REG - Yellow Cake PLC - Annual Results for the year ended 31 March 2022
22/07/2022 07:00
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RNS Number : 3730T Yellow Cake PLC 22 July 2022
22 July 2022
Yellow Cake plc ("Yellow Cake" or the "Company")
Annual Results for the year ended 31 March 2022
Highlights
- Continued improvement in the market for U(3)O(8) with the spot price
increasing 89% from USD30.65/lb on 31 March 2021 to USD57.90/lb 1 on 31
March 2022.
- Increase of 203% in the value of the Company's holding of U(3)O(8) during the
financial year to USD916.7 million(1) as at 31 March 2022, as a result of the
appreciation in the uranium price and a net increase in the volume of uranium
held from 9.86 million lb of U(3)O(8) to 15.83 million lb of U(3)O(8.)
- Profit after tax of USD417.3 million for the year ended 31 March 2022 (2021:
USD29.9 million).
- Raised USD236.6 million (GBP171.7 million) during the financial year through
share placings in June and October 2021, after raising USD138.5 million
(GBP99.3 million) in March 2021. Applied the proceeds of the three placings to
acquire 8.35 million lb of U(3)O(8) during the financial year and an
additional 0.95 million lb of U(3)O(8) post year-end. 2
- Net asset value of USD1,069.0 million (GBP4.42 per share) 3 as at 31 March
2022 (2021: USD421.4 million (GBP2.38 per share)).
- Completed a USD3 million share buyback programme following the year-end,
repurchasing 566,833 shares between 4 April and 6 May 2022 (now held in
treasury) at a volume weighted average price of GBP4.15 per share (USD5.27 per
share) and a volume weighted average discount to net asset value of 10.4%,
effectively acquiring exposure to uranium at a discount to the commodity spot
price.
- Holding of 18.81 million lb of U(3)O(8) as at 21 July 2022 (including 2.97
million lb of U(3)O(8) received post year-end) acquired at an average cost of
USD31.11/lb.(3)
- Increase of 47% in the value of the Company's holding of 18.81 million lb of
U(3)O(8) as at 15 July 2022 to USD860.4 million 4 , relative to the average
acquisition cost of USD585.1 million (USD31.11/lb). 5
Andre Liebenberg, CEO of Yellow Cake, said;
"I am very pleased to report on another year of considerable progress. We have
remained focused on our strategy to buy and hold uranium, providing investors
with the opportunity to directly participate in the continued rise in the
price of the commodity, which in turn has generated consistent returns for our
shareholders.
In 2021, we raised approximately USD375 million to acquire 8.35 million lb of
uranium during the financial year, which with an additional purchase after
year-end, means we now own 18.81 million lb, doubling the amount since the end
of the 2021 financial year.
The confidence we have in our longer term outlook remains very strong and this
is driven by the same supply demand fundamentals that have supported the
performance to date. We expect to see a sustained increase in uranium demand
and price increases in years to come as the global demand for clean energy
highlights the need for nuclear energy. We have seen very positive policy
developments in the US, the EU and in China as nuclear is increasingly
recognised as a core way to urgently address climate change. Yet despite a
clear growing demand picture and recent prise rises, supply remains severely
constrained, and looks set to get even tighter as utility companies around the
world start to address their future uncovered fuel requirements. Yellow Cake
is very well placed to capitalise on these market characteristics."
ENQUIRIES:
Yellow Cake plc
Andre Liebenberg, CEO Carole Whittall,
CFO
Tel: +44 (0) 153 488 5200
Nominated Adviser and Joint Broker: Canaccord Genuity
Limited
Henry Fitzgerald-O'Connor James
Asensio
Gordon Hamilton
Tel: +44 (0) 207 523 8000
Joint Broker: Berenberg
Matthew Armitt
Jennifer Lee
Detlir Elezi
Tel: +44 (0) 203 207 7800
Financial Adviser: Bacchus Capital Advisers
Peter Bacchus Richard
Allan
Tel: +44 (0) 203 848 1640
Investor Relations: Powerscourt
Peter Ogden
Molly
Melville
Tel: +44 (0) 7793 858 211
ABOUT YELLOW CAKE
Yellow Cake is a London-quoted company, headquartered in Jersey, which offers
exposure to the uranium spot price. This is achieved through its strategy of
buying and holding physical triuranium octoxide ("U(3)O(8)"). It may also seek
to add value through other uranium related activities. Yellow Cake seeks to
generate returns for shareholders through the appreciation of the value of its
holding of U(3)O(8) and its other uranium related activities in a rising
uranium price environment. The business is differentiated from its peers by
its ten-year Framework Agreement for the supply of U(3)O(8) with Kazatomprom,
the world's largest uranium producer. Yellow Cake currently holds 18.81
million pounds of U(3)O(8), all of which is held in storage in Canada and
France.
FORWARD LOOKING STATEMENTS
Certain statements contained herein are forward looking statements and are
based on current expectations, estimates and projections about the potential
returns of the Company and the industry and markets in which the Company will
operate, the Directors' beliefs and assumptions made by the Directors. Words
such as "expects", "anticipates", "should", "intends", "plans", "believes",
"seeks", "estimates", "projects", "pipeline", "aims", "may", "targets",
"would", "could" and variations of such words and similar expressions are
intended to identify such forward looking statements and expectations. These
statements are not guarantees of future performance or the ability to identify
and consummate investments and involve certain risks, uncertainties and
assumptions that are difficult to predict, qualify or quantify. Therefore,
actual outcomes and results may differ materially from what is expressed in
such forward looking statements or expectations. Among the factors that could
cause actual results to differ materially are: uranium price volatility,
difficulty in sourcing opportunities to buy or sell U(3)O(8), foreign exchange
rates, changes in political and economic conditions, competition from other
energy sources, nuclear accident, loss of key personnel or termination of the
services agreement with 308 Services Limited, changes in the legal or
regulatory environment, insolvency of counterparties to the Company's material
contracts or breach of such material contracts by such counterparties. These
forward-looking statements speak only as at the date of this announcement. The
Company expressly disclaims any obligation or undertaking to disseminate any
updates or revisions to any forward looking statements contained herein to
reflect any change in the Company's expectations with regard thereto or any
change in events, conditions or circumstances on which any such statements are
based unless required to do so by applicable law or the AIM Rules.
Chairman's statement
The trends underlying the widening global imbalance between uranium supply and
demand that motivated Yellow Cake's formation in 2018 strengthened during 2021
and into 2022. The tragedy of war in Ukraine crystallised energy security
concerns, given Russia's role as a key supplier of fossil fuels across Europe
and its position in the nuclear fuel cycle.
Social unrest stemming from high fuel prices in January 2022 in Kazakhstan,
the world's largest producer of uranium with historically close ties to
Russia, emphasised the concentrated nature of uranium production. Russia is
also a significant supplier of enriched uranium to US and European nuclear
utilities and the possible ramifications of sanctions on uranium fuel
production in Russia and the availability of nuclear fuel remain of concern.
These developments have highlighted the need for national energy policies to
consider both the cost of energy and security of supply. The increased global
focus on climate change and broader environmental, social and governance (ESG)
issues has added carbon emissions as another important factor in national
energy policy and resulted in a comprehensive review of the benefits of
nuclear energy.
Nuclear energy's low carbon lifecycle emissions, reliable baseload profile and
good fit with renewable energy sources are recognised in energy plans from
rapidly developing countries such as China and India as well as in positive
policy shifts in the US, UK, Japan and many countries in Europe. Several
countries are now rethinking their positions on phasing out nuclear power,
with Belgium deciding to extend the operating life of two reactors that were
scheduled to shut down in 2025 6 .
While, thankfully, the direct human impact of COVID-19 appears to be receding,
the ongoing effects of the pandemic on uranium supply through disruptions to
global supply chains and rising costs for certain products and services
continue to be felt.
Strong interest in uranium equities
Increased investor interest led to a marked increase in activity in the
uranium spot market from traders, investment firms and junior mining
companies, resulting in a rapid and sustained increase in the spot price of
U(3)O(8), which has more than doubled since Yellow Cake listed. The Company
took advantage of the strong market support through two oversubscribed equity
raises in the 2022 financial year to raise USD230 million (after costs), the
proceeds of which were deployed to significantly increase its holdings of
U(3)O(8).
Realising returns for investors
Yellow Cake was established to provide investors with long-term exposure to
the uranium spot price through a liquid and publicly-quoted vehicle. The
Company's low-cost outsourced business model minimises cost leakage and limits
risk exposure from the uranium production chain. The long-term partnership
with Kazatomprom is a key strategic advantage that provides access to material
volumes of uranium at the prevailing market price and is particularly
important as we transition to an undersupplied market.
Yellow Cake aims to realise a return for investors from the appreciation in
value of the Company's U(3)O(8) holdings. Periods when the Company's shares
trade above net asset value provide an opportunity to raise capital to invest
in additional uranium. When the shares trade below net asset value, as they
did from mid-January this year, equity issues would be dilutive for existing
shareholders. In these cases, the Board considers share buybacks to be an
effective means of increasing shareholders' exposure to uranium at a discount
to the commodity spot price.
Accordingly, the Board implemented a programme to repurchase the Company's
ordinary shares commencing on 4 April 2022, which concluded on 6 May 2022 with
the acquisition of 566,833 shares, returning USD3 million to shareholders.
While the Board reserves the right to declare a dividend as and when deemed
appropriate, the Company does not currently expect to issue dividends on a
regular or fixed basis. The Board is not declaring a dividend for this
financial year.
In the second half of the year, the Board conducted a review of the Company's
strategy in the context of the prevailing conditions and outlook for the
uranium market. The review included an assessment of the appropriateness of
Yellow Cake's corporate structure, ability to source additional U(3)O(8)
volumes beyond the Kazatomprom option, opportunities for maximising value from
the physical uranium already owned and the Company's ultimate strategic goal.
The review concluded that the current strategy and corporate structure remain
appropriate.
Share issues
Yellow Cake held two General Meetings during the financial year, in June 2021
and January 2022, to obtain shareholder approval to renew the Board's
authorities to allot additional ordinary shares ahead of the Annual General
Meetings (AGMs) in September 2021 and 2022. These renewals were necessary to
allow Yellow Cake to take advantage of opportunities to acquire uranium once
the shares issued under the authority obtained at the preceding AGMs were
almost fully utilised.
