Interim Results

Anglo Pacific Group PLC 08 September 2005 8 September 2005 Anglo Pacific Group PLC Interim Results for the six months ended 30th June 2005 Anglo Pacific Group (APG), the natural resources royalties company, today announces record interim results for the six months ended 30th June 2005. Financial Highlights: â€¢ Profit before tax up 101% to Â£5,431,000 (2004: Â£2,700,000) â€¢ Profit after tax up 101% to Â£4,167,000 (2004: Â£2,076,000) â€¢ Earnings per share for the first half up 86% to 4.38p (2004: 2.36p) â€¢ Cash of Â£2.9 million and no borrowings â€¢ Interim dividend for the year ending 31st December 2005 to be announced in November 2005 Operational Highlights â€¢ Record coal royalty receipts and further profits realised on some quoted investments â€¢ Increased exposure to coal energy projects and uranium interests â€¢ Private Australian coal exploration interests extended on three fronts â€¢ Further licences applied for in British Columbia â€¢ Exposure maintained to gold, base metals and PGM projects â€¢ International Financial Reporting Standards (IFRS) implemented from 1st January 2005 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 2005 and progress in increasing Anglo Pacific's exposure to the coal and energy sectors. The Board expects record royalty receipts for 2005 as coking coal prices look set to remain buoyant. 'With higher oil prices due to worldwide shortages, the outlook for uranium and coal energy products remains positive. Due to inflation fears and turbulence in currency markets we retain our commitment to gold and precious metals. 'The Board will continue its strategy of paying a substantial proportion of its coal royalty cashflows as dividends to shareholders, whilst endeavouring to make full use of its capital tax losses.' Enquiries: Brian Wides/Peter Boycott/Matthew Tack Anglo Pacific Group PLC 020 7409 1111 Stephen Scott / James Harris Scott Harris 020 7618 6433 Anglo Pacific Group PLC Interim Report for the six months ended 30th June 2005 Chairman's Review In the first six months of 2005 the temporary setback in mining markets reflected an anticipated slow down in consumption of raw materials and energy products by China as well as profit taking after the sharp rise in share prices at the end of 2004. However, economic output in China, India and the Far East has remained strong resulting in a continuing demand for industrial raw materials. Furthermore, the prices of oil, coal and other energy products such as uranium have recently reached record highs and look set to continue to rise as supply problems persist. The price of gold has recently started to move higher reflecting worries about not only the US Dollar but also the Euro and Sterling. In addition, industrial relations and production problems in South Africa have contributed to the strength of the gold price. It is against this background that in the period under review the Company received record coal royalty receipts and realised further profits on some of its quoted investments. During this period the Company has increased its exposure to coal energy projects with further expansion of its private coal interests in Australia and British Columbia. The Company has added to its uranium interests in Australia and Canada and more recently in the U.S.A.. The Company maintains its exposure to gold, base metals and PGM projects. Financial Review Following record coal royalty receipts and further realised capital gains I am pleased to report that Group profits before tax for the six months ended 30th June 2005 increased to Â£5,431,000 compared to Â£2,700,000 for the same period last year. Profits after tax were Â£4,167,000 compared to Â£2,076,000 with earnings per share for the half year of 4.38p compared to 2.36p. Our private mining operational interests and quoted stakes in mining projects were valued at 30th June 2005 at circa Â£18.5 million after having realised profits of Â£1.22 million over the period. Cash at 30th June 2005 was Â£2.9 million with no borrowings. On 5th August 2005 a final dividend of 2.0p per share for the year ended 31st December 2004 was paid. Shareholders owning over 25% of our issued share capital opted to take further shares in the Company under the scrip dividend alternative. The Directors also opted to take shares rather than cash in respect of substantially all