Earnings Release • Jun 30, 2015
Earnings Release
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07:00 London, 09:00 Helsinki, 14 August 2015 - Afarak Group Plc ("Afarak" or "the Company") (LSE: AFRK, NASDAQ: AFAGR) Interim Report
| KEY FIGURES (EUR million) | Q2/15 | Q2/14 | Change | H1/15 | H1/14 | Change | FY2014 |
|---|---|---|---|---|---|---|---|
| Revenue | 53.1 | 47.3 | 12.2% | 93.8 | 90.5 | 3.6% | 172.7 |
| EBITDA | 7.6 | 3.3 | 127.6% | 12.3 | 6.4 | 93.2% | 8.4 |
| EBITDA margin | 14.4% | 7.1% | 13.1% | 7.0% | 4.9% | ||
| EBIT | 5.8 | 1.4 | 8.8 | 2.4 | 1.7 | ||
| EBIT margin | 11.0% | 3.0% | 9.3% | 2.6% | 1.0% | ||
| Earnings before taxes | 5.4 | 1.7 | 8.1 | 3.1 | 0.5 | ||
| Earnings margin | 10.2% | 3.7% | 8.6% | 3.4% | 0.3% | ||
| Profit from continuing operations | 5.7 | 1.2 | 8.0 | 1.5 | 0.5 | ||
| Profit from discontinued operations | 0 | 0 | 0 | 0 | 1.8 | ||
| Profit | 5.7 | 1.2 | 8.0 | 1.5 | 2.2 | ||
| Earnings per share, basic, EUR | 0.02 | 0.01 | 0.03 | 0.01 | 0.01 |
"Both the Speciality Alloys and FerroAlloys segment performed well during the second quarter with sales volumes for standard grade material being higher than last year. In the Speciality Alloys segment there was a slight reduction in sales volume as a result of not compromising our prices for more volume. Despite the lower volumes it still contributed well to the Group's results and achieved better margins.
The higher sales volumes in the FerroAlloys segment led production levels of processed material to be 27.5% higher than the same quarter last year. The tonnage mined volumes also increased by 54.4% as a result of having all mines operating at normal levels during this quarter. At the end of the second quarter we commenced the bulk sampling at Vlakpoort mine, which is expected to be a good contributor to the Group's results in the medium term when the open pit mine is ramped up.
Following the slow start seen in the beginning of this year the Group's revenue during the second quarter recovered the lost ground of the first quarter with an increase of 12.2% higher than same period last year. We also achieved better margins as a result of a stronger US dollar on conversion of revenue. However our cost base was not significantly affected as it is primarily denominated in Euro and South African Rand.
We aim to continue focusing on our core business and the production of special grade material. At Mogale Alloys we have addressed the challenges in the supply of medium carbon ferrochrome and we are seeing interest by new customers for the material. We have also continued evaluating initiatives to strengthen our position in the industry with our main focus remaining on generating cash and increasing profits.
Finally, I would like to conclude by highlighting that we continued the positive trend started this year with a significantly higher profit from prior years. This result is a clear indication that our business, even when the market is weak, performs well and manages to achieve sustainable profits."
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.
The previous outlook, published in the full year results of 2014 on 16 February 2015, was:
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.
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 Q2/2015 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.
Management will host an investor conference call in English on 14 August 2015 at 14.00 Finnish time, 12.00 UK time. Please dial-in at least 10 minutes beforehand, quoting the reference: 38313.
Finnish number +358 (0)800 919 339 UK number +44 (0) 844 762 0 762
AFARAK GROUP PLC Alistair Ruiters CEO
For additional information, please contact:
Alistair Ruiters, CEO, +358 50 372 1130, [email protected] Melvin Grima, Finance Director, +356 2122 1566, [email protected]
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). www.afarak.com
Distribution: NASDAQ Helsinki London Stock Exchange main media www.afarak.com
This Interim Report is prepared in accordance with the IAS 34 standard and is unaudited. All the corresponding comparable figures of 2014 are presented in brackets, unless otherwise explicitly stated.
Sales from processed material:
| Tonnes | Q2/15 | Q2/14 | H1/15 | H1/14 | FY/14 |
|---|---|---|---|---|---|
| Processing, Speciality Alloys | 7,970 | 8,913 | 15,344 | 15,782 | 28,448 |
| Processing, FerroAlloys | 22,586 | 13,988 | 37,610 | 31,804 | 68,903 |
| Processing, Total | 30,556 | 22,901 | 52,954 | 47,586 | 97,351 |
The Group's processed material sold, which includes all the products produced at the Mogale Alloys and Elektrowerk Weisweiler processing plants, was 30,556 (22,901) tonnes, an increase of 33.4% compared to the equivalent period in 2014. This increase was mainly attributable to the FerroAlloys segment material were demand was strong following a slow start in Q1/2015. This cannot be said for the Speciality Alloys material where there was a decrease in sales volumes as a result of not compromising sales prices for more volume. Average sales prices remained lower in US dollar terms during this quarter when compared to the same period last year.
| EUR million | Q2/15 | Q2/14 | Change | H1/15 | H1/14 | Change | FY/14 |
|---|---|---|---|---|---|---|---|
| Revenue | 53.1 | 47.3 | 12.2% | 93.8 | 90.5 | 3.6% | 172.7 |
| EBITDA | 7.6 | 3.3 | 127.6% | 12.3 | 6.4 | 93.2% | 8.4 |
| EBITDA margin | 14.4% | 7.1% | 13.1% | 7.0% | 4.9% | ||
| EBIT | 5.8 | 1.4 | 8.8 | 2.4 | 1.7 | ||
| EBIT margin | 11.0% | 3.0% | 9.3% | 2.6% | 1.0% | ||
| Profit | 5.7 | 1.2 | 8.0 | 1.5 | 2.2 |
Revenue for the second quarter of 2015 increased by 12.2% to EUR 53.1 (47.3) million compared to the equivalent period in 2014. This increase in revenue was mainly attributable to the FerroAlloys segment were there was an increase in demand for processed material following the slow start in 2015, as well as the increase in sales volumes of the Mecklenburg mine material which was not in operation during 2014 due to the unrest in the local community. In the Speciality Alloys segment revenue was low compared with the same period last year as a result of not compromising our prices with higher trading volume.
Despite an increase in processing costs and energy cost, profitability has significantly improved as a result of the increase in sales volumes and stronger US dollar, with EBITDA for the second quarter of 2015 increasing by 127.6% to EUR 7.6 (3.3) million compared the equivalent period in 2014. The positive result in EBITDA flowed through to EBIT which in the second quarter of 2015 improved to EUR 5.8 (1.4) million. Profit during this quarter increased significantly to EUR 5.7 (1.2) million when compared to same period last year.
