REG - Yellow Cake PLC - Annual Results for the year ended 31 March 2023
19/07/2023 07:00
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RNS Number : 4369G Yellow Cake PLC 19 July 2023
19 July 2023
Yellow Cake plc ("Yellow Cake" or the "Company")
Annual Results for the year ended 31 March 2023
Highlights
- Continued improvement in the outlook for U(3)O(8) despite a decrease in the
spot price of 12.5% from USD57.90/lb as at 31 March 2022 to USD50.65/lb as at
31 March 2023. 1 (#_ftn1)
- Increase of 4% in the value of the Company's holding of U(3)O(8) during the
financial year to USD952.5 million as at 31 March 2023, as a result of a net
increase in the volume of uranium held from 15.83 million lb of U(3)O(8) to
18.81 million lb of U(3)O(8), offset by the depreciation in the uranium price.
- Loss after tax of USD102.9 million for the year ended 31 March 2023 (2022:
profit after tax of USD417.3 million) primarily due to a 12.5% reduction in
the spot price and leading to a USD96.9 million decrease in the fair value of
the Company's uranium holdings (2022: USD433.3 million gain).
- Net asset value of USD1,035.3 million (GBP4.23 per share) 2 (#_ftn2) as at 31
March 2023 (2022: USD1,069.0 million (GBP4.42 per share)).
- Raised gross proceeds of USD74.3million (GBP61.8 million) during the financial
year through a share placing in February 2023.
- Applied the raise proceeds to exercise the 2022 Kazatomprom option to acquire
a further 1.35 million lbs of U(3)O(8). This additional uranium is expected to
be received by 30 September 2023. On receipt, Yellow Cake's total holding of
20.16 million lbs will represent approximately 15% of 2022 global uranium
production.(( 3 (#_ftn3) ))
- Estimated proforma net asset value on 12 July 2023 was USD1,133.4 million or
GBP4.40 per share 4 (#_ftn4) , assuming 20.16 million lb of U(3)O(8) valued
at the daily price of USD55.40/lb published by UxC LLC on 12 July 2023, cash
and cash equivalents of USD84.4 million and net current liabilities of USD1.6
million as at 31 March 2023, less cash consideration of USD66.0 million to be
paid to Kazatomprom following the expected delivery of 1.35 million lb of
U(3)O(8) by 30 September 2023.
- Concluded a USD3 million share buyback programme, 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 18 July 2023 (not including 1.35
million lb of U(3)O(8) to be received post year-end) acquired at an average
cost of USD31.11/lb 5 (#_ftn5) .
Andre Liebenberg, CEO of Yellow Cake, said;
"We continue to deliver on our strategy to buy and hold physical uranium. In
February we completed an oversubscribed placing to raise £62 million which we
immediately used to partially exercise our 2022 purchase option with
Kazatomprom, buying an additional 1.35 million pounds of uranium, which upon
delivery later this year will take our total holding to over 20 million pounds
for the first time.
"As global nuclear power accelerates and resultant uranium market fundamentals
continue to strengthen, the outlook for the uranium price becomes increasingly
compelling, and this in turn provides considerable opportunity for value
creation for our shareholders. Our confidence in the outlook for the uranium
price is based on the consistent theme of constrained supply and steadily
growing demand. On the supply side, although the price of uranium has risen,
it is still below the levels at which it is economically viable for new
projects to be developed. We are also seeing challenged supply chains
impacting existing producers, with some buying in the spot market to fulfil
commitments instead of meeting those obligations through production. Meanwhile
the sentiment around nuclear energy continues to improve as it becomes widely
accepted as the key to achieve our net zero targets. China's new five-year
plan means there will be a 40 per cent increase in their nuclear capacity by
2025, while grid problems across the world highlight the need for a reliable
and low-carbon source of baseload power."
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
Communications Adviser: 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 accidents, 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
Yellow Cake was established in 2018 to provide investors with an opportunity
to realise value from long-term exposure to the uranium spot price in a
low-risk, low-cost, liquid and publicly-quoted vehicle. The supply demand
characteristics that drove the steady rise in the uranium price since then
remain as relevant today and continue to make for a compelling investment
case.
Nuclear power is now widely accepted as having a key role in the path to
global decarbonisation due to its low carbon lifecycle emissions, reliable
baseload profile and good fit with renewable energy sources. In the past year,
Russia's invasion of Ukraine not only highlighted the need for greater energy
security, but also accelerated the shift away from fossil fuels, further
strengthening the underlying fundamentals for nuclear energy.
As a result, the past year saw an acceleration of new build intentions,
particularly from China, and a broader appreciation of the value of existing
nuclear fleet infrastructure, with life extensions in the US and Europe, as
well as further restarts in Japan.
At the same time as future demand continues to increase, supply remains
heavily constrained due to years of underinvestment, supply chain challenges
and cost inflation. The world is already consuming more uranium than it
produces and the previous overhang from global stockpiles has significantly
eroded.
