28th Feb 2005 07:30
Anglo Pacific Group PLC28 February 2005 Anglo Pacific Group PLC28 February 2005 Anglo Pacific Group PLC Preliminary Results for the twelve months ended 31st December 2004 Anglo Pacific Group PLC (APG), the natural resources royalties company, todayannounces record preliminary results for the year ended 31st December 2004. Financial Highlights • Profit before tax increased 88% to £7,712,000 (2003: £4,109,000)• Proposed final dividend increased by 54% to 2.00p per share (2003: 1.30p)• Total dividend for the year increased by 38% to 3.60p (2003: 2.60p)• Coal royalties for the year increased by 57% to £5.3 million (2003: £3.4 million)• Australian coal royalty independent valuation increased by 30% to £57.6 million• Cash and strategic Investments increase by 114% to £24 million• Earnings increased by 93% to 7.15p per share (2003: 3.70p)• £39 million of unused tax losses Operational Highlights • The Company's interests in the Groundhog and Trefi Coal Deposits in British Columbia, Canada increased from 65% to 100% • Acquisition of further additional new coal rights and tenancies in British Columbia at minimal cost of licence applications and registrations • Several New Coal opportunities in Australia resulting from Core Resources joint venture • Merritt Coal Bed Methane project in British Columbia continuing • Record Royalty Flows from Private Ground expected in 2005 • Coking Coal prices expected to remain buoyant due to sustained Chinese, Indian, Far East and other international demand Commenting on the preliminary results, Peter Boycott, Chairman of Anglo Pacificsaid: "I am pleased to be able to report continued progress at Anglo Pacific Groupduring the twelve months to 31st December 2004. The year under review producedrecord results for the Company due to its increased focus on coal and otherenergy products where global demand has seen prices improve sharply over theyear. The Company's strategy still remains to acquire projects that expect to yielddividend and royalty cashflow as well as asset appreciation in the next fewyears. In October 2004 the Company took the opportunity to raise £3.5 millionfor further working capital. Development of the Company's Canadian and Australian coal interests is now apriority due to the continuing demand for coal energy from China, India and theFar East and the Board expects to receive record coal royalties this year fromits interests in Queensland, Australia. With the encouraging outlook for cokingcoal prices for 2005, and several years further forward, the Board looks to thefuture with confidence." Enquiries: Brian Wides / Peter Boycott Anglo Pacific Group PLC 020 7409 1111 Stephen Scott / James Harris Scott Harris 020 7618 6433 Chairman's Review Group profits before tax for the year ended 31st December 2004 were £7,712,000compared to £4,109,000 for the previous year. Profits after tax increased by98% to £6,402,000 (2003: £3,240,000) with earnings per share for the year of7.15p (2003: 3.70p). The Group has realised capital gains from its mininginterests of £3,507,000 (2003: £1,360,000). I am pleased to announce a final dividend of 2.00p per share for the year ended31st December 2004 which with the interim dividend of 1.60p per share paid on28th January 2005 will make a total for 2004 of 3.60p per share (2003: 2.60p).The Board proposes to pay the final dividend on 5th August 2005 to shareholderson the Company's share register at the close of business on 24th June 2005. Aswith the interim dividend shareholders will be given the opportunity to elect toreceive a scrip dividend instead of cash. On average, since the scrip dividendwas available to shareholders, over a third have chosen to take scrip instead ofcash. The Board is appreciative of this vote of confidence in the Company. TheCompany's directors have also elected to take scrip instead of cash in respectof most of their holdings. In October 2004 the Company took the opportunity to raise £3.5 million afterexpenses by placing 4.4 million shares at 81.75p per share for further workingcapital. The Board has decided that with the recent interest in coal and coal energycompanies worldwide it is in the best interests of the Company and shareholdersto seek a quotation on the Toronto Stock Exchange whilst maintaining the fullLondon quote. Shareholders will be kept informed of the progress of theapplication. Our coal royalty interests have been independently valued at £57.6 million as at31st December 2004 which is £13.3 million more than the valuation at 31stDecember 2003. The Company continued to participate in financings of various miningopportunities. Our mining interests and quoted stakes in coal, coal energy,uranium and other metal projects were valued at 31st December 2004 at £20.2million. This included an unrealised profit over book value of £7.4 million inaddition to the realised gains referred to earlier. The Company also had cash of£3.8 million at 31st December 2004. Operational Review Coal Energy Interests Coal Royalties In Australia, coal royalty receipts from the Kestrel and Crinum mines, operatedby Rio Tinto and BHP Billiton respectively, were £5,313,000 (2003: £3,376,000). The independent valuation of these interests at the year-end was A$141.3 million(£57.6 million) compared to A$105.2 million (£44.3 million) at 31st December2003 and is based on the net present value of the pre-tax cashflow discounted ata rate of 7%. The net royalty income is taxed in Australia at a