Preliminary Results 2009

RNS Number : 5662H

Anglo Pacific Group PLC

24 February 2010

 

Anglo Pacific Group PLC

                                                                                                               

Preliminary Results 2009

PRELIMINARY RESULTS FOR THE YEAR ENDED 31DECEMBER 2009

________________________________________________________________________________________________

Significant Expansion in Royalty Portfolio and 6.9% Increase in Final Dividend

Anglo Pacific Group PLC ("Anglo Pacific" or "The Group") (LSE: APF, ASX: AGP), the natural resources royalties company, today announces its Preliminary Results showing further substantial progress in the development of its royalty portfolio and an increase in both its final and full year dividends.

Financial Highlights

Royalties

·      Australian coal royalties independent valuation of £149.9 million (2008: £93.3 million)

·      Total value of other royalties £27.3 million (2008: £7.8 million)

·      Coal royalty income for the year of £20.3 million (2008: £22.1 million)

Assets

·      Total assets increased by 77% to a record £312 million (2008: £176 million)

·      Total quoted and unquoted strategic interests valued at £113.5 million (2008: £45.8 million)

·      Cash and royalty receivables at the year end of £17.9 million (2008: £28.4 million)

Earnings

·      Profit before tax of £25,883,000 (2008: £35,255,000)

·      Earnings per share of 19.20p (2008: 27.25p)

·      Realised profits for the year from non-core mining interests of £6.4 million (2008: £14.0 million)

Dividends

·      Final dividend increased by 6.9% to 4.65p per share (2008: 4.35p)

·      Total dividends for the year increased by 7.1% to 8.35p (2008: 7.80p)

Operational Highlights

·      New royalty rights acquired in gold, platinum and uranium

·      Compliant resources announced for the Trefi and Panorama Canadian coal projects

·      Threefold increase in value of strategic quoted interests

·      Steady coking coal royalty receipts

·      Increased exposure to coal and uranium projects

·      TSX listing progressing

Commenting on the Preliminary Results, Peter Boycott, Chairman of Anglo Pacific Group PLC said:

"Anglo Pacific has made further progress in diversifying its royalty portfolio with four new royalties acquired during the year.  Its quoted mining interests have increased in value threefold and the Group has strong cash reserves, no debt and total assets now well in excess of £300 million.

The Group remains committed to a progressive dividend policy and I am pleased to announce a 6.9% increase in the final dividend. Anglo Pacific will continue to make the acquisition of new royalties its overriding strategic focus."

For further information and enquiries:

Anglo Pacific Group PLC                                                                                                                   [phone]

Peter Boycott, Chairman

Matthew Tack, Finance Director

Liberum Capital                                                                                                                                    [phone]

Chris Bowman

Ellen Francis

Scott Harris                                                                                                                                          [phone]

Stephen Scott

James O'Shaughnessy

Website:                                                                                                                                      www.anglopacificgroup.com

2009 Review and Results

The latter part of 2009 has seen an improving economic outlook and substantially higher commodity prices.  This is in sharp contrast to 2008 and the first few months of 2009 which were characterised by falling stock markets and the banking crisis. 

This recovery in prices has benefited the Group and has been driven by a continuing demand for raw materials from the expanding Chinese and Asian economies.  In addition, the protracted crisis in the banking sectors of the Western economies has led to an extended period of quantitative easing by several Governments. This is helping a broader economic recovery, but has raised concerns about future inflation and currency stability resulting in higher prices for gold and precious metals where the Group has substantial exposure.

The rising prices of base metals, oil and coal products have produced a strong recovery in the general mining sector. The junior quoted mining markets have also recently shown signs of recovery with indications of investment returning to the sector. This and the Group's policy of active involvement in mining projects has produced a substantial improvement in the value of the Group's total assets.

In the second half of the year the price of coking coal recovered sharply resulting in an increased Australian coal royalty evaluation at the year end and steady coking coal receipts for the year. The Group made substantial progress in developing other royalty interests with four new royalties acquired. The recovery in world stock markets during the year resulted in a threefold increase in the value of the Group's quoted interests.