The Company placed 25 million new ordinary shares on 21 June 2021 and an
additional 30 million new ordinary shares on 29 October 2021. These share
issues, together with the issue in March 2021 (in the 2021 financial year),
enabled Yellow Cake to acquire 9 million lb of U(3)O(8), nearly doubling the
Company's holdings by June 2022 to 18.8 million lb, or 15% of 2021 global
annual production.
Governance
Yellow Cake's Board of Directors appreciates that long-term value can only be
created by taking an approach that looks beyond financial performance to
consider the Company's broader environmental, social and governance
performance. We are committed to good governance and high ethical standards.
The Company applies the principles and provisions of the UK Corporate
Governance Code 2018 (the "Code") to the degree appropriate to the size and
nature of its business. The Code of Conduct sets the operational and
performance requirements for Yellow Cake's employees, directors, business
partners, contractors and advisers, and promotes the Company's key values of
dignity, diversity, business integrity, compliance and accountability.
The small scale and simplicity of the organisation enhances effective
governance and oversight, and ensures good communication. Compliance policies
are regularly reviewed and updated to ensure continued alignment with the
latest developments in corporate governance requirements and guidelines.
Policies and measures are in place to prevent the opportunity for bribery or
inducements, and include a whistleblowing policy.
The Board plays an active role in overseeing the Company's activities and met
ten times during the year to 31 March 2022. Meetings were also held by the
Audit, Remuneration and Nomination Committees during the period to discharge
their duties as set out in their terms of reference.
Although Yellow Cake does not have a material direct social and environmental
impact, the Company conducts the necessary due diligence on suppliers and
business partners to ensure that they share our commitment to responsible
business practices. Yellow Cake has a zero-tolerance approach to bribery,
corruption and unethical practices.
The Board welcomes the increased global attention on climate change and
mitigating the effects of global warming.
In line with Yellow Cake's commitment to ESG principles, we commission an
annual external and independent assessment of our ESG practices and those of
our primary suppliers.
Stakeholder engagement
The Board recognises the importance of regular engagement with stakeholders
and the Company proactively facilitates opportunities for dialogue. The
Executive Directors address day-to-day queries raised by stakeholders and the
chairs of the Board Committees seek engagement with shareholders on
significant matters related to their areas of responsibility when required.
The Chairman is available to the Company's major shareholders to discuss
governance, strategy and performance. Feedback on all stakeholder engagements
is regularly communicated to the Board and informs its deliberations.
The resolution for the re-election of Emily Manning to the Board of the
Company received less than 80% of votes in favour at the AGM in September
2021. In accordance with the recommendations of the Code, Yellow Cake
approached the majority of those major shareholders who voted against the
resolution to understand their specific concerns. The Company did not receive
any substantive feedback from the major shareholders but understands that
their votes were primarily influenced by the stance taken by the proxy advisor
regarding Ms Manning's independence and membership of the Audit and
Remuneration Committees.
The Board undertook a rigorous evaluation and concluded that Ms Manning is
independent of both character and judgment and makes a valuable contribution
to Board discussions while also providing effective challenge to management
and the wider Board. Nevertheless, Ms Manning retired from the Audit and
Remuneration Committee, but remains a Director of the Company.
Appreciation
In closing, I would like to thank my colleagues on the Board for their support
and for their thorough and extensive contribution during the year. On behalf
of the Board, I would like to extend our appreciation to Yellow Cake's
shareholders and investors for their continued support and strong interest in
the share issues during the year.
The Lord St John of Bletso
Chairman
CEO statement
The past year has been an exciting period for the global uranium market and
Yellow Cake. The uranium market appears to have made the transition from a
long period of oversupply to a situation of undersupply, with little evidence
to suggest that it will rebalance in the foreseeable future. Uranium supply
remains under pressure following years of under-investment in developing new
resources, continued discipline from major producers not to sell into an
oversupplied market and the recent permanent closure of significant production
sources in Niger and Australia.
We expect rising global inflation and supply chain disruptions since the start
of COVID-19 to lead to increased exploration, development and production costs
that will further increase the incentive price of new production. The
availability and cost of skilled labour are also becoming major factors in new
uranium mine development.
Demand factors strengthened throughout 2021 as nuclear's role in meeting the
long-term increase in future energy demand during the transition to a low
carbon future is becoming increasingly recognised by governments around the
world. Uncertainty regarding US policy issues that overhung the market for the
last several years has been removed. The Biden administration's Build Back
Better Bill includes significant support to existing nuclear facilities,
enrichment programmes and research into advanced reactors.
The high price of fossil fuels and Europe's reliance on Russian natural gas
and oil have highlighted energy security as a counterargument against
prematurely closing nuclear facilities. Progress in developing advanced
reactors and small modular reactors (SMRs) is opening up new opportunities for
nuclear by reducing upfront costs and construction times, where most of the
lifecycle carbon emissions from nuclear occur. During the year, the world's
first commercial SMR started feeding electricity into the grid in China's
Shandong province 7 .
After many years of limited long-term contracting by nuclear utilities,
activity in the term uranium market started to increase as utilities appear to
be realising that uranium availability could become an issue by mid-decade.
Improved sentiment drives spot volumes and uranium equities
The shift in the supply/demand dynamic led to improved sentiment and strong
demand for uranium investments. Sprott's launch of its uranium trust in
mid-2021 raised USD2 billion and enabled purchases of 38.6 million lb in the
spot market to date. In October, ANU Energy OEIC Ltd, another physical uranium
fund, was launched to raise an initial USD50 million and raise a further
USD500 million to be invested in physical uranium. In May 2022, ANU Energy
raised an initial USD74 million in its first round of funding, which was USD24
million more than initially planned. Junior uranium producers also entered the
spot market to procure uranium in support of long-term contracting strategies
and to hold uranium as an investment, acquiring an estimated 6 to 7 million
lb, in addition to near-term buying by major producers.
Implications of the Russian invasion
The future impacts on nuclear fuel markets as a result of the economic
sanctions against Russia remain uncertain. Recent reported utility data shows
that US nuclear utilities relied on Russian origin/sources for 15% of uranium
and 22% of uranium enrichment services from 2016 to 2020 8 . US nuclear
utilities are reportedly lobbying the US government to continue to allow
nuclear fuel imports from Russia to maintain low electricity prices. The
EURATOM Supply Agency (ESA) reported that European Union (EU) nuclear
utilities had even greater reliance on Russian sources, purchasing over 17% of
uranium and 29% of enrichment services over the same five year period
(2016-2020) 9 .
The direct effect of the war in Ukraine on Yellow Cake's operations and
financial position has to this point been limited. All U(3)O(8) to which the
Company has title and has paid for is held at the Cameco storage facility in
Canada and the Orano storage facility in France.
While part of Kazatomprom's production is transported through Russia, the
Company is unaware of any restrictions on Kazatomprom's activities related to
the supply of its products to Yellow Cake. There are nevertheless risks
associated with both transit through the territory of Russia and the delivery
of cargo by sea vessels, which could adversely impact future deliveries from
Kazatomprom. Kazatomprom have publicly stated that they have an alternative
supply route which was established in 2018, should the route through St
Petersburg no longer be viable.
The delivery of the contracted 2 million lb of U(3)O(8) from Kazatomprom in
May 2022 and a further 950,000 lb of U(3)O(8) in June 2022 were completed in
accordance with agreed schedules. Payment either follows delivery or is
managed via escrow, so there is no credit risk for Yellow Cake attached to
these deliveries. The Company does not anticipate any restrictions on being
able to make further purchases under its option agreement with Kazatomprom
should it wish to do so.
Uranium market activity
Spot market volumes in the 2021 calendar year exceeded the record volumes of
2020, reaching approximately 102 million lb of U(3)O(8) (CY2020: 95 million
lb). Much of this volume was driven by non-utilities, with buying by primary
producers, financial funds, trading companies and junior uranium companies
accounting for 83% of volumes.
The uranium spot market price started 2021 at USD30.00/lb and ended the year
40% up at USD42.05/lb, after hitting a nine-year high in mid-September of
USD50.50/lb. After tracking sideways to slightly down in the first two months
of 2022, the spot uranium price rose sharply in the last week of February in
response to the Russian invasion of Ukraine. On 31 March 2022, the spot
price was USD57.90/lb and decreased to USD45.75/lb by 15 July 2022.
Aggregate long-term uranium contracting in CY2021 increased to around 70
million lb U(3)O(8) from 57 million lb in CY2020, but remained at relatively
low levels compared to CY2019 (96.2 million lb) and CY2018 (90.5 million lb).
Cameco announced that the company had added 70 million lb U(3)O(8) to its term
contract portfolio since January 2021 with 40 million lb U(3)O(8) of that
total being finalised in January 2022 alone(( 10 )). Market uncertainty
created by the Russian invasion of Ukraine resulted in significant upward
pressure on longer-term price indicators with the long-term price increasing
by over 23% in the first half of CY2022 and the three-year and five-year
forward prices rising by 25% and 28% respectively.
Increase in Yellow Cake's U(3)O(8) holdings
Strong investor interest in uranium equities allowed Yellow Cake to raise a
further USD236.6 million through two oversubscribed share placements in June
and October 2021. Together with USD138.5 million raised at the end of the
previous financial year, these funds were used to exercise the Kazatomprom
2021 option to acquire USD100 million of uranium and to buy additional uranium
from Kazatomprom and in the spot market, increasing Yellow Cake's holdings of
U(3)O(8) by a further 9 million lb to 18.8 million lb on a pro forma basis.
Company share price
The Company's shares ended the 2022 financial year 44% up on the prior year
and traded at a premium to net asset value for most of the financial year
before dropping below net asset value from mid-January 2022 to year-end. The
Board approved a share buyback programme in April 2022, which acquired 566,833
ordinary shares, increasing shareholders' exposure to uranium on a per share
basis and returning USD3 million.
