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Afarak Group — Interim / Quarterly Report 2016
Nov 11, 2016
3302_rns_2016-11-11_e80a5d96-85eb-44ad-a983-4231a2250742.pdf
Interim / Quarterly Report
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AFARAK GROUP
07:00 London, 09:00 Helsinki, 11 November 2016 - Afarak Group Plc ("Afarak" or "the Company") (LSE: AFRK, NASDAQ: AFAGR) Interim Report
AFARAK GROUP PLC'S UNAUDITED INTERIM REPORT FOR 1 JULY – 30 SEPTEMBER 2016
Q3 HIGHLIGHTS (July-September 2016):
Afarak displayed resilience in the face of a challenging quarter and is well-positioned to benefit from the current market upswing.
Health, safety & environment
- One worker, Nelson Maurison Msimango, succumbed to grievous injuries sustained followed at accident at Mogale plant
Investor highlights
- Capital redemption of EUR 2.6 (0.0) million approved and paid during the quarter
Financial highlights
- Revenue decreased by 35.4% to EUR 28.9 (Q3/2015: 44.8) million
- EBITDA was EUR -2.8 (Q3/2015: 1.3) million and the EBITDA margin was -9.8% (Q3/2015: 2.8%) EBIT was EUR -4.5 (Q3/2015: -0.7) million and the EBIT margin was -15.7% (Q3/2015: -1.5%)
- Profit for the period from continuing operations totalled EUR -3.2 (Q3/2015: -1.0) million
- Cash flow from operations was EUR -5.5 (Q3/2015: 9.9) million and liquid funds at 30 September was EUR 7.0 (30 September 2015: 22.3) (30 June 2016: 13.2) million
Operational highlights
- Processed material sold decreased by 11.7% to 18,023 (Q3/2015: 20,419) tonnes
- Production of processed material decreased by 4.4% to 18,489 (Q3/2015: 19,348) tonnes
- Tonnage mined decreased by 64.2% to 45,487 (Q3/2015: 127,004) tonnes
| KEY FIGURES (EUR million) | Q3/16 | Q3/15 | Change | Q1-Q3/16 | Q1-Q3/15 | Change | FY 2015 |
|---|---|---|---|---|---|---|---|
| Revenue | 28.9 | 44.8 | -35.4% | 109.2 | 138.5 | -21.2% | 187.7 |
| EBITDA | -2.8 | 1.3 | -326.0% | 1.2 | 13.5 | -91.0% | 17.2 |
| EBITDA margin | -9.8% | 2.8% | 1.1% | 9.8% | 9.2% | ||
| EBIT | -4.5 | -0.7 | -3.7 | 8.1 | 9.9 | ||
| EBIT margin | -15.7% | -1.5% | -3.4% | 5.8% | 5.3% | ||
| Earnings before taxes | -4.2 | -2.0 | -4.6 | 6.1 | 6.5 | ||
| Earnings margin | -14.6% | -4.5% | -4.2% | 4.4% | 3.5% | ||
| Profit from continuing operations | -3.2 | -1.0 | -4.5 | 7.0 | 7.8 | ||
| Profit from discontinued operations | 1.0 | 0 | 1.5 | 0 | 0.8 | ||
| Profit | -2.2 | -1.0 | -3.0 | 7.0 | 8.5 | ||
| Earnings per share, basic, EUR | -0.01 | 0.00 | -0.01 | 0.03 | 0.03 |
Commenting on the third quarter results, Alistair Ruiters, CEO, said:
"The company endured a very challenging quarter. It was extremely painful to deal with the loss of one of our colleagues, Nelson Maurison Msimango, who passed away following a fatal accident at our Mogale plant. We are continuing with our efforts to enhance health and safety procedures at our plants.
Markets remained subdued as prices for many of our products continued to slide accompanied by tapered demand. With prices gravitating downwards, our sales volumes in the speciality alloy segment were hit hard. Our mining and production volumes were lower due to safety stoppages at our mines and due to the closure of Mogale Alloys plant following the fatality. In response, Afarak focused its efforts on prudent working capital management, the procurement of strategic raw materials at competitive prices and debt collection. Our sales of materials, particularly charge chrome, remained satisfactory despite the seasonality associated with weak demand in the third quarter.
We are seeing a recovery in prices. Benchmark prices for charge chrome have accelerated and demand is gaining traction. This improved market sentiment together with our strong managerial and production capabilities should further support our efforts to generate value for our shareholders."
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 Q3/2016 unaudited 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 11 November 2016 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) 800 774 579
UK number +44 (0) 844 229 0 900
AFARAK GROUP PLC
Alistair Ruiters
CEO
For additional information, please contact:
Afarak Group Plc
Alistair Ruiters, CEO, +358 50 372 1130, [email protected]
Melvin Grima, Finance Director, +356 2122 1566, [email protected]
Jean Paul Fabri, PR & Communications Manager, +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).
Distribution:
NASDAQ Helsinki
London Stock Exchange
main media
www.afarak.com
The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ('MAR'). Upon the publication of this announcement via Regulatory Information Service ('RIS'), this inside information is now considered to be in the public domain.
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AFARAK GROUP
AFARAK GROUP PLC: Q3 UNAUDITED INTERIM REPORT FOR 1 JULY– 30 SEPTEMBER 2016
This Interim Report is prepared in accordance with the IAS 34 standard and is unaudited. All the corresponding comparable figures of 2015 are presented in brackets, unless otherwise explicitly stated.