The Group's coal royalty revenues for the year were £20.3 million (A$41 million) compared to £22.1 million (A$48 million) in 2008. This reflected the lower contracted price of circa $127 per ton in April 2009 compared with an agreed price of circa US$295 for the previous year.  Over the course of 2009, however, the prices of both thermal and metallurgical coal from Australia have continued to benefit from the increasing demand for seaborne coal from China.  Consequently, the Group's coal royalty interests were independently valued at 31^st December 2009 at £149.9 million compared to £93.3 million at 31^st December 2008.

The Group realised capital gains of £6.4 million during the year from the sale of non-core mining interests, compared to £14.0 million in 2008. This reflected relatively subdued junior mining markets during most of the year. Including royalty revenues, the Group achieved earnings of 19.20p per share compared to 27.25p in 2008.

In addition to the Kestrel and Crinum coking coal royalties in Queensland, Australia, the Group now owns seven further royalty entitlements. These are in addition to its royalty rights to mineral exploration on nearly five million acres of the Athabasca Basin in Canada. The total value of the Group's new royalty entitlements was £27.3 million at 31^st December 2009 compared to £7.8 million at the end of the previous year.

The value of the Group's private mining interests and quoted stakes in mining projects recovered sharply to £113.5 million at 31^st December 2009 compared to £45.8 million at 31st December 2008.  The private mining interests remain in the financial statements at cost and include the Trefi and Panorama coal projects in British Columbia where NI43-101 and JORC compliant resources have been announced for both deposits.

At 31^st December 2009 the Group had no borrowings and £14.2 million of cash in the bank.

These earnings and balance sheet valuations represent a solid outcome during a year when the direction of the world's economy has continued to be uncertain.  This progress is in no small part due to the Group's sensible management of its balance sheet and its conservative approach to mining project evaluation.

The Board is recommending that the final dividend for the year ended 31^st December 2009 be increased by 6.9% to 4.65p per share.

Strategy and Progress

The Group's strategy remains focused on securing new royalties by acquisition and through investment in its mining interests in order to generate strong cashflows and continue to pay dividends to its shareholders.  The Group remains committed to a progressive dividend policy and to further expanding its other mining interests and royalty flows in pursuit of this objective.

Royalties

The Group has continued to expand its royalty interests with four new acquisitions during the year.  The acquisition of these new royalty interests further demonstrates the Group's progress in delivering its strategy to broaden and diversify its portfolio of royalties.

·      Uranium (Australia): in March 2009 the Group acquired for A$6 million a 1% net smelter royalty (NSR) on the Beverley Four Mile uranium project in South Australia. This project has received environmental approval from the Federal Government and is expected to go into production towards the end of 2010.

·      Platinum (Canada): in May 2009 the Group purchased options to acquire a 1% royalty on each of Northern Shield Resources' Highbank Lake and Eastbank properties in Western Ontario, Canada. Northern Shield has a joint venture agreement with Impala Platinum Holdings of South Africa for Impala to fund and explore for platinum group metals on the Highbank Lake property.

·      Gold (Canada): in July 2009 the Group purchased for C$8 million a 2.5% NSR on Northern Star Mining Corporation's Midway and McKenzie Break projects in Quebec, Canada. Northern Star poured its first gold at the Midway gold project in February 2010.

·      Uranium (Europe): in December 2009 the Group acquired for A$4 million a 1% NSR on all future uranium production from the Spanish and Portuguese properties owned by Berkeley Resources. Uranium production at the Salamanca project is expected to commence in 2013.

On 23^rd September 2009 Orvana Minerals Corporation completed its takeover of Kinbauri Gold Corporation which owns the El Valle gold project in northern Spain, where the Group retains a 2.5% NSR.  Orvana recently announced that it is on budget and on schedule to commence production at El Valle in January 2011.

On 13^th May 2009 the Group made an unconditional on-market cash bid of A$0.30 per share for all the outstanding issued share capital of Royalco Resources Limited ("Royalco"), an Australian mining company which owns a number of royalty interests in Australasia.  The offer price was increased to A$0.34 on 3^rd July 2009 and the bid closed on 10^th July 2009, resulting in the Group increasing its shareholding from just under 20% to over 31%.  On 25^th September 2009 Chris Orchard, the Group's Chief Investment Officer and an executive director, was appointed to the Royalco Board to assist Royalco's management in developing and expanding its royalty interests. The Group's interest in Royalco is now accounted for as an Investment in Associate and is excluded from quoted investments.

