These consolidated financial statements of Afarak Group have been prepared in accordance with the International Financial Reporting Standards (IFRS) and in conformity with the IAS and IFRS standards as well as the SIC and IFRIC interpretations in force on 31 December 2023. In the Finnish Accounting Act and the regulations issued on the basis thereof, International Financial Reporting Standards refer to the standards and their interpretations that have been approved for application within the EU in accordance with the procedure prescribed in the EU regulation (EC) 1606/2002. Notes to the consolidated financial statements also meet the requirements set forth in the Finnish accounting and company legislation. The consolidated financial statements have been prepared on the historical cost basis, unless otherwise explicitly stated. All values are rounded\u00a0to the nearest thousand (\u20ac 000),\u00a0unless otherwise explicitly stated.
", "dimensions": { "concept": "ifrs-full:StatementOfIFRSCompliance", "language": "en", "entity": "scheme:743700KOUL1GQQQREP40", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page24-p_608-tag6367877": { "value": "to the nearest thousand (\u20ac 000),", "dimensions": { "concept": "ifrs-full:LevelOfRoundingUsedInFinancialStatements", "language": "en", "entity": "scheme:743700KOUL1GQQQREP40", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page24-body-tag6367880": { "value": "Afarak Group SE's Board of Directors resolved on 26 March 2024 that these financial statements are to be published. According to the Finnish Companies Act, shareholders shall endorse the financial statements in the Annual General Meeting convening after the financial statements have been published.
", "dimensions": { "concept": "ifrs-full:DisclosureOfAuthorisationOfFinancialStatementsExplanatory", "language": "en", "entity": "scheme:743700KOUL1GQQQREP40", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page24-body-tag6367882": { "value": "Principles of consolidation
The consolidated financial statements include the parent company Afarak Group SE, its subsidiaries, joint ventures and associated companies. Subsidiaries refer to companies controlled by the Group. The Group gains control of a company when it holds more than half of the voting rights or otherwise exercises control. The existence of potential voting rights has been taken into account in assessing the requirements for control in cases where the instruments entitling their holder to potential voting rights can be exercised at the time of assessment. Control refers to the right to govern the financial and operating policies of an enterprise so as to obtain benefits from its activities.
Acquired subsidiaries are consolidated from the time when the Group gained control, and divested subsidiaries until the time when control ceased. All intra-group transactions, receivables, debts, and unrealised profits, as well as internal distribution of profits, are eliminated when the consolidated financial statements are prepared. The distribution of profits between parent company owners and non-controlling owners is shown in the statement of comprehensive income, and the non-controlling interest of equity is shown as a separate item in the statement of financial position under shareholders' equity.\u00a0
Joint ventures are entities in which each venturer has an interest and there is a contractual arrangement establishing joint control over the economic activity of the entity.\u00a0
Associates are companies in which Afarak Group exercises significant influence. The Group exercises significant influence if it holds more than 20% of the target company's voting rights, or if the Group in other ways exercises significant influence but not control. Associates have been consolidated in the Group's financial statements using the equity method. If the Group's share of the associate's losses exceeds the carrying amount of the investment, the investment is recognised at zero value on the statement of financial position, and losses exceeding the carrying amount are not consolidated unless the Group has made a commitment to fulfil the associates' obligations. Investment in an associate includes the goodwill arising from its acquisition.
", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfConsolidationExplanatory", "language": "en", "entity": "scheme:743700KOUL1GQQQREP40", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page24-body-tag6367883": { "value": "Translation of foreign currency items
Amounts indicating the profit or loss and financial position of Group entities are measured in the currency of each entity's main operating environment ('functional currency').\u00a0Figures in the consolidated financial statements are presented in euro, the functional and presentation currency of the Group's parent company, Afarak Group SE.
Transactions in foreign currencies have been recorded at the functional currency using the exchange rate on the date of the transaction or mid reference rates of central banks. Monetary items denominated in foreign currencies have been translated into the functional currency using the exchange rates at the end of each reporting period. Exchange rate gains and losses are included in the revenue, operational costs or financial items, corresponding to their respective origin. Hedge accounting has not been applied.
In the Group accounts, foreign subsidiaries' income statements and statements of cash flows are converted into euro by using average exchange rates for the period, and the statement of financial position is converted by using the period-end exchange rate. The translation differences arising from this are recognised in other comprehensive income. Translation differences arising from the elimination of the acquisition cost and post-acquisition equity changes are also recognised in other comprehensive income. If and when the foreign subsidiary is partially or fully divested, these accrued translation differences will be taken into account in adjusting the sales gain or sales loss.
Goodwill, other assets and liabilities arising from acquisitions of subsidiaries are recognised in the Group accounts using the functional currency of each acquired subsidiary. The balances in that functional currency have then been translated into euro using the exchange rates prevailing at the end of the reporting period.
In accordance with IAS 21, any foreign exchange difference arising from Intra-group loans for which settlement is neither planned nor likely to occur in the foreseeable future is, in substance, a part of the entity's net investment in that foreign operation. This is recognised in the group's other comprehensive income and reclassified from equity to profit or loss on disposal of the net investment.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForForeignCurrencyTranslationExplanatory", "language": "en", "entity": "scheme:743700KOUL1GQQQREP40", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page24-p_628-tag6367881": { "value": "\u00a0Figures in the consolidated financial statements are presented in euro, the functional and presentation currency of the Group's parent company, Afarak Group SE.", "dimensions": { "concept": "ifrs-full:DescriptionOfPresentationCurrency", "language": "en", "entity": "scheme:743700KOUL1GQQQREP40", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page24-body-tag6368194": { "value": "Operating profit
IAS 1\u00a0Presentation of financial statements\u00a0does not define the concept of operating profit. Afarak Group has defined it as follows: Operating profit is the net amount derived by adding to revenue other operating income, less materials and supplies, and expenses from work performed by the enterprise and capitalised, less costs from employee benefits, depreciation and impairment losses, and other\u00a0expenses. Shares of associated companies' and joint venture companies' profit or loss are included in the operating profit to the extent to which they relate to the Group's core businesses. Exchange differences arising from operational transactions with third parties are included in operating profit; otherwise they are recorded under financial items.
\u00a0
All other items of the income statement are excluded from operating profit.\u00a0
IAS 1 amendment introduced the requirement for grouping of items presented in Other Comprehensive Income. \u00a0Items that are reclassified (or `recycled`) to profit or loss at a future point in time will be presented separately from items which will never be reclassified. \u00a0The amendment affected the presentation of Other Comprehensive Income.
", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfPreparationOfFinancialStatementsExplanatory", "language": "en", "entity": "scheme:743700KOUL1GQQQREP40", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page25-body-tag6367884": { "value": "Revenue recognition
The Group applies IFRS 15 Revenue from Contracts with customers standard. Income from the sale of goods is recognised once the control of goods has been transferred to the buyer. Control is transferred either over time or at a point in time. The transfer of control depends on, terms of delivery (Incoterms)\u00a0and some of which have transfer of risk to the customer before material is delivered to the final customer. The freight in conjunction with these delivery terms may be regarded as a separate performance obligation, however as they are limited in number, the Group does not consider the freight as being separate from the sale.\u00a0
The most often used terms are FCA, CIF or FOB, under which the revenue is recognised when the goods are assigned to the buyer's carrier or loaded on board the vessel nominated by the buyer.\u00a0
Generally, the Group receives short-term advances or cash against documents (CAD) from its customers. The payment terms are usually up to 60 days from end of month or after consignment report for customers with consignment agreement. The transaction price is based on official publications with premiums or discounts, while spot business is done based on negotiations. Performance obligations are satisfied at delivery of the goods and revenue is recognised based on the incoterms transfer of risk.
As typical in the business, preliminary invoices are issued for the mineral concentrates at the time of delivery. Final invoices are issued when quantity, mineral content and pricing have been defined for the delivery lot.
Income not generated by the Group's main businesses is accounted for as other operating income. The expenses incurred from disposals of non-current assets or a disposal group of assets are deducted from the gain on disposal. \u00a0\u00a0
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForRecognitionOfRevenue", "language": "en", "entity": "scheme:743700KOUL1GQQQREP40", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page25-body-tag6367886": { "value": "Pension liabilitiesPension arrangements in Afarak Group are classified as defined contribution plans or defined benefit plans (Germany and Turkey). Payments for defined contribution plans are recognised as expenses for the relevant period. The present value of obligation for the defined benefit plans has been estimated applying the\u00a0Projected Unit Credit Method\u00a0and recognised as a non-current liability on the statement of financial position. \u00a0The actuarial gains and losses are recognised in other comprehensive income when they occur and the net defined benefit liability or asset are presented in full on the statement of financial position.\u00a0", "dimensions": { "concept": "ifrs-full:DescriptionOfTypeOfRetirementBenefitPlan", "language": "en", "entity": "scheme:743700KOUL1GQQQREP40", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page25-body-tag6367885": { "value": "Share-based payments
Option rights are measured at fair value at the time they were granted and recorded as expenses on a straight-line basis during the vesting period. The expenses at the time the options were granted are determined according to the Group's estimate of the number of options expected to vest at the end of the vesting period. Fair value is determined on the basis of an applicable option pricing model (e.g. Black-Scholes). The effects of non-market-based terms and conditions are not included in the fair value of the option; instead, they are taken into account in the estimated number of options expected to vest at the end of the vesting period. The Group updates the estimated final number of options at the end of each reporting period. Changes in the estimates are recorded in the statement of comprehensive income. When the option rights are exercised, the cash payments received from the subscriptions adjusted with potential transaction costs are recorded under paid-up unrestricted equity reserve.
The Group from time to time directs free issues of shares to the members of the Board of Directors or key executives, as approved by the AGM. The compensation is settled in shares and is accordingly recognised as share-based payment in the Group's financial statements. The fair value of the granted shares is determined based on the market price of the Afarak Group share at the grant date. The total fair value is therefore the amount of granted shares multiplied by the share market price at grant date. The cost is recognised as expense in personnel costs over the vesting periods and credited to equity (retained earnings).\u00a0
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSharebasedPaymentTransactionsExplanatory", "language": "en", "entity": "scheme:743700KOUL1GQQQREP40", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page26-body-tag6367894": { "value": "Broad Based Black Economic Empowerment (BBBEE) transactions
The purpose of South African Broad Based Black Economic Empowerment (BBBEE) regulation is to enable previously disadvantaged people meaningfully to participate in the South African economy. The Group is committed to making a positive contribution towards the objectives of BBBEE. Where the Group disposes of a portion of a South African based subsidiary or operation to a BBBEE company at a discount to fair value, the transaction is considered to be a share-based payment (in line with the principle contained in South Africa interpretation AC 503 Accounting for Broad Based Black Economic Empowerment (BBBEE) Transactions). The discount provided or value given is calculated in accordance with IFRS 2 and recognised as an expense. Where the BBBEE transaction includes service conditions, the expense is recognised over the vesting period. Otherwise the expense is recognised immediately on the grant date.
", "dimensions": { "concept": "ifrs-full:DisclosureOfGeneralInformationAboutFinancialStatementsExplanatory", "language": "en", "entity": "scheme:743700KOUL1GQQQREP40", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page26-body-tag6367887": { "value": "Lease agreements (the Group as the lessee)
Leases of tangible assets where the Group possesses a material portion of the risks and benefits of ownership are classified as financial leases. An asset acquired through a financial lease agreement is recognised at the fair value of the leased object at the beginning of the lease period, or at a lower current value of minimum lease. An asset obtained through a finance lease is depreciated over the useful life of the asset or the lease term, whichever is shorter. The leases payable are divided into financial expenses and loan repayment during the lease term so that the interest rate for the remaining loan is roughly the same each financial year. Leasing obligations are included in interest-bearing liabilities. Lease agreements in which the risks and benefits typical of ownership remain with the lessor are recognised in the statement of financial position as a right-of-use asset and a corresponding lease liability at the date at which the lease asset is available for the use by the Group. Each lease payment is allocated between the liability and finance cost. The finance cost is recognised in the income statement over the lease period. The right-of-use asset is depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForLeasesExplanatory", "language": "en", "entity": "scheme:743700KOUL1GQQQREP40", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page26-body-tag6367895": { "value": "Impairment
At the end of each reporting period, the Group makes an assessment of whether there are any indications of asset impairment. If such indications exist, the recoverable amount of the asset is estimated. In addition, goodwill is assessed annually for its recoverable amount regardless of whether there are any signs of impairment. Impairment is examined at the cash-generating unit level; in other words, the lowest level of entity that is primarily independent of other entities and whose cash flows can be separated from other cash flows. Impairment related to associates and other assets are tested on a company/asset basis.
The recoverable amount is the fair value of an asset less divestment costs, or the higher value in use. Value in use means the present value of estimated future cash flows expected to arise from the asset or cash-generating unit. Value in use is forecast on the basis of circumstances and expectations at the time of testing. The discount rate takes into account the time value of money as well as the special risks involved for each asset, different industry-specific capital structures in different lines of business, and the investors' return expectations for similar investments. An impairment loss is recorded when the carrying amount of an asset is greater than its recoverable amount. If the impairment loss is allocable to a cash-flow-generating unit, it is allocated first to reduce the goodwill of the unit and subsequently to reduce other assets of the unit. An impairment loss is reversed if a change has occurred in circumstances and the recoverable amount of the asset has changed since the impairment loss was recognised. An impairment loss recognised for goodwill is not reversed in any circumstances.
