Afarak Group — Earnings Release 2013

Feb 14, 2014

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

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

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 +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

Investec Bank Plc
Jeremy Wrathall, +44 (0)20 7597 5970

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

[HUG#1761984]

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