Anglo Pacific Group Plc (LON:APF) CEO Julian Treger talks to DirectorsTalk about a positive trading update. Julian explains how the increase in income was achieved, whether its sustainable, strategy for growth, future dividends and what investors can expect from the company over the coming months.
Highlights
* ~90% increase in royalty income year-on-year to £37.0m – £37.5m (2016: £19.7m); a record for the Company
* Cash received from Denison/McClean Lake of £4.7m – £5.0m in addition to the above royalty income (£1.8m of which relates to H2 2016)
* Royalty income for Q4 2017 in the range of £12.0m – £12.6m (Q3 2017: £8.9m, Q4 2016: £12.3m)
* 93% of Kestrel’s saleable tonnes in 2017 mined from within the Group’s private royalty land, a significant increase on the 67% earned in 2016
* 90%+ of Kestrel’s saleable tonnes expected to be derived from Anglo Pacific’s private royalty lands for the immediate future
* Royalty income from Maracás Menchen more than doubled in the year, reflecting significant production improvements and a strong vanadium price
* Higher thermal coal prices resulted in an overall increase in royalty revenue for the year from Narrabri of ~15%, despite lower sales volumes
* Cash of £8.1m at December 31, 2017 compared to net debt of £1.0m at the same time in 2016
* Expansion of the Group’s borrowing facility by US$10m to US$40m, which is undrawn and fully available providing significant internal resources to fund future acquisitions
* Non-cash fair value reductions of up to £7.0m on royalty assets (2016: £5.0m)
* Recommended increase in the final dividend from 1.5p to 2.5p, which would result in a total dividend of 7p for 2017, a 16.67% increase on the 6p in 2016 with dividend cover for 2017 expected to be in excess of 2.0x
* 8.3% increase in quarterly dividend instalments from 1.5p to 1.625p commencing with the Q1 2018 interim dividend
Anglo Pacific Group PLC is a global natural resources royalty company. The Company’s strategy is to develop a leading international diversified royalty company with a portfolio centered on base metals and bulk materials, focusing on accelerating income growth mainly through acquiring royalties on projects that are currently cash flow generating or are expected to be within the next 24 months, as well as investment in earlier stage royalties. It is a continuing policy of the Company to pay a substantial portion of these royalties to shareholders as dividends.