Goodwill is tested for impairment annually at year end; for the 2023 financial year, testing took place on 30 June 2023for the Speciality Alloys business and the South African minerals processing business and on 31 December 2023 for all cash generating units. Impairment testing and the methods used are discussed in more detail in section 1.5 in the 'Impairment testing'.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfAssetsExplanatory", "language": "en", "entity": "scheme:743700KOUL1GQQQREP40", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page26-body-tag6367888": { "value": "Financial income and expense
Interest income and expense is recognised using the effective interest method, and dividends are recognised when the right to dividends is established. Unrealised changes in value of items measured at fair value are recognised in the statement of comprehensive income. These items relate to currency forward contracts. Exchange rate gains or losses that arise from intercompany loans that are considered as part of the net investment in the foreign entity are included, net of any deferred tax effects, in the translation reserve within the equity. These exchange differences are recognised in other comprehensive income while accumulated exchange differences are presented in the translation reserves in the equity.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinanceIncomeAndCostsExplanatory", "language": "en", "entity": "scheme:743700KOUL1GQQQREP40", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page26-body-tag6367889": { "value": "Borrowing costs
Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset forming part of the cost of that asset, are capitalised if it is likely that they will provide future economic benefit and can be measured in a reliable manner. Other borrowing costs are recognised as an expense in the period in which they are incurred.\u00a0
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBorrowingCostsExplanatory", "language": "en", "entity": "scheme:743700KOUL1GQQQREP40", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page26-body-tag6367890": { "value": "Income taxes
Tax expenses in the statement of comprehensive income consist of the tax based on taxable income for the year and deferred taxes. Taxes based on taxable income for the year are calculated using the applicable tax rates. Taxes are adjusted with any taxes arising from previous years. Maltese companies' income taxes are recognised by applying the nominal income tax rate which is 35%. Six sevenths of this tax is credited to the shareholder. The Maltese companies forms a fiscal unit and consequently the effective tax rate is 5%. Taxes arising from items recognised directly in equity are presented as income tax relating to other comprehensive income.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIncomeTaxExplanatory", "language": "en", "entity": "scheme:743700KOUL1GQQQREP40", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page26-body-tag6367891": { "value": "Deferred taxes have been calculated for all temporary differences between the carrying amount and taxable amount. Deferred taxes have been calculated using the tax rates set at the end of the reporting period. Deferred tax assets arising from taxable losses carried forward have been recognised up to the amount for which there is likely to be taxable income in the future, and against which the temporary difference can be used.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDeferredIncomeTaxExplanatory", "language": "en", "entity": "scheme:743700KOUL1GQQQREP40", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page26-body-tag6367893": { "value": "Tangible assets
Tangible assets have been measured at historical cost less accumulated depreciation and impairment losses. The initial cost of an asset comprises its purchase price, costs directly attributable to bringing the asset into operation and the initial estimate of the rehabilitation and decommissioning obligation. Heavy production machinery often contains components with different useful lives, and therefore the component approach is applied. Material component replacements and repairs are capitalised. The repair and maintenance of lighter machinery and other intangible items are recognised as an expense when incurred.\u00a0
Interest expenses are capitalised as part of the tangible asset's value if and when the Group acquires or constructs assets that satisfy the required terms and conditions.\u00a0
Assets are depreciated over their useful lives using the straight-line method, except for the mineral resources and ore reserves which are depreciated based on estimated or reported consumption. Land areas are not depreciated. The estimated useful lives of assets are as follows:
Buildings \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a015-50 years
Machinery and equipment \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a03-15 years
Other tangible assets \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a05-10 years
Mines and mineral assets \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Units-of-production method
The residual value of assets and their useful life are reviewed in connection with each financial statement and, if necessary, they will be adjusted to reflect the changes that have occurred in the expected financial benefit. The sales gains or losses arising from the decommissioning or divestment of tangible assets are included in other operating income or expenses.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForPropertyPlantAndEquipmentExplanatory", "language": "en", "entity": "scheme:743700KOUL1GQQQREP40", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page26-body-tag6368197": { "value": "Mines and mineral assets
Measurement of mineral resources and ore reserves in business combinations
Mineral resources and ore reserves acquired in business combinations are recognised as separate assets. In the recognition and measurement of mineral resources and ore reserves the Group utilises available third party reports of the quantities, mineral content, estimated production costs and exploitation potential of the resource. The probability of the ore reserve is also an essential factor. In the mining and minerals business, the probability is commonly described by classifying a mineral resource into categories such as 'proven', 'probable', 'inferred' and 'hypothetical'. There are also generally accepted standards for the classification of mineral resources in the business, such as the standards of the South African Code for the Reporting of Exploration Results, Mineral Resources and Mineral Reserves ('SAMREC'). The measurement of ore reserves is based on estimated market prices, estimated production costs and quantities. In the Group's statement of financial position, mineral resources and ore reserves are presented as tangible assets. Rehabilitation liabilities related to mines are included in their cost of acquisition, and corresponding provision is recognised on the statement of financial position.\u00a0
Exploration and evaluation expenses of mineral resources
Exploration and evaluation expenditure relates to costs incurred on the exploration and evaluation of potential mineral reserves and resources when new potential ore reserves are sought, for example by exploratory drilling. Exploration and evaluation expenditure is carried forward as an asset if the Group expects such costs to be recouped in full through the successful development of the area of interest; or alternatively by its sale; or if exploration and evaluation activities in the area of interest have not yet reached a stage which permits the reasonable assessment of the existence of economically recoverable reserves and active and significant operations in relation to the area are either continuing or planned for the future. Exploration and evaluation expenditure includes material and other direct costs incurred, for instance, by exploratory drilling and surveys. Overheads are included in the exploration and evaluation asset to the degree to which they can be associated with finding and evaluating a specific mineral resource. Exploration and evaluation assets are measured at cost and are transferred to mine development assets when utilisation of the mine begins. The asset is then depreciated using the units-of-production method. Assets are written off when it is determined that the costs will not lead to economic benefits or expensed when incurred if the outcome is uncertain.\u00a0
Exploration and evaluation assets are assessed for impairment if and when facts and circumstances suggest that the carrying amount exceeds its recoverable amount. In particular, the impairment tests are carried out if the period for which the Group has right to explore the specific area expires or will expire in the near future and future exploration and evaluation activities are not planned for the area.
Exploration and evaluation assets acquired in conjunction with business combinations are accounted for at fair value in accordance with the principles of IFRS 3.
Mine establishment costs
Mine establishment costs are capitalised as part of the mine's acquisition cost and depreciated using the units-of-production method when the production of the mine begins. The costs arising from changes in mining plan after the production has begun are expensed as incurred.
Impairment
The value of mineral resources and ore reserves acquired in business combinations is tested for impairment if there are indications of deterioration in the long-term ability to utilise the asset economically. In the test the cash flows generated by the asset are assessed based on most recent information on the technical and economic utilisation of the asset.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForMiningAssetsExplanatory", "language": "en", "entity": "scheme:743700KOUL1GQQQREP40", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page27-body-tag6368200": { "value": "Goodwill and intangible assets identified at acquisition
Goodwill represents the portion of acquisition cost that exceeds the Group's share of the fair value at the time of acquisition of the net assets of the acquired company. Instead of regular amortisation, goodwill is tested annually for potential impairment. For this purpose, goodwill has been allocated to cash-generating units or, in the case of an associated company, is included in the acquisition cost of the associate in question. Goodwill is measured at original acquisition cost less impairment losses. Changes in purchase considerations, for example due to earn-out arrangements, relating to acquisitions carried out before 2010 have been recognised against goodwill in accordance with the earlier IFRS 3. \u00a0
The net assets of an entity acquired in a business combination are measured at fair value at the date of acquisition. In connection with business combinations, the Group also identifies intangible assets that are not necessarily recorded on the statement of financial position of the acquired entity. These assets include, for instance, customer relationships, trademarks and technology. The assets are recognised at fair value and amortised over their useful lives on a straight-line basis. The amortisation periods for these intangible assets are as follows:
Customer relationships: 2-5 years depending on contractual circumstances
Technology: 5-15 years
Trademarks: 1 year
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsAndGoodwillExplanatory", "language": "en", "entity": "scheme:743700KOUL1GQQQREP40", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page27-body-tag6368199": { "value": "Research and development costs
Research costs are always recognised as expenses. Mine development costs are capitalised as part of mining assets and depreciated on a unit of production basis. The development costs, which primarily relate to the development of existing products, are expensed as incurred.\u00a0
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForResearchAndDevelopmentExpenseExplanatory", "language": "en", "entity": "scheme:743700KOUL1GQQQREP40", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page27-body-tag6368201": { "value": "Other intangible assetsOther intangible assets are initially recognised on the statement of financial position at cost when the costs can be reliably determined and it is probable that the expected financial benefits of those assets will be reaped by the Group. Other intangible assets mainly relate to IT software utilised in support of the Group's business operations and they are amortised over 3-5 years on a straight-line basis.", "dimensions": { "concept": "ifrs-full:AmortisationMethodIntangibleAssetsOtherThanGoodwill", "language": "en", "entity": "scheme:743700KOUL1GQQQREP40", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page27-body-tag6368202": { "value": "Inventories
Inventories are measured at acquisition cost or a lower probable net realisable value. Acquisition costs are determined using the average cost method. The cost of finished goods and work in progress comprises raw materials, direct labour expenses, other direct expenses, and an appropriate share of fixed and variable production overheads based on the normal capacity of the production facilities. In open pit mining operations, the removal costs of overburden and waste material (stripping costs) are included in the cost of inventory. The net realisable value is the estimated selling price that is obtainable, less the estimated costs incurred in completing the product and the selling expenses.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForMeasuringInventories", "language": "en", "entity": "scheme:743700KOUL1GQQQREP40", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page27-body-tag6368204": { "value": "Financial assets
Initial recognition and measurement
Financial assets are classified, at initial recognition, and subsequently measured at amortised cost, fair value through other comprehensive income (OCI), and fair value through profit or loss in accordance with IFRS 9: Financial Instruments.
The classification of financial assets at initial recognition depends on the financial asset's contractual cash flow characteristics and the Group's business model for managing them. With the exception of trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient, the Group initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. See note 13, in section 1.8. Notes to the Statement Of Financial Position, for tabular presentation of financial instruments.
Trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient are measured at the transaction price determined under\u00a0IFRS \u00a015: Revenue from Contracts with Customers.
In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to cash flows that are 'solely payments of principal and interest (SPPI)' on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level.
The Group's business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both.
Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the Group commits to purchase or sell the asset.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in four categories: 1.Financial assets at amortised cost (debt instruments);
2. Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt instruments);
3. Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon derecognition (equity instruments); and
4. Financial assets at fair value through profit or loss.
There have been no transfers of financial assets between fair value categories during the financial period. Afarak has not changed its recognition or fair valuation methods during the financial period.
Financial assets at amortised cost (debt instruments)
This category financial assets are measured at amortised cost if both of the following conditions are met:
The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows; and
The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
For debt instruments at fair value through OCI, interest income, foreign exchange revaluation and impairment losses or reversals are recognised in the statement of profit or loss and computed in the same manner as for financial assets measured at amortised cost.
The remaining fair value changes are recognised in OCI. Upon derecognition, the cumulative fair value change recognised in OCI is recycled to profit or loss.
The Group held loans receivable and trade receivables which were classified as being financial assets at amortised cost.
2.\u00a0Financial assets at fair value through OCI (debt instruments)
This category of debt instruments is measured at fair value through OCI if both of the following conditions are met:
The financial asset is held within a business model with the objective of both holding to collect contractual cash flows and selling; and
The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
For debt instruments at fair value through OCI, interest income, foreign exchange revaluation \u00a0and impairment losses or reversals are recognised in the statement of profit or loss and computed in the same manner as for financial assets measured at amortised cost. The remaining fair value changes are recognised in OCI.
Upon derecognition, the cumulative fair value change recognised in OCI is recycled to profit or loss.
The Group did not hold any debt instruments classified as being financial assets at fair value through OCI.
3.\u00a0Financial assets designated at fair value through OCI (equity instruments)
Upon initial recognition, the Group can elect to classify irrevocably its equity investments as equity instruments designated at fair value through OCI when they meet the definition of equity under IAS 32 Financial Instruments: Presentation and are not held for trading. The classification \u00a0is determined on an instrument-by-instrument basis.
Gains and losses on these financial assets are never recycled to profit or loss. Dividends are recognised as other income in the statement of profit or loss when the right of payment has been established, except when the Group benefits from such proceeds as a recovery of part of the cost of the financial asset, in which case, such gains are recorded in OCI. Equity instruments designated at fair value through OCI are not subject to impairment assessment.
The Group elected to classify irrevocably its non-listed equity investments under this category.
4.\u00a0Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include financial assets held for trading, financial assets designated upon initial recognition at fair value through profit or loss, or financial assets mandatorily required to be measured at fair value. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term.
Derivatives, including separated embedded derivatives, are also classified as held for trading unless they are designated as effective hedging instruments. Financial assets with cash flows that are not solely payments of principal and interest are classified and measured at fair value through profit or loss, irrespective of the business model. Notwithstanding the criteria for debt instruments to be classified at amortised cost or at fair value through OCI, as described above, debt instruments may be designated at fair value through profit or loss on initial recognition if doing so eliminates, or significantly reduces, an accounting mismatch.
Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value with net changes in fair value recognised in the statement of profit or loss.
The Group did not hold any debt instruments classified as being financial assets at fair value through profit or loss.
Derecognition
A financial asset is primarily derecognised when:
The rights to receive cash flows from the asset have expired; or
The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a 'pass-through' arrangement; and either (a) the Group has transferred substantially all the \u00a0risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Group has transferred its rights to receive cash flows from an asset or has entered into a passthrough arrangement, it evaluates if, and to what extent, it has retained the risks and rewards of ownership.
When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Group continues to recognise the transferred asset to the extent of its continuing involvement. In that case, the Group also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects \u00a0the rights and obligations that the Group has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay.
Impairment of financial assets
Further disclosures relating to impairment of financial assets are also provided in the following notes:
Disclosures for significant assumptions
Debt instruments at fair value through OCI
Trade receivables, including contract assets
The Group recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.
ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).
For trade receivables and should the Group have any contract assets, the Group applies a simplified approach in calculating ECLs. Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Group has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.
For debt instruments at fair value through OCI, the Group applies the low credit risk simplification. At every reporting date, the Group evaluates whether the debt instrument is considered to have low credit risk using all reasonable and supportable information that is available without undue cost or effort. In making that evaluation, the Group reassesses the internal credit rating of the debt instrument. In addition, the Group considers that there has been a significant increase in credit risk when contractual payments are more than 30 days past due.
The Group considers a financial asset in default when contractual payments are 120 days past due. However, in certain cases, the Group may also consider a financial asset to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialAssetsExplanatory", "language": "en", "entity": "scheme:743700KOUL1GQQQREP40", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page29-body-tag6368205": { "value": "Derivative financial instruments and hedge accounting
When necessary, the Group utilises derivative financial instruments, such as forward currency contracts and interest rate swaps, to hedge its foreign currency risks and interest rate risks. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. Any gains or losses arising from changes in fair value on derivatives are recognised on the income statement. The Group did not have currency hedged at year end.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsAndHedgingExplanatory", "language": "en", "entity": "scheme:743700KOUL1GQQQREP40", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page29-body-tag6368206": { "value": "Treasury shares
Own equity instruments, which are reacquired (treasury shares), are recognised at cost and deducted from the paid-up unrestricted equity reserve. No gain or loss is recognised on the purchase, sale, issue or cancellation of the Group's own equity instruments.\u00a0
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTreasurySharesExplanatory", "language": "en", "entity": "scheme:743700KOUL1GQQQREP40", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page29-body-tag6368207": { "value": "Financial liabilities
Liabilities are classified as current and non-current, and include both interest-bearing and interest-free liabilities. Interest-bearing liabilities are liabilities that either include a contractual interest component, or are discounted to reflect the fair value of the liability. In the earlier financial years discounted non-current liabilities have included acquisition-related deferred conditional and unconditional liabilities. Certain conditional liabilities have included an earn-out component that needed to be met to make the liability unconditional and fix the amount of the future payment. Acquisition-related conditional purchase considerations that were payable in the Company's shares were presented as interest-free liabilities.\u00a0
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
The company's financial liabilities include trade and other payables and loans and borrowings including bank overdrafts.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.
Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term.
Gains or losses on liabilities held for trading are recognised in the statement of profit or loss. Financial liabilities designated upon initial recognition at fair value through profit or loss are designated at the initial date of recognition, and only if the criteria in IFRS 9 are satisfied. The company has not designated any financial liability as at fair value through profit or loss.
Loans and borrowings
This is the category most relevant to the company. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses \u00a0are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit or loss.
This category generally applies to interest-bearing loans and borrowings. For more information, refer \u00a0to note 13, in 1.8 Notes to the Consolidated Statement of Financial Position.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the consolidated statement of financial position if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialLiabilitiesExplanatory", "language": "en", "entity": "scheme:743700KOUL1GQQQREP40", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page29-body-tag6368208": { "value": "Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive), as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
The provision for rehabilitation and decommissioning costs has arisen on operating mines and minerals' processing facilities. These costs are provided at the present value of expected costs to settle the obligation using estimated cash flows. The cash flows are discounted at a current pre-tax rate that reflects the risks specific to the rehabilitation and decommissioning liability. The estimated future costs of decommissioning are reviewed annually and adjusted as appropriate. Changes in the estimated future costs of or in the discount rate applied to the rehabilitation obligation are added or deducted from the profit or loss or, respectively, decommissioning obligation adjusted to the carrying value of the asset dismantled.\u00a0
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForProvisionsExplanatory", "language": "en", "entity": "scheme:743700KOUL1GQQQREP40", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page29-body-tag6368209": { "value": "Non-current assets held for sale and discontinued operations
The standard IFRS 5 requires that an entity must classify a non-current asset or a disposal group as assets held for sale if the amount equivalent to its carrying amount is accumulated primarily from the sale of the item rather than from its continued use. In this case, the asset or disposal group must be available for immediate sale in its present condition under general and standard terms for the sale of such assets, and the sale must be highly probable.
