1
AFARAK GROUP SE
The Board of Directors Report 2024 and
the Annual Financial Statements
1 January-31 December 2024
Domicile: Helsinki
Company number: 0618181-8
2
Contents
THE BOARD OF DIRECTORS REPORT .................................................................................. 4
OUR COMMITMENT ......................................................................................................... 4
SUSTAINABILITY, HEALTH AND SAFETY AT AFARAK GROUP ............................................... 4
CSRD REPORT ................................................................................................................... 5
THE FERROCHROME AND CHROME ORE MARKET ........................................................... 78
GROUP OPERATIONAL REVIEW ............................................................................................... 78
GROUP FINANCIAL PERFORMANCE ......................................................................................... 79
SEGMENTS REVIEW ........................................................................................................ 80
SPECIALITY ALLOYS SEGMENT ............................................................................................ 80
FERROALLOYS SEGMENT .................................................................................................... 81
RISK MANAGEMENT .............................................................................................................. 81
SHARE INFORMATION .................................................................................................... 82
KEY FIGURES ................................................................................................................... 86
SHARE-RELATED KEY INDICATORS ................................................................................... 87
EVENTS AFTER THE REPORTING PERIOD .......................................................................... 89
ANNUAL FINANCIAL STATEMENTS .................................................................................. 90
CONSOLIDATED FINANCIAL STATEMENTS, IFRS ............................................................... 91
CONSOLIDATED INCOME STATEMENT .................................................................................... 91
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME .................................................... 92
CONSOLIDATED STATEMENT OF FINANCIAL POSITION ............................................................ 93
CONSOLIDATED STATEMENT OF CASH FLOWS ........................................................................ 95
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY, ............................................................ 96
1. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ............................................ 97
1.1 COMPANY INFORMATION ................................................................................................ 97
1.2 ACCOUNTING PRINCIPLES ................................................................................................. 97
1.3 GOING CONCERN ............................................................................................................ 110
1.4 BUSINESS COMBINATIONS AND ACQUISTION OF NON-CONTROLLING INTERESTS ............ 110
1.5 IMPAIRMENT TESTING .................................................................................................... 110
1.6 OPERATING SEGMENTS .................................................................................................. 113
1.7 NOTES TO THE CONSOLIDATED INCOME STATEMENT ...................................................... 117
1.8 NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION .............................. 121
1.9 RELATED PARTY DISCLOSURES ........................................................................................ 140
1.10 COMMITMENTS AND CONTINGENT LIABILITIES ............................................................. 141
1.11
EVENTS AFTER THE REPORTING PERIOD.................................................................... 142
PARENT COMPANY’S FINANCIAL STATEMENTS (FAS) .................................................... 143
INCOME STATEMENT (FAS)................................................................................................... 143
STATEMENT OF FINANCIAL POSITION (FAS) .......................................................................... 144
STATEMENT OF CASH FLOWS (FAS) ....................................................................................... 146
2. NOTES TO THE FINANCIAL STATEMENTS OF THE PARENT COMPANY (FAS) ................ 147
2.1 Accounting Policies ......................................................................................................... 147
2.2 Notes to the income statement ...................................................................................... 148
2.3 Notes to assets ............................................................................................................... 149
3
2.4 Notes to equity and liabilities ......................................................................................... 151
2.5 Pledges and contingent liabilities .................................................................................... 153
2.6 Other notes .................................................................................................................... 153
SIGNATURES TO THE BOARD OF DIRECTORS REPORT AND THE FINANCIAL STATEMENTS155
THE AUDITOR’S NOTE ................................................................................................... 156
4
THE BOARD OF DIRECTORS REPORT
Dear Shareholders,
In an extremely tough year 2024, we generated a positive EBITDA of € 2.6M. The stainless steel demand was
historically low, especially in Europe. The demand for low carbon ferro-chrome suffered from this fact. In addition
the price pressure from low cost imports (India, Kazakhstan, Russia and China) weighed heavily on our margins.
We have decreased the OPEX by 21.2%, but that wasn’t enough to generate a good result. The Chrome Ore prices
decreased sharply in the second half year, which further impacted the revenues and margins. Nonetheless, we
succeeded in keeping our financial situation stable. The company will follow the new dividend policy and the
board intends to decide about the actual dividend allocation at a later stage.
Guy Konsbruck
CEO
OUR COMMITMENT
Afarak vows to deliver its contribution to environmental and social sustainability through its production processes.
We believe that our efforts will support several United Nations’ resolutions on sustainability, such as decreasing
poverty and hunger, but also increasing gender equality, education and access to clean water.
Our most significant impact on local host communities lies in providing direct and indirect employment. We
support local communities in their needs related to education and infrastructure whilst supporting social causes.
SUSTAINABILITY, HEALTH AND SAFETY AT AFARAK GROUP
Afarak Group extracts, processes, markets and trades specialised metals and is trusted by a highly diversified
customer base that covers the aviation, nuclear, oil & gas and automotive industries. Our customers are leaders in
their sectors and look to their suppliers to uphold their high standards for ethical conduct, health and safety and
environmental protection. The communities in the regions where we operate also look to us to support their
economic development.
Our sustainability commitments and our work to date is designed to provide all our stakeholders with the assurance
that we are a well-managed business that respects people and the planet.
There were two fatal accidents to a subcontractor’s workers in the company’s South African mines during 2024.
The Board has taken seriously these incidents and have been investigating the cause so as to ensure that similar
incidents do not happen in the future. Our goal is to ensure that our employees work in a safe environment at all
times.
5
CSRD REPORT
ESRS 2: General Disclosures ................................................................................................................................. 7
BP-1: General principles for the preparation of the sustainability declaration .................................................. 7
BP-2: Disclosures in connection with specific circumstances ........................................................................... 7
GOV-1: The role of the administrative, management and supervisory bodies .................................................. 9
GOV-2: Information and sustainability aspects addressed by the company's administrative, management and
supervisory bodies ........................................................................................................................................... 13
GOV-3: Inclusion of sustainability-related performance in incentive systems ................................................ 14
GOV-4: Declaration on due diligence ............................................................................................................. 15
GOV-5: Risk management and internal controls over sustainability reporting ............................................... 16
SBM-1: Strategy, business model and value chain .......................................................................................... 18
SBM-2: Stakeholders' interests and positions .................................................................................................. 22
SBM-3: Significant impacts, risks and opportunities and their interaction with strategy and business model 23
IRO-1: Description of the process for the identification and assessment of significant impacts, risks and
opportunities .................................................................................................................................................... 35
ESRS 2 IRO-1 - E1: Description of procedures for the identification and assessment of significant
climate-related impacts, risks and opportunities ......................................................................................... 36
ESRS 2 IRO-1 - E2: Description of procedures for the identification and assessment of significant
impacts, risks and opportunities related to environmental pollution ........................................................... 36
ESRS 2 IRO-1 - E3: Description of procedures for the identification and assessment of significant
impacts, risks and opportunities related to water and marine resources...................................................... 36
ESRS 2 IRO-1 - E5: Description of procedures for the identification and assessment of significant
impacts, risks and opportunities associated with resource use and the circular economy ........................... 36
IRO-2: Disclosure requirements included in the ESRS that are covered by the company's sustainability
declaration ........................................................................................................................................................ 36
Information in accordance with Article 8 of Regulation 2020/852 (Taxonomy Regulation) ............................... 42
EU Taxonomy ...................................................................................................................................................... 42
Assessment of Afarak´s Business Activities .................................................................................................... 42
Key Performance Indicators (KPI´s) for 2024 ................................................................................................. 43
Do No Significant Harm (DNSH) Criteria ...................................................................................................... 43
Capital & Operating Expenditure Classification .............................................................................................. 43
Research & Development Initiatives ............................................................................................................... 44
Sustainability-Driven Initiatives ...................................................................................................................... 44
Conclusion & Outlook ..................................................................................................................................... 44
ESRS E1: Climate Change ................................................................................................................................... 48
E1-1: Transition plan for climate protection .................................................................................................... 48
ESRS 2 SBM-3 - E1: Significant impacts, risks and opportunities and their interaction with strategy and
business model ................................................................................................................................................. 48
E1-2: Concepts related to climate change mitigation and adaptation ............................................................. 48
E1-3: Measures and resources in connection with the climate concepts .......................................................... 48
E1-4: Goals related to climate protection and adaptation to climate change ................................................... 50
E1-5: Energy consumption and energy mix ..................................................................................................... 51
E1-6: Gross GHG emissions in Scope 1, 2 and 3 categories and total GHG emissions .................................. 52
E1-8: Internal CO2 pricing ............................................................................................................................... 56
E1-9: Expected financial effects of significant physical and transition risks and potential climate-related
opportunities .................................................................................................................................................... 56
ESRS E2: Pollution .............................................................................................................................................. 56
E2-1: Concepts related to environmental pollution......................................................................................... 56
E2-2: Measures and resources related to environmental pollution .................................................................. 57
E2-3: Targets related to environmental pollution ............................................................................................ 58
E2-4: Air,water and soil pollution.................................................................................................................... 59
E2-6: Expected financial effects of impacts, risks and opportunities related to pollution ............................... 61
ESRS E3: Water and Marine Resources .............................................................................................................. 61
E3-1: Concepts related to water and marine resources ................................................................................... 61
E3-2: Measures and resources related to water and marine resources ............................................................. 62
E3-3: Goals related to water and marine resources .......................................................................................... 62
6
E3-4: Water Consumption ............................................................................................................................... 63
E3-5: Expected financial effects of impacts, risks and opportunities related to water and marine resources .. 64
ESRS E5: Resource Use and Circular Economy .................................................................................................. 64
E5-1: Concepts related to resource use and the circular economy ................................................................... 64
E5-2: Measures and means related to resource use and circular economy ...................................................... 64
E5-3: Goals related to resource use and circular economy .............................................................................. 64
E5-4: Resource Inflows ................................................................................................................................... 65
E5-5: Resource Outflows ................................................................................................................................. 67
E5-6: Expected financial effects of impacts, risks and opportunities related to resource use and the circular
economy ........................................................................................................................................................... 70
ESRS G1: Business Conduct ................................................................................................................................ 70
G1-1: Corporate culture and concepts for corporate management ................................................................... 70
G1-2: Management of relationships with suppliers ......................................................................................... 75
G1-5: Political influence and lobbying activities ............................................................................................. 76
G1-6: Payment practices .................................................................................................................................. 77
7
ESRS 2: General Disclosures
BP-1: General principles for the preparation of the sustainability declaration
This report is the first sustainability report of Afarak SE (Societas Europaea) (hereinafter referred to as "Afarak").
In accordance with the EU Corporate Sustainability Reporting Directive (CSRD), the group is obliged to report
for the 2024 financial year and is therefore preparing this sustainability report in accordance with the European
Sustainability Reporting Standards (ESRS).
The information in this sustainability report relates to the 2024 financial year, with deviations marked accordingly.
The scope of consolidation for this sustainability report includes the locations in Germany, South Africa and
Turkey. The locations not included in the scope of consolidation are Serbia and Malta, as they were not classified
as material in accordance with the materiality criteria of the ESRS standard for sustainability reporting. No
significant economic activities took place there in the reporting year.
The sustainability report relates to two value chains. The first chain relates to Afarak's mining sites, which serve
as the primary source for the extraction of raw materials and therefore represent the beginning of the value chain.
The second chain comprises the Group's production site. It should be mentioned here that some of the raw
materials extracted from the mines' value chain are processed in the company's own production facilities.
Afarak has decided not to omit any information regarding intellectual property, know-how or innovative results
from the sustainability statement. Similarly, in accordance with Article 19a (3) and Article 29a (3), no omissions
of information on forthcoming developments or issues currently under negotiation are made.
BP-2: Disclosures in connection with specific circumstances
Time horizons and further information
In accordance with the time horizons defined in ESRS 1, Afarak has not made any deviations. The medium-term
time horizon extends up to five years after the end of the current reporting period, while the long-term time horizon
extends beyond that. The reporting also does not include any upstream or downstream value chain metrics based
on estimates from indirect sources such as industry average data or other approximations. Furthermore, no
quantitative key figures or monetary amounts are reported that would be subject to a high degree of measurement
uncertainty.
As this is Afarak's first Sustainability Report, no changes have been made in the preparation and presentation of
the sustainability information compared to previous reporting periods, and there are no errors from previous
reports to mention. Furthermore, this Sustainability Report does not include any additional information based on
other legal requirements or generally accepted standards and frameworks, including standards of the European
Standardization System (ISO/IEC or CEN/CENELEC standards). Furthermore, no specific information has been
incorporated by reference into the sustainability statement.
Use of transitional periods
Afarak makes use of some transitional periods and thus omits ESRS E4 (Biodiversity and Ecosystems), ESRS S1
(Own Workforce) and ESRS S3 (Affected Communities) in accordance with Appendix C of ESRS 1. Although
detailed reporting on these topics will be dispensed with in the first reporting year, they shall remain a central
component of Afarak's strategic orientation. The plan is to cover these topics in detail in the sustainability reports
in the coming years. The importance of these aspects is already firmly integrated into the Group's business model
and strategic direction, as explained in more detail below:
In relation to E4 (Biodiversity and ecosystems)
Afarak's business model is closely linked to the use of natural resources. Although Afarak's mine sites are not
located in ecologically protected areas, the Group recognizes the importance of preserving biodiversity and
ecosystems even in areas outside officially protected regions. The long-term strategy aims to minimize negative
8
impacts on the environment. Afarak is constantly working to establish sustainable practices at its production and
mining sites.
Afarak is already integrating aspects of biodiversity and ecosystem protection into its environmental management
systems to ensure that operations are in line with local and global objectives. The measures are aimed at
maintaining soil health and protecting water resources.
The Group's current materiality assessment shows that topic standard E4 has only just reached the required
threshold for a material classification. In light of this, Afarak considers it appropriate to take advantage of the
transitional period and not report on this topic standard in the 2024 reporting year. This decision will allow a new
and more comprehensive review of materiality to be performed next year, based on the disclosures required by
ESRS E4. If the topic remains material, Afarak will establish detailed reporting on E4 by 2026 at the latest.
In addition, it is expected that regulatory requirements may change in the near future, which may result in either
a higher classification or a more detailed analysis. The use of the transition period allows Afarak to ensure that
reporting not only meets current standards, but is also flexible enough to respond to regulatory developments
and provide a solid basis for future evaluation. The aim is to ensure sound and responsible reporting that meets
both stakeholder requirements and internal standards.
With regard to S1 (Own employees)
Afarak's business model is geared towards long-term growth and stability, with the well-being and development
of employees playing a central role. Great emphasis is placed on promoting health and safety in the workplace.
Risks are continuously assessed at all sites and measures are implemented to improve health and safety guidelines.
Afarak also offers continuous training and development opportunities and is mindful of diversity and inclusion
within the workforce. These principles are firmly anchored in the corporate strategy to ensure a sustainable and
motivated workforce. Afarak will establish more detailed reporting on S1 by 2025 at the latest.
With regard to S3 (Communities concerned)
Afarak's strategy aims to achieve positive social and economic effects in the regions in which the company
operates. The Group is actively involved in initiatives that support local communities, particularly those close to
the mining sites in South Africa. Such initiatives include job creation, access to education and the promotion of
environmental awareness. Afarak also maintains an open dialogue with local stakeholders to better understand
their needs and minimize any potential negative impacts of its operations. If the topic remains material, Afarak
will establish more detailed reporting on S3 by 2026 at the latest.
Goals on these topics
In view of the measures and targets already implemented in the social area of sustainability, Afarak intends to
establish a stronger and more detailed reporting system over the next two years. This will include a more detailed
presentation of current and future initiatives. To achieve this, the Group plans to further strengthen its interaction
with relevant stakeholder groups. The aim is to better understand the expectations and concerns of internal and
external stakeholders and integrate them into strategic planning. In addition, Afarak will concretize its future plans
by precisely setting out its long-term goals and strategies, particularly with regard to social aspects such as its own
employees (ESRS S1) and the affected communities (ESRS S3). Another component of future reporting will be
the detailed presentation of past projects in order to transparently disclose progress and successes to date and
derive valuable insights for future initiatives.
Guidelines on these topics
As part of the Group's corporate social responsibility, the promotion of human rights and the improvement of the
quality of life are at the heart of the concepts and guidelines. This shall include ensuring fair working conditions
and the health and safety of employees. In addition, Afarak is committed to working with affected communities
to focus on their needs, respond to them and promote positive social impacts. Furthermore, the guidelines of the
Code of Conduct, the Code of Ethics and the Supplier Code of Conduct apply, which regulate the standards of
9
conduct at Group level. All Afarak sites are instructed to act in accordance with these guidelines, in line with local
legislation.
Measures on these topics
Afarak is committed to consistently striving to implement the Group-wide "Zero Harm Policy" at all levels of its
business activities. This Group-wide guiding principle includes the intention to ensure a safe and healthy working
environment for both employees and contractors. Regular exchanges in health and safety committees enable
Afarak to integrate its corporate activities in such a way that the social, environmental, health and safety concerns
of all stakeholders are adequately taken into account.
Afarak is actively committed to improving the working conditions of its employees by creating a safe environment
and specifically addressing key health issues - particularly HIV/AIDS at its South African sites. In addition to
safety, health is a top priority for Afarak. By providing comprehensive healthcare, the Group actively contributes
to the long-term well-being of its employees. Continuous assessments, monitoring and controls of risks to
employees are carried out at the sites.
There are various bodies and committees at all locations to protect the interests of the workforce. In Turkey, for
example, there are health and safety committees, while in South Africa employee rights are represented by
committees such as those for labor relations, equal opportunities and skills development. In Germany, employees
have a works council and are represented by a trade union. At European level, the Group's employee
representatives are also organized in an SE Works Council, which deals with Group-wide issues and employee
interests.
Afarak also supports local communities through social programs such as:
•
the care of orphans
•
Supporting schools through a food aid program that ensures the nutritional needs of children are met
•
Support for daycare centers that provide children with professional care and promote their early
childhood education and development
•
Support for a refuge center for abused women, which offers protection and support for families
GOV-1: The role of the administrative, management and supervisory bodies
The Group's administrative, management and supervisory bodies are crucial in the formulation, monitoring and
implementation of corporate policy. The Board of Directors (BoD), which is equivalent to the Advisory Board, is
ultimately responsible to monitor environmental, social and governance (ESG) strategies, while the Executive
Management Team (EMT) is responsible for the implementation of corporate policy and risk management. The
Audit and Risk Management Committee ensures the effectiveness of the internal control systems.
These bodies have the strategic responsibility to define the impacts, risks and opportunities (IROs) and integrate
them into the corporate objectives. Their task is to approve comprehensive sustainability strategies and ensure
that sufficient expertise is available in key areas. Sustainability issues are an integral part of the meetings of the
relevant bodies. Care is taken to ensure that sustainability goals are integrated into the company's overall strategy.
The bodies themselves have extensive expertise in the areas of risk management, ESG strategies and compliance.
This enables them to effectively monitor and implement corporate policy. In addition, they call on specialized
teams and experts to support them in the development and implementation of policies.
The responsibilities for monitoring the IROs and implementing the ESG strategies are structured in the following
committees :1
1 https://afarak.com/wp-content/uploads/2020/06/Corporate-Governance-Statement-2024.pdf
10
Board of Directors (BoD)
The Board of Directors (BoD) is equivalent to the Advisory Board or Executive Board and bears the highest
responsibility for monitoring sustainability-related risks and ESG issues. The BoD is responsible for approving
and evaluating ESG strategies and analyzing the impacts, risks and opportunities of all sustainability issues
affecting the company. In this role, the BoD oversees the Executive Management Team (EMT) and the Audit
Committee to ensure that policies and risk management processes are implemented appropriately. Afarak's BoD
holds regular meetings at least four times a year to monitor and manage strategic, financial and operational issues.
In addition, a strategy meeting is held at least once a year. This meeting is attended by the BoD, the EMT and the
Corporate Management Team (CMT). The aim of this meeting is to review and agree strategic objectives and
define the long-term direction of the company.
•
Chairman and independent non-executive director: Thorstein Abrahamsen
•
Independent non-executive director: Dr. Jelena Manojlovic
•
Chief Executive Office (CEO) and Managing Director: Guy Konsbruck
Board Committees
Audit and Risk Management
Afarak's Audit and Risk Management Committee monitors the company's financial reporting, internal control
system and risk management processes. It collaborates closely with external auditors, reviews their reports and
ensures that the company's management complies with legal and regulatory requirements. It also supports the
BoD in evaluating growth strategies and investments.
Nomination and Remuneration Committee
Afarak's Nomination and Remuneration Committee is responsible for the selection and nomination of
Management Board members and executives as well as the development and monitoring of the remuneration
policy. It ensures that appointments to management positions reflect the necessary expertise, diversity and
experience. It also develops performance-oriented remuneration structures that are in line with the company's
long-term goals.
Committee for Health, Safety and Sustainability
Afarak's Committee for Health, Safety and Sustainability monitors compliance with health and safety standards
and the implementation of sustainability initiatives. It promotes projects to improve working conditions,
11
environmental protection and cooperation with local communities. It also supports investments in sustainable
technologies, such as alternative energy sources and measures to reduce environmental pollution.
Executive Management Team (EMT)
The EMT is responsible for implementing ESG strategies, monitoring IROs and risk management. Risk factors,
opportunities and their impact are regularly reviewed here to ensure that appropriate management plans are
implemented.
The EMT acts as a supportive and advisory body that does not make any independent decisions. However, it
provides input and recommendations that are implemented either by the CEO, a responsible EMT member or the
BoD. This model ensures that all decision-making processes remain under the control of the highest levels of
management, in particular the CEO and the BoD. It should be emphasized that the Chief Compliance Officer
(CCO) in particular monitors the legal and regulatory requirements in the area of sustainability, including
compliance with the CSRD and other reporting standards. He also acts as ESG manager at Group level. The EMT
meets at least once a year for a strategy meeting with the CMT and the BoD. The EMT reports on risk reviews to
the BoD on a quarterly basis. In addition, the EMT submits half-yearly interim financial reports to the BoD.
The members of the EMT are as follows:
•
Chief Technology Officer (CTO): Christoph Kemper
•
Chief Compliance Officer (CCO): Stefano Bonati
•
Chief Financial Officer (CFO): Kylie Gauci
•
Chief Executive Officer (CEO): Guy Konsbruck
Corporate Management Team (CMT)
The CMT comprises the national managing directors and senior functions responsible for compliance with
national laws and local ESG requirements in the respective regions in which Afarak operates. They ensure the
direct implementation of the company's strategic guidelines in the operational business.
The members of the CMT are as follows:
•
Seyda Caglayan
•
Dr.-Ing. Christoph Kemper
•
Christoph Schneider
•
Dr. Kurt Maske
•
Kylie Gauci
•
Dr. Stefano Bonati
The CMT reports primarily to the EMT, which serves as the central interface for the coordination and monitoring
of operational activities. The EMT reviews and consolidates the CMT's reports before strategically relevant issues
are forwarded. The CMT meets at least once a year for a strategy meeting with the EMT and the BoD.
ESG team
Afarak's ESG team was established to meet CSRD reporting requirements and support the company's ESG
objectives. Led by Dr. Stefano Bonati, CCO and ESG Manager, the team helps to ensure compliance with
international ESG standards and regulatory requirements. The team reports directly and continuously to the EMT
on ESG-related findings.
The team forms a central unit for the transparent communication of environmental, social and governance aspects
to internal and external stakeholders. It consolidates the ESG data from all operating locations and ensures their
compliance with current reporting obligations. A key focus is on developing strategies that will enable a gradual
expansion of reporting in the coming years in order to meet future regulatory and market-specific requirements.
12
Composition and diversity of the administrative, management and supervisory bodies
The composition of Afarak's Board of Directors is as follows:
Reporting year
Unit
Number of managing members
1
Integer
Number of non-executive members
2
Integer
Gender diversity of the Board of Directors
33.3 % F 66.6 %
M
Percentage (%)
Percentage of independent members
66.6 %
Percentage (%)
Controls and procedures for IRO management
The members of the EMT and BoD regularly receive comprehensive reports to keep them informed of relevant
findings and developments in IRO management (Impact, Risks, and Opportunities), which have already been
listed in the previous chapter.
To ensure effective IRO management, Afarak significantly expanded its IRO management in the course of
introducing CSRD reporting and systematically integrated it with the help of the double materiality assessment
(Doppelte Wesentlichkeitsanalyse = DWA). While IRO management was previously less extensive and focused
on basic risk aspects, it has now been embedded in Group-wide risk management. Through regular reviews,
Afarak strives to ensure that IRO management is closely aligned with corporate objectives and sustainability
reporting requirements.
Expertise in monitoring the IROs
Afarak's BoD and EMT take targeted measures to ensure that appropriate skills and expertise are in place at both
operational and strategic levels to monitor and develop sustainability issues. The clear division of tasks between
operational implementation and strategic responsibility aims to ensure that sustainability expertise is leveraged at
a detailed level and also feeds into strategic decisions at management level.
1. Deployment of specialist personnel: Afarak deploys employees with in-depth expertise in environmental
management, social responsibility and corporate governance in key positions. ESG officers and
compliance specialists, who report directly to management, play a central role in this. The ESG team
coordinates strategies in the areas of environmental, social and governance, including the assessment of
risks such as carbon accounting and the development of climate strategies. Site-based HR teams promote
equal opportunities and implement anti-discrimination measures, while site managers analyze
operational risks in the supply chain and production sites and develop suitable risk mitigation strategies.
2. Targeted further training: The existing members of the relevant bodies regularly take part in training
sessions on current sustainability topics. This training covers legal requirements such as the CSRD and
the strategic ESG objectives to ensure that the company is always up to date.
3. External expertise: For specific sustainability issues, the bodies call in external consultants or
organizations to assist with specific sustainability issues or with the development of new strategies.
4. Continuous development: The executive bodies regularly review existing skills and knowledge and
continuously adapt their strategies in order to proactively meet future requirements and sustainably
promote the company's development.
Employee representation
Afarak's locations are represented by the CMT, which includes the managers responsible for each location. This
team acts as a central platform for coordination and exchange between the operating units and reports directly to
the EMT. The aim of this structure is to ensure that the interests of employees at all sites are incorporated into the
Group's strategic decision-making.
13
The representation of employees' interests has been adapted to the individual legal and organizational
requirements of the respective sites. The representation of employees and workers in the bodies of Afarak is
organized as follows:
German site:
At the German site, a works council represents the co-determination rights of employees, while a representative
body for severely disabled employees is specifically dedicated to the interests of employees with disabilities. The
employees are unionized in the IG Metall trade union. The members of the works council and the representative
body for severely disabled employees work closely with the workforce and management to comply with legal and
operational requirements. In addition, some unionized employees are active as shop stewards in the company in
order to represent and strengthen the interests of employees directly on site.
Furthermore, regular committee meetings with employee participation are dedicated to topics such as occupational
health and safety. In addition, staff meetings are held to promote communication and transparency between
company management and employees. In addition to the physical notice boards, an employee app is also used for
structured and open communication in all areas of activity, which promotes transparent exchange and information
for the entire workforce.
South Africa:
In South Africa, employees are represented by various committees. These committees focus on topics such as
labor relations, equality and skills development and offer employees a platform for co-determination and to voice
their concerns.
Turkey:
In Turkey, too, health and safety councils in the mines play a central role in co-determination and dealing with
safety-related issues
Afarak SE as a company:
As a European company, Afarak is subject to EU regulations on employee involvement and therefore has an SE
Works Council. This is made up exclusively of employees from the EU sites and represents the interests of the
European workforce in important corporate decision-making processes. The SE Works Council consists of three
members of the German Works Council, one trade union representative from IG Metall and one member from the
administrative location in Malta. Together, they represent the interests of the EU employees.
GOV-2: Information and sustainability aspects addressed by the company's administrative, management
and supervisory bodies
Administrative, management and supervisory structures in ESG management
Afarak's management and supervisory bodies receive regular reports on the main IROs relating to sustainability,
at least every six months and sometimes quarterly. Afarak uses a structured reporting system to monitor the
effectiveness of implemented measures:
•
The site managers, who are part of the CMT, report directly to the EMT.
•
The ESG team reports to the CCO (ESG manager at Group level) on progress and measures in the field
of sustainability.
•
The EMT consolidates the reports from the site managers and the ESG team and forwards them to the
BoD together with its own strategic assessments.
IROs are deliberately taken into account in strategy monitoring by including them in ESG and climate-related
decisions. Comprehensive risk analyses are carried out before important transactions are carried out. IROs are
regularly assessed and monitored as part of risk management. Trade-offs between short-term costs and long-term
sustainability goals are also carefully examined.
14
In the 2024 reporting period, the administrative, management and supervisory bodies and their committees dealt
with a number of key IROs. The following topics reflect the strategic planning priorities for 2024 and emphasize
the Group's commitment to integrating sustainability both operationally and strategically:
Results of the double materiality assessment (DWA):
In the 2024 reporting period, Afarak conducted a comprehensive double materiality assessment to identify the key
sustainability issues that are of strategic importance to the company and its stakeholders. The assessment takes
into account both the impact of business activities on the environment and society as well as financial risks and
opportunities resulting from sustainability factors.
•
In the "Environment" area, the focus was on the efficient use of resources and minimizing negative
effects. Particular attention was paid to water consumption, which has already been optimized at the mine
sites and reduced through targeted measures for reuse. Energy consumption was also assessed as a key
factor. Afarak plans to reduce costs and promote sustainability in the long term by increasing the
integration of renewable energies.
•
In the "Social" area, the working conditions of the company's own employees and the rights of the
affected communities were examined in more detail. Afarak is committed to fair working standards, safe
working environments and the promotion of employee health and safety. At the same time, responsibility
towards the communities in the vicinity of the sites plays a central role. The aim is to take local needs
into account and further expand social initiatives in order to achieve positive effects in the regions.
The results of the materiality assessment form the basis for concrete measures that contribute to the integration of
sustainability goals into the business strategy. They illustrate Afarak's commitment to promoting sustainability in
the long term, both operationally and strategically.
Development of the ESG management system:
Afarak's executive bodies have worked intensively on integrating all operating sites into a central ESG
management system in order to meet the requirements of the CSRD. One focus was on integrating all sites into
the Life Cycle Assessment (LCA). In addition, the first data collections for a "Climate Change Transition Plan"
were started in order to develop long-term strategies, measures and targets.
In addition, ESG reporting structures have been created to ensure consistent and transparent data collection and
reporting. The aim is to define clear responsibilities and establish processes that make it possible to efficiently
consolidate ESG data from all operating units and report on this data in accordance with the requirements of the
CSRD and other international standards. The focus here is on continuously improving data quality and creating a
reliable basis for future sustainability reports.
Energy dependencies:
Uncertainties and rising energy supply costs were treated as a significant risk, with the aim of using renewable
energies at all sites. The focus was on pilot projects for the use of solar energy and to improve energy efficiency.
Market fluctuations:
The ongoing price volatility of low carbon ferrochrome, particularly due to imports from Russia and India, was
closely monitored.
GOV-3: Inclusion of sustainability-related performance in incentive systems
Description of the remuneration system
•
Base salary: Determined by the position, skills and experience of the respective executive.
•
Annual bonus plan: An incentive based on annual performance.
•
Long-term share-based incentives: To promote long-term corporate goals and align the interests of
management and shareholders.
15
The remuneration of the BoD was determined by the 2024 Annual General Meeting as follows
•
Non-executive members: EUR 5,000 per month.
•
Chairman of the Board: Additional EUR 1,500 per month.
•
Committee members: An additional EUR 1,500 per month for work on Board committees.
Members of the Board who also hold executive roles in the company do not receive any additional remuneration
for their work on the Board.