A more recent emerging theme is the shift by Western utilities to diversify
nuclear fuel sources to reduce dependence on Russia and support non-Russian
capacity. These new long‑term contracts at higher price levels are necessary
to support increased production and project expansions throughout the nuclear
fuel cycle, presenting another strong rationale for the long-term holding of
uranium.
Realising value for investors
Yellow Cake actively pursues strategies to support positive returns for
investors. The Company's 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.
When the shares trade above net asset value, we have an opportunity to raise
capital to invest in additional uranium. In February 2023, Yellow Cake took
advantage of a market opportunity, placing 15 million new ordinary shares in
an upsized placing with existing and new institutional investors. We were
delighted with the strong response to our placing, which supports our view
that this remains a compelling time to invest in uranium.
The proceeds were used to acquire a further 1.35 million lbs of U(3)O(8),
which is expected to be received in September 2023. On receipt, our total
holding of 20.2 million lbs will represent approximately 15% of 2022 global
production.
Yellow Cake continues to explore opportunities to increase accessibility of
shares to global investors. During the year, the shares commenced trading on
the OTCQX Best Market, the highest tier of the US over-the-counter market.
Yellow Cake's Board of Directors ("the Board") reserves the right to declare a
dividend, as and when deemed appropriate, however, the Company does not
currently expect to declare dividends on a regular or fixed basis. The Board
is not declaring a dividend for this financial year.
Yellow Cake is committed to good governance, high ethical standards and
responsible ESG practices
The Board of Directors acknowledges that Yellow Cake's ability to create
long-term value depends on the Company's ability to responsibly manage its
environmental, social and governance impacts and performance. We welcome the
increased global attention on climate change and mitigating the effects of
global warming.
To the degree appropriate to the size and nature of Yellow Cake's business,
the Company applies the principles and provisions of the UK Corporate
Governance Code 2018 (the "Code").
We are committed to good governance and high ethical standards, and have
zero-tolerance for bribery, corruption and unethical practices. Policies and
measures are in place to prevent bribery, modern slavery, inducements and
money laundering, and to ensure compliance with economic sanctions. These
include a whistleblowing policy. The operational and performance requirements
for employees, directors, business partners, contractors and advisers are
established in the Code of Conduct, which also promotes the Company's key
values of dignity, diversity, business integrity, compliance and
accountability.
Ensuring effective oversight
Effective governance and oversight are supported by the small scale and
simplicity of the organisation, which also facilitate good communication.
Regular review and update of compliance policies ensure continued alignment
with the latest developments in corporate governance requirements and
guidelines.
The Board plays an active role in overseeing the Company's activities and met
eight times during the year to 31 March 2023. 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.
Emily Manning resigned as a Non-Executive Director in November 2022 and was
replaced on the Board by Claire Brazenall. We thank Ms Manning for her
contribution to the Company during her time on the Board.
While the Company's direct social and environmental impacts are minimal, we
conduct appropriate due diligence on suppliers and business partners to ensure
that they share our commitment to responsible business practices. We
commission an annual external and independent assessment of our ESG practices
and those of our primary suppliers.
Stakeholder engagement
The Company proactively facilitates opportunities for dialogue with
stakeholders in recognition of the importance of regular engagement. Feedback
from these engagements is regularly communicated to the Board and informs its
deliberations.
Day-to-day queries raised by stakeholders are addressed by the Executive
Directors 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.
Appreciation
I would like to express my gratitude to my fellow Directors for their
unwavering support and invaluable contributions throughout the year. On behalf
of the Board, I thank our shareholders and investors for their significant
interest in the Company.
Yellow Cake is well positioned to continue to drive shareholder value for the
long term. We remain very excited about the outlook for uranium and confident
in our strategy and investment case.
The Lord St John of Bletso
Chairman
CEO statement
The fundamental uranium supply and demand trends of the last few years
continued to strengthen in 2022. We have seen demand driven by
de-carbonisation and energy transition goals; accelerated reactor build
programmes, reactor life extensions and small modular reactor developments; a
significant jump in long-term contracting; and a focus on energy security and
energy independence post Russia's invasion of Ukraine. Although the direct
impact on uranium markets of Russia's invasion of Ukraine has been milder than
its effects on fossil fuel prices and supplies, it has added risk to the
global uranium fuel cycle and driven a de-globalisation of demand between
Russian and non-Russian sources. Against this backdrop of improving demand
fundamentals, we have yet to see any meaningful supply response.
Forecast demand continues to outstrip supply
Nuclear power is now widely recognised as a key part of efforts to achieve
future carbon commitments while meeting the forecast growth in energy demand.
This has rehabilitated perceptions of nuclear power and many countries have
demonstrated the positive shift towards nuclear in restarts and lifetime
extensions of existing facilities, as well as plans for new builds.