SALES
Processed material:
| Tonnes | Q3/16 | Q3/15 | Q1-Q3/16 | Q1-Q3/15 | FY2015 |
|---|---|---|---|---|---|
| Processing, Speciality Alloys | 3,507 | 6,287 | 14,245 | 21,631 | 27,336 |
| Processing, FerroAlloys | 14,516 | 14,132 | 58,944 | 51,381 | 76,813 |
| Processing, Total | 18,023 | 20,419 | 73,189 | 73,012 | 104,150 |
The Group's sales from processing, which includes all the products produced at the Mogale Alloys and Elektrowerk Weisweiler processing plants, were 18,023 (Q3/2015: 20,419) tonnes, representing a decrease of 11.7% compared to the equivalent period in 2015. Sales volumes in the Speciality Alloys segment continued the negative trend and decreased by 44.2% as a result of weak demand and the continued pricing pressures coming from BRICs country producers who continued offering lower price to the low carbon ferrochrome market to destock their positions. Sales volumes in the FerroAlloys segment increased marginally by 2.7% as the decrease in sales volumes of silico manganese material were offset by increases in sales volumes of both charge chrome and medium carbon ferrochrome. The availability of silico manganese shrinked as a result of the switch of P2 furnace at Mogale Alloys from silico manganese production to charge chrome during the quarter.
AFARAK GROUP'S FINANCIAL PERFORMANCE
REVENUE AND PROFITABILITY
| EUR million | Q3/16 | Q3/15 | Change | Q1-Q3/16 | Q1-Q3/15 | Change | FY2015 |
|---|---|---|---|---|---|---|---|
| Revenue | 28.9 | 44.8 | -35.4% | 109.2 | 138.5 | -21.2% | 187.7 |
| EBITDA | -2.8 | 1.3 | -326.0% | 1.2 | 13.5 | -91.0% | 17.2 |
| EBITDA margin | -9.8% | 2.8% | 1.1% | 9.8% | 9.2% | ||
| EBIT | -4.5 | -0.7 | -3.7 | 8.1 | 9.9 | ||
| EBIT margin | -15.7% | -1.5% | -3.4% | 5.8% | 5.3% | ||
| Profit from continuing operations | -3.2 | -1.0 | -4.5 | 7.0 | 7.8 | ||
| Profit from discontinued operations | 1.0 | 0.0 | 1.5 | 0.0 | 0.8 | ||
| Profit | -2.2 | -1.0 | -3.0 | 7.0 | 8.5 |
Revenue for the third quarter of 2016 decreased by 35.4% to EUR 28.9 (44.8) million compared to the equivalent period in 2015. The decrease in revenue was more accentuated in the Speciality Alloys segment as revenue decreased by 53.6% due to lower sales volumes as a result of subdued markets. The demand-side was weak coupled with an excess supply as producers from BRIC countries continued destocking their positions. Revenue also decreased in the FerroAlloys segment by 13.5% as a result of lower prices driven by poor demand. In the FerroAlloys segment a number of internally-driven factors also contributed. A decrease in production due to the depletion of the open-cast mine at Mecklenburg and the closure of the Mogale Alloys plant following the fatality together with higher energy tarrifs compounded the effects of the challenging external environment.
EBITDA for the third quarter of 2016 decreased to EUR -2.8 (1.3) million when compared to the comparative period in 2015. EBITDA decreased mainly due to lower margins resulting from a continuous drop in selling prices and increases in ore and power costs. EBIT for the third quarter of 2016 amounted to EUR -4.5 (-0.7) million. Profit for the third quarter was EUR -2.2 (-1.0) million. The share of joint venture profit for the period amounted to EUR -0.2 (-0.6) million.
Earnings per share was EUR -0.01 (0.00).
BALANCE SHEET, CASH FLOW AND FINANCING
The Group's liquidity, as at 30 September 2016, was EUR 7.0 (22.3) (30 June 2016: 13.2) million. Operating cash flow in the third quarter was EUR -5.5 (9.9) million, which was mainly driven by the results during the quarter, as well as due to an additional EUR 2.2 (-3.1) million used for working capital. During the quarter Afarak paid a capital redemption of EUR 2.6 (0.0) million. Afarak's gearing at the end of the third quarter was 0.4% (-2.4%) (30 June 2016: -4.5%). Net interest-bearing debt was EUR 0.8 (-4.2) (30 June 2016: -7.7) million.
Total assets on 30 September were EUR 257.7 (279.2) (30 June 2016: 260.0) million. The equity ratio was 66.2% (63.0%) (30 June 2016: 65.4%).
INVESTMENTS, ACQUISITIONS AND DIVESTMENTS
Capital expenditure for the third quarter of 2016 totalled EUR 0.5 (2.4) million. Capital expenditure both in the Speciality Alloys segment and in the Ferro Alloys segment was incurred to sustain Group operations.
PERSONNEL
At the end of the third quarter 2016, Afarak had 785 (760) employees. The average number of employees during the third quarter of 2016 was 773 (753).
Number of employees by segment *:
| 30.9.2016 | 30.9.2015 | Change | 31.12.2015 | |
|---|---|---|---|---|
| Speciality Alloys | 417 | 385 | 8.3% | 402 |
| FerroAlloys | 362 | 369 | -1.9% | 365 |
| Other operations | 6 | 6 | 0.0% | 6 |
| Group total | 785 | 760 | 3.3% | 773 |
*Including personnel of joint ventures.
SAFETY, HEALTH AND SUSTAINABLE DEVELOPMENT
Afarak registered its first ever fatality during quarter three of 2016. Nelson Maurison Msimango, an employee at the Mogale Alloys Plant succumbed to the previous injuries he sustained at his workplace. The plant was closed-down and an in-depth investigation and review of safety policies took place. Following the implementation of more rigorous health and safety procedures, the plant was re-opened. Afarak's management provided counselling sessions to fellow workers as well as held a memorial service on site.
