Anglo Pacific Group PLC
Report and Accounts
2009
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Anglo Pacific Group PLC
Annual Report 2009
CONTENTS
Directors and advisers
Chairman’s review
Directors’ report
Corporate governance
Directors’ remuneration report
Directors’ responsibilities in the preparation of financial statements
Report of the independent auditor
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated and company balance sheets
Consolidated statement of changes in equity
Company statement of changes in equity
Consolidated and company cash flow statements
Notes to the consolidated financial statements
Shareholder statistics
Notice of Annual General Meeting
Page
2
3
7
20
24
28
29
30
31
32
33
35
36
37
70
71
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Anglo Pacific Group PLC
Annual Report 2009
DIRECTORS
Executive
P.M. BOYCOTT (Chairman)
A.C. ORCHARD (Chief Investment Officer)
M.J. TACK (Finance Director)
J. THEOBALD (Chief Operating Officer)
B.M. WIDES (Chief Executive)
Non-Executive
M.H. ATKINSON (Senior Independent Director)
J.G. WHELLOCK
A.H. YADGAROFF
SECRETARY
M.J. TACK
HEAD OFFICE
17 HILL STREET, LONDON W1J 5NZ
REGISTERED OFFICE
17 HILL STREET, LONDON W1J 5NZ
Registered in England No. 897608
AUDITORS
GRANT THORNTON UK LLP
Grant Thornton House, Melton Street, London NW1 2EP
BANKERS
REGISTRARS
BARCLAYS BANK PLC
Business Banking Larger Business
27th Floor
Churchill Place
London E14 5HP
EQUINITI REGISTRARS LIMITED
Aspect House
Spencer Road
Lancing
West Sussex BN99 6DA
STOCKBROKERS
LIBERUM CAPITAL LIMITED
Citypoint
10th Floor
One Ropemaker Street
London EC2Y 9HT
LISTINGS
LONDON STOCK EXCHANGE
Full Listing
Symbol APF
AUSTRALIAN STOCK EXCHANGE
Dual Listing
Symbol AGP
WEBSITE
www.anglopacificgroup.com
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Anglo Pacific Group PLC
Annual Report 2009
CHAIRMAN’S REVIEW
In the year under review, I am pleased to report that the Group has acquired several new royalty interests and
will be recommending an increased final dividend.
Financial Highlights
Royalties
• Australian coal royalties independent valuation of £149.9 million (2008: £93.3 million)
• Total value of other royalties £27.3 million (2008: £7.8 million)
• Coal royalty income for the year of £20.3 million (2008: £22.1 million)
Assets
• Total assets increased by 77% to a record £312 million (2008: £176 million)
• Total quoted and unquoted strategic interests valued at £113.5 million (2008: £45.8 million)
• Cash and royalty receivables at the year end of £17.9 million (2008: £28.4 million)
Earnings
• Profit before tax of £25,883,000 (2008: £35,255,000)
• Earnings per share of 19.20p (2008: 27.25p)
• Realised profits for the year from non-core mining interests of £6.4 million (2008: £14.0 million)
Dividends
• Final dividend increased by 6.9% to 4.65p per share (2008: 4.35p)
• Total dividends for the year increased by 7.1% to 8.35p (2008: 7.80p)
Operational Highlights
• New royalty rights acquired in gold, platinum and uranium
• Compliant resources announced for the Trefi and Panorama Canadian coal projects
• Threefold increase in value of strategic quoted interests
• Steady coking coal royalty receipts
•
• TSX listing progressing
Increased exposure to coal and uranium projects
2009 Review and Results
The latter part of 2009 has seen an improving economic outlook and substantially higher commodity prices.
This is in sharp contrast to 2008 and the first few months of 2009 which were characterised by falling stock
markets and the banking crisis.
This recovery in prices has benefited the Group and has been driven by a continuing demand for raw materials
from the expanding Chinese and Asian economies. In addition, the protracted crisis in the banking sectors of
the Western economies has led to an extended period of quantitative easing by several Governments. This is
helping a broader economic recovery, but has raised concerns about future inflation and currency stability
resulting in higher prices for gold and precious metals where the Group has substantial exposure.
The rising prices of base metals, oil and coal products have produced a strong recovery in the general mining
sector. The junior quoted mining markets have also recently shown signs of recovery with indications of
investment returning to the sector. This and the Group’s policy of active involvement in mining projects has
produced a substantial improvement in the value of the Group’s total assets.
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Annual Report 2009
CHAIRMAN’S REVIEW
In the second half of the year the price of coking coal recovered sharply resulting in an increased Australian coal
royalty evaluation at the year end and steady coking coal receipts for the year. The Group made substantial
progress in developing other royalty interests with four new royalties acquired. The recovery in world stock
markets during the year resulted in a threefold increase in the value of the Group’s quoted interests.
The Group’s coal royalty revenues for the year were £20.3 million (A$41 million) compared to £22.1 million
(A$48 million) in 2008. This reflected the lower contracted price of circa $127 per ton in April 2009 compared
with an agreed price of circa US$295 for the previous year. Over the course of 2009, however, the prices of
both thermal and metallurgical coal from Australia have continued to benefit from the increasing demand for
seaborne coal from China. Consequently, the Group’s coal royalty interests were independently valued at 31st
December 2009 at £149.9 million compared to £93.3 million at 31st December 2008.
The Group realised capital gains of £6.4 million during the year from the sale of non-core mining interests,
compared to £14.0 million in 2008. This reflected relatively subdued junior mining markets during most of the
year. Including royalty revenues, the Group achieved earnings of 19.20p per share compared to 27.25p in 2008.
In addition to the Kestrel and Crinum coking coal royalties in Queensland, Australia, the Group now owns seven
further royalty entitlements. These are in addition to its royalty rights to mineral exploration on nearly five
million acres of the Athabasca Basin in Canada. The total value of the Group’s new royalty entitlements was
£27.3 million at 31st December 2009 compared to £7.8 million at the end of the previous year.
The value of the Group’s private mining interests and quoted stakes in mining projects recovered sharply to
£113.5 million at 31st December 2009 compared to £45.8 million at 31st December 2008. The private mining
interests remain in the financial statements at cost and include the Trefi and Panorama coal projects in British
Columbia where NI43-101 and JORC compliant resources have been announced for both deposits.
At 31st December 2009 the Group had no borrowings and £14.2 million of cash in the bank.
These earnings and balance sheet valuations represent a solid outcome during a year when the direction of the
world’s economy has continued to be uncertain. This progress is in no small part due to the Group’s sensible
management of its balance sheet and its conservative approach to mining project evaluation.
The Board is recommending that the final dividend for the year ended 31st December 2009 be increased by 6.9%
to 4.65p per share.
Strategy and Progress
The Group’s strategy remains focused on securing new royalties by acquisition and through investment in its
mining interests in order to generate strong cashflows and continue to pay dividends to its shareholders. The
Group remains committed to a progressive dividend policy and to further expanding its other mining interests
and royalty flows in pursuit of this objective.
Royalties
The Group has continued to expand its royalty interests with four new acquisitions during the year. The
acquisition of these new royalty interests further demonstrates the Group’s progress in delivering its strategy to
broaden and diversify its portfolio of royalties.
• Uranium (Australia): in March 2009 the Group acquired for A$6 million a 1% net smelter royalty (NSR) on
the Beverley Four Mile uranium project in South Australia. This project has received environmental
approval from the Federal Government and is expected to go into production towards the end of 2010.
• Platinum (Canada): in May 2009 the Group purchased options to acquire a 1% royalty on each of Northern
Shield Resources’ Highbank Lake and Eastbank properties in Western Ontario, Canada. Northern Shield
has a joint venture agreement with Impala Platinum Holdings of South Africa for Impala to fund and
explore for platinum group metals on the Highbank Lake property.
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Annual Report 2009
CHAIRMAN’S REVIEW
• Gold (Canada): in July 2009 the Group purchased for C$8 million a 2.5% NSR on Northern Star Mining
Corporation’s Midway and McKenzie Break projects in Quebec, Canada. Northern Star poured its first gold
at the Midway gold project in February 2010.
• Uranium (Europe): in December 2009 the Group acquired for A$4 million a 1% NSR on all future uranium
production from the Spanish and Portuguese properties owned by Berkeley Resources. Uranium production
at the Salamanca project is expected to commence in 2013.
On 23rd September 2009 Orvana Minerals Corporation completed its takeover of Kinbauri Gold Corporation
which owns the El Valle gold project in northern Spain, where the Group retains a 2.5% NSR. Orvana recently
announced that it is on budget and on schedule to commence production at El Valle in January 2011.
On 13th May 2009 the Group made an unconditional on–market cash bid of A$0.30 per share for all the
outstanding issued share capital of Royalco Resources Limited (“Royalco”), an Australian mining company
which owns a number of royalty interests in Australasia. The offer price was increased to A$0.34 on 3rd July
2009 and the bid closed on 10th July 2009, resulting in the Group increasing its shareholding from just under
20% to over 31%. On 25th September 2009 Chris Orchard, the Group’s Chief Investment Officer and an
executive director, was appointed to the Royalco Board to assist Royalco’s management in developing and
expanding its royalty interests. The Group’s interest in Royalco is now accounted for as an Investment in
Associate and is excluded from quoted investments.
Assets
During the year the Group’s cash, receivables and strategic investments increased in value by £58.2m to £132.7
million (2008: £74.5 million). Together with the Group’s coal and other royalties worth £177.2 million and
fixed assets and capitalised exploration costs of £2.5 million, the Group’s total assets at 31st December 2009
increased by 77% to £312 million (£176 million at 31st December 2008). Furthermore, this did not include any
increase in value over cost that may be attributable to the Group’s expanding private coal interests in Canada.
The Group remains debt free and its liquid resources are held in a spread of currencies and banks. The Group’s
mining interests and royalty revenues are mainly denominated in Australian, Canadian and US dollars.
Private Coal Projects
On 10th September 2009 the Group announced an initial NI43-101 and JORC compliant Measured and Indicated
Resource estimate of 39.35 million tonnes and an Inferred Resource of 51.6 million tonnes at its Trefi Coal
Project in Northeast British Columbia, Canada. A Scoping Study on this project is in the process of being
finalised.
On 16th February 2010 the Group released an initial resource statement on the Panorama Coal Project in the
Groundhog Coalfield in Northwest British Columbia. This showed a NI43-101 and JORC compliant Indicated
Resource of 13.7 million tonnes and an Inferred Resource of 24.1 million tonnes of anthracite and semi-
anthracite coal.
Quoted Equity Interests
The Group’s quoted equity interests disclosed on the LSE, ASX and TSX, where initial equity stake disclosure
levels are 3%, 5% and 10% respectively, amount to £77 million in eighteen different holdings. The balance of
quoted holdings of £23 million is made up of a further twenty incubator investments. The split of the Group’s
strategic interests by commodity can be seen on the Group’s website at www.anglopacificgroup.com where
links to all the equity disclosures can be accessed.
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Annual Report 2009
CHAIRMAN’S REVIEW
Dividends
On 3rd July 2009 a final dividend of 4.35p per share for the year ended 31st December 2008 was paid.
Shareholders representing 21.0% of the issued share capital elected to take scrip instead of cash. The interim
dividend of 3.70p per share for the year ending 31st December 2009 was paid to shareholders on 13th January
2010. Shareholders representing 25.8% of the issued share capital elected to take scrip instead of cash.
Subject to approval at the AGM to be held in London on 21st April 2010, the 2009 final dividend of 4.65p per
share will be paid to shareholders on 7th July 2010. This brings the total dividends for the year to 8.35p (2008:
7.80p). Depending on the share price at the time, the Board will consider whether shareholders will again be
given the opportunity to elect to receive a scrip dividend instead of cash.
Board Developments
Having originally joined Anglo Pacific as Chief Investment Officer and Chief Operating Officer respectively,
Mr Chris Orchard and Mr John Theobald were appointed to the Board on 22nd June 2009.
Their skills will greatly assist in the evaluation of new royalty propositions and the management of the Group’s
strategic interests.
Overseas Listings
The application for listing of the Group’s shares on the Toronto Stock Exchange is progressing. The listing is
anticipated during the second quarter of 2010. As a substantial number of the Group’s private and quoted
mining interests are in Canada, it is the Group’s medium term strategy to broaden the shareholder base to
include both Canadian and American investors.
Furthermore, the Group is seeking to de-list from the Australian Stock Exchange due to a lack of liquidity,
negligible volumes and less than two percent of the Group’s share capital being held by the Australian Share
Register.
Outlook
New contract prices for Kestrel and Crinum coking coal will become effective in April 2010. These are
expected to be higher than the previous year as spot coking coal prices have recently increased towards US$200
per ton. Output at the Kestrel mine remains buoyant whilst some production still continues from the private
ground at Crinum.
Despite the recovery in metal prices and equity markets, the raising of mining finance from conventional lenders
or equity issues still remains challenging for junior mining companies. In this environment the Group continues
to receive a steady flow of enquiries about potential royalty opportunities.
With its cash resources, strong royalty revenues and pro-active management, Anglo Pacific Group will continue
to make the acquisition of new royalties its overriding strategic focus.
In conclusion I would like to thank my Board colleagues and staff for their considerable efforts in sustaining the
continuing growth of our Group and our shareholders for their ongoing support.
P.M. Boycott
Chairman
24th February 2010
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Anglo Pacific Group PLC
Annual Report 2009
DIRECTORS’ REPORT
The directors submit their report and the Group financial statements of Anglo Pacific Group PLC for the year
ended 31st December 2009.
Anglo Pacific Group PLC is a public limited company, incorporated in England, and quoted on the London
Stock Exchange and the Australian Stock Exchange.
Principal activities
The activities of the Group, conducted through the holding company and its subsidiary undertakings, are
summarised below: -
Coal royalties
The Group, via its wholly owned Australian subsidiary Gordon Resources Limited, owns half of a royalty
entitlement to the output from the Kestrel and Crinum underground mines in Queensland other than Crown
areas. The basis of calculation of the royalty is a two tier royalty rate: 7% of the invoiced value of the coal sold
below A$100 per tonne and 10% of the invoiced value of coal above A$100 per tonne.
Uranium royalties
The Group owns a 1% Net Smelter Royalty (NSR) over the Beverley Four Mile Uranium project in South
Australia.
The Group owns a 1% NSR over the Salamanca Uranium project in Spain, operated by Berkeley Resources
Limited.
In addition, the Group holds the royalty rights to mineral exploration tenures covering approximately 4.8m acres
of the Athabasca Basin, Canada.
Gold royalties
The Group owns a 2.5% NSR on the Engenho gold project in Brazil, operated by Mundo Minerals Limited.
The Group owns a 2.5% NSR, escalating to 2.75% for gold prices in excess of US$1,250 per ounce, on
Northern Star Mining Corporation's Midway and McKenzie Break properties in Quebec, Canada.
The Group also owns a 2.5% NSR, escalating to 3% for gold prices in excess of US$1,100 per ounce, on the El
Valle deposit in Spain. This deposit is currently being developed by Orvana Minerals.
Other royalties
The Group owns a 2% NSR on the Jogjakarta Iron Sands project in Indonesia, operated by Indo Mines Limited.
Mining and exploration interests
At 31st December 2009 the Group owned a number of strategic mining and exploration interests held for the
purposes of generating additional royalty flows including:
a number of quoted and unquoted coal, uranium, gold, base metals and PGM mining projects;
a stake in Royalco Resources Limited;
•
•
• mineral licences in the Groundhog (Panorama and Discovery) and Peace River (Trefi) Coal deposits in
British Columbia, Canada;
a joint venture with Core Coal Holdings to identify mining opportunities in Australia as well as
carrying out detailed investigations into a potential new coal area in Australia; and
a talc deposit in Shetland.
•
•
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Anglo Pacific Group PLC
Annual Report 2009
DIRECTORS’ REPORT
Results and dividends
The consolidated income statement is set out on page 30 of the financial statements.
The Group profit after tax decreased by 29% to £20,631,000 (2008: £29,261,000)
The Directors recommend a final dividend of 4.65p per share for the year ended 31st December 2009 which with
the interim dividend of 3.70p per share paid on 13th January 2009 will make a total for 2009 of 8.35p per share
(2008: 7.80p). The Board proposes to pay the final dividend on 7th July 2010 to shareholders on the Company’s
share register at the close of business on 7th May 2010. As with the interim dividend, depending on the share
price at the time the Board will consider whether shareholders will be given the opportunity to elect to receive a
scrip dividend instead of cash.
5 Year Earnings per share and Dividend Performance
e
r
a
h
s
r
e
p
)
p
(
e
c
n
e
P
35.00
30.00
25.00
20.00
15.00
10.00
5.00
0.00
2005
2006
2007
2008
2009
Dividend
Earnings Per Share (p)
Review of the business
This business review comprises the Financial and Operational Reviews set out below as well as the Chairman’s
Review on pages 3 to 6. The Key Performance Indicators and Principal Risks and Uncertainties laid out on
page 12 also form part of this review.
The Group’s business is a going concern as interpreted by the Guidance on Going Concern and Financial
Reporting for directors of listed companies registered in the United Kingdom, published in October 2009.
Financial Review
Group profits before tax for the year ended 31st December 2009 were £25,883,000 compared to £35,255,000 for
the previous year. Earnings per share for the year decreased by 30% to 19.20p (2008: 27.25p). The Group had
realised capital gains of £6,367,000 (2008: £14,016,000) from its various mining interests.
The Group’s Australian coal royalty interests have been independently valued at £149.9 million as at 31st
December 2009 (2008: £93.3 million). The change in the valuation compared to last year has been credited to
the revaluation reserve after accounting for deferred tax.
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Annual Report 2009
DIRECTORS’ REPORT
The Group’s other royalties, were valued at £27.3 million at 31st December 2009 (2008: £7.8 million). The
change in valuation of the royalty income stream from the date of acquisition has been credited to revaluation
reserve after accounting for deferred tax. The change in valuation of the share options associated with these
royalty interests of £130,000 has been credited to Group profits (2008: £126,000).
The Group’s private mining operational interests and quoted stakes in mining projects, including the Group’s
investment in associates, were valued at 31st December 2009 at £113.5 million (2008: £45.8 million) after
having realised profits of £6.4 million (2008: £14.0 million) over the year. This valuation included an additional
unrealised gain / (loss) over book value of £31.0 million (2008: (£26.0) million), which included a valuation
gain for foreign exchange movements. The Group had cash of £14.2 million at 31st December 2009 (2008:
£17.1 million) with no borrowings.
Valuation of Royalties and Investments
s
n
o
i
l
l
i
m
£
350
300
250
200
150
100
50
0
2005
Interim
2005
2006
Interim
2006
2007
Interim
2007
2008
Interim
2008
2009
Interim
2009
Royalty Valuation
Cash Plus Investments
Operational Review
Coal Royalties
In Australia, coal royalty receipts from the Kestrel and Crinum mines, operated by Rio Tinto Limited and BHP
Billiton Limited respectively, were £20,334,000 (2008: £22,072,000).
The independent valuation of these interests at the year-end was A$270 million (£149.9 million) compared to
A$193 million (£93.3 million) at 31st December 2008 and is based on the net present value of the pre-tax
cashflow discounted at a rate of 7%. The net royalty income is taxed in Australia at a rate of 30%.
The coal royalty is computed by reference to Queensland Government legislation, which resulted in an increase
in the rate of royalty from 7% to 10% on the marginal price of coal in excess of A$100 per tonne in July 2008.
The legislation applies to both ground owned by the Crown and certain other privately owned areas in which the
Group participates. During the year coal royalties decreased to £20 million due to lower coal prices after
contract coal prices for the 2010 Japanese Financial Year (JFY) were settled at US$127 per tonne. In contrast to
this, forecast long term prices have increased as a result of increasing demand from China for seaborne thermal
and coking coal throughout 2009. This has resulted in the value of the Group’s coal royalty interests increasing
over the year.
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Annual Report 2009
DIRECTORS’ REPORT
Uranium Royalties
During the year the Group purchased two uranium royalties in Australia and Spain respectively.
The Group acquired the 1% NSR over the Beverley Four Mile Uranium project in South Australia. Alliance
Resources Limited reported on 21st January 2010 that Four Mile now has an inferred Joint Ore Reserves
Committee (JORC) resource of 71 million pounds of uranium grading 3,300 parts per million (ppm) uranium
oxide (U3O8). The company also reports that production is anticipated to commence in 2010 at a targeted
production rate of 3 million pounds U3O8 per annum.
During the year the Group also acquired a 1% NSR over the Salamanca Uranium project in Spain, operated by
Berkeley Resources Limited. This company reported on 26th February 2010 that the Salamanca project contains
total JORC resources of 52.4 million pounds of uranium grading 442 ppm U3O8 including inferred resources of
36 million pounds at 432 ppm U3O8 and measured and indicated resources of 16.4 million pounds at 466 ppm
U3O8. The company also reported that the project has an exploration target of an additional 25.5 to 29 million
pounds of uranium and the right to use the Quercus Uranium Processing Plant along with associated
infrastructure. A Scoping Study recently confirmed the technical and economic viability of the project and a
Definitive Feasibility Study is now underway.
In addition, the Group holds the royalty rights to mineral exploration tenures covering approximately 4.8m acres
of the Athabasca Basin, Canada. These tenures are currently being explored by a number of listed and unlisted
companies for uranium.
Gold royalties
The Group holds a 2.5% NSR on the Engenho gold project in Brazil, operated by Mundo Minerals Limited.