The fair value of the Company's holding of U(3)O(8) increased by USD614.6
million in the year to 31 March 2022. At year-end Yellow Cake's net asset
value increased by 154% and net asset value per share increased to GBP4.42 per
share over the period. The Company delivered a net profit after tax for the
year of USD417.3 million and ended the year with cash and cash equivalents of
USD153.1 million on the balance sheet. The CFO's Review that follows provides
more information regarding the Company's financial results for the period.
Stakeholder relationships
We engage with stakeholders, particularly shareholders, investors, analysts
and the media, on an ongoing basis through investor conferences, conference
calls, investor briefings with industry experts, media briefings and
interviews to improve the understanding of the Company and the industry. The
June share placement included a retail component that was very well supported
and we are pleased with the increased representation of retail shareholders,
which in June 2022 comprised 29% of the share register.
Outlook
The then looming disconnect between the medium- to long-term supply of uranium
forecast at Yellow Cake's IPO is becoming more widely evident as demand for
nuclear energy is increasingly supported by the transition to a low carbon
economy and the more immediate need to improve energy security. Even with the
run up in spot uranium prices in March 2022, the incentive price for new
supply of uranium remains higher and rising as a result of inflation and
supply chain disruptions.
With secondary activity resulting in a thinning uranium spot market,
increasing concerns about supply security and the diversity of supply
portfolios, and long-term contracting still at relatively low levels, we are
seeing strong uranium demand from nuclear utilities.
These factors should result in continued strong demand for uranium and support
a continued increase in uranium prices. Yellow Cake is well positioned to make
the most of opportunities to realise value for investors both through
increasing its holding of U(3)O(8) and through share buybacks when the share
is trading materially below net asset value.
Andre Liebenberg
Chief Executive Officer
CFO's review
Following the upsized share placing at the end of the 2021 financial year
(USD138.5 million) and the high level of investor interest in uranium, Yellow
Cake undertook two more share placements in June (USD86.9 million) and October
(USD149.7 million). The proceeds of the three placings were applied to fully
exercise the Company's 2021 option to purchase USD100 million of U(3)O(8) from
Kazatomprom under the Framework Agreement, to purchase additional uranium from
Kazatomprom and in the spot market and to fund related expenses and working
capital.
From mid-January 2022, the Company's shares traded at a material discount to
its underlying net asset value and the Board took the decision in April 2022
to implement a share buyback programme as a means of effectively acquiring
exposure to uranium at a discount to the commodity spot price. Under the
programme, the Company acquired 566,833 shares after the reporting date at a
volume weighted average discount to the Company's pro forma net asset value of
10.4%.
I am pleased to present the following audited financial statements for the
year to 31 March 2022 and report a number of highlights:
- An increase in the value of the Company's uranium holding of USD614.6 million
from USD302.1 million at 31 March 2021 to USD916.7 million at 31 March 2022;
- Gross proceeds of USD236.6 million from share placings in June and October
2021, in addition to gross proceeds of USD138.5 million from a share placing
in March 2021;
- Concluded purchases of 8.35 million lb of U(3)O(8) during the financial year
at an average price of USD34.13/lb and an aggregate consideration of USD284.9
million; and
- Profit after tax of USD417.3 million (2021: USD29.9 million).
Uranium transactions
Yellow Cake started the financial year with a holding of 9.86 million lb of
U(3)O(8). On 28 April 2021, 348,068 lb of U(3)O(8) was transferred to Uranium
Royalty Corp. under the terms of the subscription agreement entered into at
the time of Yellow Cake's IPO in July 2018. On 20 May 2021, Yellow Cake
completed the purchase of 343,053 lb of U(3)O(8) in the spot market at a price
of USD29.15/lb for total consideration of USD10.0 million.
On 21 June 2021, the Company took delivery of 3.45 million lb of U(3)O(8)
under the terms of the Kazatomprom option exercised in the previous financial
year. In July 2021, the Company concluded agreements to purchase a further
550,000 lb of U(3)O(8) in the spot market at an average price of USD32.35/lb
for a total consideration of USD17.8 million. The Company took delivery of
this uranium in July and August 2021.
In November 2021, Yellow Cake purchased 2.0 million lb of U(3)O(8) from Curzon
Uranium Limited at a price of USD46.32/lb. In October, the Company agreed to
purchase 0.95 million lb of U(3)O(8) from Kazatomprom at a price of
USD47.58/lb, which was delivered on 30 June 2022.
In November 2021, Kazatomprom exercised its Repurchase Option at a price of
USD43.25/lb less an aggregate discount of USD6.6 million, and took delivery of
2.02 million lb of U(3)O(8) from Yellow Cake. At the same time, Yellow Cake
exercised its Buyback Option for the same quantity of uranium at a price of
USD43.25/lb and took delivery of the 2.02 million lb of U(3)O(8) from
Kazatomprom in May 2022. The net impact of the Repurchase Option and Buyback
Option transactions was a pay-out by the Company to Kazatomprom of USD6.6
million.
On 4 December 2021, Yellow Cake took delivery of 2.0 million lb of U(3)O(8)
from Kazatomprom at a price of USD32.23/lb.
As at 31 March 2022, the Company's uranium investment comprised 15.83 million
lb of U(3)O(8), a net increase of 5.98 million lb of U(3)O(8) during the
financial year. The completion of agreed purchases post year-end resulted in
the Company's uranium investment increasing to 18.81 million lb of U(3)O(8) on
30 June 2022.
Uranium-related gains
Yellow Cake made total uranium-related gains of USD424.1 million in the year
to 31 March 2022 (2021: USD33.9 million). This comprised an increase in the
fair value of the Company's uranium investment of USD433.3 million (2021:
USD33.4 million), USD0.1 million in location swap fees (2021: USD1.1 million),
and a premium to the prevailing spot price of USD0.1 million on the disposal
of 0.34 million lb of U(3)O(8) to Uranium Royalty Corp. These gains were
partially offset by a discount to the prevailing spot price of USD6.1 million
on the disposal of 2.02 million lb of U(3)O(8) in satisfaction of the
Kazatomprom Repurchase Option and an increase in the fair value of a uranium
derivative liability related to the Repurchase Option of USD3.2 million
(detailed in note 7 of this report).
The increase in the fair value of the Company's uranium investment of USD433.3
million during the year was attributable to:
- an increase of USD13.02/lb in the carrying value of the 2.37 million lb of
U(3)O(8) sold during the financial year (as the U(3)O(8) spot price increased
from USD30.65/lb at the beginning of the financial year to an average of
USD43.67/lb as at the disposal dates);
- an increase of USD27.25/lb in the carrying value of the 7.48 million lb of
U(3)O(8) held by the Company during the entire financial year (as the
underlying price of U(3)O(8) increased from USD30.65/lb to USD57.90/lb over
this period); and
- an increase of USD23.77/lb in the carrying value of the additional 8.35
million lb of U(3)O(8) acquired by the Company during the financial year for
an average price of USD34.13/lb (as the underlying price of U(3)O(8) increased
to USD57.90/lb as at the end of the financial year).
Operating performance
Yellow Cake delivered profit after tax for the year of USD417.3 million (2021:
USD29.9 million).
Expenses for the year of USD6.9 million (2021: USD4.0 million) recognised in
the Statement of Comprehensive Income included the following costs:
- USD0.5 million in costs related to Yellow Cake's share placings (2021: USD0.7
million);
- USD1.9 million in commissions payable to 308 Services Limited in relation to
the purchases by Yellow Cake of U(3)O(8) (2021: USD0.3 million); and
- Operating costs of a recurring nature of USD4.5 million (2021: USD2.9
million), comprising:
- Procurement and market consultancy fees (holding fees and storage incentive
fees) paid to 308 Services Limited of USD2.1 million (2021: USD1.1 million)
(detailed in note 12); and
- Other operating costs of USD2.4 million (2021: USD1.7 million).
Operating expenses of a recurring nature of USD4.5 million represent
approximately 0.4% of the Company's net asset value as at 31 March 2022 (2021:
0.7%).
Share buyback programme
On 4 April 2022, Yellow Cake announced the initiation of a share buyback
programme to purchase up to USD3 million of the Company's ordinary shares
commencing on 4 April 2022. Given that the Company's shares had traded at a
material discount to its underlying net asset value since mid-January 2022,
the Yellow Cake Board resolved to implement a share buyback programme as a
means of effectively acquiring exposure to uranium at a discount to the
uranium spot price. Shares were purchased when the closing mid-market share
price of the Company in any given day represented a discount of 10% or more to
the Company's pro forma net asset value at that time.
Under the programme, the Company acquired 566,833 shares between 4 April and 6
May 2022, at a volume weighted average price of GBP4.15 per share and at a
volume weighted average discount to the Company's pro forma net asset value of
10.4%. The shares repurchased are held in treasury.
The Company does not propose to declare a dividend for the year.
Share placings
On 21 June 2021 the Company issued 23,947,009 new ordinary shares to existing
and new institutional investors and 1,052,991 new ordinary shares to retail
investors, at a price of GBP2.50 per share, equal to a 1% premium to the
Company's estimated net asset value per share at the date of the offering. The
Company raised net proceeds of GBP60.6 million (USD equivalent: USD84.0
million net of costs of USD2.9 million). In October 2021, Yellow Cake
successfully completed an issue of a further 30 million new ordinary shares to
existing and new institutional shareholders at a price of GBP3.64 per share,
equal to a 1% premium to the Company's estimated net asset value per share at
the date of the offering. The issue raised net proceeds of GBP106.0 million
(USD145.7 million).
Balance sheet and cash flow
The share placings in March, June and October 2021 raised net proceeds of
USD363.9 million and USD284.9 million was applied to purchasing uranium during
the financial year, while USD45.2 million was applied to purchasing uranium
post year-end. In November 2021, Yellow Cake sold 2.02 million lb of U(3)O(8)
in satisfaction of the Kazatomprom Repurchase Option and received a cash
consideration of USD80.9 million. Following the exercise of its Buyback
Option, the Company purchased the same quantity of uranium from Kazatomprom
for USD87.5 million in May 2022.
The value of Yellow Cake's U(3)O(8) uranium holding increased by 203% to
USD916.7 million at year-end compared to USD302.1 million at the end of the
2021 financial year, as a result of the appreciation in the uranium price and
a net increase in the volume of uranium held. As at 31 March 2022, Yellow Cake
had cash of USD153.1 million (2021: USD126.2 million).
