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LONDON (Alliance News) - Afarak Group PLC Monday proposed a capital redemption and said it will consider a dividend, after the chrome producer achieved positive earnings before interest and tax in 2014 and said that although revenue is forecast to remain fairly flat in 2015, earnings will continue to improve.
Afarak said it will propose a capital redemption of EUR0.02 per share, which it said would be paid out of its paid-up unrestricted equity fund and said "the board will investigate the possibility to increase the dividend," it said in a statement. Arafak paid no dividend in 2013.
For the year ended December 31, the company reported a fall in earnings before interest, tax, depreciation and amortization to EUR8.4 million from EUR14.0 million a year earlier. Afarak said write-downs from its joint ventures reduced EBITDA by EUR1.6 million.
Earnings before interest and tax were EUR1.7 million in 2014, swinging from a EUR8.0 million loss in 2013, leading to a profit from continuing operations of EUR500,000, versus a EUR4.4 million loss in 2013.
"I'm pleased to say that despite a lower EBITDA, we managed to achieve positive EBIT throughout the first three quarters of 2014. We would also have achieved a positive EBIT in the fourth quarter of 2014 but unfortunately asset write-downs in our joint venture operation pushed our results down," said Afarak Chief Executive Danko Koncar.
Afarak reported an EBIT loss of EUR1.1 million in the fourth quarter, narrowed from a loss of EUR2.8 million a year earlier.
Revenue in 2014 increased by 27% to EUR172.7 million from EUR135.5 million a year earlier as a result of increased sales and significant rises in production at its producing mines in southern Africa, slightly offset by weak commodity prices.
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, the company said.
Afarak is an integrated chrome producer supplying specialist products to thesteel and stainless steel industries. The company is split into two divisions: its speciality alloys division and ferroalloys division. The company has producing mines and processing facilities in South Africa, Turkey and Germany.
"Speciality ferrochrome prices remained stable during the year, whilst charge chrome prices
were weak and remain below the high levels seen in 2013," Afarak said. "2014 was a year where we saw a good increase in demand for ferrochrome but unfortunately the increase was not reflected in prices."
Processed material sold in 2014 totalled 97,351 tonnes, up 55% from 62,626 tonnes in 2013, whilst ferrochrome production rose by 53% to 101,461 tonnes from 66,197 tonnes.
"In spite of facing difficult conditions Afarak performed well in 2014. The volumes of processed ferrochrome increased substantially in 2014," Koncar said.
However, tonnes of ore mined during the year fell by 39% to 304,199 tonnes from 496,573 tonnes.
"The tonnage mined during the year was negatively affected by the temporary suspension of the Mecklenburg mine production and the strike and lockout at the Turkish mines," the chief executive added.
Afarak shares were untraded on Monday morning, last trading at 32.50 pence per share.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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