their shareholdings thus increasing their investment in the Company. The Company will announce its interim dividend for the year ending 31st December 2005 in November 2005, when a scrip dividend alternative will again be available to shareholders. International Financial Reporting Standards (IFRS) The European Commission published an EU Regulation in 2002 that requires the adoption of International Financial Reporting Standards (IFRSs) in member states for the preparation of the consolidated financial statements of listed entities. The Regulation applies to financial periods, beginning on or after 1st January 2005 for entities whose securities are traded on a regulated market. As of 1st January 2005 the Company implemented IFRS for the preparation of its financial statements. The relevant standards have required an adjustment for deferred tax on revaluation of the coal royalty. Quoted mining investments are now required to be shown at market value with the difference from cost being credited to investment revaluation reserve. A reconciliation between the accounts prepared under UK GAAP and IFRS is shown on pages 11 to 17. Operational Review Coal Energy Interests Coal royalties from the two mines in Queensland, Australia, increased to Â£4.66 million, (2004 Â£2.39 million). The independent valuation of the coal royalty in June 2005, based on a net present value of the pre-tax cashflow discounted at a rate of 7%, was Â£57.7 million (A$135.7 million) compared to Â£57.6 million (A$141.3 million) at 31st December 2004. This increase has been incorporated in the interim figures taking into account the new IFRS rules, mentioned above. At present the net royalty income is taxed in Australia at 30%. The royalties have increased in the first six months due to production moving from Crown Land to the Company's Private Ground and due to higher coking coal prices mainly in the second quarter when the higher prices became effective. However these royalties have been lower than expected due to continuing shipping delays at Australian ports, particularly at Gladstone in Queensland. These are expected to unwind in the second half. The Company has maintained its substantial stakes in both Cambrian Mining and Western Canadian Coal. The Board remains committed to the coal and coal energy sectors and sees the continuing expansion of the Chinese and Far East economies as an opportunity to increase its holdings in these two companies, both of which stand to benefit. The Company has staked further ground in British Columbia at Groundhog and Trefi and detailed evaluation of these projects continues. The Board is still progressing its listing on the TSE despite delays due to changes in their personnel and regulatory hurdles. In Australia the Company continues to expand its activities with Core Resources and is now jointly staking and actively exploring for coking coal in several areas of the Northern Territories, Queensland and New South Wales. The Company's private coal interests in British Columbia and Australia are part of a strategy to develop future royalty cashflows from such projects as and when they evolve. Other Mining Interests The Company holds a 19% interest in Platinum Australia where considerable progress has been achieved on various platinum projects in South Africa. Platinum Australia is seeking an AIM listing in the near future for additional access to capital for its projects due to interest from UK institutions. The Company recently announced an increase in its holding in Hidefield Gold to 18.3%. Hidefield has a number of strategic stakes in gold and diamond projects in North and South America. Substantial stakes are still held by the Company in Laramide Resources and Aquiline Resources which represent further exposure to uranium and gold. The Company has made a number of investments in the uranium sector in the last six months. In particular it has a substantial interest in Quincy Energy Corp which has numerous uranium projects in North America. Other mining interests encompass gold and base metals' as well as PGM projects. Outlook The Board remains confident that the Company will receive record royalties for 2005 from its interests in the Kestrel and Crinum mines. Coking coal prices look set to remain buoyant for the foreseeable future and, with higher oil prices due to worldwide shortages, the