Yellow Cake's net asset value at 31 March 2022 was GBP 4.42 per share 11 or
USD1,069.0 million, consisting of 15.83 million lb of U(3)O(8) valued at a
spot price of USD57.90/ lb, cash and cash equivalents of USD153.1 million and
other net current assets and liabilities of USD0.9 million.
Yellow Cake's estimated net asset value on 15 July 2022 was USD877.0 million
or GBP4.04 per share 12 , consisting of 18.81 million lb 13 of U(3)O(8)
valued at the daily price of USD45.75/lb published by UxC LLC on 15 July 2022,
cash and cash equivalents of USD153.1 million and other net current assets and
liabilities of USD0.9 million as at 31 March 2022, less the consideration of
USD132.7 million paid for purchases completed after the end of the financial
year, less USD3.0 million incurred under the share buyback programme after
financial year-end.
Carole Whittall
Chief Financial Officer
Financial statements
Statement of Financial Position
As at As at
31 March 2022 31 March 2021
Notes USD '000 USD '000
ASSETS
Non-current assets
Investment in uranium 4 916,717 302,098
Total non-current assets 916,717 302,098
Current assets
Trade and other receivables 5 130 119
Cash and cash equivalents 6 153,136 126,159
Total current assets 153,266 126,278
Total assets 1,069,983 428,376
LIABILITIES
Current liabilities
Trade and other payables 8 (970) (3,621)
Uranium derivative liability 7 - (3,361)
Total current liabilities (970) (6,982)
Total liabilities (970) (6,982)
NET ASSETS 1,069,013 421,394
Equity
Attributable to the equity owners of the Company
Share capital 9 2,544 1,785
Share premium 9 588,181 358,812
Share-based payment reserve 10 122 141
Treasury shares 11 (11,219) (11,458)
Retained earnings 489,385 72,114
TOTAL EQUITY 1,069,013 421,394
The financial statements of Yellow Cake plc and the related notes were
approved by Directors on 21 July 2022 and were signed on its behalf by:
Andre Liebenberg
Chief Executive Officer
Statement of Comprehensive Income
Year ended Year ended
31 March 2022 31 March 2021
Notes USD '000 USD '000
Uranium investment gains
Fair value movement of investment in uranium 4 433,274 33,365
Uranium swap income 4 100 1,145
Fair value movement of uranium derivative liability 7 (3,193) (774)
(Discount)/premium to spot price on disposals of uranium 4 (6,058) 180
Uranium investment gains 424,123 33,916
Expenses
Share-based payments 10 (220) (139)
Equity offering expenses 9 (534) (681)
Commission on uranium transactions 12 (1,884) (282)
Procurement and market consultancy fees 12 (2,130) (1,124)
Other operating expenses 13 (2,180) (1,739)
Total expenses (6,948) (3,965)
Bank interest income 11 3
Gain/(loss) on foreign exchange 85 (43)
Profit before tax attributable to the equity owners of the Company 417,271 29,911
Tax expense 14 - -
Profit and total comprehensive income for the year after tax attributable to 417,271 29,911
the equity owners of the Company
Basic earnings per share attributable to the equity owners of the Company 16 2.60 0.34
(USD)
Diluted earnings per share attributable to the equity owners of the Company 16 2.59 0.33
(USD)
Statement of Changes in Equity
Attributable to the equity owners of the Company
Share capital Share premium Share based payment reserve Treasury shares Retained earnings Total equity
Notes USD'000 USD'000 USD'000 USD'000 USD'000 USD '000
As at 31 March 2020 1,164 224,437 2 (726) 42,203 267,080
Total comprehensive income after tax for the year - - - - 29,911 29,911
Transactions with owners:
Shares issued 9 621 137,879 - - - 138,500
Share issue costs 9 - (3,504) - - - (3,504)
Share-based payments 10 - - 139 - - 139
Purchase of own shares 11 - - - (10,732) - (10,732)
As at 31 March 2021 1,785 358,812 141 (11,458) 72,114 421,394
Total comprehensive income after tax for the year - - - 417,271 417,271
-
Transactions with owners:
Shares issued 9 759 235,818 - - - 236,577
Share issue costs 9 - (6,449) - - - (6,449)
Share-based payments 10 - - 220 - - 220
Exercise of bonus options 11 - - (239) 239 - -
As at 31 March 2022 2,544 588,181 122 (11,219) 489,385 1,069,013
Statement of Cash Flows
1 April 2021 1 April 2020
to to
31 March 2022 31 March 2021
Notes USD'000 USD'000
Cash flows from operating activities
Profit after tax 417,271 29,911
Adjustments for:
Discount/(premium) to spot price on disposal 7, 4 6,058 (180)
Change in fair value of investment in uranium 4 (433,274) (33,365)
Change in fair value of uranium derivative liability 7 3,193 774
Share-based payments 10 220 139
(Gain)/loss on foreign exchange (85) 43
Interest income (11) (3)
Operating profit before changes in working capital (6,628) (2,681)
Changes in working capital:
Increase in trade and other receivables (11) (29)
(Decrease)/increase in trade and other payables (2,607) 3,216
Cash (used in)/generated from operating activities (9,246) 506
Interest received 11 3
Cash (used in)/generated from operating activities (9,235) 509
Cash flows from investing activities
Purchase of uranium 4 (284,890) (15,025)
Proceeds of sale of uranium 4 90,934 9,960
Net cash used in investing activities (193,956) (5,065)
Cash flows from financing activities
Proceeds from issue of shares 9, 11 236,577 138,500
Issue costs paid 9 (6,449) (3,504)
Share buyback programme 11 - (10,732)
Net cash generated from financing activities 230,128 124,264
Net increase in cash and cash equivalents during the year 26,937 119,708
Cash and cash equivalents at the beginning of the year 126,159 6,481
Effect of exchange rate changes 40 (30)
Cash and cash equivalents at the end of the year 153,136 126,159
Notes to the Financial Statements
For the year ended 31 March 2022
1. General information
Yellow Cake plc (the "Company") was incorporated in Jersey, Channel Islands on
18 January 2018. The address of the registered office is Liberation House,
Castle Street, St Helier, Jersey, JE1 2LH.
The Company operates in the uranium sector and was established to purchase and
hold U(3)O(8). The strategy of the Company is to invest in long-term holdings
of U(3)O(8) and not to actively speculate with regards to short-term changes
in the price of U(3)O(8).
The Company was admitted to list on the London Stock Exchange AIM market
("AIM") on 5 July 2018.
On 22 June 2022, the Company's shares were admitted to trading on the OTCQX,
the highest tier of the US over-the-counter market.
2. Summary of significant accounting policies
Basis of preparation
The financial information has been prepared in accordance with UK-adopted
International Accounting Standards ("IFRS").
In accordance with Section 105 of The Companies (Jersey) Law 1991, the Company
confirms that the financial information for the period ended 31 March 2022 is
derived from the Company's audited financial statements and that these are not
statutory accounts and, as such, do not contain all information required to be
disclosed in the financial statements prepared in accordance with IFRS.
The statutory accounts for the period ended 31 March 2022 have been audited
and approved, but have not yet been filed.
The Company's audited financial statements for the period ended 31 March 2022
received an unqualified audit opinion and the auditor's report contained no
statement under section 113B (3) and (6) of The Companies (Jersey) Law 1991.
The financial information contained within this preliminary statement was
approved and authorised for issue by the Board on 21 July 2022.
The principal accounting policies adopted are set out below.
New and revised standards
At the date of approval of these financial statements there are no new or
revised standards that are in issue but not yet effective and are relevant to
the financial statements of the Company.
The principal accounting policies adopted are set out below.
Going concern
The Directors, having considered the Company's objectives and available
resources along with its projected income and expenditure for at least twelve
months from the date of approval of the audited financial statements, are
satisfied that the Company has adequate resources to continue in operational
existence for the foreseeable future. Accordingly, the directors have adopted
the going-concern basis in preparing these financial statements.
The Board continues to monitor the ongoing impact of the COVID-19 pandemic on
Yellow Cake's activities, the uranium industry, and the world economy. The
Company's operations were not significantly affected during the first and
second waves of the pandemic as the Company has no physical operations and the
executive team was already home-based. The business continuity plans
implemented at the Company's key service providers have to date been effective
in enabling them to continue to provide all key support services that were
provided to the Company prior to the pandemic outbreak. To date, Yellow Cake's
suppliers and other counterparties have been able to meet their obligations to
the Company.
In addition, the Board has considered the impact of the conflict in Ukraine
and sanctions imposed against Russia and Belarus in its going-concern
assessment for the Company.
After taking into account the Company's post year-end commitments to purchase
USD132,689,090 of U(3)O(8), the Company considered that as at 31 March 2022,
it had sufficient working capital to meet approximately two years of operating
expenses before it would need to raise additional funds. The Company had no
debt or hedge liabilities on its balance sheet as at 31 March 2022. The
Company usually aims to retain three years' of working capital requirements
following an equity issuance. Following the Company's most recent equity
issuance in October 2021, the Board resolved in April 2022 to apply USD3
million to a share buyback programme to purchase the Company's shares at a
discount to net asset value, thus retaining a lower amount of working capital.
Sale of uranium and uranium swaps
The income in respect of disposals of uranium is recognised at the point when
the significant risks and rewards of ownership and legal title have been
transferred to the buyer. At the point of disposal the carrying value of the
uranium, being the spot price, is derecognised from the balance sheet.
The gain or loss on disposal of uranium is calculated as the difference
between the sales price and the carrying value, being the spot price, at the
point of sale. This gain or loss is reflected as a premium or discount to the
spot price on a separate line in the statement of comprehensive income during
the period in which the disposal occurs.
The Company has entered into certain uranium location swap agreements under
which it has agreed to exchange, by way of book transfer, an equal quantity of
uranium between specified storage facilities. In certain instances, the
location swap is temporary and the uranium will be swapped back to the
original location at the end of an agreed term. Where the swap is temporary
and for a fixed term, the income which the Company is entitled to receive in
consideration for the swap is recognised over the term of the swap, in line
with the substance of the transaction and delivery of the related performance
obligations.