In addition, Afarak Group sustained a further 2 injuries that caused a loss of time.
The Safety, Health and Environment Committee is currently working on reviewing all safety policies, procedures and monitoring and reporting frameworks with a view to improving Afarak's progress and achieving its 'Zero-Harm' goal.
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.
SEGMENT PERFORMANCE
SPECIALITY ALLOYS BUSINESS
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.
Production:
| Tonnes | Q3/16 | Q3/15 | Change | Q1-Q3/16 | Q1-Q3/15 | Change | FY/15 |
|---|---|---|---|---|---|---|---|
| Mining* | 12,455 | 11,663 | 6.8% | 42,833 | 31,345 | 36.7% | 49,152 |
| Processing | 5,079 | 4,585 | 10.8% | 19,255 | 19,813 | -2.8% | 26,234 |
| Total | 17,534 | 16,248 | 7.9% | 62,088 | 51,158 | 21.4% | 75,386 |
- Including both chromite concentrate and lumpy ore production
Production increased to 17,534 (16,248) tonnes for the third quarter of 2016, representing an increase of 7.9% when compared to the equivalent period in 2015. The increase in mining activity is primarily attributable to uninterrupted operations at the mines during Q3 of 2016 as opposed to the comparative quarter during which mining operations were disrupted by the development of the new plant at Tavas mine. Processing levels at EWW increased when compared to the comparative quarter particularly due to an increase in processing levels of specialised low carbon ferrochrome.
| EUR million | Q3/16 | Q3/15 | Change | Q1-Q3/16 | Q1-Q3/15 | Change | FY/15 |
|---|---|---|---|---|---|---|---|
| Revenue | 11.4 | 24.5 | -53.6% | 48.2 | 74.3 | -35.1% | 95.6 |
| EBITDA | -0.7 | 1.4 | -153.1% | 3.1 | 9.3 | -66.8% | 12.7 |
| EBITDA margin | -6.5% | 5.7% | -214.3% | 6.4% | 12.5% | -48.9% | 13.3% |
| EBIT | -1.4 | 0.7 | -300.7% | 1.2 | 7.4 | -83.7% | 10.1 |
| EBIT margin | -12.1% | 2.8% | -532.3% | 2.5% | 10.0% | -74.9% | 10.6% |
Revenue for the third quarter decreased by 53.6% to EUR 11.4 (24.5) million. The decrease in revenue is mainly attributable to lower sales volumes of processed material on the back of weak demand; dampened prices on account of increased pressure by BRIC producers who reduced their prices to destock their positions of low carbon ferrochrome; as well as lower trading activity of material sourced by third parties. Such a significant decline in revenue and prices caused EBITDA for the third quarter to decrease to EUR -0.7 (1.4) million and EBIT to decrease to EUR -1.4 (0.7) million.
As at 30 September 2016, the Speciality Alloys business had 417 (385) employees.
FERROALLOYS BUSINESS
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.
Production:
| Tonnes | Q3/16 | Q3/15 | Change | Q1-Q3/16 | Q1-Q3/15 | Change | FY/15 |
|---|---|---|---|---|---|---|---|
| Mining* | 33,032 | 115,341 | -71.4% | 104,535 | 334,849 | -68.8% | 412,629 |
| Processing | 13,410 | 14,763 | -9.2% | 53,651 | 54,840 | -2.2% | 77,357 |
| Total | 46,442 | 130,104 | -64.3% | 158,186 | 389,689 | -59.4% | 489,986 |
- Including both chromite concentrate and lumpy ore production by the joint ventures
Production decreased to 46,442 (130,104) tonnes in the third quarter of 2016, representing a decrease of 64.3% when compared to the same period in 2015. Mining operations decreased significantly due to the depletion of the open cast mining activity at Mecklenburg which ended in November 2015. The decrease in
mining activity is also attributable to the current idle activity at the Vlakpoort mine which contrasts with the contribution of bulk sampling which occurred during the comparative quarter. Mining activity at Stellite mine was interrupted by temporary closure due to DMR's Section 54, whereas the shaking tables plant which was commissioned earlier in 2016 continued improving recoveries during the quarter. Processing levels at Mogale Alloys during the third quarter of 2016 were lower than those registered during the comparative quarter. Processing of charge chrome increased during the third quarter of 2016 when compared to the comparative quarter, whereas the contrary occurred to silicomanganese as from July 2016, one of the furnaces was switched to produce charge chrome instead of producing silicomanganese. Mogale Alloy's production also had to stop during the quarter due to the fatality with a consequent loss of production of 1,500 tonnes.
| EUR million | Q3/16 | Q3/15 | Change | Q1-Q3/16 | Q1-Q3/15 | Change | FY/15 |
|---|---|---|---|---|---|---|---|
| Revenue | 17.5 | 20.2 | -13.5% | 60.9 | 64.0 | -4.9% | 91.8 |
| EBITDA | -1.6 | 0.7 | 0.8 | 6.4 | 7.5 | ||
| EBITDA margin | -9.1% | 3.6% | 1.3% | 10.1% | 8.1% | ||
| EBIT | -2.7 | -0.5 | -2.2 | 2.8 | 2.8 | ||
| EBIT margin | -15.2% | -2.5% | -3.7% | 4.4% | 3.0% |
- Revenue of the joint ventures is not included in the Group's revenue
Revenue for the third quarter decreased to EUR 17.5 (20.2) million compared to the equivalent period in 2015, representing a decrease of 13.5%. The decrease in revenue can be attributed to a combination of both market-driven and internal factors. The market continued to be subdued with prices of both silicomanganese and charge chrome being low. In addition the Company faced a significant increase in both manganese ore cost and energy tariffs. There was also a decrease in trading of third party material when compared to a year earlier. The negative effects brought by such factors caused EBITDA to decrease to EUR -1.6 (0.7) million and EBIT to decrease to EUR -2.7 (-0.5) million. The absence of profit which was registered by the Vlakpoort mine during the comparative quarter also negatively affected the result during the quarter. The joint venture share of profits included in EBITDA amounted to EUR -0.2 (-0.6) million.
