TIDMYCA
RNS Number : 5956F
Yellow Cake PLC
19 July 2021
1 9 July 2021
Yellow Cake plc ("Yellow Cake" or the "Company")
Annual Results for the year ended 31 March 2021
Highlights
- Continued improvement in the market for U(3) O(8) , with the spot price increasing 12% from
USD27.40/lb on 31 March 2020 to USD30.65/lb (1) on 31 March 2021
- The value of the Company's U(3) O(8) holding of 9.86 million lb has increased 39% to USD302.1
(2) million as at 31 March 2021 relative to the average acquisition cost of USD217.3 million
(USD22.05/lb)
- Profit after tax of USD29.9 million for the year ended 31 March 2021 (2020: USD12.5 million)
- Raised GBP99.3 million (USD138.5 million) through a placing of shares in March 2021 and applied
the proceeds to acquire 0.5 million lb of U(3) O(8) during the financial year and an additional
net 3.4 million lb of U(3) O(8) post year end (3)
- Buyback of 4,156,385 ordinary shares in the Company (now held in treasury) between January
2020 and October 2020 for a total consideration of USD11.5 million (GBP8.9 million) at a volume
weighted average price of GBP2.13 per share (USD2.75 per share) in a share buyback scheme.
The shares were acquired at a volume weighted average discount to net asset value of 21%,
effectively acquiring exposure to uranium at a discount to the commodity spot price
- Net asset value of USD421.4 million (GBP2.38 per share (4) ) as at 31 March 2021 (2020: USD267.1
million (GBP2.45 per share))
- After year end, the U(3) O(8) spot price continued to rise, increasing to USD32.35/lb on 12
July 2021, and the value of the Company's U(3) O(8) holding increased a further 42% to USD430.4
million (5)
- Raised GBP62.5 million (USD86.9 million) post year end through a placing of shares in June
2021, the proceeds of which are partly being applied to acquire a further 550,000 lb of U(3)
O(8) in the spot market at an average price of USD 32.35/lb for delivery later in 2021. The
Company also expects to conclude an agreement with Kazatomprom to purchase a further 2.0 million
lb of U(3) O(8) at a price of USD32.23/lb
- Holding of 13.3 million lb of U(3) O(8) (including post year-end purchases) acquired at an
average cost of USD24.05/lb
Andre Liebenberg, CEO of Yellow Cake, said:
"This has been a year of considerable progress for Yellow Cake,
during which we have acted quickly to capitalise on improved market
sentiment around uranium for the benefit of our shareholders. We
took decisive action to address the discount to NAV through a
targeted buyback programme, and I am pleased to report we now trade
at a premium to NAV.
We've also considerably increased our overall uranium holdings
during the last 12 months. We undertook two separate oversubscribed
capital raises, enabling us first to fully exercise our Kazatomprom
2021 option and acquire an additional USD100million of uranium,
while securing additional funds to acquire further volume on an
opportunistic basis, where we saw value in doing so. Since March
this year, our total holdings have increased from 9.6 million lb to
13.3 million lb, and by the end of 2021 we expect to hold almost 16
million lb.
Above all, we remain confident in the outlook for the uranium
price and our investment thesis. This confidence is founded on
continued unique supply-demand fundamentals, whereby demand is now
clearly outstripping supply, which combined with on-going mine
closures and the steady drawdown of stockpiles, supports our view
on the price outlook. We also saw in the period a true shift in
sentiment towards nuclear energy, which is now increasingly
recognised as the only existing source of clean baseload power in a
world with rapidly growing electricity demand, and a critical
element of the future energy mix."
E nquiries:
Yellow Cake plc
Andre Liebenberg, CEO Carole Whittall, CFO
+44 (0) 153 488 5200
Nominated Adviser and Joint Broker: Canaccord Genuity Limited
Henry Fitzgerald-O'Connor James Asensio
Georgina McCooke
+ 44 (0) 207 523 8000
Joint Broker: Berenberg
Matthew Armitt Jennifer Wyllie
Varun Talwar Detlir Elezi
Tel: +44 (0) 203 207 7800
Financial Adviser: Bacchus Capital Advisers
Peter Bacchus Richard Allan
Tel: +44 (0) 203 848 1640
Media/Investor Relations: Powerscourt
Peter Ogden
+44 (0) 779 3 85 8211
ABOUT YELLOW CAKE
Yellow Cake is a London-quoted company founded and established
by Bacchus Capital and 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 the acquisition of
uranium royalties and streams or 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
13.3 million lb 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
Yellow Cake was established to provide investors with long-term
exposure to the uranium spot price through a liquid and
publicly-quoted vehicle. Our long-term partnership with Kazatomprom
is a key strategic advantage that provides access to material
volumes of uranium at the prevailing market price. The Company's
strict governance structures, practices and policies provide
assurance to investors and the low-cost outsourced business model
minimises cost leakage and risk exposure as we do not participate
in the uranium production chain.
