AFARAK GROUP SE

The Board of Directors Report 2025 and the Annual Financial Statements 

1 January-31 December 2025

Domicile: Helsinki

Company number: 0618181-8

Contents

THE BOARD OF DIRECTORS REPORT

Dear Shareholders,

After a brief moderate peak in Q1, the business environment deteriorated again in 2025. The stainless-steel demand was historically low, especially in Europe. Demand for low carbon ferro-chrome suffered from this fact.

We succeeded to substantially increase our sales, but the generated EBITDA of -0.2 M€ shows that the price pressure from low-cost imports (India, Kazakhstan, Russia and China) weighed heavily on our margins. This was further impacted by the weakening of the US Dollar against the Euro, which reduced the Euro-equivalent value of USD-denominated revenues.

A setback in Cr Ore prices and some unexpected delays caused a below expectation result in our South African Chrome Ore operation

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. Our programmes are built around three broad categories: 

1. Health and Safety

During 2025, the Group's employees contributed approximately 1,141,926 working hours during which the company suffered 46 accidents that caused loss of time. Lost Time Injury (LTI) is defined as any work-related injury or illness which prevents a person from doing any work the day after the accident. In our factories we continuously assess, monitor, and control the risks of our workers. 

As part of our efforts to continually review and improve addressing the LTIs over the reporting period, we are reviewing and updating our Health & Safety Policy and Procedures and look forward to reporting this more fully in our next Annual Report.

We conduct routine health checks on all sites; these checks also include drug and alcohol testing. We are constantly reviewing the role of organising shifts in the mines to minimise any possible fatigue-related injuries.

2. Environmental protection, including water management, waste management, land rehabilitation and emissions reduction.

We understand and recognise the critical importance of environmental protection, particularly in the extractives sector. Our subsidiaries are working hard to introduce programmes to improve the management of water and waste while also focusing on emissions reduction wherever possible. We started work to establish data collection processes that will allow us to set our benchmarks and introduce realistic long-term targets to measure our improved performance. 

3. Community engagement and support

Based on the five-year Social and Labour Plan, our subsidiaries in South Africa are developing their relevant activities. During 2025, the company supported employees through the payment of inflation compensation aids in Turkey. We have provided social support to all our local communities.  

ESG GOVERNANCE

We recognise the importance of robust governance to ensure Afarak manages its ESG-related risks and its environmental and social impacts. The Board and Executive Committee takes a leading role, overseeing our sustainability strategies and ensuring alignment with our corporate objectives. We have established clear roles and responsibilities, to ensure we manage our ESG risks, deliver against our health and safety, environmental and community goals, and improve our overall sustainability performance. 

Afarak operates in highly differentiated national markets with differing national laws, preferences and cultures. As a result, operational direction and management of sustainability lie primarily with national business managers, who are best placed to ensure compliance with national legislation and market expectations. The Executive Committee, which reports to the Board, therefore takes a holistic approach to overseeing the sustainability initiatives implemented at a national level and take responsibility for ensuring that such initiatives are in line with investor expectations. 

BUSINESS ETHICS 

Ensuring Afarak operates to the highest ethical standards is critical to our stakeholders including our employees, customers, investors and regulators. Our Code of Ethics and policies ensure that standards are upheld by Afarak and its suppliers.  The Code of Ethics state the Group's commitment to ensuring an equitable, diverse and inclusive workplace. 

Additionally, to maintain strong business ethics, the Group has adopted and maintains policies on Human Rights, Anti-Bribery and Anti-Corruption. 

The whistleblowing procedure also lays down the process for making complaints on discrimination in the workplace. The whistleblowing policy, as well as the contacts are available on the Group's website (https://afarak.com/)

DIVERSITY AND INCLUSION

Afarak seeks to build a working environment that enables full and active participation and embraces and encourages diversity of thought and experience in order to maximise business performance. 

The Board is very cognisant of the ongoing desire from stakeholders for greater diversity in senior management and boards. 

The Board continues to seek to achieve greater diversity in the senior management of the Group and throughout the organisation and continuing assessment of the Group's diversity and inclusion approach in relevant areas. Currently, the Group has not adopted a Diversity and Inclusion Policy.