The share of profit from joint ventures is made up as follows:
| EUR million | Q3/16 | Q3/15 | Change | Q1-Q3/16 | Q1-Q3/15 | Change | FY/15 |
|---|---|---|---|---|---|---|---|
| Revenue | 0.7 | 2.7 | -72.6% | 2.5 | 8.1 | -69.4% | 9.7 |
| EBITDA | -0.1 | 0.4 | -0.1 | 1.3 | 1.3 | ||
| EBITDA margin | -9.3% | 15.7% | -4.5% | 16.5% | 13.2% | ||
| EBIT | -0.2 | 0.2 | -0.4 | 0.5 | 0.3 | ||
| EBIT margin | -29.6% | 7.3% | -17.5% | 6.3% | 3.4% | ||
| Financial income and expense | 0.0 | -0.8 | -0.4 | -0.3 | -0.6 | ||
| Profit for the period | -0.2 | -0.6 | -0.8 | 0.3 | -0.1 |
Afarak's share of joint ventures revenue for the third quarter decreased to EUR 0.7 (2.7) million compared to the equivalent period in 2015, representing a decrease of 72.6%. Sales volumes at the joint venture decreased significantly following the depletion of open cast mining activity at the Mecklenburg mine in November 2015. Sales volumes of both concentrate material and lumpy material were lower at the Stellite mine than those of the comparative quarter. Revenue decreased as a result of lower selling prices of concentrate and lumpy material which were agreed earlier in the quarter. Share of joint venture EBITDA for the third quarter decreased to EUR -0.1 (0.4) million as a result of the lower sales volumes and prices which led to lower margins, . Share of joint venture profits amounted to EUR -0.2 (-0.6) million.
As at 30 September 2016, the FerroAlloys business had 362 (369) employees.
GLOBAL ECONOMY & MARKET
The moderate global growth recorded towards the end of last year continued in the first nine months of 2016. Looking ahead, management expects global growth to recover gradually. Low interest rates, improving labour markets and resilient confidence support the outlook for advanced economies, although the uncertainty generated by the referendum in the United Kingdom on EU membership will weigh on demand in
that country. As regards emerging market economies (EMEs), economic activity in China is expected to slow, while the outlook for large commodity exporters remains subdued, despite some tentative signs of stabilisation. Management believes risks to the outlook for global economic activity remain on the downside.
Commodity prices remained subdued in quarter three due to a number of market-specific factors.
STAINLESS STEEL MARKET
Following the prolonged period of low and depressed prices, stainless steel producers are seeing a slight reversal in trend. Demand for steel increased on account of restocking and price increase expectations rather than for structural reasons. In terms of supply, with the Chinese domestic market gaining momentum, stocks for exports were limited leading to a general tightening of market conditions. This is expected to benefit European producers as it will allow them to secure higher prices as a result of both the tight market supply and the anti-dumping measures that have been in place.
FERROCHROME MARKET
With prices for nickel gaining ground, consumers started to demand more ferrochrome in the third quarter. On the back of increased demand, prices started to increase even as market supply continued to tighten following the cutbacks in ferrochrome production from South Africa due to several producers going into business rescue or cutting their production. Ferrochrome prices also increased as a result of higher production costs, particularly chrome ore. Management expectations for the ferrochrome market are positive for the period to mid-2017. On the other hand, the chrome metal and standard low carbon ferrochrome markets continued to be weak. Although Chinese exporters have exited the market, producers in Russia and Kazakhstan are destocking their positions.
CHROME ORE MARKET
Chinese metallurgical grade chrome ore demand continued to remain strong leading to a further decline in Chinese stock levels. In addition, the South African benchmark UG 2 ore price has accelerated from around $135 per tonne to just below $300 per tonne towards the end of quarter three. Turkish lump has also gained significantly with prices increasing to over $360 per tonne over this period. It is anticipated that at these levels the Chinese producers will start to cut production.
SILICO MANGANESE MARKET
Despite positive expectations for quarter three, the silico-manganese price remained low due to the strengthening of the euro and weakening of the yuan. In terms of demand, the European steel market has continued to remain stagnant unlike in China where the demand has been increasing.
UNALLOCATED ITEMS
For the third quarter of 2016, the EBITDA from unallocated items was EUR -0.5 (-0.9) million.
EVENTS DURING THE REVIEW PERIOD
On 16 August 2016, Afarak announced that an additional capital redemption of EUR 0.01 per share will be paid, using the authorisation given by the AGM held on 11 May 2016. The payment was made from the Company's fund for invested unrestricted equity on 16 September 2016.
On 19 August 2016, Afarak announced a fatality at its Mogale plant. Nelson Maurison Msimango, a 58-year old from Kagiso, Krugersdorp and employed with Mogale Alloys since May 2005, succumbed to the critical injuries he sustained in a serious incident at the P3 Furnace at the Mogale plant. Afarak Group had to shutdown its operations at the Mogale Alloys plant after the incident and has implemented a number of health and safety initiatives at the Plant. Following the incident, management organised a number of counselling sessions for fellow employees and a memorial service at the Plant.