COVID-19 had a significant impact across the full uranium
production cycle, highlighting the concentrated nature of uranium
supply, while global demand remained relatively unaffected due to
nuclear's role as a reliable and consistent baseload energy source.
This resulted in a steady increase in the price of uranium during
the year, in line with our investment thesis.
The resilience of Yellow Cake's business model was evident in
the year under review with minimal direct impact of the COVID-19
pandemic on the Company. Yellow Cake's two employees (the CEO and
CFO) perform their duties remotely and the Company has no operating
assets and a balance sheet with no leverage. Working capital is
maintained at a level that provides sufficient liquidity and
resources to cover an extended period of operation.
However, the pandemic had a significant impact across the full
uranium production cycle, from exploration to development, mining
and processing, highlighting the concentrated nature of uranium
supply. Production was significantly curtailed as a result of the
initial lockdowns as well as the second closure at a key producer
later in the year due to resurgences in COVID-19 infection
rates.
The equity market has warmed to the uranium story during the
second half of our financial year and uranium equities are up
significantly. A number of junior/developer companies have been
able to raise equity from a very supportive equity market.
Nuclear energy has an important role in a low carbon future
With the increasing focus on the urgent need to address climate
change, nuclear energy's role in a low-carbon future is becoming
more widely accepted by governments around the world. The recently
released report from the European Commission's Joint Research
Centre(6) concluded that the environmental and social impacts of
nuclear energy over its full lifecycle are comparable with
hydropower and other forms of renewable energy. Nuclear energy has
proven to be an excellent complement to renewables and currently
provides around 55% of the US's carbon-free electricity and 53% of
the European Union's carbon-free electricity(7) . In the world's
most populous and fastest growing nations, China and India, which
rely heavily on coal-fired electricity plants, nuclear energy
currently comprises less than 15% of carbon- free electricity(8)
.
While Yellow Cake's direct social and environmental impact is
not significant, the Board recognises 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 (ESG) performance. The Company conducts the
necessary due diligence on suppliers and business partners to
ensure that they share our commitment to responsible business
practices and Yellow Cake has a zero-tolerance approach to bribery,
corruption and unethical practices.
Supply is constrained while demand looks set to grow
While the COVID-19 pandemic affected activity and energy use in
all countries, nuclear energy proved to be a resilient electricity
source. Nuclear's role as a low-cost and non- carbon energy source
is likely to grow as energy intensity increases. Additions to the
current global reactor fleet forecast strong growth in nuclear
electricity generation from facilities currently under construction
(+15%), planned (+27%) and proposed (+90%)(9) . Net of old plants
retired, total reactors are forecast to grow by 30% to 2040.
Significant investments are being made in advanced reactor
technologies including small modular reactors that can reduce
capital costs, shorten construction times, increase safety and
broaden acceptance.
Beyond the short-term disruption caused by the pandemic, the
sustained underinvestment in future uranium supply and
concentration of production suggests continued supply constraints
in the medium to long term.
This asymmetry in uranium supply and demand was the fundamental
principle upon which Yellow Cake was established. Although the
uranium spot price improved over the last twelve months, it remains
well below the price required to support profitable investment in
developing new resources. The recent strong run in uranium stocks
suggests that these trends are becoming evident to a broader
audience. With the policy uncertainty that affected long- term
contracting for uranium supply largely resolved over the last
twelve months, the return of nuclear utilities to the long-term
contracting market could be the catalyst to the necessary recovery
in the uranium price.
Increasing holdings of U(3) O(8)
In early March 2021, the Company placed 44.5 million new
ordinary shares, the proceeds of which were used to purchase a net
4.0 million lb of U(3) O(8) , during the financial year and after
year end, at an average cost of USD28.83/lb during a pullback in
the uranium price. We were pleased with the strong reception that
the share placement received from both institutional and retail
investors, which resulted in the placement increasing to circa
USD140 million from the USD110 million originally proposed. This
enabled the Company to not only acquire the full USD100 million
U(3) O(8) allotment in terms of the Kazatomprom Framework Agreement
but also to acquire a further net 534,985 lb in the spot
market.