Investments in uranium
Acquisitions of U(3)O(8) are initially recorded at cost net of transaction
costs incurred and are recognised in the Company's statement of financial
position on the date the risks and rewards of ownership pass to the Company,
which is the date that the legal title to the uranium passes.
After initial recognition, investments in U(3)O(8) are measured at fair value
based on the most recent month-end spot price for U(3)O(8) published by UxC
LLC.
IFRS lacks specific guidance in respect of accounting for investments in
uranium. As such the Directors of the Company have considered the requirements
of International Accounting Standard 1 "Presentation of Financial Statements"
and International Accounting Standard 8 "Accounting Policies, Changes in
Accounting Estimates and Errors" to develop and apply an accounting policy.
The Directors of the Company consider that measuring the investment in
U(3)O(8) at fair value provides information that is most relevant to the
economic decision-making of users. This is consistent with International
Accounting Standard 40 Investment Property, which allows for assets held for
long-term capital appreciation to be presented at fair value.
Foreign currency translation
Functional and presentation currency
The financial statements are presented in United States Dollars ("USD") which
is also the functional currency of the Company.
These financial statements are presented to the nearest round thousand, unless
otherwise stated.
Foreign currency translation
Transactions denominated in foreign currencies are translated into USD at the
rate of exchange ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies at the
reporting date are translated into USD at the rate of exchange ruling at the
reporting date. Foreign exchange gains or losses arising on translation are
recognised through profit or loss in the statement of comprehensive income.
Financial instruments
Financial assets and financial liabilities are recognised when the Company
becomes a party to the contractual provisions of the instrument. The Company
shall offset financial assets and financial liabilities if the Company has a
legally enforceable right to set off the recognised amounts and intends to
settle on a net basis.
The carrying amount of the Company's financial assets and financial
liabilities are a reasonable approximation of their fair values due to the
short-term nature of these instruments.
Financial assets
The Company's financial assets comprise trade and other receivables. These
assets are non-derivative financial assets with fixed or determinable payments
that are not quoted in an active market. They are initially recognised at fair
value and subsequently carried at amortised cost using the effective interest
method, less any provision for impairment.
Cash and cash equivalents comprise cash in hand and short-term deposits in
banks with an original maturity of three months or less.
Financial liabilities
The Company's financial liabilities comprise trade and other payables. They
are initially recognised at fair value and subsequently carried at amortised
cost using the effective interest method.
In prior periods the Company also recognised a derivative financial liability
in the scope of IFRS 9. This financial instrument was recognised at fair value
and value changes recognised in profit and loss. The fair value of the
Repurchase Option was determined based on the expected option payoff using a
Monte Carlo simulation produced by an independent financial valuer.
Share capital
The Company's ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of shares are recognised in equity as a
deduction from proceeds of the share issue.
Treasury shares
The Company's treasury shares are classified as equity. Treasury shares are
accounted for at cost and shown as a deduction from equity in a separate
reserve. Transfers from treasury shares are recognised at the weighted average
of the cost of acquiring the treasury shares.
Share-based payments
Where the Company issues equity instruments to external parties or employees
as consideration for services received, the statement of comprehensive income
is charged with the fair value of the goods and services received, except
where services are directly attributable to the issue of shares, in which case
the fair value of such amounts is recognised in equity as a deduction from
share premium.
Equity-settled transactions are awards of shares, or options over shares, that
are provided to employees in exchange for the rendering of services.
Equity-settled transactions are measured at fair value on grant date. Fair
value is independently determined using a Black-Scholes option pricing model
that takes into account the exercise price, the term of the option, the impact
of dilution, the share price at grant date and expected price volatility of
the underlying share, the expected dividend yield and the risk free interest
rate for the term of the option, together with non-vesting conditions that do
not determine whether the consolidated entity receives the services that
entitle the employees to receive payment. No account is taken of any other
vesting conditions.
The cost of equity-settled transactions is recognised as an expense with a
corresponding increase in equity over the vesting period. The cumulative
charge to profit or loss is calculated based on the grant date fair value of
the award, the best estimate of the number of awards that are likely to vest
and the expired portion of the vesting period. The amount recognised in profit
or loss for the period is the cumulative amount calculated at each reporting
date less amounts already recognised in previous periods.
Market conditions are taken into consideration in determining fair value.
Therefore, any awards subject to market conditions are considered to vest
irrespective of whether or not that market condition has been met, provided
all other conditions are satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised
as if the modification has not been made. An additional expense is recognised,
over the remaining vesting period, for any modification that increases the
total fair value of the share-based compensation benefit as at the date of
modification.
If the non-vesting condition is within the control of the Company or employee,
the failure to satisfy the condition is treated as a cancellation. If the
condition is not within the control of the Company or employee and is not
satisfied during the vesting period, any remaining expense for the award is
recognised over the remaining vesting period, unless the award is forfeited.
If an equity-settled award is cancelled, it is treated as if it has vested on
the date of cancellation, and any remaining expense is recognised immediately.
If a new replacement award is substituted for the cancelled award, the
cancelled and new awards are treated as if they were a modification.
Taxation
As the Company is managed and controlled in Jersey it is liable to be charged
to tax at a rate of 0% under schedule D of the Income Tax (Jersey) Law 1961 as
amended.
Expenses
Expenses are accounted for on an accruals basis.
Segmental reporting
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision-maker. The chief operating
decision-maker is responsible for allocating resources and assessing
performance of the operating segments and has been identified as the Board of
Directors of the Company.
The Company is organised into a single operating segment being the holding of
U(3)O(8) for long-term capital appreciation.
Critical accounting judgments and estimation uncertainty
The preparation of financial statements requires management to make judgments,
estimates and assumptions that affect the application of accounting policies
and the reported amounts of assets, liabilities, income and expenses.
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. Revisions to accounting
estimates are recognised in the year in which the estimate is revised and in
any future years affected.
The resulting accounting estimates will, by definition, seldom equate to the
related actual results.
Accounting estimates
The key accounting estimates in prior periods were the assumptions made in
valuing the uranium derivative liability. The option in favour of Kazatomprom
was exercised on 22 November 2021 and as such the estimation is no longer
present at the year-end. Refer to note 7 for details of the derivative
liability and the exercise of the option by Kazatomprom.
Judgements
The Company receives regular tax advice and opinions from its advisors and
accountants to ensure it is aware of, and can seek to mitigate the effects on
its tax position of, changes in regulation. While the Company stores its
uranium in storage facilities in Canada and France, the Company does not carry
on business in either of these jurisdictions. The directors have considered
the tax implications of the Company's operations and have reached judgement
that no tax liability has arisen during the year (year ended 31 March 2021:
USD nil).
3. Management of financial risks
Financial risk factors
The Company's financial assets and liabilities comprise of cash, receivables
and payables that arise directly from its operations. The accounting policies
in note 2 include criteria for the recognition and the basis of measurement
applied for financial assets and liabilities. Note 2 also includes the basis
on which income and expenses arising from financial assets and liabilities are
recognised and measured.
The Company's assets and liabilities have been primarily categorised as assets
and liabilities at amortised cost, with the exception of the investment in
uranium being held at fair value. The carrying amounts of all such instruments
are as stated in their respective notes.
Market risk
The fair value or future cash flows of a financial instrument may fluctuate
because of changes in market prices. This market risk comprises two elements -
interest rate risk and other price risk and arises mainly from the changes in
values of the investment of uranium and derivatives.
Interest rate risk
Any cash balances are held on variable rate bank accounts or in money market
funds yielding rates of interest dependent on the base rate of the applicable
institution or fund return.
Price risk and sensitivity
If the value of the investment in uranium fell by 5% at the year-end, the
profit after tax would decrease by USD45,835,826 (year ended 31 March 2021:
USD15,104,910). Likewise, if the value rose by 5% the profit after tax would
have increased by USD45,835,826 (year ended 31 March 2021: USD15,104,910).
Economic risk
The COVID-19 pandemic continues to have a significant impact on the global
economy and many businesses across the world. The Company's operations
continue to remain unaffected by COVID-19, given that it has no physical
operations and the executive team is already home-based. The Company's key
service providers have put in place effective business continuity plans that
have enabled them to continue with the provision of all key support services
that were provided to the Company prior to the pandemic outbreak.
Geopolitical events that occurred in Kazakhstan and Russia/Ukraine during the
last quarter of the Company's financial year have not had a material impact to
date on the Company's operations, nor affected its financial position. The
Company's counterparties are not subject to sanctions. While the Company has
purchased and intends to continue to purchase U(3)O(8) from Kazatomprom, the
Kazakh national atomic company, all U(3)O(8) to which the Company has title
and has paid for, is held at the Cameco storage facility in Canada and the
Orano storage facility in France.
The Company exercised its Buyback Option with Kazatomprom under which it
acquired 2,022,846 lb of U(3)O(8) from Kazatomprom which was delivered to the
Company at the Cameco storage facility in Canada on 19 May 2022. In addition
the Company entered into an agreement to purchase 950,000 lb of U(3)O(8) from
Kazatomprom, which was delivered to the Company at the Cameco storage facility
in Canada on 30 June 2022. Payment was released to Kazatomprom following
delivery to the Company.
While part of Kazatomprom's production is transported through Russia, the
Company is unaware of any restrictions on Kazatomprom's activities related to
the supply of its products to the Company. The Company has to date received
deliveries from Kazatomprom in accordance with agreed delivery schedules.
There are nevertheless risks associated with both transit through the
territory of Russia and the delivery of cargo by sea vessels, which could
adversely impact future deliveries from Kazatomprom.
Liquidity risk
This is the risk that the Company will encounter in realising assets or
otherwise raising funds to meet financial commitments. Prudent liquidity risk
management involves maintaining sufficient liquidity and short-term investment
securities, being able to raise funds based on suitably adapted lines of
credit and a capacity to unwind market positions.
At year-end, the liquidity of the Company is composed of either bank account
or bank deposits, for a total amount of USD153,136,073 (31 March 2021:
USD126,159,065).
The Company's cash and cash equivalents are held with Citibank Europe PLC,
which is rated A+ (2020: A+) according to ratings agency Fitch.
