LONDON (Alliance News) - Anglo Pacific Group PLC Wednesday reduced its dividend for the year after its royalty income fell in 2014, but said its pretax loss narrowed on the back of making fewer impairments and said it expects a better performance in 2015.
The natural resources royalties company reported a pretax loss of GBP42.4 million for the year ended December 31, narrower than the GBP52.9 million loss reported in 2013 after making fewer impairments.
Impairment and revaluations in 2014 totalled GBP43.4 million, down compared to GBP56.9 million a year earlier. The impairments and revaluations were associated with its coal assets and impairments against mining, exploration and financial instruments.
The company also booked a GBP1.4 million gain on the sale of assets, compared to a GBP6.4 million loss a year earlier, alongside a GBP1.4 million gain on the disposal of coal tenures from nil the previous year, whilst finance income increased and finance costs fell.
Income from royalties in 2014 dropped by 75% to GBP3.5 million compared to GBP14.7 million a year earlier, also impacted by higher operating expenses of GBP5.5 million from only GBP3.3 million. The decrease in royalties is mainly attributable to the Kestrel coal field in Australia, which contributed GBP8.3 million less year-on-year.
The reason the Kestrel field contributed less in royalties in 2014 was because the majority of mining at Kestrel in the period occurred outside of land owned by Anglo Pacific, it said.
"By far the greatest reason for the group's adjusted loss in 2014 was the lack of production within the group's royalty lands at Kestrel. The group has historically been reliant on Kestrel for the majority of its income, the sensitivity of which should be reduced by the recently announced acquisition of the Narrabri royalty," it said.
However, Anglo Pacific said it is expecting its royalty from Kestrel to increase in 2015 as 20% to 25% of total mining is due to take place in the company's land in the first half of 2015, with 70% to 75% of total mining at the field due to take place in the company's land in the second half, it said.
As a result, Anglo Pacific proposed a final dividend of 4.0 pence per share, leading to a full year dividend of 8.45 pence per share, down from 10.2 pence in 2013. The company said it reviewed its dividend policy due to the lower royalty income, but said its longer-term policy is to use 65% of adjusted earnings for dividends, with a minimum of 8.0 pence per share dividend per year in the medium term.
At the end of December, the company reported a cash balance of GBP8.8 million, with net cash of GBP8.7 million.
"While the mining sector continues to face challenges, we believe that this in itself brings opportunities for Anglo Pacific, and we will assess opportunities that fit our criteria of enhancing value and growth to our shareholders. Our financial resources have been strengthened, and we have capacity to deliver on our strategy to continue the positive diversification of our royalty portfolio away from coal and other bulk commodities, which should in turn support returns to shareholders," said Chief Executive Julian Treger.
Anglo Pacific shares were up 1.6% to 85.81 pence per share on Wednesday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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