We are pleased to report that at 31 March 2021 Yellow Cake's
share price closed at a 15% premium to net asset value and the
share price ended 45% up for the financial year. The share buyback
programme implemented in January 2020 and extended in June was
instrumental in this regard and proved to be an effective way to
increase shareholders' exposure to U(3) O(8) at a discount to the
commodity spot price. The programme was financed by the disposal of
300,000 lb of U(3) O(8) in June 2020 and, at its conclusion in
October 2020, a total of USD11.5 million in value had been returned
to shareholders through the programme.
The Company held a General Meeting on 10 June 2021 at which
shareholders approved the renewal of the Board's authorities to
allot up to 25 million new ordinary shares prior to the Annual
General Meeting in September 2021. This was necessary to ensure
that Yellow Cake remained in a position to act opportunistically
should new uranium purchase opportunities present themselves prior
to the meeting, as the shares issued during the year had almost
fully utilised the authorities obtained at the 2020 Annual General
Meeting.
On 21 June 2021, the Company fully utilised this authority and
placed 25 million new ordinary shares. 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 expects to conclude
an agreement with Kazatomprom to purchase a further 2.0 million lb
of U(3) O(8) at a price of USD32.23/lb for a total consideration of
USD64.5 million, pursuant to Kazatomprom's offer of 12 June 2021.
The purchase transactions and the proposed purchase transactions
are expected to complete later in 2021. The completion of these
uranium purchases will take the Company's total holding to almost
16 million lb of U(3) O(8) , which represents over 10% of current
annual global uranium mine production.
Governance
Yellow Cake's Board of Directors is committed to maintaining
high ethical standards as reflected in our governance framework and
Code of Conduct. 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.
Yellow Cake has applied 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 small scale
and simplicity of the organisation reduces the number of points of
interface, improves communication and enhances governance and
oversight. Compliance policies are regularly reviewed and updated
to ensure continued alignment with the latest developments in
corporate governance requirements and guidelines. Effective
policies and measures are in place to prevent the opportunity for
bribery or inducements, and a whistleblowing policy is in
place.
The Board plays an active role in overseeing the Company's
activities and met 14 times during the year to 31 March 2021.
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.
Alexandra Nethercott-Parkes, who acted as a Client Director of
Langham Hall Fund Management (Jersey) Limited, resigned as an
Independent Non-executive Director with effect from 31 March 2021
and was replaced by Emily Manning, who is also a client director of
Langham Hall Fund Management (Jersey) Limited. On behalf of the
Board, I would like to express our sincere gratitude to Alexandra
for her significant contribution to Yellow Cake.
The Board values its dialogue with stakeholders and the Company
proactively facilitates opportunities for engagement with its
stakeholders. Day-to-day queries raised by stakeholders are
addressed by the Executive Directors, the chairs of the Board
Committees will seek engagement with shareholders on significant
matters related to their areas of responsibility and the Chairman
is available to the Company's major shareholders to discuss
governance, strategy and performance as required. The outcomes of
these engagements are regularly communicated to the Board and
inform its deliberations. As the 2020 Annual General Meeting was a
virtual event, stakeholders were invited to submit questions in
written form.
Dividend policy
One of Yellow Cake's primary objectives is to realise a return
on investment from the appreciation in the value of its U(3) O(8)
holdings and the Company does not currently expect to issue
dividends on a regular or fixed basis. The Board reserves the right
to declare a dividend, as and when deemed appropriate.
Acknowledgements and thanks
I would like to thank my fellow Board members for their
diligence and contribution during the year. The Framework Agreement
with Kazatomprom, our strategic supplier, is an important asset of
the Company that enables value creation for shareholders and we
thank them for their support. We are grateful to our shareholders
and investors for their strong interest in the share issue during
the year and welcome our new shareholders to the Company.
The Lord St John of Bletso
Chairman
CEO statement
2020 was a transition year for the uranium market in that a
number of factors and uncertainties that were affecting the uranium
price were resolved or reached a point where their implications for
higher prices became undeniable.
Recent market trends continue to highlight the long-term
supply/demand disconnect in the uranium market, while the
regulatory uncertainty that was more prevalent in 2019 is now
largely resolved and there is a growing recognition of nuclear
power's importance in meeting carbon emission reduction
targets.
The impact of COVID-19 emphasised the supply-side risk in the
uranium market with 76% of global production concentrated in four
countries. Disruptions due to the pandemic led to the loss of
approximately 20 million lb of production that will not be
recovered and production in calendar 2020 fell 12% to 125 million
lb of U(3) O(8) (10) . This follows three years of production
declines from the peak in 2016 at 160 million lb of U(3) O(8) ,
while reactor demand has stayed relatively steady around 175
million lb of U(3) O(8) a year, implying consistent inventory
drawdowns. In February and March of this year we also saw the
permanent closure of the Ranger mine in Australia and the Cominak
mine in Niger. Historically these mines in aggregate produced
around nine million lb per annum(11) .