Carrying amount < 1 year 1 to 2 years 2 to 10 years
As at 31 March 2022 USD'000 USD'000 USD'000 USD'000
Cash and cash equivalents 153,136 153,136 - -
Other creditors and accruals (970) (970) - -
As at 31 March 2021 USD'000 USD'000 USD'000 USD'000
Cash and cash equivalents 126,159 126,159 - -
Other creditors and accruals (3,621) (3,621) - -
Fair value estimation
Fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at
the measurement date, regardless of whether that price is directly observable
or estimated using another valuation technique. In estimating the fair value
of an asset or liability, the Company takes into account the characteristics
of the asset or liability at the measurement date. IFRS 13 Fair Value
Measurement requires the Company to classify fair value measurements using
fair value hierarchy that reflects the significance of the inputs used in
making the measurements. The fair value hierarchy has the following levels:
1 - Quoted prices (unadjusted) in active markets for identical assets or
liabilities (level 1);
2 - Inputs other than quoted prices included within level 1 that are observable
for the asset or liability, either directly (that is, as prices) or indirectly
(that is, derived from prices) (level 2); and
3 - Inputs for the asset or liability that are not based on observable market data
(that is, unobservable inputs) (level 3).
The level to the fair value hierarchy within which the fair value measurement
is categorised in its entirety is determined on the basis of the lowest level
input that is significant of an input is assessed against the fair value
measurement in its entirety. If a fair value measurement uses observable
inputs that require significant adjustment based on unobservable inputs, that
measurement is a level 3 measurement. Assessing the significance of a
particular input to the fair value measurement in its entirety requires
judgement, considering factors specific to the asset or liability. The
following table analyses within the fair value hierarchy the Company's
financial assets and liabilities (by class) measured at fair value.
Assets and liabilities Level 1 Level 2 Level 3 Total
As at 31 March 2022 USD'000 USD'000 USD'000 USD'000
Investment in uranium 916,717 - - 916,717
Uranium derivative liability - - - -
As at 31 March 2021
Investment in uranium 302,098 - - 302,098
Uranium derivative liability - (3,361) - (3,361)
4. Investment in uranium
Fair Value
USD'000
As at 31 March 2020 263,489
Acquisition of U(3)O(8) 15,024
Change in fair value 33,365
Sale of U(3)O(8) (9,780)
As at 31 March 2021 302,098
Acquisition of U(3)O(8) 284,890
Change in fair value 433,274
Sale of U(3)O(8) (103,545)
As at 31 March 2022 916,717
The value of the Company's investment in U(3)O(8) is based on the daily spot
price for U(3)O(8) of USD57.90/lb as published by UxC LLC on 31 March 2022
(2021: month-end spot price of USD30.65/lb as published by UxC LLC on 29
March 2021).
The value of the Company's investment in U(3)O(8) in prior years was based on
the month-end spot price for U(3)O(8) which was published by UxC LLC on the
last Monday of each calendar month. With increasing liquidity in the uranium
spot market and greater availability of daily pricing data, UxC LLC has
commenced the publication of a daily U(3)O(8) spot price, which the Company
believes more accurately represents the period end market price of the
Company's uranium investment.
As at 31 March 2022, the Company:
- had purchased a total of 18,503,669 lb of U(3)O(8) at an average cost of
USD27.48/lb;
- had disposed of 2,670,914 lb of U(3)O(8) at an average selling price of
USD40.23/lb that had been acquired at an average price of USD21.01/lb,
assuming a first in first out methodology; and
- held a total of 15,832,755 lb of U(3)O(8) acquired at an average cost of
USD28.57/lb for a net total cash consideration of USD452.4 million, assuming a
first in first out methodology.
Purchase of uranium
The Company completed the following purchase transactions during the year:
- 20 May 2021 - 343,053 lb of U(3)O(8) at price of USD29.15/lb, in the spot
market, for a cash consideration of USD9,999,995;
- 21 June 2021 - 3,454,231 lb of U(3)O(8) at price of USD28.95/lb, from
Kazatomprom for a cash consideration of USD99,999,987 in exercise of the 2021
option under the Kazatomprom Framework Agreement;
- 21 July 2021 - 250,000 lb of U(3)O(8) at an average price of USD32.39/lb, in
the spot market, for a cash consideration of USD8,097,500;
- 27 July 2021 - 100,000 lb of U(3)O(8) at a price of USD32.37/lb, in the spot
market, for a cash consideration of USD3,237,000;
- 3 August 2021 - 200,000 lb of U(3)O(8) at a price of 32.28/lb, in the spot
market, for a cash consideration of USD6,456,000;
- 5 November 2021 - 500,000 lb of U(3)O(8) at a price of USD46.32/lb, in the
spot market, for a cash consideration of USD23,160,000;
- 12 November 2021 - 500,000 lb of U(3)O(8) at a price of USD46.32/lb, in the
spot market, for a cash consideration of USD23,160,000;
- 22 November 2021 - 500,000 lb of U(3)O(8) at a price of USD46.32/lb, in the
spot market, for a cash consideration of USD23,160,000;
- 29 November 2021 - 500,000 lb of U(3)O(8) at a price of USD46.32/lb, in the
spot market, for a cash consideration of USD23,160,000; and
- 4 December 2021 - 2,000,000 lb of U(3)O(8) at a price of USD32.23/lb, in the
spot market, for a cash consideration of USD64,460,000.
Post year-end purchases of uranium
As part of the "Buyback Option" detailed in note 7, Yellow Cake bought back
from Kazatomprom, 2,022,846 lb of U(3)O(8) at USD43.25/lb when the spot price
was USD46.25/lb. This was received by the Company at the Cameco storage
facility in Canada on 19 May 2022.
Pursuant to Kazatomprom's offer of 26 October 2021, the Company entered into
an agreement with Kazatomprom to purchase 950,000 lb of U(3)O(8) for a total
consideration of USD45,201,000 (USD47.58/lb), which the Company received on 30
June 2022 at which point the risks and rewards of ownership transferred to the
Company.
Location swaps
Since May 2018, Yellow Cake has held an account with Cameco Corporation
("Cameco") for the storage of uranium owned by the Company at Cameco's
facilities at Blind River and Port Hope, Ontario in Canada.
On 15 November 2019, the Company entered into an agreement with Orano Cycle
("Orano") to open a holding account for the storage of uranium owned by the
Company at Orano's conversion facility at the Malvési and Tricastin sites in
France.
On 3 April, 24 July and 27 October 2020, the Company entered a series of
location swap agreements to exchange 600,000 lb of U(3)O(8) between these
locations. In consideration, Yellow Cake received proceeds of USD1,090,000,
net of costs and commissions (gross proceeds USD1,225,000), of which
USD90,000, net of costs and commissions (gross proceeds of USD100,000), was
recognised during the period.
Sale of uranium
On 30 March 2021, the Company accepted Uranium Royalty Corp's option exercise
notice to purchase 348,068 lb of U(3)O(8) from the Company at a price of
USD28.73/lb for a total consideration of USD10,000,000. The transaction
completed on 28 April 2021. In respect of the above disposal, a premium of
USD0.03/lb to the prevailing daily spot price of USD 28.70/lb on 28 April 2021
(as published by UxC, LLC), or USD10,442 in aggregate, has been recognised in
the statement of comprehensive income. This premium represents the cumulative
disposal proceeds of USD10,000,000 less the carrying value at the date of
disposal of USD9,989,558, being the premium to the spot price (and therefore
the carrying value) that was realised on disposal.
For illustrative purposes, since the U(3)O(8) was originally purchased, the
above sales of uranium resulted in an effective "realised gain" of
USD2,687,091. This being the total sales proceeds of USD10,000,000 less the
"acquisition cost" of USD7,312,909, where the "acquisition cost" is estimated
by applying a "first in first out" methodology to the cost of all uranium
purchases made by the Company, as at the transaction date.
In respect of the sale of uranium to Kazatomprom under the Repurchase Option
(described in note 7 of the Financial Statements), an additional discount of
USD3.00/lb to the prevailing daily spot price of USD46.25/lb on the date that
the transaction took place (as published by UxC, LLC), or USD6,068,538 in
aggregate, was recognised in the statement of comprehensive income. This
discount represents the cumulative disposal proceeds of USD87,488,089 less the
carrying value at the date of sale of USD93,556,628, being the discount to the
spot price (and therefore the carrying value) that was realised on the sale.
The discount represents the difference in the spot price prevailing when the
Repurchase Option was exercised and the date that the Repurchase Option
transaction completed.
The following table provides an analysis of the Company's investment in
U(3)O(8) at 31 March 2022:
Quantity Fair Value
Location lb USD'000
Canada 15,532,755 899,347
France 300,000 17,370
Total 15,832,755 916,717
Post year-end uranium related transactions
Quantity Cost
lb USD'000
Exercise of Buyback Option, (19 May 2022) 2,022,846 87,488
Kazatomprom purchase transaction (30 June 2022) 950,000 45,201
Total 2,972,846 132,689
5. Trade and other receivables
As at As at
31 March 2022 31 March 2021
USD'000 USD'000
Other receivables 130 119
Total 130 119
6. Cash and cash equivalents
Cash and cash equivalents as at 31 March 2022 were held with Citi Bank Europe
plc in a variable interest account with full access. Balances at the end of
the year were USD152,243,206 and GBP337,918, a total of USD153,136,073
equivalent (31 March 2021: USD126,159,065 equivalent).
7. Uranium derivative liability
As part of the initial purchase on 5 July 2018 of 8,091,385 lb of U(3)O(8)
from Kazatomprom under a ten-year Framework Agreement with Kazatomprom, the
Company benefited from a purchase price which was 2.5% below the spot price,
resulting in the Company receiving an aggregate discount of approximately
USD4.3 million. In exchange for this discount, the Company provided to
Kazatomprom an option to repurchase up to 25% of the Initial Purchase volume
of 8,091,385 lb U(3)O(8) at the prevailing uranium spot price less an
aggregate discount of approximately USD6.55 million (the "Repurchase Option").
The Repurchase Option could only be exercised if the U(3)O(8) spot price
exceeded USD37.50 /lb for a period of 14 consecutive days (the "Pricing
Condition"), starting three years from 5 July 2018 and expiring on 30 June
2027 and was exercisable within 60 days of the Pricing Condition being met.