Approval of the remuneration system
The remuneration system is monitored and approved by the Nomination and Remuneration Committee:
•
The committee consists of two independent board members: Thorstein Abrahamsen and Jelena
Manojlovic.
•
It conducts the process for Board appointments and management remuneration and makes
recommendations to the BoD and the Annual General Meeting.
Sustainability-related incentives
The remuneration system does not currently contain any explicit sustainability targets or ESG-related
remuneration components.
Reporting
year
Unit
Proportion of variable remuneration that depends on sustainability-related
targets and/or impacts
0
Percentage (%)
GOV-4: Declaration on due diligence
Core elements of the duty of care
Paragraphs in the sustainability
declaration
Does the information refer to people
and/or the environment?
a.
Integration of due diligence
into governance, strategy and
business model
ESRS 2 GOV-2, P. 12
ESRS 2 GOV-3, P. 14
ESRS 2 SBM-3, P. 26
ESRS 2 SBM-3-E1, P. 26
ESRS 2 SBM-3-E2, P. 29
ESRS 2 SBM-3-E3, P. 30
ESRS 2 SBM-3-E4, P. 31
ESRS 2 SBM-3-E5, P. 31
ESRS 2 SBM-3-S1, P. 33
ESRS 2 SBM-3-S3, P. 36
ESRS 2 SBM-3-G1, P. 38
People and the environment
People and the environment
People and the environment
Environment
Environment
Environment
Environment
Environment
Environment
People
People
b. Involvement
of
affected
stakeholders in all key due
diligence steps
ESRS 2 GOV-2, P. 12
ESRS 2 SBM-2, P. 24
ESRS 2 IRO-1, P. 42
ESRS 2 MDR-P:
E1-2, P. 59
People and the environment
People and the environment
People and the environment
Environment
16
E2-1, P. 71
E5-3, P. 83
G1-1, P. 91
G1-2, P. 98
Environment
Environment
People
People
c.
Identification and assessment
of negative impacts
ESRS 2 IRO-1, P. 42
ESRS 2 SBM-3, P. 26
ESRS 2 SBM-3-E1, P. 26
ESRS 2 SBM-3-E2, P. 29
ESRS 2 SBM-3-E3, P. 30
ESRS 2 SBM-3-E4, P. 31
ESRS 2 SBM-3-E5, P. 31
ESRS 2 SBM-3-S1, P. 33
ESRS 2 SBM-3-S3, P. 36
ESRS 2 SBM-3-G1, P. 38
People and the environment
People and the environment
Environment
Environment
Environment
Environment
Environment
People
People
People
d. Measures to counter these
negative effects
ESRS 2 MDR-A:
E1-1, P. 59
E1-3, P. 60
E2-2, P. 72
E3-2, P. 78
E5-2, P. 82
Environment
Environment
Environment
Environment
Environment
e.
Tracking the effectiveness of
these
efforts
and
communication
E1-4, P. 62
E1-5, P. 63
E1-6, P. 65
E1-8, P. 70
E2-3, P. 73
E2-4, P. 74
E3-3, P. 79
E3-4, P. 80
E5-3, P. 83
E5-4, P. 84
E5-5, P. 86
Environment
Environment
Environment
Environment
Environment
Environment
Environment
Environment
Environment
Environment
Environment
GOV-5: Risk management and internal controls over sustainability reporting
While currently the existing risk management system primarily covers financial and operational risks, non-
financial risks, such as ESG aspects, will also be given greater consideration in the future. The topics identified
in the double materiality assessment provide a valuable basis for gradual integration.
In contrast to financial reporting, which is based on standardized key figures and accounting standards, the focus
of sustainability reporting is on qualitative and forward-looking aspects, such as the assessment of climate risks
or social impacts. The necessary data is collected in close coordination with the operating units in order to better
capture material ESG risks and opportunities.
17
The double materiality assessment helps us to systematically identify, assess and monitor sustainability-related
risks. At the same time, it supports the gradual integration of these risks into our existing risk management process.
This enables a closer integration of financial and non-financial risks with the strategic and operational
management of the Group.
Scope and main features of the new risk management system
Scope
The risk management systems cover all of Afarak's locations and business units.
Main features
Risks are systematically identified and assessed using a matrix that focuses on the materiality and impact of risks
and opportunities. Group-wide standardization enables uniform application, which is, however, specifically
adapted to the needs of the individual locations.
Components of the risk management systems
Risk management
Risks and opportunities are identified and evaluated using standardized assessment methods and the double
materiality assessment. In addition, control measures are implemented to mitigate identified risks, such as systems
for monitoring environmental pollution or ensuring compliance.
Internal control
Regular reviews are carried out by internal teams. The findings that emerge from it are forwarded to the next
higher authority - such as the CMT or EMT. Based on the risk assessment, action plans are then developed and
reviewed on a regular basis.
Reporting
Annual planning and regular reports to the EMT and the BoD are used to monitor and manage ESG-relevant risks.
ESG initiatives
In future, the control mechanisms will integrate environmental and social factors including climate protection,
resource management, and the safeguarding of labor standards.
Main responsibilities in risk management
The EMT ensures that standards are adhered to and the quality of reporting is guaranteed. The implementation of
the measures is the responsibility of the local CMT members, while a central ESG team consolidates and checks
the data collected in order to fulfill the reporting obligations with regard to sustainability reporting.
Approach to risk assessment
Afarak's risk assessment follows a systematic and Group-wide approach based on consistent methods. Risks and
opportunities are identified, analyzed and evaluated using a matrix. This matrix is used to assess materiality. The
risk assessment is carried out regularly to ensure that changes in operational and external conditions are taken into
account. The process includes the following steps in detail:
•
Risk classification: Each risk is categorized based on an assessment grid that represents the severity of
the potential impact on Afarak's objectives and activities.
•
Matrix structure: The matrix structure is used to analyze different levels of financial, operational and
reputational impact; the risk assessment is then carried out in graduated stages to determine the tolerance
limit.
•
Integration: Afarak's risk management process is firmly integrated into the annual business planning and
is managed by both the locations and the Group's central functions.
18
•
Process description: The assessment of the likelihood of a risk occurring is carried out by the operational
teams at the respective locations. The impact is assessed by analyzing potential financial and non-
financial losses. Management reviews and approves the final prioritization of risks and determines
suitable risk mitigation measures.
Main identified risks and mitigation strategies
Specific risks were identified in four areas: External risks, operational risks, sustainability risks and regulatory
risks. The risks and the associated mitigation strategies are outlined below:
External risks
Afarak sees the volatility of product prices, currency fluctuations and uncertain macroeconomic conditions as key
external risks. To counter these challenges, the company relies on a broad diversification of its business areas and
geographical presence as well as hedging strategies to stabilize financial fluctuations. In addition to these
economic factors, regulatory ESG requirements and changing market expectations, which can have a long-term
impact on competitive conditions and business strategies, are also becoming increasingly important. Control
mechanisms such as continuous market monitoring and strategic adjustments make it possible to react flexibly to
volatile markets
Operational risks
Safety risks and unexpected operational incidents, including environmental risks, pose significant operational
challenges for Afarak. To minimize such risks, strict safety guidelines have been introduced, employees receive
regular training, and environmental standards are monitored consistently. Control mechanisms such as regular
safety reviews and internal audits are implemented to ensure the highest safety standards.
Sustainability risks
Afarak considers the tangible effects of climate change and increasing demands for sustainable business practices
to be key sustainability risks. To counter these, the company relies on energy-efficient technologies and makes
targeted investments in renewable energies. Here, control mechanisms include the continuous monitoring of
energy consumption and emissions as well as the implementation of planned projects such as the construction of
solar plants.
Regulatory risks
Significant regulatory risks for Afarak are the increasing requirements resulting from restrictive environmental
and occupational health and safety regulations. In response, the company relies on strict compliance with all
relevant standards through internal guidelines and regular audits, both internally and externally. As a control
mechanism, the CMT, which consists of the specific local site managers, ensures continuous compliance,
monitoring, and adaptation of these regulations.
The results of the risk assessment are integrated into the relevant internal functions and processes by the Board
Committees. Continuous reporting on the results of the risk assessment and internal controls to the administrative,
management and supervisory bodies takes place at the "Board of Directors Meeting", which is held at least four
times a year, and at the "Strategy Meeting", which is held at least once a year. The EMT, the CMT and the BoD
take part in the latter.
SBM-1: Strategy, business model and value chain
Afarak's business model and value chains
Afarak is a globally active, vertically integrated producer and innovator of specialty alloys. The Group focuses on
the production of ferrochrome (FeCr) and the mining of chrome ore. These raw materials form the basis for the
production of customer-specific special alloys that are sold worldwide.
19
Afarak serves renowned customers from various industries including the aerospace, nuclear, oil and gas,
automotive, and renewable energy industries. Thanks to this diversification, targeted investments and the highest
safety and quality standards, Afarak occupies a significant position as a manufacturer of individual special alloys.
As a global company, Afarak strives to create added value along the entire value chain. The company attaches
great importance to sustainable development by actively working to reconcile environmental, social and economic
interests. At the same time, it ensures long-term benefits for its shareholders through healthy financial
performance.
Afarak's areas of activity include:
•
Extraction: Our own mines in South Africa and Turkey ensure a high-quality supply of chrome ore
concentrate for further processing in Germany and trading on the global market.
•
Research and development: The in-house laboratory at the German site is used for our own quality
assurance. It specializes in inorganic analysis and offers precise, customer-specific solutions. State-of-
the-art analysis technology is used to examine materials in order to develop and test tailor-made special
alloys. The laboratory meets the highest quality standards and works according to recognized norms to
ensure reliable and fast results.
•
Processing: Advanced technologies and know-how are used to process the raw materials into high-
quality special alloys.
•
Global distribution: Afarak distributes its products worldwide with in-depth industry knowledge and
maintains long-term customer relationships.
•
Logistics and delivery: Efficient logistics ensure punctual deliveries in all quantities and optimize
inventory management.
These areas of activity can be described in two main value chains, each of which has its own characteristics:
Mining value chain
The mining value chain is focused on the extraction and processing of chrome ore, which is extracted in the
company's own mines. The chrome ore concentrate produced is sold worldwide and is a key raw material for the
production of stainless steel. Close cooperation with steel manufacturers enables us to reliably meet their
requirements in terms of quality and quantity. This value chain is strategically aligned to meet global demand and
ensure a reliable supply. The combination of own mines, efficient processing and a strong customer focus makes
Afarak an important player in the steel industry value chain.
Production value chain
Thanks to vertical integration, the company controls the entire process - from raw material procurement to
processing and distribution. This ensures high flexibility and product quality. The supply of raw materials is
ensured by the company's own mine value chain and close partnerships with local suppliers, while central
coordination in Malta supports the efficient distribution process. The products from this value chain are distributed
worldwide. Afarak cultivates long-term relationships in order to understand the needs of its customers and offer
customized solutions.
According to the ESRS sector classification, Afarak generates significant sales in the following sectors:
•
Mining; Mining and quarrying of metal ores subsector; NACE code 07
•
Fabricated metal products; subsector Manufacture of basic metals; NACE code 24
These classifications reflect Afarak's activities in the area of chrome ore mining in Turkey and South Africa and
the production of ferrochrome in Germany.
20
Sales by ESRS sector
Reporting year
Unit
Mining, coal and quarries
16,576,758.41
Monetary
(€)
Metal processing
111,275,018.42
Monetary
(€)
Total sales
127,851,776.83
Monetary
(€)
Afarak employs people in Turkey, Germany, South Africa, Serbia and Malta. In addition, there are employees
without a fixed geographical location, including our Board of Directors and other employees. The following table
shows the number of employees in these geographical areas as well as employees not based in a specific location:
Reporting year Unit
Turkey
328
Integer
Germany
146
Integer
South Africa
105
Integer
Serbia
14
Integer
Malta
8
Integer
Board location-independent)
3
Integer
Other employees (independent of location)
1
Integer
Total number of employees
605
Integer
* For non-financial reporting in accordance with the materiality criteria of the ESRS standards, only the locations
in Germany, Turkey and South Africa are part of the consolidated group, as only these locations have relevant
economic activities in terms of sustainability reporting.
Sustainability goals
The Group's main products are ferrochrome (FeCr) and chrome ore (Cr ore), which are primarily sold on the
global metals market. Afarak extracts, processes, markets and trades chrome ore concentrate and ferrochrome
specialty alloys. Its diversified customer base includes the aerospace, automotive, defense and sustainable energy
technology industries. These customers expect their suppliers to maintain high standards of ethical behavior,
health, safety and environmental protection. Similarly, the communities in the regions in which Afarak operates
21
expect support in their economic development. Building on this, Afarak has set itself sustainability targets in the
areas of product groups, customers, geographical areas and stakeholders. The targets in the individual categories
are outlined below:
Product groups
Afarak strives for continuous process optimization in order to increase production efficiency while minimizing
resource consumption and environmental impact.
Customers
In order to meet customer requirements, Afarak relies on the continuous optimization of logistics processes.
Targeted, efficient transport routes and sustainable packaging should not only enable faster delivery to customers,
but also reduce CO₂ emissions in supply chain management. This contributes to a more sustainable value chain
and at the same time meets customers' increasing expectations for environmentally friendly delivery processes.
Geographical areas
In South Africa and Turkey, Afarak focuses on continuously increasing the efficiency of water management and
on renaturation and land restoration projects due to the medium to high water stress. In addition, measures to
reduce emissions, particularly in the area of energy efficiency, are being implemented at all locations.
Stakeholders and suppliers
Personal and transparent contact with those responsible at each location is intended to ensure that the interests of
local communities, employees and suppliers are an integral part of the sustainability strategy.
Sustainability strategy
The sustainability aspects of Afarak's business strategy include health and safety, environmental protection
(including water management, waste management, soil remediation and emissions reduction) and community
engagement and support. Afarak is committed to contributing to environmental and social sustainability through
its production processes. These efforts are intended to support several United Nations resolutions, such as poverty
and hunger reduction and gender equality, education and access to clean water.
The creation of direct and indirect employment is Afarak's most significant impact on local communities. In
addition, Afarak supports local communities in meeting their needs in the areas of education and infrastructure
and also promotes social causes. The subsidiaries are working on programs to improve water and waste
management and focus on reducing emissions. The introduction of data collection processes enables the company
to set benchmarks and develop long-term targets to measure performance.
Responsibility
The BoD and EMT actively monitor the sustainability strategies and ensure they are in line with the company's
objectives. Clear responsibilities have been established to manage sustainability-related IROs and achieve health
and safety, environmental and social objectives. As Afarak operates in different national markets, operational
responsibility for sustainability lies with the national managing directors. They are best placed to ensure
compliance with national laws and market expectations. The BoD and EMT take a holistic approach to monitoring
sustainability initiatives at national level and ensuring that they meet investor expectations.
Key inputs and their influence on the sustainability strategy
The key inputs include raw materials, technology, skilled labor, customer data, industry knowledge and logistics.
Afarak strengthens its business model and value chain through a targeted combination of vertical integration,
continuous research and development and strategic, long-term partnerships. Particular emphasis is placed on
sustainability and the protection of intellectual property in order to promote innovation and quality in the future.
These diverse approaches ensure long-term success and strengthen the company's leading position and the
distribution of raw materials on global markets.
Afarak also integrates sustainable solutions and process optimization into its value chain in order to create long-
term environmental, social and economic benefits:
22
•
Energy-efficient technologies: The company uses technologies to reduce energy consumption and
emissions. These include planned solar systems and energy-optimized machines.
•
Water management: Recycling and closed-loop systems are used in the extraction of raw materials to
minimize water consumption.
•
Waste minimization: By implementing closed-loop production systems, Afarak reduces waste and
increases resource efficiency. Waste is specifically converted into usable recyclable materials, such as
the processing of slag into a product for road construction. In this way, Afarak contributes to the circular
economy and creates additional added value.
•
Process optimization: Production methods are constantly becoming more efficient in order to minimize
the environmental impact in the long term.
Key outputs and their influence on the sustainability strategy
The Group's outputs, including customized special alloys, innovative solutions and the procurement and
distribution of essential raw materials for the global metal processing industry, offer significant benefits for the
company's customers, investors and other stakeholders. Customers benefit from high-quality, customized products
and a reliable supply chain. Investors benefit from stable financial results and future-oriented innovations.
Employees, partners and the environment also benefit from Afarak's sustainable practices and long-term stable
business relationships. In the future, the company expects technological innovations and sustainable growth to
create additional added value for all stakeholders.
SBM-2: Stakeholders' interests and positions
Afarak's key stakeholders include employees, employees in the value chain, shareholders and financial
institutions, customers, the environment, local residents, society and the public as well as the supply chain. Afarak
attaches great importance to including the interests and perspectives of these stakeholders in its decision-making
processes. The aim is to build trusting relationships, promote the principles of sustainability and responsibility
and ensure economic success through close cooperation with all interest groups. This exchange takes place in
particular with the groups of employees, customers, environmental institutions, the supply chain and shareholders.
Organization of stakeholder involvement
The involvement of the interest groups is organized as follows:
Affected stakeholders
Employees: Communication with employees is organized autonomously at each Afarak site. At some sites, works
councils and trade unions represent the workforce vis-à-vis the management.
Environment: At each location, there are institutions that represent country-specific environmental aspects. Afarak
is always available to these institutions to develop sustainable solutions together.
Supply chain: Similar to Afarak's customers, personal contact is maintained in the supply chain in order to be able
to respond to specific needs.
Users of the sustainability declaration
Customers: Afarak relies heavily on personal contact with its customers. Each customer is therefore looked after
by a dedicated contact person.Shareholders: As a listed company in the legal form of an SE, Afarak's shareholders
are entitled to participate in the Annual General Meeting. Votes are held on key business decisions, and
shareholders are entitled to vote.
The results of this stakeholder involvement are integrated into the company's strategic planning and operational
decisions. The independent organization of the locations enables direct contact with various stakeholder groups.
This allows local circumstances to be taken into account flexibly and ensures rapid interaction. Feedback from
interest groups such as customers, local communities and employees is recorded and evaluated directly by the site
23
managers and incorporated into local decisions. The insights gained from this are incorporated into management
decisions in order to continuously improve sustainability measures, process efficiency and social responsibility.
Afarak's Code of Conduct defines how we interact with the environment, and all site representatives are obliged
to adhere to these guidelines and act accordingly. The direct exchange with stakeholders enables the sites to
immediately address and evaluate their concerns and interests. A central analysis of stakeholder concerns at Group
level has not yet been carried out systematically, as this task is a local responsibility. Issues that require escalation
are reviewed by the CMT, which is made up of various managers and site representatives. In particularly critical
cases, the matter is forwarded to the EMT, which carries out the overarching assessment and, if necessary, involves
the highest authority, the BoD
Strategy changes and adjustments
The continuous adaptation and expansion of Afarak's processes is essential in order to meet the diverse interests
and viewpoints of stakeholders. In 2024, the requirements of the new CSRD sustainability reporting in particular
contributed to significant adjustments to the strategy. This led to the integration of all locations into the LCA and
the introduction of a system for consolidated data collection. In addition, the promotion of sustainable energy was
prioritized at all locations. At the same time, the continuous optimization of processes and the supply chain was
continued in order to drive efficiency and sustainability in Afarak's business processes.
As part of reporting in accordance with the CSRD, dynamic adaptation and further development of internal
processes is essential in order to meet the constantly changing regulatory requirements. This is intended to ensure
that all data required under the ESRS in the areas of "Social" and "Environmental", which were previously only
collected superficially at Group level and in detail only at local level, are recorded accurately and promptly and
disclosed transparently in the annual sustainability reports. Through these measures, Afarak continues to pursue
the long-term integration of social responsibility into its corporate strategy, which meets both stakeholder
expectations and legal requirements.
It is foreseeable that the implementation of these steps will have a positive impact on relationships with
stakeholders. Increased stakeholder involvement, combined with expanded data collection and regular reporting,
will lead to greater transparency. This will enable stakeholders to better understand the company's development
and strengthen confidence in the Group's strategic decisions.
Information to the administrative, management and supervisory bodies
The CSRD report is dealt with at Group level, with the EMT and BoD actively involved in discussions on
materiality assessments and future implementation. Key social, environmental and economic aspects are discussed
in regular meetings to ensure that stakeholder concerns are incorporated into the Group's strategic decisions. The
relevant information from the individual locations is collected by a central ESG team and evaluated at Group
level. The aim of this approach is to align the sustainability strategy with both the corporate objectives and the
expectations of stakeholders.
SBM-3: Significant impacts, risks and opportunities and their interaction with strategy and business model
Significant effects, risks and opportunities
In the reporting year, Afarak carried out a double materiality assessment (DWA) for the first time in accordance
with the requirements of the CSRD in order to identify material impacts, risks and opportunities (IROs) associated
with its strategy and business model. In addition to the company's own business activities, the entire value chain
was considered, i.e. both upstream and downstream activities. As this is the first report prepared in accordance
with the requirements of the CSRD, there are no material changes in the IROs to report compared to the previous
reporting period. Future reports will document changes and developments in IROs. In addition, no company-
specific IROs were identified that go beyond the disclosure requirements of the ESRS. In the reporting year,
Afarak identified 47 material IROs, out of which 33 are impacts, 6 are risks and 8 are opportunities. Accordingly,
the following topic standards are material for Afarak:
•
ESRS E1 Climate change
24
•
ESRS E2 Environmental pollution
•
ESRS E3 Water and marine resources
•
ESRS E4 Biodiversity and ecosystems
•
ESRS E5 Resource utilization & circular economy
•
ESRS S1 Own staff
•
ESRS S3 Communities concerned
•
ESRS G1 Business behavior
Below is a description of the IROs identified as material for Afarak, broken down by the material sustainability
topics based on the ESRS.
E1 Climate change
Climate protection
Categorization of the IRO
Description
Actual negative impact
Contribution to climate change through greenhouse gas emissions
(GHG emissions) from own activities (Scope 1 and 2)
The production of ferrochrome in Germany is the most energy-
intensive process at Afarak. The electricity requirements for the
energy-intensive smelting furnaces are covered by the German futures
market and spot market, as it is currently not possible to cover the
energy requirements through in-house electricity generation and there
are no electricity tariffs with reduced CO₂ emissions specifically
designed for industry in Germany.
Actual negative impact
Contribution to climate change through GHG emissions from the
value chain (Scope 3)
The dependence on purchased raw materials (e.g. lime and intermediate
products such as silicochrome), their transportation and the
transportation of the most important raw material from our own value
chain, chrome ore, contribute significantly to Afarak's global Scope 3
emissions. By optimizing its supply chains and working with
sustainable and local suppliers, the Group strives to keep these
emissions as low as possible.
Risk
High investment costs due to conversion to CO2-neutrality
(buildings, products and processes) - climate-related transition risk
On the one hand, the expansion of photovoltaic systems requires
considerable resources in order to sustainably support the energy-
intensive processes. In addition, the buildings at the production site,
which is over 100 years old, need to be adapted to current energy
standards. Added to this is the lack of industrial electricity in Germany,
which represents another significant challenge. Furthermore, the
constant review of new measures to achieve CO2 neutrality is an
important part of the long-term strategy and requires continuous
investment.
Risk
Physical climate risks in own operations
25
Physical climate risks include extreme weather events such as droughts,
floods and heatwaves, which are exacerbated by climate change. These
events can have a significant impact on infrastructure and operational
processes.
Energy
Categorization of the IRO
Description
Actual negative impact
Energy consumption associated with own production
The production of Afarak, especially the production of ferrochrome
in Germany, is extremely energy-intensive. This is due to the thermal
processes required to convert chrome ore into ferrochrome. These
processes require extremely high temperatures, which can only be
achieved by using large amounts of electrical energy.
Actual negative impact
Energy consumption linked to the value chain
The extraction of the raw materials required for Afarak's products,
their transportation and the worldwide transport and further
processing of the ferrochrome produced by Afarak contribute
significantly to global energy consumption throughout the value
chain.
Opportunity
Improved profitability through investments in energy efficiency
improvements
Afarak is committed to continuously researching improvements in
energy efficiency, not only to strengthen the Group's environmental
sustainability, but also to promote profitability and competitiveness.
Opportunity
Increased demand for products for the generation of clean energy
technologies
There is increasing demand for critical raw materials such as chrome
ore and low-carbon ferrochrome for clean energy technologies and
essential applications in the energy transition, electromobility and
other green technologies.
Risk
Dependence on energy suppliers
Ferrochrome production in Germany is the most energy-intensive
process in the company and requires the operation of smelting
furnaces with high electricity consumption. This location is
particularly dependent on German electricity market prices on the
futures and spot market. Fluctuations in electricity prices can have a
significant impact on production costs and profitability
E2 Environmental pollution
Soil contamination
Categorization of the IRO
Description
26
Actual negative impact
Environmental damage during the extraction of minerals
The underground mining operations and the storage of tailings on the
surface contribute to topographical changes in Afarak itself and
through its upstream suppliers, which have a negative impact on the
ecosystem and neighboring communities.
Potential negative impact
Environmental pollution through the use of work and operating
materials
The use of operating equipment such as excavators and wheel loaders
harbors potential risks of environmental pollution. Oil and fuel spills or
improper handling of operating fluids could lead to local soil and water
contamination at the sites.
Water pollution
Categorization of the IRO
Description
Potential negative impact
Pollution of groundwater through the storage of mining residues
("tailings")
Even without the use of chemicals by Afarak, groundwater
contamination can occur due to natural components in the tailings or
physical effects. The probability of such an event occurring is highly
dependent on the natural composition of the residues and the storage
conditions.
Potential negative impact
Pollution of surface waters due to the extraction of raw materials
Although there are no surface waters in the immediate vicinity of the
sites, these can be negatively impacted indirectly. For example, the
transportation or storage of raw materials using rainwater can cause
pollution in such bodies of water. It is also possible for polluted
groundwater to reach the surface via geological structures.
Air pollution
Categorization of the IRO
Description
Actual negative impact
Air pollution due to combustion of fossil fuels in transportation
The transportation of raw materials and the ferrochrome produced by
truck and ship contributes to air pollution, which has a negative impact
on employees, the local population and suppliers at all Afarak sites.
E3 Water and marine resources
Water
Categorization of the IRO
Description
27
Actual negative impact
Consumption of water for the production process and regular
business operations
As a producer of chrome ore concentrate and ferrochrome, considerable
quantities of water are required, which can lead to a strain on local
water supplies at the sites and in the surrounding communities. In
addition, water is also used in business operations in the form of
sanitary facilities and office buildings.
Actual negative impact
Use of water for the extraction of raw materials
The use of water for the extraction of chrome ore is considerable, which
can lead to a strain on local water supplies. This includes the local
environment of all mine sites (Turkey, South Africa and Serbia).
E4 Biodiversity and ecosystems
Direct causes of biodiversity loss
Categorization of the IRO
Description
Actual negative impact
Loss of habitats due to the sealing of areas (e.g. production sites,
warehouses)
The sealing of surfaces causes the destruction of habitats and thus
affects ecosystems. Despite many years of existence of the production
site, any expansions, modernizations or changes in operating practices
can lead to further land sealing.
Potential negative impact
Disturbance of aquatic ecosystems due to the extraction of chrome
ore concentrate
The tailings produced during chrome ore concentrate extraction pose a
global problem, as they can be harmful to the environment and thus
contaminate the surrounding soil and groundwater at the mine sites.
Effects on the extent and condition of ecosystems
Categorization of the IRO
Description
Actual negative impact
Habitat fragmentation of ecosystems
The construction and operation of mines contribute to the
fragmentation of habitats. Afarak's negative impact in this respect is
limited, as the company only operates underground mines in
unpopulated areas.
E5 Resource utilization and circular economy
Resource inflows including resource utilization
Categorization of the IRO
Description
Actual negative impact
Resource consumption for production
28
The production of ferrochrome requires the use of large quantities of
chrome ore, which is a finite mineral resource and cannot be
regenerated. During production, a small amount of ferrochrome is
generated in relation to the by-product "slag". However, Afarak
processes the resulting slag so that it can be used as a recycled building
material.
Actual positive impact
Conserving resources through sustainable production processes
The needs-based optimization of Afarak's processes measurably
reduces the consumption of finite resources such as chrome ore and
energy.
Opportunity
Lower material costs thanks to improved resource efficiency
A continuous increase in the efficiency of production processes leads
to positive effects in the sustainability chain. Increasing efficiency can
lead to a reduction in electricity consumption and optimal use of raw
materials. This can result in lower material costs for Afarak.
Opportunity
Implementation of circular economy concepts can lead to savings
and new sources of income.
Promoting the circular economy is an opportunity for Afarak not only
to achieve economic benefits by conserving resources and reducing
costs, but also to assume its ecological responsibility. This strengthens
competitiveness, fulfills regulatory requirements and creates trust
among customers and stakeholders who are paying more attention to
sustainability.
Risk
Dependence on market prices
Dependence on market prices for chrome ore and ferrochrome
represents a key risk. Although Afarak supplies itself with the most
important raw material (chrome ore) for ferrochrome production,
thereby reducing its dependence on raw material prices, the volatility
of market prices for its own products (chrome ore and ferrochrome)
remains crucial for profitability and competitiveness
Resource outflows in connection with products and services
Categorization of the IRO
Description
Risk
Increasing demands (customer and regulatory) on products in
terms of sustainability aspects such as recyclability require
considerable investment.
The increasing sustainability requirements pose a financial risk for
Afarak, as they require considerable investment and adjustments. At
the same time, it is a strategic necessity to meet these requirements in
order to remain competitive in the long term and take advantage of
market opportunities.
29
Waste
Categorization of the IRO
Description
Actual negative impact
Environmental damage caused by mining waste ("tailings")
"Tailings“ are an unavoidable by-product of the extraction of chrome
ore concentrate. For sustainable further processing, it makes sense for
these tailings to remain at the mine sites, while only the concentrate is
transported worldwide for further processing. This reduces the amount
of materials to be transported, which is both economically and
ecologically beneficial. Although the tailings do not cause any direct
environmental pollution, they do lead to environmental damage as they
change landscapes and permanently occupy large areas of land.
S1 Own workforce
Working conditions
Categorization of the IRO
Description
Actual negative impact
Damage to health due to the working method/circumstances
Damage to health due to working methods or circumstances can range
from minor injuries such as cuts to serious, life-changing impairments
or death. The risk of injury is highly dependent on the specific work
activities performed at Afarak.
Actual negative impact
Health hazards due to accidents at work and on the way to work
The health risks from work and commuting accidents vary depending
on the location, with the majority of employees working in areas with
a medium to high accident risk.
Actual negative impact
Restriction of freedom of expression
The legal framework at Afarak's locations differs considerably,
particularly between the EU locations and countries such as Turkey and
South Africa. While the legal framework in the EU offers stronger
protection for freedom of expression, Afarak strives to offer employees
at all locations the opportunity to have a say in accordance with local
laws and to take their concerns seriously.
Opportunity
Higher productivity and lower fluctuation rates due to a positive
working environment (fair working conditions, etc.)
A positive working environment is a significant opportunity for Afarak,
as it boosts both productivity and employee loyalty. Fair working
conditions, respectful interaction and development opportunities make
the company more competitive and attractive in the long term - both for
existing and future employees.
Opportunity
Better access to good talent thanks to attractive working conditions
and benefits
Attractive working conditions and benefits give Afarak the opportunity
to attract and retain the best talent in the long term. This not only
30
strengthens the company's competitiveness, but also contributes to
innovation, employee satisfaction and a positive brand image. Targeted
measures enable Afarak to further expand its position as an employer
of choice in the industry.
Equal treatment and equal opportunities for all
Categorization of the IRO
Description
Actual negative impact
Lack of opportunities for further development
Around half of Afarak's employees work in semi-skilled jobs that offer
only limited opportunities for further development. This situation can
affect the motivation and long-term loyalty of employees. Although the
nature of semi-skilled jobs often requires little further training, the
company is committed to creating alternative approaches in order to
offer these employees prospects as well.