On 14 September 2016, Afarak announced that it had completed the transfer of 500,000 ordinary shares (the "Shares") from the treasury to Dr Alistair Ruiters, CEO. The Shares were issued under the authorization given by the Company's Annual General Meeting in May 2016 and form a part of the CEOs service based remuneration package.
COMPANY'S SHARES
Afarak Group Plc's shares are listed on NASDAQ Helsinki (AFAGR) and on the Main Market of the London Stock Exchange (AFRK).
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On 30 September 2016, the registered number of Afarak Group Plc shares was 263,040,695 (263,040,695) and the share capital was EUR 23,642,049.60 (23,642,049.60).
On 30 September 2016, the Company had 3,744,717 (4,244,717) own shares in treasury, which was equivalent to 1.42% (1.61%) of the issued share capital. The total amount of shares outstanding, excluding the treasury shares held by the Company on 30 September 2016, was 259,295,978 (258,795,978).
At the beginning of the period under review, the Company's share price was EUR 0.41 on NASDAQ Helsinki and GBP 0.31 on the London Stock Exchange. At the end of the review period, the share price was EUR 0.43 and GBP 0.33 respectively. During the third quarter of 2016 the Company's share price on NASDAQ Helsinki ranged from EUR 0.39 to 0.46 per share and the market capitalisation, as at 30 September 2016, was EUR 113.4 (1 January 2016: 105.7) million. For the same period on the London Stock Exchange the share price ranged from GBP 0.31 to GBP 0.33 per share and the market capitalisation was GBP 99.3 (1 January 2016: 85.5) million, as at 30 September 2016.
Based on the resolution at the AGM on 12 May 2016, the Board is authorised to buy-back up to a maximum of 15,000,000 of its own shares. This authorisation is valid until 12 November 2017. The Company did not carry out any share buy-backs during the third quarter of 2016.
MOST SIGNIFICANT SHORT TERM RISKS AND UNCERTAINTIES, CHANGES DURING AND AFTER THE PERIOD UNDER REVIEW
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 2015 Financial Statements.
Following the subdued ferrochrome markets, Afarak ended the second quarter with a high level of inventories. As part of its strategy of prudent working capital management, Afarak conducted a destocking process which also involves a temporary stoppage at its EWW plant to reduce the piling of inventory which is expected to last till the end of the year.
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 2016, which could considerably impact the Company's revenue and financial performance in 2016.
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.
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Helsinki, 11 November 2016
AFARAK GROUP PLC
BOARD OF DIRECTORS
FINANCIAL TABLES
FINANCIAL DEVELOPMENT AND ASSETS AND LIABILITIES BY SEGMENT
| Q1-Q3/2016
9 months
EUR '000 | Speciality
Alloys | Ferro
Alloys | Unallocated
items | Eliminations | Group
total |
| --- | --- | --- | --- | --- | --- |
| Revenue | 48,215 | 60,913 | 51 | -9 | 109,170 |
| EBITDA | 3,084 | 809 | -2,679 | 0 | 1,214 |
| EBIT | 1,215 | -2,236 | -2,684 | 0 | -3,705 |
| Segment's assets | 140,761 | 125,297 | 11,729 | -20,113 | 257,674 |
| Segment's liabilities | 48,076 | 53,219 | 2,142 | -16,265 | 87,172 |
| Q1-Q3/2015
9 months
EUR '000 | Speciality
Alloys | Ferro
Alloys | Unallocated
items | Eliminations | Group
total |
| --- | --- | --- | --- | --- | --- |
| Revenue | 74,254 | 64,044 | 815 | -584 | 138,530 |
| EBITDA | 9,293 | 6,438 | -2,206 | 0 | 13,525 |
| EBIT | 7,447 | 2,846 | -2,211 | 0 | 8,082 |
| Segment's assets | 153,474 | 136,417 | 11,483 | -22,136 | 279,238 |
| Segment's liabilities | 57,172 | 55,892 | 4,259 | -14,023 | 103,299 |
| FY 2015
12 months
EUR '000 | Speciality
Alloys | Ferro
Alloys | Unallocated
items | Eliminations | Group
total |
| --- | --- | --- | --- | --- | --- |
| Revenue | 95,555 | 91,774 | 1,513 | -1,130 | 187,711 |
| EBITDA | 12,740 | 7,467 | -3,017 | 0 | 17,190 |
| EBIT | 10,123 | 2,789 | -3,024 | 0 | 9,888 |
| Segment's assets | 150,216 | 129,187 | 12,519 | -24,929 | 266,994 |
| Segment's liabilities | 52,367 | 58,855 | 2,565 | -18,000 | 95,787 |
RESULTS DEVELOPMENT
| Q3/14 | Q4/14 | Q1/15 | Q2/15 | Q3/15 | Q4/15 | Q1/16 | Q2/16 | Q3/16 | |
|---|---|---|---|---|---|---|---|---|---|
| Sales (tonnes) | |||||||||
| Mining | 34,846 | 15,728 | 51,401 | 86,884 | 101,701 | 64,487 | 22,959 | 40,618 | 10,918 |
| Processing | 26,347 | 23,465 | 22,826 | 30,556 | 20,419 | 31,137 | 26,952 | 28,214 | 18,023 |
| Trading | 8,268 | 9,954 | 3,828 | 6,466 | 8,798 | 11,953 | 10,177 | 7,262 | 12,256 |
| Total | 69,461 | 49,147 | 78,055 | 123,906 | 130,558 | 107,577 | 60,088 | 76,094 | 41,260 |
| Average rates | |||||||||
| EUR/USD | 1.355 | 1.329 | 1.126 | 1.116 | 1.114 | 1.110 | 1.102 | 1.116 | 1.116 |
| EUR/ZAR | 14.536 | 14.404 | 13.228 | 13.305 | 13.701 | 14.172 | 17.455 | 17.198 | 16.683 |
| Euro (million) | Q3/14 | Q4/14 | Q1/15 | Q2/15 | Q3/15 | Q4/15 | Q1/16 | Q2/16 | Q3/16 |
| Revenue | 40.6 | 41.6 | 40.7 | 53.1 | 44.8 | 49.2 | 40.8 | 39.5 | 28.9 |
| Extraordinary items* | 1.2 | -1.6 | 0.0 | 0.0 | -0.3 | 0.0 | 0.0 | 0.0 | 0.0 |
| EBITDA | 2.1 | 0.0 | 4.6 | 7.6 | 1.3 | 3.7 | 3.3 | 0.8 | -2.8 |
| EBITDA margin | 5.1% | 0.0% | 11.4% | 14.4% | 2.8% | 7.5% | 8.0% | 2.0% | -9.8% |
| Adjusted EBITDA** | 0.9 | 1.6 | 4.6 | 7.6 | 1.6 | 3.7 | 3.3 | 0.8 | -2.8 |
| EBIT | 0.5 | -1.1 | 2.9 | 5.8 | -0.7 | 1.8 | 1.7 | -0.9 | -4.5 |
| EBIT margin | 1.3% | -2.8% | 7.2% | 11.0% | -1.5% | 3.7% | 4.2% | -2.2% | -15.7% |
*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. Extraordinary items in Q3/15 relate to loss on sale of investment in associate.