The Company had a corresponding option (the "Buyback Option") to purchase from
Kazatomprom all or a portion of the volume repurchased by Kazatomprom under
the Repurchase Option at the prevailing spot price.
The Pricing Condition was met in September 2021 and the following transactions
took place during the year in satisfaction of Repurchase Option and Buyback
Option rights and obligations:
- Purchase by Kazatomprom from Yellow Cake of 2,022,846 lb of U(3)O(8) at
USD43.25/lb less an aggregate discount of USD6.55 million, delivered on 22
November 2021; and
- Repurchase by Yellow Cake from Kazatomprom of the 2,022,846 lb of U(3)O(8) at
USD43.25/lb, delivered on 19 May 2022.
Following the exercise of the option detailed above, the uranium derivative
liability had been settled as at 31 March 2022 and has therefore been
de-recognised (31 March 2021: fair value of USD3,361,000).
In respect of the above sale of uranium to Kazatomprom under the Repurchase
Option, an additional discount of USD3.00/lb to the prevailing daily spot
price of USD46.25/lb on the date that the transaction took place (as published
by UxC, LLC), or USD6,068,538 in aggregate, was recognised in the statement of
comprehensive income. This discount represents the cumulative disposal
proceeds of USD87,488,089 less the carrying value at the date of sale of
USD93,556,628, being the discount to the spot price (and therefore the
carrying value) that was realised on the sale. The discount represents the
difference in the spot price prevailing when the Repurchase Option was
exercised and the date that the Repurchase Option transaction completed.
The Company exercised its Buyback Option with Kazatomprom under the terms of
which it bought back the full 2,022,846 lb of U(3)O(8) from Kazatomprom on 19
May 2022 at USD43.25/lb and recovered the above discount of USD3.00/lb as the
prevailing spot price increased to USD47.40/lb on 19 May 2022. As such no gain
or loss overall has occurred in respect of the exercise of the Repurchase and
Buyback Options other than settling the derivative liability.
8. Trade and other payables
As at As at
31 March 2022 31 March 2021
USD'000 USD'000
Uranium purchase consideration - 2,995
Other payables and accruals 970 626
Total 970 3,621
9. Share capital
Authorised:
10,000,000,000 ordinary shares of GBP0.01
Issued and fully paid:
Ordinary shares
Number GBP'000 USD'000
Share capital as at 31 March 2020 88,215,716 882 1,164
Shares issued in the year 44,525,014 445 621
Share capital as at 31 March 2021 132,740,730 1,327 1,785
Shares issued in the year 55,000,000 550 759
Share capital as at 31 March 2022 187,740,730 1,877 2,544
The number of shares in issue above includes the 4,069,498 Treasury shares -
refer to Note 11.
Share premium
GBP'000 USD'000
Share premium as at 31 March 2020 169,956 224,437
Proceeds of issue of shares 98,846 137,879
Share issue costs (2,512) (3,504)
Share premium as at 31 March 2021 266,290 358,812
Proceeds of issue of shares 171,150 235,818
Share issue costs (4,684) (6,449)
Share premium as at 31 March 2022 432,756 588,181
The Company has one class of shares which carry no right to fixed income.
On 21 June 2021, the Company issued a total of 23,947,009 new ordinary shares
to existing and new institutional investors and 1,052,991 new ordinary shares
to retail investors, at a price of GBP2.50 per share, raising gross proceeds
of GBP62,500,000 (USD equivalent: 86,906,250). The Company incurred listing
expenses, comprising of commissions and professional adviser fees totalling
USD2,606,464 of which USD2,362,648 have been taken to the share premium
account. Additional placing costs of USD243,816 have been recognised in the
statement of comprehensive income. Net proceeds from the placing were
GBP60,624,895 (USD equivalent: 84,083,736).
On 29 October 2021, the Company issued a total of 30,000,000 new ordinary
shares to existing and new institutional investors, at a price of GBP3.64 per
share, raising gross proceeds of GBP109,200,000 (USD equivalent: 149,669,520).
The Company incurred listing expenses, comprising of commissions and
professional adviser fees totalling USD4,376,355 of which USD4,085,717 have
been taken to the share premium account. Additional placing costs of
USD290,638 have been recognised in the statement of comprehensive income. Net
proceeds from the placing were GBP106,006,979 (USD equivalent: 145,694,325).
10. Share-based payments
The Company implemented an equity-settled share-based compensation plan in
2019 which provides for the award of long-term incentives and an annual bonus
to management personnel. During the year USD220,285 was recognised in the
statement of comprehensive income in relation to share-based payments (31
March 2021: USD138,887).
Annual bonus
The annual bonus award in relation to a financial year is usually granted
following publication of the Company's audited annual results for that
financial year. In respect of the 2021 and 2022 financial years, annual
bonuses were paid in cash and no share-based annual bonus awards were made.
The annual bonus awards in respect of the year to 31 March 2020 were granted
in the form of nominal-cost options, which usually would vest and become
exercisable no earlier than one year after grant. The annual bonus award in
respect of the year ended 31 March 2020, based on performance criteria, was
based on commercial targets and was reduced from the maximum award of 100% of
base salary to 70%. This was primarily due to the uncertainties that prevailed
in mid-2020, arising from the COVID-19 pandemic and the resulting impact on
the global economy.
The 2020 annual bonus award was split into two tranches of 35% of base salary
each, both with a vesting date of 8 July 2021, with the first award made on
8 July 2020 and the second deferred until after the Company's Annual General
Meeting on 2 September 2020, having regard to the uncertainty created by
COVID-19 at the time of finalisation of the 2020 awards. The grant of the
second tranche was made on 26 July 2021, after the Company's closed period and
therefore after the vesting date. Set out below is the summary of the annual
bonus awards as granted to directors granted on 8 July 2020 and 26 July 2021
respectively:
Director Grant date Exercise date Exercise price Opening balance Granted Exercised Expired/ forfeited/ Closing balance
other
A Liebenberg 08/07/2020 26/07/2021 GBP0.01 27,392 - (27,392) - -
C Whittall 08/07/2020 26/07/2021 GBP0.01 21,913 - (21,913) - -
A Liebenberg 26/07/2021 26/07/2021 GBP0.01 - 20,879 (20,879) - -
C Whittall 26/07/2021 26/07/2021 GBP0.01 - 16,703 (16,703) - -
Total 49,305 37,582 (86,887) - -
The options exercised on 26 July 2021 were settled with 86,887 shares held in
treasury.
A Black-Scholes option pricing model was used to determine the fair value of
the first tranche of bonus awards. As the second tranche of bonus options was
granted after the vesting date, for the reasons set out above, their fair
value is calculated as the share price at the grant date less the exercise
price (rather than based on a Black-Scholes option pricing model); as the
second tranche bonus options were exercisable upon grant, their intrinsic
value on the grant date was equal to the market value of the underlying shares
on that date.
The valuation model inputs used to determine the fair value at the grant date
are as follows:
Grant date Exercise date Share price at grant date Exercise price Expected volatility Risk-free interest rate Fair value at grant date Fair value at grant date*
08/07/2020 26/07/2021 GBP2.26 GBP0.01 30% (0.01%) GBP110,690 USD145,690
26/07/2021 26/07/2021 GBP3.29 GBP0.01 n/a n/a GBP123,081 USD161,999
* The USD equivalent is derived using the FX rate as at the date of
reporting.
Long-term incentive
The long-term incentive is in the form of options granted to acquire shares in
the Company that will become exercisable not earlier than three years after
grant (save in certain circumstances including a change of control of the
Company) and will expire 10 years after the date of grant. The option exercise
price has been determined to be the net asset value per share at the grant
date of the shares placed under option. The options are subject to a
post-vesting holding period of not less than two years (although sufficient
shares may be sold on exercise in order to meet tax liabilities arising at
vesting). Prior to 1 April 2022, the exercise price of the options multiplied
by the number of options granted was capped at 125% of salary. Each option
gives the right to acquire one share in the Company. The long-term incentive
award relating to a financial year is usually granted at the beginning of that
financial year. The exercise of each of the long-term incentive options is
conditional upon the share price as at the exercise date being equal to or
greater than the net asset value per share of the Company as at the date of
grant.
The Remuneration Committee resolved to review the long-term incentive plan and
therefore no grant of long-term incentive options was made in respect of the
2022 financial year.
Set out below is the summary of the long-term incentive options awarded on 24
February 2020 in relation to the year ended 31 March 2020 and on 8 July 2020
in relation to the year ended 31 March 2021:
Director Grant date Vesting date Exercise price Opening balance Expired/ forfeited/ Closing balance
other
Granted Exercised
A Liebenberg 24/02/2020 24/02/2023 GBP2.13 84,480 - - - 84,480
C Whittall 24/02/2020 24/02/2023 GBP2.13 67,584 - - - 67,584
Total 152,064 152,064
Total fair value as at the grant date* USD 60,644
* The USD equivalent is derived using the FX rate as at the date of
reporting.
Director Grant date Vesting date Exercise price Opening balance Granted Exercised Expired/ forfeited/ Closing balance
other
A Liebenberg 08/07/2020 08/07/2023 GBP2.88 78,262 - - - 78,262
C Whittall 08/07/2020 08/07/2023 GBP2.88 62,609 - - - 62,609
Total 140,871 140,871
Total fair value as at the grant date* USD 44,685
* The USD equivalent is derived using the FX rate as at the date of
reporting.
Subsequent to the grant of the 2020 and 2021 long term incentive awards, the
plan was amended such that the exercise price per share represents the
estimated net asset value per share on the grant date.
This has resulted in the exercise price of the options granted on 24 February
2020 being increased from GBP1.97 per share (being the average of the
mid-market closing price of the ordinary shares of the Company on AIM over the
five consecutive dealing days immediately preceding the grant date) to GBP2.13
per share (being the estimated net asset value per share of the Company on 24
February 2020). The exercise price of the long-term incentive options granted
on 8 July 2020 has also been increased from GBP2.18 per share (being the
average of the mid-market closing price of the ordinary shares of the Company
on AIM over the five consecutive dealing days immediately preceding the grant
date) to GBP2.88 per share (being the estimated net asset value per share of
the Company on 8 July 2020).
