1 APRIL - 30 JUNE 2014

07:00 London, 09:00 Helsinki, 14 August 2014 - Afarak Group Plc ("Afarak" or"the Company") (LSE: AFRK, OMX: AFAGR) Interim Report

AFARAK GROUP PLC'S INTERIM REPORT FOR 1 APRIL - 30 JUNE 2014

Q2 HIGHLIGHTS (April-June 2014):

- Revenue increased by 50.6% to EUR 47.3 (Q2/2013: 31.4) million
- Processed material sold increased by 114.3% to 22,902 (Q2/2013: 10,689) tonnes
- EBITDA was EUR 3.3 (Q2/2013: 6.2) million and the EBITDA margin was 7.1%
(Q2/2013: 19.6%)
- EBIT was EUR 1.4 (Q2/2013: 0.0) million
- Profit for the period totalled EUR 1.3 (Q2/2013: -1.8) million
- Ferrochrome production increased by 77.9% to 21,854 (Q2/2013: 12,283) tonnes
- Tonnage mined decreased by 47.8% to 79,058 (Q2/2013: 151,595) tonnes
- Cash flow from operations was EUR -0.2 (Q2/2013: 4.8) million and liquid funds
at 30 June were
  EUR 17 (30 June 2013: 17.7) (31 March 2014:16.8) million
- The Group updates its outlook for 2014

                               +-----+            +-----+            +------+
 KEY FIGURES (EUR million)     |Q2/14|Q2/13 Change|H1/14|H1/13 Change| FY/13|
-------------------------------+-----+------------+-----+------------+------+
 Revenue                       | 47.3| 31.4  50.6%| 90.5| 63.0  43.6%| 135.5|
-------------------------------+-----+------------+-----+------------+------+
 EBITDA                        |  3.3|  6.2 -45.7%|  6.4| 10.3 -38.6%|  14.0|
                               |     |            |     |            |      |
 EBITDA margin                 | 7.1%|19.6%       | 7.0%|16.4%       | 10.4%|
-------------------------------+-----+------------+-----+------------+------+
 EBIT                          |  1.4|  0.0       |  2.4| -2.0       |  -8.0|
                               |     |            |     |            |      |
 EBIT margin                   | 3.0%| 0.1%       | 2.6%|-3.2%       | -5.9%|
-------------------------------+-----+------------+-----+------------+------+
 Earnings before taxes         |  1.9| -2.5       |  3.1| -5.3       | -11.2|
                               |     |            |     |            |      |
 Earnings margin               | 4.0%|-8.0%       | 3.4%|-8.4%       | -8.2%|
-------------------------------+-----+------------+-----+------------+------+
 Profit                        |  1.3| -1.8       |  1.5| -1.9       |  -4.4|
                               |     |            |     |            |      |
 Earnings per share, basic, EUR| 0.01|-0.01       | 0.01|-0.01       | -0.02|
-------------------------------+-----+------------+-----+------------+------+


Commenting on the second quarter results, Danko Koncar, CEO, said:"The volumes of ferrochrome processed continued on a fast pace with an increase
of 77.9% in production when compared to the same period last year, as a result
of having both EWW and Mogale Alloys in full operation. The tonnage mined
volumes on the other hand were negatively affected due to the temporary
suspension of the Mecklenburg mine and the lockout at the Turkish mines.

The Group's revenue during this quarter remained strong with an increase of
50.6% when compared with the same period last year. Although ferrochrome prices
are improving, they have not yet reached the high levels of last year. The weak
US dollar has also continued to impact conversion of revenue and results from
operations as has the increase in cost of production, increase in raw material
costs in the Speciality Alloys segment and an increase in energy cost in the
Ferroalloys segment.

The ferrochrome market remains difficult to predict with signs of recovery
during this period.  In the longer term we believe that ferrochrome,
particularly the speciality and super alloys segment, will again be in high
demand. We continue evaluating different initiatives that could strengthen our
position and provide new growth opportunities.  Our focus remains on generating
cash and increasing profits.

Finally, I'm pleased to announce that despite a lower EBITDA we managed to
achieve positive EBIT and profit for the second consecutive quarter."


2014 OUTLOOK
Afarak still expects its financial performance to be better than 2013 but EBITDA
will be lower as Q3 2014 is expected to be weaker as compared to Q3 2013. The
global economic outlook continues 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 the
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 FerroAlloys
division, the Company expects to start production of medium carbon ferrochrome
during the fourth 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 full year revenue and EBIT are expected to be higher but EBITDA lower
as 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.

The previous outlook, published in the first quarter interim results on 8 May
2014, was:

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 FerroAlloys 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 Q2/2014 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.

Investor Conference Call

Management will host an investor conference call in English on 14 August 2014 at
14.00 Finnish time, 12.00 UK time. Please dial-in at least 10 minutes
beforehand, quoting the reference: 44732.

Finnish number +358 (0)800 919 339
UK number +44 (0) 844 762 0 762


AFARAK GROUP PLC
Danko Koncar
CEO


For additional information, please contact:

Afarak Group Plc
Danko Koncar, CEO, +44 (0)20 7376 1175, danko.koncar@afarak.com




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 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

[HUG#1848737]

Attachments:

Q2_EN.pdf