Assets

During the year the Group's cash, receivables and strategic investments increased in value by £58.2m to £132.7 million (2008: £74.5 million).  Together with the Group's coal and other royalties worth £177.2 million and fixed assets and capitalised exploration costs of £2.5 million the Group's total assets at 31^st December 2009 increased by 77% to £312 million (£176 million at 31^st December 2008).  Furthermore, this did not include any increase in value over cost that may be attributable to the Group's expanding private coal interests in Canada. 

The Group remains debt free and its liquid resources are held in a spread of currencies and banks. The Group's mining interests and royalty revenues are mainly denominated in Australian, Canadian and US dollars.

Private Coal Projects

On 10^th September 2009 the Group announced an initial NI43-101 and JORC compliant Measured and Indicated Resource estimate of 39.35 million tonnes and an Inferred Resource of 51.6 million tonnes at its Trefi Coal Project in Northeast British Columbia, Canada.  A Scoping Study on this project is in the process of being finalised.

On 16^th February 2010 the Group released an initial resource statement on the Panorama Coal Project in the Groundhog Coalfield in Northwest British Columbia. This showed a NI43-101 and JORC compliant Indicated Resource of 13.7 million tonnes and an Inferred Resource of 24.1 million tonnes of anthracite and semi-anthracite coal.

Quoted Equity Interests

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 £77 million in eighteen different holdings. The balance of quoted holdings of £23 million is made up of a further twenty incubator investments. The split of the Group's strategic interests by commodity can be seen on the Group's website at www.anglopacificgroup.com where links to all the equity disclosures can be accessed.

Dividends

On 3^rd July 2009 a final dividend of 4.35p per share for the year ended 31^st December 2008 was paid.  Shareholders representing 21.0% of the issued share capital elected to take scrip instead of cash.  The interim dividend of 3.70p per share for the year ending 31^st December 2009 was paid to shareholders on 13^th January 2010. Shareholders representing 25.8% of the issued share capital elected to take scrip instead of cash.

Subject to approval at the AGM to be held in London on 21^st April 2010, the 2009 final dividend of 4.65p per share will be paid to shareholders on 2^nd July 2010. This brings the total dividends for the year to 8.35p (2008: 7.80p).  Depending on the share price at the time, the Board will consider whether shareholders will again be given the opportunity to elect to receive a scrip dividend instead of cash.

Board Developments

Having originally joined Anglo Pacific as Chief Investment Officer and Chief Operating Officer respectively, Mr Chris Orchard and Mr John Theobald were appointed to the Board on 22^nd June 2009. 

Their skills will greatly assist in the evaluation of new royalty propositions and the management of the Group's strategic interests.

Overseas Listings

The application for listing of the Group's shares on the Toronto Stock Exchange is progressing. The listing is anticipated during the second quarter of 2010. As a substantial number of the Group's private and quoted mining interests are in Canada, it is the Group's medium term strategy to broaden the shareholder base to include both Canadian and American investors.

Furthermore, the Group is seeking to de-list from the Australian Stock Exchange due to a lack of liquidity, negligible volumes and less than two percent of the Group's share capital being held by the Australian Share Register.

Outlook

New contract prices for Kestrel and Crinum coking coal will become effective in April 2010. These are expected to be higher than the previous year as spot coking coal prices have recently increased towards US$200 per ton.  Output at the Kestrel mine remains buoyant whilst some production still continues from the private ground at Crinum.

Despite the recovery in metal prices and equity markets, the raising of mining finance from conventional lenders or equity issues still remains challenging for junior mining companies.  In this environment the Group continues to receive a steady flow of enquiries about potential royalty opportunities.

With its cash resources, strong royalty revenues and pro-active management, Anglo Pacific Group will continue to make the acquisition of new royalties its overriding strategic focus.

In conclusion I would like to thank my Board colleagues and staff for their considerable efforts in sustaining the continuing growth of our Group and our shareholders for their ongoing support.