** Adjusted EBITDA is EBITDA excluding the extraordinary items.
CONSOLIDATED INCOME STATEMENT, SUMMARY
| EUR '000 | Q3/16 | Q3/15 | Q1-Q3/16 | Q1-Q3/15 | FY2015 |
|---|---|---|---|---|---|
| Revenue | 28,916 | 44,765 | 109,170 | 138,530 | 187,711 |
| Other operating income | 580 | 363 | 1,107 | 1,556 | 2,331 |
| Operating expenses | -32,098 | -43,400 | -108,273 | -126,967 | -172,439 |
| Depreciation and amortisation | -1,698 | -1,931 | -4,920 | -5,443 | -7,302 |
| Items related to associates (core) | 0 | -2 | 0 | 0 | 0 |
| Share of profit from joint ventures | -241 | -467 | -790 | 406 | -414 |
| Operating profit | -4,540 | -673 | -3,705 | 8,082 | 9,888 |
| Financial income and expense | 307 | -1,354 | -926 | -2,022 | -3,367 |
| Profit before tax | -4,234 | -2,027 | -4,632 | 6,061 | 6,520 |
| Income tax | 1,028 | 1,025 | 147 | 920 | 1,236 |
| Profit for the period from continuing operations | -3,205 | -1,002 | -4,485 | 6,981 | 7,756 |
| Discontinued operations |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
| EUR '000 | Q3/16 | Q3/15 | Q1-Q3/16 | Q1-Q3/15 | FY2015 |
|---|---|---|---|---|---|
| Profit for the period | -2,158 | -1,002 | -2,976 | 6,981 | 8,539 |
| Other comprehensive income | |||||
| Remeasurement of defined benefit pension plans | 0 | 0 | 0 | 0 | 986 |
| Exchange differences on translating foreign operations – Group | 2,982 | -14,215 | 2,317 | -10,014 | -18,845 |
| Exchange differences on translating foreign operations – Associate and JV | 1,794 | -944 | 6,012 | -2,540 | -3,125 |
| Income tax relating to other comprehensive income | -251 | 3,260 | -1,039 | 2,497 | 4,552 |
| Other comprehensive income, net of tax | 4,525 | -11,898 | 7,289 | -10,057 | -16,432 |
| Total comprehensive income for the period | 2,367 | -12,900 | 4,313 | -3,076 | -7,894 |
| Total comprehensive income attributable to: | |||||
| Owners of the parent | 2,392 | -12,116 | 4,390 | -2,304 | -6,791 |
| Non-controlling interests | -26 | -784 | -77 | -773 | -1,103 |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION, SUMMARY
| EUR '000 | 30.9.2016 | 30.9.2015 | 31.12.2015 |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Goodwill | 61,082 | 61,194 | 58,349 |
| Other intangible assets | 17,538 | 19,457 | 17,014 |
| Property, plant and equipment | 44,145 | 45,313 | 43,559 |
| Other non-current assets | 39,311 | 43,137 | 42,496 |
| Non-current assets total | 162,076 | 169,101 | 161,418 |
| Current assets | |||
| Inventories | 55,751 | 54,131 | 45,152 |
| Trade receivables | 19,409 | 19,160 | 24,803 |
| Other receivables | 13,398 | 14,551 | 15,976 |
12
| Cash and cash equivalents | 7,041 | 22,294 | 19,644 |
|---|---|---|---|
| Current assets total | 95,598 | 110,137 | 105,575 |
| Total assets | 257,674 | 279,238 | 266,994 |
| 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 | 235,217 | 240,057 | 240,240 |
| Legal Reserve | 177 | 175 | 187 |
| Translation reserves | -21,729 | -21,693 | -28,692 |
| Retained earnings | -96,313 | -96,158 | -93,755 |
| Equity attributable to owners of the parent | 166,734 | 171,764 | 167,362 |
| Non-controlling interests | 3,769 | 4,175 | 3,845 |
| Total equity | 170,503 | 175,939 | 171,207 |
| Liabilities | |||
| Non-current liabilities | |||
| Deferred tax liabilities | 5,318 | 6,533 | 5,949 |
| Provisions | 10,274 | 9,830 | 9,309 |
| Share of joint ventures' losses | 17,957 | 21,768 | 23,218 |
| Pension liabilities | 18,402 | 19,768 | 18,734 |
| Financial liabilities | 3,346 | 9,862 | 4,944 |
| Non-current liabilities total | 55,297 | 67,762 | 62,155 |
| Current liabilities | |||
| Trade payables | 14,873 | 14,348 | 9,875 |
| Other current liabilities | 17,002 | 21,190 | 23,756 |
| Current liabilities total | 31,875 | 35,538 | 33,631 |
| Total liabilities | 87,172 | 103,299 | 95,787 |
| Total equity and liabilities | 257,674 | 279,238 | 266,994 |
SUMMARY OF CASH, INTEREST-BEARING RECEIVABLES AND INTEREST-BEARING LIABILITIES
| EUR '000 | 30.9.2016 | 30.9.2015 | 31.12.2015 |
|---|---|---|---|
| Cash and cash equivalents | 7,041 | 22,294 | 19,644 |