Discontinued operation is a component of the entity with operations and cash flows that can be clearly distinguished operationally and for financial reporting purposes, from the rest of the entity, that is either held for sale or already disposed of; and
represents a major line of business or geographical area of operations,
is part of a single-coordinated plan to dispose of a separate major line of business or geographical area of operations, or
is a subsidiary acquired exclusively with a view to resale and the disposal involves loss of control.
In accordance with IFRS 3, the acquisition cost of an acquired company is allocated to the assets of the acquired company. The management has to use estimates when determining the fair value of identifiable assets and liabilities. Determining a value for intangible assets, such as trademarks and customer relationships, requires estimation and discretion because in most cases, no market value can be assigned to these assets. Determining fair value for tangible assets requires particular judgment as well, since there are seldom active markets for them where the fair value could be obtained. In these cases, the management has to select an appropriate method for determining the value and must estimate future cash flows.
", "dimensions": { "concept": "ifrs-full:DisclosureOfBusinessCombinationsExplanatory", "language": "en", "entity": "scheme:743700KOUL1GQQQREP40", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page29-body-tag6367900": { "value": "Impairment testing
Goodwill is tested annually for impairment, and assessments of whether there are indications of any other asset impairment are made at end of reporting period, and more often if needed. The recoverable amounts of cash-generating units have been determined by means of calculations based on value in use. Preparation of these calculations requires the use of estimates to predict future developments.\u00a0
The forecasts used in the testing are based on the budgets and projections of the operative units, which strive to identify any expansion investments and rearrangements. To prepare the estimates, efforts have been made to collect background information from the operative business area management as well as from different sources describing general market activity. The risk associated with the estimates is taken into account in the discount rate used. The definition of components of discount rates applied in impairment testing requires discretion, such as estimating the asset or business related risk premiums and average capital structure for each business segment.\u00a0
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForGoodwillExplanatory", "language": "en", "entity": "scheme:743700KOUL1GQQQREP40", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page29-body-tag6367901": { "value": "Tangible and intangible assetsAfarak Group management is required to use its discretion when determining the useful lives of various tangible and intangible assets, which affects the amount of depreciation and thereby the carrying amount of the assets concerned. The capitalising of mine development assets and exploration and evaluation expenditure, in particular, requires the use of discretion. Similarly, management is required to use its discretion in determining the useful lives of intangible assets identified in accordance with IFRS 3, and in determining the amortisation period. This affects the financial result for the period through depreciation and change in deferred taxes.Measurement of mineral resources and ore reservesIn the Group's mining operations, estimates have to be applied in recognising mineral resources acquired in business combinations as assets. In the recognition and measurement of mineral resources and ore reserves, the Group utilises available third party analyses of the quantities, mineral content, estimated production costs and exploitation potential of the resource. The probability of the ore reserve is also a key consideration. In the mining and minerals business, the probability is commonly described by classifying a mineral resource into categories such as 'proven', 'probable', 'inferred' and 'hypothetical'. The measurement of ore reserves is based on estimated market prices, estimated production costs and on the probability classification of the mineral resource and quantities. Therefore, the Group's management has to use its discretion in applying recognition and measurement principles for mineral resources.\u00a0", "dimensions": { "concept": "ifrs-full:DescriptionOfUsefulLifePropertyPlantAndEquipment", "language": "en", "entity": "scheme:743700KOUL1GQQQREP40", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page30-body-tag6367902": { "value": "Rehabilitation provisions
The Group assesses the rehabilitation liabilities associated with its mines and production facilities annually. The amount of provision reflects the management's best estimate of the rehabilitation costs. In determining the fair value of the provision, assumptions and estimates are made in relation to discount rates, the expected cost to rehabilitate the area and remove or cover the contaminated soil from the site, the expected timing of those costs, and whether the obligations stem from past activity. These uncertainties may cause the actual costs to differ from the provision which has been made.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDecommissioningRestorationAndRehabilitationProvisionsExplanatory", "language": "en", "entity": "scheme:743700KOUL1GQQQREP40", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page30-body-tag6367903": { "value": "Standards and interpretations effective and adopted in the current year.
The Group applied, for the first time, certain amendments to the standards, which are effective for annual periods beginning on or after 1 January 2023. The Group has not early adopted any standards, interpretations or amendments that have been issued but are not yet effective.
Several other amendments apply for the first time in 2023. However, they do not impact the annual consolidated financial statements of the Group or the interim condensed consolidated financial statements of the Group and, hence, have not been disclosed.
The nature and the effect of these changes are disclosed below. Although the new standards and amendments applied for the first time in 2023, they did not have a material impact on the annual consolidated financial statements of the Group. Other than the changes described below, the accounting policies adopted are consistent with those of the previous financial year.
In 2023, the Group has adopted the following amended standards issued by the IASB.\u00a0
-Amendments to IAS 1 Presentation of financial statements, IFRS Practice Statement 2 and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors - Disclosure of Accounting Policies and Definition of Accounting Estimates: The amendments distinguish changes in accounting estimates from changes in accounting policies and aim to improve accounting policy disclosures.
\u00a0-Amendments to IAS 12 Income taxes - Deferred Tax related to Assets and Liabilities arising from single transaction: The amendment clarifies the application of the recognition exemption of deferred taxes on a single transaction.\u00a0
- Amendments to IAS 12 - International Tax Reform, Pillar Two Model Rules: The amendments to IAS 12 have been introduced in response to the OECD's BEPS Pillar Two rules and include: A mandatory temporary exception to the recognition and disclosure of deferred taxes arising from the jurisdictional implementation of the Pillar Two model rules; and disclosure requirements for affected entities to help users of the financial statements better understand an entity's exposure to Pillar Two income taxes arising from that legislation, particularly before its effective date.
The above changes did not have an impact on the 2023 consolidated financial statements.
", "dimensions": { "concept": "ifrs-full:DescriptionOfExpectedImpactOfInitialApplicationOfNewStandardsOrInterpretations", "language": "en", "entity": "scheme:743700KOUL1GQQQREP40", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page30-body-tag6367904": { "value": "Standards and interpretations not yet effectiveThe standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Group's financial statements that the Group reasonably expects will have an impact on its disclosures, financial position or performance when applied at a future date, are disclosed below. The Group intends to adopt these standards when they become effective. Of the other standards and interpretations that are issued, but not yet effective, as these are not expected to impact the Group, they have not been listed.IFRS Sustainability Disclosure Standards S1 and S2-IFRS S1: General Requirements for Disclosure of Sustainability-related Financial Information. Its objective requires an entity to disclose information about its sustainability-related risks and opportunities, that is useful to the primary users of general purpose financial reports in making decisions relating to providing resources to the entity.-IFRS S2: Climate-related Disclosures. This standard sets the requirements for identifying, measuring and disclosing information about climate-related risks and opportunities that is useful to primary users of general purpose financial reports in making decisions relating to providing resources to the entity.Other Standards-Amendments to IFRS 7: Financial Instruments- Disclosures regarding supplier finance arrangements and amendments to IAS 7: Statements of Cash Flows concerning supplier finance arrangements. Sufficient information has to be disclosed so that users of financial statements can firstly, assess how supplier finance arrangements affect an entity's liabilities and cashflows and secondly, to understand the effect of supplier finance arrangements on an entity's exposure to liquidity risk and how the entity might be affected if the arrangements were no longer available to it.-Amendments to IFRS 16: Lease Liability in a Sale and Leaseback. The amendment clarifies how a seller-lessee subsequently measures sale and leaseback transactions. The amendment clarifies how a seller-lessee subsequently measures sale and leaseback transactions that satisfy the requirements in IFRS 15 to be accounted for as a sale.-Amendments to IAS 1: Classification of Liabilities as Current or Non-current. The amendments to IAS 1 to specify the requirements for classifying liabilities as current or non-current.-Amendments to IAS 1: Presentation\u00a0of\u00a0Financial Statements regarding\u00a0the classification of\u00a0debts with covenants. The amendment clarifies how conditions with which an entity must comply within twelve months after the reporting period affect the classification of a liability.", "dimensions": { "concept": "ifrs-full:ExplanationOfNotAppliedNewStandardsOrInterpretations", "language": "en", "entity": "scheme:743700KOUL1GQQQREP40", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page31-body-tag6367905": { "value": "1.3 GOING CONCERN
The company is in sound condition and presents a healthy balance sheet.
", "dimensions": { "concept": "ifrs-full:DisclosureOfGoingConcernExplanatory", "language": "en", "entity": "scheme:743700KOUL1GQQQREP40", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page31-p_981-tag6367906": { "value": "Afarak did not carry out any acquisitions during the financial year 2023.\u00a0", "dimensions": { "concept": "ifrs-full:DescriptionOfNatureAndFinancialEffectOfBusinessCombinationsDuringPeriod", "language": "en", "entity": "scheme:743700KOUL1GQQQREP40", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page31-p_983-tag6367907": { "value": "Afarak did not carry out any acquisitions during the financial year 2022", "dimensions": { "concept": "ifrs-full:DescriptionOfNatureAndFinancialEffectOfBusinessCombinationsDuringPeriod", "language": "en", "entity": "scheme:743700KOUL1GQQQREP40", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "v1-page31-body-tag6368210": { "value": "1.5 IMPAIRMENT TESTING
General principles of impairment testing
Afarak Group has carried out impairment testing on goodwill and other assets as of 31 December 2023. The following cash generating units were defined for the impairment testing:
Speciality Alloys business (T\u00fcrk Maadin Sirketi and Elektrowerk Weisweiler) with a vertically integrated mining-beneficiation-smelting-sales operation in the specialty grade ferrochrome business;\u00a0
South African mining business (Mecklenburg, Valkpoort and Zeerust);
The Group assesses at the end of each reporting period whether there is any indication that assets may be impaired. If any such indication exists, the recoverable amount of these assets is estimated. Moreover, the recoverable amount of any goodwill and unfinished investment projects will be estimated annually, irrespective of whether there is an indication of impairment. The South African mining business did not have any goodwill at the end of the financial year 2023.
During 2023, there were no indication of impairment at both the Speciality Alloys business and the South African mining business.
The Vlakpoort mine and Zeerust mine were not tested for impairment as there were no indication of impairment.
Changes in goodwill during 2023
During the financial year 2023, the total goodwill of the Group decreased by EUR 1.7 million to a total of EUR 47 million. The increase was attributable to an exchange rate movement of EUR 1.7 million related to Goodwill.\u00a0
In 2014, the synergy goodwill identified in the Mogale acquisition, related to Afarak Trading acting as a global sales entity for the whole Group, was initially allocated to Speciality Alloys segment. Afarak Trading contribution is divided to both segments to reflect the nature of serving the whole Group. It is allocated to both segments based on their relative revenue, reflecting the volume of Afarak Trading related benefits enjoyed by the CGU.\u00a0The changes are described below:
EUR '000 | Speciality Alloys Business | FerroAlloys Business | Group Total |
Goodwill 1.1.2023 | 48,720 | 0 | 48,720 |
Exchange rate movement | -1,724 | 0 | -1,724 |
Goodwill 31.12.2023 | 46,996 | 0 | 46,996 |
The changes in goodwill during 2022 are presented below:
EUR '000 | Speciality Alloys Business | FerroAlloys Business | Group Total |
Goodwill 1.1.2022 | 46,029 | 0 | 46,029 |
Exchange rate movement | 2,691 | 0 | 2,691 |
Goodwill 31.12.2022 | 48,720 | 0 | 48,720 |
Goodwill as a ratio of the Group's equity on 31 December 2023 and 31 December 2022 was as follows:
EUR '000 | 31.12.2023 | 31.12.2022 |
Goodwill | 46,996 | 48,720 |
Equity | 105,741 | 104,787 |
Goodwill/Equity, % | 44.4% | 46.4% |
Impairment on long term assets
In 2023, there were no impairment write down on other long- term assets.
Methodology applied in impairment testing
For the cash generating units that were tested, the test was carried out by calculating their value in use. Value in use has been calculated by discounting estimated future net cash flows based on the conditions and assumptions prevailing at the time of the testing. Future cash flows for the Speciality Alloys minerals processing have been projected for a five-year period, after which a growth rate equaling projected long-term inflation has been applied (Speciality Alloys: 2%). For the terminal year after the five-year estimation period, the essential assumptions (e.g. revenue, variable costs and fixed costs) have been based at the estimation period's previous year's figures. Future cash flows for the South African mining business have been projected for the life of mine with a 6.9% growth rate equaling projected long-term inflation has been applied.
The weighted average cost of capital (WACC) has been calculated separately for each cash generating unit and assets being tested, taking into account each business's typical capital structures, investors' average required rate of return for similar investments and company size and operational location related factors, as well as risk-free interest rates and margins for debt financing. The Group has used publicly available information on the peer group companies' capital structure, risk premium and other factors. The market interest rates reflect the rates applicable on 31 December 2023.
The information used in the 31 December 2023 impairment testing is based on business units' management future forecasts, on general third-party industry expert or analyst reports where available, and to the extent possible on the current business and asset base excluding any non-committed expansion plans. Forecasted sales volumes and profitability are based on the management's view on future development while also taking past performance into account. Price forecasts are based on forecasted prices for all cash generating units. The cash flow models have been prepared at constant foreign exchange rates. The management's approach in preparing cash flow forecasts has not changed significantly from the previous impairment testing.
The underground production in the models of the South African mining business does not solely come from reserves, as some come from resources that are not yet converted to reserves. This increases the risk that some of the grades may differ, and tonnes could possibly not be economically extractable. There is also the risk that costs could be different than anticipated even though due care was taken in the cost evaluation.
These pre-tax discount rates applied in 2023 impairment testing were the following:\u00a0
Cash Generating Unit \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Pre-tax discount rate \u00a0\u00a0\u00a0\u00a0
2023 | 2022 | |
Speciality Alloys \u00a0\u00a0\u00a0\u00a0\u00a0 | 16.4% | 18.2% |
South African mine - Mecklenburg mine | 24.3% | 18.8% |
The key reasons for the changes in the discount rates compared to 2023 were the changes in risk-free interest rates in both cash-generating units.
The cash flows in the Mecklenburg mine impairment test review includes both opencast and underground operation. The Mecklenburg model has a life of mine of 10 years.
The results of impairment testing have been evaluated by comparing the cash generating units' recoverable amount to the corresponding carrying amount based on the following judgment rules:
Recoverable amount divided by the carrying amount: \u00a0\u00a0\u00a0\u00a0Conclusion:
< 100% \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Impairment
101-120% \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Slightly above
121-150% \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Clearly above
> 150% \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Significantly above
Test results 31 December 2023
The impairment test results were as follows:\u00a0
Cash generating unit | Goodwill (MEUR), pre-testing | Goodwill (MEUR), post-testing | Carrying amount\u00a0 (MEUR), pre-testing | Conclusion |
Speciality Alloys | 46.1 | 46.1 | 70.8 | Clearly above |
South African Mines | ||||
| 0.0 | 0.0 | 13.6 | Significantly above |
The testable asset base (carrying amount) includes goodwill, intangible and tangible assets and net working capital less provisions and deferred tax liabilities (in relation to purchase price allocation entries).
Key background and assumptions used in the cash flow forecasts of the impairment testing process are summarised in the following table:
\u00a0
Cash generating unit | Sales volume | Sales prices | Costs |
Speciality Alloys business | FeCr: 25,000 t/a; and is planned to increase gradually to 28,000 t/a to 2028 Cr Ore: 40,000 t/a t/a | LC/ULC ferrochrome with average Cr content of 70 %, based on forecasted prices | Raw material costs generally change in line with sales price; other costs growing at inflation rate |
South African mining business: Mecklenburg mine | ROM: Underground\u00a0mining of 20,000t in 2024; 177,000t om 2025; and is planned to increase to an average of 539,000t/a as from 2026 to 2033 | SA Concentrate & SA Lumpy prices are based on forecasted prices | The costs for underground are based on past experiences of our mining team in underground operations adjusted for inflation rate. The cost over the life of mine excluding inflation is estimated to be ZAR 747 per saleable ton of chrome. |
Moreover, the USD/ZAR foreign exchange rate affects significantly the testing of the South African mining business. The foreign exchange rate used in the test was 18.77 for the year 2023.