Advanced reactors and SMRs are making encouraging progress towards
commercialisation with increased support from investors, unlocking new
opportunities for nuclear by reducing upfront costs and construction times.
Although these facilities are smaller than existing reactors, upfront fuel
requirements to support SMRs' longer refuelling cycles suggest increased
uranium demand in the medium term.
As the outlook for future uranium demand has strengthened, uranium supply has
lagged for many years with low uranium prices leading to major producers
idling uneconomic operations or curtailing production. Low prices also
disincentivised investment in new resources at the same time as several
significant operations closed permanently.
More recently, COVID-19 affected production, with delays to wellfield
developments in 2021 evident in lower production in 2022. Ongoing supply chain
challenges have exacerbated delays and limited access to key equipment and
materials, including sulfuric acid.
The overhang in global uranium inventories has eroded in the last few years,
removing the buffer between demand and the spot and term markets.
Several producers have announced restarts of idled production, but these will
take time to reach full capacity and are insufficient to meet the shortfall.
More capital-intensive greenfields developments will be required. However, the
challenges these new projects face, which include lack of funding, delays due
to obtaining permits, unavailability of skills, material and equipment, as
well as inflationary increases across the project supply chain, suggest that
further price increases will be necessary to incentivise investment in new
projects.
War in Ukraine affects the entire front end of the uranium fuel cycle
Yellow Cake's operations, financial condition and ability to purchase and take
delivery of U(3)O(8) from any party remain unaffected by Russia's invasion.
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. We
do not anticipate any restrictions on being able to make further purchases
under the option agreement with Kazatomprom. Payment either follows delivery
or is managed via escrow, so there is no credit risk for Yellow Cake attached
to these deliveries.
However, the war set in motion a geopolitical realignment in energy markets
that emphasises the increasingly important role for nuclear power as a source
of secure and affordable energy.
Russia supplies approximately 14% of global uranium concentrates, 27% of
conversion and 46% of enrichment, highlighting the security of supply risk in
the context of the growing primary supply gap and shrinking secondary
supplies.
Uranium from Kazakhstan and Uzbekistan (together comprising more than 50% of
annual production) has historically been shipped to Western markets through
the Russian port of St Petersburg. These shipments could be affected by
disruptions along the route similar to those that affected oil exports from
Kazakhstan during the year, or by future sanctions against Russian companies,
facilities, shippers and sea vessels. Ahead of official sanctions, many
utilities in the US, Europe and elsewhere are increasingly looking to source
from non-Russian suppliers.
While Kazatomprom has successfully made shipments using the alternative
Trans-Caspian International Transport Route during the year, concerns remain
about the cost and time it would take to ship significant volumes through this
channel.
Spot market volumes decrease while term contracting rises significantly
After record spot market volumes in the 2021 calendar year (102.4 million lb),
volumes decreased by 40% to 60.8 million lb in CY2022. The decrease was mainly
due to reduced buying by financial funds (including Yellow Cake) and limited
demand from primary producers and junior uranium companies as production
started to resume. Volumes decreased slightly in the first quarter of calendar
2023.
The uranium spot market price started 2022 at USD42.05/lb and ended the year
14% up at USD48.00/lb, after hitting a high in April 2022 of USD63.75/lb, the
highest level since 2011.
The spot price closed at USD 50.65/lb on 31 March 2023, 12.5% down on 31 March
2022.
Contracting activity in the long-term market increased 58% in 2022, reaching
114 million lb (2021: 72 million lb), a significant increase on the annual
average of 72.6 million lb of the previous nine years. Indicated term prices
increased 32% to USD51.00/lb. This increase in activity was primarily driven
by utilities seeking to meet short-term needs following many years of limited
long-term contracting and by the need to address longer-term concerns over
future uranium supply and increased geopolitical risk. Identified potential
2023 term contracting already exceeds 2021 volumes and could even exceed 2022
volumes as utilities respond to increasing risks in the market. These include
the impact of potential sanctions on Russian supplies, uncertainty about the
long-term outlook for uranium supply and spot market volatility.
The spikes in conversion and enrichment prices reflect the constraints for
utilities that want to move away from Russian sources. While additional
non-Russian conversion and enrichment capacity will take several years to come
to market if higher prices are sustained, a short-term switch from
underfeeding to overfeeding could help to meet demand, but will require
additional UF6 and U(3)O(8).
Increased holdings of U(3)O(8)
During the year, we took delivery of a further 3 million lb of uranium
contracted in the 2022 financial year. The decline in global stock market
indices resulted in Yellow Cake's shares trading at a discount to net asset
value for most of the year, constraining our ability to raise equity to
acquire more U(3)O(8) without diluting existing shareholders.
When markets turned in January 2023, we took the opportunity to raise USD75
million (before costs). This was applied to partially utilise the 2022
Kazatomprom option and contract for a further 1.35 million lb, to be delivered
in September 2023, bringing our total holding after receipt to 20.2 million
lb. The full 2023 Kazatomprom option to acquire a further USD100 million
remains in place.
