Interim Results

Anglo Pacific Group PLC 31 August 2006 31 August 2006 Anglo Pacific Group PLC INTERIM RESULTS FOR THE SIX MONTHS ENDED 30TH JUNE 2006 Anglo Pacific Group (APG), the natural resources royalties company, today announces record interim results for the six months ended 30th June 2006. FINANCIAL HIGHLIGHTS: â€¢ Profit before tax up 129% to Â£12,411,000 (2005: Â£5,427,000) â€¢ Profit after tax up 167% to Â£11,109,000 (2005: Â£4,163,000) â€¢ Earnings per share for the first half up 153% to 11.06p (2005: 4.38p) â€¢ Cash and investments increase by 165% to Â£56.5 million (2005: Â£21.3 million) â€¢ Cash of Â£6.3 million and no borrowings â€¢ 2006 interim dividend to be announced in November 2006 OPERATIONAL HIGHLIGHTS: â€¢ Record profits realised on mature listed investments â€¢ Record royalty receipts â€¢ Sharp increase in value of underlying quoted interests â€¢ Steady progress on coal energy projects and uranium interests â€¢ New coal licences applied for in British Columbia and Australia â€¢ Increased exposure to gold, base metals and PGM projects Commenting on the interim results, Peter Boycott, Chairman of Anglo Pacific, said: 'I am pleased to report record results for the first six months of 2006 and steady progress in expanding the Group's resource projects in all sectors. The Board expects strong royalty receipts in the second half of 2006 with coking coal prices expected to remain buoyant. 'Recent record high prices for oil and gas confirm the Board's positive stance on uranium and coal energy products. The Board's continued commitment to the resource sector is also reflected in the Group's substantial exposure to base and precious metals. 'The Group's policy remains to pay a substantial proportion of its coal royalties as dividends to shareholders. The Board continue to make efforts to expand the Group's royalty flow profile either by acquisition or by organic development from its wide range of resource interests and coal exploration properties.' Enquiries: Brian Wides / Peter Boycott / Matthew Tack Anglo Pacific Group PLC 020 7318 6360 Stephen Scott / James Harris Scott Harris 020 7653 0030 Anglo Pacific Group PLC INTERIM RESULTS FOR THE SIX MONTHS ENDED 30TH JUNE 2006 CHAIRMAN'S REVIEW The first few months of 2006 saw a substantial rise in metal prices and mining markets as the major economies continued to expand. During this period the Group realised record profits of over Â£8.1 million on some of its mature listed mining interests, reflecting the Group's active, merchant banking strategy. May 2006 brought a set back in these markets resulting in firmer bond prices and a strengthening of the US dollar. More recently, with higher oil prices and political unrest in the Middle East, gold and other precious metal prices have again strengthened and the price of uranium has continued to rise. Despite this turbulent background, the economies of China, India and the Far East have continued to show strong growth. This has been reflected in coking coal prices still in excess of US$100 per ton and sustained demand worldwide for energy products and base metals. Consequently, during this period the Group has continued to receive strong cashflows from its coal interests in Australia, whilst successfully increasing its cash and other investments from Â£39.9 million at 31st December 2005 to Â£56.5 million as at 30th June 2006. The Group has maintained its interests in coal energy and uranium whilst still having a balanced exposure to base and precious metals. FINANCIAL REVIEW Group profits before tax for the six months ended 30th June 2006 increased to Â£12,411,000 compared to Â£5,427,000 for the same period last year. Profits after tax were Â£11,109,000 compared to Â£4,163,000 with earnings per share for the half year of 11.06p compared to 4.38p. The Group's private mining operational interests and quoted stakes in mining projects were valued at 30th June 2006 at Â£50.2 million after having realised profits of Â£8.1 million over the half year. The Group has unused capital losses of circa Â£25 million to offset against these gains. The Group continues its policy of supporting developing smaller mining companies which have good projects. The Group had cash of Â£6.3 million at 30th June 2006, with no borrowings, compared to Â£2.9 million at the same time last year. On 4th August 2006 a final dividend of 3.25p per share for the year ended 31st December 2005 was paid. Shareholders owning over 10% of our issued share capital opted to take further shares in the Company under the scrip dividend alternative. The Directors increased their