Sensitivity analysis of the impairment tests
The Group has analysed the sensitivity of the impairment test results by estimating how the essential assumptions should change in order for the recoverable amount to be equal to the carrying amount. The results of this sensitivity analysis as of 31 December 2022 are given below:
Cash generating unit | Change in pre-tax discount rate (compared to the level used in testing) | Change in free cash flow (annual average) | Change in CGU's average EBITDA margin\u00a0 |
Speciality Alloys | 2.9% - points | -19.1% | -1.5% - points |
South African mining business: | |||
| -58.4% - points | -82.7% | -51% - points |
1.6 OPERATING SEGMENTS
Afarak Group has two operating segments, FerroAlloys and Speciality Alloys, which are also the reporting segments. The operating segments are organised based on their products and production processes. The current reporting structure was adopted in 2011. The Group's executive management reviews the operating results of the segments for the purpose of making decisions on resource allocation and performance assessment. Segment performance is measured based on revenue as well as earnings before interest, taxes, depreciation and amortisation (EBITDA) as included in the internal management reports and defined consistently with the consolidated EBITDA.\u00a0
The FerroAlloys business consists of the Vlakpoort mine, Zeerust mine and Mecklenburg mine in South Africa. The business produces chrome ore for sale to global markets.
The Speciality Alloys business consists of T\u00fcrk Maadin \u015eirketi 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.
The revenue and costs of the Group's sales and marketing arm Afarak Trading Ltd (\"ATL\") is allocated to the segments in proportion to their sales. Afarak's other operations, including the Group's headquarters and other Group companies that do not have significant operations, are presented as unallocated items.
Intercompany transactions are carried out on an arm's length basis. The transactions between the segments have been limited but the parent company has provided funding and administrative services to the Group's subsidiaries.
The accounting policies applied in the operating segment information are the same as those in the consolidated financial statements.\u00a0
Operating segment information 2023
Year ended 31.12.2023 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0EUR '000 | \u00a0 | Speciality Alloys | \u00a0 | Ferro Alloys | \u00a0 | Segments total | \u00a0 | Unallocated items | \u00a0 | Eliminations | \u00a0 | Consolidated Group | ||||||||||
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | |||||||||
External revenue | \u00a0 | \u00a0 | ||||||||||||||||||||
Rendering of services | \u00a0 | 1,371 | 1,371 | 42 | 1,413 | |||||||||||||||||
Sale of goods | \u00a0 | 140,308 | 11,795 | 152,103 | 139 | 152,242 | ||||||||||||||||
Total external revenue | \u00a0 | 140,308 | 13,166 | 153,474 | 181 | 153,655 | ||||||||||||||||
Inter-segment revenue | \u00a0 | 2,467 | -2,467 | \u00b9 | - | |||||||||||||||||
Total revenue | \u00a0 | 140,308 | 13,166 | 153,474 | 2,648 | -2,467 | 153,655 | |||||||||||||||
\u00a0 | \u00a0 | \u00a0 | ||||||||||||||||||||
Segment EBITDA | \u00a0 | 17,464 | 3,018 | 20,482 | -3,888 | - | 16,594 | |||||||||||||||
\u00a0 | \u00a0 | |||||||||||||||||||||
Depreciation and amortisation | \u00a0 | -1,213 | -308 | -1,521 | -41 | - | -1,562 | |||||||||||||||
Impairment | ||||||||||||||||||||||
\u00a0 | \u00a0 | \u00a0 | ||||||||||||||||||||
Segment operating profit / (loss) | \u00a0 | 16,251 | 2,710 | 18,961 | -3,929 | - | 15,032 | |||||||||||||||
\u00a0 | \u00a0 | \u00a0 | ||||||||||||||||||||
Finance income | \u00a0 | 5,267 | ||||||||||||||||||||
Finance cost | \u00a0 | -8,334 | ||||||||||||||||||||
Income taxes | \u00a0 | -1,966 | ||||||||||||||||||||
\u00a0 | \u00a0 | \u00a0 | ||||||||||||||||||||
Profit for the period from continuing operations | \u00a0 | 9,999 | ||||||||||||||||||||
(Loss)/profit for the period from discontinued operations | 0 | |||||||||||||||||||||
Profit for the period | 9,999 | |||||||||||||||||||||
Segment's assets\u00a02 | \u00a0 | 166,573 | 47,650 | 214,223 | 7,714 | -59,595 | 162,342 | |||||||||||||||
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | ||||||||||
Segment's liabilities\u00a02 | \u00a0 | 49,635 | 42,407 | 92,042 | 40,798 | -76,239 | 56,601 | |||||||||||||||
\u00a0 | \u00a0 | \u00a0 | ||||||||||||||||||||
Other disclosures | \u00a0 | |||||||||||||||||||||
Capital expenditure\u00a03 | \u00a0 | 0 | 2,968 | 2,968 | 0 | 0 | 2,968 | |||||||||||||||
Provisions\u00a04 | \u00a0 | 1,516 | 9,980 | 11,496 | 0 | 0 | 11,496 | |||||||||||||||
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | ||||||||||
1. | Inter-segment items are eliminated on consolidation. | |||||||||||||||||||||
2. | The assets and liabilities of the segments represent items that these segments use in their activities or that can be reasonably allocated to them. | |||||||||||||||||||||
3. | Investments consist of increases in tangible and intangible assets whose life is longer than one financial year. | |||||||||||||||||||||
4. | Balance sheet values. | |||||||||||||||||||||
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Revenues from external customers | |||
EUR '000 | 2023 | \u00a0 | 2022 |
Other EU countries | \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a060,562 | 82,008 | |
United States | 64,876 | 78,068 | |
China | 4,867 | 1,666 | |
Africa | 8,068 | 3,647 | |
Finland | 0 | 0 | |
Other countries | 15,282 | 33,302 | |
Total revenue | 153,655 | 198,691 |
Revenue figures are based on the location of the customers.
The largest customer of the Group is in the Speciality Alloys business segment and represents approximately 7.27% (12.4%) of the Group's revenue in 2023.\u00a0
Non-current assets | |||
EUR '000 | 2023 | \u00a0 | 2022 |
Africa | 29,154 | 32,767 | |
Other EU countries | 9,969 | 8,502 | |
Other countries | 3,017 | 2,946 | |
Total | 42,140 | 44,214 |
In presenting geographical information, assets are based on the location of the assets. Non-current assets consist of property, plant and equipment, intangible assets and exclude Goodwill.\u00a0
", "dimensions": { "concept": "ifrs-full:DisclosureOfEntitysReportableSegmentsExplanatory", "language": "en", "entity": "scheme:743700KOUL1GQQQREP40", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page34-body-tag6367910": { "value": "Operating segment information 2022
Year ended 31.12.2022 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0EUR '000 | \u00a0 | Speciality Alloys | \u00a0 | Ferro Alloys | \u00a0 | Segments total | \u00a0 | Unallocated items | \u00a0 | Eliminations | \u00a0 | Consolidated Group | ||||||||||
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | |||||||||
External revenue | \u00a0 | \u00a0 | ||||||||||||||||||||
Rendering of services | \u00a0 | 0 | \u00a0 | 563 | \u00a0 | 563 | \u00a0 | 26 | \u00a0 | 0 | \u00a0 | 589 | ||||||||||
Sale of goods | \u00a0 | 191,736 | \u00a0 | 4,696 | \u00a0 | 196,432 | \u00a0 | 1,669 | \u00a0 | 0 | \u00a0 | 198,101 | ||||||||||
Total external revenue | \u00a0 | 191,736 | \u00a0 | 5,259 | \u00a0 | 196,995 | \u00a0 | 1,696 | \u00a0 | 0 | \u00a0 | 198,691 | ||||||||||
Inter-segment revenue | \u00a0 | 391 | \u00a0 | 0 | \u00a0 | 391 | \u00a0 | 2,333 | \u00a0 | -2,724 | \u00b9 | 0 | ||||||||||
Total revenue | \u00a0 | 192,127 | \u00a0 | 5,259 | \u00a0 | 197,386 | \u00a0 | 4,029 | \u00a0 | -2,724 | \u00a0 | 198,691 | ||||||||||
\u00a0 | \u00a0 | \u00a0 | ||||||||||||||||||||
Segment EBITDA | \u00a0 | 56,228 | 490 | 56,718 | -2,972 | 0 | 53,747 | |||||||||||||||
\u00a0 | \u00a0 | |||||||||||||||||||||
Depreciation and amortisation | \u00a0 | -847 | \u00a0 | -261 | \u00a0 | -1,108 | \u00a0 | -189 | \u00a0 | 0 | \u00a0 | -1,297 | ||||||||||
Impairment | 0 | \u00a0 | 0 | \u00a0 | 0 | \u00a0 | -157 | \u00a0 | 0 | \u00a0 | -157 | |||||||||||
\u00a0 | \u00a0 | \u00a0 | ||||||||||||||||||||
Segment operating profit / (loss) | \u00a0 | 55,381 | \u00a0 | 229 | \u00a0 | 55,611 | \u00a0 | -3,318 | \u00a0 | 0 | \u00a0 | 52,293 | ||||||||||
\u00a0 | \u00a0 | \u00a0 | ||||||||||||||||||||
Finance income | \u00a0 | 4,279 | ||||||||||||||||||||
Finance cost | \u00a0 | -7,386 | ||||||||||||||||||||
Income taxes | \u00a0 | -4,475 | ||||||||||||||||||||
\u00a0 | \u00a0 | \u00a0 | \u00a0 | |||||||||||||||||||
(Loss)/profit for the period from continuing operations | \u00a0 | 44,712 | ||||||||||||||||||||
\u00a0 | ||||||||||||||||||||||
(Loss)/profit for the period from discontinued operations | 2,885 | |||||||||||||||||||||
\u00a0 | ||||||||||||||||||||||
(Loss)/profit for the period | 47,597 | |||||||||||||||||||||
Segment's assets\u00a02 | \u00a0 | 160,747 | \u00a0 | 49,331 | \u00a0 | 210,078 | \u00a0 | 7,639 | \u00a0 | -57,959 | \u00a0 | 159,758 | ||||||||||
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | ||||||||||
Segment's liabilities\u00a02 | \u00a0 | 48,184 | \u00a0 | 42,461 | \u00a0 | 90,645 | \u00a0 | 39,036 | \u00a0 | -74,710 | \u00a0 | 54,971 | ||||||||||
\u00a0 | \u00a0 | \u00a0 | ||||||||||||||||||||
Other disclosures | \u00a0 | |||||||||||||||||||||
Capital expenditure\u00a03 | \u00a0 | 1,566 | \u00a0 | 85 | \u00a0 | 1,651 | \u00a0 | 473 | \u00a0 | 0 | \u00a0 | 2,123 | ||||||||||
Provisions\u00a04 | \u00a0 | 1,837 | \u00a0 | 10,643 | \u00a0 | 12,480 | \u00a0 | 0 | \u00a0 | 0 | \u00a0 | 12,480 | ||||||||||
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | ||||||||||
1. | Inter-segment items are eliminated on consolidation. | |||||||||||||||||||||
2. | The assets and liabilities of the segments represent items that these segments use in their activities or that can be reasonably allocated to them. | |||||||||||||||||||||
3. | Investments consist of increases in tangible and intangible assets whose life is longer than one financial year. | |||||||||||||||||||||
4. | Balance sheet values. | |||||||||||||||||||||
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
1. Revenue
EUR '000 | 2023 | 2022 | |
Sale of goods | \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0152,242 \u00a0\u00a0 | 198,101 | |
Rendering of services | \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a01,413 \u00a0\u00a0 | 589 | |
Total | \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0153,655 \u00a0\u00a0 | 198,691 |
2. Other operating income
EUR '000 | 2023 | 2022 | |
Gain/(loss) on disposal of tangible and intangible assets | 104 | -8 | |
Rental income | 229 | 184 | |
Other | 5,389 | 2,465 | |
Total | 5,722 | 2,641 |
3. Employee benefits
\u00a0 | \u00a0 | \u00a0 | |
EUR '000 | 2023 | 2022 | |
Salaries and wages | -19,152 | -16,024 | |
Share-based payments | -242 | -67 | |
Pensions costs | -821 | -518 | |
Other employee related costs | -2,057 | -1,808 | |
Total | -22,272 | -18,416 |
Average personnel during the accounting period | 2023 | 2022 | |
\u00a0 | \u00a0 | \u00a0 | |
Speciality Alloys business | 475 | 471 | |
FerroAlloys business | 107 | 57 | |
Group Management\u00a0 | 2 | \u00a0 | 2 |
Other operations * | 15 | 15 | |
Total | 599 | \u00a0 | 545 |
Personnel at the end of the accounting period | 2023 | 2022 | |
\u00a0 | \u00a0 | \u00a0 | |
Speciality Alloys business | 468 | \u00a0 | 488 |
FerroAlloys business | 111 | \u00a0 | 94 |
Group Management\u00a0 | 3 | \u00a0 | 2 |
Other operations * | 14 | 16 | |
Total | 596 | \u00a0 | 600 |
* Other operations mainly relate to Magnohrom, in Serbia
", "dimensions": { "concept": "ifrs-full:DisclosureOfEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:743700KOUL1GQQQREP40", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page36-body-tag6367914": { "value": "4. Depreciation, amortisation and impairment
EUR '000 | 2023 | 2022 | |
Depreciation / amortisation by asset category | |||
Intangible assets | |||
Other intangible assets | -102 | -90 | |
Total | -102 | -90 | |
Property, plant and equipment | |||
Buildings and constructions | -106 | -215 | |
Machinery and equipment | -970 | -673 | |
Other tangible assets | -384 | -319 | |
Right-of-use assets | |||
Total | -1,460 | -1,207 | |
Impairment by asset category | |||
Machinery and equipment | 0 | -157 | |
Total | 0 | -157 | |
5. Other operating expenses
EUR '000 | 2023 | 2022 | |
Rental costs | -217 | -207 | |
External services1 | -3,792 | -3,247 | |
Travel expenses | -614 | -427 | |
Other operating expenses | -5,676 | -4,439 | |
Total | -10,299 | \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0- 8,319 |
1. Audit fees paid to Tietotili totalled EUR 457 (2022: EUR 536) thousand in the financial year. The fees for non-audit services totalled EUR 29 (2022: EUR 87) thousand.