Outlook
Global financial market conditions may well result in short- term spot price
volatility, but the longer term fundamentals of the uranium market continue to
strengthen. These include the reduction in "mobile" near-term uranium
inventories, the significant increase in contracting activity in the uranium
term market and the heightened focus on energy security. Low prices have led
to supply concentration by origin and a growing primary supply gap.
Yellow Cake is well positioned to deliver on our stated strategy of realising
opportunities to create value for investors by increasing our U(3)O(8)
holdings when the share price is trading above net asset value.
Andre Liebenberg
Chief Executive Officer
CFO's review
"During the financial year, the value of Yellow Cake's uranium holding
increased 4% as a result of a 3.0 million lb increase in its holdings,
partially offset by a decrease in the uranium price. At the beginning of the
financial year, the Company's shares traded at a significant discount to net
asset value. Yellow Cake completed a share buyback programme in the first
quarter of the financial year as a means of effectively acquiring exposure to
uranium at a discount to the commodity spot price. By the last quarter of the
financial year, the discount had closed, putting the Company in a position to
successfully complete a USD74.3 million share placing and apply the proceeds
to the purchase of an additional 1.35 million lb of U(3)O(8) which is expected
to be received in September 2023."
I am pleased to present the following audited financial statements for the
year to 31 March 2023 and report a number of salient features:
- Uranium holding of 18.81 million lb of U(3)O(8) valued at USD952.5 million as
at 31 March 2023 (15.83 million lb of U(3)O(8) valued at USD916.7 million at
31 March 2022).
- Gross proceeds of USD74.3 million from a share placing in February 2023,
applied to the purchase 1.35 million lb of U(3)O(8) at a price of USD48.90/lb
and an aggregate consideration of USD66.0 million. We expect to take delivery
in September 2023.
- Completed two purchases totalling 2.97 million lb of U(3)O(8) during the
financial year, increasing the Company's holdings to 18.8 million lb of
U(3)O(8).
- Loss after tax of USD102.9 million (2022: Profit of USD417.3 million), driven
by a fair value loss of USD96.9 million on the Company's investment in
uranium.
Uranium transactions
Yellow Cake started the financial year with a holding of 15.83 million lb of
U(3)O(8). In the first half of the financial year, the Company took delivery
of 2.97 million lb of U(3)O(8) under two uranium purchase agreements, which
were funded with cash at bank:
- The Company exercised its option with Kazatomprom to buy back 2,022,846 lb of
U(3)O(8) from Kazatomprom at a cost of USD43.25/lb or USD87.5 million in
aggregate consideration. This was received by the Company at the Cameco
storage facility in Canada on 19 May 2022 in accordance with the agreed
delivery schedule.
- 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) at a price of
USD47.58/lb for a total consideration of USD45.2 million. This was received by
the Company at the Cameco storage facility in Canada on 30 June 2022 in
accordance with the agreed delivery schedule.
The uranium price started to strengthen early in 2023 and in February, Yellow
Cake took the opportunity to raise USD74.3 million through a share placement.
The proceeds will be applied to partially utilise the Company's 2022
Kazatomprom option by purchasing 1.35 million lb of U(3)O(8) at an average
price of USD48.90/lb and an aggregate consideration of USD66.0 million. This
uranium purchase transaction is expected to complete in September 2023.
As at 31 March 2023, the Company's uranium investment comprised 18.81 million
lb of U(3)O(8), a net increase of 3.0 million lb of U(3)O(8) during the
financial year. Following completion of the agreed purchase of 1.35 million lb
of U(3)O(8) the Company's uranium investment is expected to comprise 20.16
million lb of U(3)O(8).
Uranium-related gains and losses
Yellow Cake made a total uranium-related loss of USD96.9 million in the year
to 31 March 2023 as a result of a decrease in the fair value of the Company's
uranium investment. In 2022, the company made a total uranium-related gain of
USD433.4 million, comprising an increase in fair value of USD433.3 million and
USD0.1 million in location swap fees.
The decrease in the fair value of the Company's uranium investment was
attributable to the decrease in the spot price from USD57.90/lb to
USD50.65/lb. This was partially offset by an increase in the volume of uranium
held.
Operating performance
Yellow Cake delivered a loss after tax for the year of USD102.9 million (2022:
profit of USD417.3 million). Expenses for the year were USD7.0 million (2022:
USD6.9 million).
Yellow Cake's Management Expense Ratio for the year (total operating expenses
of a recurring nature, excluding commissions and equity offering expenses,
expressed as an annualised percentage of average daily estimated net asset
value during the period) was 0.68% (31 March 2022: 0.65%).