Actual positive impact
Promotion of training and further education
The promotion of training and further education has a consistently
positive effect on employee motivation, loyalty and professional
development,
despite
limited
development
opportunities
in
apprenticeships (such as first aider training or the rotation model for
management responsibility). It helps to strengthen operational
efficiency and the company's image, while at the same time complying
with the principles of the Code of Ethics. In this way, Afarak creates a
sustainable and employee-oriented corporate culture.
Opportunity
Increasing productivity and competitiveness by investing in
education and training programs
Investing in education and training programs is a strategic opportunity
for Afarak to increase the productivity of its workforce and ensure its
competitiveness in a global market. Well-trained employees who feel
up to the demands of the industry not only contribute to efficiency, but
also to the Group's innovative strength and long-term resilience.
Other work-related rights
Categorization of the IRO
Description
Potential negative impact
Violation of personal rights due to loss, i. e., loss of control over
employee data
The violation of personal rights through the loss of employee data can
have serious consequences for those affected, the company and society.
All locations are responsible for securing their own data and are subject
to local data protection regulations that are similar to the principles of
the General Data Protection Regulation (GDPR).
Potential negative impact
Employee safety due to the current mine locations
31
Geopolitical uncertainties can affect the safety of employees. Although
local employees are better adapted to local conditions, the risk of being
affected by global trade conflicts and energy policy remains.
Risk
Increased recruitment/employee costs due to shortage of skilled
workers and intense competition for qualified employees
The general labor shortage affects not only qualified specialists, but
also workers in semi-skilled positions. This poses a significant risk for
Afarak, as ensuring operational processes is dependent on both
specialized specialists and sufficient trainees. The increasing shortage
of labor and the rising demands of employees in terms of work-life
balance and additional benefits are leading to significantly higher costs
for recruitment, salaries and employee retention measures.
S3 Communities concerned
Economic, social and cultural rights of communities
Categorization of the IRO
Description
Actual negative impact
Damage to the health of residents due to the dismantling process
The mining of chrome ore can generally be associated with health and
environmental impacts such as air pollution or noise emissions.
However, our sites are located in uninhabited areas and operations are
subject to strict legal requirements.
Potential negative impact
Damage to the health of residents caused by the production process
Theoretically, the production process of ferrochrome can cause damage
to the health of local residents through air and noise pollution, which
can lead to respiratory diseases, stress and sleep disorders. Afarak's
production facility adheres to strict environmental regulations, uses
modern emission control technologies and works closely with local
communities to ensure the protection of local residents. In Germany,
particularly high standards of environmental protection and
occupational safety apply, which help to minimize health risks.
Actual negative impact
Nuisance to residents due to noise, light, dust and odor emissions
as a result of the quarrying process
The mining of chrome ore in underground mines leads to noise, light,
dust and odor emissions, which cause psychosocial stress. As the mines
are located in remote areas, it is mainly those workers who live on site
during their shifts and only return home afterwards who are affected.
Harassment depends on the type of mining. If nuisance occurs, it is
almost impossible to improve the situation, as it is difficult to find an
alternative mining site.
Actual negative impact
Nuisance to residents due to noise, light, dust and odor emissions
as a result of the production process
The ferrochrome production process causes noise, light, dust and odor
emissions, which can lead to psychosocial stress. The effects depend
on the technology used. The site works closely with the local district
government to minimize nuisance. The production site and the
32
surrounding region are particularly affected. The effects are long-term
and difficult to reverse.
Actual negative impact
Negative influence of the affected communities due to a change in
land use
Changes in land use due to mining lead to conflicts with existing uses.
As Afarak's underground mining takes place in unpopulated areas, land
use change is minimal and only a small geographical area within the
impact area of the mines is affected. Negative impacts of chrome ore
mining are mostly unavoidable, but partially reversible if long-term and
substantial efforts are made.
G1 Corporate policy
Management of relationships with suppliers, including payment practices
Categorization of the IRO
Description
Actual positive impact
Promotion of fair operating and business practices among
suppliers
Promoting fair operating and business practices among suppliers is
crucial to ensure ethical standards, promote sustainability and minimize
risks. The Code of Ethics and Code of Conduct for Suppliers (SCoC)
sets out clear principles of conduct expected from suppliers, including
compliance with recognized legal and ethical standards, respect for
human rights and protection of the environment. This helps to create
long-term value for the company and its stakeholders.
Opportunity
Optimization of financial market access through transparent
sustainability reporting
The production of the first CSRD-compliant sustainability report offers
Afarak a significant opportunity to improve its access to financial
markets. With the growing importance of ESG criteria for investors and
lenders, transparency in sustainability reporting is becoming a decisive
factor in the valuation of a company. At the same time, the report
creates the basis for a long-term strategic focus on sustainable growth.
Political commitment
Categorization of the IRO
Description
Actual positive impact
Supporting policymakers in the development of both user and
business friendly laws and regulations
Political support in the development of user and business friendly laws
and regulations is crucial for a flourishing economy and citizen
satisfaction. This support is provided indirectly through Afarak's
memberships in umbrella organizations such as the International
Chromium Development Association (ICDA). The foregoing has a
positive impact on various areas of society including the workforce,
regional economic development, technological innovation, research,
environmental protection, sustainability and global trade relations.
33
Actual positive impact
Support and promotion of the common good
Supporting and promoting the common good helps to create a fairer,
more stable and sustainable society. In South Africa, Afarak supports
local communities through social and educational outreach programs
and has supported their infrastructural needs in the past. In all locations,
Afarak works closely with local businesses, promoting their
development and, in Germany, offering a recycled by-product of
ferrochrome production for local road construction.
Corporate culture
Categorization of the IRO
Description
Actual positive impact
Well-being and mental health due to appreciative, supportive
professional interaction that focuses on the employee as a person
An appreciative and supportive working environment promotes the
well-being and mental health of employees, which leads to higher
productivity and lower staff fluctuation. HR measures such as regular
employee surveys and support with health problems including
HIV/AIDS in South Africa help to ensure well-being. Afarak's goal is
to implement the "Zero Harm Policy" in all companies.
Response to the main IROs in the areas of environment, social affairs and corporate governance
Environment
Afarak recognizes the fundamental importance of environmental protection, particularly in the raw materials
sector. The subsidiaries are already intensively involved in the introduction of programs to improve water and
waste management. At the same time, they are working to reduce emissions. Afarak has started to implement data
collection processes that allow the Group to set benchmarks and develop realistic long-term targets to make
improved performance measurable. In addition, the Group expanded the LCA in the 2024 reporting period to
include other environmentally relevant factors such as water consumption, resource use and waste in addition to
GHG emissions.
Social
Afarak pursues a zero-harm policy and strives to create a safe and healthy working environment for all employees
and contractors. Regular health and safety committees coordinate the Group's activities and address social,
environmental, health and safety issues. Afarak improves working conditions by providing a safe environment
and addressing key health issues, such as HIV/AIDS in South Africa. In addition to safety, the health of employees
is a top priority for Afarak. By providing health benefits, the company promotes the long-term well-being of its
workforce. Risks to employees are assessed, monitored and controlled at the production sites. In the highly
differentiated national markets in which Afarak operates, operational management and sustainability management
are primarily the responsibility of the national managing directors, who are in the best position to take account of
national legislation and cultural characteristics.
Corporate management
Afarak commits itself and its suppliers to the highest ethical standards with the "Code of Ethics" and other
guidelines in order to meet the expectations of stakeholders - including employees, customers, shareholders and
supervisory authorities. The company also has strict guidelines on human rights and combating bribery and
corruption. Through direct contact with suppliers and decentralized supplier management at each location, Afarak
34
can count on personal contact persons. Afarak actively promotes the interests of the industry through its
membership of EUROALLIAGE (Association of European Ferro Alloy Producers) and the ICDA.
Integration of the effects into the corporate strategy
The Group's strategy aims to ensure the sustainability and resilience of the business model through improvements
in environmental and social dimensions. The findings from the LCA and future scenario analyses are
systematically used to continuously optimize strategic planning and specifically address the key impacts of the
business model. In this way, Afarak aims to comprehensively integrate the findings into the corporate strategy in
order to proactively address not only climate-related but also other environmental challenges.
Integration of ecological aspects
Afarak's strategic approach is aimed at promoting energy-intensive but resource-efficient production processes.
The use of resources, particularly in chrome ore mining, has a direct impact on the availability of finite resources
and can lead to water shortages and environmental problems if processes are inefficient.
Afarak is responding to this with an expanded LCA, which was carried out in the 2024 reporting period. After the
first analysis was completed at the EWW smelting plant in Germany, the LCA was extended to other sites during
the reporting period. This represents significant progress in assessing the environmental impact of the business
model. This assessment includes not only climate protection measures, but also water consumption, raw material
consumption and waste. This expands the Group's strategy to include a holistic view of environmental impact.
Integration of social aspects
In addition to the ecological impact, Afarak's corporate strategy also takes into account social aspects such as
ensuring fair working conditions and occupational safety as well as the long-term retention of qualified specialists
through attractive working conditions.
Resilience of the corporate strategy and business model
The resilience of Afarak's strategy and business model in the face of material impacts and risks is based on the
Group's ability to proactively manage environmental and social challenges:
•
Environmental resilience: By implementing LCA, Afarak can systematically record GHG emissions,
water consumption and resource use and assess minimization. Investments into renewable energy and
energy-efficient technologies help to adapt to regulatory requirements and climate risks while ensuring
long-term profitability.
•
Social resilience: The promotion of fair working conditions, strict occupational safety measures and
workforce development strengthen social stability and productivity within the company. In addition, the
business model is geared towards cooperation with local stakeholders at the sites, which improves the
ability to effectively manage social risks such as skills shortages or conflicts with communities.
The combination of these measures ensures that the business model reacts flexibly to environmental and social
changes in order to make targeted use of opportunities such as technological innovations or the development of
new markets. This integrated approach strengthens Afarak's resilience to current and future challenges.
Sources of the expected impact
Afarak's own activities include the mining of chrome ore, the processing of raw materials and the manufacture of
ferrochrome products. These processes have a direct impact, for example on geography, infrastructure and GHG
emissions. Indirect impacts from business relationships arise both in the upstream and downstream value chain,
for example in the procurement of external raw materials or the further processing of chrome ore. These impacts
include high energy consumption, transportation emissions and indirect environmental impacts.
By combining its direct responsibility with strategic cooperation within the entire value chain, the Group strives
to minimize its environmental and social impact in all areas. This dual approach enables a comprehensive
assessment and optimization of the entire value chain.
35
Financial impact of the most important IROs
Afarak is using the transition period for the disclosure requirement ESRS 2 SBM-3 paragraph 48 letter e, as the
necessary analyses and assessments have not yet been fully completed in the current reporting period. Future
reports will include this information once the relevant assessments have been completed.
IRO-1: Description of the process for the identification and assessment of significant impacts, risks and
opportunities
In May 2024, Afarak's sustainability managers and a consulting partner began the preparatory work for the
sustainability report using a DWA.
The starting point was the impact assessment, which was carried out by the sustainability team together with the
respective departments. Suitable impacts and sustainability topics for the Group were identified on the basis of a
general internet search and then evaluated. The Afarak departments involved included the CMT, the ESG team,
HR management, shipping management, purchasing management, commercial management and production
management.
An attempt was made to gain as complete a picture as possible of Afarak's business activities, including business
relationships along the entire value chain. The management and employees from the specialist departments were
also integrated into this process. In order to take into account the perspective of the most important stakeholder
groups with regard to their sustainability-related concerns, proxy stakeholders were used in accordance with the
ESRS and no direct involvement of stakeholders was carried out as part of the materiality assessment. Interests
and concerns that were known with regard to the stakeholder groups were included in the IRO collection. In
accordance with the ESRS, the severity (extent, scope and irreversibility of positive impacts, on a rating scale of
1 to 5 (from 1 = very low/minimal/short-term to 5 = very high/absolute/irreversible)) for actual impacts and
additionally the probability of occurrence (on a rating scale of 1-5 (from 1 = very unlikely to 5 = very likely) for
potential impacts) were assessed.
Following the definition of those topics on which Afarak as a company has a significant influence (impact
assessment), financial risks and opportunities were identified that could arise from these positive and negative
impacts or from dependencies on resources (financial assessment). These sustainability-related risks and
opportunities were then supplemented by risks already identified in the Board of Directors Report (BoD Report)
from 2023. Identification was mainly carried out by the sustainability team. The opportunities and risks were then
assessed according to their probability of occurrence (scale from 1 (highly unlikely or very low) to 10 (certain or
full) and potential financial impact (scale from 1 (<€10,000 or very low) to 10 (>€50 million or full) in the short,
medium and long term.
The material IROs were determined on the basis of this assessment using threshold values. The IROs were
assigned to the sustainability topics anchored in the ESRS at sub-topic level (see ESRS 1 AR 16).
Finally, a comparison was made with the ESRS overall topic overview (see ESRS 1 AR16) to ensure that all
ESRS-relevant sustainability aspects were considered in the assessment. Additions were placed in the double
materiality assessment in accordance with the above procedure.
A sustainability topic at the level of the sub-topics in accordance with ESRS 1 AR 16 was classified as, in total,
material if a material impact, a material risk or a material opportunity was identified for it.
The procedure and the results of the DWA developed by the specialist departments were presented to the ESG
team in a workshop, supported by members of the Corporate Management Team. As part of this workshop, the
classification of the sustainability topics into material and immaterial from a strategic perspective was reviewed
and the underlying impacts, opportunities and risks were finally assessed. The sustainability topics were also
checked for completeness in accordance with ESRS 1 AR 16. The result of the workshop was the final list of
material sustainability topics as the basis for reporting.
As this is Afarak's first reporting under the ESRS, there have been no changes to the process for identifying,
assessing and managing IROs compared to a previous reporting period. Therefore, no information is currently
available on the date of the last change to the process or on future revisions to the materiality assessment
36
From now on, the DWA process be carried out annually, with experts from the relevant functions of Afarak
exchanging information. This also includes continuous monitoring and monitoring of the actual impact on people
and the environment.
In the initial process, Afarak considered all activities and business relationships without restrictions and took into
account the effects of both its own business activities and business relationships.
The processes for identifying, assessing and managing impacts, risks and opportunities are not yet integrated into
the general risk management process.
ESRS 2 IRO-1 - E1: Description of procedures for the identification and assessment of significant climate-
related impacts, risks and opportunities
Climate-related impacts, risks and opportunities were identified and assessed as part of the general double
materiality assessment process described in ESRS 2 IRO-1. Specific climate-related factors such as physical
climate risks, regulatory developments, energy consumption and market and reputational risks were taken into
account.
ESRS 2 IRO-1 - E2: Description of procedures for the identification and assessment of significant impacts,
risks and opportunities related to environmental pollution
The identification and assessment of material impacts, risks and opportunities in connection with environmental
pollution was carried out in accordance with the double materiality assessment procedure described in ESRS 2
IRO-1. This involved examining the extent to which Afarak's business activities contribute to or counteract
environmental pollution. Emissions to air, water and soil were assessed.
ESRS 2 IRO-1 - E3: Description of procedures for the identification and assessment of significant impacts,
risks and opportunities related to water and marine resources
The assessment of impacts on water and marine resources was also based on the general methodology of the
double materiality analysis from ESRS 2 IRO-1. In particular, water consumption, potential risks from water stress
and measures to reduce negative impacts were considered.
ESRS 2 IRO-1 - E5: Description of procedures for the identification and assessment of significant impacts,
risks and opportunities associated with resource use and the circular economy
The analysis of resource use and the circular economy was carried out in accordance with the general procedure
from ESRS 2 IRO-1 using the double materiality assessment. Key aspects were the efficient use of materials from
our own value creation, local resource inflows from external value creation, resource consumption in production
and the durability of our products.
IRO-2: Disclosure requirements included in the ESRS that are covered by the company's sustainability
declaration
A list of the disclosure requirements covered by this sustainability report can be found at the beginning of this
report on page 1.
37
List of data points from other EU legislation:
The table below includes all data points from ESRS 2 and from the thematic ESRSs arising from other EU
legislation, including the Sustainable Finance Disclosure Regulation (SFDR), Pillar 3 (S3), Benchmark
Regulation (BV) and EU Climate Law (EUKG) listed in Appendix B of ESRS 2. The list indicates where the data
points can be found here in Afarak's report and which data points were classified as "not material", "no indication
as use of a phase-in regulation" and "no indication as use of the transition period". The transition period refers to
the temporary suspension of an entire standard, while phase-in regulations relate to individual data points within
an applied standard that are introduced gradually
Mandatory
disclosure
Associated
data point
EU legislation
Number of
pages
ESRS 2 GOV-
1
21 (d)
Gender diversity in the management and
supervisory bodies
SFDR/BV
p. 10
ESRS 2 GOV-
1
21 (e)
Percentage of members of the management
body who are independent
BV
p. 10
ESRS 2 GOV-
4
30
Declaration on due diligence
SFDR
pp. 16-17
ESRS 2 SBM-
1
40 (d) i
Participation in activities related to fossil fuels
SFDR/S3/BV
p. 19
ESRS 2 SBM-
1
40 (d) ii
Participation in activities related to the
manufacture of chemicals
SFDR/BV
p. 19
ESRS 2 SBM-
1
40 (d) iii
Participation in activities related to
controversial weapons
SFDR/BV
p. 19
ESRS 2 SBM-
1
40 (d) iv
Participation in activities involving the
cultivation and production of tobacco
BV
Not material
ESRS E1-1
14
Transition plan to achieve climate neutrality
by 2050
EUKG
Not
specified, as
phase-in
control
is
used
ESRS E1-1
16 (g)
Companies excluded from the Paris-aligned
benchmarks
S3/BV
Not material
ESRS E1-4
34
GHG emission reduction targets
SFDR/S3/BV
Not
specified, as
phase-in
control
is
used
ESRS E1-5
38
Energy consumption from fossil fuels broken
down by source (only climate-intensive
sectors)
SFDR
p. 63
ESRS E1-5
37
Energy consumption and energy mix
SFDR
p. 63
ESRS E1-5
40-43
Energy intensity in connection with activities
in climate-intensive sectors
SFDR
p. 64
38
Mandatory
disclosure
Associated
data point
EU legislation
Number of
pages
ESRS E1-6
44
Gross GHG emissions in Scope 1, 2 and 3
categories and total GHG emissions
SFDR/S3/BV
p. 65
ESRS E1-6
53-55
Intensity of gross GHG emissions
SFDR/S3/BV
p. 68
ESRS E1-7
56
Removal of greenhouse gases and CO2
allowances
EUKG
Not material
ESRS E1-9
66
Risk position of the reference value portfolio
against climate-related physical risks
BV
Not
specified, as
phase-in
control
is
used
ESRS E1-9
66 (a); 66(c)
Breakdown of monetary amounts by acute and
chronic physical risk;
Location of significant assets with material
physical risk
S3
Not
specified, as
phase-in
control
is
used
ESRS E1-9
67 (c)
Breakdown of the carrying amount of its
properties by energy efficiency class
S3
Not
specified, as
phase-in
control
is
used
ESRS E1-9
69
Degree of exposure of the portfolio to climate-
related opportunities
BV
Not
specified, as
phase-in
control
is
used
ESRS E2-4
28
Quantity of each pollutant listed in Annex II
of the E-PRTR Regulation (European
Pollutant Release and Transfer Register)
emitted to air, water and land
SFDR
p. 74
ESRS E3-1
9
Water and marine resources
SFDR
p. 77
ESRS E3-1
13
Special concept
SFDR
Not material
ESRS E3-1
14
Sustainable oceans and seas
SFDR
Not material
ESRS E3-4
28 (c)
Total amount of water recovered and reused
SFDR
p. 81
ESRS E3-4
29
Total water consumption in m3 per net revenue
from own activities
SFDR
p. 82
ESRS 2 SBM-
3 E4
16 (a) i
Activities that have a negative impact on
biodiversity-sensitive areas
SFDR
Not
specified, as
use of the
transition
period
ESRS 2 SBM-
3 E4
16 (b)
Land degradation, desertification or soil
sealing
SFDR
Not
specified, as
39
Mandatory
disclosure
Associated
data point
EU legislation
Number of
pages
use of the
transition
period
ESRS 2 SBM-
3 E4
16 (c)
Endangered species
SFDR
Not
specified, as
use of the
transition
period
ESRS E4-2
24 (b)
Sustainable practices or concepts in the field
of land use and agriculture
SFDR
Not
specified, as
use of the
transition
period
ESRS E4-2
24 (c)
Sustainable processes or concepts in the area
of oceans/seas
SFDR
Not
specified, as
use of the
transition
period
ESRS E4-2
24 (d)
Concepts for combating deforestation
SFDR
Not
specified, as
use of the
transition
period
ESRS E5-5
37 (d)
Non-recycled waste
SFDR
p. 86
ESRS E5-5
39
Hazardous and radioactive waste
SFDR
p. 86
ESRS 2 SBM-
3 S1
14 (f)
Risk of forced labor
SFDR
Not
specified, as
use of the
transition
period
ESRS 2 SBM-
3 S1
14 (g)
Risk of child labor
SFDR
Not
specified, as
use of the
transition
period
ESRS S1-1
20
Commitments in the area of human rights
policy
SFDR
Not
specified, as
use of the
transition
period
ESRS S1-1
21
Due diligence provisions relating to issues
covered by fundamental conventions 1 to 8 of
the International Labor Organization
BV
Not
specified, as
use of the
40
Mandatory
disclosure
Associated
data point
EU legislation
Number of
pages
transition
period
ESRS S1-1
22
Procedures and measures to combat human
trafficking
SFDR
Not
specified, as
use of the
transition
period
ESRS S1-1
23
Concept or management system for the
prevention of occupational accidents
SFDR
Not
specified, as
use of the
transition
period
ESRS S1-3
32 (c)
Processing of complaints
SFDR
Not
specified, as
use of the
transition
period
ESRS S1-14
88 (b), (c)
Number of fatalities and number and rate of
occupational accidents
SFDR/BV
Not
specified, as
use of the
transition
period
ESRS S1-14
88 (e)
Number of days lost due to injury, accident,
death or illness
SFDR
Not
specified, as
use of the
transition
period
ESRS S1-16
97 (a)
Unadjusted gender pay gap
SFDR/BV
Not
specified, as
use of the
transition
period
ESRS S1-16
97 (b)
Excessive remuneration of members of the
management bodies
SFDR
Not
specified, as
use of the
transition
period
ESRS S1-17
103 (a)
Cases of discrimination
SFDR
Not
specified, as
use of the
transition
period
ESRS S1-17
104 (a)
Non-compliance with the United Nations
Guiding Principles on Business and Human
Rights and the OECD Guidelines
SFDR/BV
Not
specified, as
use of the
41
Mandatory
disclosure
Associated
data point
EU legislation
Number of
pages
transition
period
ESRS 2 SBM-
3 S2
11 (b)
Significant risk of child labor or forced labor
in the value chain
SFDR
Not material
ESRS S2-1
17
Commitments in the area of human rights
policy
SFDR
Not material
ESRS S2-1
18
Concepts related to labor in the value chain
SFDR
Not material
ESRS S2-1
19
Non-compliance with the United Nations
Guiding Principles on Business and Human
Rights and the OECD Guidelines
SFDR/BV
Not material
ESRS S2-1
19
Due diligence provisions relating to issues
covered by the International Labor
Organization's fundamental conventions 1 to 8
BV
Not material
ESRS S2-4
36
Problems and incidents related to human
rights within the upstream and downstream
value chain
SFDR
Not material
ESRS S3-1
16
Commitments in the area of human rights
SFDR
Not
specified, as
use of the
transition
period
ESRS S3-1
17
Non-compliance with the United Nations
Guiding Principles on Business and Human
Rights, the ILO Principles or the OECD
Guidelines
SFDR/BV
Not
specified, as
use of the
transition
period
ESRS S3-4
36
Problems and incidents in connection with
human rights
SFDR
Not
specified, as
use of the
transition
period
ESRS S4-1
16
Concepts related to consumers and end users
SFDR
Not material
ESRS S4-1
17
Non-compliance with the United Nations
Guiding Principles on Business and Human
Rights of the OECD Guidelines
SFDR/BV
Not material
ESRS S4-4
35
Problems and incidents in connection with
human rights
SFDR
Not material
ESRS G1-1
10 (b)
United Nations Convention against Corruption
SFDR
p. 91
ESRS G1-1
10 (d)
Protection of whistleblowers
SFDR
p. 92
ESRS G1-4
24 (a)
Fines for violations of corruption and bribery
regulations
SFDR/BV
Not material
42
Mandatory
disclosure
Associated
data point
EU legislation
Number of
pages
ESRS G1-4
24 (b)
Standards for combating corruption and
bribery
SFDR
p. 98
Information in accordance with Article 8 of Regulation 2020/852 (Taxonomy Regulation)
EU Taxonomy
The EU taxonomy is a classification system that defines environmentally sustainable business activities.
Companies required to report non-financial information must disclose the extent to which their operations align
with the EU’s sustainability objectives.
For industrial companies like Afarak, this means assessing the share of revenue, capital expenditure (CapEx), and
restricted operating expenditure (OpEx) associated with activities that qualify under the EU Taxonomy Regulation
(2020/852).
Under the regulation, activities are categorized as:
•
Eligible: Activities that fall within the scope of the taxonomy.
•
Aligned: Eligible activities that make a substantial contribution to at least one environmental objective
while avoiding significant harm to others and complying with minimum safeguards on human and labor
rights.
In 2024, the European Commission introduced additional technical screening criteria covering water management,
circular economy, pollution prevention, and biodiversity (EU 2023/2486) and revised existing climate-related
regulations (EU 2023/2485).
Afarak has evaluated its operations against EU taxonomy criteria and has determined that neither ferrochrome
processing nor chrome ore mining qualifies as an eligible activity under the current framework.
Assessment of Afarak´s Business Activities
Non-Eligible Activities
Afarak’s core business operations—ferrochrome production and chrome ore mining—are classified as non-
eligible under EU taxonomy, meaning they do not contribute to the EU’s defined sustainability objectives.
•
Ferrochrome Production:
o
The high-energy smelting process used to produce ferrochrome does not meet the EU
taxonomy’s criteria for sustainability.
o
Emissions-intensive processes, such as carbon-based reduction in smelting, are not classified as
sustainable activities.
•
Chrome Ore Mining & Processing:
o
The extraction, beneficiation, and refining of chrome ore are not recognized as environmentally
sustainable under the current EU taxonomy framework.
o
While responsible mining practices are followed, ore extraction remains non-eligible under the
EU’s defined environmental objectives.
•
Energy Procurement:
43
o
Although Afarak secures electricity for its furnaces, the company does not own renewable
energy assets that could contribute to taxonomy-aligned sustainability targets.
Key Performance Indicators (KPI´s) for 2024
2024
Total EURM
Eligible
&
Aligned (%)
Eligible & Non-
Aligned (%)
Non-Eligible (%)
Sales (Turnover)
128.6
0
0
100
Capital Expenditure
1.3
0
0
100
Restricted
operating
expenditure
0.0
0
0
100
Do No Significant Harm (DNSH) Criteria
Even though Afarak’s activities are non-eligible, the company has taken measures to align with sustainability best
practices, including:
•
Climate Change Adaptation:
o
Physical risks to production sites have been assessed and integrated into the company’s risk
management strategy.
•
Water & Biodiversity Protection:
o
All production sites comply with environmental regulations and operate under approved water
management and biodiversity protection plans.
•
Pollution Prevention & Control:
o
Emission control technologies are in place, and Afarak continues to evaluate methods for
reducing environmental impact.
The company does not use prohibited substances, and where chemicals of concern are used, they are either:
1. Essential (recognized as Best Available Technology in EU industrial guidelines).
2. Insignificant in terms of total business operations.
Capital & Operating Expenditure Classification
Capital Expenditure (CapEx)
Taxonomy-reported capital expenditure is measured on a cash basis and includes:
•
Purchases of property, plant, and equipment.
•
Investment in production efficiency improvements.
As both ferrochrome processing and chrome ore mining are non-eligible, nearly all CapEx is classified as non-
eligible. However, certain energy-efficiency upgrades and emission-reduction projects may be reassessed in the
future for potential eligibility.
Restricted Operating Expenditure (OpEx)
Operating expenditure under the taxonomy includes:
•
Maintenance and servicing costs for production assets.
•
Research & development (R&D) costs related to process improvements.
Since Afarak’s core activities remain non-eligible, the majority of associated OpEx also falls outside the EU
taxonomy framework.
44
Research & Development Initiatives
Afarak’s R&D efforts focus on process improvements that could reduce environmental impact. In 2024, Afarak’s
total R&D expenditure amounted to EUR 148,000, representing 0.1% of annual revenue.
Sustainability-Driven Initiatives
Although Afarak’s core activities are non-eligible, the company remains committed to improving sustainability
performance through:
•
Energy Efficiency Investments: Exploring waste heat recovery and improved furnace technology.
•
Circular Economy Strategies: Investigating slag reuse and by-product recycling to minimize waste.
•
Carbon Reduction Initiatives: Researching bio-based reductants to replace fossil coke in ferrochrome
smelting.
•
Water Management Innovations: Strengthening recycling systems to reduce freshwater intake at
production sites.
Conclusion & Outlook
As ferrochrome processing and chrome ore mining remain non-eligible activities, Afarak will continue to focus
on sustainable operational improvements while monitoring regulatory updates. The company remains committed
to adopting best practices that align with global environmental standards and will explore potential investments
that could contribute to long-term sustainability objectives.
Afarak’s EU taxonomy disclosure will evolve as new technical criteria emerge, ensuring compliance with the
latest industry regulations.