Demand for uranium looks set to grow as the current global fleet
of 443 operating reactors is expanding with a further 155 reactors
under construction or planned(9) , mainly in China, Russia, India
and the Middle East. The remarkable improvement in air quality as
activity decreased at the height of the pandemic demonstrated the
significant negative impact of fossil fuels in countries that rely
heavily on energy from these sources, including China and
India.
The perception of nuclear energy is becoming more positive as
more countries commit to carbon neutrality and support for a
"renewables plus nuclear" solution increases. For the first time in
many years, the nuclear industry in the US is receiving bipartisan
support, and President Biden's pre-election policy statements
explicitly included nuclear in the energy policy. The UK's Ten
Point Plan for Green Industrial Revolution includes a commitment to
nuclear energy and small modular reactors continue to gain traction
globally as cost-effective and small footprint alternatives to
traditional reactors.
Although nuclear energy currently accounts for nearly half of
the low-carbon electricity in Europe, its inclusion in the EU
taxonomy for sustainable finance has not yet been confirmed and it
would be a negative for the industry if it was excluded. Recently
the EU's Joint research Centre (JRC) concluded that nuclear energy
does not cause any more harm than the energy sources currently
included in the taxonomy(6) . The JRC report is still subject to
review prior to implementation. However, most of the growth in
reactors is forecast to take place outside the EU, so exclusion is
not expected to have a significant impact on the industry's future
growth.
The ability of producers to respond to the forecast increase in
demand is, in our view, limited. For several years, the majority of
current uranium supply is thought to have been loss making at
prevailing uranium spot prices, disincentivizing investment in new
resources even as current mines deplete. Despite the increased
current and planned activity around nuclear builds, we have seen
little progress in the uranium mining projects in the market at the
time of Yellow Cake's IPO in 2018. We believe that the lack of
bankable long-term off-take contracts are a key constraint to
projects being able to secure the necessary finance for
construction. At the same time, the main US policy issues that
created uncertainty for utility contracting over the last two years
have been clarified. These include the release of the
recommendations of the US Nuclear Fuels Working Group and the
finalisation of the Russian Suspension Agreement.
Developments in the uranium market(12)
The uranium spot market price started 2020 at USD25.00/ lb and
ran up nearly 20% in April on record volumes as COVID-19 forced the
closure of mining production around the world. The price peaked at
USD34.00/lb in May 2020 before trending down to around USD30/lb
where it ended the calendar year, closing 20% up on 2019 and nearly
70% up since the 2016 low. In 2021, after initially declining the
price reached USD30.65/lb by the end of March.
Spot market volumes reached record levels in the 2020 calendar
year at 92.3 million lb of U (3) O(8) (CY2019: 64.3 million lb)
compared to the previous record of 88.7 million lb of U (3) O(8) in
2018. We believe that this activity was driven by enhanced
purchasing activity by primary uranium producers that had reduced
production or suspended their operations due to the COVID-19
pandemic, as well as by market intermediaries.
Aggregate term contracting in CY2020 amounted to only around 56
million lb of U (3) O(8) (equivalent) which includes
delivery/purchase commitments within the so-called carry
trade/mid-term market (1-3 years forward), as well as the more
traditional long-term contracting market (3-5 years or more). Term
contracting levels in CY2020 were at unprecedented lows (96.2
million lb of U (3) O(8) (equivalent) in CY2019 and 90.5 million lb
of U (3) O(8) (equivalent) in CY2018).
Uranium spot market activity decreased markedly in the first two
months of the 2021 calendar year, totaling slightly more than 10
million lb of U (3) O(8) . We believe this decline may be
attributable to reduced purchasing by utilities as well as limited
market activity by uranium producers in the new year. Spot market
transactions rose significantly in March with the acquisition of
physical uranium by financial entities (including Yellow Cake's
acquisitions discussed below) and by several junior uranium
companies. Aggregate transaction volumes for March rose to 10.9
million lb of U (3) O(8) under 68 separate transactions(13) .
Increase in Yellow Cake's U(3) O(8) holdings
In the final quarter of 2020, we witnessed significant investor
interest in uranium equities on the back of the improving uranium
fundamentals highlighted above and this trend continued into 2021.