Share buyback programme
After a period in which the Company's shares traded at a material discount to
its underlying net asset value, Yellow Cake implemented a share buyback
programme as a means of effectively acquiring exposure to uranium at a
discount to the commodity spot price. In total, the Company acquired 566,833
shares between 4 April and 6 May 2022, for a total consideration of USD3.0
million, at a volume weighted average price of GBP4.15 pence per share and a
volume weighted average discount to 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 placing
On 2 February 2023, the Company issued 15 million new ordinary shares to
existing and new institutional investors at a price of GBP4.12 per share. The
Company raised net proceeds of GBP60.0 million (USD equivalent: USD72.1
million net of costs of USD2.2 million).
Balance sheet and cash flow
The value of Yellow Cake's uranium holding increased by 4% to USD952.5 million
at year-end compared to USD916.7 million at the end of the 2022 financial
year, as a result of a net increase in the volume of uranium held, partially
offset by the decrease in the uranium price. As at 31 March 2023, Yellow Cake
had cash of USD84.4 million (2022: USD153.1 million). The Company has
allocated USD66.0 million to purchase 1.35 million lb of U(3)O(8) after the
year-end, to be paid on delivery.
Yellow Cake's net asset value at 31 March 2023 was GBP4.23 6 (#_ftn6) per
share or USD1 035.3 million, consisting of 18.8 million lb of U(3)O(8) valued
at a spot price of USD50.65/lb, cash and cash equivalents of USD84.4 million
and other net current liabilities of USD1.6 million.
Yellow Cake's estimated proformanet asset value on 12 July 2023 was USD1,133.4
million or GBP4.40 per share 7 (#_ftn7) , assuming 20.16 million lb of
U(3)O(8) valued at the daily price of USD55.40/lb published by UxC LLC on 12
July 2023, cash and cash equivalents of USD84.4 million and net current
liabilities of USD1.6 million as at 31 March 2023, less cash consideration of
USD66.0 million to be paid to Kazatomprom following the expected delivery of
1.35 million lb of U(3)O(8) by 30 September 2023.
Carole Whittall
Chief Financial Officer
Financial statements
Statement of Financial Position
As at As at
31 March 2023 31 March 2022
Notes USD '000 USD '000
ASSETS:
Non-current assets
Investment in uranium 4 952,504 916,717
Total non-current assets 952,504 916,717
Current assets
Trade and other receivables 5 324 130
Cash and cash equivalents 6 84,428 153,136
Total current assets 84,752 153,266
Total assets 1,037,256 1,069,983
LIABILITIES:
Current liabilities
Trade and other payables 7 (1,930) (970)
Total current liabilities (1,930) (970)
Total liabilities (1,930) (970)
NET ASSETS 1,035,326 1,069,013
EQUITY
Attributable to the equity owners of the Company
Share capital 8 2,724 2,544
Share premium 8 660,203 588,181
Share-based payment reserve 9 166 122
Treasury shares 10 (14,216) (11,219)
Retained earnings 386,449 489,385
Total equity 1,035,326 1,069,013
The financial statements of Yellow Cake plc and the related notes were
approved by Directors on 18 July 2023 and were signed on its behalf by:
Andre Liebenberg
Chief Executive Officer
Statement of Comprehensive Income
1 April 2022 1 April 2021
to 31 March 2023 to 31 March 2022
Notes USD '000 USD '000
Uranium investment (losses)/gains
Fair value movement of investment in uranium 4 (96,902) 433,274
Uranium swap income 4 - 100
Fair value movement of uranium derivative liability - (3,193)
Discount to spot price on disposal 4 - (6,058)
Uranium investment (losses)/gains (96,902) 424,123
Expenses
Share-based payments 9 (44) (220)
Equity offering expenses 8 (144) (534)
Commission on uranium transactions 11 (226) (1,884)
Procurement and market consultancy fees 11 (3,092) (2,130)
Other operating expenses 12 (3,466) (2,180)
Total expenses (6,972) (6,948)
Bank interest income 576 11
Gain on foreign exchange 362 85
(Loss)/profit before tax attributable to the equity owners of the Company (102,936) 417,271
Tax expense 13 - -
(Loss)/profit and total comprehensive income for the year after tax (102,936) 417,271
attributable to the equity owners of the Company
Basic (loss)/earnings per share attributable to the equity owners of the 15 (0.56) 2.60
Company (USD)
Diluted (loss)/earnings per share attributable to the equity owners of the 15 (0.56) 2.59
Company (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 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 8 759 235,818 - - - 236,577
Share issue costs 8 - (6,449) - - - (6,449)
Share-based payments 9 - - 220 - - 220
Exercise of bonus option 10 - - (239) 239 - -
As at 31 March 2022 2,544 588,181 122 (11,219) 489,385 1,069,013
Total comprehensive income after tax for the year - - - - (102,936) (102,936)
Transactions with owners:
Shares issued 8 180 74,072 - - - 74,252
Share issue costs 8 - (2,050) - - - (2,050)
Share-based payments 9 - - 44 - - 44
Purchase of own shares 10 - - - (2,997) - (2,997)
As at 31 March 2023 2,724 660,203 166 (14,216) 386,449 1,035,326
Statement of Cash Flows
1 April 2022 1 April 2021
to 31 March 2023 to 31 March 2022
Notes USD '000 USD '000
Cash flows from operating activities
(Loss)/profit before tax (102,936) 417,271
Adjustments for:
Discount to spot price on disposal 4 - 6,058
Change in fair value of investment in uranium 4 96,902 (433,274)
Change in fair value of uranium derivative liability - 3,193