Earnings per share was EUR 0.02 (0.01).
The Group's liquidity, as at 30 June 2015, was EUR 10.5 (17.0) (31 March 2015: 11.5) million. Operating cash flow in the second quarter was EUR 5.0 (-0.3) million. Afarak's gearing at the end of the second quarter was 1.5% (-3.7%) (31 March 2015: 0.7%). Net interest-bearing debt was EUR 2.9 (-6.7) (31 March 2015: 1.2) million.
Total assets on 30 June were EUR 289.7 (279.2) (31 March 2015: 299.4) million. The equity ratio was 64.5% (64.1%) (31 March 2015: 63.2%).
Capital expenditure for the second quarter 2015 totalled EUR 1.7 (4.6) million which relates primarily to the FerroAlloys segment with the dryer at Mogale Alloys, and the ramping up of capital expenditure to commence the bulk sample at Vlakpoort mine. In the Speciality Alloys segment TMS is investing in a new plant at Tavas and a fines tailing processing plant at Kavak. TMS expects that annual mining volume will increase by 15,600 tonnes following the commissioning of these plants. At EWW capital expenditure was in line with the prior year to sustain operations.
At the end of the second quarter 2015, Afarak had 749 (712) employees. The average number of employees during the second quarter of 2015 was 743 (721).
Number of employees by segment *:
| 30.6.2015 | 30.6.2014 | Change | 31.12.2014 | |
|---|---|---|---|---|
| Speciality Alloys | 378 | 375 | 0.8% | 355 |
| FerroAlloys | 367 | 334 | 9.9% | 339 |
| Other operations | 4 | 3 | 33.3% | 4 |
| Group total | 749 | 712 | 5.2% | 698 |
*Including personnel of joint ventures.
Afarak has set up a Health Safety and Environment committee (HSEC) with the aim of integrating the Group operations to address the social, environment, health and safety position of all stakeholders. While continuing the programme focused on pro-active safety and environmental measurements as part of aiming to achieve "Zero Harm", the members of HSEC are defining Group standard protocols to ensure that all the Group activities are constantly managed, monitored and reported according to Group policies.
In the second quarter of 2015 we had 6 injuries that caused loss of time, which is at the same level of injuries experienced in the same period last year. Afarak continues all efforts, including training, to further improve the safety performance.
Afarak aims to conduct its business in a sustainable way and to preserve the environment by minimising the environmental impact of its operations. The Group has programmes on all sites to monitor and address its impact on the environment,
Our aim is to guarantee our employees a safe working place and minimum impact towards the environment, and ensure that the sustainable development meets the present needs of Afarak without compromising the ability of present and future generations.
The Speciality Alloys business consists of Türk Maadin Şirketi A.S ("TMS"), the mining and beneficiation operation in Turkey, and Elektrowerk Weisweiler GmbH ("EWW"), the chromite concentrate processing plant in Germany. TMS supplies EWW with high quality chromite concentrate which produces speciality products including specialised low carbon and ultra low carbon ferrochrome. Chrome ore from TMS that is not utilised
for the production of specialised low carbon ferrochrome is sold to the market as lumpy chrome ore.
Production:
| Tonnes | Q2/15 | Q2/14 | Change | H1/15 | H1/14 | Change | FY/14 |
|---|---|---|---|---|---|---|---|
| Mining* | 13,685 | 14,448 | -5.3% | 19,682 | 34,142 | -42.4% | 35,848 |
| Processing | 7,365 | 7,902 | -6.8% | 15,228 | 16,090 | -5.4% | 28,784 |
* Including both chromite concentrate and lumpy ore production
Production decreased to 21,050 (22,350) tonnes for the second quarter of 2015, compared to the equivalent period in 2014. Decrease in processing at EWW was a result of managing the level of stockpiles. Mining activity at TMS also reduced during this quarter, this was mainly attributable to disruptions incurred at Tavas mine due to the development of the new plant.
| EUR million | Q2/15 | Q2/14 | Change | H1/15 | H1/14 | Change | FY/14 |
|---|---|---|---|---|---|---|---|
| Revenue | 26.1 | 28.9 | -9.8% | 49.8 | 50.9 | -2.3% | 97.8 |
| EBITDA | 4.5 | 2.7 | 65.4% | 7.9 | 3.7 | 113.3% | 7.9 |
| EBITDA margin | 17.2% | 9.4% | 15.9% | 7.3% | 8.0% | ||
| EBIT | 3.9 | 2.1 | 6.8 | 2.4 | 5.7 | ||
| EBIT margin | 15.0% | 7.3% | 13.6% | 4.8% | 5.8% |
Revenue for the second quarter decreased by 9.8% to EUR 26.1 (28.9) million and EBITDA increased by 65.4% to EUR 4.5 (2.7) million compared to the equivalent period in 2014. The decrease in revenue was mainly due to lower sales volumes traded when compared with the same period last year as a result of not compromising our prices. Sales of Turkish lumpy chrome ore also impacted revenue negatively due to the lower demand from China. The reduction in production led to a higher cost per tonne in Euro during this quarter. Despite the lower sales volumes and higher production cost, as a substantial part of revenue is denominated in US dollar, the strengthening of the US dollar had a significant effect on revenue were it was positively affected on conversion to Euro. This positive affect flowed through to EBITDA and EBIT resulting in a substantial improvement in margins.
As at 30 June 2015, the Speciality Alloys business had 378 (375) employees.
The FerroAlloys business consists of the processing plant Mogale Alloys, Vlakpoort mine and the joint ventures, the Stellite mine and the Mecklenburg mine in South Africa. The business produces chrome ore, charge chrome, medium carbon ferrochrome and silico manganese for sale to global markets.
| Tonnes | Q2/15 | Q2/14 | Change | H1/15 | H1/14 | Change | FY/14 |
|---|---|---|---|---|---|---|---|
| Mining* | 108,396 | 64,610 | 67.8% | 211,172 | 155,177 | 36.1% | 268,351 |
| Processing | 20,491 | 13,952 | 46.9% | 40,077 | 34,586 | 15.9% | 72,677 |
* Including both chromite concentrate and lumpy ore production by the joint ventures
Production in this segment increased substantially to 128,887 (78,562) tonnes in the second quarter of 2015, compared to the same period in 2014. Operations at both the Mecklenburg and Stellite mine operated at normal levels during the second quarter of this year as opposed to same period in 2014 where mining operations at Mecklenburg mine were suspended due to unrest in the local community. At the end of the second quarter Afarak commenced the bulk sampling at Vlakpoort mine. Processing at Mogale Alloys was higher in the second quarter this year than last year as the shutdown of the plant for periodic maintenance which occurred in the second quarter of last year is scheduled for the third quarter of 2015.