These market dynamics allowed Yellow Cake to take advantage of the
strong investor interest in uranium and we were able to raise
USD138.5 million at net asset value in an oversubscribed equity
offering.
The equity raise allowed us to fully exercise the Kazatomprom
2021 option to acquire USD100 million of U(3) O(8) this year and to
apply the surplus cash raised to make additional uranium purchases
for value. In June 2021, the Company raised gross proceeds of
USD86.9 million and committed to further purchases of U(3) O(8) ,
which are expected to bring the Company's holding of U(3) O(8) to
more than 15 million lb in the 2021 calendar year.
A number of other uranium companies have also taken the
opportunity provided by the improved sentiment towards the
commodity and since February 2021 around USD930 million has been
raised, including Yellow Cake's equity offerings. We are also
seeing a new strategy by uranium project companies that are using
the funds raised to purchase uranium in the spot market to enhance
financing options as they pursue the restart/development of their
projects. In 2021 to date, about 12.7 million lb of U(3) O(8) has
been purchased (including Yellow Cake's 3.5 million lb from
Kazatomprom), which represents approximately 10% of forecast 2021
primary production.
The share buyback programme Yellow Cake initiated last year and
extended during the current year took advantage of the persistent
discount between the Yellow Cake share price and net asset value to
effectively increase shareholders' exposure to uranium at a
discount to the spot price. The Company's shares ended the 2021
financial year 45% up on the prior year and trading at a premium to
net asset value.
The fair value of the Company's holding of U(3) O(8) increased
by USD33.4 million in the year to 31 March 2021. At year-end Yellow
Cake's net asset value increased 58%, although after accounting for
the increased shares in issue, net asset value per share declined
marginally to GBP2.38 per share. The Company delivered a net profit
after tax for the year of USD29.9 million and ended the year with
cash and cash equivalents of USD126.2 million on the balance sheet.
The CFO's Review provides more information regarding the Company's
financial results for the period.
Stakeholder relationships
While COVID-19 prevented face to face engagements, we held a
large number of virtual engagements with shareholders, investors,
analysts and the media through investor conferences, conference
calls, investor briefings with industry experts, media briefings
and interviews to improve the understanding of the Company and the
industry. Our focus on broadening our retail shareholder base
continued and, very pleasingly, both the March and June share
placements included a retail component that was very well
supported. The Company's retail shareholding currently accounts for
25% of the share register, up from zero at the time of the IPO in
July 2018.
Outlook
Demand for uranium is likely to continue with nuclear energy
playing a key role in the long-term global energy mix as a low
carbon, low operating cost, reliable and sustainable source of
energy that complements renewable sources of energy. New supply of
uranium is uneconomic without a significant increase in prices from
current levels and the ongoing disruptions to supply from COVID-19
are resulting in producers being increasingly active in the spot
market to meet contracted volumes.
The return of long-term contracting by utilities will be the key
trigger for a rebound in the market. Market sources, including
UxC(14) , indicate that nuclear utilities are beginning to focus on
the long-term uranium market and expectations remain for long-term
uranium contracting to increase during 2021 as utility fuel
managers pursue forward uranium coverage.
The long-term fundamentals supporting our view that uranium is
currently underpriced remain intact and Yellow Cake is well placed
to realise further value for shareholders as a result.
Andre Liebenberg
Chief Executive Officer
CFO's review
In March 2021, the Company completed an upsized share placing,
raising gross proceeds of USD138.5 million at an issuance price
equal to net asset value at the time of the placing. The proceeds
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 for value and
to fund related expenses and working capital.
During the first nine months of the financial year, the
Company's shares continued to trade at a significant discount to
net asset value. The Yellow Cake Board therefore took the decision
to continue with a share buyback programme while this discount
persisted as a means of effectively acquiring exposure to uranium
at a discount to the commodity spot price and delivering value to
shareholders. The buyback programme was largely financed through
the sale of 300,000 lb of U(3) O(8) in June 2020 that generated
cash proceeds of USD9.9 million after costs and commission. Between
January 2020 and October 2020, the Company applied USD11.5 million
(GBP8.9 million) to purchasing its shares at a volume-weighted
average discount to net asset value of 21%.
The buyback programme completed in October 2020 and by the end
of 2020, the discount to net asset value had closed. By March 2021,
Yellow Cake's shares were trading at a premium to net asset value,
putting the Company in a position to successfully complete an
upsized share placing and apply the proceeds to the purchase of an
additional 4 million lb of U(3) O(8) .