Until the consideration paid for the NSR has been received in royalties the Group retains the right to convert the
difference between royalties received and this sum into shares of Mundo Minerals Limited at a price of A$0.35
per share. During the year receipts relating to the NSR on the Engenho gold project totalled £310,000 (2008:
£nil). These receipts consisted of repayments of the consideration and also included £180,000 interest (2008:
£nil).
During the year the Group acquired a 2.5% NSR on the Midway-McKenzie Break project. The project is
located in Quebec, Canada, and is operated by Northern Star Mining Corp. The NSR escalates to 2.75% for
gold prices in excess of US$1,250 per ounce, and drops to 1.5% after two million ounces have been produced,
provided gold prices are below this level. Northern Star Mining Corp announced their first gold pour from the
project on 5th February 2010.
The Group also holds a 2.5% NSR, escalating to 3% for gold prices in excess of US$1,100 per ounce, on the El
Valle deposit in Spain. This deposit is currently being developed by Orvana Minerals Corp. In the event that
production from the El Valle mill does not exceed a rate of 90,000 ounces of gold per year on or before 31st
December 2012, the Group possesses an option to convert the difference between the sum advanced and
royalties received into shares immediately redeemable for cash. Orvana recently announced that it is on budget
and on schedule to commence production at El Valle by January 2011.
Iron sands royalties
During the year the Group acquired a 2% NSR on the Jogjakarta Iron Sands project in Indonesia, operated by
Indo Mines Limited. This company is currently in the process of completing a Bankable Feasibility Study and
arranging finance for the project.
Coal Interests
The Group retains the licences and tenancies of the Panorama and Discovery Coal Projects in the Groundhog
Coalfield, northwest British Columbia and the Trefi Coal Project in the Peace River Coalfield, northwest British
Columbia. At the Trefi project, the Group commissioned a drilling programme and produced a maiden JORC
and National Instrument (NI) 43-101 compliant measured and indicated coal resource of 39.35 million tonnes
and an inferred coal resource of 51.6 million tonnes. A Scoping Study on this project is in the process of being
finalised.
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Annual Report 2009
DIRECTORS’ REPORT
At the Panorama project the Group recently announced an initial NI 43-101 and JORC compliant indicated coal
resource of 13.7 million tonnes and inferred coal resource 24.1 million tonnes of anthracite and semi-anthracite
coal.
In Australia the Group retains its 22% interest in the Tiaro coal project where drilling and exploration work is
being funded by Tiaro Coal Limited and Dynasty Metals Australia Limited.
Other Metal Interests
The Group’s other metal interests remain primarily focused on precious metals and uranium. The Group has
widened its exposure to gold and platinum group metals during the year with increased holdings in, inter alia,
Maudore Minerals and Magma Metals in North America. Further exposure to the uranium sector has been
achieved with an increased holding in Berkeley Resources and the continuing sharp increase in value in the
Group’s declining holding in Mantra Resources. Other mining interests include copper, zinc and iron ore
projects.
Strategic Mining Interests By Commodity
at 31st December 2009
Iron Ore
3%
Other
11%
Platinum Group Metals
5%
Gold
33%
Copper
3%
Coal
6%
Zinc
1%
Uranium
38%
Interest in Royalco Resources Limited
On 13th May 2009 the Group made an unconditional on–market cash bid of A$0.30 per share for all the
outstanding issued share capital of Royalco Resources Limited, an Australian mining company which owns a
number of royalty interests in Australasia. The offer price was increased to A$0.34 on 3rd July 2009 and the bid
closed on 10th July 2009, resulting in the Group increasing its shareholding to 31.1%. On 25th September 2009
Chris Orchard, the Group’s Chief Investment Officer and an executive director, was appointed to the Royalco
Resources Limited Board. As a result of its significant shareholding and this board appointment the Group’s
investment in Royalco Resources Limited has been reclassified as ‘Investments in associates’ and is now
accounted for under the equity method.
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Annual Report 2009
DIRECTORS’ REPORT
Key Performance Indicators
The Board have identified four main key performance indicators, all of which are financial:
(i) Value of new royalties acquired
(ii) Net asset value
(iii) Earnings per share
(iv) Dividends per share
In addition to these financial KPIs, the Board also considers non-financial factors such as the Group’s
compliance with Corporate Governance Standards and environmental considerations relevant to some of the
Group’s mining interests. These factors cannot be efficiently measured so do not form part of the Group’s KPIs.
Risks and uncertainties
The Board have identified five main economic risks that could affect the Group’s performance:-
Sustained low commodity prices
(i) A prolonged, world-wide economic recession
(ii)
(iii) A fall in precious metal prices
(iv) Currency volatility
(v) Changes to the current Australian state royalty regime in favour of a federal Mineral Resources Rent
Tax
Measures taken by the Board to manage these risks include:-
• Regular mining project management meetings and discussions
• Regular documented project review meetings
• Substantial cash holdings
• A spread of projects covering a number of commodities and geographical areas
• Substantial exposure to gold and other precious metals
• Regular review of sovereign risk
• Cash being held at a number of banks and stockbrokers in a spread of currencies and short term
financial instruments
• Close monitoring of Australian State and Federal policies on royalties
The Board is also aware of the need for succession planning and the associated risks to the Group are under
constant review. Further appointments will be made to the Board as required.
Future developments
The Group’s current strategy is set out in the Chairman’s Review. The directors consider that this strategy will
continue to provide positive returns for shareholders, as the limited finance options for small mining companies
in the current environment create more opportunities for the Group to secure royalties. In addition the directors’
efforts on developing the Group’s listed and unlisted interests are expected to deliver further royalty
opportunities. Management policies will continue to be reviewed in the light of changing commodity and equity
markets and macroeconomic conditions.
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Annual Report 2009
DIRECTORS’ REPORT
Financial instruments
The Company’s principal treasury objective is to provide sufficient liquidity to meet operational cash flow and
dividend requirements and to allow the Group to take advantage of new growth opportunities whilst maximising
shareholder value. The Company operates controlled treasury policies which are monitored by the Board to
ensure that the needs of the Company are met as they evolve. The impact of the risks required to be discussed in
accordance with IFRS 7 are summarised below, while detailed discussion and sensitivity analysis relating to
these risks is contained in note 22 to these accounts.
Liquidity and funding risk
The objective of the Company in managing funding risk is to ensure that it can meet its financial obligations as
and when they fall due. At the year end there was no debt outstanding. The Company has a strong credit rating
and has good access to capital markets, if required.
Credit risk
The Group’s principal financial assets are bank balances, trade and other receivables and investments. These
represent the Group’s maximum exposure to credit risk in relation to financial assets.
The Group’s credit risk is primarily attributable to its other receivables, including royalty receivables. It is the
policy of the Group to present the amounts in the balance sheet net of allowances for doubtful receivables,
estimated by the Group’s management based on prior experience and the current economic environment. There
are no doubtful receivables in this period. In relation to the four royalties acquired during the year, in the event
of non-payment the Group have security against plant and equipment and the royalties are registered against
mining title where possible. In addition, the Group is entitled to full reconciliations of amounts paid and retains
the right to audit the royalty returns and verify the calculations.
The credit risk on liquid funds is limited because the counterparties are banks with high credit-ratings assigned
by international credit-rating agencies. The Group has no significant concentration of credit risk, with exposure
spread over a large number of counterparties and customers.
In 2007 the Group created a derivative financial instrument to provide finance to an unlisted mining
development company (note 15). This instrument is convertible into equity in the company or royalties over the
company’s properties at the Group’s option for a period of up to 5 years. In the event of default the instrument
becomes repayable and the Group would rank equally with the company’s other unsecured creditors. The
Group undertakes detailed analysis of factors which mitigate the risk of default to the Group on a continual
basis.
Foreign exchange risk
The Group’s transactional foreign exchange exposure arises from income, expenditure and purchase and sale of
assets denominated in foreign currencies. As each material commitment is made, the risk in relation to currency
fluctuations is assessed by the Board and regularly reviewed. The Group does not consider it necessary to have
a hedging programme in place at this time.
The tables below show the extent to which the Group has residual financial assets and liabilities in currencies
other than sterling. Foreign exchange differences on retranslation of these assets and liabilities are taken to the
income statement of the Group.
Functional currency of operation
2009
Sterling
2008
Sterling
Net Foreign currency monetary asset/(liability)
AUD
£'000
CAD
£'000
USD
£'000
Euro
£'000
55,628
46,294
29
16,173
18,280
0
13
29
16
Total
£'000
101,951
34,469
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Anglo Pacific Group PLC
Annual Report 2009
DIRECTORS’ REPORT
Interest rate risk
The Group has no borrowings or debt and the Group’s financial instruments have limited exposure to
fluctuations as a result of changes in interest rates. This is regularly reviewed by management.
Other price risk
The Group’s mining and exploration interests are held for the purposes of generating additional royalties and are
considered long-term, strategic investments. This strategy is unaffected by fluctuations in prices for mining and
exploration equities; however, changes in market conditions may affect the value and recoverability of the
amounts invested. The Group has detailed investment review processes in place to manage this risk to the
greatest extent possible.
The royalties acquired during the year expose the Group to other price risk through fluctuations in commodity
prices, particularly the price of gold, which may affect the future cash flows received from these royalties.
Management
Directors
The following directors have held office since 1st January 2009:
(Executive Chairman)
P.M. Boycott
(Finance Director)
M.J. Tack
(Executive Director and Chief Investment Officer) (appointed 22nd June 2009)
A.C. Orchard
(Executive Director and Chief Operating Officer) (appointed 22nd June 2009)
J. Theobald
(Chief Executive)
B.M. Wides
(Non-Executive and Senior Independent Director)
M.H. Atkinson
J.G. Whellock
(Non-Executive Director)
A.H. Yadgaroff (Non-Executive Director)
The directors who are due to retire by rotation at the next Annual General Meeting are Mr P.M. Boycott and Mr
B.M. Wides, who, being eligible, offer themselves for re-election. Mr A.C. Orchard and Mr J. Theobald, having
been appointed on 22nd June 2009, retire and offer themselves for election as directors at the Annual General
Meeting in accordance with the Company’s articles of association.
The biographical details of Mr Boycott, Mr Wides, Mr Orchard and Mr Theobald are as follows:
Peter Boycott (Chairman) is a Chartered Accountant and was appointed to the board on 2nd May 1997. He
became executive Chairman on 13th June 1997. During his career he has been involved as Finance Director and
substantial shareholder in a number of private investment and property groups including engineering and
manufacturing companies supplying furnace systems to the major mining Groups world-wide. He has been a
Director of several public quoted Companies in Australia and Canada.
Brian Wides (Chief Executive) is a Chartered Accountant (SA) and was appointed to the board on 13th June
1997. He became Finance Director on 5th September 1997 and subsequently Chief Executive on 5th July 2006
following Matthew Tack’s appointment to the Board. His specialist experience includes corporate finance,
management consultancy and creating shareholder value for a large spectrum of private and public companies in
the UK, Australia and Canada.
Chris Orchard joined the Group in December 2007 as the Group’s Chief Investment Officer and was appointed
to the Board as executive director on 22nd June 2009. Mr Orchard graduated with a Mining Hons degree from
Leeds University, before working in the South African mining industry. He then spent 20 years as an
investment banker in the City specializing in the resources sector, his last roles being MD of Hambros Equity
UK and a Director of RBC Dominion Securities. More recently he managed the investment operations of a
private wealth management group.
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Anglo Pacific Group PLC
Annual Report 2009
DIRECTORS’ REPORT
John Theobald joined the Group as Chief Operating Officer in April 2008 and was appointed to the Board as
executive director on 22nd June 2009. Mr. Theobald is a qualified geologist and Chartered Engineer and has
held senior positions with major and junior mining companies covering a wide range of metallic and non-
metallic minerals. Prior to joining the Group Mr Theobald was an Operations Director for SCR-Sibelco, a
major industrial minerals group. He has also worked for Anglo American, Phelps Dodge and Iscor amongst
others and has extensive experience in exploration, acquisitions and developing and operating mines in a
number of different countries.
Biographies for all directors are available at www.anglopacificgroup.com.
The Group maintains insurance for its directors and officers against certain liabilities in relation to the Group.
The post of Chairman remains an executive role to allow the Group to continue to function as efficiently as
possible. The Board believes that, with eight directors (three of whom are non-executive) and only two non-
director employees, the appointment of a separate non-executive Chairman would not enhance either the
performance or the effectiveness of the Group in creating value for shareholders. The Board feels that, with
three independent non-executive directors on the Board, the Corporate Governance of the Group is not
adversely affected by the combination of these roles. The executive Chairman and the Chief Executive have
distinct roles with a clear and documented division of responsibilities agreed by the Board.
Directors’ interests
The beneficial interests of the directors in office at 1st January 2009 and 31st December 2009 in the issued share
capital of the Company are as follows:
Ordinary shares of
£0.02 each
P.M. Boycott (Chairman)
A.C. Orchard (Executive Director)*
M.J. Tack (Finance Director)
J. Theobald (Executive Director)*
B.M. Wides (Chief Executive)
M.H. Atkinson (Non-Executive)
J.G. Whellock (Non-Executive)
A.H. Yadgaroff (Non-Executive)
17th February 2010
2,676,983
64,634
54,126
17,134
2,903,295
3,803
13,084
180,372
31st December 2009 31st December 2008
3,275,291
N/A
34,852
N/A
3,661,443
3,622
13,084
176,380
2,676,983
64,634
54,126
17,134
2,903,295
3,803
13,084
180,372
* Mr A.C. Orchard and Mr J. Theobald were appointed to the Board on 22nd June 2009.
Corporate governance
A report on corporate governance and compliance with the Combined Code on Corporate Governance as
appended to the Listing Rules of the Financial Services Authority is set out on pages 20 to 23. The directors’
remuneration report, as set out on pages 24 to 27, will be proposed for approval at the AGM to be held on 21st
April 2010. In accordance with The Large and Medium sized companies and Group (Accounts and Reports)
Regulations 2008, the vote on such resolution is advisory and no director’s remuneration is conditional upon the
passing of the resolution.
Internal Monitoring
The Group has a policy whereby any employee may contact the Chairman or the members of the Audit
Committee at any time in relation to any concerns regarding conduct that is contrary to the values of the Group.
Such matters may include unethical practices in accounting, internal accounting controls, financial reporting or
auditing matters, or any other legal or ethical concern. By virtue of the size of the Group all employees are in
regular contact with the members of the Board, and any concerns are treated in the strictest confidence.
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Anglo Pacific Group PLC
Annual Report 2009
DIRECTORS’ REPORT
Corporate Social Responsibility
Donations
It is a continuing policy of the Group not to make political or charitable donations. However, employees are
encouraged to support their chosen charities utilising the Give As You Earn payroll contribution scheme.
No donations were made to charities during the year (2008: nil).
No political donations were made during the year (2008: nil).
Policy on payment of creditors
The Company's policy with regard to the payment of suppliers is to:
•
•
•
agree terms of payment at the start of business with each supplier;
ensure that suppliers are made aware of the terms of payment; and
pay suppliers in accordance with contractual and legal obligations.
During the year to 31st December 2009 the Company took an average of 33 days to settle its bills with suppliers
(2008: 15 days). The Company acknowledges the importance of paying invoices promptly, especially those of
small businesses.
The Environment
The Group remains committed to an Environmental Policy of collaborating fully with statutory authorities, local
communities and special interest groups to minimise effects of its activities on the natural and human
environments associated with its operations, where appropriate.
The Group acknowledges that it has the ability to positively influence the environmental practices and policies
of companies it conducts business with. Management discussions necessarily address common environmental
policy ideals, and the Board remains committed to working with its fellow mining companies to ensure that the
environmental impact of mineral exploration and development activities is minimised as much as possible. The
Board has access to consultants with requisite mining and environmental expertise to ensure the Group’s
partners meet their covenants in this regard.
Employees
The Group has 7 employees, 5 of whom are executive directors. More information regarding the Group’s
employees can be found on pages 14 and 15.
Social and Community issues
The Group acknowledges that, while its activities have little direct contact with communities, it can positively
influence the social practices and policies of companies it conducts business with. Positive social and
community relationships are essential to profitable and successful mineral extraction activities, and the Group is
committed to ensuring that companies it works with have appropriate procedures in place to facilitate this. The
Group also consults with local community groups where its activities could have an impact to ensure all relevant
parties are presented with the opportunity to engage at the planning stage.
Essential Contracts
The Group has a number of members of staff, who due to their knowledge of the Group and its intellectual
property, are essential to the continued smooth running of the business. The Group reviews its employment
policies on an annual basis, including a review of its performance-related pay policies, so as to ensure these
members of staff continue to remain incentivised and their goals remain congruent with those of the Group. All
employee contracts contain non-compete agreements and also stipulate that all intellectual property remains that
of the Group.
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Anglo Pacific Group PLC
Annual Report 2009
DIRECTORS’ REPORT
Capital Structure
The structure of the Group’s ordinary capital at 17th February 2010 is as follows:
Nominal
value per
share
£
0.02
Issued No.
107,439,463
Total
£
2,148,789
% of total
capital
100%
Ordinary shares
Rights and Obligations
Dividends
The £0.02 ordinary shares carry the right to dividends determined at the discretion of the Group’s directors.
Voting rights
The £0.02 ordinary shares carry the right to one vote per share.
Restrictions on transfer of holdings
There are no restrictions on the transfer of the Company’s shares. There are no known agreements between
holders of the Company’s shares that may result in restrictions on the transfer of shares or voting rights.
Special control rights
None of the shares carry any special control rights. There are no known agreements that take effect, alter or
terminate upon a change of control of the Company following a takeover bid.
Treasury
No shares are currently held in treasury by the Company.
Substantial Shareholdings
The Company has been notified of the following interests of 3% or more in the Share Capital of the Company at
17th February 2010.
Ransomes Dock Ltd
AXA Investment Managers UK
Rathbones Brothers PLC
Legal and General Group PLC
Ordinary Shares
of 2p each
8,841,315
6,634,147
6,395,897
5,405,779
Representing
8.23%
6.17%
5.95%
5.03%
Statement as to disclosure of information to auditors
The directors who were in office on the date of approval of these financial statements have confirmed that, as far
as they are aware, there is no relevant audit information of which the auditors are unaware. Each of the directors
have confirmed that they have taken all the steps that they ought to have taken as directors in order to make
themselves aware of any relevant audit information and to establish that it has been communicated to the
auditors.
Auditors
Grant Thornton UK LLP, have expressed willingness to continue in office. In accordance with section 489(4) of
the Companies Act 2006 a resolution to reappoint Grant Thornton UK LLP will be proposed at the Annual
General Meeting to be held on 21st April 2010.
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Anglo Pacific Group PLC
Annual Report 2009
DIRECTORS’ REPORT
Annual General Meeting
The notice of the Annual General Meeting (refer to page 71) contains ordinary and special resolutions detailed
below.
Scrip Dividend Authority
Resolution 9 seeks to renew the authority taken at last year’s Annual General Meeting to offer shareholders the
option to take dividends in ordinary shares instead of cash.
Authority to Allot Shares
Resolution 10 seeks a new authority, to replace the present authority and be effective until the earlier of 21st
April 2015 and the conclusion of the annual general meeting held in 2015, to authorise the Directors to allot
relevant securities up to a maximum nominal amount of £716,263 representing about 33.33 per cent of the
issued ordinary share capital at the date of this report. The Directors have no present intention of exercising this
authority.
Company Share Option Plan
Resolution 11 seeks approval to authorise the Directors to establish and operate the Anglo Pacific Group
Company Share Option Plan (“CSOP”), further details of which are provided at Appendix 1 to the Notice of
Annual General Meeting. This CSOP, which is recommended by the Remuneration Committee, will replace the
existing Approved Employee Share Option Plan, which can no longer issue new options as it has passed the 10
year limit. Assuming that Resolution 11 is adopted, the Company will seek HMRC approval for the CSOP
following implementation.
Company Joint Share Ownership Plan
Resolution 12 seeks approval to authorise the Directors to establish and operate the Anglo Pacific Group Joint
Share Ownership Plan (“JSOP”), which will require the establishment and operation of the Anglo Pacific Group
Employee Benefit Trust. Further details regarding the JSOP and the Employee Benefit Trust are provided at
Appendices 2 and 3 to the Notice of Annual General Meeting. The JSOP, which is recommended by the
Remuneration Committee, is designed to provide share incentives in the most overall cost effective manner with
a strong emphasis on aligning the interests of participants and shareholders and absolute growth in shareholder
value. Assuming that Resolution 12 is adopted, the plan will replace the Company’s Unapproved Executive
Share Option Scheme which closed during the year.
De-listing from the Australian Stock Exchange
Resolution 13 seeks authority for the Company to de-list from the Australian Stock Exchange.
Authority to Allot Shares and Partial Disapplication of Pre-emption Rights
Resolution 14 seeks a waiver of the pre-emption rights of existing shareholders, but only for new securities or
shares (if any) held in treasury up to a maximum aggregate nominal value of £214,878 (10% of the issued share
capital at the date of this report) or, if less, 10% of the Company's issued share capital from time to time. The
directors also seek authority to make appropriate exclusions from any rights issue, because it may not be
possible to issue new shares to some shareholders (for example, those resident in foreign jurisdictions where
regulatory difficulties might arise). The directors will be able to use this authority, if granted, to allot new
securities or issue shares held in treasury without further reference to shareholders. However, the directors have
no plans at present to make such an allotment and the proposed authority, if granted, will expire at the earlier of
the next annual general meeting of the Company or on 30th June 2011. No shares are currently held in treasury
by the Company.
This resolution, which increases the authority to 10% from 5% last year, is in line with current practice amongst
a number of companies and will provide the Company with greater flexibility when assessing new royalty
opportunities.