| EUR million | Q2/15 | Q2/14 | Change | H1/15 | H1/14 | Change | FY/14 |
|---|---|---|---|---|---|---|---|
| Revenue | 27.0 | 18.4 | 46.6% | 43.8 | 39.5 | 10.8% | 74.8 |
| EBITDA | 3.9 | 1.3 | 201.6% | 5.7 | 3.7 | 56.1% | 3.1 |
| EBITDA margin | 14.6% | 7.1% | 13.0% | 9.2% | 4.1% | ||
| EBIT | 2.7 | 0.0 | 3.3 | 1.0 | -1.4 | ||
| EBIT margin | 10.1% | 0.2% | 7.6% | 2.4% | -1.8% |
* Revenue of the joint ventures is not included in the Group's revenue
Revenue for the second quarter increased to EUR 27.0 (18.4) million compared to the equivalent period in 2014, representing an increase of 46.6%. This improvement is a reflection of the increase in demand for processed material following the slow start in 2015, as well as the increase in sales volumes of material from the Mecklenburg mine where mining operations were suspended in 2014 due to unrest in the local community.
EBITDA for the second quarter increased to EUR 3.9 (1.3) million as a result of a stronger US Dollar rate on conversion of revenue; decrease in mining cost of production; and increase in sales of mining material. During the second quarter of 2015 the weakening of the South African Rand reduced the impact on EBITDA of the higher energy costs on conversion to Euro. EBITDA also includes joint venture share of profits amounting to EUR 0.8 (0.0) million which was positively affected with unrealised difference on exchanged amounting to EUR 0.5 (0.3) million.
The share of profit from joint ventures is made up as follows:
| EUR million | Q2/15 | Q2/14 | Change | H1/15 | H1/14 | Change | FY/14 |
|---|---|---|---|---|---|---|---|
| Revenue | 3.2 | 1.0 | 220.7% | 5.4 | 3.9 | 37.6% | 5.7 |
| EBITDA | 0.6 | -0.2 | 0.9 | 0.1 | -2.2 | ||
| EBITDA margin | 18.8% | -23.3% | 16.9% | 2.8% | -38.0% | ||
| EBIT | 0.3 | -0.4 | 0.3 | -0.3 | -3.1 | ||
| EBIT margin | 9.8% | -39.4% | 5.7% | -8.8% | -54.1% | ||
| Financial income and expense |
0.5 | 0.3 | 0.5 | 0.1 | -1.0 | ||
| Profit for the period |
0.8 | 0.0 | 0.9 | -0.2 | -3.3 |
Afarak's share of joint venture revenue for the second quarter increased to EUR 3.2 (1.0) million compared to the equivalent period in 2014, representing an increase of 220.7%. The substantial increase in revenue was mainly due to the increase in sales volumes from the Mecklenburg mine where mining operations were suspended in 2014 due to unrest in the local community.
Joint venture EBITDA for the second quarter increased to EUR 0.6 (-0.2) million. Increase in EBITDA compared to the equivalent period in 2014 was driven by lower overhead cost per ton produced as production volumes increased during this quarter.
As at 30 June 2015, the FerroAlloys business had 367 (334) employees.
The weak euro has helped stainless steel mills in Europe to increase exports. However, a scarcity of stainless steel scrap has though, pushed up input costs, which has again reduced producers' profit margins. Demand has been showing signs of improving, as has rolling capacity which is being booked further in advance. Basis prices are steady with end-users being reasonable with less imported material being supplied in the European market.
There has not been any sign of an upturn in consumption as the summer holiday period approaches. Selling values have been low and profit margins have been lower than expected. There is tight competition between the different suppliers. Sales activity slowed down by end of the quarter which was not expected when looking at the year on year trends. Stockholders and service centres were purchasing only small amounts of
material as they are still concerned about market conditions. The alloy surcharges which are set to decrease further have led sellers to offset some of this loss during this period.
The European antidumping action on Chinese and Taiwanese supply has reduced the volume of imported material in Europe, but did not have a material impact on prices. Stainless steel mills are offering very low prices which are resulting in very low profit margin for distributors.
Depressed oil prices continued over the period despite a short-lived recovery. This has resulted in lower demand for plates for the pipe production and speciality drilling equipment, especially from the offshore sector and the US shale oil. This has also caused a reduction in demand for tool and machinery steels.
The spot market prices for most of the standard South African charge chrome were stable to slightly lower over the quarter, even though the second quarter normally is the strongest quarter of the year. The activity in the spot market showed some signs of recovery with smaller foundries covering their requirements through the second quarter. The conspicuous gap between benchmark and spot ferrochrome prices led the larger stainless steel mills to put pressure on ferrochrome producers to lower their prices. Due to this the South African benchmark was reduced from US\$1.15/lb Cr in the first quarter of 2015 to US\$1.08/lb Cr in the second quarter. Despite the reduction in South African benchmark price, major mills still negotiate discounts with their suppliers for volumes and long term loyalty. This led discounts to increase from about 20% up to 30%, leaving the South African benchmark number meaningless to most ferrochrome producers. Today, spot prices in Europe, China and Japan are roughly at the same level when all terms are considered.
Afarak's supply of ultra-low phosphors and low silica charge chrome continued to the speciality stainless steel producers, with good demand but slightly lower prices due to the pressure from the standard charge chrome weakening prices and increasing discounts. The demand for Afarak speciality charge chrome is expected to be fairly stable until the end of the year, with the potential for a small improvement if the oil and gas sector recovers; and demand for the 400 series stainless steel improves.
Afarak's medium carbon charge chrome, which is produced at Mogale Alloys in South Africa, has become more stable and trial lots have been forwarded to several major customers worldwide. Sales have been improving but the Company expects to provide a stable supply in the third and fourth quarter of 2015 which will then be followed by long term agreements for 2016.
Afarak's speciality low carbon ferrochrome, which is produced at EWW in Germany, has been increasing in market share. As speciality low carbon ferrochrome is a substitute for chrome metal, and the chrome metal prices are decreasing, the increase in market share of our material did not have an effect on prices.
Strong demand continued for speciality materials and production is expected to continue increasing by the end of this year, with new long term agreements being negotiated for the aerospace, automotive, nuclear power, turbine and tool industry.
During the second quarter there were no significant changes in the silico manganese market. Earlier in the second quarter the demand for silico manganese seemed to be improving when the market appeared to be slightly stronger following the lower inquiries for the lower grade silico manganese being exported from India. The main concern of market participants was due to the decision on the introduction of an antidumping duty against Indian silico manganese in Europe.
The South African market continued to be stable with producers pricing being competitive. Offtake from consumers has been also stable during this quarter.
