Afarak : ADDITIONAL INFORMATION RELATED TO QUARTERLY REPORT

15:00 London, 17:00 Helsinki, 17 May 2017 - Afarak Group Plc ('Afarak' or 'the Company') (LSE: AFRK, NASDAQ: AFAGR)

ADDITIONAL INFORMATION RELATED TO QUARTERLY REPORT

The company wishes to make available to all shareholders certain clarifications discussed and/or requested during the investor call, relating to the first quarter results (published on May 12, 2017) and with respect to: 1) currency movements that were being accounted for in equity and moved to the income statement; and, 2) tax charge.

1. Currency movements
The Company is simplifying and improving its corporate structures and its balance sheet making it also more transparent in order to pursue further investments in the development of its mining operations in South Africa. This restructuring included the repayment of the internal loans originated back in 2010 and 2011, with the foreign exchange difference arising from the time differences in South African rand against hard currencies, calculated between the origination and repayment dates. This cumulative unrealised exchange difference has been recorded in the 'Other Comprehensive Income' and 'Translation reserve' in equity. Following IFRS, when realised the accumulated exchange loss of EUR 3.2 million is recognised as a finance cost in the 'Income Statement', and the corresponding offsetting reduction in the 'Translation Reserve' is recognised within the change in the Translation Reserve in 'Other Comprehensive Income'. This realised exchange difference and the offsetting positive movement in the Translation difference, has no net impact on the shareholders equity and, as a result, the Group's total comprehensive income is EUR 8.3 million.

2. Tax charge
The reported tax charge of EUR 2.7 million during the first quarter was higher than usual on the back of the significantly improved result achieved during the period. The tax charge also included a one-off write-off of deferred tax asset amounting to EUR 1.1 million on foreign exchange difference on the historical intragroup loans that are unlikely to be utilised in the taxation of the relevant subsidiary in the short to medium term. The effective tax rate when excluding the write-off was 23.2%. The reported tax charge is provisional for the period and will fluctuate going forward, depending on Company's profitability in the coming quarters.

The necessary charges and currency movements, due to compliance with IFRS, have also not influenced the proposed capital redemption of EUR 0.02, which is reflective of strong operating cash flows, rather than the declared bottom line profit figure, affected by these book entries.

Further the Company wishes to inform that the Capital redemption proposed to the AGM will be paid, if accepted, on 9 June and not on 10 June as previously communicated.

Guy Konsbruck
CEO
Afarak Group plc
www.afarak.com

For additional information, please contact:

Guy Konsbruck, CEO, +356 2122 1566, guy.konsbruck@afarak.com Predrag Kovacevic, CFO, +356 2122 1566, pedja.kovacevic@afarak.comMelvin Grima, Finance Director, +356 2122 1566, melvin.grima@afarak.com
Jean Paul Fabri, PR Manager, +356 2122 1566, jp.fabri@afarak.com

This announcement is distributed by Nasdaq Corporate Solutions on behalf of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Afarak Group via Globenewswire