CLIMATE-RELATED FINANCIAL DISCLOSURES     

Introduction

Afarak demonstrates a strong commitment to environmental responsibility and is actively seeking to reduce its CO₂ emissions and integrate environmentally sustainable innovation into its production processes. In line with this ambition, this report covers the Group's climate change governance, its integration with overall risk management, the strategy in managing our climate-related issues and opportunities, and the metrics used to measure progress towards our targets.

In line with UK Listing Rule 6.6.6R(8), the Company has assessed its climate-related disclosures against the TCFD recommendations and recommended disclosures, as detailed in "Recommendations of the Task Force on Climaterelated Financial Disclosures" (2017) and the additional guidance as set out in the TCFD 2021 Annex, "Implementing the Recommendations of the Task Force on Climaterelated Financial Disclosures" ("TCFD Annex") including Section C "Guidance for All Sectors" and Section E "Supplemental Guidance for NonFinancial Groups". 

The Company's disclosures are consistent with 9 of the 11 TCFD recommendations. At present, the Group has not set specific targets to manage climate risks and opportunities or conducted formal resiliency analysis considering the impact of all climate risks on financial performance or position. The Company is progressing enhancements in these areas and expects formal targets to be established as part of the transition planning exercise. The Group has undertaken limited quantification of its risk exposure under different climate scenarios, which it intends to develop in future reporting cycles.

Figure 1: The table below sets out the 11 TCFD recommendations and where the related information can be found within this report:

GOVERNANCE

Board level

Board of Directors

The Board of Directors (BoD) bears the highest responsibility for monitoring sustainability-related risks and ESG issues. Headed by the Chairman, the BoD is responsible for approving and evaluating ESG strategies and analysing the impacts, risks and opportunities of all sustainability issues affecting the company, including for climate change management. The Board is supported and informed on climate-related issues via the pathways as detailed in Figure 2. This structure ensures that any potential impacts of climate change are incorporated into the review of Group strategy, business plans, and risk management. Specifically, 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. Climate risk is a subject of discussion at least twice annually, with continuous discussion at each Board meeting regarding the various strategic initiatives underway that reduce the Group's emissions footprint and drive greater resource efficiency. Where required, additional resolutions may be organised for further discussion on specific climate-related projects, strategy, and capital allocation decisions. 

In addition, a strategy meeting is held at least once a year, 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. Although no Board members are formally designated as climate experts, the Board as a whole maintains an up-to-date and commercial level of awareness and understanding of climate change and related risks and opportunities for the business, which informs its oversight of climate-related matters.

In 2025, the Board's discussions included projects relating to climate change, such as reductions of tailings volumes in Turkey, the reintegration of slag into other industries under our zero waste project, investment in renewable energy generation in Germany, and installation of solar panels in South Africa. 

From a governance perspective, sustainability and energy efficiency considerations are embedded at Board level through the Health, Safety and Sustainable Development Committee, ensuring strategic oversight of climate-related capital allocation and transition planning.

Executive Management Team

The EMT is responsible for implementing ESG strategies, monitoring IROs and risk management. Risk factors, opportunities, and their impact are regularly reviewed by the EMT to ensure that appropriate management plans are implemented. 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 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, and is present (either online or in-person) at every board meeting to ensure all climate-related issues are efficiently reported up to the Board. 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. 

In particular, the Chief Compliance Officer (CCO) monitors the legal and regulatory requirements in sustainability, including compliance with the reporting standards. He also acts as ESG manager at Group level. 

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 feeds into strategic decisions at management level. Members of 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.  For specific sustainability issues, the bodies call in external consultants or organisations to assist with specific sustainability issues or with the development of new strategies. The executive bodies regularly review existing skills and knowledge and continuously adapt their strategies to proactively meet future requirements and sustainably promote the company's development.

Management level

Corporate Management Team

The Corporate Management Team (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. 

Site managers, via the CMT, report 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, and receives regular reports on the main sustainability impacts, risks and opportunities affecting the Group at least every six months and sometimes quarterly. 

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 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. 

The team forms a central unit for the transparent communication of environmental, social and governance aspects to internal and external stakeholders. It reports directly and continuously to the EMT on ESG-related findings; consolidates the ESG data and related climate risk information from all operating locations to forward on to the BoD; 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.

Afarak works closely with industrial bodies and associations to promote dialogue with political institutions and member companies about sustainability, climate protection, energy efficiency and responsible production. The guidelines and insights offered by the International Chromium Development Association ("ICDA") and EUROALLIAGES support companies in complying with international standards and further developing their ESG strategies.