Share-based payments 9 44 220
Gain on foreign exchange (362) (85)
Interest income (576) (11)
Operating cash out flows before changes in working capital (6,928) (6,628)
Changes in working capital:
Increase in trade and other receivables (190) (11)
Increase/(decrease) in trade and other payables 1,369 (2,607)
Cash used in operating activities (5,749) (9,246)
Interest received 576 11
Cash used in operating activities (5,173) (9,235)
Cash flows from investing activities:
Purchase of uranium 4 (132,689) (284,890)
Proceeds of sale of uranium 4 - 90,934
Net cash used in investing activities (132,689) (193,956)
Cash flows from financing activities:
Proceeds from issue of shares 8 74,252 236,577
Issue costs paid 8 (2,050) (6,449)
Share buyback programme (2,997) -
Net cash generated from financing activities 69,205 230,128
Net (decrease)/increase in cash and cash equivalents during the year (68,657) 26,937
Cash and cash equivalents at the beginning of the year 153,136 126,159
Effect of exchange rate changes (51) 40
Cash and cash equivalents at the end of the year 84,428 153,136
Notes to the Financial Statements
For the year ended 31 March 2023
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 Gaspé House, 66-72
The Esplanade, 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") as issued by the International
Accounting Standards Board ("IASB").
In accordance with Section 105 of The Companies (Jersey) Law 1991, the Company
confirms that the financial information for the period ended 31 March 2023 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 2023 have been audited
and approved, but have not yet been filed.
The Company's audited financial statements for the period ended 31 March 2023
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 18 July 2023.
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 that are relevant to
the financial statements of the Company.
Going concern
The Directors, having considered the Company's objectives and available
resources along with its projected income and expenditure for at least 12
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 audited financial statements.
The Board continues to monitor the ongoing impact of the conflict in Ukraine
and sanctions imposed against Russia and Belarus on the Company's activities,
the uranium industry, and the world economy.
After taking into account of the Company's cash balance of USD84.4 million at
year-end and of its post year-end commitments to purchase USD66.0 million of
U(3)O(8), the Company considered that, as at 31 March 2023, it had sufficient
working capital to meet approximately 18 months of operating expenses before
it would need to raise additional funds. Further details can be found in note
4 of these financial statements. The Company has no debt or hedge liabilities
on its balance sheet.
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 daily 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.
Share capital
The Company's ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of shares are recognised in share premium
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 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.
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 2022:
USDnil).
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 USD47,625,185 (year ended 31 March 2022:
USD45,835,826. Likewise, if the value rose by 5% the profit after tax would
have increased by USD47,625,185 (year ended 31 March 2022: USD45,835,826).
Economic risk
Geopolitical events that occurred in Russia-Ukraine during the Company's
financial year have not had a material impact to date on the Company's
operations, nor affected its financial position. 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 has agreed to purchase 1,350,000 lb of U(3)O(8) under its
agreement with Kazatomprom (the "Framework Agreement") and expects to take
delivery at the Cameco storage facility in Canada by 30 September 2023.
Payment will be 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 end customers and the Company does not
anticipate any material delays to the delivery dates indicated above. 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
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 USD84,428,484 (31 March 2022:
USD153,136,073). The Company's cash and cash equivalents are held with
Citibank Europe PLC, which is rated A+ (2022: A+) according to ratings agency
Fitch.
Carrying amount <1 year 1 to 2 years 2 to 10 years
As at 31 March 2023 USD '000 USD '000 USD '000 USD '000
Cash and cash equivalents 84,428 84,428 - -
Other creditors and accruals (1,930) (1,930) - -
As at 31 March 2022
Cash and cash equivalents 153,136 153,136 - -
Other creditors and accruals (970) (970) - -
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 a
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 2023 USD '000 USD '000 USD '000 USD '000
Investment in uranium 952,504 - - 952,504
As at 31 March 2022
Investment in uranium 916,717 - - 916,717
4. Investment in uranium
Fair value USD '000
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
Acquisition of U(3)O(8) 132,689
Change in fair value (96,902)
As at 31 March 2023 952,504
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 USD50.65/lb as published by UxC LLC on 31 March 2023
(2022: USD 57.90/lb as published by UxC LLC on 31 March 2022).
