Interim Results
Anglo Pacific Group PLC
29 August 2007
Anglo Pacific Group PLC
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30th JUNE 2007
Anglo Pacific Group PLC, the natural resources royalties company, today
announces its interim results for the six months ended 30th June 2007. In the
half year under review the Group has again produced record results with both
earnings and net asset value increasing significantly.
Financial Highlights
• Cash and strategic investments increase by 77% to £99.8 million (2006:
£56.5 million)
• Australian coal royalty independent valuation of £59.0 million
• Realised profits from mature mining interests increased by 38% to
£11.2 million (2006: £8.1 million)
• Earnings increased by 26% to 13.90p per share (2006: 11.06p)
• Profit before tax increased by 22% to £15,099,000 (2006: £12,411,000)
• Profit after tax increased by 27% to £14,151,000 (2006: £11,109,000)
• Cash of £12.7 million (2006: £6.3 million)
• Coal royalties for the half year of £4.2 million (2006: £5.0 million)
Operational Highlights
• New royalty package acquired in Canada
• Substantial increase in value of strategic quoted interests
• Increased cash position
• Increased exposure to coal energy and uranium projects
• Increase in gold, base metal and PGM projects
• The Group remains debt free
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 2007 and good
progress in expanding the Group's resource projects in all sectors. The Board
expects steady royalty receipts in the second half of 2007 and with increasing
coking coal prices is optimistic about future royalty flows.'
'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 earnings as
dividends to shareholders. I am delighted to report the recent acquisition of a
package of royalties to bolster future cashflows. The Board's strategy remains
to increase 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 2007
CHAIRMAN'S STATEMENT
Review and Results for six months ended 30th June 2007
During the first half of 2007, the economies of India and China have continued
to show strong rates of growth and demand for both metals and energy remained
buoyant. The prices of both coking and steaming coal have risen sharply in the
last few months. Recent reported sales of spot coking coal have been at
considerably higher levels than the long term contract rates of circa US$100 per
ton used in the past two years.
This price rise is reflected in the Group's coal royalty interests being
independently valued at 30th June 2007 at £59 million compared to £48 million at
31st December 2006.
During the first six months of 2007 metal prices reached high and in some cases
record levels with stockpiles of most metals remaining low. This caused a
substantial strengthening of the mining markets, which were further supported by
consolidation and takeover activity amongst the mining majors. Junior mining
markets reached new highs in the first quarter of the year, although towards the
end of the period prices were more subdued.
Uranium prices, however, rose substantially, recently reaching US$135 per lb
compared to US$46 a year ago. Even after taking account of dollar weakness, gold
and PGM prices have remained high and the price of oil continues to hold at near
record levels.
It is against this background that the Group has realised record capital gains
of £11.2 million for the period which together with buoyant royalty receipts has
produced record earnings of 13.90p per share for the half year.
The Group's private mining interests and quoted stakes in mining projects were
valued at 30th June 2007 at £87.1 million compared to £50.2 million a year ago.
Furthermore the Group had no borrowings and nearly £13 million of cash in the
bank at 30th June 2007.
These results again reflect the Group's continuing successful active management
of its quoted and private mining interests.
Strategy and Progress
The Group's overall corporate strategy remains the same. It is to continue to
increase the total value of the Group's mining interests in order to maximise
shareholder value and develop new royalty flows.
In this respect the Group's cash and strategic investments have increased in
value by 29% in the last six months. Together with the recent valuation of the
Group's coal royalty at £59 million, the Group's total assets are now therefore
nearly £160 million with no debt. Furthermore, this does not include any excess
over cost attributable to the real value of the Group's substantial private coal
and other mining interests in British Columbia and Australia.
The return on investment over the last four years is equivalent to a compound
rate of over 76% per annum.
Anglo Pacific Group PLC
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30th JUNE 2007
CHAIRMAN'S STATEMENT
The Group's quoted equity interests disclosed on the LSE, ASX and TSX, where
initial equity stake disclosure levels are 3%, 5% and 10% respectively, amount
to £63 million in nineteen different holdings. The balance of quoted holdings of
£22 million is made up of a further thirty incubator investments. The split of
the Group's strategic interests by commodity is now on the Group's website at
www.anglopacificgroup.com where all the equity disclosures can also be accessed.
This Group's policy of maintaining a substantial level of liquidity will enable
it to provide finance for smaller early-stage mining developments when required.
These opportunities will be at more attractive levels when credit availability
in the international financial markets is tighter than usual.