P.M. Boycott

Chairman

24^th February 2010

CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2009

		2009		2008
		£'000		£'000
Royalty income		20,334		22,072
Other operating income		13		50
Finance income		796		957
		21,143		23,079
Profit on sale of mining and exploration interests		6,367		14,016
Total income		27,510		37,095
Share of profit of associates		515		-
Net operating expenses		(2,142)		(1,840)
Profit before tax		25,883		35,255
Tax		(5,252)		(5,994)
Profit attributable to equity holders		20,631		29,261
Total and continuing earnings per share
Basic earnings per share		19.20p		27.25p
Diluted earnings per share		19.20p		27.25p

Income and profit before tax are derived from the Group's continuing operations.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2009

		2009		2008
		£'000		£'000
Profit for the year		20,631		29,261
Other comprehensive income:
Net gain on revaluation to coal royalties		42,916		25,943
Net gain/(loss) on revaluation of available for sale investments		63,737		(40,881)
Net exchange gain on translation of foreign operations		15,585		7,175
Share of other comprehensive income of associates		(65)		-
Deferred tax		(21,770)		(6,295)
Net income recognised directly in equity		121,034		15,203
Transferred to income statement disposal of available for sale investments		322		(18,658)
Total transferred from equity		322		(18,658)
Total comprehensive income/(expense) for the year		121,356		(3,455)

CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2009

		2009		2008
		£'000		£'000
Non-current assets
Property plant and equipment		1,742		829
Coal royalties		149,896		93,347
Royalty instruments		21,979		7,783
Intangibles		6,095		-
Mining and exploration interests		109,695		45,755
Investments in associates		3,771		-
		293,178		147,714
Current assets
Trade and other receivables		5,082		11,575
Cash at bank		14,195		17,136
		19,277		28,711
Total assets		312,455		176,425
Non-current liabilities
Deferred tax		47,883		28,857
		47,883		28,857
Current liabilities
Taxation		4,146		877
Trade and other payables		390		849
		4,536		1,726
Total liabilities		52,419		30,583
Capital and reserves attributable to shareholders
Share capital		2,149		2,123
Share premium		20,718		18,604
Coal royalty revaluation reserve		88,582		58,430
Investment revaluation reserve		36,850		(22,149)
Share based payment reserve		78		78
Foreign currency translation reserve		18,804		7,230
Special reserve		632		632
Retained Earnings		92,223		80,894
		260,036		145,842
Total equity and liabilities		312,455		176,425

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE TWO YEARS ENDED 31 DECEMBER 2009

		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
		£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1st January 2008		2,113	17,742	40,899	33,104	48	2,224	632	59,420	156,182
Profit for the year		-	-	-	-	-	-	-	29,261	29,261
Other comprehensive income:
Coal Royalties:
Royalties valuation movement taken to equity		-	-	25,943	-	-	6,530	-	-	32,473
Deferred tax on valuation		-	-	(8,412)	-	-	(1,844)	-	-	(10,256)
Available-for-sale investments:
Valuation movement taken to equity		-	-	-	(40,881)	-	(111)	-	-	(40,992)
Deferred tax on valuation		-	-	-	4,286	-	(325)	-	-	3,961
Transferred to income statement on disposal		-	-	-	(18,658)	-	-	-	-	(18,658)
Reclassification as investment in associate		-	-	-	-	-	-	-	-	-
Share of comprehensive income of associates		-	-	-	-	-	-	-	-	-
Foreign currency translation		-	-	-	-	-	756	-	-	756
Other comprehensive income		-	-	17,531	(55,253)	-	5,006	-	-	(32,716)
Total comprehensive income		-	-	17,531	(55,253)	-	5,006	-	29,261	(3,455)
Dividends paid		-	-	-	-	-	-	-	(7,787)	(7,787)
Scrip Dividend		10	862	-	-	-	-	-	-	872
Issue of share capital		-	-	-	-	-	-	-	-	-
Issue of share capital under share-based payment		-	-	-	-	-	-	-	-	-
Equity share options issued		-	-	-	-	30	-	-	-	30
Transactions with owners		10	862	-	-	30	-	-	(7,787)	(6,885)
Balance at 31st December 2008		2,123	18,604	58,430	(22,149)	78	7,230	632	80,894	145,842

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE TWO YEARS ENDED 31 DECEMBER 2009