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingExpenseExplanatory", "language": "en", "entity": "scheme:743700KOUL1GQQQREP40", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page36-body-tag6367911": { "value": "6. Financial income and expense
EUR '000 | 2023 | \u00a0 | 2022 |
Finance income | |||
Interest income on loans and trade receivables | 588\u00a0 | 146 | |
Foreign exchange gains | 4,617\u00a0 | 3,961 | |
Other finance income | 62\u00a0 | 172 | |
Total | 5,267\u00a0 | 4,279 | |
Finance expense | |||
Interest expense on financial liabilities measured at amortised cost | -175 | -749 | |
Impairment losses on receivables\u00a0 | 25\u00a0 | -40 | |
Foreign exchange losses | -4,484 | -3,674 | |
Unwinding of discount, provisions | -668 | -1,312 | |
Other finance expenses | -3,033 | -1,610 | |
Total | -8,335 | 7,385 | |
Net finance expense | -3,068 | -3,106 |
The interest expense on financial liabilities measured at amortised cost in 2022, include an accrual for interest on prepayment received in relation to the off-take agreement.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceIncomeExpenseExplanatory", "language": "en", "entity": "scheme:743700KOUL1GQQQREP40", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page36-body-tag6367912": { "value": "7. Income taxes
EUR '000 | 2023 | \u00a0 | 2022 |
Income tax for the period | -2,174 | -3,407 | |
Income tax for previous years | -40 | 1 | |
Deferred taxes | 248 | -1,068 | |
Total | -1,966 | -4,475 |
EUR '000 | 2023 | \u00a0 | 2022 |
Profit before taxes | 11,965 | 52,072 | |
Income tax calculated at parent company income tax rate | -2,393 | -10,414 | |
Difference between domestic and foreign tax rates | -4,400 | -14,308 | |
Tax credit | 5,006 | 15,730 | |
Items recognised only for taxation purposes | 202 | 543 | |
Income tax for previous years | -40 | 1 | |
Impairment losses | 0 | -31 | |
Deferred tax asset write-offs | 0 | ||
Tax losses not recognised as deferred tax assets | -2,210 | -3,405 | |
Non-tax deductible expenses | -284 | -819 | |
Previously unrecognised tax losses now recognised | 2,153 | 8,229 | |
Total adjustments | 427 | 5,940 | |
Income tax recognised | -1,966 | -4,475 |
On 31 December 2023 the Group companies had unused tax losses totalling EUR 18.3 (2022: 21.6) million for which the Group has not recognised deferred tax assets.\u00a0
", "dimensions": { "concept": "ifrs-full:DisclosureOfIncomeTaxExplanatory", "language": "en", "entity": "scheme:743700KOUL1GQQQREP40", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page36-body-tag6367913": { "value": "8. Discontinuing operation
On 16th September 2020 the Business Rescue Plan which provided the plan for the disposal of the assets of Afarak Mogale (Pty) Ltd was approved. This led to Afarak Group loss of control on its subsidiary Afarak Mogale (Pty) Ltd, and as a result the Mogale business was reclassified to discontinued operation in the consolidated financial statements of Afarak Group.\u00a0
Afarak Group reclassified Afarak Mogale (Pty) Ltd's previously reported income statement figures as discontinued operations in 2020. As from September 2020 Afarak Group is no longer consolidating Afarak Mogale (Pty) ltd.\u00a0
In the consolidated income statement, continuing and discontinued operations are presented separately. Discontinued operations are presented as their own line item and comparative information has been adjusted accordingly.\u00a0
Profit from discontinued operations in 2022, amounted to EUR 2.9 million arising from the transaction. There were no discontinued operation during 2023.
", "dimensions": { "concept": "ifrs-full:DisclosureOfDiscontinuedOperationsExplanatory", "language": "en", "entity": "scheme:743700KOUL1GQQQREP40", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page36-body-tag6367917": { "value": "9. Earnings per share
2023 | 2022 | ||||||
Continuing operations | Discontinued operations | Total | Continuing operations | Discontinued operations | Total | ||
Profit attributable to owners of the parent company (EUR '000) | 9,451 | - | 9,451 | 44,712 | 2,885 | 47,597 | |
Weighted average number of shares, basic (1 000) | 260,478 | - | 260,478 | 251,310 | 251,310 | 251,310 | |
Basic earnings per share (EUR) total | 0.04 | - | 0.04 | 0.18 | 0.01 | 0.19 | |
2023 | 2022 | ||||||
Continuing operations | Discontinued operations | Total | Continuing operations | Discontinued operations | Total | ||
Profit attributable to owners of the parent company (EUR '000) | 9,451 | - | 9,451 | 44,712 | 2,885 | 47,597 | |
Weighted average number of shares, basic (1 000) | 260,478 | - | 260,478 | 251,310 | 251,310 | 251,310 | |
Effect of share options on issue\u00a0 (1 000) | 500 | - | 500 | 536 | 536 | 536 | |
Weighted average number of shares, diluted (1 000) | 260,978 | - | 260,978 | 251,846 | 251,846 | 251,846 | |
Diluted earnings per share (EUR) total | 0.04 | - | 0.04 | 0.18 | 0.01 | 0.19 |
Basic earnings per share is calculated by dividing profit attributable to the owners of the parent company by weighted average number of shares during the financial year.\u00a0
When calculating the diluted earnings per share, all convertible securities with a potential dilutive effect are assumed to be converted into shares. Share options have a dilutive effect if the exercise price is lower than the share price. The diluted number of shares is the number of shares that will be issued free of charge when share options are exercised since with the funds received from exercising options, the Company is not able to issue the same number of shares at fair value. The fair value of shares is based on average share price of the period.
", "dimensions": { "concept": "ifrs-full:DisclosureOfEarningsPerShareExplanatory", "language": "en", "entity": "scheme:743700KOUL1GQQQREP40", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page36-body-tag6367915": { "value": "1.8 NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
10. Property, plant and equipment
EUR '000 | Land and water property | Buildings and constructions | Machinery and equipment | Mines and mineral assets | Other tangible assets | Total |
Balance at 1.1.2023 | 1,962 | 3,898 | 12,108 | 52,565 | 2,846 | 73,379 |
Additions | 0 | 50\u00a0 | 2,509\u00a0 | 415\u00a0 | 18\u00a0 | 2,992\u00a0 |
Disposals | 0 | -70 | -628 | 0\u00a0 | -3 | -701 |
Reclass between items | 0 | 0 | 0 | 0 | 689\u00a0 | 689\u00a0 |
Effect of movements in exchange rates | -132 | -318 | -628 | -6,722 | -19 | -7,819 |
Balance at 31.12.2023 | 1,830\u00a0 | 3,560\u00a0 | 13,361\u00a0 | 46,258\u00a0 | 3,531\u00a0 | 68,540\u00a0 |
Accumulated depreciation and impairment 1.1.2023 | 0 | -3,110 | -5,495 | -25,654 | -144 | -34,403 |
Depreciation | 0 | -106 | -970 | -378 | -5 | -1,459 |
Impairment | 0 | 0 | 0 | 0 | 0 | |
Disposals | 0 | 69\u00a0 | 519\u00a0 | 0\u00a0 | 3\u00a0 | 591\u00a0 |
Effect of movements in exchange rates | 0 | 100\u00a0 | 455\u00a0 | 3,654\u00a0 | 19\u00a0 | 4,228\u00a0 |
Accumulated depreciation and impairment at 31.12.2023 | 0 | -3,047 | -5,491 | -22,378 | -127 | -31,043 |
Carrying amount at 1.1.2023 | 1,962 | 788 | 6,613 | 26,911 | 2,702 | 38,976 |
Carrying amount at 31.12.2023 | 1,830 | 513 | 7,870 | 23,880 | 3,404 | 37,497 |
Balance at 1.1.2022 | 1,964 | 3,907 | 11,074 | 53,309 | 2,242 | 72,496 |
Additions | 0 | 22 | 1,815 | 227 | 5 | 2,069 |
Disposals | 0 | -20 | -765 | 2 | -7 | -790 |
Reclass between items | 0 | 209 | 0 | 0 | 606 | 815 |
Effect of movements in exchange rates | -2 | -220 | -16 | -973 | 0 | -1,211 |
Balance at 31.12.2022 | 1,962 | 3,898 | 12,108 | 52,565 | 2,846 | 73,379 |
Accumulated depreciation and impairment 1.1.2022 | 0 | -3,033 | -4,683 | -26,168 | -142 | -34,026 |
Depreciation | 0 | -215 | -674 | -312 | -8 | -1,209 |
Impairment | 0 | 0 | -157 | 0 | 0 | -157 |
Disposals | 0 | 15 | 258 | 0 | 5 | 278 |
Effect of movements in exchange rates | 0 | 123 | -239 | 826 | 1 | 711 |
Accumulated depreciation and impairment at 31.12.2022 | 0 | -3,110 | -5,495 | -25,654 | -144 | -34,403 |
Carrying amount at 1.1.2022 | 1,964 | 874 | 6,391 | 27,141 | 2,100 | 38,470 |
Carrying amount at 31.12.2022 | 1,962 | 788 | 6,613 | 26,911 | 2,702 | 38,976 |
Machinery and equipment include the prepayments made for them.\u00a0
Property, plant and equipment include right of use asset EUR 0.2 (2022: 0.2) and a depreciation of EUR 0.1(2022: 0.1) million.
", "dimensions": { "concept": "ifrs-full:DisclosureOfPropertyPlantAndEquipmentExplanatory", "language": "en", "entity": "scheme:743700KOUL1GQQQREP40", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page37-body-tag6367918": { "value": "11. Intangible assets
EUR '000 | Goodwill | Intangible assets identified in acquisitions | Other intangible assets\u00a0 | Exploration and evaluation assets\u00a0 | Total |
Balance at 1.1.2023 | 48,721 | 77,070 | 6,044 | 1,482 | 133,317 |
Additions | 0\u00a0 | 0\u00a0 | 104\u00a0 | 0\u00a0 | 104\u00a0 |
Disposals \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 | 0\u00a0 | 0\u00a0 | -27 | -44 | -71 |
Reclass between items | 0\u00a0 | 0\u00a0 | 0\u00a0 | 0\u00a0 | 0\u00a0 |
Effect of movements in exchange rates | -1,724 | -2,485 | -713 | -184 | -5,106 |
Balance at 31.12.2023 | 46,997\u00a0 | 74,585\u00a0 | 5,408\u00a0 | 1,254\u00a0 | 128,244\u00a0 |
Accumulated amortisation and impairment at 1.1.2023 | 0\u00a0 | -77,070 | -2,086 | -202 | -79,358 |
Amortisation | 0\u00a0 | 0\u00a0 | -95 | -6 | -101 |
Disposals | 0\u00a0 | 0\u00a0 | 0\u00a0 | 44\u00a0 | 44\u00a0 |
Effect of movements in exchange rates | 0\u00a0 | 2,485\u00a0 | 301\u00a0 | 24\u00a0 | 2,810\u00a0 |
Accumulated amortisation and impairment at 31.12.2023 | 0\u00a0 | -74,585 | -1,880 | -140 | -76,605 |
Carrying amount at 1.1.2023 | 48,720 | 0 | 3,959 | 1,280 | 53,959 |
Carrying amount at 31.12.2023 | 46,997 | 0 | 3,528 | 1,114 | 51,639 |
Balance at 1.1.2022 | 46,029 | 72,904 | 6,597 | 1,507 | 127,037 |
Additions | 0 | 0 | 55 | 0 | 55 |
Disposals \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 | 0 | 0 | -275 | 0 | -275 |
Reclass between items | 0 | 0 | -209 | 0 | -209 |
Effect of movements in exchange rates | 2,692 | 4,166 | -124 | -25 | 6,709 |
Balance at 31.12.2022 | 48,721 | 77,070 | 6,044 | 1,482 | 133,317 |
Accumulated amortisation and impairment at 1.1.2022 | 0 | -72,904 | -2,361 | -198 | -75,463 |
Amortisation | 0 | 0 | -83 | -6 | -89 |
Disposals | 0 | 0 | 238 | 0 | 238 |
Effect of movements in exchange rates | 0 | -4,166 | 121 | 2 | -4,043 |
Accumulated amortisation and impairment at 31.12.2022 | 0 | -77,070 | -2,085 | -202 | -79,357 |
Carrying amount at 1.1.2022 | 46,029 | 0 | 4,236 | 1,309 | 51,574 |
Carrying amount at 31.12.2022 | 48,721 | 0 | 3,959 | 1,280 | 53,960 |
Other intangible assets include the prepayments made for them. Exploration and evaluation assets consist of mine projects in various mining projects in Turkey and South Africa.
", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsExplanatory", "language": "en", "entity": "scheme:743700KOUL1GQQQREP40", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page38-body-tag6367919": { "value": "12. Investments in associates
Afarak has an investment of 5.99% (2022: 8.99%) in Valtimo Components Oyj.
During the financial year 2023 and 2022, Afarak did not acquire or dispose holdings in associates.
", "dimensions": { "concept": "ifrs-full:DisclosureOfSignificantInvestmentsInAssociatesExplanatory", "language": "en", "entity": "scheme:743700KOUL1GQQQREP40", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page38-body-tag6367920": { "value": "13. Financial assets and liabilities\u00a0
31.12.2023, EUR '000 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Non-current financial assets | At fair value through profit and loss | At fair value through other comprehensive income | At amortised cost | Carrying value | Fair value |
\u00a0 | \u00a0 | \u00a0 | |||
Non-current interest-bearing receivables | 78 | 78 | 78 | ||
Trade and other receivables * | 1,124 | 1,124 | 1,124 | ||
\u00a0 | |||||
Current financial assets | |||||
\u00a0 | |||||
Trade and other receivables * | 20,060 | 20,060 | 20,060 | ||
Other financial assets | 546 | 546 | 546 | ||
Cash and cash equivalents | 18,032 | 18,032 | 18,032 | ||
Total financial assets | 39,840 | 39,840 | 39,840 | ||
\u00a0 | |||||
\u00a0 | |||||
Non-current financial liabilities | |||||
\u00a0 | |||||
Non-current interest-bearing liabilities | 321 | 321 | 321 | ||
Other non-current liabilities | 21 | 21 | 21 | ||
\u00a0 | |||||
Current financial liabilities | |||||
\u00a0 | |||||
Current interest-bearing liabilities | 2,766 | 2,766 | 2,766 | ||
Trade and other payables * | 0 | 0 | 0 | ||
\u00a0 | |||||
Total financial liabilities | 3,108 | 3,108 | 3,108 |
* Non-financial assets and liabilities are not included in the figures.
31.12.2022, EUR '000 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Non-current financial assets | At fair value through profit and loss | At fair value through other comprehensive income | At amortised cost | Carrying value | Fair value |
\u00a0 | \u00a0 | \u00a0 | |||
Non-current interest-bearing receivables | 102 | 102 | 102 | ||
Trade and other receivables * | 860 | 860 | 860 | ||
\u00a0 | |||||
Current financial assets | |||||
\u00a0 | |||||
Trade and other receivables * | 22,402 | 22,402 | 22,402 | ||
Other financial assets | 410 | 410 | 410 | ||
Cash and cash equivalents | 12,418 | 12,418 | 12,418 | ||
Total financial assets | 36,192 | 36,192 | 36,192 | ||
\u00a0 | |||||
\u00a0 | |||||
Non-current financial liabilities | |||||
\u00a0 | |||||
Non-current interest-bearing liabilities | 404 | 404 | 404 | ||
Other non-current liabilities | 24 | 24 | 24 | ||
\u00a0 | |||||
Current financial liabilities | |||||
\u00a0 | |||||
Current interest-bearing liabilities | 1,645 | 1,645 | 1,645 | ||
Trade and other payables * | 134 | 134 | 134 | ||
\u00a0 | |||||
Total financial liabilities | 2,207 | 2,207 | 2,207 |
* Non-financial assets and liabilities are not included in the figures.
Interest-bearing debt \u00a0\u00a0\u00a0\u00a0\u00a0
EUR '000 | 2023 | \u00a0 | 2022 |
Non-current | |||
Bank loans | 1 | 2 | |
Acquisition of NCI liability | 0 | ||
Finance lease liabilities | 319 | 401 | |
Other interest-bearing liabilities | 0 | ||
Total | 320 | 404 | |
Current | |||
Bank loans | 2,766 | 1,638 | |
Finance lease liabilities | 0 | 17 | |
Other interest-bearing liabilities (*) | 0 | 134 | |
Total | 2,766 | 1,790 | |
EUR '000 | 2023 | \u00a0 | 2022 |
Finance lease liabilities, minimum lease payments | |||
No later than 1 year | 0 | 17 | |
Later than 1 year and not later than 5 years | 320 | 401 | |
320 | 419 | ||
Finance lease liabilities, present value of minimum lease payments | |||
No later than 1 year | 0 | 17 | |
Later than 1 year and not later than 5 years | 320 | 401 | |
320 | 419 | ||
Future finance charges | 0 | 0 | |
Total minimum lease payments | 320 | 419 |
* Other interest-bearing liabilities include a short-term commercial debt which has been negotiated into a longer-term arrangement after the reporting period.