It is my pleasure to report a number of highlights for the
year:
- An increase in the Company's uranium holding of USD38.6
million from USD263.5 million to USD302.1 million
- Proceeds of USD138.5 million from the share placing in March
2021 of which USD115.0 million was applied or committed
to net purchases of 4.0 million lb of U(3) O(8) at an average
price of USD28.83/lb
- Returned USD11.5 million in value to shareholders through
a share buyback programme, with shares purchased at a 21%
discount to net asset value
- Profit after tax of USD29.9 million (2020: USD12.5 million)
Uranium transactions
Yellow Cake started the financial year with a holding of 9.62
million lb of U(3) O(8) and sold 300,000 lb of U(3) O(8) in June
2020 to finance the share buyback programme. In March 2021, the
Company acquired an additional 540,000 lb of U(3) O(8) to end the
financial year with a total holding of 9.86 million lb of U(3) O(8)
.
On 3 March 2021 Yellow Cake exercised the Kazatomprom option to
acquire a further 3.45 million lb of U(3) O(8) for an aggregate
cash consideration of USD100.0 million. The Kazatomprom purchase
completed after financial year end and the Company took delivery of
the uranium on 21 June 2021.
As part of the subscription agreement entered into at the time
of the Company's IPO in July 2018, the Company granted Uranium
Royalty Corp. an option to acquire between USD2.5 million and
USD10.0 million worth of U(3) O(8) per year in each of the nine
calendar years commencing on 1 January 2019, up to a maximum
aggregate amount over such nine-year period of USD31.25 million
worth of U(3) O(8) . On 30 March 2021, Yellow Cake accepted Uranium
Royalty Corp's option exercise notice to purchase 348,068 lb of
U(3) O(8) from Yellow Cake at USD28.73/lb for an aggregate
consideration of USD10.0 million. The sale to Uranium Royalty Corp.
completed after financial year end on 28 April 2021.
On 20 May 2021, Yellow Cake completed the purchase of 343,053 lb
of U(3) O(8) in the market at a price of USD29.15/lb for total
consideration of USD10.0 million.
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 will take delivery of this uranium between July and
August 2021.
T he Company expects to conclude an agreement with Kazatomprom
to purchase a further 2.0 million lb of U(3) O(8) for delivery
between October and December 2021 at a price of USD32.23/lb for a
total consideration of USD64.5 million, pursuant to Kazatomprom's
offer of 12 June 2021.
Uranium-related profit
Yellow Cake made a total uranium related profit of USD33.9
million in the year to 31 March 2021 (2020: USD15.9 million). This
comprised an increase in the fair value of the Company's uranium
investment of USD33.4 million (2020: USD15.7 million), a premium to
the prevailing spot price on the disposal of 300,000 lb of U(3)
O(8) of USD0.2 million and USD1.1 million in location swap fees.
These gains were partially offset by an increase in the fair value
of a uranium derivative liability related to the Kazatomprom
repurchase option of USD0.8 million (detailed in note 7 of this
report).
Of the 9.62 million lb of U(3) O(8) held at the beginning of the
financial year, 300,000 lb of U(3) O(8) was sold at the end of June
2020 at a price of USD33.20/lb and at a premium of USD0.60/lb above
the carrying value of USD32.60/lb(15) on the date of disposal,
being the prevailing market price at the time.
The increase in the fair value of the Company's uranium
investment of USD33.4 million during the year was attributable
to:
- an increase of USD5.20/lb in the carrying value of the 300,000
lb of U(3) O(8) sold at the end of June 2020;
- an increase of USD3.25/lb in the carrying value of the 9.32
million lb of U(3) O(8) uranium investment held by the Company
since the beginning of the financial year (as the underlying
price of U(3) O(8) increased from USD27.40/lb to USD30.65/lb
over the financial year); and
- an increase of USD2.83/lb in the carrying value of the additional
0.54 million lb of U(3) O(8) acquired by the Company in
March 2021 for an average price of USD27.82/lb.
At the end of the financial year, the Company's uranium
investment comprised 9.86 million lb of U(3) O(8) .
Operating performance
Yellow Cake delivered profit after tax for the year of USD29.9
million (2020: USD12.5 million).
Expenses for the year of USD4.0 million (2020: USD3.5 million)
recognised in the Statement of Comprehensive Income included the
following costs:
- USD0.7 million in costs related to Yellow Cake's share placing
(2020: USD0.5 million); and
- USD0.3 million in commissions payable to 308 Services Limited
in relation to the purchase by Yellow Cake of U(3) O(8)
(2020: USD0.2 million).
