Mining royalty company Anglo Pacific's (APF) poor results were primarily due to the weakness of the coking coal market which, combined with floods that severely disrupted production in Queensland at Rio Tinto's Kestrel mine, caused royalty revenues to crater. However, in a further slice of bad luck, the company's balance sheet had to be restated after an apparent overpayment of mining royalties by its principal partner.
The background is that Anglo Pacific apparently received £4.6m more in royalty revenues than it was entitled to from Rio Tinto (RIO) after the mining giant miscalculated the payments. The consequent effect on Anglo Pacific's accounts was that its net assets at year-end 2011 were overstated by £10.7m, while its cash flow this year was hit by the need to pay Rio back. On a positive note, Anglo will see the benefit this year from an increase in the royalty rate in Queensland from 10 per cent to 12.5 per cent if coal prices remain between A$100-A$150 (£66-£99) a tonne, rising to 15 per cent on sale prices above this level. Chief executive John Theobald said he was more optimistic that the supply glut that had affected Chinese steelmakers in 2012 was beginning to ease and that spot prices were starting to edge up.
Broker FinnCap forecasts pre-tax profits of £45.2m and EPS of 30.9p (from £14.2m and 9.2p in 2012) assuming a return to full production at Kestrel.
ANGLO PACIFIC (APF) | ||||
|---|---|---|---|---|
| ORD PRICE: | 274p | MARKET VALUE: | £300m | |
| TOUCH: | 271-274p | 12-MONTH HIGH: | 345p | LOW: 220p |
| DIVIDEND YIELD: | 3.7% | PE RATIO: | 30 | |
| NET ASSET VALUE: | 275p* | NET CASH: | £24m | |
| Year to 31 Dec | Royalties (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 22.1 | 35.3 | 27.3 | 7.80 |
| 2009 | 20.3 | 25.9 | 19.1 | 8.35 |
| 2010 | 30.1 | 65.8 | 52.0 | 9.05 |
| 2011 | 34.6 | 48.4 | 33.5 | 9.75 |
| 2012 | 13.2 | 14.2 | 9.3 | 10.20 |
| % change | -62 | -71 | -72 | +5 |
Ex-div: TBA Payment: TBA *Includes intangible assets of £71.4m, or 65p a share | ||||