Changes in liabilities arising from financing activities
EUR '000 | 1 January 2023 | Cash flows\u00a0 | Foreign exchange movement | \u00a0Other\u00a0 | 31 December 2023 |
Non-current borrowings | - | - | - | - | - |
Current borrowings | \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a01,638 \u00a0\u00a0 | \u00a0\u00a0\u00a0\u00a0\u00a0\u00a01,072 \u00a0\u00a0 | 55 | - | 2,766 |
Lease liabilities | \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0410 \u00a0\u00a0 | -85 \u00a0\u00a0 | 6 | -11 | 320 |
Total liabilities from financing activities | 2,019 | 987 | 61 | -11 | 3,086 |
EUR '000 | 1 January 2022 | Cash flows\u00a0 | Foreign exchange movement | \u00a0Other\u00a0 | 31 December 2022 |
Non-current borrowings | 17,432 | -16,592 | 876 | -1,716 | - |
Current borrowings | 20,726 | -18,748 | -369 | - | 1,638 |
Lease liabilities | 324 | 71 | 9 | 410 | 410 |
Total liabilities from financing activities | 38,511 | 35,269 | 515 | -1,709 | 2,049 |
The 'Other' column includes the effect on unwinding interest on the acquisition of non-controlling interest in non-current borrowings.
Financial risks and risk management
The Board of Directors of Afarak Group SE has outlined the key risks of the Group in the Board of Directors' Report. In the following section, the financial and commodity risks are presented in more detail with the related sensitivity analyses.\u00a0
Summary of financial assets and loan arrangements
Financial assets 31 December 2023
In addition to the operating result and the cash flow generated from it, the factors described below have most significantly affected the year-on-year change in the Group's financial assets at the 2023 closing date:\u00a0
On 31 December 2023, the cash and cash equivalents were invested mainly in interest-bearing EUR, ZAR and USD denominated bank accounts. Other financial assets comprise interest-bearing loans and other receivables.\u00a0
One of the Group's Maltese subsidiaries has been granted a trade finance loan facility amounting to $ 4.0 million during 2022 and the Group has given a corporate guarantee amounting to US$ 4.0 as collateral. The Maltese subsidiary utilized US$ 2.7 million as at the end of 2023. During 2023, an additional trade finance loan facility without recourse amounting to $ 2.0 million has been granted. The Maltese subsidiary utilized US$ 0.0 million as at the end of 2023
One of the Group's Turkish subsidiaries has been granted various short term loans in 2023. The loans amount as at end of 2023 was EUR 0.0 (2022: 0.0 million).
Interest-bearing debt 31 December 2023
Floating rate loans from financial institutions total EUR 2.7 (2022: 1.5) million. Fixed rate loans total EUR 0.0 (2022: 0.1) million.
The interest rate of the Turkish bank loan facility is tied to the market rate of EURIBOR. The interest rate on 31 December 2023, based on market interest rates at that date, was 3.845% (2022: 1.25%). The interest rate margin for the fixed rate notes was 3.325% (2022: 0.60%) p.a. \u00a0
The interest rate of the Maltese bank loan facility is tied to the at the rate of 4.5% per annum margin above the Bank's Lending Base Rate. The interest rate on 31 December 2023, based Bank's Lending Base Rate at that date, was 5.2%.
Capital Management
The Group's capital management objective is to maintain the ability to continue as a going concern and to optimise the cost of capital in order to enhance value to shareholders. As part of this objective, the Group seeks to maintain access to loan and capital markets at all times. The Board of Directors reviews the capital structure of the Group on a regular basis.
Capital structure and debt capacity are taken into account when deciding on new investments. Practical tools to manage capital include the application of dividend policy, capital redemption, share buybacks and share issues. Debt capital is managed considering the requirement to secure liquidity. The Group's internal capital structure is reviewed on a regular basis with the aim of optimising the structure by applying measures such as internal dividends and equity adjustments.\u00a0
The Group's long term target for capital structure is to keep the equity ratio above 50%. At the end of the reporting period, the Group's equity ratio stood at 65.6% (2022: 65.6%).
", "dimensions": { "concept": "ifrs-full:DisclosureOfFairValueOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:743700KOUL1GQQQREP40", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page41-body-tag6367922": { "value": "Financial Risk Management
In its normal operations, the Group is exposed to various financial risks. The main financial risks are liquidity risk, foreign exchange rate risk, interest rate risk, credit risk and commodity price risk. The objective of the Group's risk management is to identify and, to as far as reasonably possible, mitigate the adverse effects of changes in the financial markets on the Group's results. The general risk management principles are accepted by Afarak Group SE's Board of Directors and monitored by its Audit and Risk Management Committee. The managements of the Group and its subsidiaries are responsible for the implementation of risk management policies and procedures. Group management monitors risk positions and risk management procedures on a regular basis and supervises that the Group's policies and risk management principles are followed in all day-to-day operations. Risks and risk management are regularly reported to the Audit and Risk Management Committee.\u00a0
The Group's significant financial instruments comprise bank loans, finance leases, other long-term liabilities, cash and short-term deposits and money market investments. The main purpose of these financial instruments is to finance the Group's acquisitions and ongoing operations. The Group also has various other financial assets and liabilities such as trade receivables and trade payables, which arise directly from its operations.\u00a0
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialRiskManagementExplanatory", "language": "en", "entity": "scheme:743700KOUL1GQQQREP40", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page41-body-tag6367923": { "value": "(i) Liquidity risk
The Group regularly assesses and monitors its investment and working capital needs and financing, so that it has enough liquidity to serve and finance its operations and pay back loans. The availability and flexibility of financing are targeted to be guaranteed by using multiple financial institutions in the financing and financial instruments, and to agree on financial limit arrangements.
If the liquidity risks were to be realised, it would probably result in overdue interest expenses and damage the relations with suppliers. Consequently, the pricing and other terms for input goods and services and for financing could be affected.
The maturity distribution of the Group debt at the end of the financial year was as follows:
31.12.2023, EUR '000 | |||||||
Financial liabilities | Carrying amount | Contractual cash flows | 6 months or less | 6-12 months | 1-2 years | 2-5 years | More than 5 years |
Secured bank loans | 2,766 | -2,766 | -2,766 | 0 | 0 | 0 | 0 |
Finance lease liabilities | 319 | -319 | -54 | -54 | -46 | -165 | 0 |
Trade and other payables | 22 | -22 | 0 | 0 | -22 | 0 | 0 |
Total | 3,107 | -3,107 | -2,820 | -54 | -68 | -165 | 0 |
31.12.2022, EUR '000 | |||||||
Financial liabilities | Carrying amount | Contractual cash flows | 6 months or less | 6-12 months | 1-2 years | 2-5 years | More than 5 years |
Secured bank loans | 1,638 | -1,641 | -1,641 | 0 | 0 | 0 | 0 |
Finance lease liabilities | 419 | -419 | -62 | -62 | -45 | -250 | 0 |
Trade and other payables | 9,878 | -9,878 | -9,854 | 0 | -24 | 0 | 0 |
Total | 11,936 | -11,938 | -11,557 | -62 | -69 | -250 | 0 |
(ii) Foreign exchange rate risk
The Group operates internationally, including in Turkey, Malta and South Africa, and is therefore exposed to foreign exchange rate risks. The risks arise both directly from the outstanding commercial cash flows and currency positions, and indirectly from changes in competitiveness between various competitors. The foreign exchange differences arising from inter-company loans designated as net investments in foreign subsidiaries have been recognised in the translation reserve in the equity.\u00a0
\u00a0
The Group is exposed to currency-derived risks that affect its financial results, financial position and cash flows. In particular the exchange rates of US Dollar and South African Rand against the Euro have a significant impact on the Euro-denominated profitability of the Group. The cash inflows of the business are denominated in US Dollars, whereas a significant portion of the costs are denominated in the South African Rand. The fluctuation of the South African Rand has a significant impact on the Group's profit and loss as well as on the Group's assets and liabilities. In its risk management, the Group aims to match its cash inflows and outflows as well as receivables and liabilities in terms of the currency in which these items are denominated.\u00a0
The following tables present the currency composition of receivables and debt, and changes thereby relative to the previous year-end.\u00a0
31.12.2023, EUR '000 | \u00a0 | EUR exchange rate | 1 | 1.1050 | 0.86905 | 32.6531 | 20.3477 | 0.926 | 116.929 |
\u00a0 | \u00a0 | \u00a0 | EUR | USD | GBP | TRY | ZAR | CHF | RSD\u00a0 |
Cash and cash equivalents (EUR) | \u00a0 | 3,403 | 8,563 | 19 | 3,461 | 1,614 | 5 | 652 | |
\u00a0 | \u00a0 | ||||||||
Trade and other receivables (EUR) | \u00a0 | 1,101 | 5,491 | 0 | 119 | 13,894 | 0 | 0 | |
Loans and other financial assets (EUR) | \u00a0 | 1,520 | -19 | 0 | 80 | -381 | 0 | 0 | |
\u00a0 | \u00a0 | ||||||||
Trade and other current payables (EUR) | \u00a0 | -3,119 | -7,310 | -8 | -702 | -352 | 0 | -7 | |
Loans and other liabilities (EUR) | \u00a0 | -319 | -2,716 | 0 | -51 | -22 | 0 | 0 | |
\u00a0 | \u00a0 | ||||||||
Currency exposure, net (EUR) | \u00a0 | \u00a0 | 2,586 | 4,010 | 11 | 2,907 | 14,754 | 5 | 645 |
\u00a0 | \u00a0 | \u00a0 | |||||||
Currency exposure, net in currency ('000) | \u00a0 | \u00a0 | 2,586 | 4,431 | 9 | 94,928 | 300,210 | 5 | 75,391 |
31.12.2022, EUR '000 | \u00a0 | EUR exchange rate | 1 | 1.0666 | 0.88693 | 19.9649 | 18.0986 | 0.9847 | 117.1529 |
\u00a0 | \u00a0 | \u00a0 | EUR | USD | GBP | TRY | ZAR | CHF | RSD\u00a0 |
Cash and cash equivalents (EUR) | \u00a0 | 7,428 | 3,082 | 29 | 878 | 808 | 5 | 184 | |
\u00a0 | \u00a0 | ||||||||
Trade and other receivables (EUR) | \u00a0 | 742 | 7,237 | 0 | 849 | 13,984 | 0 | 0 | |
Loans and other financial assets (EUR) | \u00a0 | 1,712 | -19 | 0 | 107 | -838 | 0 | 0 | |
\u00a0 | \u00a0 | ||||||||
Trade and other current payables (EUR) | \u00a0 | -6,323 | -1,956 | -23 | -775 | -717 | 0 | -60 | |
Loans and other liabilities (EUR) | \u00a0 | -401 | -1,671 | 0 | -20 | -24 | 0 | -102 | |
\u00a0 | \u00a0 | ||||||||
Currency exposure, net (EUR) | \u00a0 | \u00a0 | 3,158 | 6,672 | 5 | 1,039 | 13,213 | 5 | 22 |
\u00a0 | \u00a0 | \u00a0 | |||||||
Currency exposure, net in currency ('000) | \u00a0 | \u00a0 | 3,158 | 7,116 | 5 | 20,741 | 239,139 | 5 | 2,587 |
31 December 2023 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | |||
\u00a0 | \u00a0 | USD | GBP | TRY | ZAR | CHF | RSD |
20% | strengthening | 1,002 | 3 | 727 | 3,689 | -5 | 161 |
15% | strengthening | 708 | 2 | 513 | 2,604 | -5 | 114 |
10% | strengthening | 446 | 1 | 323 | 1,639 | -5 | 72 |
5% | strengthening | 211 | 1 | 153 | 777 | -5 | 34 |
0% | no change | 0 | 0 | 0 | 0 | -5 | 0 |
-5% | weakening | -191 | -1 | -138 | -703 | -5 | -31 |
-10% | weakening | -365 | -1 | -264 | -1,341 | -5 | -59 |
-15% | weakening | -523 | -1 | -379 | -1,924 | -5 | -84 |
-20% | weakening | -668 | -2 | -485 | -2,459 | -5 | -107 |
31 December 2022 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | |||
\u00a0 | \u00a0 | USD | GBP | TRY | ZAR | CHF | RSD |
20% | strengthening | 1,668 | 1 | 260 | 3,303 | -5 | 6 |
15% | strengthening | 1,177 | 1 | 183 | 2,332 | -5 | 4 |
10% | strengthening | 741 | 1 | 115 | 1,468 | -5 | 2 |
5% | strengthening | 351 | 0 | 55 | 695 | -5 | 1 |
0% | no change | 0 | 0 | 0 | 0 | -5 | 0 |
-5% | weakening | -318 | 0 | -49 | -629 | -5 | -1 |
-10% | weakening | -607 | 0 | -94 | -1,201 | -5 | -2 |
-15% | weakening | -870 | -1 | -136 | -1,723 | -5 | -3 |
-20% | weakening | -1,112 | -1 | -173 | -2,202 | -5 | -4 |
Derivatives
The Group's exposure to the risk of changes in foreign exchange rates relates primarily to the Group's operating activities (when revenue or expense is denominated in a foreign currency).
Operative foreign currency derivatives that are valued at fair value on the reporting date cause timing differences between the changes in the derivative's fair values and hedged operative transactions. Changes in fair values for derivatives designated to hedge future cash flow but are not accounted for according to the principles of hedge accounting impact the Group's operating profit for the financial year. The underlying foreign currency transactions will realise in future periods.
The following table presents the approximate effect of changes in market interest rates on the Group's income statement should the deposits' and loans' interest rates change. The analysis includes floating rate financial assets and liabilities. The sensitivity analysis is illustrative in nature and applicable for the forthcoming 12 month period if the period's asset and liability structure were to be equal to that of 31 December 2023, and if there were no changes in exchange rates.
31 December 2023 | \u00a0 | \u00a0 | ||||
Interest rate change | Change in interest income | Change in interest expense | Net effect | |||
-2.00% | -2 | 55 | 54 | |||
-1.50% | -1 | 41 | 40 | |||
-1.00% | -1 | 28 | 27 | |||
-0.50% | 0 | 14 | 13 | |||
0.00% | 0 | 0 | 0 | |||
0.50% | 0 | -14 | -13 | |||
1.00% | 1 | -28 | -27 | |||
1.50% | 1 | -41 | -40 | |||
2.00% | 2 | -55 | -54 |
31 December 2022 | \u00a0 | \u00a0 | |
Interest rate change | Change in interest income | Change in interest expense | Net effect |
-2.00% | -2 | 33 | 31 |
-1.50% | -2 | 25 | 23 |
-1.00% | -1 | 16 | 15 |
-0.50% | -1 | 8 | 8 |
0.00% | 0 | 0 | 0 |
0.50% | 1 | -8 | -8 |
1.00% | 1 | -16 | -15 |
1.50% | 2 | -25 | -23 |
2.00% | 2 | -33 | -31 |
(iii) Interest rate risk
The Group is exposed to interest rate risk when Group companies take loans, or make other financing agreements or deposits and investments related to liquidity management. In addition, changes in interest rates can alter the fair values of the Group's assets. The Group's revenue and operative cash flows are mainly independent of the changes in market interest rates.\u00a0
To manage interest rate risks, the Group has used both fixed and floating rate debt instruments and derivative instruments, such as interest rate swaps, when needed. At the end of 2023, the Group's interest-bearing debt was mainly based on floating interest rates; and there were no interest rate swaps in place. The Group aims to match the loan maturities with the businesses' needs and to have the maturities spread over various periods so that the Group's interest rate risks are somewhat diversified. Floating rate financing is mainly tied to the market rates of different countries (United Kingdom, South Africa), changes to which will then influence the Group's total financing cost and cash flows.\u00a0
The short-term interest-bearing receivables of the Group are mainly loan receivables and receivables on past asset disposals. The Group's interest-bearing liabilities have been discussed above. The effects of credit risks for loan receivables are explained in more detail in section 1.8. (iv) credit risk.