45
Turnover
Substantial Contribution Criteria
DNSH criteria ('Does Not Significantly Harm')
Economic Activities (1)
Code (2)
Absolute turnover (3)
Proportion of Turnover (4)
Climate Change Mitigation (5)*
Climate Change Adaptation (6)
Water
(7)
Pollution
(8)
Circular Economy
(9)
Biodiversity and ecosystems (10)
Climate Change Mitigation (11)
Climate Change Adaptation (12)
Water
(13)
Pollution
(14)
Circular Economy
(15)
Biodiversity
(16)
Minimum Safeguards
(17)
Taxonomy
aligned
proportion
of total
turnover,
year N
(18)**
Category
(enabling
activity)
(20)
Category
(transitional
activity)
(21)
Manufacture of
ferroalloy
c24.10
EUR
(Millions)
%
%
%
%
%
%
%
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
%
E
T
A. TAXONOMY-ELIGIBLE ACTIVITIES
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
y
A.1. Environmentally sustainable activities (Taxonomy-aligned)
Turnover of environmentally
sustainable activities
(Taxonomy-aligned) (A.1)
0,00
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
A.2 Taxonomy-Eligible but not environmentally sustainable activities
(not Taxonomy-aligned activities)
Turnover of Taxonomy-eligible
but not environmentally
sustainable activities (not
Taxonomy-aligned activities)
(A.2)
0,00
0%
Total (A.1+A.2)
0,00
0%
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
Turnover of Taxonomy-non-
eligible activities
128,6 100%
Total (A+B)
128,6 100%
46
CapEx
Substantial Contribution Criteria
DNSH criteria ('Does Not Significantly Harm')
Economic Activities (1)
Code (2)
Absolute CapEx (3)
Proportion of CapEx (4)
Climate Change Mitigation (5)*
Climate Change Adaptation (6)
Water
(7)
Pollution
(8)
Circular Economy
(9)
Biodiversity and ecosystems (10)
Climate Change Mitigation (11)
Climate Change Adaptation (12)
Water
(13)
Pollution
(14)
Circular Economy
(15)
Biodiversity
(16)
Minimum Safeguards
(17)
Taxonomy
aligned
proportion
of total
CapEx,
year N
(18)**
Category
(enabling
activity)
(20)
Category
(transitional
activity)
(21)
Manufacture of
ferroalloy
c24.10
EUR
(Millions)
%
%
%
%
%
%
%
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
%
E
T
A. TAXONOMY-ELIGIBLE ACTIVITIES
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
y
A.1. CapEx of environmentally sustainable activities (Taxonomy-aligned)
CapEx of environmentally
sustainable activities
(Taxonomy-aligned) (A.1)
0,00
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
A.2 Taxonomy-Eligible but not environmentally sustainable activities (not
Taxonomy-aligned)
CapEx of Taxonomy-eligible but
not environmentally
sustainable activities (not
Taxonomy-aligned activities)
(A.2)
0,00
0%
Total (A.1+A.2)
0,00
0%
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
Capex of Taxonomy-non-
eligible activities
1,25
100%
Total (A+B)
1,25
100%
47
OpEx
Substantial Contribution Criteria
DNSH criteria ('Does Not Significantly Harm')
Economic Activities (1)
Code (2)
Absolute OpEx (3)
Proportion of OpEx (4)
Climate Change Mitigation (5)*
Climate Change Adaptation (6)
Water
(7)
Pollution
(8)
Circular Economy
(9)
Biodiversity and ecosystems (10)
Climate Change Mitigation (11)
Climate Change Adaptation (12)
Water
(13)
Pollution
(14)
Circular Economy
(15)
Biodiversity
(16)
Minimum Safeguards
(17)
Taxonomy
aligned
proportion
of total
OpEx,
year N
(18)**
Category
(enabling
activity)
(20)
Category
(transitional
activity)
(21)
Manufacture of
ferroalloy
c24.10
EUR
(Millions)
%
%
%
%
%
%
%
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
%
E
T
A. TAXONOMY-ELIGIBLE ACTIVITIES
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
y
A.1. Environmentally sustainable activities (Taxonomy-aligned)
OpEx of environmentally
sustainable activities
(Taxonomy-aligned) (A.1)
0,00
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
A.2 Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-
aligned activities)
OpEx of Taxonomy-eligible but
not environmentally
sustainable activities (not
Taxonomy-aligned activities)
(A.2)
0,00
0%
Total (A.1+A.2)
0,00
0%
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
OpEx of Taxonomy-non-eligible
activities
0,00 100%
Total (A+B)
0,00 100%
48
ESRS E1: Climate Change
E1-1: Transition plan for climate protection
Afarak demonstrates a strong commitment to environmental responsibility and sustainability and is actively
seeking to reduce CO₂ emissions and integrate environmentally sustainable innovations into its production
processes. In the reporting period, there is no transition plan for climate protection within the Group that meets
the specific requirements of ESRS E1. However, a transition plan is now being developed across the Group in
order to meet the requirements of the ESRS in the future. The individual Afarak sites will act independently to
implement measures. This decentralized approach ensures compliance with the applicable national environmental
laws and regulatory requirements. In future, the site-specific measures are to be systematically recorded and
documented in a bundled form in the Climate Change Transition Plan at Group level - with responsibility for
planning and implementation remaining with the respective sites.
The future transition plan, the "Climate Change Transition Plan", is intended to present the orientation and
measures of the individual locations with regard to the challenges of climate change. It is to be implemented in
2025, or 2026 at the latest. It will serve as future documentation for the climate protection initiatives of the
individual sites and ensure that they independently implement the necessary measures to achieve the defined
environmental targets. This transition plan will thus strengthen the company's existing environmental and
sustainability commitments.
ESRS 2 SBM-3 - E1: Significant impacts, risks and opportunities and their interaction with strategy and
business model
Afarak has not yet carried out a resilience analysis of its strategy and business model in relation to climate change.
However, such an analysis is planned as part of the Climate Change Transition Plan, which is intended to cover
the extended, mandatory regulatory reporting. The plan is scheduled for completion by the end of 2026.
E1-2: Concepts related to climate change mitigation and adaptation
To date, Afarak has not adopted any independent concepts with regard to climate change, as the company follows
the guidelines of the umbrella organizations ICDA and EUROALLIAGES. Both organizations pursue goals that
are geared towards sustainability, market development and the representation of their members' interests. In
addition, Afarak takes into account the specific local guidelines and requirements at its sites in Germany, Turkey
and South Africa in order to design measures in line with national requirements.
Afarak is currently in the process of developing its own concept at Group level, the Climate Change Transition
Plan. With this "Climate Change Transition Plan", which is expected to be adopted in 2025 and 2026, the Group
aims to intensify its climate protection efforts and develop a clear strategic direction, which will be implemented
in the years 2025 and 2026. The national and regional legal requirements and regulatory requirements that form
the basis for the climate-related measures include in:
•
Germany: Implementation of the Federal Climate Protection Act and the EU Emissions Directives, which
stipulate emission limits and energy-efficient production methods.
•
Turkey: Following the ratification of the Paris Green Deal, Turkey is pursuing national targets for
reducing emissions, including industrial energy efficiency and minimizing CO₂ emissions.
•
South Africa: Implementation of the National Environmental Management Act together with other
climate targets that require a reduction in GHG emissions.
E1-3: Measures and resources in connection with the climate concepts
Afarak has not yet adopted any specific measures in connection with overarching climate concepts, but has
implemented some operational measures that make an indirect contribution to climate protection. These measures
prepare for future concepts and reporting, but are not currently embedded in an overarching climate strategy. A
comprehensive "Climate Change Transition Plan" is in progress and is to be introduced by 2025/2026 in order to
bundle climate protection measures and ensure the achievement of environmental targets.
49
Afarak's measures are designed to make various aspects of the company's operations more sustainable and
minimize its environmental impact. The initiatives implemented include the expansion of renewable energies and
the optimization of processes to conserve resources and comply with local regulations:
Emission reduction and environmental management
This includes initiatives and optimizations of production processes to improve energy management and reduce
CO₂ emissions and energy consumption with the aim of minimizing the ecological footprint. In addition, work
began this year at the German site to reform the existing energy management system in accordance with ISO
50001:2018, which aims, among other things, to raise employee awareness of this issue and promote proactive,
energy-conscious action. The introduction of the LCA process at all key locations supports these measures by
systematically analysing environmental impacts and identifying data-based optimization potential.
Use of renewable energies
Projects that promote the use of renewable energies are supported at the various sites in order to ensure more
sustainable operations. This year, investments were again made in the expansion of photovoltaic systems,
accompanied by an examination of further expansion potential.
ESG integration and control
This includes the implementation of internal audits and risk management systems that take ESG aspects into
account and thus monitor compliance with environmental targets. In addition, an ESG team was established this
year, which is responsible for preparing reports, consolidating ESG-related data from all locations and further
developing the ESG strategy. The implementation of the LCA process provides a valuable data basis for ESG
reporting and supports the continuous monitoring and improvement of environmental performance at all key
locations.
Strategic development
The work on a "Climate Change Transition Plan" aims to coordinate and standardize all climate protection
measures across the Group in order to achieve long-term environmental goals more efficiently.
Afarak also works closely with these organizations as a member of the umbrella associations and
EUROALLIAGES. Both associations promote dialog with political institutions and member companies in order
to advance goals regarding sustainability, climate protection, energy efficiency and responsible production. The
guidelines and insights offered by ICDA and EUROALLIAGES support companies in complying with
international standards and further developing their ESG strategies.
Contributions from the associations
•
Promoting sustainability: The ICDA advises its members on sustainability issues by providing guidelines
and scientific findings that promote the development of sustainable production processes. It supports the
exchange between members and thus contributes to compliance with international environmental
standards.
•
Regulatory monitoring: Both organizations advise members on international regulations such as the
REACH Regulation (Registration, Evaluation, Authorization and Restriction of Chemicals) and play an
active role in shaping the regulatory framework.
•
Energy efficiency and climate neutrality: EUROALLIAGES promotes the reduction of energy
consumption in production and develops strategies to integrate the industry into the EU climate targets,
including the switch to renewable energies and low-emission technologies.
•
Scientific research and innovation: ICDA and EUROALLIAGES fund studies on the safe and efficient
use of chromium and on increasing production efficiency.
•
Stakeholder dialogue: Both associations organize conferences and seminars to promote exchange
between members and relevant stakeholders.
•
Market promotion: The ICDA is working to open up new markets for chrome products and support
existing applications.
50
Time horizons
The time horizons for implementing Afarak's key climate protection measures can only be communicated once
the strategic development of the "Climate Change Transition Plan" has been completed. This plan will include a
roadmap setting out the time horizons for the implementation and completion of the individual measures. Until
then, Afarak will continue to work on individual environmental measures and improving the sustainability of its
processes.
Mitigation measures for actual significant impacts
Afarak will not be able to disclose information on mitigation measures for material impacts, related results and
progress, capital and operating expenditures, and any decarbonization levers until the development of the Climate
Change Transition Plan and associated data collection is complete.
E1-4: Goals related to climate protection and adaptation to climate change
Afarak has not yet adopted any specific measurable and results-oriented targets in connection with climate change.
Nevertheless, the Group intends to develop such targets as part of the planned Climate Change Transition Plan.
Once the transition plan has been finalized, specific measurable targets will also be defined and evaluated using
relevant key figures. The exact reference period from which progress will be measured systematically and using
specific indicators will also be defined. Until then, the assessment will be based on existing general ESG practices
and internal monitoring processes.
Although no formal targets have been set to date, Afarak nevertheless addresses the effectiveness of the strategies
and measures with regard to the material impacts, risks and opportunities in the context of climate change.
Qualitative indicators are currently used to assess progress, such as internal audits and ESG reports that monitor
the effectiveness of the measures. Quantitative indicators such as emissions data and energy consumption metrics
are also part of the data collection to set benchmarks and support long-term performance targets. In the manner
described below, Afarak ensures that, despite the lack of specifically defined targets, the effectiveness of
environmental measures is always kept in view and continuously adjusted:
Risk management and ESG integration
In future, Afarak's risk management system will be expanded to include ESG aspects by incorporating the double
materiality assessment. This will enable the structured identification of environmental and climate risks and their
targeted management through appropriate measures.
Internal audits and controls
Regular internal audit processes are used to check compliance with and the effectiveness of measures to reduce
emissions and promote sustainable practices. The audits are reported to the BoD and the Audit Committee. In
addition, the ESG team monitors the entire ESG management and reports regularly to the BoD. The BoD also has
ultimate oversight of compliance with and the effectiveness of the climate strategies.
Key figures and metrics
Although specific climate-related targets are still being developed, Afarak uses existing indicators to assess energy
consumption, emissions and resource use. These metrics are used to monitor progress and identify opportunities
for improvement. With regard to data collection, processes have been implemented to monitor and adjust
environmental performance.
The foregoing is also supported by the gradual implementation of the LCA at all sites. The process began with
coverage of the most energy-intensive site in Germany and has been extended to all other key sites since 2024.
This ensures consistent and comprehensive recording and analysis of key figures and metrics.
51
E1-5: Energy consumption and energy mix
Climate-intensive sectors
Climate-intensive sectors are used to determine energy intensity. At Afarak, these include the mining sites, in
particular the mining of chrome ore, the extraction of chrome ore concentrate and the processing industry, which
includes the processing of the extracted raw material for the production of ferrochrome.
Net revenue from the climate-intensive sectors
Both of the above sectors are climate intensive and require significant energy resources. Close monitoring and
management of these activities is critical to minimizing environmental impacts and achieving sustainability goals.
The two energy-intensive sectors are described in more detail below and the net revenues from these areas are
presented:
FerroAlloys (South Africa)
This division comprises the Vlakpoort, Zeerust and Mecklenburg mines in South Africa. The main activity is the
extraction of chrome ore, which is produced for sale on the global markets. The mining and processing of chrome
ore are processes that require a great deal of energy. Although this area only accounts for a small proportion of
the Group's total sales, it remains a key aspect of Afarak's raw material sourcing and marketing strategy.
Specialty Alloys (Turkey & Germany)
This section focuses on the production of ferrochrome-based specialty products from high-grade chrome ore.
Mining takes place in Turkey, while the processing plant is located in Germany. These highly specialized products
are supplied to leading companies in the aerospace, medical steel production and automotive industries. Energy-
intensive production plays a central role in the international markets for high-quality alloys. This area is also
Afarak's strongest in terms of sales and plays a key role in the company's value chain. The following table provides
a breakdown of revenue from these climate-intensive sectors:
Reporting year
Unit
Revenue from activities in climate-intensive sectors used to calculate
energy intensity (FerroAlloys)
16,576,758.41
Monetary (€)
Sales from activities in climate-intensive sectors used to calculate
energy intensity (specialty alloys)
111,275,018.42
Monetary (€)
Total sales in climate-intensive sectors (conclusion)
127,851,776.83
Monetary (€)
The following energy intensity can be calculated from these sales:
Reporting
year
Unit
Total energy consumption from activities in climate-intensive
sectors / turnover from activities in climate-intensive sectors
922
(Energy
in
MWh/Monetary
(€
million)
Afarak's energy consumption and energy mix are made up as follows:
Calculation according to the current energy mix of the IEA (as of
06.02.2025: DEU = 2023, ZAF = 2022, TUR = 2023)
Reporting year
Unit
Fuel consumption from coal and coal products
0
Energy (MWh)
52
Fuel consumption from crude oil and petroleum products
19,519
Energy (MWh)
Fuel consumption from natural gas
4,318
Energy (MWh)
Fuel consumption from other fossil sources
0
Energy (MWh)
Consumption from purchased or received electricity, heat, steam and
cooling and from fossil sources (Scope 2)
44,308
Energy (MWh)
Total consumption of fossil energy
68,145
Energy (MWh)
Share of fossil sources in total energy consumption
57.83
Percentage (%)
Consumption from nuclear power sources
121
Energy (MWh)
Share of consumption from nuclear sources in total energy
consumption
0.10
Percentage (%)
Fuel consumption for renewable sources, including biomass (also
industrial and municipal waste of biological origin, biogas, hydrogen
from renewable sources, etc.)
0
Energy (MWh)
Consumption from purchased or received electricity, heat, steam and
cooling and from renewable sources
49,576
Energy (MWh)
Consumption of self-generated renewable energy that is not fuel
0
Energy (MWh)
Total consumption of renewable energy
49,576
Energy (MWh)
Share of renewable sources in total energy consumption
42,07
Percentage (%)
Total energy consumption
117,842
Energy (MWh)
* Reference to the OWN company and not supply chain
E1-6: Gross GHG emissions in Scope 1, 2 and 3 categories and total GHG emissions
Gross GHG emissions
The 2024 reporting year is the first year in which Afarak publishes a CSRD report detailing its corporate carbon
footprint (CCF). Accordingly, 2024 is the base year for future calculations
Gross GHG emissions
The total GHG emissions are recorded. Different emissions are generated in Scope 1, Scope 2 and Scope 3. The
emissions are broken down in detail below.
Gross GHG emissions
Reporting year
Unit
Scope 1 GHG emissions
Scope-1 GHG gross emissions
29,721
GHG emissions (tCO2e)
Percentage of Scope 1 GHG
emissions
from
regulated
emissions trading schemes
5
Percentage (%)
53
Scope 2 GHG emissions
Site-related Scope 2 GHG gross
emissions
43,037
GHG emissions (tCO2e)
Market-related Scope 2 GHG
gross emissions
* Calculation using the residual
mix
29,878
GHG emissions (tCO2e)
Scope 3 GHG emissions
Total indirect (Scope 3) gross
GHG emissions
71,320
GHG emissions (tCO2e)
Purchased goods and services
62,345
GHG emissions (tCO2e)
Activities related to fuels and
energy (not included in Scope 1
or Scope 2)
1,879
GHG emissions (tCO2e)
Upstream
transportation
and
distribution
6,918
GHG emissions (tCO2e)
Waste generation in companies
178
GHG emissions (tCO2e)
Total GHG emissions
Total GHG emissions
(location-based)
144,078
GHG emissions (tCO2e)
Total GHG emissions (market-
related)
130,919
GHG emissions (tCO2e)
GHG emissions from Afarak - composition and analysis of scopes
Afarak's GHG emissions are made up of the three standardized scopes of the Greenhouse Gas (GHG) Protocol:
Scope 1, Scope 2 and Scope 3. These cover all major sources of emissions along the value chain.
Scope 1: Direct emissions on site
Scope 1 comprises all direct emissions resulting from operational activities on site, such as the combustion of
fossil fuels in production facilities or vehicles. This area accounts for the smallest share of the Group's total GHG
footprint.
Scope 2: Emissions from purchased electricity
Scope 2 takes into account the indirect emissions caused by the purchase of electricity, heat or steam. These
emissions depend heavily on the energy sources of the respective locations. They play an important role at Afarak,
particularly at energy-intensive locations such as Germany.
Scope 3: Indirect emissions along the value chain
Scope 3 accounts for by far the largest share of Afarak's emissions. Various categories along the upstream and
downstream value chain are taken into account here, including:
•
Category 1: Purchased goods and services consumed in the reporting year.
•
Category 3: Fuel and energy-related activities that do not fall under Scope 1 or 2.
•
Category 4: Upstream transportation and distribution.
•
Category 5: Waste generated during operation.
54
Summary of the distribution
The analysis of the distribution of emissions shows that the largest share of GHG emissions at Afarak, more than
half of the total footprint, is attributable to Scope 3. Scope 2 follows with a significant but much smaller
contribution, while Scope 1 accounts for the smallest share of emissions.
The reduction of emissions in Scope 1 and Scope 2 is largely within Afarak's direct control, as emissions can be
reduced through targeted measures. These measures include, for example, process optimization, energy efficiency
programs, the purchase of electricity from renewable sources instead of fossil fuels or grid electricity and the in-
house production of electricity, for example from solar energy.
On the other hand, Scope 3 can only be influenced by direct measures to a limited extent, as these emissions occur
along the upstream and downstream value chain and are heavily dependent on external factors such as suppliers,
transport partners and end consumers. Nevertheless, the reduction of Scope 3 emissions remains a central starting
point for the Group's long-term sustainability strategy, as it has the greatest impact on the carbon footprint.
Biogenic emissions
The biogenic emissions of CO2 caused by Afarak are disclosed in the following table:
Reporting year
Unit
Biogenic CO2 emissions from the combustion or biodegradation of
biomass that are not reported in Scope 1+ Scope 2 GHG emissions*
*Calculation with biomass wood factor
175.7
GHG
emissions
(tCO2e)
Biogenic CO2 emissions from the combustion or biodegradation of
biomass that occur in the upstream and downstream value chain and are
not reported in the Scope 3 gross GHG emissions**
N/A
GHG
emissions
(tCO2e)
*Emissions of other types of greenhouse gases (in particular CH4 and N2O) are included in Scope 1 GHG
emissions and Scope 2 GHG emissions respectively.
**Emissions of other types of greenhouse gases (in particular CH4 and N2O) and CO2 emissions that occur
within the life cycle of biomass other than from combustion or biodegradation (for example, GHG emissions
from the processing or transportation of biomass) are included in the calculation of Scope 3 GHG emissions.
Greenhouse gas intensity
The greenhouse gas intensity (GHG intensity) is calculated from Afarak's total turnover. The turnover used for
the calculation is shown in the table below:
Reporting year
Unit
Turnover (from climate-intensive sectors)
127,851,777
Monetary (€)
Other sales (from non-climate-intensive sectors)
789,227
Monetary (€)
Total sales (in the financial statements)
128,641,004
Monetary (€)
Afarak's total emissions amounted to 144,078 tCO2e in the reporting year. They were applied to the total turnover
in order to calculate the GHG intensity. The calculation results in a GHG intensity of around 1,120 tCO2e per
million euros in sales.
55
Reporting year
Unit
Total GHG emissions (location-based) per turnover
1,120
GHG emissions
in
tCO2e
/
monetary
(€
million)
Total GHG emissions (market-related) per turnover
1.018
GHG emissions
in
tCO2e
/
monetary
(€
million)
Calculation method and emission factors
Afarak calculates the CCF, which includes the GHG emissions of the sites in Germany, Turkey and South Africa,
with the support of Sphera software. This software is based on the specifications of the GHG Protocol, which is
recognized by the ESRS as the authoritative standard. The calculation includes the following methods,
assumptions and emission factors:
Areas covered
•
Scope 1: Direct emissions from the sites, such as from the combustion of fossil fuels.
•
Scope 2: Indirect emissions as a result of purchased energy.
•
Partial Scope 3: Includes categories 1 (goods and services purchased and consumed), 3 (energy-related
activities), 4 (upstream transportation and distribution) and 5 (operational waste).
Areas not covered
Certain categories are not included in Scope 3 at Afarak, including:
•
Category 1: Goods not consumed but purchased. (Afarak avoids inventories as much as possible and
purchased goods are largely consumed just-in-time. In this way, Afarak not only helps to conserve
resources, but also minimizes potential emissions from unused materials, making this category negligible
for the Group).
•
Category 2: Capital goods. (Afarak's capital goods have a comparatively long useful life and their
proportionate annual emissions are negligible in relation to total emissions).
•
Category 6 to 15: Business travel, employee commuting, downstream transportation, end-of-life (EoL)
treatment of products sold and other categories such as franchise agreements and investments. (These
categories do not exist or are so marginal that they have been classified as negligible. Their emissions
make up too small a proportion of Afarak's total emissions compared to the material categories such as
energy consumption and raw material production).
Application of methods
The calculation of emissions is based on energy consumption and material flow data from the production site in
Germany, the chrome ore mines in South Africa and Turkey. The data is multiplied by specific emission factors
taken from reliable international sources such as the International Energy Agency (IEA) and national databases.
Life cycle analysis (LCA)
Although LCAs are mainly product-related, Afarak uses this methodology to partially capture Scope 3 emissions
and ultimately integrate them into the CCF. These analyses are based on the ISO 14040 and 14044 standards.
56
Calculation tools
For the CCF calculations, Afarak uses specialized LCA software from Sphera, which ensures a comprehensive
database and precise modelling. This is based on the ecoinvent database, which is one of the world's leading
sources for environmental and life cycle analyses and is regularly updated. Sphera is one of the world's largest
and regularly updated databases, specially optimized for the metals and raw materials industry. This process
enables a transparent and systematic presentation of climate-relevant corporate activities. The current CCF data
is based on the extraction of chrome ore, chrome concentrate and the production of low carbon ferrochrome (LC
FeCr) at the key sites mentioned above.
Justification of the methods
Afarak uses the LCA method and the Sphera software, as these make it possible to analyze the environmental
impact of Afarak's processes and products in detail. The LCA process provides a structured and standardized
method that is directly compatible with the requirements of international standards such as the GHG Protocol and
ISO 14040/44.
The use of Sphera ensures that:
•
Data quality and consistency are guaranteed by access to comprehensive databases such as ecoinvent.
•
precise calculations of emissions and environmental impacts, taking into account specific site conditions.
•
transparency and traceability for reporting in accordance with ESRS standards.
This combination means that Afarak not only fulfills regulatory requirements, but also creates a sound basis for
strategic decisions on emissions reduction and sustainability.
E1-8: Internal CO2 pricing
Afarak does not currently have an internal carbon pricing system. Instead, the Group focuses on direct measures
to reduce emissions, such as optimizing processes and promoting renewable energies as well as the sustainable
optimization of business activities. However, Afarak will regularly evaluate whether such a measure can
contribute to supporting its sustainability goals in the future.
E1-9: Expected financial effects of significant physical and transition risks and potential climate-related
opportunities
For this disclosure requirement, Afarak makes use of the transition period in accordance with ESRS E1-9. The
disclosure requirements on the expected financial effects of significant physical risks, transition risks and potential
climate-related opportunities that were not fulfilled in the reporting period are addressed exclusively in qualitative
terms in this first reporting year, as it is not currently feasible to prepare quantitative disclosures. In future, this
information will form part of the planned "Climate Change Transition Plan", which is expected to be completed
in 2025/2026. Quantitative information will be provided as soon as the necessary data and analyses are available.
ESRS E2: Pollution
E2-1: Concepts related to environmental pollution
Afarak has not yet adopted any formalized pollution reduction concepts that meet the specific requirements of
ESRS E2. Nevertheless, the company has long been active in implementing site-specific measures aimed at
minimizing environmental impact. These activities include the optimization of production processes, the
promotion of the circular economy and the use of low-emission technologies. They are based on the guidelines of
the umbrella organizations ICDA and EUROALLIAGES as well as local legal requirements.
The "Climate Change Transition Plan" planned until 2025/2026 will transform these existing initiatives into a
comprehensive Group-wide concept in order to meet the requirements of ESRS E2. Until then, the focus will be
on the continuation and further development of current measures to address environmental pollution in a targeted
and effective manner at the respective locations.
57
The following sections provide an overview of Afarak's activities in this area to date.
1. Adoption of guidelines from umbrella organizations
Afarak is guided by the environmental guidelines of the umbrella organizations ICDA and EUROALLIAGES,
which serve as a standardized and industry-specific framework for sustainable processes. These guidelines are
implemented on a site-specific basis in order to meet local conditions and legal requirements.
Joint measures and priorities
Both umbrella organizations emphasize the importance of sustainable pollution reduction practices, which are
integrated into Afarak's processes as follows:
•
Emission control: Afarak uses modern filter technologies at its production sites to reduce emissions and
significantly improve air quality.
•
Waste management: The company continuously optimizes its production processes in order to
minimize waste volumes. For example, slag is processed and used for local purposes such as road
construction, which helps to promote the circular economy.
•
Cooperation with authorities: All sites work closely with local authorities to comply with strict
environmental standards. This ensures that compliance with local regulations and international best
practices is always prioritized.
Specific contributions from ICDA and EUROALLIAGES
•
ICDA: The ICDA promotes the circular economy by recycling and reusing chrome products. At the
same time, it supports its members in the introduction of technologies that minimize air and waste
pollution in chrome production. The ICDA also works closely with international authorities to shape
global environmental standards, which Afarak implements in its processes.
•
EUROALLIAGES: EUROALLIAGES places particular emphasis on the reduction of pollutant
emissions and waste management. This includes the promotion of low-emission technologies and
energy-efficient processes. The association's strategic guidelines support Afarak in optimizing its
operations and developing sustainable production practices.
2. Site-specific requirements
Responsibility for environmental measures lies with the respective locations in Germany, Turkey and South
Africa. These locations act independently to meet the legal requirements and environmental targets of the
respective countries. Due to local differences, it is currently difficult to implement a uniform strategy at Group
level.
3. Climate Change Transition Plan in progress
Afarak is currently working on a Group-wide "Climate Change Transition Plan". This plan is intended to
coordinate the existing site-specific environmental targets and measures and create a Group-wide framework
structure. This will ensure that key issues such as reducing pollution, resource efficiency and compliance with
environmental standards are included in the planning.
Afarak is committed to ensuring that this plan is consistent with the requirements of ESRS E2 (Pollution) and
other relevant standards. In future reports, the progress documentation of this plan will be presented transparently
in order to meet stakeholder expectations and ensure consistent reporting
E2-2: Measures and resources related to environmental pollution
Afarak has not yet implemented any uniform measures to combat environmental pollution. Instead, responsibility
for implementing and enforcing environmental protection measures lies with the individual sites in Germany,
Turkey and South Africa. These sites carry out locally adapted measures to reduce environmental pollution in the
areas of air, water and soil in accordance with the legal requirements of the respective countries. In addition to
optimizing production processes to minimize waste and emissions, this also includes the use of sustainable
58
technologies and processes at the sites to reduce air, water and soil pollution. Continuous monitoring ensures that
all processes comply with local and international environmental standards.
Local measures
Germany (Elektrowerk Weisweiler GmbH)
•
Air filter systems to reduce emissions during production processes.
•
Water treatment plants to minimize discharges into local waters.
•
Rainwater collection basins that reduce the consumption of fresh water.
Turkey and South Africa (mining sites)
•
Water treatment plants for the recycling of process water.
•
Access to well water as a measure to reduce drinking water consumption.
•
No chemical agents are used in the extraction of chrome ore concentrates.
In addition to these measures, the local sites comply with country-specific environmental regulations with regard
to emission limits and waste management. This also includes regular monitoring and reporting on environmental
impacts in accordance with the requirements of the local authorities.
With the development of a new "Climate Change Transition Plan" in the period 2025/2026, Afarak intends to
establish an overarching corporate strategy that coordinates the specific environmental targets and measures of
the various sites across the Group. The targets will continue to be adapted to the respective local requirements, as
each country formulates different requirements and objectives.
E2-3: Targets related to environmental pollution
There are currently no specific, measurable and results-oriented pollution reduction targets. As part of the
development of the Climate Change Transition Plan, Afarak will consider whether measurable pollution reduction
targets can be set. The plan will also define the reference period that could be used to measure progress in pollution
reduction.
Despite the lack of formal targets, Afarak tracks the effectiveness of its strategies and measures with regard to
significant impacts, risks and opportunities related to pollution. These measures aim to ensure that pollution
reduction strategies are systematically evaluated, monitored and adapted to new requirements as needed:
Risk management and ESG integration
A comprehensive risk management system that integrates ESG aspects enables the identification, analysis and
assessment of environmental pollution risks, including potential pollution of air, water and soil.
Internal audits and controls
Regular internal audit processes check compliance with and the effectiveness of measures to reduce air, water and
soil pollution and identify areas that need to be optimized. The results are presented to the BoD and the Audit
Committee. In addition, the ESG team continuously monitors the further development of regulatory requirements
in accordance with the ESRS standards in the areas of environment, social affairs and corporate governance and
regularly informs the BoD of the findings and any necessary measures. The BoD is responsible for the ultimate
supervision of ensuring the effectiveness of and compliance with measures to reduce environmental pollution and
regularly reviews progress and confirms any necessary adjustments.
Key figures and metrics
Although specific, measurable targets are still being developed, current metrics are used to monitor emissions,
waste management and resource use. This data supports the evaluation of progress and promotes continuous
improvement.
59
E2-4: Air, water and soil pollution
Ferrochrome production and chrome ore extraction at Afarak generate emissions that (potentially) pollute the air,
water and soil.
Afarak is not only committed to complying with legal requirements, but also pursues the goal of making its
production processes as environmentally friendly as possible. Here, the focus is on continuously reducing
emissions and environmental impact in order to ensure sustainable production.
Nevertheless, environmental pollution cannot be completely avoided in industrial processes. Afarak therefore
focuses on keeping unavoidable pollution to a minimum and actively implementing measures to further optimize
environmental impact. This basic attitude forms the basis for the use of modern environmental technologies and
the responsible use of natural resources at all sites.
The following table shows the pollution of air, water and soil in our own operations:
Reporting year
Unit
Air pollution
Chromium and its compounds
234
Mass (in kg)
Pollution of the water
Nitrogen (discharge into receiving water)
17
Mass (in kg)
Air pollution
Ferrochrome production is an energy-intensive process that can release pollutants into the air in addition to GHG
emissions. During the reporting period, air pollutants were emitted during production, in particular chromium and
its compounds. These emissions mainly arise during the thermal processes in the smelting furnaces, where chrome
ore is processed into ferrochrome at high temperatures.
Afarak meets the legal requirements by using modern filter and exhaust gas purification systems that are specially
designed to minimize emissions of chromium and its compounds. Compliance with the limit values is ensured by
continuous emission monitoring and regular inspections by the authorities.
Although the reported chromium emissions comply with current legal requirements, Afarak is committed to
continuous improvement. The company is continuously testing and implementing advanced technologies to
further reduce emissions and minimize environmental impact.
Pollution of the water
Afarak's production processes generate a small amount of water pollution, which is largely minimized by
operating its own wastewater treatment plant. The remaining small amount of nitrogen discharged into a receiving
watercourse cannot yet be completely avoided. This discharge complies with current legal requirements and is
within the limits set by the relevant authorities.