RISK MANAGEMENT

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 analysis forms the basis of Afarak's climate risk assessment, with climate-related risks and opportunities incorporated into the Group's overall risk management framework to ensure that their importance is comparable. 

The assessment covered all our material operational locations and considered transition risks/opportunities arising across our value chain. All categories of risks and opportunities from the TCFD guidance were considered, although not all categories were deemed to be relevant to Afarak. The climate-related risk assessment will be renewed at least every three years to ensure it is aligned with current and relevant information.

Within the double materiality assessment, physical climate risks, in particular water stress in certain regions, were considered at a qualitative level. Potential risks to affected sites were identified using the WRI Water Atlas and corresponding mitigation measures were described. However, a separate site-specific physical risk assessment using defined temperature pathways (e.g. 1.5°C or 2°C) has not yet been conducted. We intend to further develop this approach to assess resilience under different temperature pathways in future reporting cycles.

Risks and opportunities are assessed according to their probability of occurrence, with a scale from 1 (Rare) to 5 (Almost certain). Potential financial impact is assessed on a scale from 1 (<€200,000) to 5 (>€8 million). Risks and opportunities are assessed to be material by combining likelihood with financial impact, with both assessed on a 5-point scale. 

Figure 3: Risk Likelihood scale

STRATEGY

Time horizons for the climate-risk assessment were determined in line with the time horizons stipulated by ESRS 1: short- (0-1 year), medium- (2-5 years), and long-term (5+ years). The short-term time horizon covers our immediate in-year actions, the medium-term includes our near-term business strategy, and the long-term covers the useful life of the Group's assets and ensures that the risk assessment allowed proper time for climate-related risks to manifest.

Afarak recognises that the tangible effects of climate change and increasing demands for sustainable business practices present both risks and opportunities for the Group. As of 2025, the Group 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. 

While scenario analysis of different physical risks has not yet been conducted, the Group has undertaken limited scenario analysis of transition risk exposures where applicable, to understand how different climate outcomes may affect the behaviour of risks and thereby improve the resilience of the business to climate change. The following climate scenarios were explored:

• Net Zero 2050 (NZE): an ambitious scenario which sets out a narrow but achievable pathway for the global energy sector to achieve net zero CO2 emissions by 2050. This meets the TCFD requirement of using a "below 2°C" scenario and is included as it informs the decarbonisation pathways used by the Science Based Targets initiative (SBTi). 

• Stated policies scenario (STEPS): a combination of physical and transitions risk impacts as temperatures rise by around 2.5°C by 2100 from preindustrial levels, with a 50% probability. This scenario is included as it represents a base case pathway with a trajectory implied by today's policy settings.  

No effects of climate-related risks are reflected in any judgements and statements applied in the financial statements. Any mitigation or required investment is currently assumed to be covered and integrated into the Group's strategy. We will continue to monitor the climate exposure and action plans through the Group's risk management framework, whilst developing our analysis as new data is made available to us.

RISKS

Five key climate-related risks have been identified as follows:

Figures 4-8: Climate-related risks

1) High investment costs due to conversion to CO2-neutrality (buildings, products and processes) 

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 are 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.

To address the high capital expenditure associated with decarbonisation, Afarak is pursuing a portfolio of operational, technological and governance measures. A key initiative is the development of its own solar power generation capacity in South Africa. At the Vlakpoort site, the planned commissioning of a new wash plant in combination with a solar energy installation is intended to reduce reliance on the national electricity grid, mitigate exposure to power supply constraints and lower long-term energy costs and emissions intensity.

In parallel, Afarak continues to make ongoing investments in plant and infrastructure to maintain operational resilience and progressively modernise its asset base. This includes the gradual electrification of selected underground mining equipment and continuous optimisation of energy-intensive processes, particularly in ferrochrome production, to improve energy efficiency and reduce carbon intensity over time.

2) Physical climate risks in own operations

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.

To mitigate physical climate risks across its operations, Afarak has implemented targeted environmental and operational controls, particularly in water-stressed regions. At sites exposed to elevated water scarcity risks, such as in Turkey, the company has introduced closed-loop water recycling systems. These systems reduce overall freshwater abstraction, limit dependence on external water sources and enhance operational resilience during drought conditions.