investment in the Group by opting to take shares rather than cash on some of their shareholdings. As in previous years the Group will announce its interim dividend for the year ending 31st December 2006 in November 2006, when a scrip dividend alternative will again be available to shareholders. OPERATIONAL REVIEW Coal Energy Interests Coal royalties from the two mines in Queensland, Australia, were Â£5.05 million, (2005 Â£4.66 million). The independent valuation of the coal royalty in June 2006, based on a net present value of the pre-tax cashflow discounted at a rate of 7%, was A$131.0 million (Â£52.7 million) compared to A$133.4 million (Â£56.7 million) at 31st December 2005. At present the net royalty income is taxed in Australia at 30%. The coal royalties for the first six months of 2006 were less than internal forecasts due to congestion at ports and unanticipated delays in opening a new longwall at one of the mines. These shortfalls should be recovered in the second half of the year. The Group's joint venture with West Hawk Development Corporation at Groundhog in British Columbia, Canada, is making progress whilst elsewhere at Groundhog additional licences have been applied for. The Group remains a substantial shareholder in West Hawk with its interests in clean coal gasification technology and other coal properties in western Canada. The Group's assessment of how best to commercialise its Peace River interests in British Columbia is continuing. In Australia, field work on certain coal licences produced uneconomic results. These licences have now been dropped. However, further field work continues in an adjacent area where at reduced cost new licences have been applied for and taken up. The Group still remains a supportive shareholder in Cambrian where its shareholding is now less than 5%. Other Metal Interests After realising profits on some of its uranium interests, the Group still retains, inter alia, major holdings in Energy Metals Corporation, Forum Uranium and Omegacorp. The Group remains positive on the outlook for gold and platinum group metals and retains a stake of over 16% in Platinum Australia which is now adequately funded up to mine development on its Smokey Hills project. The Group remains committed to a number of gold projects in Australia, Canada and Nevada, USA, including Goldminco, Hidefield Gold, Columbus Gold and Alto Ventures. The Group has increased to over 10% its holding in Northern Australian Diamonds where recently a 10 carat diamond worth US$61,500 was produced at the Merlin project in the Northern Territories in Australia. Other mining interests include several copper, zinc and iron ore projects. STRATEGY The Group's policy remains to pay a substantial proportion of its coal royalties as dividends to shareholders. The Board continue to make efforts to expand the Group's royalty flow profile either by acquisition or by organic development using its wide range of strategic resource interests and coal exploration properties. Numerous opportunities exist to finance and assist the development of viable maturing projects within the mining sector. MANAGEMENT On 5th July 2006, Mr Matthew Tack was appointed Finance Director of the Company. Mr Tack is a Chartered Accountant (Australia) who joined the Company as Group Financial Controller in July 2004 and has been Company Secretary since September 2004. He is a welcome and useful addition to the Board. Following this appointment, Mr Brian Wides becomes Chief Executive and Mr Peter Boycott remains executive Chairman. OUTLOOK The Group remains confident that the second half of 2006 will produce strong royalty receipts and that coking coal prices should remain at current levels over the period. P.M.Boycott Chairman 31st August 2006 CONSOLIDATED INCOME STATEMENT FOR THE SIX MONTHS ENDED 30th JUNE 2006 Six months Six months Year ended ended 30th ended 30th 31st December June 2006 June 2005 2005 Â£'000 Â£'000 Â£'000 Royalty income 5,047 4,655 11,479 Other operating income 145 107 91 Profit on sale of mining and 8,107 1,224 6,626 exploration interests Finance income 93 71 188 --------- --------- --------- 13,392 6,057 18,384 --------- --------- --------- Net operating expenses (981) (630) (1,440) --------- --------- --------- Profit before tax 12,411 5,427 16,944 Tax (1,302) (1,264) (3,078) --------- --------- --------- Profit attributable to equity holders 11,109 4,163 13,866 ========= ========= ========= Basic earnings per share 11.06p 4.38p 14.31p --------- --------- --------- Fully diluted earnings per share 10.98p 4.35p 14.21p --------- --------- --------- CONSOLIDATED