The split of interest-bearing debt and receivables, also classified into fixed rate and floating rate instruments on 31 December 2023 and 31 December 2022 was as follows:
\u00a0
Interest rate profile of interest-bearing financial instruments (EUR '000) | |||
\u00a0 | \u00a0 | \u00a0 | \u00a0 |
Fixed rate instruments | 31.12.2023 | 31.12.2022 | |
\u00a0 | Financial assets | 0 | 0 |
\u00a0 | Financial liabilities | 0 | 0 |
Fixed rate instruments, net | 0 | 0 | |
\u00a0 | |||
Variable rate instruments | |||
\u00a0 | Financial assets | 78 | 102 |
\u00a0 | Financial liabilities | -2,766 | -1,645 |
Variable rate instruments, net | -2,688 | -1,543 | |
\u00a0 | |||
Interest-bearing net debt | -2,688 | -1,543 |
Credit risk can be realised when the counterparties in commercial, financial or other agreements cannot take care of their obligations and thus cause financial damage to the Group. The Group's operational policies define the creditworthiness requirements for customers and for counterparties in financial and derivative transactions, as well as the principles followed when investing liquidity. In the case of major sales agreements, the counterparty's credit rating is checked.\u00a0
The Group's key customers are major international stainless steel companies, and a number of specialist agents selling to the steel sector, with typically long and successful business histories. Since the customers represent one sector of industry, major changes in that industry's profitability could increase the credit risk. In order to mitigate credit risk, the Group credit insure its trade receivables.
The trade receivables and loan receivables form a major share of the assets, which are exposed to the credit risk. Afarak did not present the expected credit losses in tabular format due to minimal credit losses in the historical data and including the future credit loss expectations. Additionally, the group collect prepayments from sales from its customers.
As presented in the section 1.8. note 15. The Group's trade receivables total EUR 7.5 million for year ended 31 December 2023 (2022: 7.8). The Group did not record any loss allowance on trade receivables during 2023 and during 2022. The portion of prepaid revenues or portion under trade financing amounts to EUR 1.7 million on 31 December 2023 (2022: 1.7). The prepaid portion of the trade receivables does not include any potential losses.\u00a0
The loan receivables amounted to EUR 0.5\u00a0million on 31 December 2023 (2022: 0.4). The total potential credit risk for the loan receivables is higher than for the trade receivables as the potential risk of default is more concentrated with only few lenders. The group estimates the potential credit risk in relation to the loan receivables frequently and reports any changes at each reporting period and estimates the possibility for default on a per lender basis.\u00a0
In 2023 and in 2022, the Group did not recognise a provision on other receivables.\u00a0
The credit risk assessment and the method of calculation has remained the same between the financial period ending 31.12.2023 and the previous financial period.\u00a0
The trade receivables do not pose a credit risk due to concentration, as the sales are diversified to several customers.\u00a0
Further information about the expected credit loss can be found in the basis of preparation in section 1.2 Accounting Principles under \"Financial Assets\" and \"Impairment of financial assets\".
The Board of Directors of Afarak Group SE has determined a cash management policy for the Group's parent company, according to which the excess cash reserves are deposited for a short-term only and with sound financial institutions with which the Group has established business relations. The credit rating of all significant counterparties is analysed from time to time.\u00a0
The maximum credit risk is equal to the carrying value of the receivables as of 31 December, and is split as follows:
Category | ||
\u00a0EUR 000's | 31.12.2023 | 31.12.2022 |
\u00a0 | ||
Interest-bearing | \u00a0 | \u00a0 |
Cash and cash equivalents | 18,032 | 12,418 |
Other interest bearing receivables | 78 | 102 |
Interest-bearing, total | 18,110 | 12,520 |
\u00a0 | ||
Interest-free | ||
Trade receivables | 7,467 | 7,833 |
Other short-term receivables | 13,140 | 14,979 |
Long-term receivables | 1,124 | 860 |
Interest-free, total | 21,731 | 23,672 |
\u00a0 | ||
Total | 39,841 | 36,192 |
(v) Commodity risks
The Group is exposed to price risks on various output and input products, materials and commodities, energy costs and disruptive availability of electricity. Also, securing the availability of raw materials without any serious disruptions is vital to its businesses.
The price risks on input materials and commodities are managed by pricing policies so that changes in input materials and commodities can be moved into sales prices. This, however, is not always possible or there may be delays as a result of contractual or competitive reasons.
The Group's units that have production operations are exposed to availability, quality and price fluctuations in raw materials and commodities. To diminish these risks, the Group's business units seek to enter into long-term agreements with known counterparties; although this is not always possible due to the tradition and practice of the business. For the most part, because it is not possible or economically feasible to hedge commodity price risks in the Group's business sectors with derivative contracts, the Group did not have any commodity derivative contracts in place as of 31 December 2023.
Sensitivity Analysis - Speciality Alloys business
The effect of changes in the sales price of special grade ferrochrome, produced by the Group's Speciality Alloys business, to the Group's operating profit and equity is illustrated below, assuming that the EUR/USD rate were constant. The analysis is based on December 2023 price level. Since the products are priced in USD, the exchange rate changes could have a major effect on the Group's profitability in EUR. Full capacity is of 36,000 t/a, and for simulation purposes is set at 2023 production of 21,179 t/a. It is also assumed that only one ferrochrome quality is produced. Various raw materials are used in ferrochrome production, including chrome concentrate and ferrosilicochrome. The purchase prices of the main raw materials typically move in the same direction as the sales prices, although the correlation is not perfect and the timing may differ. In practice, therefore the net effect on the Group's profitability most probably would be lower than shown below. Electricity usage is also substantial, and hence changes in electricity prices have a significant effect on profitability; electricity prices do not correlate with changes in commodity prices.
Change in Sales price \u00a0\u00a0\u00a0\u00a0\u00a0(USD / lb Cr) | Change in Operating Profit | Change in Group's Equity | |
EUR 000's | EUR 000's | ||
3.72 | 20% | 18,339 | 17,422 |
3.57 | 15% | 13,754 | 13,066 |
3.41 | 10% | 9,169 | 8,711 |
3.26 | 5% | 4,585 | 4,355 |
3.10 | 0% | 0 | 0 |
2.95 | -5% | -4,585 | -4,355 |
2.79 | -10% | -9,169 | -8,711 |
2.64 | -15% | -13,754 | -13,066 |
2.48 | -20% | -18,339 | -17,422 |
Financial year 2022
Change in Sales price \u00a0\u00a0\u00a0\u00a0\u00a0(USD / lb Cr) | Change in Operating Profit | Change in Group's Equity | |
EUR 000's | EUR 000's | ||
4.50 | 20% | 28,911 | 27,465 |
4.31 | 15% | 21,683 | 20,599 |
4.13 | 10% | 14,455 | 13,733 |
3.94 | 5% | 7,228 | 6,866 |
3.75 | 0% | 0 | 0 |
3.56 | -5% | -7,228 | -6,866 |
3.38 | -10% | -14,455 | -13,733 |
3.19 | -15% | -21,683 | -20,599 |
3.00 | -20% | -28,911 | -27,465 |
Sensitivity Analysis - Mining business
As a general rule, the Group sells its concentrate production and chrome ore at market prices and normally does not enter into forward sales, derivatives or other hedging arrangements to establish a price in advance for the sale of its future production. The Group is exposed to the risk of fluctuations in prevailing market commodity prices on the mineral products it produces.
Assuming, for simplicity, an average annual mining activity of 97,489 t/a, and December 2023 price level for Chrome Ore, the following table represents a rough proxy of the sales price sensitivities. It should also be taken into account that the profitability of the mining operations can be substantially impacted by changes in the USD and ZAR exchange rates, electricity prices and availability of electricity, as well as changes in market prices.
In practice, therefore the net effect on the Group's profitability most probably would be lower than shown below. Due to the high market volatility the range of change was kept at +/- 20%.
Financial Year 2023
Change in Sales price (USD/t) | Change in Operating Profit | Change in Group's Equity | |
309.00 | 20% | 5,021 | 3,615 |
296.13 | 15% | 3,765 | 2,711 |
283.25 | 10% | 2,510 | 1,807 |
270.38 | 5% | 1,255 | 904 |
257.50 | 0% | 0 | 0 |
244.63 | -5% | -1,255 | -904 |
231.75 | -10% | -2,510 | -1,807 |
218.88 | -15% | -3,765 | -2,711 |
206.00 | -20% | -5,021 | -3,615 |
Financial Year 2022
Change in Sales price (USD/t) | Change in Operating Profit | Change in Group's Equity | |
339.00 | 20% | 3,618 | 2,605 |
324.88 | 15% | 2,714 | 1,954 |
310.75 | 10% | 1,809 | 1,303 |
296.63 | 5% | 905 | 651 |
282.50 | 0% | 0 | 0 |
268.38 | -5% | -905 | -651 |
254.25 | -10% | -1,809 | -1,303 |
240.13 | -15% | -2,714 | -1,954 |
226.00 | -20% | -3,618 | -2,605 |
14. Inventories
EUR '000 | 2023 | \u00a0 | 2022 |
Goods and supplies | 16,636 | 11,955 | |
Unfinished products | 129 | 122 | |
Unfinished construction projects | 283 | 0 | |
Finished products | 12,399 | 12,395 | |
Prepayments | 136 | 263 | |
Total | 29,583 | 24,734 | |
15. Trade and other current receivables
EUR '000 | 2023 | \u00a0 | 2022 |
Trade receivables | 7,467 | 7,833 | |
Loan receivables | 546 | 410 | |
Prepaid expenses and accrued income | 2,615 | 4,953 | |
Income tax receivables | 123 | 291 | |
Other receivables | 12,594 | 14,569 | |
Total | 23,345 | 28,056 |
Prepaid expenses and accruals mainly relate to rental contracts, personnel expenses, VAT receivables and accrued interest for loans. The values of receivables at the end of the reporting period closely correspond to the monetary value of maximum credit risk in the potential case where the counterparties cannot fulfil their commitments.\u00a0
The ageing of trade receivables at the end of the reporting period
EUR '000 | 2023 | \u00a0 | 2022 |
Not past due | 4,698 | 4,348 | |
Past due 0-30 days | 1,184 | 2,063 | |
Past due 31-60 days | 678 | 300 | |
Past due 61-90 days | 37 | 3 | |
Past due more than 90 days | 870 | 1,119 | |
Trade receivables total | 7,467 | 7,833 |
The expected credit losses have historically been minimal. Thus the expected credit loss is not material and no separate credit loss reserve has been recorded.\u00a0
", "dimensions": { "concept": "ifrs-full:DisclosureOfTradeAndOtherReceivablesExplanatory", "language": "en", "entity": "scheme:743700KOUL1GQQQREP40", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page44-body-tag6367928": { "value": "16. Cash and cash equivalents
EUR '000 | 2023 | \u00a0 | 2022 |
Cash and bank balances | 16,252 | 11,768 | |
Cash and cash equivalents in the consolidated cash flow statement: | |||
EUR '000 | 2023 | \u00a0 | 2022 |
Cash and bank balances | 16,252 | 11,768 | |
Short-term money market investments | 1,780 | 650 | |
Total | 18,032 | 12,418 |
17. Notes to equity
\u00a0 | Number of registered shares | Number of shares on issue | Share capital, EUR '000 |
\u00a0 | \u00a0 | ||
31.12.2021 | 252,041,814 | 246,367,823 | 23,642 |
\u00a0 | \u00a0 | ||
Share based payments (CEO) | 500,000 | \u00a0 | |
Issue of shares in exchange for settlement of liability | 15,000,000 | 13,132,477 | \u00a0 |
31.12.2022 | 267,041,814 | 260,000,300 | 23,642 |
Share based payments (CEO) | 500,000 | ||
31.12.2023 | 267,041,814 | 260,500,300 | 23,642 |
There is no nominal value for the Company's share.
The equity reserves are described below:
Share premium reserve
Related to the old Finnish Companies Act, the Company has a share premium reserve in relation to old share issues, where the premium in excess of the par value of the shares subscribed has been recognised in the share premium reserve.
Paid-up unrestricted equity reserve
Paid-up unrestricted equity reserve comprises other equity investments and subscription price of shares to the extent that it is not recognised in the share capital based on a specific decision.
Translation reserve
The translation reserve comprises all foreign currency differences arising from the translation of financial statements of foreign operations.
Treasury shares\u00a0
On 31 December 2023, the Company had 6,541,514 (7,041,514) own shares in treasury, which was equivalent to 2.45% (2.64%) of the issued shares. The total number of shares outstanding, excluding the treasury shares held by the Company on 31 December 2023, was 260,500,300 (260,000,300).
The Company's subsidiaries do not hold any of Afarak Group SE's shares.
Share Issue Authorisations given to the Board of Directors
Based on the resolution at the AGM on 21 June 2023, the Board is authorised to issue shares and stock options and other special rights that entitle to shares in one or more tranches up to a maximum of 250,000,000 new shares or shares owned by the Company. This equates to approximately 90.2% of the Company's currently registered shares.
The authorization may be used among other things to raise additional finance and enabling corporate and business acquisitions or other arrangements and investments of business activity or for employee incentive and commitment schemes. 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 Finnish Companies' Act are fulfilled. The authorization replaces all previous authorizations and is valid two (2) years from the decision of the Annual General Meeting.\u00a0
", "dimensions": { "concept": "ifrs-full:DisclosureOfReservesAndOtherEquityInterestExplanatory", "language": "en", "entity": "scheme:743700KOUL1GQQQREP40", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page45-body-tag6367931": { "value": "18. Share-based payments
As part of the remuneration package under the CEO agreement, the CEO received 500,000 Company shares on 10 February 2022. On January 2023, the Group extended for another year the CEO contract and granted 500,000 shares in the Company. These shares have effectively been received after reporting period on 22 January 2024
These shares have a lock-up period of two years from subscription date. The fair value of the granted shares is determined based on the market price of Afarak Group share at the grant date which was EUR 0.50 per share. The expense recognized in the income statement during the year was EUR 242,397 (2022: EUR 66,849).\u00a0
", "dimensions": { "concept": "ifrs-full:DisclosureOfSharebasedPaymentArrangementsExplanatory", "language": "en", "entity": "scheme:743700KOUL1GQQQREP40", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page45-body-tag6367932": { "value": "19. Deferred tax assets and liabilities
Movements in deferred taxes in 2023
EUR '000 | 01.01.2023 | Exchange rate differences | Recognised in \u00a0income statement | 31.12.2023 |
Deferred tax assets: | ||||
Unrealised expenses | 197 | 4 | 356 | 557 |
Pension liabilities | -32 | 0 | 45 | 13 |
From translation difference | -69 | 0 | 0 | -69 |
Group eliminations | 558 | -34 | 19 | 543 |
Total | 654 | -30 | 420 | 1,044 |
Deferred tax liabilities: | ||||
Assets at fair value in acquisitions | 8,768 | -1,005 | -53 | 7,710 |
Translation difference | 80 | 0 | 0 | 80 |
Other timing differences | 263 | -3 | 1 | 261 |
Total | 9,111 | -1,008 | -52 | 8,051 |
Movements in deferred taxes in 2022
EUR '000 | 01.01.2022 | Exchange rate differences | Recognised in \u00a0income statement | 31.12.2022 |
Deferred tax assets: | ||||
Unrealised expenses | 1,316 | 5 | -1,124 | 197 |
Pension liabilities | 168 | -201 | -32 | |
From translation difference | -69 | 0 | -69 | |
Group eliminations | 351 | 4 | 203 | 558 |
Total | 1,766 | 9 | -1,121 | 654 |
Deferred tax liabilities: | ||||
Assets at fair value in acquisitions | 8,830 | -16 | -46 | 8,768 |
Translation difference | 80 | 80 | ||
Other timing differences | 272 | -2 | -7 | 263 |
Total | 9,182 | -18 | -53 | -9,110 |
20. Provisions
EUR '000 | Environmental and rehabilitation provisions | \u00a0 | Other provisions | \u00a0 | Total |
Balance at 1.1.2023 | 10,855 | 1,625 | 12,480 | ||
Additions | 92 | 753 | 845 | ||
Releases and reversals | -657 | -552 | -1,209 | ||
Unwinding of discount | 1,069 | 0 | 1,069 | ||
Exchange differences | -1,252 | -437 | -1,689 | ||
Balance at 31.12.2023 | 10,107 | 1,389 | 11,496 |
Balance at 1.1.2022 | 9,453 | 2,484 | 11,937 | ||
Additions | 610 | 933 | 1,543 | ||
Releases and reversals | -117 | -1,945 | -2,062 | ||
Unwinding of discount | 989 | 272 | 1,261 | ||
Exchange differences | -79 | -119 | -198 | ||
Balance at 31.12.2022 | 10,855 | 1,625 | 12,480 | ||
EUR '000 | 2023 | \u00a0 | 2022 | ||
Long-term provisions | 11,400 | 12,206 | |||
Short-term provisions | 96 | 274 | |||
Total | 11,496 | 12,480 |
The long-term provisions in the statement of financial position relate to environmental and rehabilitation provisions of the Group's production facilities and mines. The provisions are based on expected liability.