Compliance with these requirements is monitored through strict and regular inspections by the authorities
responsible for approving and inspecting wastewater discharges. Afarak works closely with these authorities to
ensure that all water legislation requirements are met.
In addition to self-monitoring by Afarak's in-house laboratory, which carries out regular analyses and submits the
results to the authorities, random samples are also taken by the authorities. These unannounced samplings by the
responsible authorities ensure that all specifications are continuously adhered to and that there are no violations.
Afarak remains committed to further optimizing its wastewater processes in order to continue to reduce water
pollution and meet the highest environmental standards.
60
Contamination of the soil
Chrome ore is extracted at Afarak completely without the use of chemicals. This applies both to the activities in
the underground mines in Turkey and to the extraction of the chrome ore concentrate. As a result, there is no
chemical contamination of the soil, which is why the issue of soil pollution does not directly apply to Afarak's
processes.
Nevertheless, residues are produced during processing in the form of tailings, which are stored on the surface.
Although these residues do not constitute direct soil pollution, Afarak considers the issue of soil to be essential,
as physical and indirect environmental impacts such as erosion or sediment displacement could occur. In order to
avoid any adverse effects and actively contribute to the preservation of healthy soils, the Group therefore attaches
great importance to the responsible storage of tailings.
Afarak relies on sustainable and environmentally friendly extraction processes that ensure both soil quality and
the long-term conservation of resources.
Monitoring of pollutant emissions
Afarak uses a variety of measurement methods to monitor pollutant emissions to ensure that the company keeps
an eye on its emissions and meets all legal requirements:
Cooperation with official measuring institutes
Afarak cooperates with external, officially recognized measuring institutes that carry out regular and independent
investigations of emission sources. This partnership not only ensures compliance with legal requirements, but also
provides an objective assessment of the ecological impact.
Own chemical laboratory
With its in-house chemical laboratory, Afarak is able to continuously take samples and analyze pollutant
concentrations in air and water directly on site. This capability enables the prompt and precise identification of
irregularities, ensuring consistently high quality control of emissions.
Dust-tight measuring method
To monitor air emissions, Afarak uses dust-tight measurement technologies that record the concentration of
particles in the air. These measures ensure compliance with defined limit values for dust and fine particles.
Analysis of wastewater volumes
Afarak's wastewater is routinely monitored and analyzed, whereby both the concentration of pollutants and the
total volume of wastewater are monitored on the basis of the specified discharge guidelines. This makes it possible
to precisely control the total load discharged into the water and to comply with the legal regulations on wastewater
disposal.
Data collection for environmental accounting
For environmental accounting and reporting, Afarak collects comprehensive data on emissions, waste and
resource consumption from various internal and external sources. This data is consolidated using the LCA process
to provide standardized and structured information from all sites. This ensures coordinated further processing of
the data, which forms a sound basis for analysis and reporting. The central processes and sources of information
are listed below:
•
Air and water emissions: The continuous monitoring methods and sampling for air and water emissions
include data from official measuring institutes as well as from the in-house chemical laboratory. This
data includes the concentrations of pollutants and the quantities of waste water.
•
Emissions: Afarak's emissions are not measured directly, but are based on standardized calculations using
specific emission factors. This methodology is preferred as direct emission measurements at all sites are
currently not technically feasible, economically viable or regulatory necessary. The calculations are
based on internationally recognized sources, in particular those of the IEA, to ensure a precise and
consistent evaluation.
61
•
Waste and recycling data: Internal reports and records of the disposal processes provide detailed
information on the waste generated and the proportion of recycling.
•
Energy and water use: Production reports and consumption data from the systems provide a
comprehensive view of the resources used and play a decisive role in the environmental balance.
E2-6: Expected financial effects of impacts, risks and opportunities related to pollution
Afarak is making use of the transition period in accordance with ESRS E3-5 and is not disclosing the relevant
information. This information will be part of the future "Climate Change Transition Plan", which is currently
being developed and is expected to be finalized in 2025/2026. Quantitative information will be provided as soon
as the necessary data and analyses are available.
ESRS E3: Water and Marine Resources
E3-1: Concepts related to water and marine resources
Afarak has not yet adopted any formalized concepts for the use and conservation of water and marine resources
that meet the specific requirements of ESRS E3. Nevertheless, the company has long been implementing site-
specific measures aimed at optimizing water consumption and minimizing the impact on water resources. These
activities include the use of modern water recycling systems, the introduction of efficient wastewater treatment
processes and the reduction of water pollution.
The planned "Climate Change Transition Plan" will transform these existing initiatives into a comprehensive
Group-wide document in order to meet the requirements of ESRS E3. Until then, the focus will be on the
continuation and further development of current measures to promote the sustainable use and protection of water
resources in a targeted and effective manner at the respective locations.
The following sections provide an overview of Afarak's activities in this area to date.
1. Adoption of general guidelines of the organizations
Afarak follows the general strategic guidelines of the ICDA and EUROALLIAGES to promote sustainable
processes. These guidelines are implemented through technologies for the reuse and recycling of process water.
At Afarak's sites, this is achieved through closed-loop water systems, which significantly reduce both fresh water
consumption and wastewater discharges.
Afarak also attaches great importance to minimizing water pollution. The company's own wastewater treatment
plants and optimized wastewater treatment processes significantly reduce the discharge of pollutants into water
resources. The company recycles up to 95% of the process water at the mine sites, which makes a significant
contribution to conserving resources.
In the spirit of promoting innovative solutions, Afarak uses alternative water sources such as rainwater and well
water to further reduce dependence on fresh water resources - an important factor, especially for mine sites in
water-scarce regions.
2. Site-specific requirements
Responsibility for the use of water and marine resources lies with the Group's sites in Germany, Turkey and South
Africa. These operate independently in order to take account of the varying legal conditions and environmental
protection requirements in the individual countries. In view of these differences, it is currently difficult to
implement a uniform strategy at Group level.
3. Climate Change Transition Plan currently being planned
Afarak is currently developing a "Climate Change Transition Plan" with the aim of coordinating the existing
environmental protection targets and measures across the Group and establishing a structured framework. The
plan is intended to ensure that key issues such as the sustainable use of water resources, wastewater management
and compliance with relevant water standards are given appropriate consideration.
62
Afarak is committed to meeting the requirements of ESRS E3 (Water and Marine Resources) and other relevant
standards with this plan. Future reports will transparently document progress in implementing this plan to meet
stakeholder expectations and ensure consistent reporting.
E3-2: Measures and resources related to water and marine resources
In the reporting period, Afarak did not introduce any specific measures with regard to water and marine resources.
However, Afarak has a large number of ongoing and already implemented measures that have been successfully
contributing to the sustainable use and conservation of water resources for years.
Location-oriented personal responsibility
At the locations in Germany, Turkey and South Africa, individually adapted water management measures are
implemented independently. This approach has proven to be sufficient to meet all applicable legal requirements
and standards in the area of water resources.
•
Ongoing measures: The activities implemented include water conservation, recycling and the protection
of local water sources, which have been operating successfully for years.
•
Optimizations: These systems are regularly reviewed and improved in order to further increase efficiency
and meet local environmental requirements.
Sector-specific requirements of the umbrella organizations
As described above, Afarak follows the environmental guidelines of the ICDA and EUROALLIAGES. Although
these organizations set general environmental guidelines for the industry, they do not include specific regulations
regarding water and marine resources. Nevertheless, Afarak also follows the general guidelines of the umbrella
organizations in the area of water use to integrate environmentally friendly processes and promote the
minimization of environmental impacts. These guidelines are integrated into the existing water management
systems.
Future strategic orientation
As part of the planned "Climate Change Transition Plan", Afarak will document the existing, already well-
functioning water management measures by continuously reviewing the existing measures in order to ensure their
effectiveness and identify any potential for improvement. The aim is to maintain Afarak's high standards and to
further expand them in a targeted manner in order to ensure the long-term and sustainable use of water resources
at all sites. The autonomy of the sites with regard to local requirements will continue to be taken into account.
E3-3: Goals related to water and marine resources
At present, Afarak has not set any specific, measurable or results-oriented targets or quantitative or qualitative
indicators to assess progress in the area of water and environmental protection. This is due to the fact that the
company already has well-functioning water management measures in place that do not currently require any
significant changes.
As part of the planned "Climate Change Transition Plan", the focus in this area will be on continuously reviewing
the efficiency of existing processes. The aim is to ensure that these measures meet Afarak's high standards and
are optimized where necessary. Measurable and results-oriented targets and specific indicators can be defined in
this context if required.
Through this approach, Afarak ensures the systematic and sustainable further development of water management
without unnecessarily changing the already established and functioning processes.
The main responsibility for monitoring environmental measures lies with the management of the respective sites.
This ensures compliance with all local requirements and standards, including the regular review and adaptation
of measures to current environmental conditions. The sites report regularly on the progress and status of their
environmental initiatives to the Group's EMT. Afarak itself assumes an overarching control function to ensure
63
comprehensive compliance with local requirements. This enables consistent monitoring and coordination of
measures at all sites and allows any necessary corrections or additional support to be initiated in a targeted manner.
E3-4: Water Consumption
Total water consumption and water intensity
The total water consumption of Afarak amounts to 5,659,047 m³ and is made up of the following sources:
Reporting year
Unit
Total water consumption
5,659,047
Volume (m³)
Total water consumption in water-prone areas, including
areas with high water stress
5,476,195
Volume (m³)
Total amount of water recovered and reused
127,087 Rainwater
5,142,000
95% of the process
water
Volume (m³)
Total stored water
5,000
Volume (m³)
Changes in water storage
0
Volume (m³)
Water intensity
43,991
Volume (m³) / total turnover
(€ million)
Water recycling and reuse
A total of 5,269,087 m³ of water consumption was successfully recycled and reused.
Water quality and water catchment areas
The water quality and the specific catchment areas are regularly monitored at each site. Drinking water is sourced
from local suppliers and meets the regionally defined drinking water standards. Rainwater and well water are
adapted to the conditions at the individual sites and are regularly checked for compliance with local quality
standards. There is a high level of water stress at the mine sites in South Africa and Turkey, as these regions are
characterized by limited water availability. This requires particularly efficient use of water in order to minimize
the impact on local water resources. Measures for water conservation and sustainable use, such as the reuse of
process water and the optimization of water consumption in operating processes, are therefore an integral part of
the operational water strategy.
Data collection and methodology
The water consumption data is based on direct measurements and regular records, using industry-specific factors
to categorize consumption from different sources. Standardized measuring devices and regional legal standards
such as local environmental regulations and ISO standards (where applicable) are used for data collection and
documentation.
Calculation basis
The data on total consumption and individual categories is based on annual records and monthly consumption
reports that have been carefully calculated and analyzed. Measures to reuse and recycle water are based on internal
efficiency programs to conserve resources, which are continuously updated.
64
E3-5: Expected financial effects of impacts, risks and opportunities related to water and marine resources
Afarak is making use of the transition period in accordance with ESRS E3-5 and is not disclosing the relevant
information. This information will be part of the future "Climate Change Transition Plan", which is currently
being developed and is expected to be finalized in 2025/2026. Quantitative information will be provided as soon
as the necessary data and analyses are available.
ESRS E5: Resource Use and Circular Economy
E5-1: Concepts related to resource use and the circular economy
Afarak has not yet adopted any formalized resource use and circular economy concepts that meet the specific
requirements of ESRS E5. Nevertheless, the company has long been implementing site-specific measures aimed
at using resources efficiently and integrating material cycles into its processes. These activities include the
introduction and expansion of LCA to all major sites, the continuous investigation and implementation of
optimization opportunities in production processes and the reuse of by-products.
The LCA, which was extended to all major locations in the reporting year, analyzes and evaluates resource
consumption along the entire value chain. These results create a solid data basis for identifying targeted measures
to improve the use of resources and integrate material cycles.
As part of the development of the "Climate Change Transition Plan", Afarak will use the knowledge gained from
the LCA process to enable in-depth analyses of resource use and the circular economy. The data collected will be
used to identify potential for more sustainable resource use and the integration of material cycles. Based on these
findings, it will be examined whether and to what extent specific measures or strategic goals can be included in
the "Climate Change Transition Plan".
The focus here is on collecting and evaluating data in order to improve the efficiency of existing processes and
make targeted adjustments where necessary. The planned timeframe for the review and further development of
these approaches is set for 2025/2026.
E5-2: Measures and means related to resource use and circular economy
In the reporting year, Afarak implemented an important measure in the area of resource use and the circular
economy by expanding the LCA to all major sites. This complements the already integrated site in Germany and
now also includes the sites in Turkey and South Africa. The aim of this measure was to create uniform and
comparable data collection for all environmental areas in order to be able to report on resource consumption in a
well-founded manner.
The LCA provides detailed findings on resource use, energy efficiency and potential environmental impacts along
the entire value chain. This data forms the basis for future strategies and measures to promote the circular economy
and the sustainable use of resources
Future strategic orientation
Afarak is also working on the creation of a "Climate Change Transition Plan", which is to be introduced in the
period 2025/2026. This plan will use the knowledge gained from the LCA to develop, optimize and implement
structured strategies and, if necessary, specific measures for resource use and the circular economy.
E5-3: Goals related to resource use and circular economy
Currently, Afarak has not established specific measurable and result-oriented targets and qualitative or
quantitative indicators in relation to resource use and circular economy. However, the Group is in a dynamic
development process that is driving forward the implementation and expansion of the LCA at the sites in order to
obtain sound data. This data serves as the basis for analyses and makes it possible to identify potential and
challenges in the area of resource use and the circular economy. With the planned completion of the "Climate
Change Transition Plan" by 2025/2026, it will be examined whether and to what extent it is necessary to set
65
measurable and results-oriented targets. This will build on the findings of the LCA processes to ensure that any
targets are formulated in a well-founded and needs-based manner.
Although there are currently no specific targets, Afarak continuously measures the effectiveness of its resource
use and circular economy strategies and initiatives. This is done through ongoing data collection as part of the
LCA process and forms the basis for well-founded analyses and the evaluation of the effectiveness of implemented
measures.
Afarak pursues various approaches to systematically monitor and optimize the effectiveness of its resource use
and circular economy strategies:
1. Life Cycle Assessment (LCA)
The German site was already integrated into the LCA. In the reporting year, the sites in Turkey and South Africa
were also included. The data on water consumption, waste management and resource use recorded in the LCA
enables the environmental impact along the entire value chain to be assessed. These findings make it possible to
identify trends and make well-founded decisions to optimize the use of resources.
2. Internal audits and reviews
Regular internal audits ensure compliance with Afarak's standards and evaluate the effectiveness of the measures
implemented. These reviews help to identify potential areas for improvement.
3. Reporting and communication
Transparent reporting on progress and challenges is important to Afarak. This includes communicating with
stakeholders and publishing information on environmental impacts and measures.
4. Adjustments and improvements
Based on the data collected and the results of audits, strategies and measures are continuously adapted to increase
their effectiveness and meet new challenges.
E5-4: Resource Inflows
The following resources form the basis of Afarak's production processes and are integrated into Afarak's value
chain with a strong focus on efficiency and reuse. No material from by-products or waste streams is used in the
production processes. The main resource inputs in the upstream value chain include
1. Raw materials
Chrome ore concentrate: This critical raw material for the production of ferrochrome is extracted directly from
Afarak's own mines in Turkey and is of crucial importance for Afarak's ferrochrome production.
Lime: Lime is an important component in the ferrochrome production process and is sourced from local suppliers.
Silicochrome: This raw material is an intermediate product and is also sourced from local suppliers. Silicochrome
is used as a starting material in the ferrochrome production process to achieve the desired chemical composition.
2. Water
The extraction of chrome ore concentrate from the chrome ore rock requires the use of considerable amounts of
water. Afarak focuses on recycling and reusing the process water in order to reduce the consumption of natural
resources.
3. Energy
Ferrochrome production requires a significant amount of energy in the form of electricity.
66
4. Property, plant and equipment and machinery
The use of large construction machinery is essential for chrome ore extraction at all operating sites. These heavy
machines are of central importance for operations and represent a significant inflow of resources.
5. Transportation
The raw materials are transported to the production site both by truck and by ship, where they are processed into
ferrochrome.
6. Packaging
To ship the ferrochrome, Afarak uses steel drums and single trip big bags, which are known for their durability.
From the Group's perspective, these types of packaging are currently the most environmentally friendly options
available, as they can be reused by customers or recycled worldwide, thus reducing the need for new packaging
materials.
Reporting
year
Unit
Total weight of products and technical and biological materials used during
the reporting period
81,758
Mass (in t.)
Percentage of biological materials (and biofuels used for non-energy
purposes) (incl. packaging)
0
Percentage (%)
The absolute weight of reused or recycled secondary components, products
and materials (including packaging) used in the manufacture of the
company's products and services
0
Mass (in t or kg)
Percentage of reused or recycled secondary components, products and
materials used
0
Percentage (%)
Data collection and methodology
The methods and assumptions used to calculate the products and materials used are explained below:
Data collection
Raw material data is recorded through regular and systematic documentation of consumption at the production
sites. This important information is obtained from the internal production reports and the warehouse management
systems.
Accounting
Balancing involves a comparison of quantities supplied and consumed. This process makes it possible to precisely
determine raw material consumption over defined periods of time.
Standardized conversion
In order to standardize analysis and reporting, standardized conversion factors are used for certain raw materials,
whereby input variables are converted into consistent units.
Assumptions
•
Stability of sources of supply: It is assumed that the sources of supply for materials such as lime,
silicochrome and chrome ore remain unchanged and that the raw materials supplied are of the specified
quality.
•
Production capacity: The assumption of stable production capacity supports the prediction of future raw
material requirements.
67
•
Market developments: To facilitate long-term planning, it is assumed that market prices and the
availability of raw materials remain constant over the entire period under consideration.
E5-5: Resource Outflows
Afarak's ferrochrome is characterized by its longevity, corrosion resistance and high durability, making it a key
component in numerous end products such as stainless steel and special alloys. Ferrochrome also retains its
material properties in the end products. This enables an extended use cycle, as ferrochrome can be reintegrated
into industrial applications by recycling at the end of the end product's use.
Chrome ore concentrate, on the other hand, is used as a raw material for the manufacture of products such as
ferrochrome and is fully integrated into the production process. While the chromium from the concentrate is reused
in durable and recyclable materials, the direct use cycle of the concentrate ends with further processing.
Afarak focuses on minimizing waste through sustainable production processes and generating by-products that
can be reused in other industries, such as road construction. These approaches promote resource-conserving use.
Thanks to the special material properties of ferrochrome and the targeted use of chrome ore concentrate in
industrial processes, Afarak actively contributes to the promotion of the circular economy and the reduction of
resource discharges.
Relevant waste streams
In the Afarak sector, the relevant waste stream is the EWC code "C0809" of the European Waste Catalog (EWC),
which refers to "slag and other waste from the metalworking industry". This waste stream includes materials
generated during ferrochrome production and managed as part of waste management practices. Afarak's waste
under this EWC code consists exclusively of slag. Afarak makes every effort to minimize this waste and convert
it into by-products whenever possible. These in turn can be used in other sectors of the economy, such as road
construction. This promotes the circular economy and contributes to the sustainable use of resources.
Breakdown of waste
The following tables provide a more detailed breakdown of what Afarak's waste is made up of and how it is
disposed of.
Waste diverted from disposal:
A total of 31,412 tons of waste - 100% of which was non-hazardous - was diverted from disposal in the reporting
year.
Reporting year
Unit
Non-hazardous waste diverted from disposal by preparation for reuse
18,725
Mass (in t.)
Non-hazardous waste diverted from disposal through recycling
29
Mass (in t.)
Non-hazardous waste diverted from disposal by other recovery operations
12,658
Mass (in t.)
Total quantity of waste diverted for disposal
31,412
Mass (in t.)
For the disposal of certain waste:
A total of 0 tons of waste - 100% of which was non-hazardous - was forwarded for disposal by Afarak in the
reporting year:
Reporting year
Unit
Non-hazardous waste destined for disposal by incineration
0
Mass (in t or kg)
Non-hazardous waste destined for disposal by landfill
0
Mass (in t or kg)
68
Non-hazardous waste destined for disposal by other disposal operations
0
Mass (in t or kg)
Total quantity of waste destined for disposal
0
Mass (in t or kg)
Hazardous waste:
Afarak produces neither hazardous nor radioactive waste. For this reason, the quantities are not listed in a table.
Total amount of waste generated:
The total amount of waste generated in the reporting year was 31,412 tons.
The total amount of non-recycled waste is 0 tons, which corresponds to 0%.
Data collection and methodology
The following methods and assumptions were used to calculate data on waste (especially slag) and its
classification:
Data collection
The quantities of slag are collected by continuously recording and documenting the waste streams in the
production facilities. This is done with the help of internal production reports and waste management systems.
Waste accounting
The slag is balanced by regularly weighing and recording the slag produced during the production process. This
method enables precise recording and tracking of waste streams over precisely defined periods of time.
Standardized classification
Slags are classified according to the European Waste Catalog (EWC), whereby the slags are specifically assigned
to the EWC code "C0809", which stands specifically for slags from the metalworking industry.
Assumptions
•
Quality of the raw materials: It is assumed that the quality of the raw materials used remains constant,
which influences the composition of the resulting slag.
•
Production conditions: The assumption of stable production conditions supports the Group's ability to
forecast slag volumes over time.
•
Market developments: Afarak assumes that the demand for slag as a by-product in application areas such
as road construction will remain constant.
Recyclability of products and packaging
The following table shows that Afarak's products and packaging have a high degree of recyclability
Reporting year
Unit
Quotas of recyclable content of products*
> 90
Percentage (%)
Quotas of recyclable content in product packaging** > 85
Percentage (%)
The figures are based on estimates and approximate values that were determined taking into account available
industry standards and the following sources:
* Source: Worldstainless ( https://www.worldstainless.org/about-stainless/environment/stainless-steels-and-co2-
industry-emissions-and-related-data/)
** Source: World Steel Association (https://worldsteel.org/about-steel/facts/steelfacts/) and Uniplast
69
Recyclability of the products (ferrochrome)
Ferrochrome is an essential component of stainless steel and has an exceptionally high recyclability. Stainless
steel products, which are the main area of application for ferrochrome, have a recycling rate of more than 90%,
based on established global recycling cycles. Within the recycling process, the majority of the ferrochrome
contained is retained and can be almost completely reused without any loss of quality. The recovery rate of
chromium in the smelting process is typically 95 to 98%. The recycling rate takes into account closed material
cycles and efficient collection of stainless steel scrap, where low losses due to oxidation and impurities occur.
Recyclability of product packaging
The steel drums used have a recycling rate of over 85%. Steel is a material that can be recycled almost indefinitely
without any loss of quality. The rate is based on the global steel recycling infrastructure and takes into account
possible losses due to improper disposal.
The single-trip big bags are made of polypropylene, a plastic with a theoretical recyclability of almost 100%.
Under real conditions, they achieve a recyclability of more than 85% with clean disposal and an efficient recycling
infrastructure. The rate is based on the assumption that the single-trip big bags enter the local recycling cycle and
are not affected by contamination or improper disposal.
The recyclability values stated represent average values and may vary depending on the regional infrastructure
and collection processes. They are based on optimized recycling conditions in which material purity and efficient
cycles are guaranteed. The figures are intended to emphasize the sustainability of the materials and packaging
concepts used
Flexibility for customers:
Afarak offers customers the option of choosing between steel drums and single-trip big bags, depending on their
needs and logistics requirements. This flexibility ensures that the type of packaging meets the customer's specific
requirements without compromising the recyclability of the materials.
Circular economy as a focus:
Due to the global nature of transportation, Afarak specifically uses packaging materials that can be recycled
internationally. This ensures that packaging - regardless of its destination - can be disposed of properly and
returned to the material cycle. This approach supports the principles of the circular economy, reduces waste and
conserves resources along the entire supply chain.
Shelf life of the products
Products such as ferrochrome and chrome ore are characterized by their exceptional shelf life. Although they
serve as intermediate products in the supply chain and are not considered end products, they retain their quality
for an almost unlimited period of time if stored properly. Ferrochrome remains stable under normal conditions
and retains its alloying properties, while chrome ore offers a long shelf life due to its chemical resistance. These
properties ensure that our products can be used reliably for decades in long-life applications such as stainless steel,
making a significant contribution to sustainability in the supply chain.
1. Ferrochrome (FeCr):
Ferrochrome is characterized by exceptional durability and is used in long-lasting products such as stainless steel.
Products containing ferrochrome have a service life of several decades. The durability of stainless steel made with
ferrochrome therefore contributes significantly to the conservation of resources, as these products can be used
over long periods of time without having to be replaced. The chemical stability of ferrochrome also ensures that
it retains its properties throughout its service life. At the end of their useful life, materials containing ferrochrome
can be returned to the cycle almost indefinitely worldwide without any loss of quality.
70
2. Chrome ore:
Chrome ore concentrate is a raw material that is used directly in further processing, such as the production of
ferrochrome. Although its service life technically ends with further processing, it is used in durable products such
as stainless steel. The chemical stability of chromium ore makes it an indispensable raw material in the metal
industry. Even when stored, it remains unchanged over long periods of time and retains its quality, meaning it can
continue to be used without restriction.
3. Big bags:
The single-trip big bags are made of polypropylene and are designed for single use (single trip). This type of
packaging is common practice in the industry, as the return of single-trip big bags is often considered less
sustainable. Polypropylene also offers the advantage that it can be easily recycled worldwide
4. Steel drums:
Steel drums are made from robust and durable material that is ideal for the transportation and storage of our
products. Their durability allows them to be used safely for many years, making them a reliable choice for storage
or onward transportation. The properties of steel ensure that the drums retain their stability and safety even during
intensive use. In addition, steel offers the advantage that it can be easily and efficiently returned to the cycle
worldwide, promoting sustainable use of the material.
E5-6: Expected financial effects of impacts, risks and opportunities related to resource use and the circular
economy
Afarak is making use of the transition period in accordance with ESRS E5-6 and is not disclosing the relevant
information. This information will be part of the future "Climate Change Transition Plan", which is currently
being developed and is expected to be finalized in 2025/2026. Quantitative information will be provided as soon
as the necessary data and analyses are available.
ESRS G1: Business Conduct
G1-1: Corporate culture and concepts for corporate management
Corporate culture at Afarak
Afarak is a globally active, vertically integrated company that operates its own mines in South Africa and Turkey
to secure the supply of raw materials for its own ferrochrome production in Germany, among other things. Afarak's
corporate culture is based on the company's core values: integrity, environmental responsibility, and social
commitment. These values are defined by central corporate guidelines, which are described in the following
chapters. Afarak attaches great importance to the individual responsibility of each site. This makes it possible to
effectively meet local needs and to build and maintain close relationships with the local communities.
Afarak's values are promoted through targeted initiatives, regular meetings, company assemblies and the active
involvement of employees in decision-making processes, as well as evaluated through ongoing feedback and
audits. This holistic approach aims to ensure that the culture is not only part of the corporate strategy, but is
actively filled with life. Among other things, the corporate culture is promoted through the following measures:
•
Programs and initiatives: Afarak invests in health and safety programs, environmental management and
social engagement, such as education, infrastructure and job creation in local communities.
•
Communication: Internal communication channels such as notices, the employee app (available in
Germany) and regular dialogue with committees and managers serve to promote the corporate culture.
•
Corporate culture assessment: Compliance with Afarak's values is monitored through internal audits and
reports that provide analysis on the strength of Afarak's corporate culture. Regular reviews of indicators
such as employee satisfaction, workplace safety and community engagement help to evaluate the success
of Afarak's cultural measures.
71
Concepts for corporate management and corporate culture
Afarak does not pursue a uniform company-wide "overall policy", but relies on a number of specialized guidelines,
each of which covers specific aspects of company policy. These individual policies address areas such as risk
management, ethical behavior, compliance and governance. In addition, Afarak develops country-specific codes
of conduct that take into account local legal requirements and cultural characteristics. Each policy supports
Afarak's corporate goals and values and is part of an overarching governance structure aimed at managing the
company responsibly.
A central component of Afarak's strategy is the promotion of integrity, ethical behavior and a sense of
responsibility. Key aspects are:
•
Risk management to ensure long-term stability
•
Transparency and compliance (in particular through the "Code of Ethics", "Code of Conduct" and future
local codes of conduct)
•
Whistleblower protection for the secure reporting of breaches
•
Promoting social responsibility in dealing with employees and the environment
This central content strengthens trust, legal compliance and sustainable growth within the company and is
reflected in several of the Group's central guidelines:
Risk management and compliance
The Risk Management Policy serves to systematically identify and manage risks in order to safeguard the
corporate strategy in the long term and to optimally support the achievement of objectives in all business areas. It
places particular emphasis on promoting a corporate culture based on risk awareness and compliance with both
legal requirements and internal guidelines.
The matrix is regularly reviewed and updated to implement this policy. Risks are divided into categories such as
financial, operational, legal and environmental aspects. The local management teams and central compliance
teams report annually to the BoD on the risks identified. An escalation structure ensures that critical risks are
identified and addressed at an early stage.
Internal audits ("Internal Audit Charter") are also used to ensure the effectiveness of risk management. These
independent audits are coordinated by the central internal audit department in order to review the efficiency of
risk management processes and the implementation of measures to eliminate weaknesses. The results of the audits
are presented to the BoD's Audit Committee.
"Code of Conduct" and "Code of Ethics"
The "Code of Conduct" and the "Code of Ethics" serve as ethical guidelines for employees as well as for partners
and suppliers and are aligned with the corporate values. The codes are committed to integrity and transparency
and thus promote responsible behavior in day-to-day business.
"Whistleblowing policy"
Afarak's whistleblowing policy is a central component of the compliance strategy and aims to promote
transparency and ethics within the organization and to effectively identify and address illegal behavior such as
insider trading, market manipulation, violations of accounting standards or other compliance issues. It regulates
how complaints and concerns from employees and external persons are received, documented, investigated and
processed. The policy and its mechanisms enable employees and external stakeholders (e.g. business partners) to
report concerns or potential violations safely and without fear of reprisals. The reporting process takes place via
defined channels such as written reports or e-mail. All relevant contact details for reporting and the policy are
publicly available on the Afarak website. For those without online access, they are available in written form at
each location of the organization. These mechanisms promote a secure reporting process through strict
confidentiality protocols.
72
Scope of the concepts
Afarak's corporate policy and corporate culture concepts are far-reaching and encompass employees, customers,
suppliers and business partners. While employees and suppliers are directly involved through specific guidelines
or contractual conditions, customers and business partners are primarily subject to contractual obligations that
ensure core values such as compliance and transparency.
Employees: All internal guidelines such as the "Code of Conduct", the "Code of Ethics" and the whistleblowing
policy are binding for employees. These cover aspects such as ethical behavior, compliance and transparency
Customers: By signing the sales orders, customers undertake to comply with the legal provisions contained therein
("Legals"). These provisions include provisions on compliance with statutory and contractual regulations as well
as important clauses, such as those on dispute resolution and force majeure.
Suppliers: Suppliers must accept and sign the "Code of Conduct for Suppliers" at the start of the business
relationship. These requirements include guidelines on human rights, anti-corruption and compliance.
Business partners: The "Code of Ethics" formulates clear expectations towards business partners with regard to
compliance with ethical and legal standards. However, it is not generally mandatory to sign it.
Limitations of the concepts
Although the concepts of corporate policy and corporate culture are very comprehensive, implementation is
subject to a number of limitations. They arise due to local legislation, cultural differences and the complexity of
policy coordination. Afarak continuously reviews and develops its concepts to ensure consistent adherence to the
core values and corporate objectives in all markets.
