These weak results from mining royalty company Anglo Pacific (APF) reflect falling commodity prices and continued exposure to operational risk at several mines. Half-year operating profit slumped to just £4.8m - down 6 per cent year on year - but a thumping 70 per cent below 2011's first-half outcome. Impairment charges of £34.3m, reflecting writedowns to Anglo Pacific's equity portfolio, resulted in a £30m net loss.
Royalties are supposed to deliver steady income, but a quick glance over Anglo Pacific's portfolio shows the business is proving anything but reliable. For example, a port at the Amapa mine was partially destroyed and it's currently unknown when shipping operations will resume; a new government in Greenland has held up permitting at the Isua project, damage to a mining shaft in Spain is hampering production, and work at a Canadian project has ground to a halt because of environmental resistance.
That said, it's not all bad. Anglo Pacific maintained its dividend at 2012's level, although it is slightly worrying that the dividend is little more than covered. Moreover, mining has recently started at the Kestrel South mine, with production there ramping up until 2016.
Broker FinnCap forecasts adjusted full-year pre-tax profit of £8.1m, with EPS of 12.1p, rising to £22m and 15.1p in 2014 (from £18.4m and 13p in 2012).
ANGLO PACIFIC (APF) | ||||
|---|---|---|---|---|
| ORD PRICE: | 196p | MARKET VALUE: | £215m | |
| TOUCH: | 196-197p | 12-MONTH HIGH: | 293p | LOW: 160p |
| DIVIDEND YIELD: | 5.2% | PE RATIO: | NA | |
| NET ASSET VALUE: | 227p* | NET CASH: | £16.4m | |
| Half-year to 30 Jun | Royalties (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 6.87 | 7.94 | 4.75 | 4.45 |
| 2013 | 6.32 | -34.5 | -27.6 | 4.45 |
| % change | -8 | - | - | - |
Ex-div: 27 Nov Payment: 4 Feb *Includes intangible assets of £67m, or 62p a share | ||||