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Anglo Pacific Group PLC
Annual Report 2009
DIRECTORS’ REPORT
Authority to purchase own shares
Resolution 15 gives authority for the Company to purchase its own shares and specifies the maximum number
of shares which may be acquired (10,743,946, being approximately 10% of the Company's issued ordinary share
capital as at the date of this report) and the maximum (the higher of 105% of the 5 day average middle market
price and the last independent trade or bid) and minimum (the nominal value) prices at which shares may be
bought. The directors intend to exercise this power only if, in the light of market conditions prevailing at the
time, they believe that the effect of such purchases will be to increase earnings per share. They will also have
regard to whether, at the time, this represents the best use of the Company's resources and is in the best interests
of the shareholders generally. Other investment opportunities, appropriate gearing levels and the overall
position of the Company will be taken into account in reaching such a decision. Any shares purchased in this
way will either be cancelled and the number of shares in issue reduced accordingly, or else held in treasury. In
total there are options outstanding over 71,367 ordinary shares; they represent 0.07% of the current issued share
capital and would represent 0.07% of the issued share capital if the full buy back authority was used and the
shares so acquired cancelled. The proposed authority, if granted, will expire at the earlier of the next annual
general meeting of the Company or eighteen months from the date of passing of the resolution. At 31st
December 2009 the Company still had authority to acquire 10,617,213 shares under Resolution 10 passed at the
last Annual General Meeting.
Recommendation
The directors believe that all of the resolutions to be proposed at the Annual General Meeting are in the best
interests of the Company and its shareholders as a whole and the directors unanimously recommend that
shareholders vote in favour of all of the resolutions.
Cautionary statement on forward- looking statements and related information
This document contains a number of forward-looking statements relating to the Group with respect to, amongst
others, the following: financial conditions; results of operations; economic conditions in which the Group
operates; the business of the Group; and the management plans and objectives. The Group considers that any
statements that are not historical facts are “forward-looking statements”. They relate to events and trends that
are subject to risks and uncertainties that could cause the actual results and financial position of the Group to
differ materially from the information presented in the relevant forward-looking statement. When used in this
document the words “estimate”, “project”, “intend”, “aim”, “anticipate”, “believe”, “expect”, “should” and
similar expressions, as they relate to the Group or the management of it, are intended to identify such forward-
looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements
which speak only as at the date of this document. Neither the Group nor any member of the Group’s
management undertake any obligation publicly to update or revise any of the forward-looking statements,
whether as a result of new information, future events or otherwise, save in respect of any requirement under
applicable laws, the Listing Rules, and other regulations.
Registered Office
17 Hill Street
London
W1J 5NZ
By Order of the Board
M.J. Tack C.A.
Company Secretary
12th March 2010
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Anglo Pacific Group PLC
Annual Report 2009
CORPORATE GOVERNANCE
Principles of Corporate Governance
The Group’s Board appreciates the value of good corporate governance not only in the areas of accountability
and risk management but also as a positive contribution to business prosperity. It believes that corporate
governance involves more than a simple “box ticking” approach to establish whether the Group has met the
requirements of a number of specific rules and regulations. Rather the issue is one of applying corporate
governance principles (including those set out in Section 1 of the Principles of Good Governance and Code of
Best Practice (“the Combined Code 2008”) published by the Financial Reporting Council) in a sensible and
pragmatic fashion having regard to the individual circumstances of the Group’s business. The key objective is
to enhance and protect shareholder value.
Board Structure
The Board currently comprises the Executive Chairman, the Chief Executive, the Finance Director, two
executive directors and three independent non-executive directors. A statement of directors’ responsibilities in
respect of the financial statements is set out on page 28. Non-executive Directors have a particular
responsibility to ensure that the strategies proposed by the executive directors are fully considered. The day to
day management of the Group is delegated to the executive directors including the Chairman, save for certain
matters reserved for consideration by the Board. There is a specific list of matters reserved for the Board's
consideration which is provided to the Board as guidance. However it is the policy of the Group for the
executive directors to report and refer to the Board at regular intervals on all matters relating to the running of
the Group. The Board meets at least six times a year. Prior to each meeting, directors are sent an agenda and
backup papers on individual agenda items where applicable. Directors may request additional Board papers on
any topic.
The Group’s directors have a wide range of expertise as well as experience in financial, commercial and mining
activities. Individual directors, in conjunction with other Board members, may take training tailored to their
own requirements. During the year directors attended, inter alia, workshops and briefings on mining industry
developments, corporate governance best practice and corporate social responsibility. To enable the Board to
discharge its duties, directors are able to take both independent professional advice and appropriate training at
the Group's expense.
New director appointments are considered formally by the Board following recommendations from the
Nomination Committee. All directors are subject to election by shareholders at the first opportunity after their
appointment. Under the terms of the Company's Memorandum and Articles of Association, all directors are
required to retire and seek re-appointment by shareholders at an Annual General Meeting on the third
anniversary of their appointment. Non-executive directors are not subject to specified terms as all directors are
subject to the 3 year re-election requirement. The Board considers this appropriate but will review the situation
at regular intervals.
Biographies of all directors are available at www.anglopacificgroup.com.
Committees of the Board
The following committees, which have written terms of reference, deal with specific aspects of the Group’s
affairs.
Executive Committee
The Executive Committee, comprising the executive directors of the Group, is responsible for reaching and
implementing decisions on matters not reserved for the full Board. The committee is chaired by Mr P.M.
Boycott. Minutes of Executive Committee meetings are presented at the next full Board meeting for approval.
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Annual Report 2009
CORPORATE GOVERNANCE
Remuneration Committee
The Remuneration Committee, comprising solely the independent non-executive directors, is responsible for
making recommendations to the Board on the Group’s framework of Executive remuneration and its cost.
The committee determines the contract terms, remuneration and other benefits for each of the executive
directors, including performance related bonus schemes, pension rights and compensation payments. It is
chaired by Mr A.H. Yadgaroff and has access to recruitment consultants when required. The Board itself
determines the remuneration of the non-executive directors. The report on Directors’ remuneration is set out
on pages 24 to 27.
Audit Committee
The Audit Committee comprises solely the independent non-executive directors and is chaired by Dr J.G.
Whellock. Its prime tasks are to review the scope of internal and external audit, to receive regular reports
from Grant Thornton UK LLP and to review the half-yearly and annual accounts before they are presented to
the Board, focusing in particular on accounting policies and areas of management judgment and estimation.
The committee is responsible for monitoring the controls which are in force to ensure the integrity of the
information reported to the shareholders. The committee acts as a forum for discussion of internal control
issues and contributes to the Board’s review of the effectiveness of the Group’s internal control and risk
management systems and processes. The committee also considers whether a need for an internal audit
function is present. It advises the Board on the appointment of external auditors and on their remuneration
for both audit and non-audit work, and discusses the nature and scope of the audit with the external auditors.
The Committee reviews annually the objectivity and independence of the external auditors.
The committee, which meets at least twice a year, provides a forum for reporting by the Group’s external
auditors. Meetings may also be attended, by invitation, by the Executive Chairman, the Chief Executive and
the Finance Director.
The Audit Committee has considered the Group’s circumstances and due to the close involvement of the
executive directors in operational, financial and risk management and control, and in view of the Group’s
size, it believes that shareholders would not benefit from the implementation of an internal audit function at
this time. This will continue to be reviewed annually.
Nomination Committee
The Nomination Committee comprises solely the independent non-executive directors and is responsible for
identifying and nominating candidates for the approval of the Board to fill Board vacancies as they arise.
Previously appointments were considered by the full Board. The committee also reviews the structure, size
and composition required of the Board compared to its current position and makes recommendations to the
Board with regard to any changes. It is chaired by Mr M.H. Atkinson and is authorised to utilise external
legal or professional services when required. Meetings are held as and when required for the purposes of
filling Board vacancies and considering Board structure. The committee held one meeting during the period.
Senior Independent Director
Mr M.H. Atkinson is the Group’s Senior Independent Director (SID). The role of the SID is to be available
to shareholders to discuss any concerns they may have about the running of the Group where the normal
channels of communication are not appropriate. The SID is not required to seek meetings with shareholders;
however, he is available to do so if required in order to understand shareholder concerns and take them to the
Board for discussion. The SID is also required to lead discussions at meetings of non-executive directors.
Evaluation and Appraisal
The Board does not currently have a formal system in place for evaluating the performance of individual
directors and committees. The presence of an open environment where feedback is continually sought
provides an informal process that enables the continual improvement of directors and committees. The Board
believes that this system is effective given the current size of the Board and the increasing executive
requirements placed upon the Group’s limited resources. The Board will consider the implementation of a
formal evaluation process each year as appropriate.
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Anglo Pacific Group PLC
Annual Report 2009
CORPORATE GOVERNANCE
Attendance
Directors’ attendance at Board and Committee meetings was as follows:
Total meetings
held:
Attendance:
P.M. Boycott
A.C. Orchard*
M.J. Tack
J. Theobald*
B.M. Wides
M.H. Atkinson
J.G. Whellock
A.H. Yadgaroff
General
Executive
Audit
Remuneration Nomination
12
12
5
12
5
12
12
12
12
4
4
-
4
-
4
-
-
-
3
-
-
3
-
-
3
3
3
2
1
1
2
1
1
2
2
2
1
-
-
1
-
-
1
1
1
* Mr A.C. Orchard and Mr J. Theobald were appointed to the Board on 22nd June 2009.
Internal Control
The directors are responsible for the Group’s system of internal control and reviewing its effectiveness.
The Board has designed the Group’s system of internal control in order to provide the directors with
reasonable assurance that its assets are safeguarded, that transactions are authorised and properly recorded
and that material errors and irregularities are either prevented or would be detected within a timely period.
However, no system of internal control can eliminate the risk of failure to achieve business objectives or
provide absolute assurance against material misstatement or loss.
The key elements of the control system in operation are:
• The Board meets regularly with a formal schedule of matters reserved to it for decision and has put in
place an organisational structure with clear lines of responsibility defined and with appropriate
delegation of authority;
• There are established procedures for planning, approval and monitoring of capital expenditure and
information systems for monitoring the Group’s financial performance against budgets and forecasts;
• The Finance Director is required annually to undertake a full assessment process to identify and quantify
the risks that face the Group’s businesses and functions, and assess the adequacy of the prevention,
monitoring and mitigation practices in place for those risks. In addition, regular reports about significant
risks and associated control and monitoring procedures are made to the Audit Committee. They are
responsible for reviewing the risk assessment for completeness and accuracy. The consolidated results of
these reviews are reported to the Board to enable the directors to review the effectiveness of the system
of internal control. The process adopted by the Group accords with the guidance contained in the
document “Internal Control Guidance for Directors on the Combined Code” issued by the ICAEW.
The Audit Committee receives reports from external auditors on a regular basis and from the executive
directors of the Group. During the period, the Audit Committee has reviewed the effectiveness of the system
of internal control as described above. The Board receives periodic reports from all committees.
There are no significant issues disclosed in the report and financial statements for the year ended 31st
December 2009 and up to the date of approval of the report and financial statements that have required the
Board to deal with any related material internal control issues.
The directors confirm that the Board has reviewed the effectiveness of the system of internal control as
described during the period.
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Anglo Pacific Group PLC
Annual Report 2009
CORPORATE GOVERNANCE
Relations with Shareholders
The Group values its dialogue with both institutional and private investors. Effective two-way
communication with fund managers, institutional investors and analysts is actively pursued and this
encompasses issues such as performance, policy and strategy. During the year the directors had a number of
meetings with institutional investors whose combined shareholdings represented over 50% of the total issued
share capital of the Company.
Private investors are encouraged to participate in the Annual General Meeting at which the Chairman
presents a review of the results and comments on current business activity. The Chairmen of the Audit,
Remuneration and Nomination Committees will be available at the Annual General Meeting to answer any
shareholder questions.
This year’s Annual General Meeting will be held on 21st April 2010. The notice of the Annual General
Meeting may be found on page 71.
Capital Structure
The Group’s capital structure is disclosed in the Directors’ Report on page 17.
Going Concern
The directors confirm that they are satisfied that the Company and Group have adequate resources to continue
in business for the foreseeable future. For this reason, they continue to adopt the going concern basis in
preparing the financial statements.
Statement by the directors on compliance with the provisions of the Combined Code
The Company confirms that it complies with the provisions set out in Section 1 of the Combined Code,
except where disclosed below:
• Principle A6: Absence of a formal process to evaluate the performance of directors and committees;
• Provision A7.2: Non-executives not appointed for specific terms.
23
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Anglo Pacific Group PLC
Annual Report 2009
DIRECTORS' REMUNERATION REPORT
The Remuneration Committee comprises:
A.H. Yadgaroff (Chairman)
M.H. Atkinson
J.G. Whellock
In accordance with the recommendations of the Combined Code all the members of the Committee are
independent non-executive directors. The Committee is responsible for determining the Group’s policy on
remuneration of its executive directors, including service contracts and compensation in the event of early
termination. The Committee’s full terms of reference are available on the Group’s website.
The fees of non-executive directors are determined by the Board having regard to the commitment of time
required and the level of fees in similar companies. Non-executive directors are not eligible to participate in
the Company’s bonus plan, share option schemes or pension scheme.
The Group’s non-executive directors are employed on rolling contracts with a 30 day notice period by either
party.
The Policy and objectives
The Committee’s policy is to attract, retain and motivate full-time high quality executive directors with a
competitive salary package which comprises a fixed monthly basic salary and a significant performance-related
bonus award that is strongly aligned with the interests of shareholders. The Committee reviews the salary
package annually having regard, amongst other factors, to the remuneration paid by companies of comparable
size and business.
It is the Committee’s policy that executive directors should have service contracts with an indefinite term
providing for a notice period of six months. Service contracts remain in force for all executive directors.
The committee confirms that it complies with section 1 of the Combined Code in determining the Group’s
policy on remuneration of its executive directors, including service contracts and compensation.
Executive directors’ remuneration
(i)
(ii)
Basic salary
The basic salary component is low relative to that paid by companies of a similar size and nature, and
the Committee’s aim is to achieve an appropriate balance between basic salary and performance-related
pay which provides a strong incentive for high performance.
Performance-Related Bonus
A performance-related bonus scheme has been established which creates a pool divisible between all
executive directors at the discretion of the Committee from time to time. The Committee consider the
performance of the directors against a number of criteria, including the movement in the Group’s share
price and the four main KPIs outlined on page 12. A proportion of this bonus is payable in shares to
align the directors’ interests with shareholders.
(iii)
Share schemes
Unapproved Executive Share Option Scheme
No executive share options have been granted to directors since 1999 and no options are currently
exercisable under the scheme, which is unapproved by HM Revenue and Customs (HMRC). Under the
scheme rules no options may be granted after November 2007. As a result this scheme has now closed.
24
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Anglo Pacific Group PLC
Annual Report 2009
DIRECTORS' REMUNERATION REPORT
Approved Employee Share Option Plan
The Group operates a HMRC approved Company Share Option Plan. No options were granted to
directors during the year under this plan.
The options of the directors at 31st December 2009 under this scheme were as undernoted for which nil
has been paid.
A.C. Orchard*
M.J. Tack
J. Theobald*
No. of Shares
2009
18,250
36,923
16,194
2008
N/A
36,923
N/A
Exercisable
between
07/04/11 – 07/04/18
04/10/07 – 04/10/14
15/07/11 – 15/07/18
Exercise
price
164.375p
81.25p
185.25p
* Mr A.C. Orchard and Mr J. Theobald were appointed to the Board on 22nd June 2009. At the time of their
appointments Mr A.C. Orchard held 18,250 options and Mr J. Theobald held 16,194 options.
There was no difference in the market price and the exercise price on the date the share options were
granted.
The vesting period for the option plan is 3 years and, if an option remains unexercised after a period of
10 years from the date of grant, the option will lapse. The exercise condition of the option plan
stipulates that the Group’s Earnings per Share (EPS) must grow at a rate of 2% in excess of the UK
Retail Price Index (RPI) over the vesting period. No options were exercised during the year.
(iv)
Pension rights
The Company operates a Money Purchase Group Personal Pension Scheme which all employees and
executive directors are eligible to join. Pension scheme assets are held by Standard Life. During the
year the Group paid pension contributions in respect of directors as follows:
A.C. Orchard*
M.J. Tack
J. Theobald*
2009
£
3,500
5,583
3,500
2008
£
N/A
5,000
N/A
* Mr A.C. Orchard and Mr J. Theobald were appointed to the Board on 22nd June 2009.
(v)
Early termination
In the event of early termination, the executive directors’ service contracts provide for compensation
limited to twelve month’s basic salary. There are no agreements between the Group and its directors
resulting in compensation for loss of office or employment that may occur as a result of a takeover bid.
The Board considers that this provision is appropriate in a competitive market place.
25
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Anglo Pacific Group PLC
Annual Report 2009
DIRECTORS' REMUNERATION REPORT
Directors’ emoluments and compensation
Salaries
Performance-Related Bonus
Fees
The remuneration of the directors was as follows:-
2009
£
471,500
447,000
148,000
1,066,500
P.M. Boycott
A.C. Orchard1
M.J. Tack
J. Theobald1
B.M. Wides
M.H. Atkinson
J.G. Whellock
A.H. Yadgaroff
Performance
-Related
Bonus
£
75,000
99,000
99,000
99,000
75,000
-
-
-
447,0002
Salary
£
147,333
70,000
111,667
70,000
72,500
-
-
-
471,500
Fees
£
-
-
-
-
49,000
33,000
33,000
33,000
2009
Total
£
222,333
169,000
210,667
169,000
196,500
33,000
33,000
33,000
148,000 1,066,500
1 Mr A.C. Orchard and Mr J. Theobald were appointed to the Board on 22nd June 2009.
2 £149,000 was paid in shares, see note 28.
Share Price Performance
Anglo Pacific Group plc (APG)
2008
£
390,000
490,000
99,000
979,000
2008
Total
£
327,150
-
225,700
-
327,150
33,000
33,000
33,000
979,000
250
200
150
100
50
)
p
(
e
c
i
r
P
0
2005
Enfocus Software - Customer Support
2006
2007
2008
2009
Anglo Pacific Group plc
FTSE Small Cap Index (rebased)
26
Anglo Pacific Group PLC
Annual Report 2009
DIRECTORS' REMUNERATION REPORT
The above graph plots the movement for the ordinary share price of Anglo Pacific Group plc for the last 5 years
against the FTSE Small Cap Index, which has been rebased to Anglo Pacific Group plc’s share price at the start
of the period in order to provide a graphical measure of comparative performance. The FTSE Small Cap Index
has been selected as a comparable index because it is the nearest relevant index appropriate to the Group. The
Group was admitted to the FTSE Small Cap Index in December 2004.
The market price of the shares at 31st December 2009 was 226p and the range during the year was 88p to 235p.
Audit
Under section 421 of the Companies Act 2006 the directors’ emoluments and compensation, and items (iii) and
(iv) of the executive directors’ remuneration section have been audited.
Approval
This report was approved by the Board of Directors and authorised for issue on 10th March 2010 and signed on
its behalf by:
M.J. Tack C.A.
Company Secretary
12th March 2010
27
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Anglo Pacific Group PLC
Annual Report 2009
DIRECTORS' RESPONSIBILITIES IN THE PREPARATION OF FINANCIAL STATEMENTS
The directors are responsible for preparing the Annual Report, the Directors’ Remuneration Report and the
financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the
directors have elected to prepare the Group and parent Company financial statements in accordance with
International Financial Reporting Standards (IFRSs) as adopted by the European Union (EU). Under company
law the directors must not approve the financial statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Group and the Company and of the profit or loss of the Group for that period.
In preparing these financial statements, the directors are required to:
•
select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable and prudent;
•
state whether applicable IFRSs as adopted by the European Union have been followed, subject to any
material departures disclosed and explained in the financial statements;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that
the company will continue in business.
•
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
Company’s transactions and disclose with reasonable accuracy at any time the financial position of the
Company and the Group and enable them to ensure that the financial statements and the directors’ remuneration
report comply with the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS
Regulation. They are also responsible for safeguarding the assets of the Company and the Group and hence for
taking reasonable steps for the prevention and detection of fraud and other irregularities.
The directors are
the Group’s website,
the maintenance and
www.anglopacificgroup.com. Legislation in the United Kingdom governing the preparation and dissemination
of financial statements may differ from legislation in other jurisdictions.
integrity of
responsible
for
Directors’ statement pursuant to the Disclosure and Transparency Rules
Each of the directors, whose names and functions are listed in the management section of the Directors’ Report
confirm that, to the best of each person’s knowledge and belief:
•
•
the financial statements, prepared in accordance with IFRSs as adopted by the EU, give a true and fair
view of the assets, liabilities, financial position and profit of the Group and Company; and
the directors’ report contained in the annual report includes a fair review of the development and
performance of the business and the position of the Company and Group, together with a description of
the principal risks and uncertainties that they face.
By order of the board
M.J. Tack C.A.
Company Secretary
12th March 2010
28
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Anglo Pacific Group PLC
Annual Report 2009
REPORT OF THE INDEPENDENT AUDITOR TO THE MEMBERS OF
ANGLO PACIFIC GROUP PLC
We have audited the financial statements of Anglo Pacific Group plc for the year ended 31st December 2009 which comprise the
consolidated income statement, the consolidated statement of comprehensive income, the consolidated and company balance sheets, the
consolidated and company statements of changes in equity, the consolidated and company cash flow statements and the related notes 1 to
30. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the European Union and, as regards the parent company financial statements, as applied in accordance with
the provisions of the Companies Act 2006.
