Interim results for the six months ended June 30, 2017 - Anglo Pacific Group

Anglo Pacific Group PLC (“Anglo Pacific”, the “Company”, the “Group”) (LSE: APF) (TSX: APY) is pleased to announce interim results for the six months ended June 30, 2017 which are available on both the Group’s website at www.anglopacificgroup.com and on SEDAR at www.SEDAR.com.
Results for the half year
• Free cash flow* generated in H1 2017 of £18.9m, a 300% increase on the £4.7m in H1 2016 and comfortably in excess of £13.4m generated in FY 2016
• This includes £3.3m from the Denison financing arrangement, of which £1.7m relates to FY 2016 – this arrangement has generated cash returns of C$0.5m per month on average
• Royalty income in H1 2017 of £16.1m, a 295% increase from £4.1m in H1 2016 and at 82% of the £19.7m earned for 2016 as a whole
• Increase attributable mainly to higher commodity prices, favourable exchange rate and increased mining within our private royalty land at Kestrel (88% in H1 2017 and 95% in Q2 2017 vs 38% in H1 2016)
• Record royalty income from Maracás Menchen reflecting strong production and a significant improvement in vanadium prices – H1 2017 average of US$5.46/lbs compared to US$3.15/lbs in H1 2016, and currently in excess of US$9.50/lbs
• Increase in overheads to £3.0m in H1 2017 from £1.8m in the corresponding period, reflecting higher staff costs, including share based payments, and increased investment costs associated with sourcing and appraising royalty transactions
• Adjusted earnings* of £12.9m for the first six months of 2017, a 438% increase on the £2.4m equivalent in 2016 translating into adjusted earnings per share* of 7.44p (H1 2016: 1.43p)
• Non-cash fair value charges of £14.9m, mainly related to resource depletion and pricing assumptions led to a loss after tax of £2.5m and loss per share of 1.46p (H1 2016: £10.2m, £5.4m and 3.18p respectively)
• Interim dividend of 3p per share, to be paid on November 15, 2017 – which, in line with our recently announced payment policy change is ~ 85 days ahead of our previous payment timetable
• Kestrel valuation £107.5m at June 2017, down 8% on £116.9m at the beginning of the year – mainly due to resource depletion and forward pricing assumptions
• Net debt of £0.6m at June 30, 2017 (December 31, 2016: £1.0m) – with all borrowings subsequently repaid following receipt of the Q2 2017 royalty income and after payment of the 2016 final dividend
• Net assets of £209.6m (December 31, 2016: £210.1m) translating into net assets per share of 116p (December 31, 2016: 124p)
• 2017 expected to continue the recent trend of recording significant growth in royalty income
• ~90% of Kestrel’s coal sales over the next twelve months expected to be subject to the Group’s royalty
• Commodity prices, particularly coking coal and vanadium, have beaten expectations to date in Q3 2017
• Royalty revenues continue to benefit from weak Sterling exchange rate versus the US and Australian dollar
Words with this symbol * are defined as Alternative Performance Measures. For more information on the APMs used by the Group, including definitions, please refer to the Alternative Performance Measures section of the notes to editors on page 3.
Julian Treger, Chief Executive Officer, commented:
“Anglo Pacific has had a very strong start to 2017, which has seen us add to our portfolio with the Denison financing arrangement, report significant further increases in royalty revenue, and become debt free. This gave us the confidence to implement the payment of our dividend on a quarterly basis, to match the timing of our quarterly revenue, and also to accelerate the timing of dividend payments post declaration.
Mining at Kestrel is now firmly back to within the Group’s private royalty land. It is pleasing to see that this increased volume in mined coal that is subject to the Group’s royalty has coincided with a strong rebound in the coking coal price. This, along with the contribution from the rest of the portfolio and the recent Denison financing arrangement, has seen us post a doubling of income over the last two years and a similar outcome is expected this year.
We have now repaid all of our borrowings, including the amounts drawn down as part of the Denison transaction, and have a fully covered dividend. The Group has ready access to between US$30.0-US$40.0m of cash and borrowing facilities for further royalty investments, and this is very much the focus for the second half of the year.”
Analyst presentation
There will be an analyst presentation www.anglopacificgroup.com today at the offices of Redleaf Communications, First Floor, 4 London Wall Buildings, Blomfield Street, London, EC2M 5NT. The presentation will be hosted by Julian Treger (CEO), Kevin Flynn (CFO) and Juan Alvarez (Head of Investments). If you would like to attend please email [email protected]
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