Local legislation: In some countries, specific adjustments are necessary to meet regulatory requirements.
Cultural differences: The perception and acceptance of policies such as the whistleblowing policy can depend
heavily on the regional culture. In certain countries, employees or partners may be reluctant to raise concerns,
even if anonymous channels are available.
Practical implementation: The large number of guidelines (e.g. "Code of Ethics", "Whistleblowing Policy", "Risk
Management Policy") requires coordinated implementation in order to avoid redundancies and overlaps.
Ownership of the locations: The various locations are responsible for adapting and implementing the global
corporate strategy to the specific needs and conditions of their respective local environment. This enables targeted
and flexible implementation that takes regional differences into account.
Responsibilities
Afarak's BoD is responsible for implementing the corporate strategy at Group level. It defines the strategic
direction and monitors key areas such as risk management, compliance and ethical standards. The BoD also
ensures that all necessary resources and structures are provided to achieve the strategic goals and uphold the
corporate values. The Audit and Risk Committee is a central body that supports the BoD in monitoring key
strategic areas. This includes risk management, adherence to compliance requirements and internal control. The
committee also supports the implementation and management of whistleblowing mechanisms, including the
documentation and investigation of incoming reports.
In addition to the BoD and the Audit and Risk Committee, there are other supporting teams, such as the EMT,
which consists of the CEO, CTO, CFO and CCO. This ensures that strategic objectives are effectively
implemented both centrally and locally.
Local committees at the locations
In addition to the central committees, there are local operational and support committees that deal with local
issues. They include, for example, the works council and committees for labor relations, safety and equality. They
ensure compliance with local laws and internal standards, particularly in the areas of health, safety, equal
73
opportunities and labor relations. At some locations, stakeholder engagement coordinators assume the role of
interface to local communities and interest groups, for example in dialogue with neighbouring communities.
ESG team
The central ESG team is responsible for implementing the sustainability strategy throughout the Group. It collects
and bundles ESG data from all locations that is required for reporting in accordance with the CSRD Directive. It
also coordinates the development of future ESG strategies in order to meet long-term requirements.
Executive Management Team (EMT)
The EMT, consisting of the CEO, CTO, CCO and CFO, assumes a supporting role at Group level and is
responsible for the operational implementation of strategic guidelines and assessments. The EMT's core tasks
include risk management, compliance with ESG standards and the monitoring of operational processes. The EMT
acts as a link between the company's strategic objectives and their practical implementation at the locations. It
ensures the uniform application of the guidelines and supports the locations in implementing the specified
strategies. In addition, the EMT reports regularly to the BoD and the relevant committees in order to create
transparency and monitor the company's strategic direction.
Inclusion of international standards
Afarak complies with various international standards from third-party organizations when implementing its
strategy. These standards ensure that Afarak operates in accordance with globally recognized principles for
sustainable and ethical business practices. Such practices include the following guidelines and standards:
•
UN Global Compact: The ten principles of the United Nations Global Compact cover key areas such as
human rights, labor standards, the environment and anti-corruption.
•
OECD Guidelines for Multinational Enterprises: These guidelines promote ethical behavior and social
responsibility in the international business environment.
•
ILO Declaration of Principles: The Declaration of the International Labor Organization contains
fundamental principles and rights at work, including labor and social standards.
•
Rio Declaration on Environment and Development: These standards promote the sustainable use of
resources.
•
UN Guiding Principles on Business and Human Rights: These guidelines ensure the respect and
promotion of human rights in business.
Consideration of the stakeholders
Afarak systematically integrates the interests of the most important stakeholders into the corporate strategy, the
foregoing being ensured by defined processes and committee structures. As an SE (Societas Europaea), the
company is subject to European regulations on co-determination and employee participation. In addition, other
mechanisms are used to ensure that the interests of stakeholders are incorporated into strategic decisions. Through
these processes, Afarak ensures that strategic decisions are not only economically sustainable, but also take into
account the social, ethical and legal expectations of key stakeholders. The following overview shows how this is
taken into account:
Employee participation and co-determination
As an SE, Afarak has integrated bodies such as the works council and employee representatives at European level.
They are involved in strategic decision-making processes in an advisory capacity. Employee representatives have
information rights, consultation rights and/or co-determination rights in strategic matters, particularly in
discussions in the BoD and in committees. This ensures that work-related issues are taken into account at an early
stage.
Governance by the Board of Directors (BoD)
The Charter of the Board stipulates that the BoD includes the interests of all key stakeholder groups, i. e.,
shareholders, employees, customers and suppliers, in its strategic planning and takes them into account in
74
decisions that affect the company's values. Regular meetings and strategic discussions with stakeholders ensure
their concerns are recognized at an early stage and integrated into the corporate strategy.
Specialized committees and reporting structures
Specific committees, such as the Audit and Risk Committee, monitor compliance with standards and stakeholder
requirements. These committees receive regular reports from a combination of internal departments, such as the
ESG team, and external sources. These reporting structures ensure that both regulatory requirements and social
and ethical standards are met in the interests of stakeholders.
Access to the strategy for stakeholders
Afarak makes its strategy available to its stakeholders via various communication channels, thus ensuring that the
corporate strategy is communicated to stakeholders in a transparent and easily accessible manner:
Publications and reports
The strategic directions, including important corporate guidelines such as the Code of Conduct and the strategies
for risk management and sustainability, are set out in detail in annual and ESG reports. These reports are available
on the company website, making it easier for shareholders, customers, suppliers and the general public to access
relevant information.
Company website
Via its company website, Afarak makes key documents, including the Code of Ethics and the Whistleblowing
Policy, as well as other guidelines available to its stakeholders, particularly business partners and suppliers. The
website also provides a clear insight into the current strategic guidelines and corporate values.
Complaints mechanisms
Afarak has established a comprehensive system of policies and procedures to identify, report and investigate
concerns regarding unlawful acts or violations of the Code of Conduct and/or the Code of Ethics. The
whistleblowing policy is the main mechanism for serious violations, supplemented by alternative reporting
channels and structures. This ensures that all relevant concerns are effectively considered and dealt with according
to their urgency.
To promote the use of these complaints mechanisms, Afarak provides basic information about their availability
and use. This is done via various communication channels such as written notices, emails, staff meetings, staff
representatives or an app. The distribution of information is organized independently at each location to ensure
that all employees are informed in an equal fashion, regardless of their type of employment. These measures are
intended to raise awareness of the reporting channels and ensure they are used effectively.
The main reporting processes are described in the following paragraphs:
Reporting serious violations via the whistleblowing system
Employees, external business partners and other internal and external stakeholders can report possible serious
violations or unethical behavior anonymously or confidentially. Reports can be made either by e-mail to
compliance@afarak.com or by mail to the following address:
General Counsel / Complaint
Afarak SE
Unioninkatu 20-22
00130 Helsinki
Finland
Incoming complaints can be addressed in writing to the CCO or directly to the Chairman of the Audit Committee.
All reports will be treated in strict confidence, ensuring that the identity of whistleblowers is protected and no
reprisals are taken against those who raise concerns in good faith.
75
After receiving a report, the CCO assesses whether it is a whistleblowing complaint. If this is confirmed, a formal
investigation is conducted in which all relevant information is systematically collected and analyzed. Afarak will
involve external auditors or consultants as required to bring additional expertise and a neutral perspective to
investigations.
Alternative reporting channels
In addition to the whistleblowing system, Afarak employees have a variety of other reporting channels for minor
or personal complaints, including direct reporting to line managers or communication with internal bodies such
as the Works Council in Germany or the SE Works Council at European level. Specific internal committees, such
as local labor relations committees or health and safety committees, also offer platforms for expressing concerns
and support in resolving them.
Reporting and escalation
Complaints reported via alternative channels, such as line managers or works councils, can be forwarded to the
whistleblowing channel or the CCO depending on their severity. All cases reported via the whistleblowing channel
are documented in a dossier ("docket") and reviewed by the CCO or directly by the Audit Committee. If a
complaint concerns the CCO directly, the Audit Committee itself takes over the investigation in order to ensure
independence and transparency. Depending on the case and the outcome of the investigation, Afarak may be
obliged to forward relevant information to external supervisory authorities or regulatory bodies. The foregoing
applies in particular when it comes to unlawful behavior that requires external intervention.
Protection against retaliation
Retaliation against anyone who makes a whistleblowing complaint or cooperates with an investigation in good
faith is strictly prohibited under company policy. This also applies to immediate family members if they are
employed by the Group. Those affected can report possible retaliation directly to the CEO.
The protection does not apply in the case of personal misconduct, unless this was ordered by a manager.
Deliberately false complaints can result in disciplinary action, including dismissal.
Concepts and strategies for internal organizational training on business conduct
Similarly, there are currently no systematic concepts for internal organizational training on the subject of "business
conduct".
Corruption and bribery
At Afarak, the "Purchasing", "Sales", "Distribution" and "Business Development" functions are particularly
susceptible to corruption and bribery risks. In Purchasing and Sales, the risk exists above all when awarding major
contracts to external suppliers, as bribes could be used at this stage to obtain preferential treatment. In sales and
business development, employees who are involved in the acquisition of major contracts or in international
contract negotiations are at risk. They could become the target of bribery attempts in order to secure orders or new
business opportunities.
G1-2: Management of relationships with suppliers
Strategies for preventing late payments
Afarak implements measures to avoid late payment, especially for small and medium-sized enterprises (SMEs):
1. Efficient liquidity planning: Afarak pays particular attention to forward-looking liquidity planning.
Regular cash flow analyses enable the company to identify potential bottlenecks at an early stage and
take appropriate countermeasures.
76
2. Clearly defined payment terms and negotiations: At the beginning of each business relationship, realistic
payment terms are defined that are in line with both the company's liquidity situation and the needs of
the suppliers.
3. Communication and partnership with suppliers: An open and proactive approach to communication is of
key importance to Afarak. If there are signs of late payment, suppliers are informed at an early stage in
order to work together on solutions such as payment deadline extensions. This practice strengthens trust
and promotes long-term partnerships.
4. Contract management and prioritization: Payments to strategically important suppliers, especially for
critical raw materials or services, are treated as a priority. Efficient contract management ensures clear
agreements in order to meet payment obligations on time. Particular attention is paid to SMEs, which
tend to be more dependent on timely payments.
5. Avoidance of over-ordering: To avoid unnecessary financial burdens, Afarak takes care to avoid over-
ordering and to focus on actual demand. This minimizes unnecessary costs and bottlenecks and ensures
that liquidity is not tied up in excess stock.
Supplier relationship
Afarak relies on long-term and trusting partnerships with its suppliers. Suppliers are carefully selected according
to criteria such as quality, reliability and sustainability. They must also demonstrate that they apply sustainable
business practices. Afarak recognizes the risks that can arise from dependence on suppliers, particularly in the
event of potential supply shortages or disruptions due to natural disasters, political instability or economic
uncertainty. To mitigate risks, Afarak gives preference to local suppliers and maintains open communication to
identify and mitigate risks at an early stage. In addition, the Group relies on its own upstream value chain to obtain
the most important raw materials for production.
Integration of social and ecological criteria in supplier selection
Sustainability is a central component of the Group's supplier strategy, and it is important to the Group that
suppliers comply with both environmental and social standards and criteria. The social criteria are set out in the
"Code of Conduct for Suppliers". They include requirements on ethics, fair competition, the prevention of
corruption, money laundering and conflicts of interest, the use of information and intellectual property, respect
for human and labor rights, a healthy and safe working environment and the protection of personal data.
Ecological criteria include, in particular, environmental protection with the aim of minimizing the impact of
activities, products and services on the environment. Such criteria are, among others, the efficient use of natural
resources, the use of renewable energies, proper waste disposal, control of GHG emissions and the reduction of
impacts on biodiversity and ecosystems.
In addition, Afarak suppliers must comply with the OECD Guidelines and ensure the traceability of their supply
chains. Suppliers must allow Afarak to verify compliance with this Code of Conduct at any time.
G1-5: Political influence and lobbying activities
As a member of the ICDA and EUROALLIAGES, Afarak is involved in lobbying activities to influence political
decisions and thus promote both corporate and social objectives. Afarak mainly addresses the following topics:
•
Environmental and climate policy: Regulation of CO₂ emissions and environmental regulations for the
ferroalloy industry.
•
Trade policy and market access: access to international markets and removal of trade barriers.
•
Raw material security and availability: Sustainable use and responsible procurement of essential raw
materials.
•
Labor and social standards: Regulation of working conditions and social standards in the metal industry.
•
Research and development: Promotion of innovation and technological progress in the field of ferroalloy
production.
77
G1-6: Payment practices
Below, Afarak provides a detailed overview of the company's payment terms according to the main supplier
categories.
The standard payment terms are categorized as follows:
•
Raw material suppliers: 14 to 30 days
•
Service provider: 0 to 60 days
•
Transportation and logistics suppliers: 0 to 7 days
•
Energy suppliers: 0 to 15 days
In addition, the average payment periods for Afarak's most important supplier groups were determined based on
the agreed payment terms. The payment terms are: 22 days for raw material suppliers, 30 days for service
providers, 3.5 days for transportation and logistics and 7.5 days for energy suppliers. These values result in an
average payment period of 15.75 days - calculated as the sum of the payment terms divided by the number of
categories.
Reporting
year
Unit
Average number of days required by the company to
settle an invoice from the start of the contractual or
statutory payment period
15,75
days
Percentage of payments that meet the standard payment
terms
90
Percentage (%)
Number of outstanding court proceedings due to late
payment
0
Integer
Reporting year
Unit
Financial
political
contributions made
0
Monetary (€)
Political contributions
made in the form of
contributions in kind
0
Monetary (€)
Level of internal and
external lobbying
expenditure
0
Monetary (€)
Amounts paid for
membership of lobby
associations
EUROALLIAGE: 23,901
ICDA: 8,782
Monetary (€)
78
THE FERROCHROME AND CHROME ORE MARKET
Afarak Group operates primarily in the chrome market.
Globally, most of the chrome ore is used in metallurgical applications. However, chrome ore is also used, though
to a much lesser extent, in refractories, as foundry sands and as a chemical grade as shown below. Afarak produces
ferrochrome which is the main type of chrome used in metallurgical applications, in turn mainly driven by the
demand for stainless steel.
Therefore, chrome ore and ferrochrome are very much correlated to the developments of the stainless-steel
industry.
2024 Market overview
The stainless steel industry faced significant challenges in 2024, and signals are indicating that 2025
could become another challenging year. Throughout 2024, demand for stainless steel remained weak,
particularly in Germany, with the entire European market remained subdued.
In the third quarter, and especially in the fourth Cr Ore prices saw an unexpected and substantial
decline, driven by economic weakness in China. However, since mid-January, this trend has reversed,
and market signals for Cr Ore have turned more positive.
Market sentiment for Q1/2025
Output of LC FeCr is expected to increase in 2025. The low market prices show signs of bottoming out.
We continue our efforts to lower our COP and dilute the fix cost via increased production of standard
grades. Output of chrome ore is expected to remain at the same level. The market prices have recently
begun to improve again.
GROUP OPERATIONAL REVIEW
Operationally, 2024 presented higher sales and higher production for the Group.
Sales
The Group sales of processed material increased by 5.1% and stood at 21,759 (2023: 20,709) tonnes.
Group mining
Group mining activity increased by 8.7% to 365,929 (2023: 336,601) tonnes during the year under review.
Annual mining levels in the Speciality Alloys segment decreased by 1.1% to 64,945 (2023: 65,655) tonnes.
Production within the FerroAlloys segment increased significantly as the output increased in South African mines
to 300,985 (2023: 270,946) tonnes.
Group processing
Group processing for 2024 increased by 8.4% to 22,963 (2023: 21,179) tonnes on account of higher demand.
Human resources
At the end of the year 2024, Afarak had 602 (596) employees. The average number of employees during the year
2024 was 594 (599).
79
GROUP FINANCIAL PERFORMANCE
2024 performance
The Group revenue was lower compared to prior year EUR 128.6 (153.7) million mainly to a decline in prices.
Speciality Alloys Processed material sold increased by 2.7%, to 21,759 (FY/2023: 20,709) tonnes.
The mining operation increased by 8.7%, to 365,929 (FY/2023: 336,601) tonnes.
Loss for the year totalled EUR -7.2 (FY/2023 profit: 10.0) million and EBITDA during the year decreased to EUR
2.6 (FY/2023: 16.6) million. EBIT stood at EUR -0.1 (FY/2023: 15.0) million.
A hyperinflation adjustment of 1.9 million is included in the financial expenses with respect to the Turkish entities.
EUR million
H1 2024
H2 2024
FY 2024
FY 2023
Revenue
71.4
57.2
128.6
153.7
EBITDA
4.2
-1.6
2.6
16.6
EBIT
3.1
-3.2
-0.1
15.0
Profit for the period
0.5
-7.8
-7.2
10.0
EBITDA margin
5.9%
-2.9%
2%
10.8%
EBIT margin
4.3%
-5.6%
-0.1%
9.8%
Balance Sheet, Cash Flow and Financing
The Group’s total assets on 31 December 2024 stood at EUR 161.6 (2023:162.2) million and net assets totalled
EUR 112.1 (2023:105.8) million. During the second half, the translation differences on conversion of foreign
denominated subsidiaries was adjusted by EUR 4.6 million. The Group’s cash and cash equivalents, as at 31
December 2024, totalled EUR 4.0 (2023:18.0) million. Operating cash flow stood at EUR -6.3 (2023: 9.6) million.
The equity ratio stood at 69.3% (2023:65.1%). Afarak’s gearing at the end of the year was –1.2% (2023: -14.1%),
as the company kept low interest-bearing debt of EUR 2.6 (2023:3.1) million.
Investments, Acquisitions and Divestments
Capital expenditure for the full year of 2024 totalled EUR 5.8 (3.0) million. Capital Expenditure was mainly
incurred to sustain Group operations.
80
SEGMENTS REVIEW
SPECIALITY ALLOYS SEGMENT
The Speciality Alloys business consists of Türk Maadin Şirketi A.S (“TMS”), the mining and beneficiation
operation in Turkey, and Elektrowerk Weisweiler GmbH (“EWW”), the chromite concentrate processing plant in
Germany. TMS supplies EWW with high quality chromite concentrate which produces speciality products
including specialised low carbon and ultra-low carbon ferrochrome. Chrome ore from TMS that is not utilised for
the production of specialised low carbon ferrochrome is sold to the market.
2024 in Review
Revenue for the year under review decreased by 20.7% to EUR 111.3 (2023:140.3) million, driven by a substantial
decrease in market prices.
Nevertheless, processing levels by increased by 11.1% when compared to last year. The decrease in revenue
resulted in a lower EBITDA for the year to EUR 1.7 (2023:17.5) million, and EBIT of EUR -0.4 (2023:16.3)
million.
Revenue
€111.3mln
(2023: €140.3mln)
EBITDA
€1.7mln
(2023: €17.5mln)
EBIT
€-0.4mln
(2023: €16.3mln)
Mining production
64,945mt
(2023: 65,655mt)
Processing production
22,963mt
(2023: 21,179mt)
Sales of processed material
21,759mt
(2023: 20,709mt)
Personnel
479
(2023: 468)
Production
Total production levels during 2024 increased by 1.2% to 87,907(2023: 86,834) tonnes. The mining operations at
TMS remained consistent, leading to a slight 1.1% decrease when compared to same period last year. Processing
levels at the EWW plant in Germany was 8.4% higher than same period last year.
Sales
Speciality Alloys Processed material sold increased by 5.1%, to 21,759 (2023: 20,709) tonnes.
Financial performance
The declining sales resulted in a lower EBITDA for the year to EUR 17.5 (2023:17.5) million, and EBIT of EUR
16.3 (2023:16.3) million.
EUR million
H1 2024
H2 2024
FY 2024
FY 2023
Revenue
62.8
48.5
111.3
140.3
EBITDA
3.4
-1.6
1.7
17.5
EBIT
2.4
-2.9
-0.4
16.3
EBITDA margin
5.4%
-3.4%
1.5%
12.4%
EBIT margin
3.9%
-5.9%
-0.4%
11.6%
Looking ahead
Stability is expected in the Low carbon ferrochrome prices for standard grade going forward, although they persist
at notably low levels. We do not expect increasing the output for these grades, unless the stainless mills improve
their activity. The special grade market continues to grow and show some upside. Overall, Afarak is expecting
81
solid results for 2024. However, the tense geopolitical landscape coupled with uncertainties in the money market
could potentially cast a significant negative influence on these expectations.
FERROALLOYS SEGMENT
The FerroAlloys business consists of the Vlakpoort mine, Stellite mine, Mecklenburg mine and Zeerust mine in
South Africa. The business produces chrome ore for sale to global markets.
2024 in Review
The Ferro Alloys segment showed a steady increase both from the revenue and mining aspects. This is manifested
in the EBITDA of EUR 4.3 (2023:3.0) million, an increase of 43.3% over last year
Revenue
€16.6mln
(2023: €13.2mln)
EBITDA
€4.3 mln
(2023: €3mln)
EBIT
€3.9mln
(2023: €2.7mln)
Mining production
300,985mt
(2023: 270,946mt)
Processing production
0mt
(2023: 0mt)
Sales of processed material
0mt
(2023: 26mt)
Personnel
105
(2023: 111)
Production
Operationally, the segment registered an increase of 11.1% with total production reaching 300,985 (2023:
270,946) tonnes. Production within the FerroAlloys segment increased significantly as the output increased in
South African mines on account of the favourable market conditions. Opencast mining was resumed at the
Mecklenburg mine.
Sales
The sales of mining material from the FerroAlloys segment increased by 25.8% in 2023 to EUR 16.6 million
when compared to 2023 (EUR 13.2) million.
Financial performance
EUR million
H1/24
H2/24
FY24
FY23
Revenue
8.3
8.3
16.6
13.2
EBITDA
2.5
1.8
4.3
3.0
EBIT
2.3
1.6
3.9
2.7
EBITDA margin
30.2%
21.5%
25.9%
22.9%
EBIT margin
27.7%
19%
23.4%
20.6%
Production within the FerroAlloys segment increased significantly as the output increased resulting in a positive
EBITDA increase to EUR 4.3 (2023: 3.0) million during the reporting period.
Looking ahead
Afarak continued with its mining activity in South Africa and plans to increase its output during 2024.
RISK MANAGEMENT
Afarak’s prudent approach to risk management is a crucial component of our continued success and is present in
managing all aspects of our performance.
By understanding and managing risk, we provide greater certainty and confidence for our shareholders,
employees, customers, suppliers and host communities. In fact, we believe that successful risk management can
be a source of competitive advantage.
Our risks are viewed and managed on a Group-wide basis. As a truly global operation, managing diversity
82
in our operations, portfolio of products, geographies, economies and currencies is a key characteristic of our
risk management approach.
Risk management is one of the key responsibilities of the Board and its Audit and Health & Safety Committees.
2025 Developments
Afarak’s processing operations in Germany and South African mines are intensive users of energy, primarily
electricity. Fuel and energy prices globally have been characterised by volatility and cost inflation. In South Africa
the majority of the electricity supply, price and availability are controlled by one entity, Eskom. Increased
electricity prices and/or reduced, or uncertain electricity supply, or allocation may negatively impact Afarak’s
current operations, which could have an impact on the Group’s financial performance.
Management continued to work closely with the Units to provide continuous monitoring and oversight in
accordance with the Group’s risk management policy. Health & safety and the stated aim of ‘Zero-Harm’ will
continue to be a central pillar of the Company’s risk management strategy.
SHARE INFORMATION
On 31 December 2024, the registered number of Afarak Group SE shares was 277,041,814 (267,041,814) and
the share capital was EUR 23,642,049.60 (23,642,049.60).
On 31 December 2024, the Company had 16,041,514 (6,541,514) own shares in treasury, which was equivalent
to 5.79% (2.45%) of the issued shares. The total number of shares outstanding, excluding the treasury shares
held by the Company on 31 December 2024, was 261,000,300 (260,500,300).
Flagging notifications
Afarak Group SE has on 29 February 2024 made 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.
Trading information
Afarak Group SE’s shares are listed on the main market of the London Stock Exchange and on NASDAQ Helsinki.
Afarak shares are traded on the London Stock Exchange under the trading code AFRK and on the NASDAQ
Helsinki under code AFAGR. The ISIN code is FI0009800098 and the trading takes place in Pound Sterling
(GBP) and in Euros (EUR).
Share performance and Trading
At the beginning of the period under review as at December 2023, the Company’s share price was EUR 0.40 on
NASDAQ Helsinki and GBP 0.20 on the London Stock Exchange. At the end of the review period as at December
2024, the share price was EUR 0.29 and GBP 0.20 respectively. During the second half of 2024, the Company’s
share price on NASDAQ Helsinki ranged from EUR 0.22 to 0.35 per share and the market capitalisation, as at 31
December 2024, was EUR 80.34 (1 January 2024: 107.88) million. For the same period on the London Stock
Exchange, the share remained at GBP 0.20 per share and the market capitalisation was GBP 55.41 (1 January
2023: 53.41) million, as at 31 December 2024.
Shareholders
On 31 December 2024, the Company had a total of 8,340 shareholders (8,387 shareholders on 31 December
2023), of which nine were nominee-registered. The registered number of shares on 31 December 2024 was
277,041,814 (2023: 267,041,814).
83
LARGEST SHAREHOLDERS ON 31 DECEMBER 2024
Shareholder
Shares
%
1
Skandinaviska Enskilda Banken AB
153,217,819
55.31
2
Hino Resources Co. Ltd
36,991,903 13.35
3
Afarak Group Plc
16,041,514 5.79
4
Hanwa Company Limited
9,000,000
3.25
5
4capes Oy
5,440,000
1.96
6
Joensuun Kauppa ja Kone Oy
5,160,683
1.86
7
Nieminen Jorma Juhani
3,477,470 1.26
8
Osuusasunnot Oy
2,900,000
1.05
9
PM Ruukki Oy
2,299,934
0.83
10
Hukkanen Esa Veikko
1,639,296
0.59
Total
236,168,619
85.25
Other Shareholders
40,873,195
14.75
Total shares registered
277,041,814
100.00
Afarak Group SE’s Board members and Chief Executive Officer owned in total 2,450,000 (2023: 1,950,000)
Afarak Group SE shares on 31 December 2024, including shares owned either directly, through persons closely
associated with them or through controlled companies. This corresponds to 0.9% (2023: 0.7 %) of the total
number of registered shares on 31 December 2024.
SHAREHOLDERS BY CATEGORY 31 DECEMBER 2024
Number of shares
Number of
shareholders
% share of
shareholder
Number of
shares held
% of shares
held
1 - 100
2,423
28.70
100,647
0.04
101 - 1000
3,100
36.71
1,447,801
0.52
1001 - 10000
2,254
26.69
8,249,629
2.98
10001 - 100000
585
6.93
16,520,375
5.96
100001 - 1000000
63
0.75
13,342,301
4.82
1000001 - 1000000
8
0.10
31,071,161
11.22
10000001 & above
3
0.04
206,309,900
74.47
Total
8,436
100%
277,041,814
100.00
of which nominee-registered
8
0.10%
154,364,189
55.72
Total outstanding
261,000,300
94.21
SHAREHOLDERS BY SHAREHOLDER TYPE ON 31 DECEMBER 2024
% of share
Finnish shareholders
27.63
of which:
Non-financial corporations and housing corporations
7.07
Financial and insurance corporations
6.13
Households
14.44
Non-profit institutions serving households
0.00
Foreign shareholders
72.37
Total
100.00
of which nominee-registered
55.72
84
RESOLUTIONS OF THE ANNUAL GENERAL MEETING
Afarak Group SE’s Annual General Meeting was held in Helsinki on 31 May 2024.
The AGM adopted the financial statements and the consolidated financial statements and discharged
the members of the Board of Directors and the CEO from liability for the financial period 2023. The
AGM resolved that no dividend would be paid for 2023. The AGM also adopted the Remuneration
Report and Remuneration Policy for the Company’s governing bodies.
THE BOARD OF DIRECTORS
The AGM resolved that the Board of Directors would comprise of three (3) members: Dr Jelena
Manojlovic (UK citizen), Mr. Thorstein Abrahamsen (Norwegian citizen) and Mr. Guy Konsbruck
(Luxembourg citizen) were re-elected as Board members.
The AGM resolved that the Non-executive Board Members shall be paid EUR 5,000 per month and the
Chairman of the board shall be paid an additional EUR 1,500 per month. Non-Executive Board
Members who serve on the Board's Committees shall be paid an additional EUR 1,500 per month for
committee work. Those members of the Board of Directors that are executives of the Company are not
entitled to receive any remuneration for Board membership. Board Members shall be compensated for
travel and accommodation expenses as well as other costs directly related to Board and Committee
work in accordance with the company's travel rules.
THE AUDITOR
The AGM resolved that the Company will pay the fee to the auditor against an invoice that is inspected
by the Company and that according to the recommendation by the Audit Committee, the Authorised
Public Accountant Tietotili Audit Oy was re-elected as the Auditor of the Company. Tietotili Audit Oy
has informed the Company that the individual with the principal responsibility at Tietotili Audit Oy, is
Authorised Public Accountant Urpo Salo.
ONE-OFF RETROACTIVE ADDITIONAL COMPENSATION TO NON-EXECUTIVE BOARD
MEMBERS
The AGM resolved that the Non-Executive Board Members Thorstein Abrahamsen and Dr Jelena
Manojlovic shall be paid EUR 25,000 each as a one-off retroactive additional compensation for during
the last year having continued to take on substantial more work on a 24/7 availability basis, to facilitate
operating through difficult times with challenged market conditions during the year and with further
changes in the Company organization and a slimmed management team and continued recovery and
improvement of the Company to one of the best financial result in 2023.
AUTHORIZATION TO THE BOARD OF DIRECTORS TO DECIDE UPON SHARE ISSUE AND
UPON ISSUING OTHER SPECIAL RIGHTS THAT ENTITLE TO SHARES
The AGM resolved to authorize the Board of Directors to issue shares and stock options and other
special rights that entitle to shares in one or more tranches up to a maximum of 250,000,000 new shares
or shares owned by the Company. This equates to approximately 90.24 % 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 granted in the Annual General Meeting in 2023 and
is valid two (2) years from the decision of the Annual General Meeting.
85
Information presented by reference
The Group’s key financial figures, related party disclosures, information on share capital and option rights are
presented in the notes to the consolidated financial statements. The share ownership of the parent company’s
Board members and Chief Executive Officer is presented in the notes to the parent company’s financial statements.
The Corporate Governance Statement and the Remuneration Report are presented as separate reports in this
Annual Report.
For the purposes of United Kingdom Listing Authority listing rules (“LR”) 9.8.4C R, the information required to
be disclosed by LR 9.8.4 R can be found in the following locations:
Sector
Topic
Location
1
Interest capitalised
1.8. Notes to the statement of
financial position, 10. Property,
plant and equipment.
2
Publication of unaudited financial information
Not applicable
4
Details of long-term incentive schemes
1.8. Notes to the statement of
financial position, 18. Share-
based payments
5
Waiver of emoluments by a director
Not applicable
6
Waiver of future emoluments by a director
Not applicable
7
Non pre-emptive issues of equity for cash
Not applicable
8
Item (7) in relation to major subsidiary undertakings
Not applicable
9
Parent participation in a placing by a listed subsidiary
Not applicable
10
Contracts of significance
1.8. Notes to the statement of
financial position, 1.9.2 Related
party transactions
11
Provision of services by a controlling shareholder
Not applicable
12
Shareholder waivers of dividends
Not applicable
13
Shareholder waivers of future dividends
Not applicable
14
Agreements with controlling shareholders
Not applicable
All the information cross-referenced above is hereby incorporated by reference into this Board of Directors
report.