rate of 30%. Thechange in the valuation compared to last year has been adjusted to revaluationreserve. Our coal royalty is computed by reference to Queensland Government legislationwhich resulted in an increase in the rate of royalty from 4% to 7% in April2000. The legislation applies to both ground owned by the Crown and certainother privately owned areas in which the Company participates. During 2004mining output increased from the private area of the coal deposits. In 2005 thisis expected to continue with record royalty flows for the Company anticipated. During 2004 the Company has sought to take advantage of the distinct shift insentiment away from gold and precious metals towards base metals, coal, coalenergy, oil and uranium. Consequently your Company has increased substantiallyits exposure to coal and coal energy products with particular emphasis on cokingor metallurgical coal. The price rises achieved by suppliers of coking coal in the last twelve monthshave started to be reflected in the values of the Company's interests. Recentpublished prices of supplier contracts of coking coal have been agreed at over120 US$ per ton compared to prices at half that level a year ago. A major USinvestment bank stated in a recent report that it expected coking coal suppliesto remain tight through to 2008 leading to significant upward pressure onprices. Coal Deposits In line with this strategy the Company has again expanded its holdings in itsCanadian coal deposits in British Columbia by increasing from 65% to 100% itsinterests in the Groundhog and Peace River projects. Furthermore, by stakingmore ground near and around these projects the Company has strengthened itsposition in these major strategic coal fields. The outlook for the potential joint venture development of these resourcesremains very encouraging due to the continuing global demand for Canadian coalproducts especially from China, Japan and the Far East. The Company's decision to seek a listing on the Toronto Stock Exchange (TSX) isexpected to greatly enhance the ability to take these projects forward. Coal Bed Methane The Company still owns a circa 15% interest in the Merritt coal and coal bedmethane project in British Columbia. Coal bed gas prices have again risen during2004 and the Company's interests are now held through its holding in ForumDevelopment Corporation which is quoted on the TSVX. This company has alsorecently acquired some uranium interests. Cambrian Mining The Company now owns circa 6% of Cambrian Mining (listed on AIM) as well as adirect holding in Western Canadian Coal (listed on the TSX), a new operatingcoal producer in British Columbia, Canada. Cambrian owns circa 43% of WesternCanadian Coal and a 27% stake in Asia Energy (listed on AIM), in addition tobeing entitled directly to a one US$ per ton royalty on all coal produced atAsia Energy's Phulbari coal project in Bangladesh. The Company has recentlyparticipated in placings by both Cambrian and Western Canadian Coal where thelatter raised C$115 million for working capital to ramp up coal production atWestern Canadian Coal's projects in British Columbia. Core Resources In September 2004 the Company announced a joint venture relationship with CoreResources, a private Australian based resources group, to identify miningopportunities in Australia as well as carrying out detailed investigations intoa potential new coal area in Northern Australia. This project was recentlyidentified by Conarco Minerals Pty Ltd (Conarco), a private company whichincludes amongst its shareholders, John Collier, a former senior executive ofRio Tinto in Australia. Conarco retains an active interest in these tenements. Other Metal Interests The Company still retains substantial investments, albeit at a reduced level, invarious gold, diamond and platinum projects based mostly in North America andAustralia. As already indicated and in the light of the continuing globaldemand especially in the Far East, the Company's policy is to concentrate moreon base metals and uranium. In this respect the Company's strategy still remains to acquire projects thatexpect to yield dividend and royalty cashflow as well as asset appreciation inthe next few years. During 2004 the Company has taken profits on a number of its quoted goldinvestments whilst still retaining, inter alia, holdings in Kirkland Lake Gold,Uruguay Minerals, Starfield Resources and Muscox Minerals but at reduced levels.The Company remains a supportive and substantial shareholder in Hidefield Gold,Aquiline Resources and Alto Ventures where it has had disclosable stakes. The Company retains a 16% interest in Platinum Australia where progress has beenmade on three challenging and substantial platinum projects in South Africa. Theprocess technology associated with the Panton project in Australia remains avaluable asset for Platinum Australia in developing these recently acquiredinterests. In September 2004 the Company announced a circa 9% interest in LaramideResources which owns the Westmoreland-Lagoon Creek uranium deposit in Australiawhere, according to Laramide, 28% of the world's known recoverable resources ofuranium exist. Uranium prices have improved substantially in the past 18 months,with spot prices rising from below US$10 per lb to current levels of aroundUS$20 per lb. This holding is in line with the Company's strategy of increasingits exposure to energy products and is one of a number of uranium interestsacquired in recent