In addition to water stewardship measures, Afarak applies preventive environmental monitoring and technical protection measures to safeguard infrastructure and maintain business continuity in the face of extreme weather events, including floods and heatwaves. These controls are intended to reduce operational disruption and asset damage arising from climate-related hazards.

3) 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.

To reduce its exposure to energy supplier dependency Afarak is pursuing a combination of diversification, efficiency and financial risk management measures. Concrete steps are already underway in Germany, where a photovoltaic system installed on the crushing hall building generated approximately 700 MWh of electricity by the end of 2025, alongside measures such as LED lighting conversion (approximately 21,000 KWh/year savings). The company is evaluating the feasibility of additional solar energy projects at selected sites, with the objective of increasing the share of self-generated renewable electricity and reducing structural reliance on external grid supply.

At the operational level, Afarak is implementing ongoing optimisation of smelting processes at the German site. Given that ferrochrome production is highly electricity-intensive, incremental improvements in furnace efficiency and process control can materially reduce specific energy consumption per tonne of output, thereby lowering sensitivity to electricity price fluctuations. To support structured energy management, Afarak has also implemented ISO 50001 compliant energy management software for improved monitoring and optimisation of plant energy flows.

Additionally, the Group has commissioned a 1.5 MWp solar plant in South Africa with 3.0 MWh battery storage, which is expected to replace just under 1,000 MWh of grid electricity annually. In addition to two 550 kVA back-up diesel generators, this plant further strengthens the business's resilience to grid volatility. 

From a financial and risk governance perspective, energy price volatility is continuously monitored within the Group's broader financial and risk management framework. This includes oversight of exposure to futures and spot market price movements in the German electricity market, enabling management to assess cost impacts and adapt procurement or operational strategies accordingly.

4) 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.

To mitigate its exposure to volatility in chrome ore and ferrochrome market prices, Afarak pursues a vertically integrated operating model. By supplying its own chrome ore for ferrochrome production, the company reduces reliance on third-party raw material procurement and limits direct exposure to external ore price fluctuations. This integration enhances cost control and provides greater visibility over input margins across the value chain.

In addition, Afarak has undertaken portfolio optimisation measures to concentrate on strategically relevant and higher-performing assets. The divestment of the Ilitha and Zeerust mines in South Africa reflects a deliberate focus on core operations with stronger operational synergies and margin potential. This streamlined asset base is intended to improve resilience under adverse market pricing conditions.

The company is also investing in production expansion in South Africa, including increased chrome ore concentrate output supported by the new wash plant at Vlakpoort. Higher operational efficiency and scale can contribute to improved unit cost competitiveness, thereby partially offsetting price pressure during market downturns.

5) 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 to remain competitive in the long term and take advantage of market opportunities.

To address the financial and strategic implications of increasing sustainability requirements, Afarak has embedded sustainability considerations within its corporate governance framework. The establishment of a Health, Safety and Sustainable Development Committee at Board level ensures structured oversight of environmental, social and governance (ESG) matters, including regulatory developments, stakeholder expectations and transition-related investments. This governance integration supports alignment between capital allocation decisions and long-term sustainability objectives.

Operationally, the company undertakes ongoing investments in production facilities aimed at maintaining efficiency and cost competitiveness. Continuous process optimisation and modernisation of assets contribute to reduced resource consumption, improved energy performance and lower environmental intensity per unit of output-thereby supporting compliance with evolving sustainability standards while protecting margins.

In addition, Afarak applies circular economy approaches, including the processing and utilisation of by-products such as slag. These measures enhance resource efficiency, reduce waste streams and can generate incremental value from secondary materials, partially offsetting the cost burden associated with stricter environmental requirements.

OPPORTUNITIES

Four key climate-related opportunities have been identified as follows:

Figures 9-12: Climate-related opportunities

1) 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. Afarak leverages energy efficiency improvements, production optimisation and its own energy generation as strategic tools to enhance its cost structure, margin stability and competitiveness. As mentioned earlier, the installation of a photovoltaic system, LED lighting upgrades, and deployment of ISO 50001 compliant energy management software at the German EWW facility are already supporting more efficient energy use and improved visibility of opportunities for optimization.

Operational upgrades in Turkey, including the replacement of diesel and electric engines with lower-impact equipment and investments to improve mining efficiency have also enabled increased production while keeping overall energy consumption broadly stable.