- Operating costs of a recurring nature of USD2.9 million
(2020: USD2.8 million), comprising: - Procurement and market consultancy fees (holding fees and
storage incentive fees) paid to 308 Services Limited of
USD1.1 million (2020: USD1.0 million) (detailed in note
12); and
- Other operating costs of USD1.7 million (2020: USD1.8 million).
Operating expenses of a recurring nature of USD2.9 million
represent approximately 0.7% of the Company's net asset value at 31
March 2021.
Share buyback programme
The share buyback programme (the "Programme") approved by the
Board early in 2020 to purchase up to USD2.0 million of the
Company's ordinary shares continued during the year under review.
On 30 June 2020, the Company announced its intention to enlarge the
Programme, with a view to purchase up to an additional USD10.0
million of the Company's outstanding ordinary shares.
During the financial year, the Company purchased 3,846,597
shares under the Programme for a total consideration of GBP8.3
million (USD10.7 million). The Programme was completed in October
2020 with the acquisition of a total of 4,156,385 of the Company's
shares for a total consideration of GBP8.9 million (USD11.5
million) at a volume weighted average price of GBP2.13 per share
and volume weighted average discount to the Company's estimated net
asset value of 21%.
The shares repurchased are held in treasury.
The Company does not propose to declare a dividend for the
year.
Share placings
On 2 March 2021, the Company issued a total of 43,001,944 new
ordinary shares to existing and new institutional investors and
1,523,070 new ordinary shares to retail investors, at a price of
GBP2.23 per share, equal to the Company's estimated net asset value
per share at the date of the offering. The Company raised net
proceeds of GBP96.3 million (USD equivalent: 134.4 million net of
costs of USD4.1 million).
On 21 June 2021, after year end, 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 at the date of the offering. The Company raised net
proceeds of GBP60.6 million (USD equivalent: 84.0 million net of
costs of USD2.9 million).
Additional transactions to realise value from the company's U(3)
O(8) holdings
On 24 July 2020, the Company concluded a location swap agreement
that realised gross proceeds of USD1.1 million. The location swap
was reversed in May 2021 and realised a small profit
contribution.
Under the location swap agreement, the Company exchanged 500,000
lb of U(3) O(8) located at Cameco's storage facility in Canada for
an equal volume of U(3) O(8) located at Orano's storage facility in
France. In consideration, Yellow Cake received gross proceeds of
USD1.1 million on 11 August 2020. The location swap was reversed in
May 2021, at which time Yellow Cake received the same volume of
uranium in Canada in exchange for uranium held in France and
received a swap fee of USD100,000.
The Company will continue to pursue attractive uranium related
transaction opportunities as they arise, including location
swaps.
Balance sheet and cash flow
The share placing and retail offer which completed on 2 March
2021 raised net proceeds of USD134.4 million. USD15.0 million was
applied to purchasing uranium during the financial year, while the
Company committed to purchasing USD100.0 million of U(3) O(8) from
Kazatomprom under the Framework Agreement after financial year-end.
The Kazatomprom purchase transaction completed in June 2021.
Yellow Cake's U(3) O(8) investment increased by 15% to USD302.1
million at year-end compared to USD263.5 million at the end of the
2020 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 2021, Yellow Cake had cash of USD126.2 million (2020: USD6.5
million).
Yellow Cake's net asset value at 31 March 2021 was GBP2.38 per
share(16) or USD421.4 million, consisting of 9,856,385 lb of U(3)
O(8) valued at a spot price of USD30.65/lb, a uranium derivative
liability of USD3.4 million, cash and cash equivalents of USD126.2
million and other net current assets and liabilities of USD3.5
million.
Yellow Cake's estimated net asset value on 12 July 2021 was
USD533.8 million, consisting of 13,305,601 lb(17) of U(3) O(8)
valued at the weekly price of USD32.35/lb published by UxC LLC on
12 July 2021, a uranium derivative liability of USD3.4 million,
cash and cash equivalents of USD126.2 million and other net current
assets and liabilities of USD3.5 million as at 31 March 2021, less
net consideration paid for net purchases of USD100.0 million
completed after the end of the financial year, plus net proceeds of
the share placing on 21 June 2021 of USD84.0 million.
Yellow Cake's estimated net asset value per share as at 12 July
2021 was GBP2.50 per share. At market close on 12 July 2021, the
Company's share price was GBP2.68 per share, which represents a 7%
premium to the estimated net asset value.
