Anglo Pacific Group plc (LON:APF) Chief Executive Officer Julian Treger caught up with DirectorsTalk for an exclusive interview to discuss their recent trading update
Q1: We note a trading update released for the period 1st July to 9th November 2017, can you talk us through some of the main highlights?
A1: With pleasure, yes. I think we saw in this quarter another strong period of growth year-on-year and the highlight in particular which was in part helped by one-off events was the tripling of our cash flow from around £5 million to around £15 million, just for the quarter. That also was accompanied by a doubling of the income that was generated from our royalty portfolio and as a result of all of that, despite acquisitions, net cash position improved significantly from around £500,000 of debt to just over £6 million of net cash at the end of the quarter.
Q2: What have been the key drivers in the increase for Anglo Pacific Group?
A2: I think the key drivers have been actually higher than expected commodity prices, in particularly both thermal and coking coal, which are two significant parts of our portfolio, have been much stronger than people expected at the beginning of the year and certainly year-on-year, they continued to show very strong increases. I think that’s also coupled with the fact that our share of the royalties from the Kestrel royalty which is a significant part of our portfolio has gone up year-on-year and we are close to 100% now for the next years, maybe 8-10 years.
On top of that, we always have, fortunately, some exposure to vanadium which has been one of the commodities favoured for storage of electricity in relation to electric batteries and that’s also shown significant like-for-like growth.
Finally, we did make an acquisition at the beginning of the year which is also contributing to the like-for-like comparison.
Q3: As you mentioned, you are in a net cash position of £6.2 million, do you have your eyes on any further acquisitions down the line?
A3: Yes, I would hope that we could try and execute on one more investment by the end of year and we continue to believe that we’re in the beginnings of the recovery phase of the super cycle and we should accelerate the rate in which we make new royalty investments. So, if we could do three this year, hopefully we can do more next year.
Q4: In terms of other news, what can we expect to see over the next quarter from Anglo Pacific Group?
A4: I think we actually expect Q4 to be hopefully the strongest quarter of the year and we see a strong finish to the 2017 period. As I said, we expect to see an acquisition hopefully during the period as well and that will inform our decision as to how we deal with the dividends for the full calendar year. So, investors should expect a change in dividend, hopefully upwards, for Q4 which will be announced at the beginning of next year.