outlook for uranium and coal energy products remains positive. Due to inflation fears and turbulence in currency markets we retain our commitment to gold and precious metals. The Board will continue its strategy of paying a substantial proportion of the coal royalty cashflows as dividends to shareholders, whilst endeavouring to make full use of its capital tax losses. Shareholders were informed that Mr Henry Michaelis resigned for health reasons on 20th June 2005. The Directors wish to thank Mr Michaelis for his hard work and substantial contribution to the development of the Company since he was appointed in May 1997. The Board wishes him well in his retirement. The Company intends to appoint a new non-executive director later in the year. P.M.Boycott Chairman 8th September 2005 CONSOLIDATED INCOME STATEMENT FOR THE SIX MONTHS ENDED 30th JUNE 2005 Restated Restated Year ended Six months Six months 31st ended 30th ended 30th December June 2005 June 2004 2004 Â£'000 Â£'000 Â£'000 Royalty income 4,655 2,391 5,313 Other operating income 107 65 122 4,762 2,456 5,435 Net operating expenses (626) (506) (1,316) Operating profit 4,136 1,950 4,119 Profit on sale of mining and exploration 1,224 718 3,507 interests Finance income 71 32 86 Profit before tax 5,431 2,700 7,712 Tax (1,264) (624) (1,310) Profit attributable to equity holders 4,167 2,076 6,402 Basic earnings per share 4.38p 2.36p 7.11p Fully diluted earnings per share 4.35p 2.33p 7.06p Dividend per share 1.60p 3.60p Dividend (Â£'000) 1,513 3,414 CONSOLIDATED BALANCE SHEET AS AT 30th JUNE 2005 Restated Restated 30th June 2005 30th June 2004 31st December 2004 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Non-current assets Property plant and equipment 849 847 852 Coal royalties (at valuation) 57,693 47,084 57,648 Mining and exploration interests 18,432 6,993 20,186 76,974 54,924 78,686 Current assets Trade and other receivables 2,870 1,629 2,891 Cash at bank 2,877 1,559 3,452 5,747 3,188 6,343 Total assets 82,721 58,112 85,029 Current liabilities Taxation 572 189 401 Trade and other payables 572 227 1,178 Dividends payable 1,901 1,146 1,513 3,045 1,562 3,092 Non-current liabilities Deferred tax 13,659 10,549 13,341 13,659 10,549 13,341 Total liabilities 16,704 12,111 16,433 Capital and reserves attributable to shareholders Share capital 1,901 1,764 1,891 Share premium 5,222 594 4,741 Revaluation reserve 43,140 35,269 42,964 Investment revaluation reserve 2,297 71 7,850 Foreign currency translation reserve 160 85 119 Special reserve 632 632 632 Retained Earnings 12,665 7,586 10,399 66,017 46,001 68,596 Total equity and liabilities 82,721 58,112 85,029 CONSOLIDATED STATEMENT OF CHANGES OF EQUITY Share Share Revaluation Investment Foreign Special Retained Total capital premium reserve revaluation currency reserve earnings equity reserve translation reserve Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Balance at 1 January 2004 1,749 420 33,647 3,393 103 632 6,656 46,600 Gain / (Loss) on Royalties revaluation 1,622 1,622 Gain / (Loss) on Investments revaluation (3,322 ) (3,322 ) Foreign currency translation (18 ) (18 ) Net income recognised 1,749 420 35,269 71 85 632 6,656 44,882 direct into equity Profit for the period 2,076 2,076 Total recognised income 1,749 420 35,269 71 85 632 8,732 46,958 and expenses Issue of share capital 0 Scrip Dividend 5 94 99 Cash Dividend (1,146 ) (1,146 ) Equity share options 10 80 90 issued Balance at 30 June 2004 1,764 594 35,269 71 85 632 7,586 46,001 Gain / (Loss) on 7,695 7,695 Royalties revaluation Gain / (Loss) on 7,779 7,779 Investments revaluation Foreign currency 34 34 translation Net income recognised 1,764 594 42,964 7,850 119 632 7,586 61,509 direct into equity Profit for the period 4,326 4,326 Total recognised income 1,764 594 42,964 7,850 119 632 11,912 65,835 and expenses Issue of share capital 88 3,402 3,490 Scrip Dividend 19 585 604 Cash Dividend (1,513 ) (1,513 ) Equity share options 20 160 180 issued Balance at 31 December 1,891 4,741 42,964 7,850 119 632 10,399 68,596 2004 Gain / (Loss) on 176 176 Royalties revaluation Gain / (Loss) on (5,553 ) (5,553 ) Investments revaluation Foreign currency 41 41 translation Net income recognised 1,891 4,741 43,140 2,297 160 632 10,399 63,260 direct into equity Profit for the period 4,167 4,167 Total recognised income 1,891 4,741 43,140 