The exercise price for the long-term incentive options granted on 24 February
2020 was amended after the grant date such that the fair value of these
options was reduced, as measured immediately before and after this
modification. In accordance with IFRS 2, this reduction in fair value is not
taken into account and the Company will continue to measure the amount
recognised for services received as consideration for the incentive options,
based on the grant date fair value.
A Black-Scholes option pricing model was used to determine the fair value of
the long-term incentive options. The valuation model inputs used to determine
the fair value at the grant date are as follows:
Grant date Vesting date Share price at grant date Exercise price Expected volatility Risk-free interest rate Fair value at grant date Fair value at grant date
GBP
USD*
24/02/2020 24/02/2023 GBP1.95 GBP1.97 25% 0.40% GBP46,075 USD60,644
08/07/2020 08/07/2023 GBP2.26 GBP2.88 30% (0.08%) GBP33,950 USD44,685
* The USD equivalent is derived using the FX rate as at the date of
reporting.
Treasury shares
11.
Number GBP'000 USD'000
Treasury shares as at 31 March 2020 309,788 565 726
Purchased in the year 3,846,597 8,301 10,732
Treasury shares as at 31 March 2021 4,156,385 8,866 11,458
Exercise of bonus options (86,887) (185) (239)
Treasury shares as at 31 March 2022 4,069,498 8,681 11,219
During the year, options granted to executive management were exercised on 26
July 2021 and settled with 86,887 shares held in treasury. The reduction in
the value of treasury shares resulting from the exercise of bonus options has
been calculated based on the weighted average acquisition cost of the treasury
shares.
On 4 April 2022, Yellow Cake announced the initiation of a share buyback
programme to purchase up to USD3 million of the Company's Ordinary Shares over
30 calendar days commencing on 4 April 2022 (the "Programme"). Given that the
Company's shares traded at a material discount to its underlying net asset
value since mid-January this year, the Yellow Cake Board resolved to implement
a share buyback programme as a means of effectively acquiring exposure to
uranium at a discount to the commodity spot price. Shares were purchased when
the closing mid-market share price of the Company in any given day represented
a discount of 10% or more to the Company's pro formanet asset value at that
time. Under the Programme, following the year-end, the Company acquired
566,833 shares between 4 April and 6 May 2022, at a volume weighted average
purchase price of GBP4.15 per share or USD3.0 million in aggregate and at a
volume weighted average discount to the Company's pro formanet asset value of
10.4%.
12. Commissions, procurement and consultancy fees
308 Services Limited ("308 Services") provides procurement services to the
Company relating to the sourcing of U(3)O(8) and other uranium transactions
and in securing competitively priced converter storage services.
Under the terms of the agreement entered into between the Company and 308
Services on 30 May 2018, 308 Services is entitled to receive (i) a Holding Fee
comprised of a Fixed Fee of USD275,000 per calendar year plus a Variable Fee
equal to 0.275% per annum of the amount by which the value of the Company's
holdings of U(3)O(8) exceeds USD100 million and (ii) an Annual Storage
Incentive Fee equal to 33% of the difference between the amount obtained by
multiplying the Target Storage Cost (initially set at USD0.12 /lb per year) by
the volume of U(3)O(8) (in pounds) owned by the Company on 31 December of each
respective year and the total converter storage fees paid by the Company in
the preceding calendar year.
The Company considers Holding Fees and Storage Incentive Fees to be costs of
an ongoing nature. During the period the Company paid Holding Fees and Storage
Incentive Fees of USD 2,129,617 (31 March 2021: USD1,123,870) to 308 Services.
308 Services is also entitled to receive a commission equivalent to 0.5% of
the transaction value in respect of sale and purchase transactions completed
at the request of the Yellow Cake Board.
In addition, if the purchase price paid by the Company in respect of such a
purchase transaction is in the lowest quartile of the range of reported
uranium spot prices in the calendar year in which the transaction completed,
308 Services is entitled to receive, at the beginning of the following
calendar year, an additional commission of 0.5% of the value of the uranium
transacted. If the purchase price paid by the Company in respect of such a
purchase transaction is in the second lowest quartile of the range of reported
uranium spot prices in the calendar year in which the transaction completed,
308 Services is entitled to receive, at the beginning of the following
calendar year, an additional commission of 0.25% of the value of the uranium
transacted. If the purchase price is in the top half of the range for the
calendar year in which the transaction completed, no additional commission
will be payable to 308 Services.
During the period, commissions payable to 308 Services totalled USD1,884,453
(31 March 2021: USD282,296).
13. Other operating expenses
Year ended 31 March 2022 Year ended 31 March 2021
USD '000 USD '000
Professional fees 769 687
Management cash compensation and directors' fees 709 535
Other expenses 603 443
Auditor's fees 99 74
Total 2,180 1,739
14 Taxation
Year ended 31 March 2022 Year ended
31 March 2021
USD '000 USD '000
Tax expense for the year - -
Total - -
As the Company is managed and controlled in Jersey it is liable to be charged
tax at a rate of 0% under schedule D of the Income Tax (Jersey) Law 1961 as
amended.
15. Related party transactions
During the year, the Company incurred USD186,056 (31 March 2021: USD173,802)
of administration fees payable to Langham Hall Fund Management (Jersey)
Limited ("Langham Hall"). Emily Manning is an employee of Langham Hall and has
served as a Non-Executive Director of the Company since 31 March 2021, for
which she has received no Directors' fees. As at 31 March 2022, there were no
amounts due to Langham Hall (31 March 2021: USD nil).
The key management personnel are the Directors and there are no other
employees. Their remuneration is detailed in note 13 and represented within
'Other operating expenses' in the Statement of Comprehensive Income.
The following Directors own ordinary shares in the Company as at 31 March
2022:
Name Number of ordinary shares % of share capital
The Lord St John of Bletso* 26,302 0.01%
Sofia Bianchi 13,186 0.01%
The Hon Alexander Downer 29,925 0.02%
Emily Manning - -
Alan Rule 18,837 0.01%
Andre Liebenberg 121,478 0.06%
Carole Whittall 49,918 0.03%
Total 259,646 0.14%
* The Lord St John of Bletso's shares are held through African Business
Solutions Limited, in which he holds 100% of the Ordinary
Shares.
While the Non-Executive Directors hold shares in the Company, the holdings are
considered sufficiently small so as not to impinge on their independence.
16. Earnings per share
1 April 2021 1 April 2020
to to
31 March 2022 31 March 2021
Profit for the year (USD '000) 417,271 29,911
Weighted average number of shares during the year - Basic* 160,754,398 89,017,413
Weighted average number of shares during the year - Diluted* 161,046,530 89,308,071
Earnings per share attributable to the equity owners of the Company (USD):
Basic 2.60 0.34
Diluted 2.59 0.33
* The weighted average number of shares excludes treasury shares.
17. Events after the reporting date
The Company initiated a share buyback programme on 4 April 2022, following the
year-end, and acquired 566,833 shares between 4 April and 6 May 2022, at a
volume weighted average purchase price of GBP4.15 per share or USD3.0 million
in aggregate and at a volume weighted average discount to the Company's pro
formanet asset value of 10.4%.
As part of the "Buyback Option" detailed in note 7, Yellow Cake bought back
from Kazatomprom 2,022,846 lb of U(3)O(8) at a cost of USD43.25/lb or
USD87,488,090 in aggregate. This was received by the Company at the Cameco
storage facility in Canada on 19 May 2022.
Pursuant to Kazatomprom's offer of 26 October 2021, the Company entered into
an agreement with Kazatomprom to purchase 950,000 lb of U(3)O(8) for a total
consideration of USD45,201,000 (USD47.58/lb), which was delivered on 30 June
2022.
On 22 June 2022, the Company's shares were admitted to trading on the OTCQX,
the highest tier of the US over-the-counter market
1 . Based on the month-end spot price of USD30.65/lb published by UxC
LLC on 31 March 2021 and the daily spot price of USD57.90/lb published by UxC
LLC on 31 March 2022.
2 . During the financial year, Yellow Cake purchased 8.35 million lb
of U(3)O(8) and purchased an additional 0.95 million lb of U(3)O(8)
post-year-end. Under option arrangements entered into in 2018, the Company
disposed of 2.37 million lb of U(3)O(8) during the financial year and
repurchased 2.02 million lb of this U(3)O(8) post year-end.
3 . Net asset value per share as at 31 March 2022 is calculated
assuming 187,740,730 ordinary shares in issue less 4,069,498 shares held in
treasury, the Bank of England's daily USD/GBP exchange rate of 1.3162 as at 31
March 2022 and the daily spot price published by UxC LLC on 31 March 2022.
4 . Based on the daily spot price of USD45.75/lb published by UxC LLC
on 15 July 2022
5 . Average cost calculated based on a first-in, first-out
methodology.
6 . World Nuclear News; "Extended Operation of Two Belgian Reactors
Approved"; 21 March 2022.
7 . Bloomberg, "New reactor spotlights China's push to lead way in
nuclear power", 21 December 2021.
8 . US Department of Energy '2020 Uranium Marketing Annual Report',
May 2021.
9 . Euratom Supply Agency Annual Reports 2016 - 2020.
10 . Cameco 2021 Management's discussion and analysis, 9 February 2022.
11 . Net asset value per share on 31 March 2022 is calculated assuming
187,740,730 ordinary shares in issue less 4,069,498 shares held in treasury,
the Bank of England's daily USD/GBP exchange rate of 1.3162 on 31 March 2022
and the daily spot price published by UxC LLC on 31 March 2022.
12 . Net asset value per share on 15 July 2022 is calculated assuming
187,740,730 ordinary shares in issue less 4,636,331 shares held in treasury, a
USD/GBP exchange rate of 1.1855 and the daily spot price published by UxC LLC
on 15 July 2022.
13 . As at 31 March 2022, Yellow Cake held 15,832,755 lb of U(3)O(8).
Adjustments for purchases completed after 31 March 2022 include the addition
of 2.02 million lb of U(3)O(8) bought back from Kazatomprom for a cash
consideration of US$87.5 million and received on 19 May 2022, and 0.95 million
lb of U(3)O(8) purchased from Kazatomprom for a cash consideration of US$45.2
million and received on 30 June 2022.
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