86
KEY FIGURES
FINANCIAL INDICATORS
2024
2023
2022
Revenue
EUR '000
128,641
153,655
198,691
EBITDA
EUR '000
2,607
16,594
53,747
% of revenue
2.0%
10.8%
27.1%
Operating profit (EBIT)
EUR '000
-146
15,032
52,293
% of revenue
-0.1%
9.8%
26.3%
Profit before taxes
EUR '000
-5,297
11,965
49,187
% of revenue
-4.1%
7.8%
24.8%
Return on equity
-6.6%
9.5%
60.3%
Return on capital employed
2.6%
18.8%
59.9%
Equity ratio
69.3%
65.1%
65.6%
Gearing
-1.2%
-14.1%
-14.1%
Personnel at the end of the accounting
period
602
595
595
87
SHARE-RELATED KEY INDICATORS
2024
2023
2022
Earnings per share, basic
EUR
-0.03
0.04
0.19
Earnings per share,
diluted
EUR
-0.03
0.04
0.19
Equity per share
EUR
0.43
0.41
0.41
Price to earnings
EUR
-10.58
11.02
1.84
Average number of
shares
1,000
260,972
260,478
251,310
Average number of
shares, diluted
1,000
261,472
260,978
251,846
Number of shares at the
end of the period
1,000
277,042
267,042
267,042
Share price information
(NASDAQ Helsinki)
Average share price
EUR
0.31
0.52
0.42
Lowest share price
EUR
0.22
0.35
0.12
Highest share price
EUR
0.42
0.69
0.98
Market capitalisation
EUR
'000
80,342
107,885
94,266
Share turnover
EUR
'000
7,494
42,513
62,146
Share turnover
%
8.53
30.70
55.90
Share price information
(London Stock
Exchange)
Average share price
EUR
0.24
0.23
0.23
GBP
0.20
0.20
0.19
Lowest share price
EUR
0.24
0.24
0.23
GBP
0.20
0.20
0.20
Highest share price
EUR
0.24
0.23
0.23
GBP
0.20
0.20
0.20
Market capitalisation
EUR
'000
66,823
61,456
60,217
GBP
'000
55,408
53,408
53,408
Share turnover
EUR
'000
212
34
2,125
Share turnover
GBP
'000
176
29
1,812
Share turnover
%
0.00
0.02
2.30
88
The company did not distribute capital redemption from financial years 2024 and 2023. The company will
follow the new dividend policy and the board intends to decide about the actual dividend allocation at a later
stage.
FORMULAS FOR CALCULATION OF INDICATORS
Financial indicators
Return on equity
(Loss) / profit for the period / Total equity (average for the
period) * 100
Return on capital employed
((Loss) / profit before taxes + financing expenses) / (Total
assets – Interest-free liabilities) average * 100
Equity ratio
Total equity / (Total assets - prepayments received) * 100
Gearing
(Interest-bearing debt - liquid funds) / Total equity * 100
EBITDA
Operating (loss) / profit + depreciation + amortisation +
impairment losses
Operating (loss) / profit
Operating (loss) / profit is the net of revenue plus other
operating income, plus gain/loss on finished goods
inventory change, minus employee benefits expense,
minus depreciation, amortisation and impairment and
minus other operating expense. Foreign exchange gains or
losses are included in operating profit when generated
from ordinary activities. Exchange gains or losses related
to financing activities are recognised as financial income
or expense.
Share-related key indicators
Earnings per share, basic
(Loss) / profit attributable to owners of the parent company
/ Average number of shares during the period.
Earnings per share, diluted
(Loss) / profit attributable to owners of the parent company
/ Average number of shares during the period, diluted.
Equity per share
Equity attributable to owners of the parent / Average
number of shares during the period.
Distribution per share
Distribution / Number of shares at the end of the period. In
the attached table of share related key indicators, the
dividend and capital redemptions are presented in that
year's column on which results the pay-out are based; hence
the actual payment takes place during next year.
Price to earnings
Share price at the end of the period / Earnings per share
89
Average share price
Total value of shares traded in currency / Number of shares
traded during the period.
Market capitalisation
Number of shares * Share price at the end of the period.
EVENTS AFTER THE REPORTING PERIOD
Stock Exchange Releases
On 21 February 2025, the Board of Directors issued a profit warning regarding the decrease of turnover and
EBITDA for the financial year 2024.
Flagging notification after the reporting period
There were no flagging notifications after the reporting period
90
ANNUAL FINANCIAL STATEMENTS
1 January-31 December 2024
91
CONSOLIDATED FINANCIAL STATEMENTS, IFRS
CONSOLIDATED INCOME STATEMENT
1.1.-31.12.2024
1.1.-31.12.2023
EUR '000
Note
Revenue
1
128,641
153,655
Other operating income
2
5,405
5,722
Materials and supplies
-100,205
-110,170
Employee benefits expense
3
-24,344
-22,272
Depreciation and amortisation
4
-2,753
-1,562
Impairment
4
0
0
Other operating expenses
5
-6,890
-10,341
Operating loss/profit
-146
15,032
Finance income
6
3,049
5,267
Finance expense
6
-8,200
-8,334
Profit before taxes
-5,297
11,965
Income taxes
7
-1,921
-1,966
Profit for the year
-7,218
9,999
Profit attributable to:
Owners of the parent
-7,572
9,450
Non-controlling interests
354
549
-7,218
9,999
Earnings per share (counted from profit attributable
to owners of the parent):
8
basic (EUR), Group total
-0.03
0.04
diluted (EUR), Group total
-0.03
0.04
92
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
1.1.-31.12.2024
1.1.-31.12.2023
EUR '000
Note
Loss/Profit for the year
-7,218
9,999
Other comprehensive income/(loss)
Items that will not be reclassified to profit and
loss
Remeasurements of defined benefit pension plans
1,166
-1,241
Items that may be reclassified to profit and loss
Exchange differences on translation of foreign
operations - Group
4,587
-6,394
Other comprehensive income/(loss), net of tax
5,753
-7,635
Total comprehensive income for the year
-1,465
2,365
Total comprehensive income attributable to:
Owners of the parent
-1,796
1,751
Non-controlling interests
331
614
-1,465
2,365
93
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
EUR '000
Note
31.12.2024
31.12.2023
ASSETS
Non-current assets
Property, plant and equipment
9
46,925
37,497
Goodwill
10
49,779
46,997
Other intangible assets
10
4,942
4,643
Other financial assets
12
1,679
1,201
Deferred tax assets
18
478
1,044
103,803
91,382
Current assets
Inventories
13
28,829
29,583
Trade and other receivables
14
25,016
23,345
Cash and cash equivalents
15
3,954
18,032
57,799
70,960
Total assets
161,602
162,342
94
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (CONT.)
EUR '000
Note
31.12.2024
31.12.2023
EQUITY AND LIABILITIES
Equity attributable to owners of the parent
Share capital
16
23,642
23,642
Share premium reserve
25,364
25,223
Legal Reserve
-47
18
Paid-up unrestricted equity fund
215,556
215,359
Translation reserve
-38,073
-42,683
Retained Earnings
-114,397
-115,512
112,045
106,047
Non-controlling interests
23
-306
Total equity
112,068
105,741
Non-current liabilities
Deferred tax liabilities
18
8,283
8,051
Interest-bearing debt
12
335
321
Pension liabilities
20
11,249
12,838
Other non-current debt
21
22
22
Provisions
19
11,776
11,400
31,665
32,632
Current liabilities
Trade and other payables
21
14,925
16,670
Provisions
19
167
96
Tax liabilities
21
516
4,437
Interest-bearing debt
12
2,260
2,766
17,869
23,969
Total liabilities
49,534
56,601
Total equity and liabilities
161,602
162,342
95
CONSOLIDATED STATEMENT OF CASH FLOWS
EUR '000
Notes
1.1.-31.12.2024
1.1.-31.12.2023
Operating activities
(Loss) / profit from continuing operation
-7,218
9,999
Adjustments to net profit:
Non-cash items
Depreciation, amortisation and impairment
4
2,753
1,562
Finance income and cost
6
5,718
3,250
Income taxes
7
1,354
1,966
Share-based payments
17
241
242
Proceeds from non-current assets
-479
-1,098
Working capital changes:
Change in trade receivables and other receivables
-412
2,191
Change in inventories
1,996
-6,717
Change in trade payables and other debt
-1,355
2,103
Change in provisions
-169
427
Interests paid
-1,130
-1,266
Interests received
702
653
Other financing items
-5,228
-2,100
Income taxes paid
-3,068
-1,633
Net cash from operating activities
-6,295
9,579
Investing activities
Capital expenditure on non-current assets, net
-5,687
-3,216
Other investments, net
-15
-19
Repayments of loan receivables and loans given net
-1,495
-200
Net cash used in investing activities
-7,197
-3,435
Financing activities
Proceeds from borrowings
3
61
Repayments of borrowings
-49
-20
Payment of principal portion of lease liabilities
0
-95
Movement in short term financing activities
-602
1,122
Net cash used in financing activities
-648
1,068
Change in cash and cash equivalents
-14,140
7,212
Cash at beginning of period
18,032
12,418
Exchange rate differences
62
-1,598
Cash at end of period
3,954
18,032
Change in the statement of financial position
16
-14,140
7,212
96
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY,
EUR '000
A = Share capital
B = Share premium reserve
C = Paid-up unrestricted equity reserve
D = Translation reserve
E = Retained earnings
F = Legal reserve
G = Equity attributable to owners of the parent, total
H = Non-controlling interests
I = Total equity
Attributable to owners of the parent
EUR '000
Notes
A
B
C
D
E
F
G
H
I
Equity at 31.12.2022
23,642
25,223
209,798
-38,292
-176,170
39
44,240
-801
43,439
Profit for the period 1-
12/2023 +
comprehensive income
9,450
9,450
549
9,999
Other Comprehensive
Income
-6,459
-1,241
-7,700
65
-7,635
Total comprehensive
income
-6,459
8,209
1,750
614
2,364
Share-based payments
242
242
242
Other changes in equity
-1,641
-12
-1,653
-1,653
Equity at 31.12.2023
23,642
25,223 215,359 -42,683 -115,512
18
106,047
-306
105,741
Profit for the period 1-
12/2024 +
comprehensive income
-7572
-7,572
353
-7,218
Other Comprehensive
Income
4,610
1,166
5,776
-23
5,753
Total comprehensive
income
4,610
-6,406
-1,796
330
-1,465
Share-based payments
197
197
197
Acquisition of non-
controlling interest
-9
-9
-99
-108
Hyperinflation
adjustment
(Turkish entities)
141
7,534
7,675
98
7,773
Other changes in equity
-4
-65
-69
-69
Equity at 31.12.2024
23,642
25,364
215,556
-38,073
-114,397
-47
112,045
23
112,068
97
1. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1.1 COMPANY INFORMATION
Afarak Group is a public limited company in Finland. Afarak Group is a chrome mining and minerals producer
focused on delivering sustainable growth with a speciality alloys business in southern Europe and a ferro alloys
business in southern Africa. The Group’s parent company is Afarak Group SE (business ID: 0618181-8)
(previously Afarak Group plc). The parent company is domiciled in Helsinki, Finland, and its registered address
is Kaisaniemenkatu 4, 00100 Helsinki, Finland. Copies of the consolidated financial statements are available at
Afarak Group SE’s head office or at the Company’s website: www.afarak.com.
Afarak Group SE is quoted on the NASDAQ Helsinki Oy (trading code: AFAGR) in the industrials group, in the
small-cap category, and on the main market of the London Stock Exchange (AFRK).
For the purpose of reporting according to ESEF regulations: the company changed name from Afarak Group plc
to Afarak Group SE during 2022. Afarak Group SE is the ultimate parent of the Group and its principal place of
business is Helsinki, Finland. The ESEF financial statements are audited.
1.2 ACCOUNTING PRINCIPLES
Basis of preparation
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 2024. 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 to the nearest thousand (€ 000),
unless otherwise explicitly stated.
Afarak Group SE’s Board of Directors resolved on 28 March 2025 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.
Presentation of financial statements
The consolidated financial statements provide comparative information in respect of the previous period. In
addition, the Group presents an additional statement of financial position at the beginning of the earliest period
presented when there is: a retrospective application of an accounting policy; a retrospective restatement; or a
reclassification of items in financial statements that has a material impact on the Group.
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.
98
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.
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.
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’). Figures 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.
Operating profit
IAS 1 Presentation of financial statements does 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 expenses. 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.
All other items of the income statement are excluded from operating profit.
IAS 1 amendment introduced the requirement for grouping of items presented in Other Comprehensive Income.
Items 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. The amendment affected the presentation of Other Comprehensive
Income.
99
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) and 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.
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.
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.
Pension liabilities
Pension 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 Projected
Unit Credit Method and recognised as a non-current liability on the statement of financial position. The 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.
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).
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
100
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.
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.
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 2024 financial year, testing took place on 30 June
2024 for the Speciality Alloys business and the South African minerals processing business and on 31 December
2024 for all cash generating units. Impairment testing and the methods used are discussed in more detail in section
1.5 in the ‘Impairment testing’.
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.
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.
101
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.
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.
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.
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.
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
15–50 years
Machinery and equipment
3–15 years
Other tangible assets
5–10 years
Mines and mineral assets
Units-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.
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.
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.
102
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.
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.
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.
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
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.
103
Other intangible assets
Other 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.
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.
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 IFRS 15: 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.
104
1. 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. Financial 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 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 did not hold any debt instruments classified as being financial assets at fair value through OCI.
3. Financial 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 is 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. Financial 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.
105
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 risks 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 the 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
106
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.
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.
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.
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.
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 are 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.
107
This category generally applies to interest-bearing loans and borrowings. For more information, refer to 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.
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.
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.
Accounting policies requiring management discretion and key uncertainty factors for estimates
Preparation of the financial statements requires management to make estimates, assumptions and forecasts
regarding the future. Future developments may deviate significantly from the assumptions made if changes occur
in the business environment and/or business operations. In addition, management is required to use its discretion
in the application of the financial statements’ preparation principles.
The scope of the financial statements
The consolidated financial statements include the parent company Afarak Group SE, its subsidiaries, joint
ventures and associated companies. Subsidiaries refer to companies in which the Group has control. The Group
108
gains control of a company when it holds more than half of the voting rights or otherwise exercises control. The
assessment of whether control is exercised requires management discretion.
Allocation of the cost of a business combination
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.
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.
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.
Tangible and intangible assets
Afarak 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 reserves
In 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.
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.
109
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 2024. 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 2024. 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 2024, 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 2024, the Group has adopted the following amended standards issued by the IASB.
-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.
-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 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.
-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.
The above changes did not have an impact on the 2024 consolidated financial statements.
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.
110
Standards and interpretations not yet effective
The 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.
Other Standards
-Amendments to IAS 1: Presentation of Financial Statements regarding the classification of debts 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.
-Amendments to IFRS 7: Financial Instruments- Amendments regarding the classification and measurement of
financial instruments.
1.3 GOING CONCERN
The company is in sound condition and presents a healthy balance sheet.
1.4 BUSINESS COMBINATIONS AND ACQUISTION OF NON-CONTROLLING INTERESTS
1.4.1 Financial Year 2024
Afarak acquired shares of non-controlling interest of 1.23% in Türk Maadin Sirketi.
1.4.2 Financial Year 2023
Afarak did not carry out any acquisitions during the financial year 2023.
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 2024. The
following cash generating units were defined for the impairment testing:
-
Speciality Alloys business (Türk Maadin Sirketi and Elektrowerk Weisweiler) with a vertically
integrated mining-beneficiation-smelting-sales operation in the specialty grade ferrochrome business;
-
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 2024.
During 2024, 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 2024
111
During the financial year 2024, the total goodwill of the Group increased by EUR 2.8 million to a total of EUR
49.8 million. The increase was attributable to an exchange rate movement of EUR 2.8 million related to Goodwill.
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. The
changes are described below:
EUR '000
Speciality Alloys
Business
FerroAlloys
Business
Group Total
Goodwill 1.1.2024
46,996
0
46,996
Exchange rate movement
2,783
0
2,783
Goodwill 31.12.2024
49,779
0
49,779
The changes in goodwill during 2023 are presented 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
Goodwill as a ratio of the Group’s equity on 31 December 2024 and 31 December 2023 was as follows:
EUR '000
31.12.2024
31.12.2023
Goodwill
49,779
46,996
Equity
112,068
105,741
Goodwill/Equity, %
44.4%
44.4%
Impairment on long term assets
In 2024, 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 4.4% 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 2024.
112
The information used in the 31 December 2024 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 2024 impairment testing were the following:
Cash Generating Unit
Pre-tax discount rate
2024
2023
Speciality Alloys
17.6%
16.4%
South African mine - Mecklenburg mine
20.0%
24.3%
The key reasons for the changes in the discount rates compared to 2024 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:
Conclusion:
< 100%
Impairment
101-120%
Slightly above
121-150%
Clearly above
> 150%
Significantly above
Test results 31 December 2024
The impairment test results were as follows:
Cash generating unit
Goodwill
(MEUR),
pre-testing
Goodwill
(MEUR), post-
testing
Carrying
amount
(MEUR),
pre-
testing
Conclusion
Speciality Alloys
49.8
49.8
76.5
Clearly above
South African Mines
-
Mecklenburg
0.0
0.0
16.4
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:
Cash generating unit
Sales volume
Sales prices
Costs
113
Speciality Alloys business
FeCr:
30,000 t/a; from 2025 to 2029
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 mining of
131,000t in 2026; and is
planned to increase to an
average of 486,000t/a as
from 2026 to 2035
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 735 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 18.49 for the year 2024.
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 2024 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
Speciality Alloys
1.4% - points
-8.3%
-0.7% - points
South African mining
business:
-
Mecklenburg mine
-43.7% - points
-63.7%
-37.0% - 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.
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 Türk Maadin Şirketi A.S (“TMS”), the mining and beneficiation
operation in Turkey, and Elektrowerk Weisweiler GmbH (“EWW”), the chromite concentrate processing plant in
Germany. TMS supplies EWW with high quality chromite concentrate which produces speciality products
including specialised low carbon and ultra low carbon ferrochrome. Chrome ore from TMS that is not utilised for
the production of specialised low carbon ferrochrome is sold to the market.
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.
114
The accounting policies applied in the operating segment information are the same as those in the consolidated
financial statements.
Operating segment information 2024
Year ended
31.12.2024
EUR '000
Speciality
Alloys
Ferro
Alloys
Segments
total
Unallocated
items
Eliminations
Consolidated
Group
External revenue
Rendering of
services
0
1,919
1,919
0
0
1,919
Sale of goods
111,275
14,658
125,933
789
0
126,722
Total external
revenue
111,275
16,577
127,852
789
0
128,641
Inter-segment
revenue
2,494
-2,494 ¹
-
Total revenue
111,275
16,577
127,852
3,283
-2,494
128,641
Segment
EBITDA
1,715
4,289
6,004
-3,398
0
2,607
Depreciation and
amortisation
-2,163
-417
-2,580
-173
0
-2,753
Impairment
Segment
operating profit /
(loss)
-448
3,872
3,424
-3,571
0
-146
Finance income
3,049
Finance cost
-8,199
Income taxes
-1,921
Profit for the
period
-7,218
Segment's assets 2
154,750
49,429
204,179
4,630
-47,207
161,602
Segment's
liabilities 2
42,270
42,478
84,748
21,034
-56,249
49,534
Other disclosures
Capital
expenditure 3
4,523
101
4,624
101
-4,726
0
Provisions 4
2,576
9,368
11,944
0
-447
11,497
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.
115
Year ended
31.12.2023
EUR '000
Speciality
Alloys
Ferro
Alloys
Segments
total
Unallocated
items
Eliminations
Consolidated
Group
External revenue
Rendering of
services
1,371
1,371
42
1,413
Sale of goods
140,308
11,795
152,103
139
152,242
Total external
revenue
140,308
13,166
153,474
181
153,655
Inter-segment
revenue
2,467
-2,467 ¹
-
Total revenue
140,308
13,166
153,474
2,648
-2,467
153,655
Segment
EBITDA
17,464
3,018
20,482
-3,888
-
16,594
Depreciation and
amortisation
-1,213
-308
-1,521
-41
-
-1,562
Impairment
Segment
operating profit /
(loss)
16,251
2,710
18,961
-3,929
-
15,032
Finance income
5,267
Finance cost
-8,334
Income taxes
-1,966
Profit for the
period
9,999
Segment's assets 2
166,573
47,650
214,223
7,714
-59,595
162,342
Segment's
liabilities 2
49,635
42,407
92,042
40,798
-76,239
56,601
Other disclosures
Capital
expenditure 3
0
2,968
2,968
0
0
2,968
Provisions 4
1,516
9,980
11,496
0
0
11,496
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.
116
Geographical information
Revenues from external customers
EUR '000
2024
2023
Other EU countries
55,447
60,562
United States
47,988
64,876
China
11,238
4,867
Africa
5,341
8,068
Finland
0
0
Other countries
8,627
15,282
Total revenue
128,641
153,655
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
6.88% (7.27%) of the Group’s revenue in 2024.
Non-current assets
EUR '000
2024
2023
Africa
30,672
29,154
Other EU countries
11,997
9,969
Other countries
9,197
3,017
Total
51,866
42,140
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.
117
1.7 NOTES TO THE CONSOLIDATED INCOME STATEMENT
1. Revenue
EUR '000
2024
2023
Sale of goods
126,722
152,242
Rendering of services
1,919
1,413
Total
128,641
153,655
2. Other operating income
EUR '000
2024
2023
Gain/(loss) on disposal of tangible and intangible assets
55
104
Rental income
280
229
Other
5,070
5,389
Total
5,405
5,722
3. Employee benefits
EUR '000
2024
2023
Salaries and wages
-21,015
-19,152
Share-based payments
-197
-242
Pensions costs
-878
-821
Other employee related costs
-2,254
-2,057
Total
-24,344
-22,272
Average personnel during the accounting period
2024
2023
Speciality Alloys business
471
475
FerroAlloys business
105
107
Group Management
3
2
Other operations *
15
15
Total
594
599
Personnel at the end of the accounting period
2024
2023
Speciality Alloys business
479
468
FerroAlloys business
105
111
Group Management
3
3
Other operations *
15
14
Total
602
596
* Other operations mainly relate to Magnohrom doo Kraljevo, in Serbia
118
4. Depreciation, amortisation and impairment
EUR '000
2024
2023
Depreciation / amortisation by asset category
Intangible assets
Other intangible assets
-105
-102
Total
-105
-102
Property, plant and equipment
Buildings and constructions
-297
-106
Machinery and equipment
-1,518
-970
Other tangible assets
-833
-384
Total
-2,648
-1,460
Impairment by asset category
Machinery and equipment
0
0
Total
0
0
5. Other operating expenses
EUR '000
2024
2023
Rental costs
-356
-217
External services1
-3,717
-3,792
Travel expenses
-757
-614
Other operating expenses
-2,060
-5,676
Total
-6,890
-10,299
1. Audit fees paid to Tietotili totalled EUR 342 (2023: EUR 457) thousand in the financial year. The fees for
non-audit services totalled EUR 98 (2023: EUR 29) thousand.
6. Financial income and expense
EUR '000
2024
2023
Finance income
Interest income on loans and trade receivables
450
588
Foreign exchange gains
2,512
4,617
Other finance income
87
62
Total
3,049
5,267
Finance expense
Interest expense on financial liabilities measured at amortised cost
-10
-175
Impairment losses on receivables
10
25
Foreign exchange losses
-2,474
-4,484
Hyperinflation adjustment
-1,917
0
Unwinding of discount, provisions
-1,120
-668
Other finance expenses
-2,689
-3,033
Total
-8,200
-8,335
119
Net finance expense
-5,151
-3,068
Hyperinflation
Türkiye has been identified as a hyperinflationary economy to which accounting in accordance with IAS 29 shall
be applied. The amounts recognized in the 2024 income statement and balance sheet have been restated using the
general price index. As a result of the restatement, an amount of €7.8 million was recognised in equity. The
revaluations have been made using the Türkiye consumer price index.
7. Income taxes
EUR '000
2024
2023
Income tax for the period
-1,385
-2,174
Income tax for previous years
0
-40
Deferred taxes
-536
248
Total
-1,921
-1,966
EUR '000
2024
2023
Profit before taxes
-5,297
11,965
Income tax calculated at parent company income tax rate
1,059
-2,393
Difference between domestic and foreign tax rates
-2,012
-4,400
Tax credit
0
5,006
Items recognised only for taxation purposes
259
202
Income tax for previous years
0
-40
Impairment losses
0
0
Deferred tax asset write-offs
0
0
Tax losses not recognised as deferred tax assets
-5,354
-2,210
Non-tax deductible expenses
2,773
-284
Previously unrecognised tax losses now recognised
1,354
2,153
Total adjustments
-2,980
427
Income tax recognised
-1,921
-1,966
On 31 December 2024 the Group companies had unused tax losses totalling EUR 26.2 (2023: 18.3) million for
which the Group has not recognised deferred tax assets.
8. Earnings per share
2024
2023
Profit attributable to owners of the parent
company (EUR '000)
-7,572
9,451
Weighted average number of shares,
basic (1 000)
260,972
260,478
Basic earnings per share (EUR) total
-0.03
0.04
120
2024
2023
Profit attributable to owners of the parent
company (EUR '000)
-7,572
9,451
Weighted average number of shares,
basic (1 000)
260,972
260,478
Effect of share options on issue
(1 000)
500
500
Weighted average number of shares,
diluted (1 000)
261,472
260,978
Diluted earnings per share (EUR) total
-0.03
0.04
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.
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.
121
1.8 NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
9. 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 1.1.2024
1,830
3,560
13,361
46,258
3,531
68,540
Additions
0
154
4,463
835
120
5,572
Disposals
0
0
-85
0
-27
-113
Reclass between items
0
0
0
0
501
501
Effect of movements in exchange rates
39
-38
464
1,317
7
1,789
Hyperinflation adjustment
(Turkish entities)
3
2,163
5,431
786
0
8,384
Balance at 31.12.2024
1,872
5,839
23,634
49,197
4,131
84,673
Accumulated depreciation and
impairment 1.1.2024
0
-3,047
-5,491
-22,378
-127
-31,043
Depreciation
0
-296
-1,518
-807
-27
-2,648
Impairment
0
0
0
0
0
0
Disposals
0
0
13
0
27
40
Effect of movements in exchange rates
0
25
-3,573
-542
-7
-4,097
Accumulated depreciation and
impairment at 31.12.2024
0
-3,318
-10,569
-23,726
-134
-37,748
Carrying amount at 1.1.2024
1,830
513
7,870
23,880
3,404
37,497
Carrying amount at 31.12.2024
1,872
2,521
13,065
25,469
3,998
46,925
Balance at 1.1.2023
1,962
3,898
12,108
52,565
2,846
73,379
Additions
0
50
2,509
415
18
2,992
Disposals
0
-70
-628
0
-3
-701
Reclass between items
0
0
0
0
689
689
Effect of movements in exchange rates
-132
-318
-628
-6,722
-19
-7,819
Balance at 31.12.2023
1,830
3,560
13,361
46,258
3,531
68,540
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
519
0
3
591
Effect of movements in exchange rates
0
100
455
3,654
19
4,228
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
Machinery and equipment include the prepayments made for them.
Property, plant and equipment include right of use asset EUR 0.08 (2023: 0.2) and a depreciation of EUR
0.07(2023: 0.1) million.
122
10. Intangible assets
EUR '000
Goodwill
Intangible
assets
identified in
acquisitions
Other
intangible
assets
Exploration
and
evaluation
assets
Total
Balance at 1.1.2024
46,997
74,585
5,408
1,254
128,244
Additions
0
0
261
0
261
Disposals
0
0
-79
-18
-97
Reclass between items
0
0
391
0
391
Hyperinflation adjustment
(Turkish entities)
0
0
74
-18
56
Effect of movements in exchange rates
2,783
4,392
104
40
7,319
Balance at 31.12.2024
49,780
78,977
6,159
1,258
136,174
Accumulated amortisation and
impairment at 1.1.2024
0
-74,585
-1,880
-140
-76,605
Amortisation
0
0
-85
-20
-105
Disposals
0
0
4
0
4
Effect of movements in exchange rates
0
-4,392
-350
-5
-4,747
Accumulated amortisation and
impairment at 31.12.2024
0
-78,977
-2,311
-165
-81,453
Carrying amount at 1.1.2024
46,997
0
3,528
1,114
51,639
Carrying amount at 31.12.2024
49,780
0
3,848
1,093
54,721
Balance at 1.1.2023
48,721
77,070
6,044
1,482
133,317
Additions
0
0
104
0
104
Disposals
0
0
-27
-44
-71
Reclass between items
0
0
0
0
0
Effect of movements in exchange rates
-1,724
-2,485
-713
-184
-5,106
Balance at 31.12.2023
46,997
74,585
5,408
1,254
128,244
Accumulated amortisation and
impairment at 1.1.2023
0
-77,070
-2,086
-202
-79,358
Amortisation
0
0
-95
-6
-101
Disposals
0
0
0
44
44
Effect of movements in exchange rates
0
2,485
301
24
2,810
Accumulated amortisation and
impairment at 31.12.2023
0
-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
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.
123
11. Investments in associates
Afarak has an investment of 5.99% (2023: 5.99%) in Valtimo Components Oyj.
During the financial year 2024 and 2023, Afarak did not acquire or dispose holdings in associates.
12. Financial assets and liabilities
31.12.2024, EUR '000
Non-current financial assets
At fair
value
through
profit and
loss
At fair
value
through
other
comprehe
nsive
income
At
amortised
cost
Carrying
value Fair value
Non-current interest-bearing receivables
83
83
83
Trade and other receivables *
1,596
1,596
1,596
Current financial assets
Trade and other receivables *
19,804
19,804
19,804
Other financial assets
2,054
2,054
2,054
Cash and cash equivalents
3,954
3,954
3,954
Total financial assets
27,491
27,491
27,491
Non-current financial liabilities
Non-current interest-bearing liabilities
333
333
333
Other non-current liabilities
22
22
22
Current financial liabilities
Current interest-bearing liabilities
2,260
2,260
2,260
Trade and other payables *
0
0
0
Total financial liabilities
2,615
2,615
2,615
* Non-financial assets and liabilities are not included in the figures.
124
31.12.2023, EUR '000
Non-current financial assets
At fair
value
through
profit and
loss
At fair
value
through
other
comprehe
nsive
income
At
amortised
cost
Carrying
value Fair value
Non-current interest-bearing receivables
78
78
78
Trade and other receivables *
1,124
1,124
1,124
Current financial assets
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
Non-current financial liabilities
Non-current interest-bearing liabilities
321
321
321
Other non-current liabilities
21
21
21
Current financial liabilities
Current interest-bearing liabilities
2,766
2,766
2,766
Trade and other payables *
0
0
0
Total financial liabilities
3,108
3,108
3,108
* Non-financial assets and liabilities are not included in the figures.
Interest-bearing debt
EUR '000
2024
2023
Non-current
Bank loans
1
1
Acquisition of NCI liability
0
0
Finance lease liabilities
333
319
Other interest-bearing liabilities
0
0
Total
334
320
Current
Bank loans
2,260
2,766
Finance lease liabilities
0
0
Other interest-bearing liabilities (*)
0
0
Total
2,260
2,766
125
EUR '000
2024
2023
Finance lease liabilities, minimum lease payments
No later than 1 year
0
0
Later than 1 year and not later than 5 years
333
320
333
320
Finance lease liabilities, present value of minimum lease payments
No later than 1 year
0
0
Later than 1 year and not later than 5 years
333
320
333
320
Future finance charges
0
0
Total minimum lease payments
333
320
* 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
2024
Cash flows
Foreign
exchange
movement
Other
31
December
2024
Current borrowings
2,766
-349
-156
-
2,260
Lease liabilities
320
13
0
-
333
Total liabilities from financing activities
3,086
-336
-156
-
2,594
EUR '000
1 January
2023
Cash flows
Foreign
exchange
movement
Other
31
December
2023
Current borrowings
1,638
1,072
55
-
2,766
Lease liabilities
410
-85
6
-11
320
Total liabilities from financing activities
2,019
987
61
-11
3,086
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.
