Anglo Pacific Group PLC Results for the year -6-
March 25 2015 - 3:02AM
UK Regulatory
underlying performance. of which provide some assurance over
the receipt and accuracy of royalty
The Group depends on the operator income.
for the accurate calculation
and timely payment of royalties.
Achieving investment projections The Directors have significant experience
The Group's success largely of investing in the mining industry
depends upon its ability to and have considerable expertise in
acquire royalties at appropriate assessing the forward demand for commodities.
valuations. The Group uses consensus or lower
forecasts when valuing all royalty
This success is based on the investments, which reduces the risk
accuracy of investment assumptions of underperformance and a site visit
regarding the estimates of mineral is undertaken, where possible, to
reserves and resources and the assess the viability of the underlying
production estimates of mine project.
operators as well as the Group's
ability to make accurate assumptions The Executive Committee regularly
regarding the valuation, timing review the Group's financial performance,
and amount of revenues to be including the royalty income on a
derived from its royalties, month by month basis for any sign
particularly with respect to of underperformance.
royalties on development stage
properties.
Unknown defects in or disputes
relating to the royalties the
Group holds may prevent it from
realising all of the anticipated
benefits from its royalties.
Financial covenants associated
with secured debt The Group has a conservative approach
The Group's borrowings are secured to borrowings and sets internal leverage
and subject to certain financial limits which are relatively low compared
covenants, the failing of which to the financial limits permitted
could impact on the ability by the loan agreements.
of the Group to continue to
run its business independently. The Group prepares regular cash flow
projections which include forward
Indebtedness may increase the covenant projections such that timely
Group's vulnerability to general action can be taken if headroom deteriorates.
adverse economic and industry
conditions or require the Group
to dedicate a substantial portion
of its cash flow from operations
and proceeds of any equity issuances
to payments on its indebtedness,
rather than, for example, on
new acquisitions or dividend
payments, any of which may place
the Group at a competitive disadvantage
to its competitors that may
have less debt.
Financial risks
Risk description Mitigation
Liquidity risk The Group seeks to ensure that it
can meet all of its obligations as
they fall due by preparing regular
cash flow projections and highlighting
any currency requirements well in
advance of settlement. The Group has
a strong balance sheet, US$24m currently
undrawn on the US$30m three-year revolving
credit facility secured in February
2015 and potential access to the capital
markets to provide additional funding
to meet its obligations as well as
its investment objectives.
Credit risk The Group operates controlled treasury
policies which spreads the concentration
of the Group's cash balances amongst
separate financial institutions with
high credit ratings. The Group's credit
risk on monies advanced to explorers
and operators is taken into account
when assessing the fair value of these
assets at each reporting date. For
receivables, the Group presents these
on the balance sheet net of any amount
for doubtful debt. As these primarily
relate to the Kestrel royalty, the
credit risk is minimal due to the
world class nature of the operator.
Foreign exchange risk The Group's main foreign currency
exposure is to the US dollar as this
is the currency in which most of the
Group's royalty revenue is derived.
With respect to royalty acquisitions,
the Group is exposed to foreign exchange
risk when raising equity in pounds
sterling and transacting in US dollars.
The Directors take this into account
as part of the financing strategy
of each royalty acquisition.
Interest rate risk The Group has limited exposure to
interest rate risk, and its three-year
revolving credit facility is unhedged.
Other pricing risk The value of the Group's royalties
is underpinned by commodity prices
which may affect the future expected
cash flows. This is taken into account
at each reporting date in assessing
for impairment. The Group has a portfolio
of junior mining equity investments
which fluctuate in value based on
the active quoted share price. The
reduction in value of the portfolio
over the last few years has resulted
in a full impairment of unrealised
losses such that any further pricing
risk should be much less material
to the Group.
Condensed Consolidated Financial Statements
CONDENSED CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2014
2014 2013
GBP'000 GBP'000
Royalty related income 3,481 14,731
Amortisation of royalties (759) (854)
Operating expenses (5,524) (3,275)
--------- ---------
Operating (loss)/profit before impairments, revaluations and gain/(losses) on disposals (2,802) 10,602
Gain/(Loss) on sale of mining and exploration interests 1,350 (6,398)
Gain on disposal of coal tenures 1,409 -
Impairment of mining and exploration interests (4,873) (26,321)
Impairment of royalty and exploration intangible assets (10,033) (8,313)
Impairment of royalty financial instruments (15,288) -
Impairment of property, plant and equipment (1,352) -
Revaluation of coal royalties (Kestrel) (11,822) (13,568)
Revaluation of royalty financial instruments - (8,735)
Finance income 439 789
Finance costs (1,408) (2,964)
Other income 1,981 2,012
--------- ---------
Loss before tax (42,399) (52,896)
Current income tax charge (1,386) (715)
Deferred income tax (charge)/credit (3,804) 11,114
--------- ---------
Loss attributable to equity holders (47,589) (42,497)
========= =========
Total and continuing loss per share
Basic and diluted loss per share (42.09p) (39.01p)
Condensed Consolidated Financial Statements
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
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