2) Increased demand for products for the generation of clean energy technologies

There is increasing demand for raw materials such as chrome ore and low-carbon ferrochrome for clear energy technologies and essential applications in the energy transition, electromobility and other green technologies.

To capitalise on this demand, Afarak positions itself as a Western producer of Low Carbon Ferrochrome, differentiating its offering in markets increasingly focused on supply chain security, geopolitical diversification and sustainability credentials. As a Western-based supplier of this critical alloy, the company can serve aerospace, defence, automotive and green energy technology sectors that prioritise reliable, transparent and regulation-aligned sourcing.

In parallel, Afarak is pursuing expansion of chrome ore production in South Africa, supported by investment decisions to increase chrome ore concentrate output. By strengthening upstream capacity, the company enhances its ability to secure feedstock for ferrochrome production and to respond flexibly to rising market demand.

3) 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, resulting in lower material costs for Afarak. 

Afarak leverages efficiency improvements in production and raw material utilisation, as well as vertical integration, to stabilise and reduce material costs over the long term. Recent operational initiatives to support these efficiency improvements include the renewal of diesel and electric engines in Turkey with lower-impact equipment and investments to improve mining efficiency, enabling production increases while keeping overall energy consumption stable. Likewise, implementation of ISO 50001 compliant energy management software in Germany ensures that the business is better able to visualize plant energy flows and optimise production processes.

4) 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, fulfils regulatory requirements and creates trust among customers and stakeholders who are paying more attention to sustainability.

A central lever is the utilisation of FeCr slag generated during ferrochrome production. Rather than treating slag solely as waste, Afarak processes it for use as a secondary material, for example in road construction. This approach reintegrates by-products into the economic cycle, reduces disposal requirements and can generate incremental income streams. It also lowers the overall environmental footprint per tonne of ferrochrome produced by improving material efficiency.

From a governance perspective, circular economy initiatives fall under the oversight of the Health, Safety and Sustainable Development Committee at Board level. This ensures that resource efficiency, waste valorisation and environmental performance are strategically embedded and aligned with broader sustainability objectives.

METRICS AND TARGETS

We monitor and report on relevant cross-industry metrics such as our Scope 1, 2 and 3 greenhouse gas (GHG) emissions, calculated in line with the GHG protocol. We also track and disclose other key sustainability metrics relating to water (see Concepts related to water and marine resources section). The metrics used to track our identified climate-related risks and opportunities are outlined above. 

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 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.

Afarak does not currently have an internal carbon pricing system. Instead, the Group focuses on direct measures to reduce emissions, such as optimising processes and promoting renewable energies as well as the sustainable optimisation of business activities. However, Afarak will regularly evaluate whether such a measure can contribute to supporting its sustainability goals in the future.

As of 2025, the executive remuneration system does not contain any specific sustainability targets or ESG-related remuneration components.

Scope 1, 2 and 3 GHG emissions, of Afarak Group is disclosed in the following chapter.

CORPORATE CARBON FOOTPRINT FACTSHEET FOR AFARAK GROUP SE

The Corporate Carbon Footprint considered in this factsheet covering the Afarak sites of:

• Elektrowerk Weisweiler GmbH (EWW), Germany

• Vlakpoort Mine, South Africa

• Afarak SA concentrator (Vlakpoort)

• Mecklenburg Mine, South Africa

• Türk Maadin Sirketi A.S. (TMS), Turkey

This fact sheet describes the Global Warming Potential (Corporate Carbon Footprint) of the annual production of chrome ore, chrome concentrate and Low Carbon Ferrochrome (LC FeCr).

Figure 2:     Corporate Carbon Footprint for Afarak Group SE in 2025 

In the following table the Scope categories are described which are in- and excluded.

CONCEPTS RELATED TO WATER AND MARINE RESOURCES

Afarak has been implementing site-specific measures to 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 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.

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.

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.

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.

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:

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.

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.

2025 Market overview

 The expected recovery in the stainless steel market did not materialize in the second half of 2025. Continued pricing pressure and a weaker US dollar negatively impacted margins in the LC ferrochrome business despite ongoing cost-optimization measures.

Chrome ore prices decreased in the second half of the year, resulting also in lower margins due to subdued stainless steel demand. Minor issues in the Vlakport wash plant and solar plant commissioning caused some delays, so that we expect the plant to be at full capacity utilization within Q1/2026 now.