As at 31 March 2023, the Company:
- Had purchased a total of 21,476,515 lb of U(3)O(8) at an average price of
USD29.85/lb;
- Had disposed of 2,670,914 lb of U(3)O(8) at an average price of USD 40.23/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 18,805,601 lb of U(3)O(8) at an average price of USD31.11/lb
for a net total cash consideration of USD585.1 million, assuming a
first-in-first-out methodology.
Purchase of uranium
The Company completed the following purchase transactions during the year:
- The Company exercised its option under its Framework Agreement with
Kazatomprom to buy back 2,022,846 lb of U(3)O(8) from Kazatomprom at a cost of
USD43.25/lb or USD87.5 million in aggregate consideration. 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) at a price of
USD47.58/lb for a total consideration of USD45.2 million. This was received by
the Company at the Cameco storage facility in Canada on 30 June 2022.
Post year-end purchases of uranium
Following the completion of the approximately GBP62 million share placing on 7
February 2023, the Company elected to purchase 1,350,000lb of U(3)O(8) at a
price of USD48.90/lb for a total consideration of USD66.0 million as part of
its 2022 uranium purchase option under its Framework Agreement with
Kazatomprom. The Company expects to take delivery at the Cameco storage
facility in Canada by 30 September 2023.
Sale of uranium
During the period, there were no sales of uranium.
The following table provides a summary of the Company's investment in U(3)O(8)
at 31 March 2023:
Quantity Fair value
lb USD '000
Canada 18,505,601 937,309
France 300,000 15,195
Total 18,805,601 952,504
5. Trade and other receivables
As at As at
31 March 2023 31 March 2022
USD '000 USD '000
Other receivables 324 130
324 130
6. Cash and cash equivalents
Cash and cash equivalents as at 31 March 2023 were held with Citi Bank Europe
plc in a variable interest account with full access. Balances at the end of
the year were USD84,420,908 and GBP6,127 a total of USD84,428,484 equivalent
(31 March 2022: USD152,243,206 and GBP678,367 a total of USD153,136,073
equivalent).
7. Trade and other payables
As at As at
31 March 2023 31 March 2022
USD '000 USD '000
Other payables and accruals 1,930 970
1,930 970
8. 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 2021 132,740,730 1,327 1,785
Issued 21 June 2021 25,000,000 250 348
Issued 29 October 2021 30,000,000 300 411
Share capital as at 31 March 2022 187,740,730 1,877 2,544
Issued 7 February 2023 15,000,000 150 180
Share capital as at 31 March 2023 202,740,730 2,027 2,724
The number of shares in issue above includes the 4,636,331 Treasury shares -
refer to note 10.
Share premium
GBP '000 USD '000
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
Proceeds of issue of shares 61,650 74,072
Share issue costs (1,706) (2,050)
Share premium as at 31 March 2023 492,700 660,203
The Company has one class of shares which carry no right to fixed income.
On 7 February 2023, the Company issued a total of 15,000,000 new ordinary
shares to existing and new institutional investors, at a price of GBP4.12 per
share. The Company incurred listing expenses, comprising of commissions and
professional adviser fees totalling USD2,194,125 of which USD2,050,108 have
been taken to the share premium account. Additional placing costs of
USD144,017 have been recognised in the statement of comprehensive income. Net
proceeds from the placing were GBP 59,974,596 (USD equivalent: 72,058,575).
9. 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 period, USD43,996 was recognised in the statement of comprehensive
income, in relation to share-based payments (31 March 2022: USD220,285).
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. The annual bonus awards are either in cash or in the form of
nominal-cost options, which usually will vest and become exercisable no
earlier than one year after grant.
In respect of the 2022 and 2023 financial years, annual bonuses were paid in
cash and no share-based annual bonus awards were made. The annual bonus award
in respect of the year ended 31 March 2023 was based on commercial targets and
was 50% of base salary (31 March 2022: 70% of base salary).
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 face value (exercise price of the options
multiplied by the number of options granted) was capped at 125% of salary.
Following this date, the cap was reduced for the CEO and CFO respectively to
75% and 45%. 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.
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, on 8 July 2020 in
relation to the year ended 31 March 2021 and on 3 November 2022 in relation to
the year ended 31 March 2023:
Director Grant date Vesting date Exercise price Opening balance Exercised Expired/ forfeited/ other Closing balance
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 56,967
* The USD equivalent is derived using the FX rate as at the date of
reporting.
Director Grant date Vesting date Exercise price Opening balance Exercised Expired/ forfeited/ other Closing balance
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 41,976
* The USD equivalent is derived using the FX rate as at the date of
reporting.
Director Grant date Vesting date Exercise price Opening balance Exercised Expired/ forfeited/ other Closing balance
A Liebenberg 03/11/2022 03/11/2025 GBP4.75 33,162 - - 33,162
C Whittall 03/11/2022 03/11/2025 GBP4.75 14,094 - - 14,094
Total 47,256 47,256
Total fair value as at the grant date* USD 60,998
* 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.