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our
audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an
auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other
than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the Directors’ Responsibilities Statement set out on page 28, the directors are responsible for the preparation of
the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit the financial statements in
accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the
Auditing Practices Board’s (APB’s) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the APB's website at www.frc.org.uk/apb/scope/UKP.
Opinion on financial statements
In our opinion:
(cid:131)
the financial statements give a true and fair view of the state of the Group's and of the parent Company's affairs as at 31st December
2009 and of the Group's profit for the year then ended;
the Group financial statements have been properly prepared in accordance with IFRS as adopted by the European Union;
the parent Company financial statements have been properly prepared in accordance with IFRS as adopted by the European Union
and as applied in accordance with the provisions of the Companies Act 2006; and
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards the
Group financial statements, Article 4 of the IAS Regulation.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion:
(cid:131)
(cid:131)
the part of the Directors' Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006;
the information given in the Directors' Report for the financial year for which the financial statements are prepared is consistent with
the financial statements; and
the information given in the Corporate Governance Statement set out on pages 20 to 23 with respect to internal control and risk
management systems in relation to financial reporting processes and about share capital structures is consistent with the financial
statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following:
Under the Companies Act 2006 we are required to report to you if, in our opinion:
(cid:131)
adequate accounting records have not been kept by the parent Company, or returns adequate for our audit have not been received
from branches not visited by us; or
the parent Company financial statements and the part of the Directors' Remuneration Report to be audited are not in agreement with
the accounting records and returns; or
certain disclosures of directors’ remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit; or
a corporate governance statement has not been prepared by the company.
(cid:131)
(cid:131)
(cid:131)
(cid:131)
(cid:131)
(cid:131)
(cid:131)
(cid:131)
Under the Listing Rules, we are required to review:
(cid:131)
(cid:131)
the directors' statement, set out on page 23, in relation to going concern; and
the part of the Corporate Governance Statement relating to the Company's compliance with the nine provisions of the June 2008
Combined Code specified for our review.
Christopher Smith
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
12th March 2010
Grant Thornton UK LLP
Grant Thornton House
Melton Street
Euston Square
LONDON
NW1 2EP
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Anglo Pacific Group PLC
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2009
Royalty income
Other operating income
Finance income
Profit on sale of mining and exploration interests
Total income
Share of profit of associates
Net operating expenses
Profit before tax
Tax
Profit attributable to equity holders
Total and continuing earnings per share
Basic earnings per share
Diluted earnings per share
Notes
2009
£'000
2008
£'000
3
3
3,6
3
17
4
7
25
9
9
20,334
13
796
21,143
6,367
27,510
515
(2,142)
25,883
(5,252)
20,631
22,072
50
957
23,079
14,016
37,095
-
(1,840)
35,255
(5,994)
29,261
19.20p
27.25p
19.20p
27.25p
30
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Anglo Pacific Group PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2009
Profit for the year
Other comprehensive income:
Net gain on revaluation to coal royalties
Net gain/(loss) on revaluation of available for sale investments
Net exchange gain on translation of foreign operations
Share of other comprehensive income of associates
Deferred tax
Net income recognised directly in equity
Notes
2009
£'000
2008
£'000
12
17
21
20,631
29,261
42,916
63,737
15,585
(65)
(21,770)
121,034
25,943
(40,881)
7,175
-
(6,295)
15,203
Transferred to income statement disposal of available for sale investments
Total transferred from equity
322
322
(18,658)
(18,658)
Total comprehensive income/(expense) for the year
121,356
(3,455)
31
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Anglo Pacific Group PLC
CONSOLIDATED BALANCE SHEET AND COMPANY BALANCE SHEET
AS AT 31 DECEMBER 2009
Consolidated
2009
£'000
2008
£'000
Notes
Non-current assets
Property, plant and equipment
Coal royalties
Royalty instruments
Intangibles
Mining and exploration interests
Investments in subsidiaries
Investments in associates
Deferred tax
Other receivables
Current assets
Taxation
Trade and other receivables
Cash at bank
Total assets
Non-current liabilities
Deferred tax
Current liabilities
Taxation
Trade and other payables
Total liabilities
Capital and reserves attributable
to shareholders
Share capital
Share premium
Coal royalty revaluation reserve
Investment revaluation reserve
Share based payment reserve
Foreign currency translation reserve
Special reserve
Retained Earnings
11
12
13
14
15
16
17
21
19
19
19
22
21
20
20
23
23
24
25
Company
2009
£'000
896
-
21,979
2,296
102,910
5,665
-
-
5,018
138,764
-
1,347
6,624
7,971
2008
£'000
829
-
7,783
-
36,095
6,618
-
1,603
45
52,973
646
276
101
1,023
1,742
149,896
21,979
6,095
109,695
-
3,771
-
-
293,178
-
5,082
14,195
19,277
829
93,347
7,783
-
45,755
-
-
-
-
147,714
-
11,575
17,136
28,711
312,455
176,425
146,735
53,996
47,883
47,883
28,857
28,857
3,189
3,189
4,146
390
4,536
877
849
1,726
226
337
563
52,419
30,583
3,752
-
-
20
222
242
242
2,149
20,718
88,582
36,850
78
18,804
632
92,223
260,036
2,123
18,604
58,430
(22,149)
78
7,230
632
80,894
145,842
2,149
20,718
-
36,845
78
82
632
82,479
142,983
2,123
18,604
-
(21,733)
78
82
632
53,968
53,754
Total equity and liabilities
312,455
176,425
146,735
53,996
The financial statements of Anglo Pacific Group PLC (registered number: 897608) on pages 30 to 69 were
approved by the Board of Directors and authorised for issue on 10th March 2010 and are signed on its behalf by:
B.M. Wides
P.M. Boycott
Director
Director
32
12th March 2010
Enfocus Software - Customer Support
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S
Enfocus Software - Customer Support
Anglo Pacific Group PLC
CONSOLIDATED CASH FLOW STATEMENT AND COMPANY CASH FLOW STATEMENT FOR THE
YEAR ENDED 31 DECEMBER 2009
Group
Company
Notes
2009
£'000
2008
£'000
2009
£'000
2008
£'000
Cash flows from operating activities
Profit before taxation
Adjustments for:
Interest received
Unrealised foreign currency loss
Depreciation of property, plant and equipment
(Gain) on disposal of mining and exploration interests
(Gain) on revaluation of assets held as fair value
through profit or loss
Loss on writedown of assets
Inter-company dividends
Share of associates (profit)
Share based payments
6
4
13,15
28
Decrease/ (Increase) in trade and other receivables
excluding amounts due from subsidiary companies
(Decrease) / Increase in trade and other payables
Cash generated from operations
Income taxes paid
Net cash flows from operating activities
Cash flows from investing activities
Proceeds on disposal of mining and exploration interests
Purchases of mining and exploration interests
Purchases of royalty interests
Acquisition of associates
Purchases of property, plant and equipment
Exploration and evaluation expenditure
Interest received
Net cash flows from investing activities
6
Cash flows from financing activities
Proceeds from issue of share capital
Dividends paid
Net financing of related entities
Net cash flows from financing activities
25,883
35,255
37,903
25,100
(796)
1,562
12
(6,367)
(130)
410
-
(515)
150
20,209
6,493
(459)
26,243
(4,727)
21,516
25,391
(29,195)
(12,245)
(1,331)
(80)
(513)
796
(17,177)
(957)
756
9
(14,016)
(126)
-
-
-
30
20,951
(9,701)
588
11,838
(4,342)
7,496
31,117
(28,849)
(5,574)
-
-
-
957
(2,349)
(593)
-
12
(6,701)
(130)
410
(30,500)
-
150
551
(1,071)
115
(405)
553
148
22,384
(26,511)
(9,215)
-
(80)
-
593
(12,829)
(850)
-
9
(12,041)
(126)
-
(12,450)
-
30
(328)
(244)
136
(436)
(3,285)
(3,721)
27,388
(27,194)
(5,574)
-
-
-
850
(4,530)
-
(7,280)
-
(7,280)
-
(6,915)
-
(6,915)
-
(7,280)
26,484
19,204
-
(6,915)
13,232
6,317
Net increase in cash and cash equivalents
(2,941)
(1,768)
6,523
(1,934)
17,136
18,904
101
2,035
14,195
17,136
6,624
101
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
22
22
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Enfocus Software - Customer Support
Anglo Pacific Group PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2009
1.
Summary of significant accounting policies
1.1 Corporate information
The financial statements of the Group were authorised for issue in accordance with a directors’ resolution on 10th
March 2010. Anglo Pacific Group PLC is incorporated in England and quoted on Stock Exchanges in the United
Kingdom and Australia. Anglo Pacific Group PLC’s registered office is at 17 Hill Street, London, W1J 5NZ,
United Kingdom (registered number: 897608).
Anglo Pacific Group PLC’s business is securing natural resources royalties by acquisition and through investment
in mining interests. The Group’s royalties and mining interests are diversified but are strongly represented by
coal, gold and uranium.
1.2 Basis of preparation
The basis of preparation and principal accounting policies applied in the preparation of these consolidated
financial statements are set out below. These policies have been consistently applied to all the years presented,
unless otherwise stated.
The consolidated financial statements of Anglo Pacific Group PLC have been prepared in accordance with
International Financial Reporting Standards as adopted by the European Union (IFRSs as adopted by the EU),
IFRIC Interpretations and the Companies Act 2006 applicable to companies reporting under IFRS. The
consolidated financial statements have been prepared under the historical cost convention, as modified by the
revaluation of coal royalties, available-for-sale financial assets, and financial assets and financial liabilities
(including derivative instruments) at fair value through profit or loss.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting
estimates. It also requires management to exercise its judgement in the process of applying the Group’s
accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions
and estimates are significant to the consolidated financial statements are disclosed in note 2.
1.2.1 Changes in accounting policies and disclosures
(a) New and amended standards adopted by the Group
The Group has adopted the following new and amended IFRSs as of 1st January 2009:
•
•
•
IAS 1 (revised) ‘Presentation of financial statements’ – effective 1st January 2009. The revised standard
prohibits the presentation of items of income and expenses (that is, ‘non-owner changes in equity’) in the
statement of changes in equity, requiring ‘non-owner changes in equity’ to be presented separately from
owner changes in equity in a statement of comprehensive income. As a results the Group has elected to
present the ‘Statement of comprehensive income’ in two statements: the ‘Consolidated income statement’
and a ‘Consolidated statement of comprehensive income’. Only one comparative period has been
presented for the balance sheet as there are no retrospective restatements of any figures from applying the
amended IAS 1. As the change in accounting policy only impacts presentation aspects, there is no impact
on earnings per share.
IFRS 7 (amendment) ‘Financial instruments – Disclosures’ – effective 1st January 2009. The amendment
requires enhanced disclosure about fair value measurement and liquidity risk. In particular, the
amendment requires disclosure of fair value measurements by level of a fair value measurement
hierarchy.
IFRS 8 ‘Operating Segments’ – effective 1st January 2009. The standard requires disclosure of
information about the Group’s operating segments and also about the Group’s businesses and the
geographical area in which it operates.
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Anglo Pacific Group PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2009
(b) Standards, amendments and interpretations to existing standards that are not yet effective and have not been
early adopted by the Group
The following standards and amendments to existing standards have been published and are mandatory for the
Group’s accounting periods beginning on or after 1st January 2010 or later periods, but the Group has not early
adopted them:
•
•
•
•
•
IFRS 9 ‘Financial Instruments’ – effective 1st January 2013
IFRIC 14 (amendments) ‘Prepayments of a Minimum Funding Requirement’ – effective 1st January 2011
IFRIC 19 ‘Extinguishing Financial Liabilities with Equity Instruments’ – effective 1st July 2010
IFRS 2 (amendments) ‘Group Cash-settled Share-based Payment Transactions’ – effective 1st January
2010
IAS 24 (revised 2009) ‘Related Party Disclosures’ – effective 1st January 2011
The directors anticipate that the adoption of these Standards and Interpretations in future periods will have no
material impact on the financial statements of the Group. The Group does not intend to apply any of these
pronouncements early.
1.3 Consolidation
The financial statements consist of the consolidation of the accounts of Anglo Pacific Group PLC (the Company) and
its subsidiaries (together ‘the Group’).
All intragroup balances, transactions, income and expenses, including unrealised profits from intragroup transactions,
have been eliminated on consolidated. Unrealised losses are eliminated in the same way as unrealised gains except
that they are only eliminated to the extent that there is no evidence of impairment.
(a) Subsidiaries
Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies
generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of
potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group
controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the
Group. They are de-consolidated from the date that control ceases.
In the accounts of the Company, investments in subsidiaries are shown at cost less any provision for impairment. The
results of subsidiaries are included in the consolidated income statement.
The consolidated financial statements include all the assets, liabilities, revenues, expenses and cash flows of the
Company and its subsidiaries after eliminated intercompany transactions as noted above.
(b) Associates
Associates are all entities over which the Group has significant influence but not control, generally accompanying
a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using
the equity method of accounting and are initially recognised at cost. The Group’s investment in associates
includes goodwill identified on acquisition, net of any accumulated impairment loss.
The Group’s share of its associates’ post-acquisition profits or losses is recognised in the income statement, and its
share of post-acquisition movement in reserves is recognised in reserves. The cumulative post-acquisition
movements are adjusted against the carrying amount of the investment. When the Group’s share of losses in an
associate equal or exceeds its interest in the associate, including any other unsecured receivables, the Group does
not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.
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Anglo Pacific Group PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2009
Unrealised gains on transaction between the Group and its associates are eliminated to the extent of the Group’s
interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an
impairment of the asset transferred. Accounting policies of the associates have been changed where necessary to
ensure consistency with the policies adopted by the Group.
On 13th May 2009 the Group made an unconditional on–market cash bid of A$0.30 per share for all the
outstanding issued share capital of Royalco Resources Limited, an Australian mining company which owns a
number of royalty interests in Australasia. The offer price was increased to A$0.34 on 3rd July 2009 and the bid
closed on 10th July 2009, resulting in the Group increasing its shareholding to 31.1%. On 25th September 2009
Chris Orchard, the Group’s Chief Investment Officer and an executive director, was appointed to the Royalco
Resources Limited Board. As a result of its significant shareholding and this board appointment, the Group’s
investment in Royalco Resources Limited is accounted for under the equity method. Note 17 provides further
details of the Group’s investment in Royalco Resources Limited.
(c) Joint Ventures
A joint venture is an entity in which the Group holds an interest on a long-term basis and which is jointly
controlled by the Group and one or more other partners under a contractual arrangement.
The results and assets and liabilities of joint ventures are incorporated in these financial statements using the
proportionate consolidation method of accounting. The Group’s share of the assets, liabilities, income and expenses of
the joint ventures are incorporated with the similar items, line by line, in its financial statements.
Where a Group company transacts with a joint venture of the Group, profits and losses are eliminated to the extent of
the Group’s interest in the relevant joint venture. Losses may provide evidence of an impairment of the asset
transferred in which case appropriate provision is made for impairment.
Where necessary, adjustments are made to the results of subsidiaries, associates and joint ventures to bring their
accounting policies into line with those used by the Group.
1.4 Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the Executive and
Investment committees, who combined fulfil the role of the chief operating decision-maker. The Executive and
Investments committees are responsible for allocating resources and assessing performance of the Group’s
operating segments.
A segment is a distinguishable component of the Group that is engaged either in providing products or services
(business segment), or in providing products or services within a particular economic environment (geographical
segment), which is subject to risks and rewards that are different from those of other segments. For the purposes
of management reporting the Group does not have separate geographical reporting segments.
1.5 Foreign currencies
(a) Function and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the
primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial
statements are presented in pounds sterling, which is the Company’s functional and the Group’s presentation currency.
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency of the respective Group entity, using the
exchange rates prevailing at the dates of the transactions (spot exchange rate). Foreign exchange gains and losses
resulting from the settlement of such transactions and from the remeasurement of monetary items at year-end
exchange rates are recognised in profit or loss. Non-monetary items measured at historical cost are translated using the
exchange rates at the date of the transaction (not retranslated). Non-monetary items measured at fair value are
translated using the exchange rates at the date when fair value was determined.
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Enfocus Software - Customer Support
Anglo Pacific Group PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2009
(c) Group companies
The results and financial position of all the Group entities that have a functional currency different from the
presentation currency are translated into the presentation currency as follow:
(a) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that
balance sheet;
(b) income and expenses for each income statement are translated at average exchange rates; and
(c) all resulting exchange difference are charged/credited to other comprehensive income and recognised in the
currency translation reserve in equity.
On consolidation, exchange differences arising from the translation of the net investment in foreign operations, and of
borrowings are taken to the currency translation reserve in equity. When a foreign operation is partially disposed of or
sold, exchange differences that were recorded in equity are recognised in the income statement as part of the gain or
loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of
the foreign entity and translated at the closing rate.
1.6 Property, plant and equipment (excluding coal royalties)
Property, plant and equipment are stated at cost, less accumulated depreciation and accumulated impairment
losses. The cost of property, plant and equipment comprises its purchase price, any costs directly attributable
to bringing the asset to the location and condition necessary for it to be capable of operating in the manner
intended by management. Once a mining project has been established as commercially viable, expenditure
other than that on land, buildings, plant and equipment is capitalised under ‘Producing assets’ together with any
amount transferred from ‘Exploration and evaluation costs’.
Property, plant and equipment is depreciated over its useful life, or over the remaining life of the mine if
shorter. The major categories of property, plant and equipment are depreciated on a units of production and/or
straight line basis as follows:
Producing assets
Coal Tenures
Fixtures and equipment
Units of production
Units of production
4 to 10 years
The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the
sales proceeds and the carrying amount of the asset and is recognised in income.
1.7 Coal royalties
The Group owns a royalty entitlement to the output from the Kestrel and Crinum underground mines in
Queensland, excluding the output from Crown areas. As the Group owns the physical right to the minerals this
entitlement is treated in the consolidated financial statements as a tangible fixed asset under IAS 16 Property
Plant and Equipment and the Group has adopted the revaluation method accordingly. The coal royalties are
valued at fair value based on future discounted cash flows calculated on a quarterly basis by an independent
external consultant. Management consider the valuation on a quarterly basis for any indications of possible
impairment considering factors such as pricing and production forecasts.
Any movement in the valuation of the royalties is recognised in the coal royalty revaluation reserve, excluding
the effects of foreign currency changes and net of deferred taxation in accordance with IAS 12 Income Taxes.
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Enfocus Software - Customer Support
Anglo Pacific Group PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2009
1.8 Intangibles
(a) Exploration and evaluation costs
Exploration and evaluation expenditure comprises costs that are directly attributable to:
• researching and analysing exploration data;
• conducting geological studies, exploratory drilling and sampling;
• examining and testing extraction and treatment methods; and/or
• compiling prefeasibility and feasibility studies.
Exploration expenditure relates to the initial search for deposits with economic potential. Evaluation
expenditure arises from a detailed assessment of deposits or other projects that have been identified as having
economic potential.
Expenditure on exploration and evaluation activities is capitalised when there is a high degree of confidence in
the project’s viability and hence it is probable that future economic benefits will flow to the Group.
The carrying values of capitalised amounts are reviewed twice per annum by management and the results of
these reviews are reported to the Audit Committee. In the case of undeveloped projects there may be only
inferred resources to form a basis for the impairment review. The review is based on a status report regarding
the Group’s intentions for development of the undeveloped project.
Subsequent recovery of the resulting carrying value depends on successful development or sale of the
undeveloped project. If a project does not prove viable, all irrecoverable costs associated with the project net
of any related impairment provisions are written off.
(b) Royalty Interests
Royalty interests represent the net smelter royalties acquired on the Four Mile Project in South Australia and
the Salamanca Uranium Project in Spain, which are development and feasibility stage projects respectively.
The Group does not own the physical rights to the minerals on these projects, rather it is entitled to the royalty
payments from both the Four Mile and Salamanca Uranium projects arising from contractual rights. It is
probable that future economic benefits will flow to the Group, however, such benefits can not be reliably
measured and as there is no active market for royalties for the determination of fair value the royalty interests
are recorded at cost less accumulated amortisation.
The useful life of the royalty interests will be determined by reference to planned mine life on commencement
of mining and the cost of the royalty contract amortised on a systematic basis over this useful life once the asset
is available for use. Amortisation rates are adjusted on a prospective basis for all changes to estimates of the
life of mine. Acquisition costs of royalty interests on feasibility stage projects are not amortised. Amortisation
will stop when the royalty is classified as held for sale or derecognised.
1.9 Impairment of non-financial assets
Intangible assets are tested for impairment at least at each reporting date and the assessment includes variables
such as the production profiles, commodity prices and management representations. Property, plant and
equipment are tested for impairment whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable.
An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable
amount, which is the higher of fair value less costs to sell and value-in-use. To determine the value-in-use,
management estimates expected future cash flows from each asset and determines a suitable interest rate in
order to calculate the present value of those cash flows. The data used for impairment testing procedures are
directly linked to the Group's latest forecasts. Discount factors are determined individually for each asset and
reflect their respective risk profiles as assessed by management. Impairment losses for business combinations
reduce first the carrying amount of any goodwill allocated to that business combination. Any remaining
41
Enfocus Software - Customer Support
Anglo Pacific Group PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2009
impairment loss is charged to the investment in subsidiary or associate. With the exception of goodwill, all
assets are subsequently reassessed for indications that an impairment loss previously recognised may no longer
exist. An impairment charge is reversed if the asset’s recoverable amount exceeds its carrying amount.