BALANCE SHEET AS AT 30th JUNE 2006 30th June 2006 30th June 2005 31st December 2005 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 --------- --------- --------- --------- --------- --------- Non-current assets Property plant and equipment 842 849 847 Coal royalties (at valuation) 52,661 57,693 56,715 Mining and exploration interests 50,240 18,432 34,135 --------- --------- --------- 103,743 76,974 91,697 Current assets Trade and other receivables 3,146 2,870 2,548 Cash at bank 6,266 2,877 5,797 --------- --------- --------- 9,412 5,747 8,345 --------- --------- --------- Total assets 113,155 82,721 100,042 ========= ========= ========= Current liabilities Taxation 538 572 1,386 Trade and other payables 588 572 595 Dividends payable 3,264 1,901 - --------- --------- --------- 4,390 3,045 1,981 Non-current liabilities Deferred tax 13,568 13,659 13,713 --------- --------- --------- 13,568 13,659 13,713 --------- --------- --------- Total liabilities 17,958 16,704 15,694 --------- --------- --------- Capital and reserves attributable to shareholders Share capital 2,008 1,901 2,005 Share premium 11,575 5,222 11,338 Coal royalty revaluation reserve 38,343 43,140 42,017 Investment revaluation reserve 14,469 2,297 5,704 Share based payment reserve 18 6 12 Foreign currency translation reserve 200 160 279 Special reserve 632 632 632 Retained Earnings 27,952 12,659 22,361 --------- --------- --------- 95,197 66,017 84,348 --------- --------- --------- --------- --------- --------- Total equity and liabilities 113,155 82,721 100,042 ========= ========= ========= CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD TO 30th JUNE 2006 Share Share Coal Investment Share based Foreign Special Retained Total capital premium royalty revaluation payment currency reserve earnings equity revaluation reserve reserve translation reserve reserve Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 -------------------------------------------------------------------------------------------------------------------- Balance at 1st January 2005 1,891 4,741 42,964 7,850 2 119 632 11,910 70,109 Gain on Royalties revaluation 45 45 Deferred tax on revaluation 131 131 (Loss) on Investments revaluation (4,102) (4,102) Realised gain (1,451) (1,451) Foreign currency translation 41 41 -------------------------------------------------------------------------------------------------- Net income recognised direct into equity 1,891 4,741 43,140 2,297 2 160 632 11,910 64,773 Dividends paid (3,414) (3,414) Profit for the period 4,163 4,163 -------------------------------------------------------------------------------------------------- Total recognised income and expenses 1,891 4,741 43,140 2,297 2 160 632 12,659 65,522 Scrip Dividend 10 481 491 Share options charge 4 4 -------------------------------------------------------------------------------------------------- Balance at 30th June 2005 1,901 5,222 43,140 2,297 6 160 632 12,659 66,017 -------------------------------------------------------------------------------------------------- (Loss) on Royalties revaluation (978) (978) Deferred tax on revaluation (145) (145) Gain on Investments 5,135 5,135 revaluation Realised gain (1,728) (1,728) Foreign currency translation 119 119 -------------------------------------------------------------------------------------------------- Net income recognised direct into equity 1,901 5,222 42,017 5,704 6 279 632 12,659 68,420 Profit for the period 9,702 9,702 -------------------------------------------------------------------------------------------------- Total recognised income and expenses 1,901 5,222 42,017 5,704 6 279 632 22,361 78,122 Issue of share capital 94 5,640 5,734 Scrip Dividend 10 476 486 Share options charge 6 6 -------------------------------------------------------------------------------------------------- Balance at 31st December 2005 2,005 11,338 42,017 5,704 12 279 632 22,361 84,348 -------------------------------------------------------------------------------------------------- (Loss) on Royalties (4,054) (4,054) revaluation Deferred tax on revaluation 380 380 Gain on Investments revaluation 10,371 10,371 Realised gain (1,606) (1,606) Foreign currency translation (79) (79) -------------------------------------------------------------------------------------------------- Net income recognised direct into equity 2,005 11,338 38,343 14,469 12 200 632 22,361 89,360 Dividend paid (5,518) (5,518) Profit for the period 11,109 11,109 -------------------------------------------------------------------------------------------------- Total recognised income and expenses 