The US market continues to be a premium market, but producers worldwide are careful in exporting large tonnages to USA at low prices following the initiation of a US International Trade Commission (ITC) investigation into silico manganese imports from Australia after all 6 commissioners determined that there is a reasonable indication that the local producer is being harmed. The US Department of Commerce will continue to investigate a preliminary anti-dumping duty determination. As long as volumes are carefully controlled, duty free imports into the USA can continue.
For the second quarter of 2015, EBITDA from unallocated items was EUR -0.8 (-0.7) million.
Further to the announcement of 27 March 2014, whereby Afarak announced that the Company had been served a notice of arbitration by Chinese Suzhou Kaiyuan Chemical Co. Ltd ("Suzhou"), on 14 July 2015, Afarak announced that the claim by Suzhou was withdrawn. Suzhou's claim of EUR 2.66 million had related to a chrome ore sales agreement entered into by Chromex Mining Plc ("Chromex") prior to the acquisition of Chromex by Afarak together in a joint venture with Kermas Limited and was served on Afarak's marketing arm RCS Limited and various companies which form part of the Chromex joint venture. As a result of the withdrawal the arbitration tribunal dismissed the claim and ordered Suzhou to pay the full arbitration cost.
The Company's Annual General Meeting ("AGM") was held on 8 May 2015. The AGM adopted the financial statements. The AGM resolved in accordance with the proposal of the Board of Directors a capital redemption of EUR 0.02 per share for the year ended on 31 December 2014. The capital redemption was paid on 20 May 2015.
The AGM resolved that the Chairman of the Board and the Chairman of the Audit and Risk Management Committee would be paid € 4,500 per month and the ordinary Board Members would be paid EUR 3,500 per month. Furthermore, the non-executive Board Members who serve on the Board's Committees shall be paid an additional EUR 1,500 per month for the committee work. Those members of the Board of Directors that are executives of the Company are not entitled to receive any remuneration for Board membership.
The AGM resolved that the Board of Directors comprises of seven members. Mr Michael Lillja, Mr Markku Kankaala, Dr Jelena Manojlovic and Dr Alfredo Parodi were re-elected to the Board. Mr Barry Rourke, Dr Alistair Ruiters and Mr Ivan Jakovcic were elected.
The AGM resolved that authorised public accountant firm Ernst & Young Oy is re-elected as the Auditor of the Company for the year 2015.
The AGM resolved to authorize the Board of Directors to issue shares and stock options and other special rights that entitle to shares in one or more tranches up to a maximum of 25,000,000 new shares or shares owned by the Company. This equates to approximately 9.6% of the Company's currently registered shares. The authorization may be used among other things in financing, enabling corporate and business acquisitions or other arrangements and investments of business activities and in the employee incentive and commitment programs. By virtue of the authorization, the Board of Directors can decide both on share issues against payment and on share issues without payment. The payment of the subscription price can also be made with consideration other than money. The authorization contains the right to decide on derogating from shareholders' pre-emptive right to share subscriptions provided that the conditions set in the Companies' Act are fulfilled. The authorisation replaces all previous authorisations and is valid 2 years from the decision of the Annual General Meeting.
The AGM authorised the Board of Directors to resolve upon acquiring a maximum of 15,000,000 of the Company's own shares. The authorisation replaces all previous authorisations and it is valid for 18 months from the decision of the Annual General Meeting.
The AGM resolved to approve the proposed transfer of the Company's equity share listing on the Official List of the United Kingdom Listing Authority (''UKLA'') and on the Main Market of the London Stock Exchange plc from the Premium listing (commercial company) segment to the Standard listing (shares) segment as described in detail in the circular to shareholders dated 16 April 2015.
On 16 April 2015, Afarak announced that the Company intended to transfer the listing segment of its share on the Main Market of the London Stock Exchange to a Standard listing from the current Premium listing. The proposed change to a Standard listing was subject to shareholder approval and the Board sought authority from the shareholders to transfer its listing on the London Stock Exchange. The purpose of the transfer is to allow the Company to reduce the costs of its listing which arise from the regulatory burden applicable to companies with a Premium listing, which would no longer be applicable following transfer to a Standard listing. Afarak will maintain the listing of its shares on the NASDAQ Helsinki Stock Exchange. The trading arrangements for the Company's shares on the NASDAQ Helsinki Stock Exchange and on the London Stock Exchange remain unchanged.
On 16 April 2015, Afarak announced that the company had published a circular to shareholders in connection with the proposed transfer of the listing segment of its shares on the Main Market of the London Stock Exchange to a Standard listing from the current Premium listing.
On 21 May 2015, Afarak announced changes in the Company's management structure so that its current executive management team and board member Dr Alistair Ruiters is appointed new Chief Executive Officer ("CEO") of the Company. The current CEO, Dr. Danko Koncar, will then focus on the operational matters of the Company as Business Development Director, reporting to the CEO. Dr Ruiters will continue to serve as a board member of the Company. Further, Mr Michael Lillja, currently head of marketing and a board member, will take on the responsibilities of Marketing Director while continuing as a board member. The changes have been agreed to take immediate effect.
The current executive management team is as follows Dr. Alistair Ruiters, CEO Dr. Danko Koncar, Business Development Director Michael Lillja, Marketing Director
Furthermore, the board has also reviewed the composition of the board committees. The new committees are as follows:
Audit Committee Barry Rourke, Chairman Markku Kankaala Ivan Jakovcic
The Nomination and Remuneration committee Jelena Manojlovic, Chairman Markku Kankaala Ivan Jakovcic
The Committee for Health Safety and Sustainable Development Alfredo Parodi, Chairman Michael Lillja Markku Kankaala
On 9 June 2015 Afarak announced that the United Kingdom Listing Authority had given its approval to effect the shares transfer on the Main Market of the London Stock Exchange to a Standard listing from a Premium listing, and that the transfer had now become effective.
On 29 June 2015 Afarak announced that the Company had commenced bulk sampling at its Vlakpoort open pit mine in South Africa. The total open pit measured, indicated, and inferred resources are estimated at 1.9 million tonnes of chromite, as stated in the Company's resource statement, with a life of mine for the open pit of five years. The Company expects to ramp up to full production in 2016, once the submitted mining right has been approved.
On 30 April 2015, Afarak announced that as a result of a transaction that occurred between two controlled corporations of Dr Danko Koncar, Kermas Limited and Kermas Resources Limited, Kermas Limited has decreased below the threshold of 5% and Kermas Resources Limited has increased above the threshold of 25%. However, the total combined beneficial ownership of Dr Danko Koncar remains unchanged.
On 14 July 2015, Afarak announced that the claim that had been served on Afarak's marketing arm RCS Limited and various companies which form part of the Chromex joint venture by Chinese Suzhou Kaiyuan Chemical Co. Ltd (Suzhou) was withdrawn. As a result of the withdrawal the arbitration tribunal dismissed the claim and ordered Suzhou to pay the full arbitration cost.
