Anglo Pacific Group increases dividend despite fall in profits

published 13 February 2013

Anglo Pacific Group increased its final dividend by 4.5 per cent to 5.75p per share despite a fall in annual operating profits.

The natural resources company reported £9.3m in operating profits, a 70% drop from £31.8m the previous year.

Results were hit by production problems and delays at the firm's Kestrel coking coal mine in Australia due to a longwall changeover and adverse weather during the period. Commissioning setbacks also impacted output.

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Despite the difficulties, Acting Chairman Brian Wides said the group achieved solid performance throughout the year.

He said a rise in coal royalty rates in the Australian state of Queensland offset impact of weaker commodity prices.

The Queensland Government raised royalty rates by 25% to 12.5% above AU$100 and 50% to 15% above AU$150 sales price per tonne. The company believes it will directly benefit future sales from the Kestrel mine.

The group subsequently acquired two new royalty interests during the year, bringing its total up to 22.

"We have been particularly encouraged by the progress across a number of the Group's development royalties, which we believe will bring forward future royalty cash flows," Wides said.

Royalty entitlements for the year, however, came to £15.2m, down from £35m the year earlier.

Anglo's cash position was at £24m by the end of the year, a drop from £32.2m in 2011.

The firm expects results to pick up this year as production at Kestrel recovers and the world economy improves in markets including China, the US, Japan, India and South Korea.

"This confidence has produced better mining markets and a more optimistic outlook for metal prices and in particular iron ore," the company said.

"As Rio Tinto continues to progress with the Kestrel expansion project, we remain confident of a recovery in production from Kestrel in 2013.

"This together with, the substantial increase in royalty rates announced by the Queensland Government in September last year [...] should impact positively on royalty receipts from Kestrel in 2013."

Shares rose 2.39% to 267.50p at 9:34 Wednesday.