| Interest-bearing receivables | |||
| Current | 3,514 | 5,026 | 3,519 |
| Non-current | 28,799 | 34,008 | 33,165 |
| Interest-bearing receivables | 32,313 | 39,034 | 36,684 |
| Interest-bearing liabilities | |||
| Current | 7,758 | 10,380 | 12,133 |
| Non-current | 50 | 7,756 | 2,975 |
| Interest-bearing liabilities | 7,808 | 18,136 | 15,108 |
| NET TOTAL | 31,457 | 43,193 | 41,220 |
SUMMARY OF GROUP'S PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS
| EUR '000 | Property, plant and equipment | Intangible assets |
|---|---|---|
| Acquisition cost 1.1.2016 | 73,843 | 206,835 |
| Additions | 1,621 | 442 |
| Disposals | -4 | -5 |
| Reclass between items | 442 | 0 |
| Effect of movements in exchange rates | 3,141 | 8,964 |
| Acquisition cost 30.9.2016 | 79,043 | 216,236 |
| Acquisition cost 1.1.2015 | 78,052 | 225,275 |
| Additions | 7,336 | 652 |
| Disposals | -898 | -310 |
| Reclass between items | 211 | 30 |
| Effect of movements in exchange rates | -10,858 | -18,811 |
| Acquisition cost 31.12.2015 | 73,843 | 206,835 |
CONSOLIDATED STATEMENT OF CASH FLOWS, SUMMARY
| EUR '000 | Q1-Q3/16 | Q1-Q3/15 | FY2015 |
|---|---|---|---|
| Profit for the period | -2,976 | 6,981 | 8,539 |
| Adjustments to profit for the period | 1,836 | 4,673 | 6,258 |
| Changes in working capital | 1,500 | 527 | -2,438 |
| Discontinued operations | 948 | 0 | 177 |
| Net cash from operating activities | 1,307 | 12,181 | 12,535 |
| Acquisition of subsidiaries and associates, net of cash acquired | -19 | 0 | -173 |
| Disposal of subsidiaries and associates, net of cash sold | 0 | 109 | 293 |
| Capital expenditure and other investing activities | -925 | -7,032 | -7,555 |
| Proceeds from repayments of loans and loans given | -251 | 3,514 | 3,516 |
| Net cash used in investing activities | -1,194 | -3,409 | -3,919 |
| Capital Redemption | -5,176 | -5,106 | -5,106 |
| Proceeds from borrowings | 7,817 | 9,664 | 8,728 |
| Repayment of borrowings, and other financing activities | -15,402 | -4,117 | -5,720 |
| Net cash from financing activities | -12,760 | 441 | -2,098 |
| Net increase in cash and cash equivalents | -12,648 | 9,213 | 6,518 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
A = Share capital
B = Share premium reserve
C = Paid-up unrestricted equity reserve
D = Translation reserve
E = Retained earnings
F = Legal 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 31.12.2014 | 23,642 | 25,740 | 243,424 | -12,061 | -103,657 | 210 | 177,298 | 4,947 | 182,244 |
| Profit for the period 1-9/2015 + comprehensive income | -7,092 | 7,328 | 236 | -347 | -111 | ||||
| Share of OCI in associates and JV | -2,540 | -2,540 | -2,540 | ||||||
| Translation differences | 0 | -426 | -426 | ||||||
| Share-based payments | 200 | 200 | 1 | 201 | |||||
| Rights Issue | 1,739 | 1,739 | 1,739 | ||||||
| Capital redemption | -5,106 | -5,106 | -5,106 | ||||||
| Acquisitions and disposals of subsidiaries | -29 | -29 | -29 | ||||||
| Other changes in equity | -35 | -35 | -35 | ||||||
| Equity at 30.9.2015 | 23,642 | 25,740 | 240,057 | -21,693 | -96,158 | 175 | 171,763 | 4,175 | 175,937 |
| Profit for the period 10-12/2015 + comprehensive income | -6,413 | 1,526 | -4,887 | 32 | -4,855 | ||||
| Share of OCI in associates and JV | -585 | -585 | -585 | ||||||
| Translation differences | 0 | -362 | -362 | ||||||
| Share-based payments | 183 | -109 | 74 | 74 | |||||
| Remeasurements of defined benefit pension plans | 986 | 986 | 986 | ||||||
| Other changes in equity | 12 | 12 | 12 | ||||||
| Equity at 31.12.2015 | 23,642 | 25,740 | 240,240 | -28,691 | -93,755 | 187 | 167,362 | 3,845 | 171,207 |
| Profit for the period 1-9/2016 + comprehensive income | 950 | -2,572 | -1,622 | -404 | -2,026 | ||||
| Share of OCI in associates and JV | 6,012 | 6,012 | 6,012 | ||||||
| Translation differences | 327 | 327 | |||||||
| Share-based payments | 153 | 15 | 168 | 1 | 168 | ||||
| Capital redemption | -5,176 | -5,176 | -5,176 | ||||||
| Other changes in equity | -10 | -10 | -10 | ||||||