On 11 August 2015, Afarak announced that as a result of the strong performance during the first half of 2015, Afarak Group Plc had revised its guidance and now estimates the Group's revenue for 2015 to remain at the same levels of 2014 but for EBIT to significantly improve when compared to 2014. The increase is primarily due to the positive effect of exchange rates, in particular the strong US dollar and weak South African Rand, but also improved sales from the FerroAlloys division and the re-opening of the Mecklenburg mine in December 2014.
Afarak Group Plc's shares are listed on NASDAQ Helsinki (AFAGR) and on the Main Market of the London Stock Exchange (AFRK).
On 30 June 2015, the registered number of Afarak Group Plc shares was 259,562,434 (248,432,000) and the share capital was EUR 23,642,049.56 (23,642,049.56).
On 30 June 2015, the Company had 4,244,717 (4,244,717) own shares in treasury, which was equivalent to 1.64% (1.71%) of the issued share capital. The total amount of shares outstanding, excluding the treasury shares held by the Company on 30 June 2015, was 255,317,717 (244,187,283).
At the beginning of the period under review, the Company's share price was EUR 0.44 on NASDAQ Helsinki and GBP 0.33 on the London Stock Exchange. At the end of the review period, the share price was EUR 0.37 and GBP 0.33 respectively. During the second quarter of 2015 the Company's share price on NASDAQ Helsinki ranged from EUR 0.36 to 0.46 per share and the market capitalisation, as at 30 June 2015, was EUR 96.0 (1 January 2015: 83.1) million. For the same period on the London Stock Exchange the share price remained GBP 0.33 per share and the market capitalisation was GBP 84.4 (1 January 2015: 65.5) million, as at 30 June 2015.
Based on the resolution at the AGM on 8 May 2015, the Board is authorised to buy-back up to a maximum of 15,000,000 of its own shares. This authorisation is valid until 8 November 2016. The Company did not carry out any share buy-backs during the second quarter of 2015.
The changes in the key risks and uncertainties are set out below. Further details of the risks and uncertainties have been published in the Group's 2014 Financial Statements.
Afarak´s financial performance is dependent on the general market conditions of the mining, smelting and minerals processing business. Global financial markets have been very volatile, exacerbated by the Eurozone crisis, and there is uncertainty as to how commodity prices will respond for the rest of 2015, which could considerably impact the Company's revenue and financial performance in 2015.
Changes in foreign exchange rates, if adverse, could have a substantial negative impact on the Group's profitability, in particular changes in US Dollar/South African Rand. In order to better manage its foreign exchange US Dollar/South African Rand exposure, the Group has entered into forward contract arrangements.
Afarak's processing operations in Germany and South Africa are intensive users of energy, primarily electricity. Fuel and energy prices globally have been characterised by volatility and cost inflation. In South Africa the majority of the electricity supply, price and availability are controlled by one entity, Eskom. Increased electricity prices and/or reduced or uncertain electricity supply or allocation may negatively impact Afarak's current operations, which could have an impact on the Group's financial performance.
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.
The previous outlook, published in the full year results of 2014 on 16 February 2015, was:
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.
| Closed period | Reporting date | |
|---|---|---|
| Q3 Interim Report 2015 | 10.10.-10.11.2015 | 10 November 2015 |
| H1/2015 | Speciality | Ferro | Unallocated | Eliminations | Group |
|---|---|---|---|---|---|
| 6 months | Alloys | Alloys | items | total | |
| EUR '000 | |||||
| Revenue | 49,753 | 43,796 | 606 | -389 | 93,766 |
| EBITDA | 7,902 | 5,703 | -1,338 | 0 | 12,267 |
| EBIT | 6,762 | 3,343 | -1,349 | 0 | 8,755 |
| Segment's assets | 163,256 | 119,152 | 4,683 | 2,587 | 289,679 |
| Segment's liabilities | 55,943 | 57,674 | 4,445 | -15,368 | 102,695 |
| H1/2014 | Speciality | Ferro | Unallocated | Eliminations | Group |
|---|---|---|---|---|---|
| 6 months | Alloys | Alloys | items | total | |
| EUR '000 | |||||
| Revenue | 50,927 | 39,539 | 73 | -65 | 90,474 |
| EBITDA | 3,705 | 3,654 | -1,009 | 0 | 6,350 |
| EBIT | 2,438 | 969 | -1,049 | 0 | 2,358 |
| Segment's assets | 148,867 | 106,867 | 50,458 | -26,987 | 279,205 |
| Segment's liabilities | 63,675 | 46,947 | 13,519 | -23,817 | 100,325 |
| FY 2014 | Speciality | Ferro | Unallocated | Eliminations | Group |
|---|---|---|---|---|---|
| 12 months | Alloys | Alloys | items | total | |
| EUR '000 | |||||
| Revenue | 97,836 | 74,818 | 147 | -132 | 172,669 |
| EBITDA | 7,865 | 3,084 | -2,502 | 0 | 8,447 |
| EBIT | 5,659 | -1,381 | -2,552 | 0 | 1,726 |
| Segment's assets | 181,664 | 113,125 | 9,645 | -14,146 | 290,288 |
| Segment's liabilities | 68,419 | 52,451 | 3,720 | -16,547 | 108,044 |
| Q2/13 | Q3/13 | Q4/13 | Q1/14 | Q2/14 | Q3/14 | Q4/14 | Q1/15 | Q2/15 | |
|---|---|---|---|---|---|---|---|---|---|
| Sales (tonnes) | |||||||||
| Mining | 76,830 | 103,739 | 98,507 | 97,281 | 45,341 | 34,846 | 15,728 | 51,401 | 86,884 |
| Processing | 10,689 | 11,359 | 23,593 | 24,638 | 22,902 | 26,347 | 23,465 | 22,826 | 30,556 |
| Trading | 809 | 1,387 | 2,133 | 3,909 | 6,451 | 8,268 | 9,954 | 3,828 | 6,466 |
| Total | 88,328 | 116,485 | 124,233 | 125,828 | 74,694 | 69,461 | 49,147 | 78,055 | 123,906 |
| Average rates | |||||||||
| EUR/USD | 1.313 | 1.317 | 1.328 | 1.370 | 1.370 | 1.355 | 1.329 | 1.126 | 1.116 |
| EUR/ZAR | 12.115 | 12.502 | 12.833 | 14.887 | 14.676 | 14.536 | 14.404 | 13.228 | 13.305 |
| Euro (million) | Q2/13 | Q3/13 | Q4/13 | Q1/14 | Q2/14 | Q3/14 | Q4/14 | Q1/15 | Q2/15 |
| Revenue* | 31.4 | 30.7 | 41.8 | 43.2 | 47.3 | 40.6 | 41.6 | 40.7 | 53.1 |
| Extraordinary | |||||||||
| items* | 4.8 | 0.0 | 0.1 | 0.0 | 0.0 | 1.2 | -1.6 | 0.0 | 0.0 |
| EBITDA | 6.2 | 2.9 | 0.8 | 3.0 | 3.3 | 2.1 | 0.0 | 4.6 | 7.6 |
| EBITDA margin | 19.7% | 9.4% | 1.9% | 7.0% | 7.1% | 5.1% | 0.0% | 11.4% | 14.4% |
| EBIT | -2.5 | -3.1 | -2.9 | 0.9 | 1.4 | 0.5 | -1.1 | 2.9 | 5.8 |
| EBIT margin | -8.0% | -10.1% | -6.9% | 2.1% | 3.0% | 1.3% | -2.8% | 7.2% | 11.0% |
*Revenue in Q2/13 is low due Mogale Alloys participation in Eskom's electricity buyback program. Income received in connection with Eskom's electricity buyback program is included in extraordinary items. Extraordinary items in Q3/14 relate to profit on sale of land in Turkey. Extraordinary items in Q4/14 relates to net write-down of assets that are included in the joint venture share of profits.