2,005 11,338 38,343 14,469 12 200 632 27,952 94,951 Scrip Dividend 3 237 240 Share options charge 6 6 -------------------------------------------------------------------------------------------------- Balance at 30th June 2006 2,008 11,575 38,343 14,469 18 200 632 27,952 95,197 ================================================================================================== CONSOLIDATED CASH FLOW STATEMENT FOR THE SIX MONTHS ENDED 30th JUNE 2006 Six months Six months Year ended ended 30th ended 30th 31st December June 2006 June 2005 2005 Â£'000 Â£'000 Â£'000 Cashflows from operating activities Profit before taxation 12,411 5,427 16,944 Adjustments for: Interest received (93) (71) (188) Foreign exchange loss 84 41 160 Depreciation of property, plant and equipment 5 5 9 (Gain) on disposal of mining and exploration interests (8,107) (1,224) (6,626) Share based payments 6 4 10 --------- --------- --------- 4,306 4,182 10,309 (Increase)/decrease in trade and other receivables (597) 21 (406) (Decrease)/increase in trade and other payables (6) (606) 166 --------- --------- --------- Cash generated from operations 3,703 3,597 10,069 Income taxes paid (1,798) (644) (1,738) --------- --------- --------- Net cash from operating activities 1,905 2,953 8,331 --------- --------- --------- Cash flows from investing activities Proceeds on disposal of mining and exploration interests 17,637 3,545 11,276 Purchase of mining and exploration interests (16,911) (6,122) (20,744) Interest received 93 71 188 --------- --------- --------- Net cash from/(used in) investing activities 819 (2,506) (9,280) --------- --------- --------- Cash flows from financing activities Proceeds from issue of share capital - - 5,734 Dividends paid (2,255) (1,022) (2,440) --------- --------- --------- Net cash (used in)/from financing activities (2,255) (1,022) 3,294 --------- --------- --------- Net increase/(decrease) in cash and cash equivalents 469 (575) 2,345 Cash and cash equivalents at beginning of period 5,797 3,452 3,452 --------- --------- --------- Cash and cash equivalents at end of period 6,266 2,877 5,797 ========= ========= ========= NOTES TO THE ACCOUNTS 1. Basis of preparation The interim,condensed consolidated financial statements of Anglo Pacific Group PLC have been prepared on the basis of the accounting policies set out in the Group's latest annual financial statements for the year ended 31 December 2005. These accounting policies are drawn up in accordance with International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board. The interim financial statements do not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. The financial statements have been reviewed by the Company's auditors. The comparative figures for the year ended 31 December 2005 were derived from the statutory accounts for that year which have been delivered to the Registrar of Companies. Those accounts received an unqualified audit report. 2. Non-current Assets (a) Coal Royalty Investments The Company's coal royalty investments comprise the Kestrel and Crinum coal royalties in Queensland, Australia. The Company commissioned a valuation of the coal royalties in June 2006, based on a net present value of the pre-tax cashflow discounted at a rate of 7%, which produced a valuation of A$131 million (Â£52.7 million). At present the net royalty income is taxed in Australia at a rate of 30%. Were the coal royalties to be realised at the revalued amount there are Â£8.9 million (A$22.0 million) of capital losses potentially available to offset against taxable gains. These losses have been included in the deferred tax computation. In addition, the Company has UK capital tax losses in the region of Â£25 million available for offset against capital gains. (b) Mining and Exploration Interests The investments in securities included above represent investments in listed and unlisted equity securities which present the Group with opportunity for returns through dividends and gains on sale. These investments are acquired as part of the Group strategy to acquire new royalties and are not held for the purpose of trading. Gains may be realised where it is deemed appropriate by the Investment Committee. The fair values of these securities are based on quoted market prices for listed securities and cost for unlisted securities. During the period to 30 June 2006 a number of opportunities arose which allowed the Group to increase its investment holdings, particularly in listed securities. The market value of the quoted Mining and Exploration Interests at 30th June 2006 was Â£49,229,000. The directors' valuation of the unquoted Mining and Exploration Interests was Â£1,011,000. 