		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
		£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1st January 2009		2,123	18,604	58,430	(22,149)	78	7,230	632	80,894	145,842
Profit for the period		-	-	-	-	-	-	-	20,631	20,631
Other comprehensive income:
Coal Royalties:
Royalties valuation movement taken to equity		-	-	42,916	-	-	13,633	-	-	56,549
Deferred tax on valuation		-	-	(12,764)	-	-	(4,007)	-	-	(16,771)
Available-for-sale investments:
Valuation movement taken to equity		-	-	-	63,791	-	8	-	-	63,799
Deferred tax on valuation		-	-	-	(5,060)	-	61	-	-	(4,999)
Transferred to income statement on disposal		-	-	-	322	-	-	-	-	322
Reclassification as investment in associate		-	-	-	(54)	-	-	-	-	(54)
Share of comprehensive income of associates		-	-	-		-	(65)	-		(65)
Foreign currency translation		-	-	-	-	-	1,944	-	-	1,944
Other comprehensive income		-	-	30,152	58,999	-	11,574	-	-	100,725
Total comprehensive income		-	-	30,152	58,999	-	11,574	-	20,631	121,356
Dividends paid		-	-	-	-	-	-	-	(9,302)	(9,302)
Scrip Dividend		24	1,966	-	-	-	-	-	-	1,990
Issue of share capital		-	-	-	-	-	-	-	-	-
Issue of share capital under share-based payment		2	148	-	-	-	-	-	-	150
Equity share options issued		-	-	-	-	-	-	-	-	-
Transactions with owners		26	2,114	-	-	-	-	-	(9,302)	(7,162)
Balance at 31st December 2009		2,149	20,718	88,582	36,850	78	18,804	632	92,223	260,036

CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2009

		2009		2008
		£'000		£'000
Cash flows from operating activities
Profit before taxation		25,883		35,255
Adjustments for:
Interest received		(796)		(957)
Unrealised foreign currency loss		1,562		756
Depreciation of property, plant and equipment		12		9
(Gain) on disposal of mining and exploration interests		(6,367)		(14,016)
(Gain) on revaluation of assets held as fair value through profit or loss		(130)		(126)
Loss on write-down of assets		410		-
Share of associates income		(465)		-
Share based payments		150		30
		20,259		20,951
Decrease / (Increase) in trade and other receivables excluding amounts due from subsidiary companies		6,493		(9,701)
(Decrease) / Increase in trade and other payables		(459)		588
Cash generated from operations		26,293		11,838
Income taxes paid		(4,727)		(4,342)
Net cash flows from operating activities		21,566		7,496
Cash flows from investing activities
Proceeds on disposal of mining and exploration interests		25,341		31,117
Purchase of mining and exploration interests		(29,195)		(28,849)
Purchase of royalty interests		(12,245)		(5,574)
Acquisition of associates		(1,331)		-
Purchase of property, plant and equipment		(593)		-
Interest received		796		957
Net cash flows from investing activities		(17,227)		(2,349)
Cash flows from financing activities
Dividends paid		(7,280)		(6,915)
Net cash flows from financing activities		(7,280)		(6,915)
Net decrease in cash and cash equivalents		(2,941)		(1,768)
Cash and cash equivalents at beginning of period		17,136		18,904
Cash and cash equivalents at end of period		14,195		17,136

NOTES

1.             Earnings per ordinary share is calculated on the Group's profit after tax of £20,631,000 (2008: £29,261,000) and the weighted average number of shares in issue during the year of 107,439,463 (2008:  107,373,389).

                The diluted earnings per ordinary share is calculated on a profit after tax of £20,631,000 (2008: £29,261,000) and 107,459,305 shares (2008: 107,388,826).  The dilutive effect is due to options outstanding under the Employee Share Option Scheme at the year end.

2.             The above figures do not constitute full accounts within the meaning of Section 435 of the Companies Act 2006. The figures for the year ended 31^st December 2008 constitute abridged accounts extracted from the published accounts for the year which have been filed with the Registrar of Companies and on which the auditors' report was unqualified and did not contain a statement under Section 498(2) or (3) of the Companies Act 2006.  The audit opinion on the accounts for the year ended 31^st December 2009 has not yet been signed.

 

END

 

 

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