1.10 Financial instruments
Financial assets and financial liabilities are recognised on the Group’s balance sheet when the Group has
become a party to the contractual provisions of the instrument.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term, highly liquid
investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of
changes in value.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market. On initial recognition loans and receivables are stated at their fair value. After
initial recognition these are measured at amortised cost using the effective interest method, less provision for
impairment. Discounting is omitted where the effect of discounting is immaterial. The Group's trade and most
other receivables fall into this category of financial instruments.
Individually significant receivables are considered for impairment when they are past due or when other
objective evidence is received that a specific counterparty will default. Receivables that are not considered to
be individually impaired are reviewed for impairment in groups, which are determined by reference to the
industry and region of a counterparty and other available features of shared credit risk characteristics. The
percentage of the write down is then based on recent historical counterparty default rates for each identified
group. Impairment of trade receivables are presented within 'other expenses'.
Mining and exploration interests
Mining and exploration interests are recognised and derecognised on a trade date where a purchase or sale of an
investment is under a contract whose terms require delivery of the investment within the timeframe established
by the market concerned, and are initially measured at fair value, including transaction costs.
Mining and exploration interests are classified upon initial recognition as either available-for-sale or as assets at
fair value through profit or loss, depending on the characteristics of the particular instrument and its purpose.
Interests classified as available-for-sale are measured at subsequent reporting dates at their fair value. For
available-for-sale investments, gains and losses arising from changes in fair value are recognised directly in
equity within the investment revaluation reserve, until the security is disposed of or is determined to be
impaired, at which time the cumulative gain or loss previously recognised in equity is included in the profit or
loss for the period. Unquoted investments are initially recognised using cost as the best evidence of fair value.
In the absence of an active market for these securities, the Group considers each unquoted security to ensure
there has been no material change in the fair value since initial recognition. When a market price can be
established the investments are revalued accordingly.
For mining and exploration interests classified as assets at fair value through profit or loss, gains and losses
arising from changes in fair value are recognised directly in the income statement. The fair values of such
instruments are assessed with reference to the relevant factors, which include, inter alia, equity prices in active
markets, commodity prices, production profiles and management representations. These assets are reviewed
regularly to ensure that the initial classification remains correct given the asset characteristics and the Group’s
investment policies. These assets may be initially recognised using cost as the best evidence of fair value at
acquisition (see note 15).
All mining and exploration interests held as available for sale are assessed for impairment at least at each
reporting date and the assessment includes variables such as the instrument’s valuation in active markets, the
company’s underlying assets as well as any potential for economic mineral development within the relevant
company’s licences.
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Anglo Pacific Group PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2009
Royalty instruments
Royalty instruments are recognised or derecognised on completion date where a purchase or sale of the royalty
is under a contract, and are initially measured at fair value, including transaction costs.
Royalty instruments are classified upon initial recognition as available-for-sale or as assets at fair value through
profit or loss, depending on the characteristics of the particular instrument and its purpose. The Group assesses
each royalty with reference to whether it would meet the applicable criteria for a derivative, and if the entire
royalty contract meets the criteria it is classified as fair value through profit or loss. Some royalty contracts
include clauses relating to the possibility of conversion to equity in the company granting the royalty. These
clauses are treated as embedded derivatives and are classified as fair value through profit or loss.
Royalty instruments classified as available-for-sale are measured at subsequent reporting dates at their fair
value. For royalties classified in this manner gains and losses arising from changes in fair value are recognised
directly in equity within the investment revaluation reserve, until the royalty is disposed of or is determined to
be impaired, at which time the cumulative gain or loss previously recognised in equity is included in the profit
or loss for the period.
For royalty instruments or embedded derivatives classified as assets at fair value through profit or loss, gains
and losses arising from changes in fair value are recognised directly in the income statement. The fair values of
such instruments are assessed with reference to the relevant factors, which include, inter alia, equity prices in
active markets, production profiles, commodity prices and management representations. These assets are
reviewed regularly to ensure that the initial classification remains correct given the asset characteristics and the
Group’s investment policies. These assets may be initially recognised using cost as the best evidence of fair
value at acquisition; however, embedded derivatives are valued at acquisition and this fair value is separated
from the balance of the royalty instrument.
All royalty instruments are assessed for impairment at least at each reporting date and the assessment includes
variables such as the instrument’s valuation in active markets, production profiles, commodity prices and
management representations.
Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the substance of the contractual
arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets
of the Group after deducting all of its liabilities.
Trade payables
Trade payables are not interest bearing and are stated at their fair value. On initial recognition these are
measured at amortised cost using the effective interest method.
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs.
1.11 Current and deferred income tax
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported
in the income statement because it excludes items of income or expense that are taxable or deductible in other
years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is
calculated by using tax rates and laws that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets
and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit,
and is accounted for using the balance sheet liability method. Deferred tax liabilities are recognised for all taxable
temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits
will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not
recognised if the temporary differences arise from initial recognition of goodwill on business combinations.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2009
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and
associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary
difference and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or the
liability is settled. Deferred tax is charged or credited in the income statement, except when it relates to items
credited or charged directly to equity, in which case the deferred tax is also dealt with in equity.
1.12 Share-based payments
The Group has applied the requirements of IFRS 2 Share-based Payments. In accordance with the transitional
provisions, IFRS 2 has been applied to all grants of equity instruments after 7th November 2002 that were
unvested as of 1st January 2005.
The Group issues equity-settled share-based payments to certain employees. Equity-settled share-based
payments are measured at fair value at the date of grant. The fair value determined at the grant date of equity-
settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group’s
estimate of shares that will eventually vest.
Fair value is measured by use of the Black Scholes model. The expected life used in the model has been
adjusted, based on management’s best estimate, for the effect of non-transferability, exercise restrictions, and
behavioural considerations.
1.13 Reserves
Equity comprises the following:
• "Share capital" represents the nominal value of equity shares.
• "Share premium" represents the excess over nominal value of the fair value of consideration received for
equity shares, net of expenses of the share issue.
• "Coal royalty revaluation reserve" represents revaluation of the coal royalty from the opening carrying
value, excluding the effects of deferred tax and foreign currency changes.
• "Investment revaluation reserve" represents gains and losses due to the revaluation of the investments in
mining and exploration interests and other royalties from the opening carrying values, including the
effects of deferred tax and foreign currency changes.
• "Share based payment reserve" represents equity-settled share-based employee remuneration until such
share options are exercised.
• "Foreign currency reserve" represents the differences arising from translation of investments in overseas
subsidiaries.
• "Special reserve" represents the level of profit attributable to the Group for the period ended 30th June
2002 which was created as part of a capital reduction performed in 2002.
• "Retained earnings" represents retained profits.
1.14 Revenue recognition
The revenue of the Group comprises royalty income and amounts receivable from external customers for services
excluding value added tax and other sales related taxes. It is measured at the fair value of the consideration
received or receivable. The royalty income becomes receivable on extraction and sale of the relevant minerals.
Disposals of mining and exploration interests are disclosed net of any commissions and foreign exchange.
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest
rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of
the financial asset to that asset’s net carrying amount.
Dividend income from investments is recognised when the shareholders’ rights to receive payment have been
established.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2009
1.15 Leases
Rentals payable under operating leases where substantially all of the benefits and risks of ownership are not
transferred to the lessee are charged against profits on a straight line basis over the term of the lease.
1.16 Dividend distribution
Dividend distribution to the Company’s shareholders is recognised as a liability in the Group’s financial
statements in the period in which the dividends are approved by the Company’s shareholders.
2.
Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical experience and other factors,
including expectations of future events that are believed to be reasonable under the circumstances.
2.1 Critical accounting estimates and assumptions
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates and
assumptions will, by definition, seldom equal the related actual results. The estimates and assumptions that
have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within
the next financial year are addressed below.
(a) Review of asset carrying values and impairment charges and reversals – note 1.7, note 1.8, note 1.9, note
12, note 13, note 14 and note 15.
(b) Recoverability of deferred tax assets – note 1.11 and note 21
2.2 Critical judgements in applying the Group’s accounting policies
Areas of judgement that have the most significant effect on the amounts recognised in the financial statements are:
(a) Classification of mining and exploration interests – note 1.10 and note 15
(b) Classification of royalty instruments and royalty interests.
The Directors review the nature of those royalty agreements to determine which class of asset they fall
under. For those royalties acquired which give the Group a straight royalty with no conversion rights to
shares for example, these are classified as a royalty interest within intangibles – note 1.8 (b) and note 14.
Where an agreement has a convertible option within it, the contracts are reviewed to determine whether
the option is closely related or not to the host contract. This will determine whether the assets should be
classified as a derivative at fair value through profit and loss or an available for sale financial asset with
an embedded derivative – note 1.10 and note 13.
(c) Review of assumptions underlying the independent coal industry advisors’ valuation of the Kestrel and
Crinum coal royalty – note 12.
(d) Review of assumptions underlying the valuation of royalty instruments and their associated embedded
derivatives – note 13.
The Directors review the latest available mine plans and obtain independent foreign exchange and
commodity price forecasts to determine the each of the royalty instruments carrying value at reporting
date.
(e) Review of asset carrying values and impairment charges and reversals – note 1.7, note 1.8, note 1.9, note
12, note 13, note 14 and note 15.
(f) Recognition of deferred tax liabilities and the continued application of relevant exemptions – note 1.11,
note 7 and note 21.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2009
3.
Segment information
Management has determined the operating segments based on the reports reviewed by the Executive and
Investment committees that are used to make strategic decisions.
The committees consider the Group’s undertakings from a business perspective. This has resulted in the Group
being organised into two operating segments – royalties and mining and exploration interests.
The royalties segment encompasses all Group activities relating directly to the royalties received from mining
operations. The mining and exploration interests segment encompasses all Group activities relating directly to the
acquisition, disposal and continued monitoring of the Group’s investments in listed and unlisted entities operating
in mining and mineral exploration. Any revenue, overheads, assets or liabilities that cannot be directly allocated
to these segments is reported under “Unallocated”.
For the year ended 31st December 2009, income from royalties was derived 100% in Australia through the coal
royalty held (2008: 100%). The Group’s royalty assets are 89% (2008: 93%) held in Australasia with the balance
being represented by interests in Europe 6% (2008: 5%), North America 4% (2008: nil) and South America 1%
(2008:2%). This analysis has been based on the source of royalty income, together with the location of the
operations giving rise to the royalty income.
The Group’s listed mining and exploration interests are 100% operated from the United Kingdom and whilst the
interests of those mining companies are worldwide they are listed on the following markets:
• Australia – 56% (2008: 58%)
• Canada – 41% (2008: 37%)
• United Kingdom – 3% (2008: 5%)
The segment information provided to the Executive and Investment committees for the reportable segments for the
year ended 31st December 2009 is as follows:
Income
Profit on sale of mining and exploration
interests
Interest received
Depreciation
Tax
Share of profits of associates
Segment Result
Segment Assets
Segment Liabilities
Net Segment Assets
Capital Expenditure
Exploration and evaluation expenditure
Year ended 31st December 2009
Mining
Interests
£'000
Unallocated
£'000
-
13
6,367
-
-
-
515
6,882
115,082
(408)
114,674
88
367
-
796
(12)
(5,252)
-
(6,585)
20,172
(4,536)
15,636
80
-
Total
£'000
20,347
6,367
796
(12)
(5,252)
515
20,631
312,455
(52,419)
260,036
168
367
Royalty
£'000
20,334
-
-
-
-
-
20,334
177,201
(47,475)
129,726
-
-
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Anglo Pacific Group PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2009
Year ended 31st December 2008
Mining
Interests
£'000
Unallocated
£'000
-
50
Income
Profit on sale of mining and exploration
interests
Interest received
Depreciation
Tax
Share of profits of associates
Segment Result
Segment Assets
Segment Liabilities
Net Segment Assets
Capital Expenditure
Exploration and evaluation expenditure
4.
Profit before tax
Royalty
£'000
22,072
-
-
-
-
-
22,072
101,130
(30,781)
70,349
-
-
14,016
-
-
-
-
14,016
45,755
1,924
47,679
-
-
Profit before tax is stated after charging/(crediting):—
Net realised foreign exchange (gains)
Depreciation of property plant and equipment (note 11)
Staff costs (note 5)
Movement in fair value through profit or loss investments (note 13 & note
15)
Payments under operating leases
Auditors' remuneration:
Fees payable to the Company's auditor for audit of the financial statements
Fees payable to the Company’s auditor for other services:
- Interim review
- Other taxation services
5.
Staff costs
Wages and salaries
Social security costs
Other pension costs
Executive directors
Administration
Total
£'000
22,122
14,016
957
(9)
(5,994)
-
29,261
176,425
(30,583)
145,842
6
-
2008
£'000
(567)
9
1,322
126
66
40
8
15
-
957
(9)
(5,994)
-
(6,827)
29,540
(1,726)
27,814
6
-
2009
£'000
(893)
12
1,408
130
146
39
11
10
Consolidated
2009
£'000
1,250
121
37
1,408
2008
£'000
1,208
100
14
1,322
Consolidated
2009
Number
5
2
7
2008
Number
3
3
6
Directors’ salaries are shown in the directors’ remuneration report on pages 24 to 27, including the highest paid
director.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2009
6.
Finance income
Interest on bank deposits
Interest on royalty instruments
7.
Income tax expense
Total corporation tax charge
Deferred tax (credited)/charged to income – current year (note 21)
Tax on profit on ordinary activities
2009
£'000
431
365
796
2009
£'000
8,239
(2,987)
5,252
2009
£'000
2008
£'000
931
26
957
2008
£'000
2,932
3,062
5,994
2008
£'000
Factors affecting the tax charge for the year:
Profit on activities before tax
25,883
35,255
Prima facie tax payable at UK rate of 28% (2008: 28.50%) and Australian
rate of 30% (2008: 30%)
7,744
10,379
Adjustment for tax exempt income
Investment allowances
Utilisation of losses brought forward
Adjustment for foreign taxed income
Non-deductible expenses
Utilisation of previously unrecognised deferred tax assets
Total income tax expense
(1,841)
-
108
(342)
(417)
-
5,252
(3,311)
(120)
(540)
196
(610)
-
5,994
Refer to note 21 for information regarding the Group’s deferred tax assets and liabilities.
8.
Dividends
On 7th January 2009 an interim dividend of 3.45 pence per share was paid to shareholders in respect of the year
ended 31st December 2008. On 3rd July 2009 a final dividend of 4.35 pence per share was paid to shareholders
to make a total dividend for the year of 7.80 pence per share.
On 13th January 2010 an interim dividend of 3.70 pence per share was paid to shareholders in respect of the
year ended 31st December 2009. This dividend has not been included as a liability in these financial statements.
The directors propose that a final dividend of 4.65 pence per share be paid to shareholders on 7th July 2010, to
make a total dividend for the year of 8.35 pence per share. This dividend is subject to approval by shareholders
at the Annual General Meeting and has not been included as a liability in these financial statements.
The proposed final dividend for 2009 is payable to all shareholders on the Register of Members on 7th May 2010.
The total estimated dividend to be paid is £5.0 million. This will be reduced to the extent that shareholders
elect to receive scrip instead of cash under any scrip dividend alternative. The Board will consider whether
shareholders will again be given the opportunity to elect to receive a scrip dividend instead of cash depending
on the share price at the time.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2009
9.
Earnings per share
Earnings per ordinary share is calculated on the Group’s profit after tax of £20,631,000 (2008: £29,261,000)
and the weighted average number of shares in issue during the year of 107,439,463 (2008: 107,373,389).
The diluted earnings per ordinary share is calculated on a profit after tax of £20,631,000 (2008: £29,261,000)
and 107,459,305 shares (2008: 107,388,826). The numbers used in calculating basic and diluted earnings per
share are restated below:
Net profit attributable to shareholders
Earnings—basic
Earnings—diluted
Weighted average number of shares in issue
Ordinary shares in issue
Employee Share Option Scheme
2009
£'000
20,631
20,631
2008
£'000
29,261
29,261
Number
107,439,463
19,842
107,459,305
Number
107,373,389
15,437
107,388,826
10.
Results of Anglo Pacific Group Plc
Included in the consolidated profit attributable to the shareholders of Anglo Pacific Group PLC is a profit after tax
of £37,813,000 (2008: £24,697,000), which has been dealt with in the accounts of the holding company. As
permitted by Section 408 of the Companies Act 2006, the parent company's profit and loss account has not been
included in these financial statements.
11.
Property, plant and equipment
Consolidated
Gross carrying amount
Balance 1st January 2009
Additions
Reclassification from mining and exploration interests
Disposals
Balance 31st December 2009
Depreciation and impairment
Balance 1st January 2009
Disposals
Depreciation
Balance 31st December 2009
Carrying amount 31st December 2009
Equipment
Producing
assets
£'000
Coal
Tenures
£'000
and
Fixtures
£'000
Total
£'000
821
-
-
-
821
(2)
-
-
(2)
819
-
88
758
-
846
-
-
-
-
846
150
80
-
(74)
156
(140)
73
(12)
(79)
77
971
168
758
(74)
1,823
(142)
73
(12)
(81)
1,742
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2009
Consolidated
Gross carrying amount
Balance 1st January 2008
Additions
Disposals
Reclassification from mining and exploration interests
Balance 31st December 2008
Depreciation and impairment
Balance 1st January 2008
Disposals
Depreciation
Balance 31st December 2008
Carrying amount 31st December 2008
Producing
assets
£'000
Equipment
and
Fixtures
£'000
Total
£'000
821
-
-
-
821
(2)
-
-
(2)
819
144
6
-
-
150
(131)
-
(9)
(140)
10
965
6
-
-
971
(133)
-
(9)
(142)
829
Coal tenures relate to the Trefi and Panorama coal projects in British Columbia, Canada. As both projects are not
yet in production there was no depreciation during the period.
Company
Gross carrying amount
Balance 1st January 2009
Additions
Reclassification from mining and exploration interests
Disposals
Balance 31st December 2009
Depreciation and impairment
Balance 1st January 2009
Disposals
Depreciation
Balance 31st December 2009
Carrying amount 31st December 2009
Producing
assets
£'000
Equipment
and
Fixtures
£'000
Total
£'000
821
-
-
-
821
(2)
-
-
(2)
819
150
80
-
(74)
156
(140)
73
(12)
(79)
77
971
80
-
(74)
977
(142)
73
(12)
(81)
896
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Anglo Pacific Group PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2009
Company
Gross carrying amount
Balance 1st January 2008
Additions
Disposals
Reclassification from mining and exploration interests
Balance 31st December 2008
Depreciation and impairment
Balance 1st January 2008
Disposals
Depreciation
Balance 31st December 2008
Carrying amount 31st December 2008
Producing
assets
£'000
Equipment
and
Fixtures
£'000
Total
£'000
821
-
-
-
821
(2)
-
-
(2)
819
144
6
-
-
150
(131)
-
(9)
(140)
10
965
6
-
-
971
(133)
-
(9)
(142)
829
The Group’s property plant and equipment are carried at cost less depreciation with the exception of leases
relating to the talc deposit on Shetland held by the parent company. The producing asset on Shetland is included
at a directors’ valuation of £0.8 million (2008: £0.8 million) plus additions which are carried at cost. This
valuation was carried out on 26th March 2001. At the date of transition to IFRS, the Group elected to use this
valuation as deemed cost at that date.
12.
Coal Royalties
At 1st January 2008
Revaluation adjustment
Foreign currency translation
At 31st December 2008
Revaluation adjustment
Foreign currency translation
At 31st December 2009
Consolidated
£'000
60,874
25,943
6,530
93,347
42,916
13,633
149,896
Company
£'000
-
-
-
-
-
-
-
The Group’s coal royalty entitlements comprise the Kestrel and Crinum coal royalties.
The coal royalty was valued during December 2009 at £149.9 million (A$270 million) by VCoal Pty Limited, coal
industry advisors, on a net present value of the pre-tax cash flow discounted at a rate of 7%. The net royalty
income from this investment is currently taxed in Australia at a rate of 30%. This valuation is incorporated in the
accounts and the above revaluation amount represents the difference between the opening carrying value and the
external valuation, excluding the effects of foreign currency changes. Were the coal royalty to be realised at the
revalued amount there are £2.5 million (A$4.5 million) of capital losses potentially available to offset against
taxable gains. These losses have been included in the deferred tax calculation (note 21). The Directors do not
presently have any intention to dispose of the coal royalty.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2009
13.
Royalty instruments
The Group’s royalty instruments are represented by four convertible debentures which entitle the Group to the
repayment of principal and a net smelter return (NSR) royalty for the life of the mine. Until such time as the
principal is repaid the Group retains the option to convert the outstanding balance into the common shares of the
grantor. Details of the Group’s royalty instruments are summarised below:
Project
Commodity
Cost
'000
Engenho
Gold A$4,000
Royalty
Rate
2.50%
Escalation
Option
Price
A$0.35
Discount
Rate
10%
-
Royalty
Valuation
£'000
2,881
El Valle
Jogjakarta
Iron Sands1
Midway-
McKenzie
Break2
Gold C$7,500
2.50%
3%
>US$1,100/oz C$0.958
12.5%
7,869
Iron Sands A$5,000
2.00%3
A$0.10 -
A$0.50
-
15%
3,541
200
Gold C$8,000
2.50%
2.75%
>US$1,250/oz
C$0.70
12%
6,878
21,169
345
810
Option
Valuation
£'000
265
-
1 Jogjakarta Iron Sands royalty instrument was acquired on 15th June 2009.
2 Midway-McKenzie Break royalty instrument was acquired on 3rd September 2009.
3 Jogjakarta Iron Sands royalty rate decreases to 1% following repayment of principal, unless liquid iron prices exceed
US$700/t.