", "dimensions": { "concept": "ifrs-full:DisclosureOfProvisionsExplanatory", "language": "en", "entity": "scheme:743700KOUL1GQQQREP40", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page45-body-tag6398576": { "value": "21. Pension liabilities
The majority of the Group's pension plans are defined contribution plans for which a total expense of EUR 0.7 (2022: 0.6) million has been recognised on the 2023 statement of comprehensive income. In addition, the Group's German subsidiary has defined benefit plans. The amount of defined benefit obligations of the plan is based on actuarial calculations made by authorized actuaries. The pension scheme is arranged by recognising a provision on the statement of financial position. The present value of the obligation less fair value of plan assets totalled EUR 12.8 (2022: 12) million on 31 December 2023. The Group has considered that the value on 31 December also corresponds with the amount of net obligation at the end of the reporting period. The assets of the pension plans are kept separate from the Group's assets.
Retirement benefit obligation | \u00a0 | \u00a0 | \u00a0 |
EUR '000 | 2023 | \u00a0 | 2022 |
Present value of funded obligation | 21,147 | 19,973 | |
Fair value of plan assets | -8,308 | -7,985 | |
Net liability | 12,839 | 11,988 |
\u00a0
Movements in defined benefit obligation | \u00a0 | \u00a0 | \u00a0 |
EUR '000 | 2023 | \u00a0 | 2022 |
\u00a0 | \u00a0 | \u00a0 | \u00a0 |
Defined benefit obligations at 1.1. | 19,973 | 28,116 | |
Benefits paid | -774 | -853 | |
Current service costs | 241 | 407 | |
Interest expense | 728 | 315 | |
Actuarial losses / (gains) | 979 | -8,013 | |
Closing balance at 31.12.\u00a0 | 21,147 | 19,973 | |
\u00a0 Movements in the fair value of the plan assets | \u00a0 | \u00a0 | \u00a0 |
EUR '000 | 2023 | \u00a0 | 2022 |
Fair value of the plan assets at 1.1. | 7,985 | 7,498 | |
Expected return on plan assets | 306 | 86 | |
Benefits paid by the plan | -217 | -200 | |
Return on plan assets greater/(less) than discount rate\u00a0 | -262 | 89 | |
Contributions paid into the plan | 496 | 513 | |
Closing balance at 31.12. | 8,308 | 7,985 |
The benefits of the defined benefit plan are insured with an insurance company. The corresponding assets are the responsibility of the insurance company and a part of the insurance company's investment assets. The distribution in categories is not possible to provide.
Expense recognised in statement of comprehensive income | \u00a0 | \u00a0 | \u00a0 |
EUR '000 | 2023 | \u00a0 | 2022 |
Current service cost | -241 | -407 | |
Net interest on net defined benefit liability/(asset) | -422 | -229 | |
-663 | -636 |
\u00a0
Expense recognised in other comprehensive income (OCI) | |||
EUR '000 | 2023 | 2022 | |
Actuarial (gains)/losses due to liability experience | -479 | -187 | |
Return on plan assets (greater)/less than discount rate | 262 | -89 | |
Actuarial (gains)/losses - financial assumptions | 1,457 | -7,826 | |
1,240 | -8,101 |
Actual return on plan assets totalled EUR 0.26 (2022: 0.08) million in 2023.
Principal actuarial assumptions\u00a0 | 2023 | \u00a0 | 2022 |
Discount rate | 3.17% | 3.73% | |
Expected retirement age | 65 | 65 | |
Expected rate of salary increase | 3.00% | 3.00% | |
Inflation | 2.25% | 2.25% |
\u00a0
The expected retirement age has been assumed to be in accordance with German legislation (RVAGAnpG 2007). Similarly, the expected pension increases have been assumed to be in line with the German legislation, and mortality expectancy in accordance with the German \"Richttafeln 2005 G\" has been applied in the valuations.
\u00a0
Provision for retirement pay liability in Turkey
In accordance with existing social legislation in Turkey, the Turkish subsidiary of the Group is required to make lump-sum payments to employees whose employment is terminated due to retirement or for reasons other than resignation or misconduct. The computation of the liability was based on the retirement pay ceiling announced by the Turkish government. On 31 December 2023, the employee severance indemnity recognised in accordance with IAS 19 totalled EUR 1.0 (2022: 1.1) million.\u00a0
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EUR '000 | 2023 | \u00a0 | 2022 |
Non-current | |||
Other liabilities | 22 | 23 | |
Total non-current | 22 | 23 | |
Current | |||
Current liabilities to related parties | 6 | 6 | |
Trade payables | 10,863 | 7,352 | |
Accrued expenses and deferred income | 5,171 | 5,566 | |
Current advances received | 4 | 1 | |
Income tax liability | 4,437 | 3,754 | |
Other liabilities | 626 | 2,495 | |
Total current | 21,107 | 19,174 |
Trade payables included a liability to supplier in relation to financing of material amounting to Eur 0.1 million in 2022.
", "dimensions": { "concept": "ifrs-full:DisclosureOfTradeAndOtherPayablesExplanatory", "language": "en", "entity": "scheme:743700KOUL1GQQQREP40", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "v1-page46-p_1417-tag6368658": { "value": "\u00a0RELATED PARTY DISCLOSURES1.9.1 Group structure on 31 December 2023
Subsidiaries
Name | Country of incorporation | Group's ownership and share of votes (%) | Afarak Group SE's direct ownership and share of votes (%) |
Afarak doo Belgrade | Serbia | 100.00 | 0.00 |
Afarak Holdings Ltd | Malta | 100.00 | 0.00 |
Afarak Investments Ltd | Malta | 100.00 | 100.00 |
Afarak Mining (Pty) Ltd | South Africa | 100.00 | 0.00 |
Afarak Mining Investments (Pty) Ltd | South Africa | 100.00 | 0.00 |
Afarak Platinum (Pty) Ltd | South Africa | 100.00 | 0.00 |
Afarak Processing Technologies (Pty) Ltd | South Africa | 100.00 | 0.00 |
Afarak Processing Technologies 2 (Pty) Ltd | South Africa | 100.00 | 0.00 |
Afarak South Africa (Pty) Ltd | South Africa | 100.00 | 0.00 |
Afarak Trading Ltd\u00a0 | Malta | 100.00 | 0.00 |
Auburn Avenue Trading 88 (Pty) Ltd | South Africa | 74.00 | 0.00 |
Chromex Mining Company (Pty) Ltd | South Africa | 94.00 | 0.00 |
Chromex Mining Ltd | United Kingdom | 100.00 | 0.00 |
Destiny Spring Investments 11 (Pty) Ltd | South Africa | 73.30 | 0.00 |
Destiny Spring Investments 12 (Pty) Ltd | South Africa | 100.00 | 0.00 |
Duoflex (Pty) Ltd | South Africa | 74.00 | 0,00 |
Elektrowerk Weisweiler GmbH | Germany | 100.00 | 0.00 |
Ilitha Mining (Pty) Ltd | South Africa | 100.00 | 0.00 |
Intermetal Madencilik ve Ticaret A.S. | Turkey | 99.00 | 0.00 |
Magnohrom doo Kraljevo | Serbia | 100.00 | 0.00 |
Rekylator Oy | Finland | 100.00 | 100.00 |
Synergy Africa Ltd | United Kingdom | 100.00 | 0.00 |
T\u00fcrk Maadin Sirketi A.S. | Turkey | 98.75 | 98.75 |
ZCM Holdco One (Pty) Ltd | South Africa | 74.00 | 23.00 |
Zeerust Chrome Mine Ltd | South Africa | 74.00 | 0.00 |
In December 2023, the ownership of Afarak Investments Ltd was changed to a Single Member Company, hence one share which was previously owned by Rekylator Oy, was transferred to Afarak Group SE.
1.9.2 Related party transactions
Afarak Group SE defines the related parties as:\u00a0
\u2022 companies, entities or persons having common control or considerable voting power in Afarak Group
\u2022 subsidiaries
\u2022 joint ventures
\u2022 associates
\u2022 Afarak Group SE's and the above mentioned entities' top management
Related party transactions with persons belonging to the Group's Board and management
Finnish accounting legislation, KPA 2:8 \u00a7 4 paragraph disclosure requirement
2023 | 2022 | |||||||
EUR '000 | Salaries | Fees | Share-based remuneration | Salaries | Fees | Share-based remuneration | ||
CEO | ||||||||
Konsbruck Guy | Board member 05.2.2018 onwards, CEO 15.1.2017 onwards | \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a014 | 535 | 242 | 710 | 67 | ||
Board members | ||||||||
Abrahamsen Thorstein | Board member 23.5.2017 onwards, Chairman11.11.2019 onwards | 137 | 75 | |||||
Manojlovic Jelena | Board member 11.7.2008 onwards, Chairperson 23.5.2017 - 25.6.2019 | 125 | 65 | |||||
Total | \u00a0 | 14 | 797 | 242 | \u00a0 | 0 | 850 | 67 |
As some of the Board members have also had executive management roles, both the Board fees and the salaries in relation to the executive role have been presented above.
The CEO fees for his service during 2023 were EUR 360,000, a salary of EUR 14,636 and a Company bonus of EUR 175,000. \u00a0
As part of the remuneration package under the CEO agreement, the CEO received 500,000 Company shares on 10 February 2022. On January 2023, the Group extended for another year the CEO contract and granted 500,000 shares in the Company. These shares have effectively been received after reporting period on 22 January 2024.
Management remuneration\u00a0
EUR '000 | 2023 | 2022 |
Fixed salaries and fees | 553 | 100 |
Total | 553 | 100 |
The table includes the Executive Management Team remuneration excluding the CEO for the year 2023. The comparative period includes salary to Danko Koncar, COO amounting to Eur100,000. Danko Koncar resigned from his position as COO on 31 May 2022. The CEO and Board members compensation has been presented separately.
Other related party transactions
No dividends were received from associated companies during 2023 and 2022.
On 18 August 2022, the company has resolved on directed share issue (\"Share Issue\") to RCS Trading Corporation Ltd (\"RCS\"). The Share Issue is connected to an Arrangement approved by the Board of Directors on 18th August 2022 related to the purchase by Afarak of certain loan receivables that RCS Trading Corporation Ltd has from Afarak's Group company Synergy Africa Limited. Afarak also settled the remaining loan balance before the year end 31 December 2022.
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1.10.1 Mortgages and guarantees pledged as security
On 31 December 2023 the Group had loans from financial institutions totalling EUR 2.8 (2022: 1.6) million. The Group has provided real estate mortgages and other assets as collaterals for total carrying value of EUR 2.7 (2022: 1.6) million. Moreover, the Group companies have given cash deposits totalling EUR 0. (2022: 0.3) million as security for their commitments. The value of other collaterals totalled EUR 3.8 (2022: 3.8) million as at 31 December 2023.\u00a0
1.10.2 Covenants included in the Group's financing agreements
One of the Group's Maltese subsidiaries, Afarak Trading Ltd, was granted a loan facility from a Maltese bank in 2023. As at year end 2023 the balance was US$ 2.7 (EUR 1.6) million. An additional trade finance loan facility without recourse amounting to $ 2.0 million was utilised during the year. The Maltese subsidiary made use of this facility and settled in full by end of 2023.The financial covenants attached to both loans were not breached at the end of the reporting period.\u00a0
1.10.3 Rental agreements
Liabilities associated with rental and operating lease agreements totaled some EUR 0.2 (2022: 0.2) million for the period. Typically, the rental agreements maturity varies between two to five years, and normally there is a possibility to continue these agreements beyond the original maturity date. For these contacts, their price indexing, renewal and other terms differ contract by contract. As guarantees for these rental agreements, the Group companies have made cash deposits of approximately EUR 0.0 (0.0) million as at 31 December 2023.
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Stock Exchange Releases
On\u00a022 January 2024,\u00a0pursuant to the share issue authorization granted by the Company's Annual General Meeting held on June 21, 2023, the Board of Directors has resolved on a directed share issue without payment. Based on the share issue 500,000 of the Company's treasury shares (\"Shares\") have now been transferred to CEO Guy Konsbruck. The Shares form a part of the remuneration package under the CEO agreement.
After the execution of the share issue 6,041,514 treasury shares shall remain in the possession of Afarak, representing approximately 2.26 per cent of the total shares and votes of the Company.
On\u00a014 February 2024, Afarak's Board of Directors has decided, to direct a share issuance without payment to the Company itself, by virtue of the authority granted by the General Annual Meeting of 21 June 2023 and according to chapter 9, section 20 of the Companies' Act.
The share issuance consists of 10,000,000 new shares. The shares are of the same share series than the existing shares of the Company and they have the same share rights as of their registration than the Company\u00b4s existing shares. The shares which will be held by the Company may be used among other things to raise additional finance and enabling corporate and business acquisitions or other arrangements and investments of business activity or for employee incentive and commitment schemes.
The new shares will be registered into the Trade Register without undue delay after which the Company will apply for the shares to be publicly traded on Nasdaq Helsinki Oy.
On\u00a029 February 2024, a total of 10,000,000 new shares issued on the basis of the directed share issuance without payment to the Company itself was decided by Afarak's Board of Directors on February 14, 2024 based on the authorization granted by Afarak's Annual General Meeting on June 21, 2023 have been registered in the Trade Register today. The new shares are of the same share series than the existing shares of the Company.
The new shares will be applied for public trading on Nasdaq Helsinki Oy from on or about March 1, 2024.
As a result of the registration of the new shares, the number of Afarak Group SE's shares is 277,041,814, of which 16,041,514 are treasury shares.
On\u00a025 March 2024,\u00a0Afarak published a notice regarding an Extraordinary General Meeting in connection with the Report of the Special Audit.
Flagging notification after the reporting period
Afarak Group SE has on\u00a029 February 2024\u00a0made a flagging notification to FIN-FSA pursuant to Chapter 9, Section 5 of the Finnish Securities Markets Act. According to the flagging notification Afarak's portion of the Company's shares has exceeded the threshold of 5 per cent.
According to the notification, Afarak holds 16,041,514 treasury shares in Afarak, which corresponds to approximately 5.79 % of the total shares in Afarak. This is based on the fact that a total of 10,000,000 new shares issued on the basis of the directed share issuance without payment to the Company itself decided by Afarak's Board of Directors on February 14, 2024 based on the authorization granted by Afarak's Annual General Meeting on June 21, 2023 have been registered in the Trade Register on 29 February 2024.
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