2,297 160 632 14,566 67,427 and expenses Issue of share capital 0 Scrip Dividend 10 481 491 Cash Dividend (1,901 ) (1,901 ) Equity share options 0 issued Balance at 30 June 2005 1,901 5,222 43,140 2,297 160 632 12,665 66,017 CONSOLIDATED CASH FLOW STATEMENT FOR THE SIX MONTHS ENDED 30th JUNE 2005 Restated Restated Year ended Six months Six months 31st ended 30th ended 30th December June 2005 June 2004 2004 Â£'000 Â£'000 Â£'000 Cashflows from operating activities Profit before taxation 5,431 2,700 7,712 Adjustments for: Interest received (71) (32) (86) Foreign exchange gain / (loss) 41 (18) 16 Depreciation of property, plant and equipment 5 4 8 (Gain) on disposal of property, plant and (1,224) (718) (3,507) equipment 4,182 1,936 4,143 Decrease / (Increase) in trade and other 21 (577) (1,839) receivables (Decrease) / Increase in trade and other payables (606) 113 1,063 Cash generated from operations 3,597 1,472 3,367 Income taxes paid (644) (477) (1,027) Net cash from operating activities 2,953 995 2,340 Cash flows from Investing activities Proceeds on disposal of property, plant and 3,545 2,648 8,647 equipment Purchase of property, plant and equipment (6,122) (2,810) (11,444) Interest received 71 32 86 Net cash used in investing activities (2,506) (130) (2,711) Cash flows from Financing activities Proceeds from issue of share capital - 189 3,760 Dividends paid (1,022) (1,137) (1,579) Net cash used in financing activities (1,022) (948) 2,181 Net increase in cash and cash equivalents (575) (83) 1,810 Cash and cash equivalents at beginning of period 3,452 1,642 1,642 Cash and cash equivalents at end of period 2,877 1,559 3,452 Explanation of material adjustments to the cash flow statement Income taxes paid in the relevant period are now classified as operating cash flows under IFRS, but were included as a separate category of tax cash flows under UK GAAP. This was Â£644,000 for the six months to 30th June 2005, Â£477,000 for the six months to 30th June 2004, and Â£1,027,000 for the year to 31st December 2004. Under IFRS credit cash balances held by stockbrokers are treated as cash. Under UK GAAP, these were treated as accounts receivable. This was Â£23,000 at 30th June 2005, Â£72,000 at 30th June 2004 and Â£311,000 at 31st December 2004. There are no other material differences in the cash flow statements presented under IFRS and previously presented under UK GAAP. NOTES TO THE ACCOUNTS 1. Basis of preparation These condensed consolidated financial statements of Anglo Pacific Group PLC have been prepared in accordance with International Accounting Standards (IAS) 34, Interim Financial Reporting, and are covered by IFRS 1, First-time Adoption of IFRS, because they are part of the period covered by the Group's first IFRS financial statements for the year ending 31st December 2005. The policies set out below have been consistently applied to all the periods presented. Consolidated financial statements of the Group until 31st December 2004 had been prepared in accordance with UK Generally Accepted Accounting Principles (UK GAAP). UK GAAP differs in certain respects with IFRS. When preparing the consolidated interim financial statements for 2005 management has amended certain recognition and measurement bases applied in the UK GAAP financial statements to comply with IFRS. The comparative figures in respect of the interim period ending 30th June 2004 and the year end figures ended 31st December 2004 have been restated to reflect these adjustments. Reconciliations and descriptions of the effect of the transition from UK GAAP to IFRS on the group's equity and its net income are given in the notes to the statements on pages 11 to 17. Comparative figures for the year ended 31st December 2004 have been extracted from the Group's 2004 statutory accounts. The financial statements have been reviewed by the Company's auditors. The 2004 accounts received an unqualified auditors' report and have been delivered to the Registrar of Companies. 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 2005, based on a net present value of the pre-tax cashflow discounted at a rate of 7%, which produced a valuation of Â£57.7 million (A$135.7 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£13.2 million (A$31.0 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 market value of the quoted Mining and Exploration Interests at 30th June 2005 was Â£17,448,000. The directors' valuation of the unquoted Mining and Exploration Interests was Â£984,000. 