| Equity at 30.9.2016 | 23,642 | 25,740 | 235,217 | -21,729 | -96,313 | 177 | 166,734 | 3,769 | 170,503 |
RELATED PARTY TRANSACTIONS DURING THE REVIEW PERIOD
| EUR '000 | Q1-Q3/16 | Q1-Q3/15 | FY2015 |
|---|---|---|---|
| Sales to joint ventures | 144 | 255 | 353 |
| Sales to other related parties | 19 | 24 | 30 |
| Purchases from joint ventures | -74 | -7,714 | -9,448 |
| Financing income from joint ventures | 590 | 736 | 958 |
| Financing expense to other related parties | -18 | 287 | 296 |
| Loan receivables from joint ventures | 28,130 | 33,419 | 32,573 |
| Loan receivables from other related parties | 3,614 | 3,588 | 3,519 |
| Trade and other receivables from joint ventures | 7,896 | 7,113 | 7,913 |
| Trade and other receivables from other related parties | 80 | 68 | 62 |
| Trade and other payables to joint ventures | 310 | 359 | 209 |
FINANCIAL INDICATORS
| Q1-Q3/16 | Q1-Q3/15 | FY2015 | |
|---|---|---|---|
| Return on equity, % p.a. | -3.5% | 5.2% | 4.4% |
| Return on capital employed, % p.a. | -1.3% | 9.8% | 9.3% |
| Equity ratio, % | 66.2% | 63.0% | 64.2% |
| Gearing, % | 0.4% | -2.4% | -2.6% |
| Personnel at the end of the period | 785 | 760 | 773 |
EXCHANGE RATES
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:
Average rates
| Q1-Q3/16 | Q1-Q3/15 | FY2015 | |
|---|---|---|---|
| TRY | 3.2766 | 2.9708 | 3.0255 |
| USD | 1.1162 | 1.1114 | 1.1095 |
| ZAR | 16.6827 | 13.7010 | 14.1723 |
Balance sheet rates
| 30.9.2016 | 30.9.2015 | 31.12.2015 | |
|---|---|---|---|
| TRY | 3.3576 | 3.3903 | 3.1765 |
| USD | 1.1161 | 1.1203 | 1.0887 |
| ZAR | 15.5238 | 15.4984 | 16.9530 |
FORMULAS FOR FINANCIAL INDICATORS
Financial ratios and indicators have been calculated with the same principles as applied in the 2015 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
ACCOUNTING POLICIES
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 2015. Afarak has applied the same accounting principles in the preparation of this Interim Report as in its financial statements for 2015, except for the adoption of new standards and interpretations that become effective in 2016. 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.
Share-related key figures
| Q3/2016 | Q3/2015 | Q1-Q3/2016 | Q1-Q3/2015 | FY 2015 | ||
|---|---|---|---|---|---|---|
| Share price development in London Stock Exchange | ||||||
| Average share price* | EUR | 0.41 | 0.45 | 0.41 | 0.45 | 0.45 |
| GBP | 0.33 | 0.33 | 0.33 | 0.33 | 0.33 | |
| Lowest share price* | EUR | 0.38 | 0.45 | 0.35 | 0.34 | 0.34 |
| GBP | 0.31 | 0.33 | 0.28 | 0.25 | 0.25 | |
| Highest share price* | EUR | 0.40 | 0.45 | 0.40 | 0.45 | 0.45 |
| GBP | 0.33 | 0.33 | 0.33 | 0.33 | 0.33 | |
| Share price at the end of the period** | EUR | 0.38 | 0.44 | 0.38 | 0.44 | 0.44 |
| GBP | 0.33 | 0.33 | 0.33 | 0.33 | 0.33 | |
| Market capitalisation at the end of the period** | EUR million | 99.3 | 115.8 | 99.3 | 115.8 | 116.5 |
| Share trading development | GBP million | 85.5 | 85.5 | 85.5 | 85.5 | 85.5 |
|---|---|---|---|---|---|---|
| Share turnover | thousand shares | 60 | 7 | 63 | 7 | 13 |
| Share turnover | EUR thousand | 25 | 3 | 26 | 3 | 6 |
| Share turnover | GBP thousand | 20 | 2 | 21 | 2 | 4 |
| Share turnover | % | 0.0 % | 0.0 % | 0.0 % | 0.0 % | 0.0 % |
| Share price development in NASDAQ Helsinki | ||||||
| Average share price | EUR | 0.42 | 0.52 | 0.42 | 0.44 | 0.44 |
| Lowest share price | EUR | 0.39 | 0.36 | 0.39 | 0.33 | 0.33 |
| Highest share price | EUR | 0.46 | 0.58 | 0.51 | 0.58 | 0.67 |
| Share price at the end of the period | EUR | 0.43 | 0.53 | 0.43 | 0.53 | 0.40 |
| Market capitalisation at the end of the period | EUR million | 113.4 | 139.4 | 113.4 | 139.4 | 105.7 |
| Share trading development | ||||||
| Share turnover | thousand shares | 5,329 | 12,382 | 16,250 | 32,962 | 38,224 |
| Share turnover | EUR thousand | 2,219 | 6,408 | 6,789 | 14,376 | 16,936 |
| Share turnover | % | 2.0 % | 4.7 % | 6.2 % | 12.5 % | 14.5 % |
- 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
FORWARD LOOKING STATEMENTS
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.