(a) Available for sale
The Group’s entitlement to the repayment of the principal and the NSR royalty have been classified as available
for sale and are carried at fair value. Any gains and losses arising from changes in fair value are recognised
directly in equity with the investment revaluation reserve as detailed below:
At 1st January 2008
Additions
Disposals
Revaluation adjustment
Fair value at 31st December 2008
Additions
Disposals
Revaluation adjustment
Fair value at 31st December 2009
Consolidated
£'000
-
5,343
-
2,083
7,426
6,596
-
7,147
21,169
Company
£'000
-
5,343
-
2,083
7,426
6,596
-
7,147
21,169
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2009
(b) Fair value through profit and loss
The Group’s option to convert the outstanding balance of the debentures into common shares of the grantors is an
embedded derivative requiring a separate valuation to the NSR royalty. The options are classified as fair value
through profit and loss, with gains and losses arising from changes in fair value directly recognised in the income
statement as detailed below:
Consolidated
£'000
-
231
-
126
357
323
-
130
810
Company
£'000
-
231
-
126
357
323
-
130
810
2009
2008
Consolidated
£'000
21,979
Company
£'000
21,979
Consolidated
£'000
7,783
Company
£'000
7,783
At 1st January 2008
Additions
Disposals
Revaluation adjustment
Fair value at 31st December 2008
Additions
Disposals
Revaluation adjustment
Fair value at 31st December 2009
Total royalty instruments
14.
Intangibles
Consolidated
Gross carrying amount
Balance 31st December 2008
Additions
Reclassification from mining and exploration interests
Balance 31st December 2009
Amortisation and impairment
Balance 31st December 2008
Impairment charge
Amortisation charge
Balance 31st December 2009
Carrying amount 31st December 2009
Exploration
& Evaluation
Costs
£'000
Royalty
Interests
£'000
-
367
402
769
-
-
-
-
769
-
5,326
-
5,326
-
-
-
-
5,326
Total
£'000
-
5,693
402
6,095
-
-
-
-
6,095
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2009
Company
Gross carrying amount
Balance 31st December 2008
Additions
Reclassification from mining and exploration interests
Balance 31st December 2009
Amortisation and impairment
Balance 31st December 2008
Impairment charge
Amortisation charge
Balance 31st December 2009
Carrying amount 31st December 2009
Royalty
Interests
£'000
-
2,296
-
2,296
-
-
-
-
2,296
Total
£'000
-
2,296
-
2,296
-
-
-
-
2,296
The Group’s intangibles comprise capitalised exploration and evaluation costs and royalty interests.
The exploration and evaluation costs comprise expenditure that is directly attributable to the Trefi and
Panorama coal projects in British Columbia, Canada.
The royalty interests are represented by the net smelter royalties on the Four Mile Project in South Australia
and the Salamanca Uranium Project in Spain, which are development and feasibility stage projects respectively.
These royalty interests are recorded at cost.
All amortisation and impairment charges (or reversals if any) are included within 'depreciation, amortisation
and impairment of non-financial assets'. As both royalty interests remain in preproduction there was no
amortisation or impairment during the period. No intangible assets have been pledged as security for liabilities.
15.
Mining and Exploration Interests
(a) Available for sale
At 1st January 2008
Additions
Disposals
Revaluation adjustment
Foreign currency translation
Fair value at 31st December 2008
Additions
Disposals
Reclassification as investment in associate
Reclassification as exploration interests
Revaluation adjustment
Foreign currency translation
Fair value at 31st December 2009
Quoted investments
Unquoted investments
54
Consolidated
£'000
94,690
28,766
(35,636)
(42,964)
(111)
44,745
29,730
(19,181)
(3,321)
(953)
57,657
8
108,685
99,543
9,142
108,685
Company
£'000
78,538
26,839
(28,322)
(41,970)
-
35,085
26,081
(15,777)
-
-
56,511
-
101,900
97,597
4,303
101,900
Enfocus Software - Customer Support
Anglo Pacific Group PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2009
These investments are acquired as part of the Group’s strategy to acquire new royalties and are not held for the
purpose of trading. Gains may be realised where it is deemed appropriate by the Investment Committee. The fair
values of listed securities are based on quoted market prices. Unquoted investments are initially recognised using
cost as the best evidence of fair value. In the absence of an active market for these securities, the Group considers
each unquoted security to ensure there has been no material change in the fair value since initial recognition.
(b) Fair value through profit and loss
At 1st January 2008
Additions
Disposals
Revaluation adjustment
Fair value at 31st December 2008
Additions
Disposals
Revaluation adjustment
Fair value at 31st December 2009
Consolidated
£'000
1,060
-
(50)
-
1,010
-
-
-
1,010
Company
£'000
1,060
-
(50)
-
1,010
-
-
-
1,010
A non-repayable convertible instrument was created by the Group in 2007. This convertible instrument was
created to provide finance to an unlisted mining development company and is convertible into equity in the
company or royalties over the company’s properties at the Group’s option for a period of up to 5 years. The
instrument was initially recognised using cost as the best evidence of fair value. The Group considers that there
had been no material change in the fair value of the instrument at the reporting date, and this will be re-examined
on a regular basis considering factors such as the presence of an active market for the equity and valuations of the
potential royalty streams. The Group has no present intention of exercising the conversion of the instrument in the
next 12 months.
2009
2008
Consolidated
£'000
Company
£'000
Consolidated
£'000
Company
£'000
Total mining and
interests
exploration
109,695
102,910
45,755
36,095
55
Enfocus Software - Customer Support
Anglo Pacific Group PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2009
16.
Investments in subsidiaries
Company
Cost:
At 1st January 2008
Additions:
At 31st December 2008
Additions
Investment reclassified as exploration interests
At 31st December 2009
Provisions:
At 1st January 2008
Additions
At 31st December 2008
Additions
At 31st December 2009
Net book value:
At 1st January 2008
At 31st December 2008
At 31st December 2009
Investments in
subsidiaries
£'000
6,686
277
6,963
-
(953)
6,010
345
-
345
-
345
6,341
6,618
5,665
Starmont Holdings Pty Ltd
Indian Ocean Resources Ltd
Alkormy Pty Ltd
Gordon Resources Ltd
Jandale Pty Ltd
Starmont Ventures Pty Ltd
Shetland Talc Ltd
APGM Ltd
Southern Cross Royalties Ltd
Advance Royalty Corporation
Panorama Coal Corporation
Trefi Coal Corporation
† Denotes held by a subsidiary company.
Proportion
of shares
held at
31st December
2009
100%
100%†
100%†
100%†
100%†
100%†
100%
100%
100%
100%
100%
100%
Country of
registration and
operation
Principal activity
Intermediate holding
company
Investments
Investments
Owner of coal royalty
Joint venture company
Investments
Mineral exploration
Investments
Owner of uranium royalty
Owner of uranium royalties
Holder of coal tenures
Holder of coal tenures
Australia
Australia
Australia
Australia
Australia
Australia
Scotland
England
England
Canada
Canada
Canada
56
Enfocus Software - Customer Support
Anglo Pacific Group PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2009
17.
Investments in associates
At 1st January 2008
Additions - cost
At 1st January 2009
Additions - cost
Share of profits
Share of other comprehensive income
At 31st December 2009
Investments in
associates
£'000
-
-
-
3,321
515
(65)
3,771
Investments in associates at 31 December 2009 include goodwill of £587,000 (2008: £nil).
The goodwill comprises the excess of the acquisition cost for Royalco Resources Limited over the fair value of
the Group’s share of the identifiable net assets of this company. The cost base of the Group’s acquisition of its
31.13% interest in Royalco Resources Limited as at 10th July 2009 was A$6.0 million. The Group’s share of
Royalco Resources Limited’s net assets on acquisition was A$4.9 million. As the cost base exceeds the
Group’s share of Royalco Resources Limited’s net assets, the A$1.1 million excess has been recognised as
goodwill.
Goodwill is carried at cost less accumulated impairment losses. Royalco Resources Limited announced on 9th
September 2009 that it had commissioned an independent valuation of its royalties which were held on the
company balance sheet at 30th June 2009 at a cost of A$248,000. This independent valuation returned a value
range between A$15.9 million and A$17.0 million for these assets. After evaluating this information the Group
does not consider the goodwill to be impaired.
The Group’s share of the results of its principal associates and its aggregated assets (including goodwill) and
liabilities, are as follows:
Name
Royalco Resources Limited
Country of
incorporation
Australia
%
interest
held
31.13
Assets
£'000
3,318
3,318
Liabilities
Revenues
£'000
£'000
135
135
740
740
Profit
£'000
515
515
The Group has not incurred any contingent liabilities or other commitments relating to its investments in
associates.
57
Enfocus Software - Customer Support
Anglo Pacific Group PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2009
18.
Joint ventures
The Group has a 50% equity shareholding (and voting rights) in a joint venture established in Australia between
Jandale Pty Ltd (a wholly owned subsidiary of the Company) and Core Resources Pty Ltd for the purpose of
exploration and development.
The following amounts are included in the Group’s financial statements using proportionate consolidation:
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Income
Expenses
2009
£'000
-
2
-
1
-
48
2008
£'000
-
7
-
3
50
-
The Group has no contingent liabilities or any capital commitments under this joint venture.
19.
Trade and other receivables
Income tax receivable
Trade receivables
Other receivables (including royalties
receivable)
Prepayments and accrued income
Amounts due from subsidiaries
2009
2008
Consolidated
£'000
-
-
Company
£'000
-
-
Consolidated
£'000
-
-
Company
£'000
646
-
5,008
74
5,082
-
5,082
1,280
67
1,347
5,018
6,365
11,537
38
11,575
-
11,575
251
25
922
45
967
Trade and other receivables principally comprise amounts relating to royalties receivable for the quarter 1st
October to 31st December 2009. The directors consider that the carrying amount of trade and other receivables is
approximately their fair value. Amounts due from subsidiaries, are considered long term loans. All other amounts
are considered short term and none are past due.
20.
Trade and other payables
Income tax payable
Other taxation and social security
payable
Trade payables
Other payables
Accruals and deferred income
2009
2008
Consolidated
£'000
3,920
Company
£'000
-
Consolidated
£'000
857
Company
£'000
-
226
125
210
55
4,536
58
226
90
192
55
563
20
35
780
34
1,726
20
33
155
34
242
Enfocus Software - Customer Support
Anglo Pacific Group PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2009
Trade and other payables principally comprise amounts outstanding for taxation, investment purchases and
ongoing costs. The average credit period taken for trade purchases is 33 days. The directors consider that the
carrying amount of trade and other payables is approximately their fair value. All amounts are considered short
term and none are past due.
21.
Deferred tax
The movement in the year in the Group’s net deferred tax position was as follows:
At 1st January
Released to income for the year
Charge to equity for the year
Foreign currency translation
At 31st December
2009
2008
Consolidated
£'000
28,857
(2,987)
17,824
4,189
47,883
Company
£'000
(1,603)
-
4,792
-
3,189
Consolidated
£'000
19,252
3,062
4,126
2,417
28,857
Company
£'000
393
-
(1,996)
-
(1,603)
The following are the major deferred tax liabilities/(assets) recognised by the Group and the movements thereon
during the period:
Coal royalties
Available-for sale-
investments
Revaluation
Effects of
Revaluation Revaluation
Accrual of
of coal Tax losses
of royalty
of mining
royalty
At 1st January 2008
Released to income for the year
(note 7)
Charge to equity for the year
Foreign currency translation
At 31st December 2008
Released to income for the year
(note 7)
Charge to equity for the year
Foreign currency translation
At 31st December 2009
royalty
£'000
17,749
-
7,783
1,959
27,491
-
12,875
4,090
44,456
£'000
(1,077)
-
629
(115)
(563)
-
(111)
(83)
(757)
instruments
interests
receivable
£'000
-
-
994
-
994
-
1,671
-
2,665
£'000
2,037
-
(5,280)
325
(2,918)
-
3,389
(61)
410
£'000
543
3,062
-
248
3,853
(2,987)
-
243
1,109
Total
£'000
19,252
3,062
4,126
2,417
28,857
(2,987)
17,824
4,189
47,883
This provision represents the Group’s full potential liability to deferred taxation. This may be reduced by tax
losses available to the Group. Australian capital losses are disclosed in note 12. Temporary differences arising in
connection with interests in associates and joint ventures are insignificant.
The following are the major deferred tax liabilities recognised by the Company and the movements thereon during
the period:
Available-for sale-investments
Revaluation
Revaluation
of mining
of royalty
interests
instruments
£'000
£'000
393
-
(2,990)
994
(2,597)
994
3,121
1,671
524
2,665
59
Total
£'000
393
(1,996)
(1,603)
4,792
3,189
At 1st January 2008
Charge to equity for the year
At 31st December 2008
Charge to equity for the year
At 31st December 2009
Enfocus Software - Customer Support
Anglo Pacific Group PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2009
22.
Other financial assets
The disclosures detailed below are as required by IFRS 7 ‘Financial Instruments: Disclosures’. The Company’s
principal treasury objective is to provide sufficient liquidity to meet operational cash flow requirements and to
allow the Group to take advantage of new growth opportunities whilst maximising shareholder value. The
Company operates controlled treasury policies which are monitored by the Board to ensure that the needs of the
Company are met as they evolve. The impact of the risks required to be discussed in accordance with IFRS 7 are
detailed below:
Liquidity and funding risk
The objective of the Group in managing funding risk is to ensure that it can meet its financial obligations as and
when they fall due. At the year end there was no debt outstanding. The Group has a strong credit rating and has
good access to capital markets, if required.
Credit risk
The Group’s principal financial assets are bank balances and cash, trade and other receivables and investments,
which represent the Group’s maximum exposure to credit risk in relation to financial assets.
The Group’s credit risk is primarily attributable to its other receivables. It is the policy of the Group to present the
amounts in the balance sheet net of allowances for doubtful receivables, estimated by the Group’s management
based on prior experience and the current economic environment. There are no doubtful receivables this period.
The credit risk on liquid funds is limited because the counterparties are banks with high credit-ratings assigned by
international credit-rating agencies. The Group has no significant concentration of credit risk, with exposure
spread over a large number of counterparties and customers.
The Group acquired four royalties during the year. In the event of non-payment of royalties, in both instances the
Group have security against plant and equipment and the royalties are registered against mining title where
possible. In addition, the Group is entitled to full reconciliations of amounts paid and retains the right to audit the
royalty returns and verify the calculations.
A derivative financial instrument to provide finance to an unlisted mining development company is currently held
by the Group (note 15). This instrument is convertible into equity in the company or royalties over the company’s
properties at the Group’s option for a period of up to 5 years. In the event of default the instrument becomes
repayable and the Group would rank equally with the company’s other unsecured creditors in this regard. The
Group undertakes detailed analysis of factors which mitigate the risk of default to the Group.
Foreign exchange risk
The Group’s transactional foreign exchange exposure arises from income, expenditure and purchase and sale of
assets denominated in foreign currencies. As each material commitment is made, the risk in relation to currency
fluctuations is assessed by the Board and regularly reviewed. The Group does not have a hedging programme in
place at this time.
Foreign currency denominated financial assets and liabilities, translated into Sterling at the closing rate, are as
follows:
2009
GBP AUD CAD USD Euro
£'000 £'000 £'000
£'000
£'000
18
1,005 55,628 46,294
-
-
18
1,005 55,628 46,294
29
-
29
-
-
2008
GBP AUD
£'000
£'000
3,860 16,173
-
-
3,860 16,173
CAD USD Euro
£'000 £'000 £'000
16
20,418
-
-
16
20,418
-
-
-
Financial assets
Financial liabilities
Short term exposure
The following table illustrates the sensitivity of the net result for the year and equity in regards to the Group’s
financial assets and financial liabilities and the Australian Dollar – Sterling and the Canadian Dollar – Sterling
exchange rate.
60
Enfocus Software - Customer Support
Anglo Pacific Group PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2009
It assumes a +/- 10% change of the Sterling / Australian Dollar exchange rate for the year ended 31st December
2009 (2008: 10%). A +/- 10% is considered for the Sterling / Canadian Dollar exchange rate (2008: 10%). The
sensitivity analysis is based on the Group’s foreign currency financial instruments held at balance sheet date.
If Sterling had weakened against the Australian Dollar and the Canadian Dollar by 10% this would have had the
following impact:
2009
GBP AUD CAD USD Euro
£'000 £'000 £'000 £'000 £'000
-
(76)
772
2
101 5,563 4,629
-
3
-
2008
GBP AUD CAD USD Euro
£'000
3
2
£'000
4
386
£'000
918
1,617
£'000
88
2,042
£'000
-
-
Net result for the year
Equity
If Sterling had strengthened against the Australian Dollar and the Canadian Dollar by 10% this would have had
the following impact:
2009
2008
Net result for the year
Equity
GBP
£'000
-
(101)
AUD
£'000
(772)
(5,563)
CAD USD Euro
£'000 £'000 £'000
-
(2)
76
(4,629)
-
(3)
GBP
£'000
(4)
(386)
AUD
£'000
(918)
(1,617)
CAD USD Euro
£'000 £'000 £'000
(3)
(2)
(88)
(2,042)
-
-
Exposures to foreign exchange rates vary during the year depending on the volume of overseas transactions.
Nonetheless, the analysis above is considered to be representative of the Group’s exposure to currency risk.
Other price risk
The Group is exposed to other price risk in respect of its mining and exploration interests which include listed and
unlisted equity securities and any convertible instruments.
A sensitivity analysis based on a 10% increase or decrease in listed equity prices has been performed. If the
quoted stock price for these securities had increased or decreased by this percentage the net result for the year
would have been increased / reduced by £2,534,000 (2008: £2,207,000). Equity would have changed by
£9,954,000 (2008: £3,473,000).
The royalties acquired during the year (note 13 and note 14) expose the Group to other price risk through
fluctuations in commodity prices, particularly the prices of gold and uranium. As the directors obtain independent
commodity price forecasts, the generation of which takes into account fluctuations in prices, no detailed analysis
of the impact of fluctuations on the valuations of the royalties has been undertaken.
The Group is exposed to other price risk through its convertible instruments (note 13) that can be converted into
equity or royalties. The underlying value of the equity may change resulting in an increase or decrease in the
value of the instrument. As the equity is currently unlisted it is not possible to quantify this risk at this stage.
The Group’s mining and exploration interests are held for the purposes of generating additional royalties and are
considered long-term, strategic investments. This strategy is unaffected by recent severe fluctuations in prices for
mining and exploration equities; however, interests are continually monitored for indicators that may suggest
problems for these companies raising capital or continuing their day-to-day business activities to ensure remedial
action can be taken if necessary.
No specific hedging activities are undertaken in relation to these interests and the voting rights arising from these
equity instruments are utilised in the Group’s favour.
61
Enfocus Software - Customer Support
Anglo Pacific Group PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2009
Interest rate risk
The Group is exposed to interest rate risk in respect of the cash balances held with banks and other highly rated
counterparties. If the interest rate the Group received had increased/decreased by one percent during the year, the
net result for the year would have been increased / reduced by £796,000 (2008: £383,000). There would have
been no impact on equity.
2009
Assets
Cash
Trade receivables
Other receivables
Total Financial Assets
Financial Liabilities
Trade payables
Other payables
Total Financial Liabilities
Net Financial Assets
2008
Financial Assets
Cash
Other receivables
Total Financial Assets
Financial Liabilities
Trade payables
Other payables
Total Financial Liabilities
Net Financial Assets
Total
£'000
14,195
-
5,008
19,203
125
210
335
18,868
Total
£'000
17,136
11,537
28,673
35
780
815
27,858
Weighted
average effective
interest rate
Fixed Non interest
bearing
£'000
interest rate
£'000
1.00%
8.50%
8,154
-
1,112
9,266
-
-
-
9,266
6,041
-
3,896
9,937
125
210
335
9,602
Weighted
average effective
interest rate
Fixed Non interest
bearing
£'000
interest rate
£'000
17,136
-
17,136
-
-
-
17,136
-
11,537
11,537
35
780
815
10,722
2.65%
62
Enfocus Software - Customer Support
Anglo Pacific Group PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2009
Financial Assets
The Group and Company held the following investments in financial assets:
Available-for-sale
Other royalties
Mining and exploration interests
Fair value through profit or loss
Other royalties
Mining and exploration interests
Loans and receivables
Trade and other receivables
Cash at bank and in hand
2009
2008
Group
£'000
21,169
108,685
810
1,010
5,008
14,195
Company
£'000
21,169
101,900
810
1,010
6,298
6,624
Group
£'000
7,426
44,745
357
1,010
11,537
17,136
Company
£'000
7,426
35,085
357
1,010
296
101
Cash at bank and in hand comprise cash and short-term deposits held by the Group treasury function. The carrying
amount of these assets is approximately their fair value.
Fair value hierarchy
The Group adopted the amendments for IFRS 7 ‘Improving Disclosures about Financial Instruments’ effective
from 1st January 2009. These amendments require the Group to present certain information about financial
instruments measured at fair value in the statement of financial position. In the first year of application,
comparative information need not be presented for the disclosures required by the amendment. Accordingly, the
disclosure of the fair value hierarchy is only presented for the year ended 31st December 2009.
The following table presents financial assets and liabilities measured at fair value in the statement of financial
position in accordance with the fair value hierarchy: This hierarchy groups financial assets and liabilities into three
levels based on the significance of inputs used in measuring the fair value of the financial assets and liabilities.
The fair value hierarchy has the following levels:
• Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities;
• Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly (ie. as prices) or indirectly (ie. derived from prices); and
• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable
inputs).
The level within which the financial asset or liability is classified is determined based on the lowest level of
significant input to the fair value measurement.