3. Earnings per ordinary share The earnings per ordinary share is calculated on the Company's profit after tax of Â£4,167,000 and 95,073,076 shares. Fully diluted earnings per shares is calculated on a profit after tax of Â£4,167,000 and 95,778,889 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 2005 Royalty Mining Unallocated Total Interests Â£'000 Â£'000 Â£'000 Â£'000 Revenue 4,655 - 107 4,762 Operating profit 4,655 - (519) 4,136 Profit on sale of mining and exploration interests - 1,224 - 1,224 Interest received - - 71 71 Tax - - (1,264) (1,264) Segment Result 4,655 1,224 (1,712) 4,167 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 Six months ended 30th June 2004 Royalty Mining Unallocated Total Interests Â£'000 Â£'000 Â£'000 Â£'000 Revenue 2,391 - 65 2,456 Operating profit 2,391 - (441) 1,950 Profit on sale of mining and exploration interests - 718 - 718 Interest received - - 32 32 Tax - - (624) (624) Segment Result 2,391 718 (1,033) 2,076 Segment Assets 47,084 6,993 4,035 58,112 Segment Liabilities (10,549) - (1,562) (12,111) Net Segment Assets 36,535 6,993 2,473 46,001 Year ended 31st December 2004 Royalty Mining Unallocated Total Interests Â£'000 Â£'000 Â£'000 Â£'000 Revenue 5,313 10 112 5,435 Operating profit 5,313 10 (1,204) 4,119 Profit on sale of mining and exploration interests - 3,507 - 3,507 Interest received - - 86 86 Tax - - (1,310) (1,310) Segment Result 5,313 3,517 (2,428) 6,402 Segment Assets 57,648 20,196 7,185 85,029 Segment Liabilities (13,341) - (3,092) (16,433) Net Segment Assets 44,307 20,196 4,093 68,596 INCOME STATEMENT RECONCILIATION FOR THE SIX MONTHS ENDED 30th JUNE 2005 Effect of Previous transition to IFRSs Note GAAP IFRSs Â£'000 Â£'000 Â£'000 Royalty income 4,655 - 4,655 Other operating income 107 - 107 4,762 - 4,762 Net operating expenses (626) - (626) Operating profit 4,136 - 4,136 Profit on sale of mining and exploration 1,224 - 1,224 interests Finance income 71 - 71 Profit before tax 5,431 - 5,431 Tax (1,264) - (1,264) Profit attributable to equity holders 4,167 - 4,167 Earnings per share 1 4.39p (0.01p) 4.38p Fully diluted earnings per share 2 4.35p - 4.35p NOTES TO THE INCOME STATEMENT RECONCILIATION FOR THE SIX MONTHS TO 30 JUNE 2005: 1. Under UK GAAP the earnings per ordinary share would have been calculated on the Company's profit after tax of Â£4,167,000 and 94,986,836 shares. Under IFRS the number of shares used in the calculation is 95,073,076, resulting in a reduction in the earnings per share. This is due to the inclusion of shares issued as scrip dividends from the beginning of the period. 2. Under UK GAAP the fully diluted earnings per share would have been calculated on a profit after tax of Â£4,167,000 and 95,692,658 shares. Under IFRS the number of shares used in the calculation is 95,778,889. This is due to the inclusion of shares issued as scrip dividends from the beginning of the period. However, this does not change the diluted earnings per share. 3. Dividends declared after the period end are not included in the period's financial statements under IFRSs. The 2004 final dividend has therefore been recognised in the period to 30 June 2005. INCOME STATEMENT RECONCILIATION FOR THE SIX MONTHS ENDED 30th JUNE 2004 Effect of Previous transition to IFRSs Note GAAP IFRSs Â£'000 Â£'000 Â£'000 Royalty income 2,391 - 2,391 Other operating income 65 - 65 2,456 - 2,456 Net operating expenses (506) - (506) Operating profit 1,950 - 1,950 Profit on sale of mining and exploration 718 - 718 interests Finance income 32 - 32 Profit before tax 2,700 - 2,700 Tax (624) - (624) Profit attributable to equity holders 2,076 - 2,076 Earnings per share 1 2.36p - 2.36p Fully diluted earnings per share 2 2.33p - 2.33p NOTES TO THE INCOME STATEMENT RECONCILIATION FOR THE SIX MONTHS TO 30 JUNE 2004: 1. Under UK GAAP the earnings per ordinary share was calculated on the Company's profit after tax of Â£2,076,000 and 88,059,638 shares. Under IFRS the number of shares used in the calculation is 88,093,902. This is due to the inclusion of shares issued as scrip dividends from the beginning of the period. However, this does not change the earnings per share. 