Market sentiment for Q1/2026

Our customer base is suffering

For the fourth year in a row the EU steel industry has contracted in 2025, after a brief increase in Q1. The share of low priced imported steel in the EU is at a record high of 27%. In the case of stainless steel the share is 25%.

The output of steel in the EU has dropped by 3.4% year on year. Modest recovery is projected for 2026, but high uncertainty is expected, given:

Global overcapacity of 680 M mt of steel worldwide. Europe is disadvantaged by high energy cost and disrupted flows created by the 50% USA tariff implemented mid-2025.

Our margins are still under pressure

While the market price for Lc Fe-Cr started to show more sustained improvements in the last quarter 2025, the falling USD exchange rate has wiped out most of the positive effect. Low Carbon Ferrochrome continues to be a USD commodity.

CBAM  and new EU safeguard measures have started to show some positive effects early 2026, but the cost of energy and the rise of the carbon compliance cost is going to continue weighing heavily on European producers.

GROUP OPERATIONAL REVIEW

Operationally, 2025 presented higher sales and lower production for the Group.

Sales

The Group sales of processed material increased by 30.6% and stood at 28,407 (2024: 21,759) tonnes. 

Group mining

Group mining activity decreased by 31.3% to 251,257 (2024: 365,929) tonnes during the year under review. 

Annual mining levels in the Speciality Alloys segment increased by 19.8% to 77,806 (2024: 64,945) tonnes. Production within the FerroAlloys segment decreased significantly as the output decreased in South African mines to 173,451 (2024:300,985 tonnes. This is mainly due to the disposal of the Zeerust mine mid-year.

Group processing

Group processing for 2025 increased by 20.3% to 27,626 (2024: 22,963) tonnes on account of higher demand. 

Human resources

At the end of the year 2025, Afarak had 626 (602) employees. The average number of employees during the year 2025 was 623 (594). 

GROUP FINANCIAL PERFORMANCE

2025 performance

The Group revenue was higher compared to prior year EUR 141.3 (128.6) million. Speciality Alloys Processed material sold increased by 30.6%, to 28,407 (FY/2024: 21,759) tonnes.

The mining operation decreased by 31.3%, to 251,257 (FY/2024: 365,929) tonnes.

Loss for the year totalled EUR -8.9 (FY/2024:-7.2) million and EBITDA during the year decreased to EUR -0.2 (FY/2024: 2.6) million. EBIT stood at EUR -2.6 (FY/2024: -0.1) million. 

Balance Sheet, Cash Flow and Financing

The Group's total assets on 31 December 2025 stood at EUR 148.1 (2024:161.6) million and net assets totalled EUR 95.8 (2024:112.1) million. During the second half, the translation differences on conversion of foreign denominated subsidiaries was adjusted by EUR 8.2 million. The Group's cash and cash equivalents, as at 31 December 2025, totalled EUR 7.3 (2024:4.0) million. Operating cash flow stood at  EUR 2.8 (2024: -6.3) million. The equity ratio stood at 64.7% (2024:69.3%). Afarak's gearing at the end of the year was -4.1% (2024: -1.2%), as the company kept low interest-bearing debt of EUR 3.4 (2024:2.6) million.

Investments, Acquisitions and Divestments

Capital expenditure for the full year of 2025 totalled EUR 11.8 (5.8) million. Capital Expenditure was mainly incurred to sustain Group operations and new investments in renewable energy.  

SEGMENTS REVIEW

Financial Development and Assets and Liabilities by Segment

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.

2025 in Review

Revenue for the year under review increased by 17.6% to EUR 130.9 (2024:111.3) million.

Nevertheless, processing levels increased by 20.3% when compared to last year.  The increase in revenue resulted in a higher EBITDA for the year to EUR 4.3 (2024:1.7) million, and EBIT of EUR 2.3 (2024:-0.4) million.

Production

Total production levels during 2025 increased by 19.9% to 105,432 (2024: 87,907) tonnes. The mining operations at TMS remained consistent, with a 11.2% increase over last year. Processing levels at the EWW plant in Germany was 20.3% higher than same period last year.

Sales

Speciality Alloys Processed material sold increased by 30.6%, to 28,407 (2024: 21,759) tonnes.

Financial performance

The increase in sales resulted in a higher EBITDA for the year to EUR 4.3 (2024:1.7) million, and EBIT of EUR 2.3 (2024:-0.4) million.

