A RECORD YEAR
ANGLO PACIFIC GROUP PLC
2021 ANNUAL REPORT & ACCOUNTS
NEW APG WEBSITE...
www.anglopacificgroup.com
PERFORMANCE MEASURES
Adjusted earnings per shareThroughout this report a number of financial measures are used to assess the Group's performance. The measures are defined as follows:
Portfolio contribution
Portfolio contribution represents the funds received or receivable from the Group's underlying royalty related assets which is taken into account by the Board when determining dividend levels.
Adjusted earnings represents the Group's underlying operating performance from core activities. Adjusted earnings is the profit/ (loss) attributable to equity holders, plus royalties received from royalty financial instruments carried at fair value through profit or loss, less all valuation movements and impairments (which are non-cash adjustments that arise primarily due to changes in commodity prices), together with amortisation charges, foreign exchange gains/(losses), any associated deferred tax and any profit or loss on non-core asset disposals.
Portfolio contribution is royalty and stream related revenue (refer to note 5) plus royalties received or receivable from royalty financial instruments carried at fair value through profit or loss ('FVTPL') and principal repayment received under the Denison financing agreement (refer to note 21). Refer to note 35 to the financial statements for portfolio contribution.
Adjusted earnings divided by the weighted average number of shares in issue gives adjusted earnings per share. Refer to note 12 to the financial statements for adjusted earnings/(loss) per share.
Dividend cover
Operating profit/(loss)
Dividend cover is calculated as the number of times adjusted earnings per share exceeds the dividend per share. Refer to note 13 to the financial statements for dividend cover.
Operating profit/(loss) represents the Group's underlying operating performance from its royalty and stream interests. Operating profit/(loss) is royalty income, less amortisation of royalties and operating expenses, and excludes impairments, revaluations and gain/(loss) on disposals. Operating profit/(loss) reconciles to 'operating profit/(loss) before impairments, revaluations and gain/(losses) on disposals' on the income statement.
Free cash flow per share
Free cash flow per share is calculated by dividing net cash generated from operating activities, plus proceeds from the disposal of non-core assets and any cash considered as repayment of principal, less finance costs, by the weighted average number of shares in issue. Refer to note 34 to the financial statements for free cash flow per share.
WHAT'S INSIDE...
STRATEGIC REPORT
GOVERNANCE
02
04
Our business at a glance Our business model
06
08
Our approach and investment strategy Our portfolio
74 78
Task Force on Climate-Related
80
Financial Disclosures Corporate governance The Board
10
Chairman's statement
85
14
18
Chief Executive Officer's statement Market overview
87
91
24
54
Business review Financial review
92
93
57
58
60
Key performance indicators Engaging with our stakeholders Risk management
105
Nomination Committee Audit Committee Sustainability Committee Remuneration Committee Directors' remuneration report Directors' report
107
Statement of Directors' responsibilities
62
Principal risks
FINANCIAL STATEMENTS
SUSTAINABILITY PROGRESS REPORT
108
115
Independent auditor's report Consolidated income statement
68 70
2021 sustainability highlights
116
Our approach to sustainability
117
118
119
120 121
Consolidated statement of comprehensive income Consolidated and Company balance sheets Consolidated statement of changes in equity Company statement of changes in equity Consolidated statement of cash flows and Company statement of cash flows Notes to the consolidated financial statements
OTHER INFORMATION
164 164 165
Shareholder statistics Corporate details Forward-looking statements
WE ARE THE LEADING LONDON LISTED ROYALTY AND STREAMING BUSINESS FOCUSED ON INVESTING IN THE COMMODITIES REQUIRED TO PROVIDE FOR A MORE SUSTAINABLE WORLD
03 16 66
A RECORD AND TRANSFORMATIONAL YEAR FOR ANGLO PACIFIC
As the world moves towards a low-carbon economy, Anglo Pacific has also undergone its own transformation during 2021.
EXECUTING OUR STRATEGY
Anglo Pacific has successfully executed on its strategy to build a diversified royalty and streaming portfolio with a focus on commodities which encompass environmental benefits and support a more sustainable world.
10 | A RECORD YEAR IN THE GROUP'S HISTORY |
18 | SPOTLIGHT ON COBALT |
INVESTING IN ESSENTIAL RESOURCES
A royalty and streaming company giving investors exposure to 21st century commodities such as cobalt, copper, nickel, vanadium and uranium.
14 | EVOLUTION 2016-2022 RECORD ROYALTY PORTFOLIO CONTRIBUTIONS |
24 | OUR PORTFOLIO READY FOR A LOW CARBON FUTURE |
OUR BUSINESS AT A GLANCE
ROYALTIES AND STREAMS PROVIDE INVESTORS WITH 'TOP LINE' EXPOSURE TO A BASKET OF COMMODITIES WITHOUT OPERATIONAL OR INFLATIONARY RISK
PRIMARY LISTING | SECONDARY LISTING |
LSE | TSX |
London Stock Exchange | Toronto Stock Exchange |
(LSE: APF) | (TSX: APY) |
ROYALTIES AND STREAMS EXPLAINED
GRR: GROSS REVENUE ROYALTY
OVER THE PAST EIGHT YEARS ANGLO PACIFIC HAS TRANSFORMED ITS COMMODITY EXPOSURE
Towards 21st century commodities and driving global decarbonisation. Our 15 principal royalty and streaming related assets across 10 commodities.