months. Information on some of these projects and our other mining interests can befound on the Group's website at www.anglopacificgroup.com as well as on therelevant mining company's own website. Due to continuously altering equity holdings and important commercial andproject viability considerations, the Company has decided to no longer publishits attributable underlying asset positions. Talc The Board continues to negotiate improvements to the leases of this project andremains committed to joint venture this interest when appropriate. Strategy The Company's strategy remains to pay a substantial proportion of the coalroyalty as dividends to shareholders whilst pursuing an active miningparticipation policy. The Board's mining operations and joint ventures are still concentrated in NorthAmerica, Australia and Western Europe. Profits from these operations should beshielded from tax by the Company's tax losses. The Company's main focus is now on coal energy and base metals includinguranium. Development of the Company's Canadian and Australian coal interests isnow a priority due to the continuing demand for coal energy from China, Indiaand the Far East. Outlook The Board expects to receive record coal royalties this year from its interestsin Queensland, Australia. With the encouraging outlook for coking coal pricesfor 2005, and several years further forward, the Board looks to the future withconfidence. Finally I wish to thank shareholders for their support over the last year aswell as extending my thanks to our hard working directors and staff. P.M. BOYCOTTChairman28th February 2005 CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31st DECEMBER 2004 2004 2003 £000's £000's Turnover 5,313 3,376Cost of sales - - ------- -------Gross profit 5,313 3,376 ------- ------- Administrative expenses (1,316) (849)Other operating income 122 106 ------- -------Operating profit 4,119 2,633 ------- -------Profit on sale of fixed asset investments 3,507 1,360Interest received 86 116 ------- -------Profit on ordinary activities before tax 7,712 4,109Taxation on ordinary activities (1,310) (869) ------- -------Profit for the financial year 6,402 3,240Dividends: Interim (1,513) (1,137) Final (1,892) (1,146) ------- -------Retained profit for the financial year 2,997 957 _______ _______Earnings per ordinary share 7.15p 3.70pDiluted earnings per ordinary share 7.10p 3.66p ____ ____ STATEMENT OF TOTAL RECOGNISED 2004 2003GAINS AND LOSSES £000's £000'sRetained profit for the financial year 2,997 957Unrealised revaluation of Australian royalty interests 13,353 15,582Currency translation surplus on foreign currency investments 16 22 _______ _______ 16,366 16,561 _______ _______ Turnover and operating profit are derived from the Group's continuingoperations. CONSOLIDATED BALANCE SHEET AT 31st DECEMBER 2004 2004 2003 £000's £000'sFixed assetsTangible assets 852 846Investments 69,984 50,342 ------- ------- 70,836 51,188Current assetsDebtors 2,580 1,052Cash at bank and in hand 3,763 1,642 ------- ------- 6,343 2,694Current liabilitiesCreditors-amounts falling due withinone year (4,984) (2,662) ------- -------Net current assets 1,359 32 ------- -------Total assets less current liabilities 72,195 51,220 Long term liabilitiesProvisions for liabilities and charges (370) (224) ------- ------- 71,825 50,996 _______ _______Capital and reservesCalled up share capital 1,891 1,749Share premium account 4,741 420Revaluation reserve 55,935 42,582Foreign currency translation reserve 119 103Special reserve 632 632Profit and loss account surplus 8,507 5,510 ------- -------Equity shareholders' funds 71,825 50,996 _______ _______ CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31st DECEMBER 2004 2004 2003 £000's £000's £000's £000'sNet cash inflow from operatingactivities 3,678 2,690Returns on investments and servicingof financeInterest received 86 116 ________ ________Net cash inflow from returns on investments and servicing of finance 86 116TaxationOverseas tax paid (1,027) (1,614)UK Income tax - - ________ ________ (1,027) (1,614)Capital expenditure and financialinvestmentPayments to acquire tangible fixed assets (15) (14)Receipts from sales of tangible fixed assets - -Sale of equity investments 8,647 3,613Purchase of equity investments (11,429) (5,390) ________ ________Net cash (outflow) from capitalexpenditure and financial investment (2,797) (1,791) Acquisitions and disposals - - ________ ________ Net cash (outflow) before financing (60) (599)FinancingIssue of ordinary share capital 3,760 -Dividends paid (1,579) (1,525) ________ ________Net cash inflow/(outflow) from financing 2,181 (1,525) ________ ________Increase/(decrease) in cash 2,121 (2,124) ________ ________ NOTES 1. Earnings per ordinary share is calculated on the Group's profit after tax of £6,402,000 (2003 - £3,240,000) and the weighted average number of shares in issue during the year of 89,575,628 (2003 - 87,462,955). The diluted earnings per ordinary share is calculated on a profit after tax of £6,402,000 and 90,189,475 shares. 2. The above figures do not constitute full accounts within the meaning of Section 240 of the Companies Act 1985. The figures for the year ended 31st December 2003 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. The audit opinion on the accounts for the year ended 31st December 2004 has not yet been signed. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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