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.

2025 in Review

The Ferro Alloys segment showed a decline in both revenue  and mining due to the disposal of a South African mine halfway through the year. Consequently, the EBITDA was EUR-1.3  (2024:4.3) million.

Production

Operationally, the segment registered a decrease of 42.4% with total production falling to 173,451 (2024: 300,985) tonnes. 

Sales

The sales of mining material from the FerroAlloys segment decreased by 40.4% in 2025 to EUR 9.9 million when compared to 2024 (EUR 16.6) million. 

Financial performance

The disposal of the South African mine midyear led production to decrease by 42.4% within the FerroAlloys segment which led to a decrease in revenue  resulting in an EBITDA of EUR -1.3 (2024: 4.3) million during the reporting period. 

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 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 2025, the registered number of Afarak Group SE shares was 277,041,814 (277,041,814) and the share capital was EUR 1,000,000 (23,642,049.60). The EGM resolved on 29 January 2025 to reduce the share capital of the Company from EUR 23,642,049.60 by EUR 22,642,049.60 in order to transfer funds to the fund for invested unrestricted equity. After the decision, the share capital of the Company was EUR 1,000,000.00, and the fund for invested unrestricted equity increased correspondingly by EUR 22,642,049.60.

On 31 December 2025, the Company had 15,641,514 (16,041,514) own shares in treasury, which was equivalent to 5.65% (5.79%) of the issued shares. The total number of shares outstanding, excluding the treasury shares held by the Company on 31 December 2025, was 261,400,300 (261,000,300).

Flagging notifications

There were no flagging notifications during 2025.

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 2024, the Company's share price was EUR 0.29 on NASDAQ Helsinki and GBP 0.20 on the London Stock Exchange. At the end of the review period as at December 2025, the share price was EUR 0.26 and GBP 0.20 respectively. During the second half of 2025, the Company's share price on NASDAQ Helsinki ranged from EUR 0.28 to 0.33  per share and the market capitalisation, as at 31 December 2025, was EUR 72.03 (1 January 2025: 80.34) 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 2025: 55.41) million, as at 31 December 2025.

On 29 January 2025 - an extraordinary general meeting for Afarak Group SE was held whereby it was resolved to reduce the 

a) share capital of the Company from EUR 23,642,049.60 by EUR 22,642,049.60 to transfer funds to the fund for invested unrestricted equity.

After the measure the share capital of the Company will be EUR 1,000,000.00 and the fund for invested unrestricted equity will increase correspondingly with EUR 22,642,049.60.

The entry into force of the reduction of the share capital is subject to the completion of the creditor protection procedure set out in Chapter 14 of the Limited Liability Companies Act.

All practical measures related to the reduction of the share capital shall be decided by the Board of Directors.

b) share premium reserve as evidenced by the Company's balance sheet as of 31 December 2023 by transferring all funds recorded therein, i.e. EUR 25,223,189.79 to the Company's fund for invested unrestricted equity.

The reduction of the share premium reserve is done without remuneration and will not have an effect on the number of shares, holdings of shares nor rights attached to the shares.

The entry into force of the reduction of the share premium reserve is subject to the completion of the creditor protection procedure set out in Chapter 14 of the Limited Liability Companies Act.

All practical measures related to the reduction of the share premium reserve shall be decided by the Board of Directors.

On 31 March 2025 - changes in Afarak Group SE treasury shares took place pursuant to the share issue authorization granted by the Company's Annual General Meeting held on May 31, 2024, the Board of Directors has resolved on a directed share issue without payment. Based on the share issue 400,000 of the Company's treasury shares ("Shares") have now been transferred to CEO Guy Konsbruck. The Shares form a part of the remuneration package under the CEO agreement.

After the execution of the share issue 15,641,514 treasury shares shall remain in the possession of Afarak, representing approximately 5.65 per cent of the total shares and votes of the Company.

On 28 May 2025 - registration in the Finnish Trade register of resolution taken during Afarak SE Extraordinary General meeting on 29 January 2025 to reduce share capital by EUR 22,642,049.60. The reduced amount has been transferred to the reserve for invested unrestricted equity in accordance with the resolution. Following the registration, the Company's share capital amounts to EUR 1,000,000.

The reduction of share capital has no effect on the number of the Company's shares.