| EUR '000 | Q2/15 | Q2/14 | H1/15 | H1/14 | FY/14 |
|---|---|---|---|---|---|
| Revenue | 53,053 | 47,294 | 93,766 | 90,474 | 172,669 |
| Other operating income | 505 | 480 | 1,193 | 844 | 3,370 |
| Operating expenses | -46,781 | -44,379 | -83,567 | -84,784 | -164,287 |
| Depreciation and amortisation | -1,788 | -1,918 | -3,512 | -3,992 | -6,717 |
| Impairment | 0 | 0 | 0 | 0 | -5 |
| Items related to associates (core) | 1 | 1 | 2 | 2 | 6 |
| Share of profit from joint ventures | 842 | -48 | 873 | -187 | -3,311 |
| Operating profit | 5,831 | 1,431 | 8,755 | 2,358 | 1,725 |
| Financial income and expense | -410 | 316 | -668 | 720 | -1,265 |
| Profit before tax | 5,421 | 1,747 | 8,088 | 3,078 | 460 |
| Income tax | 289 | -591 | -105 | -1,599 | 12 |
| Profit for the period from continuing operations |
5,711 | 1,156 | 7,982 | 1,479 | 472 |
| Discontinued operations | |||||
| Profit for the period from discontinued | |||||
| operations | 0 | 0 | 0 | 0 | 1,773 |
| Profit for the period | 5,711 | 1,156 | 7,982 | 1,479 | 2,245 |
| Profit attributable to: | |||||
| Owners of the parent | 5,750 | 1,359 | 8,119 | 1,707 | 2,858 |
| Non-controlling interests | -40 | -203 | -137 | -228 | -613 |
| Total | 5,711 | 1,156 | 7,982 | 1,479 | 2,245 |
| Earnings per share for profit | |||||
| attributable to the shareholders | |||||
| of the parent company, EUR | |||||
| Basic earnings per share, EUR | 0.02 | 0.01 | 0.03 | 0.01 | 0.01 |
| Diluted earnings per share, EUR | 0.02 | 0.01 | 0.03 | 0.01 | 0.01 |
| EUR '000 | Q2/15 | Q2/14 | H1/15 | H1/14 | FY/14 |
|---|---|---|---|---|---|
| Profit for the period | 5,711 | 1,156 | 7,982 | 1,479 | 2,245 |
| Other comprehensive income | |||||
| Remeasurements of defined benefit pension plans |
0 | 0 | 0 | 0 | -4,036 |
| Exchange differences on translating foreign operations - Group |
-3,879 | -7,121 | 4,200 | -7,327 | -5,198 |
| Exchange differences on | -132 | -624 | -1,596 | -654 | -997 |
| translating foreign operations – Associate and JV |
|||||
|---|---|---|---|---|---|
| Income tax relating to other comprehensive income |
1,056 | -225 | -763 | -187 | -964 |
| Other comprehensive income, net of tax | -2,956 | -7,970 | 1,841 | -8,169 | -11,196 |
| Total comprehensive income for the period | 2,755 | -6,814 | 9,823 | -6,690 | -8,951 |
| Total comprehensive income attributable to: | |||||
| Owners of the parent | 2,987 | -6,627 | 9,812 | -6,470 | -8,533 |
| Non-controlling interests | -232 | -187 | 11 | -220 | -418 |
| EUR '000 | 30.6.2015 | 30.6.2014 | 31.12.2014 |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Goodwill | 64,383 | 62,334 | 63,052 |
| Other intangible assets | 21,784 | 20,533 | 20,358 |
| Property, plant and equipment | 49,867 | 41,197 | 47,970 |
| Investments in associates | 89 | 79 | 92 |
| Other non-current assets | 44,231 | 48,144 | 44,664 |
| Non-current assets total | 180,354 | 172,286 | 176,136 |
| Current assets | |||
| Inventories | 60,742 | 50,116 | 60,051 |
| Trade receivables | 20,780 | 25,146 | 19,987 |
| Other receivables | 17,308 | 14,658 | 20,782 |
| Cash and cash equivalents | 10,494 | 16,999 | 13,332 |
| Current assets total | 109,324 | 106,919 | 114,153 |
| Total assets | 289,679 | 279,205 | 290,289 |
| EQUITY AND LIABILITIES | |||
| Equity attributable to owners of the parent | |||
| Share capital | 23,642 | 23,642 | 23,642 |
| Share premium reserve | 25,740 | 25,740 | 25,740 |
| Paid-up unrestricted equity reserve | 238,318 | 237,841 | 243,424 |
| Legal Reserve | 198 | 205 | 210 |
| Translation reserves | -10,368 | -12,890 | -12,061 |
| Retained earnings | -95,505 | -100,836 | -103,657 |
| Equity attributable to owners of the parent | 182,025 | 173,702 | 177,298 |
| Non-controlling interests | 4,959 | 5,178 | 4,947 |
| Total equity | 186,984 | 178,880 | 182,245 |
| Liabilities | |||
| Non-current liabilities | |||
| Deferred tax liabilities | 8,412 | 7,795 | 8,200 |
| Provisions | 10,481 | 9,922 | 10,137 |
| Share of joint ventures' losses | 20,277 | 16,127 | 19,622 |
| Pension liabilities | 19,830 | 16,027 | 19,954 |
| Financial liabilities | 9,854 | 6,328 | 10,337 |
| Non-current liabilities total | 68,854 | 56,201 | 68,250 |
| Current liabilities | |||
|---|---|---|---|
| Trade payables | 15,713 | 18,013 | 19,291 |
| Other current liabilities | 18,128 | 26,111 | 20,503 |
| Current liabilities total | 33,841 | 44,124 | 39,794 |
| Total liabilities | 102,695 | 100,325 | 108,044 |
| Total equity and liabilities | 289,679 | 279,205 | 290,289 |
| EUR '000 | 30.6.2015 | 30.6.2014 | 31.12.2014 |
|---|---|---|---|
| Cash and cash equivalents | 10,494 | 16,999 | 13,332 |
| Interest-bearing receivables | |||
| Current | 5,193 | 5,188 | 9,213 |
| Non-current | 35,414 | 39,448 | 34,993 |
| Interest-bearing receivables | 40,607 | 44,636 | 44,206 |
| Interest-bearing liabilities | |||
| Current | 4,612 | 4,020 | 1,792 |
| Non-current | 8,736 | 6,288 | 10,337 |