2. Under UK GAAP the fully diluted earnings per share was calculated on a profit after tax of Â£2,076,000 and 89,227,862 shares. Under IFRS the number of shares used in the calculation is 89,262,126. This is due to the inclusion of shares issued as scrip dividends from the beginning of the period. However, this does not change the diluted earnings per share. 3. Dividends declared after the period end are not included in the period's financial statements under IFRSs. The 2003 final dividend has therefore been recognised in the period to 30 June 2004. INCOME STATEMENT RECONCILIATION FOR THE YEAR ENDED 31st DECEMBER 2004 Effect of Previous transition to IFRSs Note GAAP IFRSs Â£'000 Â£'000 Â£'000 Royalty income 5,313 - 5,313 Other operating income 122 - 122 5,435 - 5,435 Net operating expenses (1,316) - (1,316) Operating profit 4,119 - 4,119 Profit on sale of mining and exploration 3,507 - 3,507 interests Finance income 86 - 86 Profit before tax 7,712 - 7,712 Tax (1,310) - (1,310) Profit attributable to equity holders 6,402 - 6,402 Earnings per share 1 7.15p (0.04p) 7.11p Fully diluted earnings per share 2 7.10p (0.04p) 7.06p NOTES TO THE INCOME STATEMENT RECONCILIATION FOR YEAR ENDED 31st DECEMBER 2004: 1. Under UK GAAP the earnings per ordinary share was calculated on the Company's profit after tax of Â£6,402,000 and 89,575,628 shares. Under IFRS the number of shares used in the calculation is 90,020,365, resulting in a reduction in the earnings per share. This is due to the inclusion of shares issued as scrip dividends from the beginning of the period. 2. Under UK GAAP the fully diluted earnings per share was calculated on a profit after tax of Â£6,402,000 and 90,189,475 shares. Under IFRS the number of shares used in the calculation is 90,634,211, resulting in a reduction in the diluted earnings per share. This is due to the inclusion of shares issued as scrip dividends from the beginning of the period. 3. Dividends approved after the period end are not included in the period's financial statements under IFRSs. The 2004 final dividend has therefore been recognised in the period to 30 June 2005. Similarly, the 2003 final dividend has been recognised in the period to 30 June 2004. 4. The actual final dividend for the year ended 31st December 2004 was Â£1,901,462 due to the additional shares issued under the scrip dividend alternative in respect of the interim dividend for the year ended 31st December 2004, which was paid in January 2005. RECONCILIATION OF EQUITY AS AT 30th JUNE 2005 Effect of Previous transition to IFRSs Note GAAP IFRSs Â£'000 Â£'000 Â£'000 Non-current assets Property plant and equipment 849 - 849 Coal royalties (at valuation) 1 57,647 46 57,693 Mining and exploration interests 2 16,135 2,297 18,432 74,631 2,343 76,974 Current assets Trade and other receivables 3 2,979 (109) 2,870 Cash at bank and in hand 3 2,854 23 2,877 5,833 (86) 5,747 Total assets 80,464 2,257 82,721 Current liabilities Taxation 572 - 572 Trade and other payables 3 658 (86) 572 Dividends payable 1,901 - 1,901 3,131 (86) 3,045 Non-current liabilities Deferred tax 4 818 12,841 13,659 818 12,841 13,659 Total liabilities 3,949 12,755 16,704 Capital and reserves Share capital 1,901 - 1,901 Share premium 5,222 - 5,222 Revaluation reserve 5 55,935 (12,795) 43,140 Investment revaluation reserve 6 2,297 2,297 - Foreign currency translation reserve 160 - 160 Special reserve 632 - 632 Retained earnings 12,665 - 12,665 76,515 (10,498) 66,017 Total equity and liabilities 80,464 2,257 82,721 RECONCILIATION OF EQUITY AS AT 30th JUNE 2004 Effect of Previous transition to IFRSs Note GAAP IFRSs Â£'000 Â£'000 Â£'000 Non-current assets Property plant and equipment 847 - 847 Coal royalties (at valuation) 1 44,295 2,789 47,084 Mining and exploration interests 2 6,922 71 6,993 52,064 2,860 54,924 Current assets Trade and other receivables 3 1,701 (72) 1,629 Cash at bank and in hand 3 1,487 72 1,559 3,188 - 3,188 Total assets 55,252 2,860 58,112 Current liabilities Taxation 189 - 189 Trade and other payables 227 - 227 Dividends payable 1,146 - 1,146 1,562 - 1,562 Non-current liabilities Deferred tax 4 447 10,102 10,549 447 10,102 10,549 Total liabilities 2,009 10,102 12,111 Capital and reserves Share capital 1,764 - 1,764 Share premium 594 - 594 Revaluation reserve 5 42,582 (7,313) 35,269 Investment revaluation reserve 6 71 71 - Foreign currency translation reserve 85 - 85 Special reserve 632 - 632 Profit and loss account balance 7,586 - 7,586 53,243 (7,242) 46,001 Total equity and liabilities 55,252 2,860 58,112 RECONCILIATION OF EQUITY AS AT 31st DECEMBER 2004 Effect of Previous transition to IFRSs Note GAAP IFRSs Â£'000 Â£'000 Â£'000 Non-current assets Property plant and equipment 852 - 852 Coal royalties (at valuation) 57,648 - 57,648 Mining and exploration interests 2 12,336 7,850 20,186 70,836 7,850 78,686 Current assets Trade and other receivables 3 2,580 311 2,891 Cash at bank and in hand 3 3,763 (311) 3,452 6,343 - 6,343 Total assets 77,179 7,850 85,029 Current liabilities Taxation 401 - 401 Trade and other payables 1,178 - 1,178 Dividends payable 7 3,405 (1,892) 1,513 4,984 (1,892) 3,092 Non-current liabilities Deferred tax 4 370 12,971 13,341 370 12,971 13,341 Total liabilities 5,354 11,079 16,433 Capital and reserves Share capital 1,891 - 1,891 Share premium 4,741 - 4,741 Revaluation reserve 5 55,935 (12,971) 42,964 Investment revaluation reserve 6 7,850 7,850 - Foreign currency translation reserve 119 - 119 Special reserve 632 - 632 Profit and loss account balance 8,507 1,892 10,399 71,825 (3,229) 68,596 Total equity and liabilities 77,179 7,850 85,029 RECONCILIATION OF EQUITY AS AT 1st JANUARY 2004 Effect of Previous transition to IFRSs Note GAAP IFRSs Â£'000 Â£'000 Â£'000 Non-current assets Property plant and equipment 846 - 846 Coal royalties (at valuation) 44,295 - 44,295 Mining and exploration interests 2 6,047 3,393 9,440 51,188 3,393 54,581 Current assets Trade and other receivables 3 1,052 (117) 935 Cash at bank and in hand 3 1,642 117 1,759 2,694 - 2,694 Total assets 53,882 3,393 57,275 Current liabilities Taxation 265 - 265 Trade and other payables 114 - 114 Dividends payable 7 2,283 (1,146) 1,137 2,662 (1,146) 1,516 Non-current liabilities Deferred tax 224 8,935 9,159 224 8,935 9,159 Total liabilities 2,886 7,789 10,675 Capital and reserves Share capital 1,749 - 1,749 Share premium 420 - 420 Revaluation reserve 8 42,582 (8,935) 33,647 Investment revaluation reserve 6 - 3,393 3,393 Foreign currency translation reserve 103 - 103 Special reserve 632 - 632 Profit and loss account balance 5,510 1,146 6,656 50,996 (4,396) 46,600 Total equity and liabilities 53,882 3,393 57,275 NOTES TO THE RECONCILIATIONS OF EQUITY 1. The revaluation of the coal royalty is recognised in the interim accounts under IFRSs, where previously the valuation had only been included by way of a note to the interim results. 2. Under IFRSs the investments in mining and exploration entities via listed equities are treated as financial assets available for sale, and as such are revalued to fair value at the date of the Balance Sheet. 3. Under IFRSs credit cash balances held by stockbrokers are treated as cash. Under GAAP these were treated as accounts receivable. 4. Under IFRSs the revaluation of the coal royalty in the accounts necessitates an entry in the deferred tax account, even though the asset was not intended for sale at the end of the period. 5. The revaluation reserve is reduced by the amount transferred to deferred tax in Note 4. 6. Due to the revaluation in Note 2, a separate revaluation reserve has been created. 7. Dividends approved after the period end are not included in the period's financial statements under IFRSs. The final dividend for 2004 was not approved until 2005 so is not recognised in the 2004 financial statements. In addition, the final dividend for 2003 was not approved until 2004 so is not recognised in the opening balance at 1st January 2004. 8. Under IFRS 1 the opening revaluation reserve at 1st January 2004 must be adjusted to reflect the deferred tax component of past revaluations. 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 2005 which comprises consolidated income statement, consolidated balance sheet, consolidated cashflow and consolidated statement of recognised income and expenses. 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 Standard 34, 'Interim Financial Reporting' and the requirements of IFRS 1, 'First Time Adoption 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 2005. Baker Tilly Chartered Accountants Breckenridge House 274 Sauchiehall Street Glasgow G2 3EH 8th September 2005 This information is provided by RNS The company news service from the London Stock Exchange

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