On 28 May 2025 - registration in the Finnish Trade register of resolution taken during Afarak SE Extraordinary General meeting on 29 January 2025 to reduce Company's share premium reserve by EUR 25,223,189.79.

Following the reduction, the amount of the share premium reserve recorded in Afarak's balance sheet is zero. The reduced amount has been transferred to the reserve for invested unrestricted equity.

The reduction of the share premium reserve has no effect on the number of shares in the Company.

Shareholders

On 31 December 2025, the Company had a total of 8,587 shareholders (8,436 shareholders on 31 December 2024), of which eight were nominee-registered. The registered number of shares on 31 December 2025 was 277,041,814 (2024: 277,041,814).

LARGEST SHAREHOLDERS ON 31 DECEMBER 2025

Afarak Group SE's Board members and Chief Executive Officer owned in total 2,850,000 (2024: 2,450,000) Afarak Group SE shares on 31 December 2025, including shares owned either directly, through persons closely associated with them or through controlled companies. This corresponds to 1.03% (2024: 0.9 %) of the total number of registered shares on 31 December 2025.

SHAREHOLDERS BY CATEGORY 31 DECEMBER 2025

SHAREHOLDERS BY SHAREHOLDER TYPE ON 31 DECEMBER 2025

RESOLUTIONS OF THE ANNUAL GENERAL MEETING

Afarak Group SE's Annual General Meeting was held in Helsinki on 3 June 2025.

 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 2024.

The AGM resolved that no dividend would be paid for 2024. However, the AGM authorized the Board of Directors to resolve in its discretion on the distribution of an aggregate maximum of EUR 0.005 per share as dividend from the retained earnings and/or as assets from the reserve for invested unrestricted equity. The authorization is valid until 31 December 2025. On 24 December 2025, the Board made a separate resolution to distribute a capital redemption from the reserve for invested unrestricted equity and was paid on 20th February 2026.The Company made a separate announcement of such Board resolution. The AGM also adopted the Remuneration Report 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) and Mr. Thorstein Abrahamsen (Norwegian citizen) were re-elected as Board members and Mr. Julien Duniague (Swiss citizen) was elected as a new Board member.

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 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.

THE SUSTAINABILITY REPORTING ASSURER

The AGM resolved that the Company will pay the fee to the sustainability reporting assurer against an invoice that is inspected by the Company and that according to the recommendation by the Audit Committee, Authorized Sustainability Audit Firm Tietotili Audit Oy was elected as the sustainability reporting assurer of the Company. Tietotili Audit Oy has informed the Company that the sustainability reporting assurer with the main responsibility would be authorized sustainability auditor Urpo Salo.

In line with the EU's simplification to the Corporate Sustainability Reporting Directive (CSRD), the Board of Directors have decided that no sustainability report will be proposed for the financial year 2025.

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:

All the information cross-referenced above is hereby incorporated by reference into this Board of Directors report.

KEY FIGURES

FINANCIAL INDICATORS

SHARE-RELATED KEY INDICATORS

The company follows the new dividend policy and the board intends to decide about the actual dividend allocation at a later stage. The Board of Directors resolved a capital redemption of EUR 0.005 per share on 24 December 2025. The resolution is based on the authorization granted by the Annual General Meeting held on 3 June 2025.

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

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 24 February 2026, the Board of Directors issued a profit warning regarding the decrease of EBITDA for the financial year 2025.

Flagging notification after the reporting period

On 20 January 2026- Afarak Group SE has issued a flagging notification pursuant to Chapter 9, Section 5 of the Finnish Securities Markets Act, stating that the combined ownership of Jorma Nieminen and his companies 4capes Oy and Osuusasunnot Oy in Afarak's shares has exceeded the 5 percent threshold.

According to the notification, the direct and indirect shareholding of Jorma Nieminen in Afarak has increased to 13,897,071 shares, corresponding to 5.02 percent of Afarak's total number of shares and voting rights.

ANNUAL FINANCIAL STATEMENTS

1 January-31 December 2025

CONSOLIDATED FINANCIAL STATEMENTS, IFRS

CONSOLIDATED INCOME STATEMENT

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

CONSOLIDATED STATEMENT OF FINANCIAL POSITION (CONT.)

CONSOLIDATED STATEMENT OF CASH FLOWS

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY,

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

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.

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.