| Interest-bearing liabilities | 13,348 | 10,308 | 12,129 |
| NET TOTAL | 37,753 | 51,327 | 45,409 |
| EUR '000 | Property, plant and equipment |
Intangible assets |
|---|---|---|
| Acquisition cost 1.1.2015 | 78,052 | 225,275 |
| Additions | 3,314 | 466 |
| Disposals | -109 | 0 |
| Reclass between items | 128 | 0 |
| Effect of movements in exchange rates | 387 | 3,594 |
| Acquisition cost 30.6.2015 | 81,773 | 229,335 |
| Acquisition cost 1.1.2014 | 61,744 | 220,967 |
| Additions | 14,369 | 441 |
| Disposals | -298 | 0 |
| Reclass between items | 22 | 24 |
| Effect of movements in exchange rates | 2,215 | 3,843 |
| Acquisition cost 31.12.2014 | 78,052 | 225,275 |
| EUR '000 | H1/15 | H1/14 | FY/14 |
|---|---|---|---|
| Profit for the period | 7,982 | 1,479 | 2,245 |
| Adjustments to profit for the period | -3,103 | 5,929 | 7,397 |
| Changes in working capital | -2,583 | -4,347 | -3,425 |
| Discontinued operations | 0 | -404 | -1,087 |
| Net cash from operating activities | 2,296 | 2,657 | 5,129 |
| Disposal of subsidiaries and associates, net of cash sold |
0 | 0 | -2 |
| Capital expenditure and other investing activities |
-3,939 | -6,799 | -12,562 |
| Proceeds from repayments of loans and | |||
| loans given | 3,510 | 3,534 | 2,351 |
| Net cash used in investing activities | -429 | -3,265 | -10,213 |
| Capital Redemption | -5,106 | -4,884 | -4,884 |
| Proceeds from borrowings | 3,363 | 9,341 | 11,364 |
| Repayment of borrowings, and other financing activities |
-3,004 | -674 | -1,891 |
| Net cash used in financing activities | -4,747 | 3,783 | 4,590 |
| Net increase in cash and cash equivalents | -2,880 | 3,174 | -494 |
A = Share capital
B = Share premium reserve
G = Equity attributable to owners of the parent, total
H = Non-controlling interests
I = Total equity
| EUR '000 | A | B | C | D | E | F | G | H | I |
|---|---|---|---|---|---|---|---|---|---|
| Equity at 31.12.2013 | 23,642 | 25,740 | 242,726 | -4,773 | -102,575 | 201 | 184,961 | 5,368 | 190,328 |
| Profit for the period 1-6/2014 + comprehensive income Share of OCI in associates and |
-7,463 | 1,707 | -5,756 | -228 | -5,984 | ||||
| JV | -654 | -654 | -654 | ||||||
| Translation differences | -60 | -60 | 9 | -51 | |||||
| Share-based payments | 91 | 91 | 29 | 121 | |||||
| Capital redemption | -4,884 | -4,884 | -4,884 | ||||||
| Other changes in equity | 4 | 4 | 4 | ||||||
| Equity at 30.6.2014 | 23,642 | 25,740 | 237,842 | -12,890 | -100,837 | 205 | 173,702 | 5,178 | 178,880 |
| Profit for the period 7-12/2014 + comprehensive income Share of OCI in associates and |
1,172 | 1,151 | 2,323 | -385 | 1,938 | ||||
| JV | -343 | -343 | -343 | ||||||
| Translation differences | 181 | 181 | |||||||
| Rights Issue | 5,583 | 5,583 | 5,583 | ||||||
| Share-based payments | 63 | 63 | -26 | 37 | |||||
| Acquisitions and disposals of subsidiaries Remeasurements of defined |
2 | 2 | 2 | ||||||
| benefit pension plans | -4,036 | -4,036 | -4,036 | ||||||
| Other changes in equity | 5 | 5 | 5 | ||||||
| Equity at 31.12.2014 | 23,642 | 25,740 | 243,425 | -12,062 | -103,658 | 210 | 177,297 | 4,948 | 182,244 |
| Profit for the period 1-6/2015 + comprehensive income Share of OCI in associates and |
3,289 | 8,119 | 11,409 | -137 | 11,272 | ||||
| JV | -1,596 | -1,596 | -1,596 | ||||||
| Translation differences | 148 | 148 | |||||||
| Share-based payments | 60 | 60 | 1 | 61 | |||||
| Capital redemption | -5,106 | -5,106 | -5,106 | ||||||
| Acquisitions and disposals of subsidiaries |
-27 | -27 | -27 | ||||||
| Other changes in equity | -11 | -11 | -11 | ||||||
| Equity at 30.6.2015 | 23,642 | 25,740 | 238,318 | -10,368 | -95,505 | 198 | 182,025 | 4,960 | 186,984 |
| EUR '000 | H1/15 | H1/14 | FY/14 |
|---|---|---|---|
| Sales to joint ventures | 175 | 54 | 145 |
| Sales to other related parties | 16 | 15 | 30 |
| Purchases from joint ventures | -4,488 | -4,004 | -4,376 |
| Financing income from joint ventures | 494 | 511 | 1,020 |
| Financing expense to other related parties | 308 | -170 | -120 |
| Loan receivables from joint ventures | 34,804 | 34,060 | 34,406 |
| Loan receivables from other related parties | 3,592 | 7,242 | 7,102 |
| Trade and other receivables from joint ventures | 7,323 | 5,763 | 6,389 |
| Trade and other receivables from other related parties |
78 | 8 | 8 |
| Trade and other payables to joint ventures | 291 | 1,495 | 166 |
| H1/15 | H1/14 | FY/14 | |
|---|---|---|---|
| Return on equity, % p.a. | 8.5% | 1.6% | 1.2% |
| Return on capital employed, % p.a. | 14.5% | 4.5% | 4.0% |
| Equity ratio, % | 64.5% | 64.1% | 62.8% |
| Gearing, % | 1.5% | -3.7% | -0.7% |
| Personnel at the end of the period | 749 | 712 | 698 |
The balance sheet date rate is based on exchange rate published by the European Central Bank for the closing date. The average exchange rate is calculated as an average of daily rates from the European Central Bank during the year.
