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AFARAK GROUP: INTERIM REPORT H1 2021

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06:00 London, 08:00 Helsinki, 20 August 2021 - Afarak Group Plc ("Afarak" or "the Company") (LSE: AFRK, NASDAQ: AFAGR)

FINANCIAL INTERIM RELEASE H1 2021

Afarak Group has restated its figures for H1 2020 due to the loss of control and the end of the consolidation of Afarak Mogale (Pty) Ltd. Afarak Group reclassified Afarak Mogale (Pty) Ltd’s previously reported income statement figures as discontinued operations. There is no change to the previously reported balance sheet figures.

H1/21

H1/20
Restated

2020

Revenue

EUR million

37.3

35.5

59.8

EBITDA

EUR million

-0.9

-0.3

-4.1

EBIT

EUR million

0.9

-1.7

-28.2

Earnings before taxes

EUR million

-0.5

-4.1

-32.4

Profit from continuing operations

EUR million

-0.9

-4.6

-27.6

Profit from discontinuing operations

EUR million

0.0

-11.5

6.1

Profit

EUR million

-0.9

-16.1

-21.6

Earnings per share

EUR

0.00

-0.07

-0.07

EBITDA margin

%

-2.4

-1.0

-6.8

EBIT margin

%

2.4

-4.8

-47.1

Earnings margin

%

-1.3

-11.4

-54.3

Personnel (end of period)

608

770

621

FIRST HALF 2021 HIGHLIGHTS

  • Revenue increased by 5.2% to EUR 37.3 (H1/2020: 35.5) million;

  • Processed material sold decreased by 45.8% to 12,667 (H1/2020: 23,356) tonnes;

  • Tonnage mined decreased by 47.8% to 53,542 (H1/2020: 102,659) tonnes due to low mining activity at the South African mines;

  • The Group’s EBITDA decreased to EUR -0.9 (H1/2020: -0.3) million and the EBITDA margin was -2.4% (H1/2020: -1.0%);

  • Profitability was positively affected by a reversal gain on previously recognised impairment loss on Ilitha’s mining assets, amounting to EUR 2.9 (0.0) million;

  • EBIT was EUR 0.9 (H1/2020: -1.7) million, with the EBIT margin at 2.4% (H1/2020: -4.8%);

  • Profit for the period from continuing operation totalled EUR -0.9 (H1/2020: -21.6) million;

  • Cash flow from operations stood at EUR -1.9 (H1/2020: -2.2) million;

  • Net interest-bearing debt after deducting liquid funds amounted to EUR 50.3 (54.7) (31 December 2020: 48.2) million;

  • Cash and cash equivalents at 30 June totalled EUR 2.9 (30 June 2020: 6.1) (31 December 2020: 1.1) million.

OUTLOOK FOR THE SECOND HALF OF 2021

The Ferrochrome market is closely bound to the stainless-steel market. The main producing Countries are, where possible, putting in place measures to calm down the rallying prices of Stainless steel.

Starting August 1st, Russia has imposed a temporary export tax of 15% on ferrous and non-ferrous metals ,including ferroalloys. This measure is taken in order to compensate high cost steel products meant for state projects.

This export tax will be imposed until December 31st, 2021 for export to countries outside the Eurasian Customs Union.

In China, also as of 1st of August, due to an increased electricity shortage and price, most Ferrochrome Chinese Ferrochrome producers have left the spot market. The Chinese Ministry of Finance have announced that steel will become more expensive to export to other countries and that they will be imposing, most probably during Q3, export duties on steel products.

Export Tariffs on ferrochrome are up to 40 percent from 20 percent.

CEO GUY KONSBRUCK

“During the first half of 2021, the company continued to go through difficult times. It is only towards the end of the period that we saw first signs of improvements.
Nevertheless, we succeeded to reduce our debt despite a very constrained cashflow situation. Our specialty segment remained profitable despite very difficult markets. A starting price increase was unfortunately accompanied by rises in logistic cost, higher raw material cost and unfavorable USD exchange rates. We foresee further improvements in H2. The FerroAlloys segment continued to be weak, as the mining activity in South Africa was further reduced.

The company is expecting proceeds from the Mogale Business Rescue, (which was completed in the meantime via an asset sale), and the disposal of one of its South African Mining Assets. These inflows should improve the company’s cashflow situation and we will be in a position to focus on further debt reduction.

The raw materials and stainless steel markets are seeing a general positive trend finally, and we expect to be able to see a more stable business environment throughout the rest of the year.”

Helsinki, August 20, 2021

Afarak Group Plc

Board of Directors

For additional information, please contact:

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


Financial reports and other investor information are available on the Company's website: www.afarak.com.

Afarak Group is a specialist alloy producer focused on delivering sustainable growth with a Speciality Alloys business in southern Europe and a FerroAlloys business in South Africa. The Company is listed on NASDAQ Helsinki (AFAGR) and the Main Market of the London Stock Exchange (AFRK).

Distribution:
NASDAQ Helsinki
London Stock Exchange
Main media
www.afarak.com

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