Anglo Pacific Group plc (LON:APF) Chief Executive Officer Julian Treger caught up with DirectorsTalk for an exclusive interview to discuss their record year, the increased dividend and their debt-free balance sheet
Q1: It’s been a record year for Anglo Pacific, can you explain to us why?
A1: Well, I think it’s been a combination of significantly higher commodity prices plus more production and then our share of production has increased as well. So, it’s quite a number of effects that’s coming through which have resulted in our total royalty income rising by 90% and our total income rising by more than 100%.
Q2: I see that you’ve also increased the dividend, is this something that you’ll continue to do?
A2: Subject to the out-turn for this year, our intention and the policy is to have progressive dividend payments, and not only have we increased the base dividend, but we’ve also allowed us the option to significantly change the Q4 dividend because we’re paying dividends on a quarterly basis. So, if we have a strong year, there’s definitely scope for the dividend to be increased further.
Investors should note that our dividend cover last year, based on adjusted earnings, was 2.4 times so very healthy protection for maintaining and growing the dividend.
Q3: What’s the plan with Anglo Pacific’s new now debt-free balance sheet?
A3: Not only is our balance sheet debt-free, we have net cash as at the end of last year of $10 million (£8 million) and that will grow throughout the year so there should be significant cash generation organically during 2018.
We also have a non-core equity portfolio of between $15-$20 million dollars and, as you say, we have significant borrowing lines which are unutilised. So, we have altogether, we estimate, about $100 million of fire power and although there is some organic growth within the portfolio, it’s unlikely the portfolio would double, in the way it did last year, organically.
So, we still see an opportunity to do very interesting accretive and opportunistic acquisitions of other royalties and that is increasingly the focus of the business in terms of where the growth is going to come from.