Summary of financial assets and loan arrangements
Financial assets 31 December 2024
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 2024 closing date:
On 31 December 2024, 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.
One of the Group’s Maltese subsidiaries has been granted a trade finance loan facility amounting to USD 4.0
million during 2022 and the Group has given a corporate guarantee amounting to USD 4.0 as collateral. The
Maltese subsidiary utilized USD 2.1 million as at the end of 2024. During 2024, an additional trade finance loan
facility without recourse amounting to USD 2.0 million has been granted. The Maltese subsidiary utilized USD
0.2 million as at the end of 2024.
126
Interest-bearing debt 31 December 2024
-
Floating rate loans from financial institutions total EUR 2.3 (2023: 2.7) million. Fixed rate loans total
EUR 0.0 (2023: 0.0) million.
-
The interest rate of the Maltese bank loan facility is at the rate of 3.75% per annum margin above the
Bank’s Lending Base Rate. The interest rate on 31 December 2024, based Bank’s Lending Base Rate at
that date, was 5.0%.
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.
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 69.3% (2023: 65.6%).
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.
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.
(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:
127
31.12.2024 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
2,260
-2,260
-2,260
0
0
0
0
Finance lease liabilities
333
-333
-54
-54
-46
-180
0
Trade and other payables
22
-22
0
0
-22
0
0
Total
2,616
-2,616
-2,314
-54
-68
-180
0
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
(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.
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.
The following tables present the currency composition of receivables and debt, and changes thereby relative to
the previous year-end.
31.12.2024, EUR '000
EUR
exchange
rate
1
1.0389 0.82918 36.7372 19.6188
0.941
116.79
EUR
USD
GBP
TRY
ZAR
CHF
RSD
Cash and cash equivalents (EUR)
1,485
1,292
10
599
446
0
117
Trade and other receivables (EUR)
1,624
5,570
0
0
12,991
0
1,505
Loans and other financial assets
(EUR)
1,539
0
0
86
54
0
0
Trade and other current payables
(EUR)
-2,706
-3,843
-1,980
-626
-596
0
-6
Loans and other liabilities (EUR)
-333
-2,260
0
-1
-22
0
0
Currency exposure, net (EUR)
1,608
759
-1,970
57
12,873
0
1,616
128
Currency exposure, net in currency
('000)
1,608
788
-1,633
2,086 252,558
0
188,753
31.12.2023, EUR '000
EUR
exchange
rate
1
1.1050 0.86905 32.6531 20.3477
0.926
116.929
EUR
USD
GBP
TRY
ZAR
CHF
RSD
Cash and cash equivalents (EUR)
3,403
8,563
19
3,461
1,614
5
652
Trade and other receivables (EUR)
1,101
5,491
0
119
13,894
0
0
Loans and other financial assets
(EUR)
1,520
-19
0
80
-381
0
0
Trade and other current payables
(EUR)
-3,119
-7,310
-8
-702
-352
0
-7
Loans and other liabilities (EUR)
-319
-2,716
0
-51
-22
0
0
Currency exposure, net (EUR)
2,586
4,010
11
2,907
14,754
5
645
Currency exposure, net in currency
('000)
2,586
4,431
9
94,928 300,210
5
75,391
The effect on the 31 December 2024 currency denominated net assets which would be caused by changes in
foreign exchange rates compared with the rates used in the Group consolidation is presented below. Due to the
high market volatility of the exchange rates, the range of change was kept at +/- 20%.
31 December 2024
USD
GBP
TRY
ZAR
CHF
RSD
20%
strengthening
190
-492
14
3,218
0
404
15%
strengthening
134
-348
10
2,272
0
285
10%
strengthening
84
-219
6
1,430
0
180
5%
strengthening
40
-104
3
678
0
85
0%
no change
0
0
0
0
0
0
-5%
weakening
-36
94
-3
-613
0
-77
-10%
weakening
-69
179
-5
-1,170
0
-147
-15%
weakening
-99
257
-7
-1,679
0
-211
-20%
weakening
-126
328
-9
-2,146
0
-269
31 December 2023
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
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
129
accounting impact the Group’s operating profit for the financial year. The underlying foreign currency
transactions will realise in future periods.
(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.
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.
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 2024 and 31 December 2023 was as follows:
Interest rate profile of interest-bearing financial instruments
(EUR '000)
Fixed rate instruments
31.12.2024
31.12.2023
Financial assets
0
0
Financial liabilities
0
0
Fixed rate instruments, net
0
0
Variable rate instruments
Financial assets
83
78
Financial liabilities
-2,260
-2,766
Variable rate instruments, net
-2,177
-2,688
Interest-bearing net debt
-2,177
-2,688
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 2024, and if there were no
changes in exchange rates.
130
31 December 2024
Interest rate
change
Change in
interest income
Change in
interest
expense
Net effect
-2.00%
-2
45
44
-1.50%
-1
34
33
-1.00%
-1
23
22
-0.50%
0
11
11
0.00%
0
0
0
0.50%
0
-11
-11
1.00%
1
-23
-22
1.50%
1
-34
-33
2.00%
2
-45
-44
31 December 2023
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
(iv) Credit risk
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.
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 2024 (2023: 7.5). The Group did not record any loss allowance on trade receivables during 2024 and
during 2023. The portion of prepaid revenues or portion under trade financing amounts to EUR 2.3 million on 31
December 2024 (2023: 2.7). The prepaid portion of the trade receivables does not include any potential losses.
The loan receivables amounted to EUR 2.0 million on 31 December 2024 (2023: 0.5). The total potential credit
risk for the loan receivables is higher than for the trade receivables as the potential risk of default is more
131
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.
In 2024 and in 2023, the Group did not recognise a provision on other receivables.
The credit risk assessment and the method of calculation has remained the same between the financial period
ending 31.12.2024 and the previous financial period.
The trade receivables do not pose a credit risk due to concentration, as the sales are diversified to several
customers.
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.
The maximum credit risk is equal to the carrying value of the receivables as of 31 December, and is split as
follows:
Category
EUR 000’s
31.12.2024
31.12.2023
Interest-bearing
Cash and cash equivalents
3,954
18,032
Other interest bearing receivables
83
78
Interest-bearing, total
4,037
18,110
Interest-free
Trade receivables
7,502
7,467
Other short-term receivables
14,356
13,140
Long-term receivables
1,596
1,124
Interest-free, total
23,454
21,731
Total
27,491
39,841
(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
132
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 2024 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 2024 production of 22,963 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.
Financial year 2024
Change in Sales price
(USD / lb Cr)
Change in
Operating Profit
Change in
Group's Equity
EUR 000’s
EUR 000’s
2.71
20%
15,384
14,615
2.59
15%
11,538
10,961
2.48
10%
7,692
7,307
2.37
5%
3,846
3,654
2.26
0%
0
0
2.14
-5%
-3,846
-3,654
2.03
-10%
-7,692
-7,307
1.92
-15%
-11,538
-10,961
1.80
-20%
-15,384
-14,615
Financial year 2023
Change in Sales price
(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
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.
133
Assuming, for simplicity, an average annual mining activity of 166,029 t/a, and December 2024 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 2024
Change in Sales price
(USD/t)
Change in
Operating
Profit
Change in
Group's Equity
231.00
20%
6,392
4,602
221.38
15%
4,794
3,452
211.75
10%
3,196
2,301
202.13
5%
1,598
1,151
192.50
0%
0
0
182.88
-5%
-1,598
-1,151
173.25
-10%
-3,196
-2,301
163.63
-15%
-4,794
-3,452
154.00
-20%
-6,392
-4,602
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
13. Inventories
EUR '000
2024
2023
Goods and supplies
11,050
16,636
Unfinished products
387
129
Unfinished construction projects
0
283
Finished products
17,159
12,399
Prepayments
233
136
Total
28,829
29,583
134
14. Trade and other current receivables
EUR '000
2024
2023
Trade receivables
7,502
7,467
Loan receivables
2,054
546
Prepaid expenses and accrued income
2,949
2,615
Income tax receivables
210
123
Other receivables
12,301
12,594
Total
25,016
23,345
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.
The ageing of trade receivables at the end of the reporting period
EUR '000
2024
2023
Not past due
3,527
4,698
Past due 0-30 days
2,940
1,184
Past due 31-60 days
272
678
Past due 61-90 days
341
37
Past due more than 90 days
422
870
Trade receivables total
7,502
7,467
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.
15. Cash and cash equivalents
EUR '000
2024
2023
Cash and bank balances
3,864
16,252
Cash and cash equivalents in the consolidated cash flow statement:
EUR '000
2024
2023
Cash and bank balances
3,864
16,252
Short-term money market investments
90
1,780
Total
3,954
18,032
135
16. Notes to equity
Number of
registered shares
Number of shares
on issue
Share
capital,
EUR ‘000
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
Share based payments (CEO)
500,000
31.12.2024
277,041,814
261,000,300
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
On 31 December 2024, the Company had 16,041,514 (6,541,514) 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 2024, was 261,000,300 (260,500,300).
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 31 May 2024, 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 90.24 % 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'
136
Act are fulfilled. The authorization replaces all previous authorizations granted in the Annual General Meeting in
2023 and is valid two (2) years from the decision of the Annual General Meeting.
17. Share-based payments
As part of the remuneration package under the CEO agreement, the CEO received 500,000 Company shares on
17 January 2023 and 500,000 Company shares on 22 January 2024. On January 2024, the Group extended the
CEO’s contract for another year and approved the granting of Company shares as an incentive based on overall
performance KPIs. For the year 2024, 400,000 company shares are to be transferred after reporting period.
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 0.39 per share. The
expense recognized in the income statement during the year was EUR 197,260 (2023: EUR 242,397).
18. Deferred tax assets and liabilities
Movements in deferred taxes in 2024
EUR '000
01.01.2024 Exchange rate
differences
Recognised in
income
statement
31.12.2024
Deferred tax assets:
Unrealised expenses
557
1
-551
7
Pension liabilities
13
0
56
69
From translation difference
-69
0
0
-69
Group eliminations
543
26
-98
472
Total
1,044
27
-593
478
Deferred tax liabilities:
Assets at fair value in acquisitions
7,710
64
-64
7,710
Translation difference
80
0
0
80
Other timing differences
262
224
8
493
Total
8,051
288
-57
8,283
Movements in deferred taxes in 2023
EUR '000
01.01.2023 Exchange rate
differences
Recognised in
income
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
137
19. Provisions
EUR '000
Environmental
and rehabilitation
provisions
Other
provisions
Total
Balance at 1.1.2024
10,107
1,389
11,496
Additions
351
1,476
1,827
Releases and reversals
-2,477
-273
-2,750
Unwinding of discount
1,131
0
1,131
Exchange differences
357
-118
239
Balance at 31.12.2024
9,469
2,474
11,943
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
EUR '000
2024
2023
Long-term provisions
11,776
11,400
Short-term provisions
167
96
Total
11,943
11,496
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.
20. Pension liabilities
Defined benefit pension plans
The majority of the Group’s pension plans are defined contribution plans for which a total expense of EUR 0.6
(2023: 0.7) million has been recognised on the 2024 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 11.2 (2023: 12.8) million on 31 December 2024. 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
EUR '000
2024
2023
Present value of funded obligation
20,397
21,147
Fair value of plan assets
-9,148
-8,308
Net liability
11,249
12,839
Movements in defined benefit obligation
EUR '000
2024
2023
Defined benefit obligations at 1.1.
21,147
19,973
138
Benefits paid
-752
-774
Current service costs
243
241
Interest expense
655
728
Assumption changes
-600
0
Actuarial losses / (gains)
-296
979
Closing balance at 31.12.
20,397
21,147
Movements in the fair value of the plan assets
EUR '000
2024
2023
Fair value of the plan assets at 1.1.
8,308
7,985
Expected return on plan assets
266
306
Benefits paid by the plan
-227
-217
Return on plan assets greater/(less) than discount rate
270
-262
Contributions paid into the plan
531
496
Closing balance at 31.12.
9,148
8,308
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
EUR '000
2024
2023
Current service cost
-243
-241
Net interest on net defined benefit liability/(asset)
-389
-422
-632
-663
Expense recognised in other comprehensive
income (OCI)
EUR '000
2024
2023
Actuarial (gains)/losses due to liability experience
-296
-479
Return on plan assets (greater)/less than discount
rate
-270
262
Actuarial (gains)/losses – financial assumptions
-600
1,457
-1,166
1,240
Actual return on plan assets totalled EUR -0.26 (2023: 0.26) million in 2024.
Principal actuarial assumptions
2024
2023
Discount rate
3.41%
3.17%
Expected retirement age
65
65
Expected rate of salary increase
3.00%
3.00%
Inflation
2.25%
2.25%
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.
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
139
resignation or misconduct. The computation of the liability was based on the retirement pay ceiling announced by
the Turkish government. On 31 December 2024, the employee severance indemnity recognised in accordance
with IAS 19 totalled EUR 2.1 (2023: 1.0) million.
21. Trade payables and other interest-free liabilities
EUR '000
2024
2023
Non-current
Other liabilities
22
22
Total non-current
22
22
Current
Current liabilities to related parties
6
6
Trade payables
7,075
10,863
Accrued expenses and deferred income
5,16
5,171
Current advances received
4
4
Income tax liability
516
4,437
Other liabilities
2,673
626
Total current
15,441
21,107
140
1.9 RELATED PARTY DISCLOSURES
1.9.1 Group structure on 31 December 2024
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
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
Türk Maadin Sirketi A.S.
Turkey
99.98
0.00
ZCM Holdco One (Pty) Ltd
South Africa
74.00
23.00
Zeerust Chrome Mine Ltd
South Africa
74.00
0.00
In December 2024, 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. Rekylator Oy is in
liquidation.
On 20 February 2024, Afarak Group SE transferred the interest holding in Türk Maadin Sirketi A.S. to Afarak
Holdings Limited.
On 9 July 2024 Afarak Holdings Limited acquitted an additional 1.23% holding from non-controlling interest.
1.9.2 Related party transactions
Afarak Group SE defines the related parties as:
• companies, entities or persons having common control or considerable voting power in Afarak Group
• subsidiaries
• joint ventures
• associates
• Afarak Group SE’s and the above mentioned entities’ top management
141
Related party transactions with persons belonging to the Group’s Board and management
Finnish accounting legislation, KPA 2:8 § 4 paragraph disclosure requirement
2024
2023
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
84
420
197
14
535
242
Board members
Abrahamsen
Thorstein
Board member 23.5.2017 onwards,
Chairman11.11.2019 onwards
121
137
Manojlovic
Jelena
Board member 11.7.2008 onwards,
Chairperson 23.5.2017 – 25.6.2019
103
125
Total
84
644
197
14
797
242
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 2024 were EUR 360,000, a salary of EUR 84,000 and a Company bonus of
EUR 60,000.
As part of the remuneration package under the CEO agreement, the CEO received 500,000 Company shares on
17 January 2023 and 500,000 Company shares on 22 January 2024. On January 2024, the Group extended the
CEO’s contract for another year and approved the granting of Company shares as an incentive based on overall
performance KPIs. For the year 2024, 400,000 company shares are to be transferred after reporting period.
Management remuneration
EUR '000
2024
2023
Fixed salaries and fees
673
553
Total
673
553
The table includes the Executive Management Team remuneration excluding the CEO for the year 2024. The
CEO and Board members compensation has been presented separately.
Other related party transactions
No dividends were received from associated companies during 2024 and 2023.
1.10 COMMITMENTS AND CONTINGENT LIABILITIES
1.10.1 Mortgages and guarantees pledged as security
On 31 December 2024 the Group had loans from financial institutions totalling EUR 2.3 (2023: 2.8) million. The
Group has provided real estate mortgages and other assets as collaterals for total carrying value of EUR 2.3 (2023:
2.7) million. Moreover, the Group companies have given cash deposits totalling EUR 0.3 (2023: 0.3) million as
security for their commitments. The value of other collaterals totalled EUR 5.6 (2023: 3.8) million as at 31
December 2024.
142
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 of USD 4.0 million from
a Maltese bank in 2023. As at year end 2024 the balance was USD 2.1 (EUR 2) million. An additional trade
finance loan facility without recourse amounting to USD 2.0 million was utilised during the year. As at year end
2024, the balance was USD 0.2 (EUR 0.18) million EUR. The financial covenants attached to both loans were not
breached at the end of the reporting period.
1.10.3 Rental agreements
Liabilities associated with rental and operating lease agreements totaled some EUR 0.4 (2023: 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 2024.
1.11 EVENTS AFTER THE REPORTING PERIOD
Stock Exchange Releases
On 21 February 2025, the Board of Directors issued a profit warning regarding the decrease of turnover and
EBITDA for the financial year 2024.
Flagging notification after the reporting period
There are no flagging notifications to report.
143
PARENT COMPANY’S FINANCIAL STATEMENTS (FAS)
INCOME STATEMENT (FAS)
1.1.2024
1.1.2023
- 31.12.2024
- 31.12.2023
EUR '000
Note
Revenue
1
2,495
2,468
Personnel expenses
Salaries and wages
-258
-327
Pension expenses
0
0
Social security expenses total
0
0
Personnel expenses total
-258
-327
Depreciation, amortisation and impairment
2
Impairment of investment in subsidiaries
-0
0
Depreciation, amortisation and impairment total
-0
0
Other operating expenses
3
-2,176
-2,545
OPERATING PROFIT
61
-404
Financial income and expenses:
4
Impairment of non-current investments
9,651
0
Other financial income
8,601
0
From Group companies
0
151
From others
156
1,109
Interests and other financial expenses
21
0
To Group companies
0
-2,014
To others
-1,644
-40
Impairment of intra-group receivable
-699
0
Financial income and expenses total
16,086
-794
PROFIT BEFORE TAXES
16,147
-1,198
Income taxes
5
0
0
PROFIT FOR THE PERIOD
16,147
-1,198
144
STATEMENT OF FINANCIAL POSITION (FAS)
EUR '000
Note
31/12/2024
31/12/2023
ASSETS
NON-CURRENT ASSETS
Investments
6
Shares in Group companies
64,488
65,832
Total investments
64,488
65,832
Non-current receivables
7
Receivables from Group companies
5,252
5,257
Total non-current receivables
5,252
5,257
Total non-current assets
69,740
71,089
CURRENT ASSETS
Current receivables
7
Trade receivables
15
0
Receivables from Group companies
1,626
4,973
Other non interest-bearing receivables
28
35
Prepaid expenses and accrued income
38
39
Total current receivables
1,707
5,047
Cash and cash equivalents
1
0
Total current assets
1,708
5,047
TOTAL ASSETS
71,488
76,136
145
STATEMENT OF FINANCIAL POSITION (FAS) (CONT.)
EUR '000
Note
31/12/2024
31/12/2023
EQUITY AND LIABILITIES
SHAREHOLDERS' EQUITY
8
Share capital
23,642
23,642
Share premium reserve
25,223
25,223
Paid-up unrestricted equity reserve
219,051
219,051
Retained earnings
-229,894
-228,696
Profit for the period
16,147
-1,198
Total shareholders' equity
54,169
38,022
LIABILITIES
9
Non-current liabilities
Liabilities to Group companies
11,428
26,464
Provisions
0
0
Total non-current liabilities
11,428
26,464
Current liabilities
Liabilities to Group companies
0
220
Liabilities to others
0
0
Accounts payable
127
167
Accounts payable to Group companies
5,278
10,591
Other liabilities
6
6
Accrued expenses and deferred income
440
666
Total current liabilities
5,851
11,650
Total liabilities
17,279
38,114
TOTAL EQUITY AND LIABILITIES
71,448
76,136
146
STATEMENT OF CASH FLOWS (FAS)
1.1.-31.12.2024
1.1.-31.12.2023
EUR '000
Operating activities
(Loss) / profit for the period
16,147
-1,198
Adjustments for:
Gain on disposal of investment
-9,651
0
Unrealised foreign exchange gains and losses
-112
-1,039
Financial revenue and expense excluding impairment
-6,078
1,833
Other adjustments
-442
87
Cash flow before working capital changes
-136
-317
Working capital changes:
Change in current trade receivables
3,752
2,021
Change in current trade payables
2,661
1,769
Change in Provisions
0
0
Cash flow before financing items and taxes
6,277
3,472
Interests received from Group companies
-11
-1
Interests received and other financing items
-791
30
Interests paid and other financing items
-1,644
-2,014
Net cash used in operating activities
3,831
1,487
Investing activities
Proceeds from sale of tangible and intangible assets
0
0
Net cash from investing activities
0
0
Financing activities
Proceeds from sale of investment
9,651
0
Disposal of
1,386
0
Non-current loans from Group companies
5
-3,401
Repayments of current loan receivables
0
1,911
Proceeds from current borrowings
-9,007
0
Repayment of current borrowings
-5,865
0
Net cash from financing activities
3,830
-1,490
Change in cash and cash equivalents
1
-3
Cash at beginning of period
0
3
Cash at end of period
1
0
Change in the statement of financial position
1
-3
147
2. NOTES TO THE FINANCIAL STATEMENTS OF THE PARENT COMPANY
(FAS)
2.1 Accounting Policies
Scope of financial statements and accounting policies
The parent company has prepared its separate financial statements in accordance with Finnish Accounting
Standards. Consolidated financial statements have been prepared in accordance with International Financial
Reporting Standards. Consolidated financial statements are presented separately as a part of these financial
statements.
Information on holdings in subsidiaries and associated companies and information on their consolidation is
presented in the notes to the financial statements.
All figures are presented in thousand Euros, unless otherwise explicitly stated.
Valuation principles and methods
Investments in associated companies and debt instruments are valued at acquisition cost, less eventual impairment.
Dividends received from Group companies and associates have been recorded as financial income.
The value of property, plant and equipment in the statement of financial position is stated at acquisition cost, less
accumulated depreciation. Other assets have been stated in the statement of financial position at the lower of
acquisition cost or their likely realisable value. Debt items are valued at acquisition cost. Loan receivables from
subsidiaries and Group companies have been valued at acquisition cost.
Depreciation methods
Acquisition costs of property, plant and equipment are depreciated over their useful lives according to plan.
Depreciation plans have been defined based on practice and experience.
Asset
Depreciation method and period
Intangible rights
5 years straight line
IT equipment
2 years straight line
Other machinery and equipment
5 years straight line
Translations of foreign currency items
Items in the statement of financial position denominated in foreign currency are translated into functional
currency using the exchange rates as at the end of the reporting year. Income statement items are translated
applying the exchange rates prevailing at the date of the transaction.
Comparability of the reported financial year and the previous year
The reported financial year and the previous year were both calendar years and are thus comparable. The
Company has been actively restructuring its business, which has required various ownership and financial
arrangements. The transactions have had significant non-recurring effects on the Company's income
statement and statement of financial position, which make comparison of financial statements and estimating
the future more difficult.
148
2.2 Notes to the income statement
1. Revenue
EUR '000
2024
2023
By business line:
Services
2,495
2,468
Total
2,495
2,468
By geography:
Finland
0
1
EU countries
1,722
1,614
Other countries
773
853
Total
2,495
2,468
2. Depreciation, amortisation and impairment
EUR '000
2024
2023
Impairment
Impairment on investment in subsidiaries
0
0
Total
0
0
3. Other operating expenses
EUR '000
2024
2023
Premise expenses
-17
-15
Machinery and equipment expenses
-43
-93
Travelling expenses
-29
-77
Administration expenses
-1,060
-1,534
Other operating expenses
-1,027
-826
Total
-2,176
-2,545
4. Financial income and expense
EUR '000
2024
2023
Other financial income
From Group companies
156
151
From others
21
1,109
Other financial expense
To Group companies
-1,644
-2,014
To others
-699
-40
Impairment on Intra-group receivables
0
0
Total
-2,166
-794
149
5. Income taxes
EUR '000
2024
2023
Profit before taxes
16,147
-1,198
Profit for the period
16,147
-1,198
2.3 Notes to assets
6. Investments
Shares in Group
companies
Shares in
associated
companies
Receivables
from Group
companies
Total
Acquisition cost 1.1.2023
324,194
8,153
17,614
349,961
Addition of investment
0
0
0
0
Acquisition cost 31.12.2023
324,194
8,153
17,614
349,961
Accumulated depreciation and
impairment 1.1.2023
-258,362
-8,153
-17,614
-284,129
Impairment of investment in
subsidiaries
0
0
0
0
Accumulated depreciation and
impairment 31.12.2023
-258,362
-8,153
-17,614
-284,129
Book value 31.12.2023
65,832
0
0
65,832
Shares in Group
companies
Shares in
associated
companies
Receivables from
Group companies
Total
Acquisition cost 1.1.2024
324,194
8,153
17,614
349,961
Addition of investment
42
0
0
42
Sale of Investment
-1,386
0
0
-1,386
Acquisition cost 31.12.2024
322,850
8,153
17,614
348,617
Accumulated depreciation
and impairment 1.1.2024
-258,362
-8,153
-17,614
-284,129
Impairment of investment in
subsidiaries
0
0
0
0
Accumulated depreciation
and impairment 31.12.2024
-258,362
-8,153
-17,614
-284,129
Book value 31.12.2024
64,488
0
0
64,488
150
Holdings in Group and other companies
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
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
Türk Maadin Sirketi A.S.
Turkey
99.98
0.00
ZCM Holdco One (Pty) Ltd
South Africa
74.00
23.00
Zeerust Chrome Mine Ltd
South Africa
74.00
0.00
In December 2024, 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. Rekylator Oy is in
liquidation.
On 20 February 2024, Afarak Group SE transferred the holding interest in Türk Maadin Sirketi A.S. to Afarak
Holdings Limited.
On 9 July 2024, Afarak Holdings Limited acquired an additional 1.23% holding in Türk Maadin Sirketi A.S. from
non-controlling interest.
7. Receivables
EUR '000
2024
2023
Non-current
Loan and other receivables
5,252
5,257
Total
5,252
5,257
Current
Loan receivables
0
0
Trade receivables
1,250
3,910
Interest receivables
376
209
151
Prepayments and accrued income
0
854
Total
1,626
4,973
Other interest-bearing receivables
EUR '000
2024
2023
Current
VAT receivable
11
18
Total
11
18
Other interest-free receivables
EUR '000
2024
2023
Current
Trade receivables
15
0
Other receivables
17
17
Total
32
17
Prepaid expenses and accrued income
2024
2023
Other prepaid expenses and accrued income
38
39
Total
38
39
2.4 Notes to equity and liabilities
8. Shareholders’ equity
EUR '000
Share capital
2024
2023
Share capital 1.1.
23,642
23,642
Share capital 31.12.
23,642
23,642
Share premium reserve
2024
2023
Share premium reserve 1.1.
25,223
25,223
Share premium reserve 31.12.
25,223
25,223
Paid-up unrestricted equity reserve
2024
2023
Paid-up unrestricted equity reserve 1.1.
219,051
219,051
152
Issue of shares
0
0
Paid-up unrestricted equity reserve 31.12.
219,051
219,051
Retained earnings
2024
2023
Retained earnings 1.1.
-228,696
-225,241
Profit for the period
-1,198
-3,482
Retained earnings 31.12.
-229,894
-228,696
Profit for the period
16,147
-1,198
Total shareholders' equity
54,169
38,022
Distributable funds
2024
2023
Retained earnings 1.1.
-229,894
-228,696
(Loss) / profit for the period
16,147
-1,198
Retained earnings 31.12.
-213,747
-229,894
Paid-up unrestricted equity reserve
219,051
219,051
Distributable funds 31.12.
5,304
0
9. Liabilities
Non-current liabilities
EUR '000
Non-current interest bearing debt
2024
2023
Loans from Group companies
11,428
26,464
Total
11,428
26,464
Non-current interest-free debt
2024
2023
Capital loans
0
0
Total
0
0
Current liabilities
EUR '000
Current interest bearing debt
2024
2023
Other debt to Group companies
0
0
Total
0
0
153
Current interest-free debt
2024
2023
Accounts payable
127
167
Payables to Group companies
5,278
10,591
Other debt
6
6
Other debt to Group companies
0
220
Accrued expenses and deferred income
440
666
Total
5,851
11,650
2.5 Pledges and contingent liabilities
The company did not have any pledges and contingent liabilities as at year end
Pension liabilities
The Company's pension liabilities are directly in accordance with the statutory TyEL-system.
2.6 Other notes
Related party loans
The Company had no loan receivables from the members and past members of the Board.
Information on the personnel
Personnel, annual average
2024
2023
(all employees)
Employees
1
1
Management remuneration (EUR ’000)
2024
2023
Chief Executive Officer
420
535
Board members
224
262
The CEO fees for his service during 2024 were EUR 420,000.
As part of the remuneration package under the CEO agreement, the CEO received 500,000 Company shares on
17 January 2023 and 500,000 Company shares on 22 January 2024. On January 2024, the Group extended the
CEO’s contract for another year and approved the granting of Company shares as an incentive based on overall
performance KPIs. For the year 2024, 400,000 company shares are to be transferred after reporting period.
Information on shares and shareholders
Changes in the number of shares and share capital
On 31 December 2024, the registered number of Afarak Group SE shares was 277,041,814 (267,041,814) and the
share capital was EUR 23,642,049.60 (23,642,049.60).
On 31 December 2024, the Company had 16,041,514 (6,541,514) own shares in treasury, which was equivalent
to 5.79% (2.45%) of the issued shares. The total number of shares outstanding, excluding the treasury shares held
by the Company on 31 December 2024, was 261,000,300 (260,500,300).
154
More information on shares, share capital and shareholders has been presented in the notes to the consolidated
financial statements.
Information obligated to a Group company
The Company is the Group’s parent company.
Afarak Group SE, domicile Helsinki (address: Kaisaniemenkatu 4, 00100 Helsinki, Finland)
Board members' and Chief Executive Officer's ownership
Afarak Group SE’s Board members and Chief Executive Officer owned in total 2,450,000 (2023: 1,950,000)
Afarak Group SE shares on 31 December 2024 when including shares owned either directly, through persons
closely associated with them or through controlled companies. This corresponds to 0.9% (2023: 0.7%) of all
outstanding shares that were registered in the Trade Register on 31 December 2024.
31.12.2024
shares
options
Board and CEO total:
Thorstein Abrahamsen
Chairman & Non-Executive
Director
0
0
Jelena Manojlovic
Dependent Non-Executive
Director
150,000
0
Guy Konsbruck
Chief Executive Officer &
Executive Director
2,300,000
0
Board and CEO total
2,450,000
0
All shares outstanding
277,041,814
Proportion of all shares
0.9%
On 31 December 2024 the total number of registered shares was 277,041,814 and the Board and CEO's ownership
corresponded to 0.9% of the total number of registered shares.
Auditor’s fees
EUR '000
2024
2023
Tietotili Audit Oy
audit
343
225
other services
98
29
Total
441
254
Board’s dividend proposal
The company will follow the new dividend policy and the board intends to decide about the actual dividend
allocation at a later stage.
155
SIGNATURES TO THE BOARD OF DIRECTORS REPORT AND THE
FINANCIAL STATEMENTS
Helsinki 28 March 2025
Thorstein Abrahamsen
Guy Konsbruck
Chairman
Member of the Board & CEO
Jelena Manojlovic
Member of the Board
156
THE AUDITOR’S NOTE
Our auditor’s report has been issued today.
Vantaa 28 March 2025
Tietotili Audit Oy
Authorised Public Accountants
Urpo Salo
Authorised Public Accountant