Anglo Pacific Group PLC (‘Anglo Pacific’, the ‘Company’ or the ‘Group’) (LSE: APF) (TSX: APY) is pleased to announce its full year results for the year ended 31 December 2017 and the publication of its audited 2017 Annual Report and Accounts. These are available on the Group’s website at www.anglopacificgroup.com and on SEDAR at www.SEDAR.com. The following statement should be read in conjunction with the audited financial statements.
Royalty Income Highlights
2017 £m % 2016 £m 2015 £m
Kestrel 28.8 +119% 13.1 3.6
Narrabri 4.9 +17% 4.3 3.2
EVBC 1.7 +42% 1.2 1.3
Maracás Menchen 2.0 +150% 0.8 0.6
Four Mile – 0.3 –
Total royalty income * 37.4 +90% 19.7 8.7
* Royalty income does not include income from the Group’s Denison financing arrangement of which £5.0m was received in 2017 (£1.8m relating to H2 2016)
•Record £37.4m in royalty income, an increase of 90% on last year (2016: £19.7m)
•Free cash flow more than tripled in 2017 to £41.5m (2016: £13.4m) resulting in free cash flow per share2 of 23.20p (2016: 7.93p)
•72% increase in adjusted earnings per share1 to 16.82p (2016: 9.76p) which excludes non-cash valuation items that do not impact on dividend cover
•7% increase in the total dividend for 2017 to 7p per share (2016: 6p per share) with dividend cover, based on adjusted earnings, of 2.4x (2016: 1.6x)
•Cash of £8.1m at 31 December 2017 (31 December 2016: Net debt £1.0m) after investing £29.4m, paying £15.9m dividends and repaying all outstanding borrowings
•Strong increase in commodity prices driving the Group’s revenue; noticeably coking coal, thermal coal and vanadium
•Significant increase in sales volumes derived from within our private royalty area at Kestrel – 93% in 2017 compared to 67% in 2016 – with potential to increase ROM production to 5.7mt in the short to medium term
•Higher coal prices compensated for lower sales volumes at Narrabri, leading to an overall increase in revenue
•Record production at Maracás Menchen in 2017 of 9,297 tonnes, a 17% increase from 2016 with a more than doubling of average vanadium prices year on year
•Received £5.0m in cash from Denison in line with expectations
•Revenue from EVBC was higher owing to increased production from Orvana, which is continuing to explore possible mine life extension
•The Group acquired a Gross Revenue Royalty interest for the development of the Piaui Nickel Cobalt Project located in north eastern Brazil for an initial US$2m consideration
Julian Treger, Chief Executive Officer of Anglo Pacific, commented:
“2017 was a record year for Anglo Pacific with royalty income of £37.4m, and total income of £42.4m when the cash flows from our Denison transaction are included. This was achieved through a combination of higher commodity prices across our portfolio and a significant increase in mining from within our private royalty area at Kestrel – up from 67% in 2016 to 93% – very much in line with our guidance.
Anglo Pacific has enjoyed two years of significant growth in income and aims to maintain this momentum for future years by acquiring new royalties. With access to over US$50m of liquidity from our balance sheet and a favourable commodity pricing outlook, we believe we are well placed to take advantage of the opportunities to deploy capital in an accretive manner.
Our pipeline is in very good shape and we move forward into 2018 with optimism.”
1 Adjusted earnings/(loss) represents the Group’s underlying operating performance from core activities. Adjusted earnings/(loss) is the profit/(loss) attributable to equity holders less all valuation movements, non-cash impairments and amortisation charges (which are non-cash IFRS adjustments that arise primarily due to changes in commodity prices), finance costs, any associated deferred tax and any profit or loss on non-core asset disposals as these are not expected to be ongoing. See note 11 to the financial statements for adjusted earnings/(loss).
2 Free cash flow is the net increase/(decrease) in cash and cash equivalents prior to core acquisitions, equity raising and changes in the level of borrowings. See note 33 to the financial statements for free cash flow per share.