3. Earnings per ordinary share The earnings per ordinary share is calculated on the Company's profit after tax of Â£11,109,000 and 100,416,200 shares. Fully diluted earnings per shares is calculated on a profit after tax of Â£11,109,000 and 101,157,378 shares. 4. This statement will be sent to shareholders and will be available at the Company's registered office at 1st Floor Sentinel House, Brent Street, London NW4 2EP. 5. Segment Information Six months ended 30th June 2006 Royalty Mining Unallocated Total Interests Â£'000 Â£'000 Â£'000 Â£'000 Revenue 5,047 - 145 5,192 --------- --------- --------- --------- Operating profit 5,047 - (836) 4,211 Profit on sale of mining and exploration - 8,107 - 8,107 interests Interest received - - 93 93 Tax - - (1,302) (1,302) --------- --------- --------- --------- Segment Result 5,047 8,107 (2,045) 11,109 --------- --------- --------- --------- Segment Assets 52,661 50,240 10,254 113,155 Segment Liabilities (13,568) - (4,390) (17,958) --------- --------- --------- --------- Net Segment Assets 39,093 50,240 5,864 95,197 ========= ========= ========= ========= Six months ended 30th June 2005 Royalty Mining Unallocated Total Interests Â£'000 Â£'000 Â£'000 Â£'000 Revenue 4,655 - 107 4,762 --------- --------- --------- --------- Operating profit 4,655 - (523) 4,132 Profit on sale of mining and exploration - 1,224 - 1,224 interests Interest received - - 71 71 Tax - - (1,264) (1,264) --------- --------- --------- --------- Segment Result 4,655 1,224 (1,716) 4,163 --------- --------- --------- --------- Segment Assets 57,693 18,432 6,596 82,721 Segment Liabilities (13,659) - (3,045) (16,704) --------- --------- --------- --------- Net Segment Assets 44,034 18,432 3,551 66,017 ========= ========= ========= ========= Year ended 31st December 2005 Royalty Mining Unallocated Total Interests Â£'000 Â£'000 Â£'000 Â£'000 Revenue 11,479 - 91 11,570 --------- --------- --------- --------- Operating profit 11,479 - (1,349) 10,130 Profit on sale of mining and exploration interests - 6,626 - 6,626 Interest received - - 188 188 Tax - - (3,078) (3,078) --------- --------- --------- --------- Segment Result 11,479 6,626 (4,239) 13,866 --------- --------- --------- --------- Segment Assets 56,715 34,135 9,192 100,042 Segment Liabilities (13,713) - (1,981) (15,694) --------- --------- --------- --------- Net Segment Assets 43,002 34,135 7,211 84,348 ========= ========= ========= ========= INDEPENDENT REVIEW REPORT TO ANGLO PACIFIC GROUP PLC Introduction We have been instructed by the company to review the financial information for the six months ended 30th June 2006 which comprises consolidated income statement, consolidated balance sheet, consolidated statement of changes in equity and consolidated cashflow. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. This report, including the conclusion, has been prepared for and only for the company for the purpose of the Listing Rules of the Financial Services Authority and for no other purpose. We do not, therefore, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. Directors' responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved by the directors. The directors are responsible for preparing the interim report in accordance with the Listing Rules of the Financial Services Authority. As disclosed in note 1 to the accounts, the next annual financial statements of the group will be prepared in accordance with those IFRSs adopted for use by the European Union. This interim report has been prepared in accordance with International Accounting Standards and the requirements of International Financial Reporting Standards relevant to interim reports. The accounting policies are consistent with those that the directors intend to use in the next annual financial statements. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A review consists principally of making enquiries of group management and applying analytical procedures to the financial information and underlying financial data and based thereon, assessing whether the disclosed accounting policies have been applied. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit and therefore provides a lower level of assurance. Accordingly, we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 30th June 2006. Baker Tilly Chartered Accountants Breckenridge House 274 Sauchiehall Street Glasgow G2 3EH 31st August 2006 This information is provided by RNS The company news service from the London Stock Exchange

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