On 23rd August 2007 the Group announced the acquisition of a package of uranium
royalty interests in the Athabasca Basin in Canada. The properties covered by
the royalty interests total approximately 4.8 million acres and are currently
operated by a number of listed Canadian companies. The Athabasca Basin is
considered to be highly prospective for uranium exploration and production and
currently hosts large, high grade uranium mines and deposits. The Group is
issuing 3.125 million new shares in consideration for these assets.
The group's strategy of paying a substantial proportion of its earnings as
dividends to shareholders continues.
On 3rd August 2007 a final dividend of 3.75p per share for the year ended 31st
December 2006 was paid. Shareholders owning 27.5% of the 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 a substantial proportion of their holdings.
As in previous years the Group will announce its interim dividend for the year
ending 31st December 2007 in November 2007, when a scrip dividend alternative
will again be available to shareholders.
Outlook
The Group expects steady royalty flows in the second half of 2007 and is
confident that the recent increases in underlying coking coal prices will be
maintained for some time. Following the recent turmoil in the equity markets
the outlook for the mining sector is dependent on the demand for metals driven
by the continued expansion of the emerging Chinese and Indian economies. The
Board remains confident that opportunities will continue to arise for the
further profitable development of the Group's current and future mining
interests.
P.M.Boycott
Chairman
29th August 2007
Anglo Pacific Group PLC
CONSOLIDATED INCOME STATEMENT
FOR THE SIX MONTHS ENDED 30th JUNE 2007
Six months Six months Year ended
ended 30th ended 30th 31st December
June 2007 June 2006 2006
£'000 £'000 £'000
Royalty income 4,176 5,047 10,472
Other operating income 80 145 266
Profit on sale of mining and exploration 11,202 8,107 13,322
interests
Finance income 204 93 232
15,662 13,392 24,292
Net operating expenses (563) (981) (2,183)
Profit before tax 15,099 12,411 22,109
Tax (948) (1,302) (2,811)
Profit attributable to equity holders 14,151 11,109 19,298
Basic earnings per share 13.90p 11.06p 19.12p
Fully diluted earnings per share 13.90p 10.98p 19.11p
Anglo Pacific Group PLC
CONSOLIDATED BALANCE SHEET
AS AT 30th JUNE 2007
30th June 2007 30th June 2006 31st December 2006
£'000 £'000 £'000 £'000 £'000 £'000
Non-current assets
Property plant and equipment 835 842 838
Coal royalties (at valuation) 59,012 52,661 47,868
Mining and exploration 87,081 50,240 67,317
interests
146,928 103,743 116,023
Current assets
Trade and other receivables 2,659 3,146 1,834
Cash at bank 12,726 6,266 9,836
15,385 9,412 11,670
Total assets 162,313 113,155 127,693
Current liabilities
Taxation 720 538 1,414
Trade and other payables 629 588 255
Dividends payable 3,818 3,264 -
5,167 4,390 1,669
Non-current liabilities
Deferred tax 18,641 14,356 14,530
18,641 14,356 14,530
Total liabilities 23,808 18,746 16,199
Capital and reserves
attributable to shareholders
Share capital 2,037 2,008 2,032
Share premium 12,427 11,575 12,112
Coal royalty revaluation 41,583 39,893 35,403
reserve
Investment revaluation reserve 37,371 13,741 27,078
Share based payment reserve 33 18 27
Foreign currency translation 591 (1,410) (1,930)
reserve
Special reserve 632 632 632
Retained Earnings 43,831 27,952 36,140
138,505 94,409 111,494
Total equity and liabilities 162,313 113,155 127,693
Anglo Pacific Group PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD ENDED 30th JUNE 2007
Share Share Coal Investment Share Foreign Special Retained Total
based
capital premium royalty revaluation payment currency reserve earnings equity
revaluation reserve reserve translation
reserve reserve
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at
1st January 2006 2,005 11,338 41,211 5,180 12 1,321 632 22,361 84,060
Coal Royalties:
Royalties valuation - - (965) - - (3,089) - - (4,054)
movement taken to equity
Deferred tax on valuation - - (353) - - 734 - - 381
Available-for-sale
investments:
Valuation movement taken - - - 10,655 - (300) - - 10,355
to equity
Deferred tax on valuation - - - (505) - 3 - - (502)