Read more in our business review.
A natural resources royalty is a non-operating interest in a project that provides the royalty holder with the right to a proportion of revenue, profit or production.
Historically, royalties originated as a result of the sale of a mineral property, allowing the seller to retain some ongoing economic participation in the property. However, an increasing number of royalties are now created directly by operators and developers as a source of finance. A royalty holder is not generally obligated to contribute towards operating or capital costs, nor environmental or reclamation liabilities.
TYPES OF NATURAL RESOURCES ROYALTIES AND STREAMS
The Group's royalties are mostly revenue or production-based royalties. Typically, these royalties are either Gross Revenue or Net Smelter Return royalties, each of which can be described in more detail opposite.
A GRR entitles the royalty holder to a fixed portion of the gross revenues generated from the sales of mineral production from a property. In calculating a GRR payment, deductions, if any, applied by the property owner to reduce the royalty payment are usually minimal, and GRRs are therefore the simplest form of royalty to account for and implement.
NSR: NET SMELTER RETURN ROYALTY
NSR royalties entitle the holder to a fixed portion of the net revenues received from a smelter or refinery from the sales of mineral production from a property, after the deduction of certain offsite realisation costs. Typical realisation costs include those related to transportation, insurance, smelting and refining. These deductions are generally higher in base metals mines due to the semi-finished product, such as concentrate, often being produced at the mine site, when compared to precious metals mines, which produce a nearly-finished product on site
PRIMARY VERSUS SECONDARY ROYALTIES
Primary royalties are entered into between a royalty company and the property owner directly, where the property owner grants a royalty to the royalty company in return for one or more up-front cash payments from the royalty company. In contrast, secondary royalties are existing royalties that are acquired from a third party with no payment made to the owner of the underlying property.
METAL STREAMS
A metal stream is an agreement that provides, in exchange for an upfront payment, the right to purchase all or a portion of one or more metals produced from a mine, at a price determined for the life of the stream. Streams, whilst providing similar outcomes for Anglo Pacific, are not royalties because they do not constitute an interest in land and there is an ongoing cash payment required to purchase the physical metal. However, a stream holder is not ordinarily required to contribute towards operating or capital costs, nor environmental or reclamation liabilities.
INNOVATIVE STRUCTURES
Our primary focus is on royalty and streaming transactions, however, we will also review alternative structures that deliver superior long-term cash flows. An example would be the Denison financing arrangement executed in 2017 which was structured as a long-term loan with a separate stream element, deriving income from a tolling agreement on the McClean Lake uranium mill, which processes ore from the world class Cigar Lake uranium operation in Canada. We will always look for ways of gaining exposure to tier one natural resource projects and sometimes this will involve creative thinking and structuring to support our main objective of acquiring royalties and streams.
OUR RECORD RESULTS ARE ALLOWING US TO REPAY BORROWINGS AND RECYCLE CAPITAL INTO GROWTH OPPORTUNITIES WHILST ALSO MAINTAINING A SECTOR LEADING DIVIDEND
24 66
RE-POSITIONED TOWARDS 21ST CENTURY COMMODITIES
24 66
COMMODITY EXPOSURE
by asset value at 31.12.21
08 24
GEOGRAPHIC EXPOSURE
by asset value at 31.12.21
26 46 51
STAGE OF PRODUCTION
by asset value at 31.12.21
EMIX GLOBAL MINING INDEX
2012-2022
excl. gold & energy
150
125 100 75 50 25
DEC 11
DEC 12
Coking coal 13%
EXIT FROM THERMAL COAL
Narrabri sale completed in November 2021, consistent with our stated strategy of moving away from carbon-based energy exposure.
Iron ore 8%
Gold 4%Coking coal 13%
Iron ore 8%
Copper 10%
Vanadium 10%
Gold 4%
Uranium 6%
Cobalt 47%
Other 2%
16 | SEAMLESS TRANSITION Pleased to announce the appointment of Mr. Marc Bishop Lafleche as Chief Executive Officer, with effect from 1 April 2022. Mr. Bishop Lafleche succeeds Mr. Julian Treger. |
DEC 13
DEC 14
DEC 15
DEC 16
DEC 17
Australia 14%
Canada 60%
Chile 10%
Brazil 11%
Spain 2%
Other 2%Producing 95%
Development 1%
Early-stage 4%Mining Index APG - TSR Re-based to 100
DEC 18
DEC 19
DEC 20
DEC 21
57 | 85.3 207.7 $85.3m $207.7m $43.7m $9.8m ROYALTY RELATED REVENUE 43.7 ROYALTY ASSETS ACQUIRED 9.8 20 21 20 21 25.18c 25.18 23.28c 33.77 15.69c 33.77c 23.28c ADJUSTED EARNINGS PER SHARE 15.69 FREE CASH FLOW PER SHARE 20 21 20 21 7.00p 9.00 2.6x 2.6 9.00p 7.00 1.4x DIVIDEND PER SHARE DIVIDEND COVER 1.4 20 21 20 21 |
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Anglo Pacific Group plc published this content on 30 March 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 March 2022 10:24:04 UTC.