The key exchange rates applied in the accounts:
| H1/15 | H1/14 | FY/14 | |
|---|---|---|---|
| TRY | 2.8626 | 2.9678 | 2.9065 |
| USD | 1.1158 | 1.3703 | 1.3285 |
| ZAR | 13.3048 | 14.6758 | 14.4037 |
| 30.6.2015 | 30.6.2014 | 31.12.2014 | |
|---|---|---|---|
| TRY | 2.9953 | 2.8969 | 2.8320 |
| USD | 1.1189 | 1,3658 | 1.2141 |
| ZAR | 13.6416 | 14.4597 | 14.0353 |
Financial ratios and indicators have been calculated with the same principles as applied in the 2014 financial statements. These principles are presented below.
Return on equity, % = Profit for the period / Total equity (average for the period) * 100
Return on capital employed, % = (Profit before taxes + financing expenses) / (Total assets - interest-free liabilities) average * 100
Equity ratio, % = Total equity / (Total assets - prepayments received) * 100
Gearing, % = (Interest-bearing debt - liquid funds) / Total equity * 100
Net interest-bearing debt = Interest-bearing debt - liquid funds
Earnings per share, basic, EUR = Profit attributable to owners of the parent company / Average number of shares during the period
Earnings per share, diluted, EUR = Profit attributable to owners of the parent company / Average number of shares during the period, diluted
Operating profit (EBIT) = Operating profit is the net of revenue plus other operating income, plus gain/loss on finished goods inventory change, minus employee benefits expense, minus depreciation, amortisation and impairment and minus other operating expense. Foreign exchange gains or losses are included in operating profit when generated from ordinary activities. Exchange gains or losses related to financing activities are recognised as financial income or expense.
Earnings before interest, taxes, depreciation and amortisation (EBITDA) = Operating profit + depreciation + amortisation + impairment losses
This Interim Report is prepared in accordance with IAS 34 'Interim Financial Reporting' and should be read in conjunction with Afarak's financial statements for 2014. Afarak has applied the same accounting principles in the preparation of this Interim Report as in its financial statements for 2014, except for the adoption of new standards and interpretations that become effective in 2015. The changes did not have material impact on the Interim Report.
The preparation of the Interim Report in accordance with IFRS requires management to make estimates and assumptions that affect the valuation of the reported assets and liabilities and other information, such as contingent liabilities and the recognition of income and expenses in the income statement. Although the estimates are based on the management's best knowledge of current events and actions, actual results may differ from the estimates.
The figures in the tables have been rounded off, which must be considered when calculating totals. Average exchange rates for the period have been used for income statement conversions, and period-end exchange rates for balance sheet.
The Interim Report data are unaudited.
| Q2/15 | Q2/14 | H1/15 | H1/14 | FY/14 | ||
|---|---|---|---|---|---|---|
| Share price development in London |
||||||
| Stock Exchange | ||||||
| Average share price* | EUR | 0.44 | 0.37 | 0.44 | 0.37 | 0.37 |
| GBP | 0.33 | 0.30 | 0.33 | 0.30 | 0.30 | |
| Lowest share price* | EUR | 0.44 | 0.37 | 0.34 | 0.37 | 0.30 |
| GBP | 0.33 | 0.30 | 0.25 | 0.30 | 0.24 | |
| Highest share price* | EUR | 0.44 | 0.38 | 0.44 | 0.38 | 0.39 |
| GBP | 0.33 | 0.31 | 0.33 | 0.31 | 0.32 | |
| Share price at the end of the period** |
EUR | 0.46 | 0.37 | 0.46 | 0.37 | 0.32 |
| GBP | 0.33 | 0.30 | 0.33 | 0.30 | 0.25 | |
| Market capitalisation at | EUR | |||||
| the end of the period** | million | 118.6 | 93.0 | 118.6 | 93.0 | 84.1 |
| GBP million |
84.4 | 74.5 | 84.4 | 74.5 | 65.5 | |
| Share trading development |
||||||
| thousand | ||||||
| Share turnover | shares EUR |
7 | 13 | 7 | 20 | 23 |
| Share turnover | thousand | 3 | 5 | 3 | 7 | 9 |
| GBP | ||||||
| Share turnover | thousand | 2 | 4 | 2 | 6 | 7 |
| Share turnover | % | 0.0 % | 0.0 % | 0.0 % | 0.0 % | 0.0 % |
| Share price development in NASDAQ Helsinki |
||||||
| Average share price | EUR | 0.40 | 0.38 | 0.39 | 0.37 | 0.32 |
| Lowest share price | EUR | 0.36 | 0.36 | 0.33 | 0.31 | 0.21 |
| Highest share price | EUR | 0.46 | 0.42 | 0.65 | 0.42 | 0.42 |
| Share price at the end of | ||||||
| the period | EUR | 0.37 | 0.37 | 0.37 | 0.37 | 0.32 |
| Market capitalisation at | EUR | |||||
| the end of the period | million | 96.0 | 91.9 | 96.0 | 91.9 | 83.1 |
| Share trading |
| development | ||||||
|---|---|---|---|---|---|---|
| Share turnover | thousand shares |
4,636 | 6,005 | 20,579 | 8,249 | 20,927 |
| Share turnover | EUR thousand |
1,868 | 2,286 | 7,968 | 3,055 | 6,638 |
| Share turnover | % | 1.8% | 2.4% | 7.9% | 3.3% | 8.1% |
* Share prices have been calculated on the average EUR/GBP exchange rate published by Bank of Finland.
** Share price and market capitalisation at the end of the period have been calculated on the EUR/GBP exchange rate published by Bank of Finland at the end of the period.
Formulas for share-related key indicators
Average share price = Total value of shares traded in currency / Number of shares traded during the period
Market capitalisation, million = Number of shares * Share price at the end of the period
This report contains forward-looking statements. Often, but not always, forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology. By their nature, forward-looking statements involve uncertainty because they depend on future circumstances, and relate to events, not all of which are within the Company's control or can be predicted by the Company.
Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. Actual results could differ materially from those set out in the forward-looking statements. Save as required by law (including the Finnish Securities Markets Acts (746/2012), as amended, or by the Listing Rules or the Disclosure and Transparency Rules of the UK Financial Services Authority), the Company undertakes no obligation to update any forward-looking statements in this report that may occur due to any changes in the Directors' expectations or to reflect events or circumstances after the date of this report.
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