Transferred to income - - - (1,589) - - - - (1,589)
statement on disposal
Foreign currency translation - - - - - (79) - - (79)
Net income recognised direct - - (1,318) 8,561 - (2,731) - - 4,512
into equity
Profit for the period - - - - - - - 11,109 11,109
Total recognised income and - - (1,318) 8,561 - (2,731) - 11,109 15,621
expenses
Dividends paid - - - - - - - (5,518) (5,518)
Scrip Dividend 3 237 - - - - - - 240
Equity share options issued - - - - 6 - - - 6
Balance at
30th June 2006 2,008 11,575 39,893 13,741 18 (1,410) 632 27,952 94,409
Coal Royalties:
Royalties valuation - - (4,827) - - 35 - - (4,792)
movement taken to equity
Deferred tax on valuation - - 337 - - (8) - - 329
Available-for-sale
investments:
Valuation movement taken - - - 17,694 - (276) - - 17,418
to equity
Deferred tax on valuation - - - (877) - (66) - - (943)
Transferred to income - - - (3,480) - - - - (3,480)
statement on disposal
Foreign currency translation - - - - - (205) - - (205)
Net income recognised direct - - (4,490) 13,337 - (520) - - 8,327
into equity
Profit for the period - - - - - - - 8,188 8,188
Total recognised income and - - (4,490) 13,337 - (520) - 8,188 16,515
expenses
Dividends paid - - - - - - - - -
Issue of share capital on 18 194 - - - - - - 212
exercise of options
Scrip Dividend 6 343 - - - - - - 349
Equity share options issued - - - - 9 - - - 9
Balance at
31st December 2006 2,032 12,112 35,403 27,078 27 (1,930) 632 36,140 111,494
Anglo Pacific Group PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 30th JUNE 2007
Share Share Coal Investment Share Foreign Special Retained Total
based
capital premium royalty revaluation payment currency reserve earnings equity
revaluation reserve reserve translation
reserve reserve
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at
1st January 2007 2,032 12,112 35,403 27,078 27 (1,930) 632 36,140 111,494
Coal Royalties:
Royalties valuation - - 8,600 - - 2,545 - - 11,145
movement taken to equity
Deferred tax on valuation - - (2,420) - - (680) - - (3,100)
Available-for-sale
investments:
Valuation movement taken - - - 17,972 - 606 - - 18,578
to equity
Deferred tax on valuation - - - (781) - 23 - - (758)
Transferred to income - - - (6,898) - - - - (6,898)
statement on disposal
Foreign currency translation - - - - - 27 - - 27
Net income recognised direct - - 6,180 10,293 - 2,521 - - 18,994
into equity
Profit for the period - - - - - - - 14,151 14,151
Total recognised income and - - 6,180 10,293 - 2,521 - 14,151 33,145
expenses
Dividends paid - - - - - - - (6,460) (6,460)
Scrip Dividend 5 315 - - - - - - 320
Equity share options issued - - - - 6 - - - 6
Balance at
30th June 2007 2,037 12,427 41,583 37,371 33 591 632 43,831 138,505
Anglo Pacific Group PLC
CONSOLIDATED CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 30th JUNE 2007
Six months Six months Year ended
ended 30th ended 30th 31st December
June 2007 June 2006 2006
£'000 £'000 £'000
Cashflows from operating activities
Profit before taxation 15,099 12,411 22,109
Adjustments for:
Interest received (204) (93) (232)
Unrealised foreign currency (gain) / loss 27 84 (284)
Depreciation of property, plant and equipment 6 5 10
(Gain) on disposal of mining and exploration (11,202) (8,107) (13,322)
interests
Share based payments 6 6 15
3,732 4,306 8,296
(Increase) / Decrease in trade and other (826) (597) 715
receivables
Increase / (Decrease) in trade and other 374 (6) (340)
payables
Cash generated from operations 3,280 3,703 8,671
Income taxes paid (1,388) (1,798) (2,990)
Net cash from operating activities 1,892 1,905 5,681
Cash flows from investing activities
Proceeds on disposal of mining and exploration 21,485 17,637 30,024
interests
Purchase of mining and exploration interests (18,366) (16,911) (27,180)
Interest received 204 93 232
Net cash used in investing activities 3,323 819 3,076
Cash flows from financing activities
Proceeds from issue of share capital - - 212
Dividends paid (2,325) (2,255) (4,930)
Net cash used in financing activities (2,325) (2,255) (4,718)
Net increase in cash and cash equivalents 2,890 469 4,039
Cash and cash equivalents at beginning of 9,836 5,797 5,797
period
Cash and cash equivalents at end of period 12,726 6,266 9,836
Anglo Pacific Group PLC
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 2006.