The financial assets and liabilities measured at fair value in the statement of financial position are grouped into the
fair value hierarch as follows:
Consolidated
Assets
Royalty instruments
Mining and exploration interests - quoted
Mining and exploration interests - unquoted
Total
Net fair value
Note
(a)
(b)
(c)
2009
Level 1
£'000
Level 2
£'000
Level 3
£'000
-
99,543
-
99,543
99,543
-
-
10,152
10,152
10,152
21,979
-
-
21,979
21,979
Total
£'000
21,979
99,543
10,152
131,674
131,674
63
Enfocus Software - Customer Support
Anglo Pacific Group PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2009
Company
Assets
Royalty instruments
Mining and exploration interests - quoted
Mining and exploration interests - unquoted
Total
Net fair value
Note
(a)
(b)
(c)
2009
Level 1
£'000
Level 2
£'000
Level 3
£'000
-
97,597
-
97,597
97,597
-
-
5,313
5,313
5,313
21,979
-
-
21,979
21,979
Total
£'000
21,979
97,597
5,313
124,889
124,889
There have been no significant transfers between levels 1 and 2 in the reporting period.
The methods and valuation techniques used for the purposes of measuring fair value are unchanged compared to
the previous reporting period.
(a) Royalty instruments
The Group’s royalty streams arising from its four royalty instruments have been classified as available for sale,
with value on initial recognition being calculated as the total cost of the agreement less the valuation of the option
to convert to shares. At reporting date the royalty streams have been valued on the net present value of the pre-tax
cash flows discounted at a rate management considers reflects the risk associated with each of the projects. Note
13 details the discount rates used.
The option to convert to shares has been treated as fair value through profit and loss as designated on initial
recognition at the date of acquisition and has been independently valued at 31st December 2009 utilising an option
model. The key assumptions, in addition to those utilised in the royalty stream valuations such as mine life and
expected cash flows, include the price, volatility of the projects listed equity and where applicable the conversion
price and redemption value of redeemable shares.
(b) Mining and exploration interests – quoted
All the quoted mining and exploration interests have been issued by publicly traded companies in Australia,
Canada and the United Kingdom. Fair values for these securities have been determined by reference to their
quoted bid prices at the reporting date.
(c) Mining and exploration interest – unquoted
All the unquoted mining and exploration interests are initially recognised using cost as the best evidence of fair
value. In the absence of an active market for these securities, the Group considers each unquoted security to
ensure there has been no material change in the fair value since initial recognition.
Fair value measurements in Level 3
The Group’s financial assets classified in Level 3 uses valuation techniques based on significant inputs that are not
based on observable market data. The financial instruments within this level can be reconciled from beginning to
ending balances as follows:
64
Enfocus Software - Customer Support
Anglo Pacific Group PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2009
Available-for-
sale financial
assets
Net smelter
return royalty
£'000
7,426
Financial assets
at fair value
through profit
and loss
Optionality to
convert debenture
£'000
357
7,147
6,596
-
-
21,169
130
323
-
-
810
Total
£'000
7,783
130
7,147
6,919
-
-
21,979
Opening balance as at 1st January 2009
Gains or losses recognised in:
Profit and loss
Other comprehensive income
Additions
Disposals
Transfers into level 3
Transfers out of level 3
Closing balance as at 31st December 2009
(a)
(a) Gains and losses on the optionality to convert debentures are presented in ‘net operating expenses’.
Gains or losses recognised in profit and loss for the period are presented in ‘net operating expenses’ and can be
attributed to assets held at the end of the reporting period as follows:
Available-for-
sale financial
assets
Net smelter
return royalty
£'000
Financial assets
at fair value
through profit
and loss
Optionality to
convert debenture
£'000
-
-
130
130
Total
£'000
130
130
Assets held at the end of the reporting
period
Total gains or losses
There have been no transfers into or out of level 3 in the reporting period under review.
The Group measures its entitlement to the royalty streams and the optionality embedded in the royalty instruments
using discounted cash flow models. In determining the discount rate to be applied, management consider the
country and sovereign risk associated with the projects, together with the time horizon to the commencement of
production and the success or failure of projects of a similar nature.
Management have not undertaken detailed analysis of the impact of using alternative discount rates on the fair
value of the royalty streams or the optionality embedded in the royalty instruments, as the rates used reflect the
risks inherent in the four projects and the use of alternative rates would be unjustified.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2009
23.
Called up share capital and share premium
At 1st January 2008
Scrip dividends
Issue of share capital under share-based payment
At 31st December 2008
Scrip dividends
Issue of share capital under share-based payment
At 31st December 2009
Number of
shares
105,626,626
545,513
-
106,172,139
1,201,250
66,074
107,439,463
Ordinary
shares
£'000
Share
premium
£'000
2,113
10
-
2,123
24
2
2,149
17,742
862
-
18,604
1,966
148
20,718
Total
£'000
19,855
872
-
20,727
1,990
150
22,867
The total authorised number of ordinary shares is 500,000,000 shares of 2p each (2008: 500,000,000 shares). All
issued shares are fully paid.
Share option schemes
Shares under option to directors in office at 31st December 2009 are disclosed within the Directors’ Remuneration
Report. The Group operates an employee share option plan, the Anglo Pacific Company Share Option Plan,
which is open to all Group employees. Options were first granted under this scheme during 1999. During the
year 19,672 options were surrendered under this scheme and 71,367 options remain outstanding at 31st December
2009. Further information is provided at note 28.
24.
Special reserve
As part of the capital reduction in 2002, a special reserve was created, which represents the level of profit
attributable to the Group for the period ended 30th June 2002. At 31st December 2009, this reserve remains
unavailable for distribution.
At 1st January 2009 and 31st December 2009
25.
Retained Earnings
Balance at 1st January 2009
Dividends paid
Profit for the financial year
Balance at 31st December 2009
Consolidated
£'000
632
Company
£'000
632
Consolidated
£'000
80,894
(9,302)
20,631
92,223
Company
£'000
53,968
(9,302)
37,813
82,479
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2009
26.
Financial commitments
Operating leases
At the balance sheet date, the Group had outstanding commitments under non-cancellable operating leases. The
total commitments due under these leases are shown according to the scheduled expiry dates of the leases as
follows:
Within one year
In the second to fifth years inclusive
After five years
2009
£'000
148
592
225
965
2008
£'000
50
200
360
610
The annual commitments for leases expiring after five years total £50,000 per annum.
Capital commitments
At the year end the Group had capital commitments of £2,365,000 (2008: £nil) in respect of purchases of quoted
investments. The Group’s share of capital commitments of joint ventures at the balance sheet date amounted to
£nil (2008: £nil).
Subsidiary undertakings have commitments as detailed below:
Shetland Talc Limited
A bond was granted to Shetland Islands Council for £10,000 in respect of the installation of a Talc processing
plant at Broonies Taing, Sandwick and the extraction of talc magnesite rock at Catpund, Cunningsburgh.
27.
Retirement benefits plans
The Group operates a money purchase group personal pension scheme. Under this scheme the Group makes
contributions to personal pension plans of individual employees. The pension cost charge represents
contributions payable by the Group to these plans in respect of the year.
The total cost charged to income of £37,200 (2008: £13,800) represents contributions payable to these schemes
by the Group at rates specified in the rules of the schemes. As at 31st December 2009, contributions of £4,600
(2008: £5,600) due in respect of the current reporting period had not been paid over to the schemes.
28.
Share based payments
The Group has an Inland Revenue approved Company Share Option Plan. The option plan provides for a grant
price equal to the quoted market price of the Group’s shares on the date of grant.
The vesting period for the option plan is 3 years and, if an option remains unexercised after a period of 10 years
from the date of grant, the option will lapse. The exercise condition of the option plan stipulates that the Group’s
Earnings per Share (EPS) must grow at a rate of 2% in excess of the UK Retail Price Index (RPI) over the vesting
period.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2009
Outstanding at 1st January
Granted during the year
Surrendered during the year
Outstanding at 31st December
Options
91,039
-
(19,672)
71,367
2009
2008
Weighted
average exercise
price (£)
1.3181
-
1.5250
1.2611
Weighted
average Exercise
price (£)
1.0602
1.7419
-
1.3181
Options
56,595
34,444
-
91,039
Exercisable at 31st December
36,923
0.8125
36,923
0.8125
The options outstanding at 31st December 2009 had a weighted average exercise price of £1.26 and a weighted
average remaining contractual life of 6.7 years. The Group recognised total expenses of £nil (2008: £30,300)
relating to equity-settled share-based payment transactions. For this calculation the Black-Scholes model was
employed.
On 29th December 2009 following the recommendation of the Remuneration Committee, the Group issued 66,074
Ordinary Shares of 2p each in the Company at a price of 225.5p per share to the Executive Directors as part of
their remuneration.
29.
Related party transactions
During the year, Group companies entered into the following transactions with subsidiaries:
Funding transactions
Management fee
Amounts owed by related parties at year end
Subsidiaries
Associates
2009
£'000
26,484
(1,504)
5,018
2008
£'000
13,118
(1,272)
45
2009
£'000
2008
£'000
-
10
3
-
-
-
All transactions were made in the course of funding the Group’s continuing activities.
Remuneration of key management personnel
The remuneration of the key management personnel of the Group is set out below in aggregate for each of the
categories specified in IAS 24 Related Party Disclosures. Further information about the remuneration of
individual directors is provided in the audited part of the Directors’ Remuneration Report on pages 24 to 27.
Short-term employee benefits
Post-employment benefits
Share-based payment
2009
£'000
1,371
37
-
1,408
2008
£'000
1,308
14
30
1,352
Directors’ transactions
Related party transactions in the year ended 31st December 2009 were payments of £8,290 to Allenbridge Group
plc, a company in which Mr A.H. Yadgaroff, a non-executive director, is both a director and shareholder, for the
provision of office support services (2008: £29,750). At 31st December 2009 a total of £nil was owing to
Allenbridge Group plc (2008: £nil).
In addition, during the year payments of £nil were made to JW Technologies, a company in which Dr J.G.
Whellock, a non-executive director, is both a director and shareholder, for the provision of technical consulting
services (2008: £4,416). At 31st December 2009 a total of £nil was owing to JW Technologies (2008: £nil).
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2009
30.
Events occurring after year end
The Group is seeking to de-list from the Australian Stock Exchange, with the necessary application being lodged
on 23rd February 2010. The Group’s decision to de-list was based on the lack of liquidity, negligible volumes and
less than two percent of the Group’s share capital being held by the Australian Share Register.
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Annual Report 2009
SHAREHOLDER STATISTICS
(a) Size of Holding (at 17th February 2010)
Category
UK and Australia
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – and over
Number of
Shareholders
546
830
263
453
2,092
%
26.10
39.67
12.57
21.66
100.00
Number
of Shares
305,663
2,144,903
1,992,753
102,996,144
107,439,463
%
0.28
2.00
1.85
95.87
100.00
(b) The percentage of total shares held by or on behalf of the twenty largest shareholders as at 17th February
2010 was 45.49%.
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Annual Report 2009
NOTICE OF ANNUAL GENERAL MEETING
This document is important and requires your immediate attention. If you are in any doubt as to what action
you should take, you are recommended to seek your own financial advice from your stockbroker, solicitor,
accountant or other independent professional adviser authorised under the Financial Services and Markets Act
2000 immediately. If you have sold or otherwise transferred all of your shares in Anglo Pacific Group PLC,
please forward this document, together with the accompanying documents, as soon as possible to the purchaser
or transferee or to the stockbroker, bank or other agent through whom the sale or transfer was effected for
transmission to the purchaser or transferee.
NOTICE IS HEREBY GIVEN that the Annual General Meeting of Anglo Pacific Group PLC (the "Company")
will be held at 17 Hill Street, London W1J 5NZ, United Kingdom on Wednesday 21st April, 2010 at 11.00 am to
consider and, if thought fit, to pass the following resolutions of which resolutions 1 to 13 will be proposed as
ordinary resolutions and resolutions 14 and 15 will be proposed as special resolutions:-
1. To receive the Accounts for the year ended 31st December 2009 together with the Directors’ and Auditors’
Reports thereon.
2. To approve the Directors’ Remuneration Report for the year ended 31st December 2009.
3. To declare a final dividend of 4.65p per ordinary share of the Company.
4. To re-elect as a director P.M. Boycott, who retires after a 3 year appointment in accordance with the
Company’s articles of association.
5. To re-elect as a director B.M. Wides, who retires after a 3 year appointment in accordance with the
Company’s articles of association.
6. To elect as a director A.C. Orchard, who was appointed to the Board on 22nd June 2009 and who retires
and offers himself for election in accordance with the Company’s articles of association.
7. To elect as a director J. Theobald, who was appointed to the Board on 22nd June 2009 and who retires and
offers himself for election in accordance with the Company’s articles of association.
8. To re-appoint Messrs Grant Thornton UK LLP as auditors of the Company to hold office until the
conclusion of next general meeting at which accounts are laid before the Company, and to authorise the
directors of the Company to fix their remuneration.
9. THAT the Board of Directors of the Company (the "Directors") be and they are hereby authorised to offer
the holders of ordinary shares of 2p each in the capital of the Company (“Ordinary Shares”) (subject to such
exclusions or other arrangements as the Directors may consider necessary or expedient in relation to treasury
shares or any legal or practical problems arising under the laws of any overseas territory or the requirements of
any regulatory body or stock exchange in any territory or otherwise) the right to elect to receive new Ordinary
Shares instead of cash in respect of all or part of the final dividend for the year ended 31st December 2009 and
all other dividends declared up to the beginning of the next annual general meeting of the Company.
10. THAT the Board of Directors of the Company (the "Directors") be and they are hereby generally and
unconditionally authorised pursuant to section 551 of the Companies Act 2006 (the "Act") to exercise all the
powers of the Company to allot shares in the Company and to grant rights to subscribe for or to convert any
security into shares in the Company up to an aggregate nominal amount of £716,263 provided that this authority
(unless previously revoked or renewed) shall expire on the earlier of 21st April 2015 and the conclusion of the
annual general meeting of the Company held in 2015, save that the Company may before such expiry (or the
expiry of any renewal of this authority) make any offer or agreement which would or might require shares to be
allotted, or rights to subscribe for or to convert securities into shares to be granted, after such expiry and the
Directors may allot shares or grant such rights in pursuance of such offer or agreement as if this authority had
not expired, and provided further that this authority shall be in substitution for the authority conferred by a
resolution dated 23rd April 2009 to the extent unused and shall supersede and revoke any other earlier authorities
under section 80 of the Companies Act 1985.
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NOTICE OF ANNUAL GENERAL MEETING
11. THAT the Anglo Pacific Group Company Share Option Plan the main features of which are summarised in
Appendix 1 of the Notice to the meeting, a copy of the rules of which is produced to the meeting and initialled
by the Chairman for the purposes of identification, be hereby approved and the Board of Directors of the
Company be and they are hereby authorised to do all acts and things which it considers necessary or desirable to
carry the same into effect including making such amendments as may be required to obtain the approval of HM
Revenue & Customs.
12. THAT the Anglo Pacific Group Joint Share Ownership Plan, including the establishment and operation of
the Anglo Pacific Group Employee Benefit Trust the main features of both of which are summarised in
Appendix 2 and Appendix 3 respectively of the Notice to the meeting and a copy of the rules and a copy of the
draft Trust Deed for which are produced to the meeting and each initialled by the Chairman for the purposes of
identification, be hereby approved and the Board of Directors of the Company be and they are hereby authorised
to do all acts and things which it considers necessary or desirable to carry the same into effect.
13. THAT pursuant to the listing rules of the Australian Securities Exchange (“ASX”) (including for the
purposes of listing rule 17.11), the Company be removed from the official list of the ASX at a date to be
determined by ASX and that the Directors be authorised to do all things necessary or expedited to procure the
delisting including, without limitation anything necessary to comply with any ASX requirement or condition.
14. THAT the Board of Directors of the Company (the "Directors") be and they are hereby generally
empowered pursuant to section 570 and section 573 of the Companies Act 2006 (the "Act") to allot equity
securities (within the meaning of section 560 of the Act) (including the grant of rights to subscribe for, or to
convert any securities into, ordinary shares of two pence each in the capital of the Company) wholly for cash (a)
by selling equity securities held by the Company as treasury shares; or (b) by allotting new equity securities
pursuant to any authority for the time being in force conferred on them for the purposes of section 551 of the
Act (or section 80 of the Companies Act 1985), as if section 561(1) of the Act did not apply to any such
allotment, provided that this power shall be limited:—
(a)
to the allotment of equity securities in connection with or pursuant to a rights issue or any other offer in
favour of the holders of equity securities and other persons entitled to participate therein in proportion (as nearly
as may be practicable) to the respective numbers of ordinary shares then held by them (or, as appropriate, the
number of such securities which such other persons are for those purposes deemed to hold), but subject to such
exclusions or other arrangements as the Directors may consider necessary or expedient to deal with any
fractional entitlements or treasury shares or legal or practical difficulties which may arise under the laws of any
overseas territory or the requirements of any regulatory body or any stock exchange in any territory or
otherwise;
to the allotment (otherwise than pursuant to paragraph (a) above) of equity securities up to an aggregate
(b)
nominal value of £214,878;
and this power shall (unless renewed, varied or revoked by the Company) expire on 30th June 2011 or, if
earlier, at the conclusion of the annual general meeting of the Company next held following the passing of this
resolution save that the Company may before such expiry make an offer or agreement which would or might
require equity securities to be allotted after such expiry and the Directors may allot equity securities in
pursuance of such an offer or agreement as if this power had not expired.
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NOTICE OF ANNUAL GENERAL MEETING
the higher of the price of the last independent trade and the highest current independent bid on the trading
the aggregate maximum number of Ordinary Shares hereby authorised to be purchased is 10,743,946;
the maximum price which may be paid for an Ordinary Share is an amount being not more than the higher
15. THAT the Company be and is hereby generally and unconditionally authorised for the purposes of section
701 of the Companies Act 2006 (the "Act") to make one or more market purchases (within the meaning of
section 693(4) of the Act) of ordinary shares of 2p each in the capital of the Company ("Ordinary Shares") on
such terms and in such manner as the Directors of the Company (the "Directors") think fit, subject to the
following restrictions and provisions:-
(a)
(b)
of:
(i) 105 per cent of the average of the middle market quotations for an Ordinary Share as derived from the
London Stock Exchange's Daily Official List for the five business days immediately preceding the day on which
the Ordinary Share is purchased, and
(ii)
venue where the purchase is carried out,
in each case exclusive of any associated expenses;
(c)
associated expenses);
(d) unless previously renewed, revoked or varied, this authority shall expire at the conclusion of the annual
general meeting of the Company to be held in 2011 or eighteen months from the date of passing of this
resolution, whichever shall be the earlier;
(e)
the Company may enter into a contract to purchase Ordinary Shares under this authority before the expiry
of such authority, and may make a purchase of Ordinary Shares pursuant to any such contract which purchase
would or might be completed wholly or partly after the expiration of this authority; and
(f) any Ordinary Shares so purchased shall be cancelled or, if the Directors so determine and subject to the
provisions of any applicable laws or regulations, held as treasury shares.
the minimum price which may be paid for an Ordinary Share is its nominal value (exclusive of any
Registered Office
17 Hill Street
London
W1J 5NZ
By Order of the Board
M.J. Tack C.A.
Company Secretary
12th March 2010
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NOTICE OF ANNUAL GENERAL MEETING
Notes:
1. A member entitled to attend and vote at the above meeting may appoint one or more persons as his proxy to attend,
speak and vote instead of him at the meeting. If multiple proxies are appointed they must not be appointed in respect of
the same shares. A proxy need not be a member of the Company. A form of proxy is enclosed with this Notice.
Completion and return of the form of proxy will not prevent a member from attending the meeting and voting in person
if he so wishes. A member present in person or by proxy shall have one vote on a show of hands and on a poll every
member present in person or by proxy shall have one vote for every ordinary share of which he is the holder.
2. In order to be valid, forms of proxy for the meeting and the power of attorney or other authority (if any) under which it is
executed or a notarially certified copy of such power or authority must be received, not later than 48 hours before the
time fixed for the meeting, at the office of the Company’s Registrars: Equiniti, Aspect House, Spencer Road, Lancing,
West Sussex, BN99 6ZL.
3. CREST members who wish to appoint a proxy or proxies by utilising the CREST electronic proxy appointment service
may do so for this meeting by following the procedures described in the CREST Manual. CREST personal members or
other CREST sponsored members, and those CREST members who have appointed a voting service provider(s), should
refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their
behalf.
4. In order for a proxy appointment or instruction made by means of CREST to be valid, the appropriate CREST message
(a "CREST Proxy Instruction") must be properly authenticated in accordance with Euroclear's specifications and must
contain the information required for such instructions, as described in the CREST Manual which can be viewed at
www.euroclear.com/CREST. The message must, in order to be valid, be transmitted so as to be received by the
Company's agent (ID RA 19) not later than 48 hours before the time fixed for the meeting. For this purpose, the time of
receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications
Host) from which the Company's agent is able to retrieve the message by enquiry to CREST in the manner prescribed by
CREST. After this time, any change of instructions to proxies appointed through CREST should be communicated to the
proxy through other means. CREST members and, where applicable, their CREST sponsors or voting service
provider(s) should note that Euroclear does not make available special procedures in CREST for any particular
messages. Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy
Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST
personal member or sponsored member or has appointed a voting service provider(s), to procure that his CREST sponsor
or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means
of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST
sponsors or voting service provider(s) are referred, in particular, to those sections of the CREST Manual concerning
practical limitations of the CREST system and timings.
5. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the
Uncertificated Securities Regulations 2001.
6. A person to whom this Notice is sent who is a person nominated under section 146 of the Companies Act 2006 to enjoy
information rights (a "Nominated Person") may, under an agreement between him/her and the member by whom he/she
was nominated, have a right to be appointed (or to have someone else appointed) as a proxy for the meeting. If a
Nominated Person has no such proxy appointment right or does not wish to exercise it, he/she may, under any such
agreement, have a right to give instructions to the member as to the exercise of voting rights. The statements of the
rights of members in relation to the appointment of proxies in Notes 1 and 3 above do not apply to a Nominated Person.
The rights described in those Notes can only be exercised by registered members of the Company.
7. As at 11th March 2010 (being the last business day prior to the publication of this Notice) the Company's issued share
capital amounted to 107,439,463 ordinary shares carrying one vote each. Therefore the total voting rights in the
Company as at 11th March 2010 were 107,439,463 votes.
8. Pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001, the Company specifies that only those
shareholders registered in the register of members of the Company or in the Company’s overseas branch register as at
6:00pm on 19th April 2010 (or in the event that the meeting is adjourned, only those shareholders registered in the
register of members of the Company or in the Company's overseas branch register as at 6.00 pm on the day which is
three days prior to the adjourned meeting) shall be entitled to attend or vote at the above meeting in respect of the
number of shares registered in their name at that time. Changes to entries on the relevant register of securities after that
time shall be disregarded in determining the rights of any person to attend or vote at the meeting.
9. Any corporation which is a member can appoint one or more corporate representatives. Members can only appoint
more than one corporate representative where each corporate representative is appointed to exercise rights attached to
different shares. Members cannot appoint more than one corporate representative to exercise the rights attached to the
same share(s).
10. Information regarding the Annual General Meeting, including information required by section 311A of the Companies
Act 2006, and a copy of this notice of Annual General Meeting is available from the Company Secretary.
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NOTICE OF ANNUAL GENERAL MEETING
11. Members should note that it is possible that, pursuant to requests made by members of the Company under section 527
of the Companies Act 2006, the Company may be required to publish on a website a statement setting out any matter
relating to: (a) the audit of the Company's accounts (including the auditor's report and the conduct of the audit) that are
to be laid before the Annual General Meeting; or (b) any circumstance connected with an auditor of the Company
ceasing to hold office since the previous meeting at which annual accounts and reports were laid in accordance with
section 437 of the 2006 Act. The Company may not require the members requesting any such website publication to
pays its expenses in complying with sections 527 or 528 of the 2006 Act. Where the Company is required to place a
statement on a website under section 527 of the 2006 Act, it must forward the statement to the Company's auditor not
later than the time when it makes the statement available on the website. The business which may be dealt with at the
Annual General Meeting includes any statement that the Company has been required under section 527 of the 2006 Act
to publish on a website.
12. Any person holding 3% or more of the total voting rights of the Company and who appoints a person other than the
Chairman of the Annual General Meeting as his proxy will need to ensure that both he, and his proxy, comply with their
respective disclosure obligations under the UK Disclosure and Transparency Rules.
13. Under section 319A of the Companies Act 2006, the Company must cause to be answered any question relating to the
business being dealt with at the Annual General Meeting put by a member attending the meeting unless answering the
question would interfere unduly with the preparation for the meeting or involve the disclosure of confidential
information, or the answer has already been given on a website in the form of an answer to a question, or it is
undesirable in the interests of the Company or the good order of the meeting that the question be answered. Members
who have any queries about the Annual General Meeting should contact the Company Secretary by email on
company.secretary@anglopacificgroup.com. Members may not use any electronic address provided in this notice or in
any related documents (including the accompanying circular and proxy form) to communicate with the Company for
any purpose other then those expressly stated.
14. The directors’ service contracts, the letters of appointment of the non-executive directors and the full terms of the Anglo
Pacific Group Company Share Option Plan and the full terms of the Anglo Pacific Group Joint Share Ownership Plan
will be available for inspection from the date of this notice until the conclusion of the Annual General Meeting at 17
Hill Street, London W1J 5NZ.
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NOTICE OF ANNUAL GENERAL MEETING
Appendix 1
Anglo Pacific Group Company Share Option Plan (“CSOP”)
The summary in this Appendix 1 does not form part of the rules of the CSOP and should not be taken as affecting the
interpretation of the detailed rules of the CSOP.
Eligibility
A participant in the CSOP must be an employee or a full time director of the Company or any of its subsidiaries (together,
the “Group”), and may be selected for inclusion (a "Participant") in the CSOP by the board of directors of the Company (the
"Board") at their absolute discretion.
Timing of Option Grants
No options may be granted under the CSOP more than ten years after the CSOP’s adoption by the Board. No option may be
granted within a closed period. Awards shall only be granted during either of: (a) the period of 30 days following the date of
approval of the Plan by shareholders at the AGM; or (b) a period commencing on the sixth dealing day after the date of
announcement to the London Stock Exchange of the annual or half-yearly results of the Company and ending forty two days
following the date of the relevant announcement.
Structure of Options
Options over ordinary shares in the Company ("Ordinary Shares") may be granted under the CSOP. The options will
normally become exercisable 3 years and are subject to performance conditions. No payment will be required for the grant of
an option. Options will not be transferable except on death nor will they be pensionable.
Exercise price
The exercise price will not be less than the higher of the nominal value of an Ordinary Share and the market value of an
Ordinary Share on the day on which the option is granted. Market value will be the average mid market closing price of an
ordinary share for the three dealing days before grant or as agreed with HMRC.
Performance conditions
The Remuneration Committee of the board of directors of the Company (the “Committee”) may determine objective
performance conditions for each option to be satisfied over a period and measured against such objective criteria as
determined by the Committee. Initially it is proposed that the performance condition shall be that the Group’s absolute total
shareholder return (TSR) must grow at an annual rate (not compounded) of 3% in excess of the UK Retail Price Index (RPI)
over the three years from the date of grant.
Leaving employment with the Group
If an employee leaves before the exercisable date of the option by reason of death, disability, ill health, retirement,
redundancy, if he is dismissed without reasonable cause (to be determined by the Committee) or his employing company or
the part of the business in which he works ceasing to be part of the Group, he becomes entitled to exercise his option within
a period of 6 months following the leaving date (12 months in the case of death) (the "Extended Exercise Period"), provided
that during the Extended Exercise Period the vesting period has passed and the performance conditions have been satisfied
or waived, otherwise the options will lapse. If a participant leaves before the exercisable date of the option for any other
reason, the Company has the right to request that the employee forfeits the option.
Voting, dividend and other rights
Participants will have no voting or dividend rights in respect of the Ordinary Shares under option until the options are
exercised.
Takeover, reconstruction or winding-up
Special provisions allow early exercise but subject to the performance condition unless waived or varied in the event of a
change in control, demerger, reconstruction or winding-up of the Company.
Overall limit
The number of Ordinary Shares that may be issued or placed under option to an employee under the CSOP or any other
employee share plan in any 10 year period may not exceed 10% of the Ordinary Shares in issue from time to time. The
number of shares that may be issued or placed under option to an executive under the Plan or any other Company executive
share plan in any 10 year period may not exceed 5% of the Ordinary Shares in issue from time to time.
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Anglo Pacific Group PLC
Annual Report 2009
NOTICE OF ANNUAL GENERAL MEETING
Variation of Share Capital
Adjustments to the number of Ordinary Shares and or the exercise price may be made by the Board with the approval of
HMRC in the event of a variation of the share capital of the Company. Any alteration to the benefit of participants will
require shareholder approval.
Tax and National Insurance
The optionholder will be required to indemnify the Company or their employer for any tax and employee national insurance
liability.
Amendment of the Plan
The CSOP may be amended by the Board, however, no amendment may be made to the rules of the CSOP if it would
adversely affect the rights of Participants, or give them substantially greater rights than under the CSOP currently. Minor
amendments to benefit the administration of the CSOP, to take account of legislation or to obtain or maintain favourable tax,
exchange control, or regulatory treatment may, however, be made without the approvals set out above where such
amendments do not alter the basic principles of the CSOP. No amendment to the key features of the CSOP rules shall take
effect without the prior approval of HMRC.
Appendix 2
Anglo Pacific Group Joint Share Ownership Plan (“JSOP”)
The summary below shows only the key features of the JSOP and should not be taken as affecting the interpretation of each
Joint Share Ownership Deed (“Agreement”).
Operation and eligibility
The Remuneration Committee of the board of directors of the Company (the “Committee”) will supervise the operation of
the JSOP. A participant in the JSOP must be an employee or officer of the Group. Actual participation in the JSOP will be
at the absolute discretion of the Board or, in the case of executive directors, at the absolute discretion of the Remuneration
Committee.
Timing of share awards
No award of shares under the JSOP (a “JSOP Award”) may be made more than ten years after the passing of the resolution
of shareholders approving the JSOP. No JSOP Award may be granted within a closed period. JSOP Awards shall only be
made during either: (a) a period of the 30 days following the date of approval of the JSOP by shareholders at the AGM; or
(b) a period commencing on the sixth dealing day after the date of announcement to the London Stock Exchange of the
annual or half-yearly results of the Company and ending forty two days following the date of the relevant announcement.
Structure of a JSOP award
The Committee will invite selected employees (a "Participant") to enter into an Agreement with a “Co-Owner” to acquire a
number of ordinary shares in the capital of the Company ("Ordinary Shares"). Unless regulatory requirements dictate
otherwise, the Co- Owner will usually be an employee benefit trust ("EBT") established by the Company (as to which see
Appendix 3). The Agreement will set out the respective rights of the two joint purchasers. For legal purposes, the shares
will be held in the name of the Co-Owner, however the Agreement will give the Participant a beneficial interest in those
shares. Provided any applicable performance targets have been met, the beneficial interest conferred will entitle the
Participant to receive a proportion of the proceeds of sale of the Ordinary Shares. Their entitlement will be to receive all sale
proceeds in excess of a threshold amount.
The threshold amount will be fixed by the Committee when a JSOP Award is made. It will be set at not less than the market
value of the shares at the time of acquisition. It may be set at more than the market value of the shares at the date of
acquisition. In normal circumstances, the Participant would therefore benefit from growth in value in the shares after
acquisition. On sale, the Co-Owner will be entitled to the balance of the proceeds from the sale.
There are some important differences between a JSOP and a share option. The JSOP requires that the Participant acquires a
restricted beneficial interest in shares from the outset. They will be required to pay a nominal value for that interest at the
date of award, rather than making payment at the date of realisation of the JSOP Award as would be the case for an option.
However, in common with an option, the JSOP will reward the Participant for growth in share value. Performance targets
based on personal or corporate performance may be set on individual JSOP Awards.
The JSOP Award is non-transferable except on death and the entitlements under it are non-pensionable.
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Anglo Pacific Group PLC
Annual Report 2009
NOTICE OF ANNUAL GENERAL MEETING
Performance conditions
For the initial JSOP Awards, the performance conditions are that the Group’s absolute total shareholder return (TSR) must
grow at an annual rate (not compounded) of 3% in excess of the UK Retail Price Index (RPI) over the three year vesting
period. In addition the initial JSOP Awards will stipulate that the Company’s share price must increase by an amount to be
determined by the Committee during the three year vesting period. On a change of control, only the first condition will
apply.
Leaving employment with the Group
If a Participant leaves:
- at any time by reason of death, disability, ill health, retirement, redundancy, if the business or subsidiary in which he
is employed is sold outside the Group or if he is dismissed without reasonable cause (to be determined by the Remuneration
Committee), the Co-Owner may exercise its right to require the Participant to sell his JSOP interest. In these circumstances,
the price would be determined as the excess of market value over the threshold value. The Participant’s benefit would be
conditional on the satisfaction of the performance conditions (with the Board, acting through the Committee, retaining
general discretion in these circumstances to vary the price and conditions).
- at any time for any other reason, the Co-Owner will have the right to require the Participant to sell his interest within
a period specified by the Co-Owner, at a price equal to the price paid by the Participant for his interest.
Accounting Treatment
A corporation tax deduction can be claimed under general accounting principles based on the IFRS2 charge.
Tax and National Insurance
The Participant will be required to indemnify the Company or their employer for any tax and employee national insurance
liability.
Change in Participant’s circumstances
In the event of a Participant being adjudicated bankrupt, the Co-Owner will immediately require the Participant to sell his
interest in the shares.
Realising the value of a JSOP Award
From the time when a JSOP Award is made, the employee and the Co-Owner will together own the JSOP Award shares on
unequal terms. At any time after the awards have vested (and on satisfaction of any performance conditions) the Participant
may ask the Co-Owner to jointly sell his holdings of Shares. If the Shares have not been sold after 10 years from the date of
grant of the JSOP Award, the Co-Owner can require the Participant to sell the shares.
Company reorganisations and reconstructions
If there is a reorganisation or reconstruction which results in a new holding of shares which are equated with the original
holding for capital gains tax purposes, the shares or other securities comprised in the new holding shall be held subject to the
terms of the Agreement.
Individual Participant Limits
The Committee may issue JSOP Awards under the JSOP to members of the executive team for incentivisation purposes.
However, such awards will be limited in value such that the initial value of shares acquired jointly with the Co-owner under
the award will not exceed 400% of a Participant's gross annual salary. The Committee will determine the level of JSOP
Awards after taking into consideration the total remuneration levels of comparable companies with respect to both size and
sector compared to the current modest levels within the Group. To the extent that the operation of the JSOP results in
increased costs to the Company, the Committee will endeavour to ensure that the size of JSOP Awards take this into
consideration.
Overall Limits on the Issue of Shares
The Company may issue shares for the purposes of making JSOP Awards. However, the number of shares that may be
issued or placed under option to an employee under the JSOP or any other employee share Plan in any 10 year period may
not exceed such number of shares that represents 10% of the Ordinary Shares in issue from time to time. The number of
shares that may be issued or placed under option to an executive under the JSOP or any other executive share plan in any 10
year period may not exceed such number of shares as represents 5% of the Ordinary Shares in issue from time to time.
Award Shares may be sourced from the existing issued share capital of the Company to avoid dilution of share capital,
however these shares so sourced will continue to count towards these limits for so long as this is required by institutional
investor guidelines.
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Notes
1. To appoint as a proxy a person other than the Chairman of the meeting insert the full name in the space provided.
A proxy need not be a member of the Company. You can also appoint more than one proxy provided each proxy
is appointed to exercise the rights attached to a different share or shares held by you. The following options are
available:
(a)
(b)
(c)
To appoint the Chairman as your sole proxy in respect of all your shares, simply fill in any voting
instructions in the appropriate box and sign and date the Form of Proxy
To appoint a person other than the Chairman as your sole proxy in respect of all your shares,
delete the words ‘the Chairman of the meeting (or)’ and insert the name of your proxy in the spaces
provided. Then fill in any voting instructions in the appropriate box and sign and date the Form of
Proxy
To appoint more than one proxy, you may photocopy this form. Please indicate the proxy holder’s
name and next to it the number of shares in relation to which they are authorised to act as your
proxy (which, in aggregate, should not exceed the number of shares held by you). Please also
indicate by ticking the box overleaf if the proxy instruction is one of multiple instructions being
given. If you wish to appoint the Chairman as one of your multiple proxies, simply write ‘the
Chairman of the Meeting’. All forms must be signed and should be returned together in the same
envelope
2.
In the case of joint holder, where more than one of the joint holders purports to appoint one or more proxies, only
the purported appointment submitted by the most senior holder will be accepted. Seniority is determined by the
order in which the names of the joint holders appear in the Company's register of members in respect of the joint
holding (the first named being the most senior).
3. Unless otherwise indicated the proxy will vote as he thinks fit or, at his discretion, abstain from voting.
4. The Form of Proxy below must arrive not later than 48 hours before the time set for the meeting at Equiniti,
Aspect House, Spencer Road, Lancing, West Sussex, BN99 6ZL during usual business hours accompanied by any
Power of attorney under which it is executed (if applicable)
5. A corporation must execute the Form of Proxy under either its common seal or the hand of a duly authorised
officer or attorney.
6. The ‘Vote Withheld’ option is to enable you to abstain on any particular resolution. Such a vote is not a vote in law
and will not be counted in the votes ‘For’ and ‘Against’ a resolution.
7. Shares held in uncertified form (i.e. in CREST) may be voted through the CREST Proxy Voting Service in
accordance with the procedures set out in the CREST manual.
8. Completion and return of the Form of Proxy will not preclude you from attending and voting in person at the
Meeting should you subsequently decide to do so
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ANGLO PACIFIC GROUP PLC
ANNUAL GENERAL MEETING
FORM OF PROXY
I/We………………………………………………………………………………………………………………..
of…………………………………………………………………………………………………………………...
being (a) member(s) of Anglo Pacific Group PLC (“the Company”) hereby appoint the Chairman of the
meeting, or,
……………………………………………………………………………………………………………………...
as my/our proxy to attend, speak and vote for me/us and on my/our behalf at the Annual General Meeting of the
Company to be held at 11.00 a.m. on Wednesday 21st April 2010 at 17 Hill Street, London W1J 5NZ and any
adjournment thereof.
Date…………………………………..Signature(s)……………………………………………………………..…
Please tick here if this proxy appointment is one of multiple appointments being made.
For the appointment of more than one proxy please refer to Note 1 overleaf.
I/We direct my/our proxy to vote on the following resolutions as I/we have indicated by marking the appropriate
box with an "X". If no indication is given, my/our proxy will vote or abstain from voting at his or her discretion
and I/we authorise my/our proxy to vote (or abstain from voting) as he or she thinks fit in relation to any other
matter which is put before the meeting.
Resolution
For Against Withheld
Ordinary 1. Resolution to receive the 2009 Accounts.
Ordinary 2. Resolution to approve the Directors’ Remuneration Report.
Ordinary 3. Resolution to declare a final dividend of 4.65p per Ordinary
Share.
Ordinary 4. Resolution to re-elect P. M. Boycott as a director.
Ordinary 5. Resolution to re-elect B. M. Wides as a director.
Ordinary 6. Resolution to elect A. C. Orchard as a director.
Ordinary 7. Resolution to elect J. Theobald as a director.
Ordinary 8. Resolution to re-appoint Messrs. Grant Thornton UK LLP as
auditors and authorise the directors to fix their remuneration.
Ordinary 9. Resolution to authorise scrip dividends.
Ordinary 10. Resolution that the directors be authorised to exercise all the
powers of the Company to allot relevant securities up to an aggregate
nominal amount of £716,263.
Ordinary 11. Resolution that the Anglo Pacific Group Company Share
Option Plan be approved and established.
Ordinary 12. Resolution that the Anglo Pacific Group Joint Share Ownership
Plan be approved and established.
Ordinary 13. Resolution that the Company de-list from the Australian Stock
Exchange.
Special 14. Resolution that the directors be authorised to allot treasury
shares or new equity securities for cash up to an aggregate nominal amount
of £214,878 free from statutory pre-emption rights.
Special 15. Resolution that the Company be authorised to make one or more
market purchases of up to 10,743,946 Ordinary Shares in the capital of the
Company, subject to certain restrictions and provisions, including the
maximum and minimum price at which such shares may be purchased.
Please indicate with an “X” how you wish your vote to be cast.
Notes
1. To appoint as a proxy a person other than the Chairman of the meeting insert the full name in the space provided.
A proxy need not be a member of the Company. You can also appoint more than one proxy provided each proxy
is appointed to exercise the rights attached to a different share or shares held by you. The following options are
available:
(a)
(b)
(c)
To appoint the Chairman as your sole proxy in respect of all your shares, simply fill in any voting
instructions in the appropriate box and sign and date the Form of Proxy
To appoint a person other than the Chairman as your sole proxy in respect of all your shares,
delete the words ‘the Chairman of the meeting (or)’ and insert the name of your proxy in the spaces
provided. Then fill in any voting instructions in the appropriate box and sign and date the Form of
Proxy
To appoint more than one proxy, you may photocopy this form. Please indicate the proxy holder’s
name and next to it the number of shares in relation to which they are authorised to act as your
proxy (which, in aggregate, should not exceed the number of shares held by you). Please also
indicate by ticking the box overleaf if the proxy instruction is one of multiple instructions being
given. If you wish to appoint the Chairman as one of your multiple proxies, simply write ‘the
Chairman of the Meeting’. All forms must be signed and should be returned together in the same
envelope
2.
In the case of joint holder, where more than one of the joint holders purports to appoint one or more proxies, only
the purported appointment submitted by the most senior holder will be accepted. Seniority is determined by the
order in which the names of the joint holders appear in the Company's register of members in respect of the joint
holding (the first named being the most senior).
3. Unless otherwise indicated the proxy will vote as he thinks fit or, at his discretion, abstain from voting.
4. The Form of Proxy below must arrive not later than 48 hours before the time set for the meeting at Equiniti,
Aspect House, Spencer Road, Lancing, West Sussex, BN99 6ZL during usual business hours accompanied by any
Power of attorney under which it is executed (if applicable).
5. A corporation must execute the Form of Proxy under either its common seal or the hand of a duly authorised
officer or attorney.
6. The ‘Vote Withheld’ option is to enable you to abstain on any particular resolution. Such a vote is not a vote in law
and will not be counted in the votes ‘For’ and ‘Against’ a resolution.
7. Shares held in uncertified form (i.e. in CREST) may be voted through the CREST Proxy Voting Service in
accordance with the procedures set out in the CREST manual.
8. Completion and return of the Form of Proxy will not preclude you from attending and voting in person at the
Meeting should you subsequently decide to do so.
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