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 GBP Fair value at grant date USD*
24/02/2020 24/02/2023 GBP1.95 GBP1.97 25% 0.40% GBP46,075 USD56,967
08/07/2020 08/07/2023 GBP2.26 GBP2.88 30% (0.08%) GBP33,950 USD41,976
03/11/2022 03/11/2025 GBP4.30 GBP4.75 40% 3.21% GBP49,335 USD60,998
* The USD equivalent is derived using the FX rate as at the date of
reporting.
10. Treasury shares
Number GBP '000 USD '000
Treasury shares as 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
Purchase in the year 566,833 2,352 2,997
Treasury shares as at 31 March 2023 4,636,331 11,033 14,216
In 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 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 commodity spot price. Shares were purchased when
the closing mid-market share price of the Company on 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 purchase price of GBP4.15 per
share or USD3 million in aggregate and at a volume weighted average discount
to the Company's pro formanet asset value of 10.4%.
11. 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.
In 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 USD3,092,083 (31 March 2022: USD2,129,617) to 308 Services.
308 Services is also entitled to receive a commission equivalent to 0.5% of
the transaction value in respect of certain uranium 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 USD226,005 (31
March 2022: USD1,884,453).
12. Other operating expenses
1 April 2022 to 1 April 2021 to
31 March 2023 31 March 2022
USD '000 USD '000
Professional fees 772 769
Management salaries and Directors' fees 965 709
Other expenses 1,590 603
Auditor's fees 139 99
3,466 2,180
13. Taxation
1 April 2022 to 1 April 2021 to
31 March 2023 31 March 2022
USD '000 USD '000
Tax expense for the year - -
- -
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.
14. Related party transactions
During the year, the Company incurred USD160,607 (31 March 2022: USD186,056)
of administration fees payable to Langham Hall Fund Management (Jersey)
Limited ("Langham Hall"). Emily Manning was an employee of Langham Hall and
served as a Non-Executive Director of the Company from 31 March 2021 to 8
November 2022, for which she received no Directors' fees. Claire Brazenall was
an employee of Langham Hall and has served as a Non-Executive Director of the
Company since 9 November 2022, for which she has received no Directors' fees.
As at 31 March 2023 there were no amounts due to Langham Hall (31 March 2022:
USD nil).
The key management personnel are the directors and there are no other
employees. Their remuneration is detailed in note 12 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
2023:
% of share
Number of capital as at
ordinary shares 31 March 2023
The Lord St John of Bletso* 26,302 0.01%
Sofia Bianchi 13,186 0.01%
The Hon Alexander Downer 29,925 0.02%
Claire Brazenall - -
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.
15. Earnings per share
1 April 2022 to 1 April 2021 to
31 March 2023 31 March 2022
USD '000 USD '000
(Loss)/profit for the year (USD '000) (102,936) 417,271
Weighted average number of shares during the year - Basic* 185,323,320 160,754,398
Weighted average number of shares during the year - Diluted* 185,635,546 161,046,530
(Loss)/earnings per share attributable to the equity owners of
the Company (USD)
Basic (0.56) 2.60
Diluted (0.56) 2.59
* The weighted average number of shares excludes treasury shares.
16. Events after the reporting date
There were no material events after the reporting date.
1 (#_ftnref1) Based on the daily spot price of USD57.90/lb published
by UxC LLC on 31 March 2022 and the daily spot price of USD50.65/lb published
by UxC LLC on 31 March 2023.
2 (#_ftnref2) Net asset value per share as at 31 March 2023 is calculated
assuming 202,740,730 ordinary shares in issue less 4,636,331 shares held in
treasury, the Bank of England's daily USD/GBP exchange rate of 1.2364 as at 31
March 2023 and the daily spot price published by UxC LLC on 31 March 2023.
3 (#_ftnref3) UxC Weekly, 2022 U(3)O(8) Production Review, 15/05/23.
4 (#_ftnref4) Estimated net asset value per share as at 12 July 2023 is
calculated assuming 202,740,730 ordinary shares in issue, less 4,604,645
shares held in treasury, a USD/GBP exchange rate of 1.2997 and the daily spot
price published by UxC LLC on 12 July 2023.
5 (#_ftnref5) Average cost calculated based on a first-in, first-out
methodology.
( 6 (#_ftnref5) )Net asset value per share as at 31 March 2023 is
calculated assuming 202,740,730 ordinary shares in issue less 4,636,331 shares
held in treasury, the Bank of England's daily USD/GBP exchange rate of 1.2364
as at 31 March 2023 and the daily spot price published by UxC LLC on 31 March
2023.
( 7 (#_ftnref5) ) Estimated proforma net asset value per share as at 12
July 2023 is calculated assuming 202,740,730 ordinary shares in issue, less
4,604,645 shares held in treasury, the Bank of England's USD/GBP exchange rate
of 1.2997 as at 12 July 2023 and the daily spot price published by UxC LLC on
12 July 2023.
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