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 and as adopted
by the European Union (EU). 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 2006 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 which did not
contain statements under section 237(2) or (3) of the Companies Act 1985. The
interim review report is set out on page 12.
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 2007, based on a net present value of the pre-tax
cashflow discounted at a rate of 7%, which produced a valuation of A$139.3
million (£59 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 £6 million (A$14.3 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 £7 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 2007 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
2007 was £85,518,000. The directors' valuation of the unquoted Mining and
Exploration Interests was £1,922,000.
3. Earnings per ordinary share
The earnings per ordinary share is calculated on the Company's profit after tax
of £14,151,000 and 101,806,482 shares. Fully diluted earnings per shares is
calculated on a profit after tax of £14,151,000 and 101,823,220 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.
Anglo Pacific Group PLC
NOTES TO THE ACCOUNTS
5. Segment Information
Six months ended 30th June 2007
Royalty Mining Unallocated Total
Interests
£'000 £'000 £'000 £'000
Revenue 4,176 - 80 4,256
Operating profit 4,176 - (478) 3,698
Profit on sale of mining and exploration - 11,202 - 11,202
interests
Interest received - - 204 204
Depreciation - - (5) (5)
Tax - - (948) (948)
Segment Result 4,176 11,202 (1,227) 14,151
Segment Assets 59,012 87,081 16,220 162,313
Segment Liabilities (18,641) - (5,167) (23,808)
Net Segment Assets 40,371 87,081 11,053 138,505
Capital Expenditure - - 1 1
Six months ended 30th June 2006
Royalty Mining Unallocated Total
Interests
£'000 £'000 £'000 £'000
Revenue 5,047 - 145 5,192
Operating profit 5,047 - (831) 4,216
Profit on sale of mining and exploration - 8,107 - 8,107
interests
Interest received - - 93 93
Depreciation - - (5) (5)
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 (14,356) - (4,390) (18,746)
Net Segment Assets 38,305 50,240 5,864 94,409
Capital Expenditure - - - -
Anglo Pacific Group PLC
NOTES TO THE ACCOUNTS
5. Segment Information (continued)
Year ended 31st December 2006
Royalty Mining Unallocated Total
Interests
£'000 £'000 £'000 £'000
Revenue 10,472 - 266 10,738
Operating profit 10,472 - (1,907) 8,565
Profit on sale of mining and exploration - 13,322 - 13,322
interests
Interest received - - 232 232
Depreciation - - (10) (10)
Tax - - (2,811) (2,811)
Segment Result 10,472 13,322 (4,496) 19,298
Segment Assets 47,868 67,317 12,508 127,693
Segment Liabilities (14,530) - (1,669) (16,199)
Net Segment Assets 33,338 67,317 10,839 111,494
Capital Expenditure - - 1 1
Anglo Pacific Group PLC
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 30 June 2007 which comprises the consolidated income
statement, consolidated balance sheet, consolidated statement of changes in
equity, consolidated cash flow statement and the related notes 1 to 5 set out on
pages 9 to 11. We have read the other information contained in the interim
report which comprises the Chairman's statement and considered whether it
contains any apparent misstatements or material inconsistencies with the
financial information. Our responsibilities do not extend to any other
information.
This report is made solely to the company in accordance with guidance contained
in APB Bulletin 1999/4 'Review of Interim Financial Information'. Our review
work has been undertaken so that we might state to the company those matters we
are required to state to them in a review report and for no other purpose. To
the fullest extent permitted by law, we do not accept or assume responsibility
to anyone other than the company for our review work, for this report, or for
the conclusion we have formed.
Directors' responsibilities
The interim report including the financial information contained therein is the
responsibility of, and has been approved by, the directors. They are
responsible for preparing the interim report and that the accounting policies
and presentation applied to the interim figures should be consistent with those
applied in preparing the preceding annual accounts except where any changes, and
the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
'Review of Interim Financial Information' issued by the Auditing Practices Board
for use in the United Kingdom. A review consists principally of making
enquiries of management and applying analytical procedures to the financial
information and underlying financial data and, based thereon, assessing whether
the accounting policies and presentation have been consistently applied unless
otherwise disclosed. 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 performed in accordance with
International Standards of Auditing (UK & Ireland) and therefore provides a
lower level of assurance than an audit. 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 30 June 2007.
GRANT THORNTON UK LLP
CHARTERED ACCOUNTANTS
London
29th August 2007
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