Carole Whittall
Chief Financial Officer
Financial statements
Statement of Financial Position
As at As at
31 March 2021 31 March 2020
Notes USD'000 USD'000
========================================== ======== ============== ==============
ASSETS
Non-current assets
Investment in uranium 4 302,098 263,489
------------------------------------------ -------- -------------- --------------
Total non-current assets 302,098 263,489
------------------------------------------ -------- -------------- --------------
Current assets
Trade and other receivables 5 119 89
Cash and cash equivalents 6 126,159 6,481
------------------------------------------ -------- -------------- --------------
Total current assets 126,278 6,570
------------------------------------------ -------- -------------- --------------
Total assets 428,376 270,059
------------------------------------------ -------- -------------- --------------
LIABILITIES
Non-current liabilities
Uranium derivative liability 7 - (2,587)
------------------------------------------ -------- -------------- --------------
Total non-current liabilities - (2,587)
------------------------------------------ -------- -------------- --------------
Current liabilities
Trade and other payables 8 (3,621) (392)
Uranium derivative liability 7 (3,361) -
------------------------------------------ -------- -------------- --------------
Total current liabilities (6,982) (392)
------------------------------------------ -------- -------------- --------------
Total liabilities (6,982) (2,979)
------------------------------------------ -------- -------------- --------------
NET ASSETS 421,394 267,080
------------------------------------------ -------- -------------- --------------
EQUITY
Attributable to the equity owners of the company
Share capital 9 1,785 1,164
Share premium 9 358,812 224,437
Share-based payment reserve 10 141 2
Treasury shares 11 (11,458) (,726)
Retained earnings 72,114 42,203
------------------------------------------ -------- -------------- --------------
TOTAL EQUITY 421,394 267,080
========================================== ======== ============== ==============
Statement of Comprehensive Income
1 April 1 April
2020 2019
to to
31 March 31 March
2021 2020
Notes USD'000 USD'000
=============================================== ====== ========= =========
Uranium related profit
Fair value movement of investment in uranium 4 33,365 15,714
Uranium swap income 4 1,145 -
Premium to spot price on disposal of uranium 4 180 -
Fair value movement of uranium derivative
liability 7 (774) 212
----------------------------------------------- ------ --------- ---------
Total uranium related profit 33,916 15,926
----------------------------------------------- ------ --------- ---------
Expenses
Share-based payments 10 (139) (2)
Equity offering expenses 9 (681) (547)
Commission on uranium transactions 12 (282) (152)
Procurement and market consultancy fees 12 (1,124) (1,017)
Other operating expenses 13 (1,739) (1,756)
----------------------------------------------- ------ --------- ---------
Total expenses (3,965) (3,474)
----------------------------------------------- ------ --------- ---------
Bank interest income 3 104
Loss on foreign exchange (43) (47)
----------------------------------------------- ------ --------- ---------
Profit before tax attributable to the equity owners
of the Company 29,911 12,509
------------------------------------------------------- --------- ---------
Tax expense 14 - -
----------------------------------------------- ------ --------- ---------
Profit and total comprehensive income for the year
after tax attributable to the equity owners of
the Company 29,911 12,509
Basic earnings per share attributable to the
equity owners of the company (USD) 16 0.34 0.14
Diluted earnings per share attributable to
the equity owners of the company (USD) 16 0.33 0.14
=============================================== ====== ========= =========
Statement of Changes in Equity
Attributable to the equity owners of the company
Share based Retained
Share capital Share premium payment reserve Treasury shares earnings Total equity
Notes USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
===================== ============= ============= ================ =============== ================ ============
As at 31 March
2019 1,007 192,248 - - 29,694 222,949
----------------- ------------- ------------- ---------------- --------------- ---------------- ------------
Total
comprehensive
income after tax
for the year - - - - 12,509 12,509
Transactions with
owners:
Shares issued 9 157 33,608 - - - 33,765
Share issue costs 9 - (1,419) - - - (1,419)
Share incentive
options 10 - - 2 - - 2
Purchase of own
shares 11 - - - (726) - (726)
----------------- ------------- ------------- ---------------- --------------- ---------------- ------------
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 incentive
options 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
===================== ============= ============= ================ =============== ================ ============
Statement of Cash Flows
1 April 2020 1 April 2019
to to 31 March 2020
31 March 2021 USD'000
USD'000
Notes
======================================================= ============================ ===============================
Cash flows from operating activities
Profit after tax 29,911 12,509
Adjustments for:
Change in fair value of investment in uranium 4 (33,365) (15,714)
Change in fair value of uranium derivative
liability 7 774 (212)
Premium to spot price on disposal of uranium 4 (180) -
Share based payments 10 139 2
Loss/(gain) on foreign exchange 43 47
Interest income (3) (104)
--------------------------------------------------- ---------------------------- -------------------------------
Operating profit before changes in capital (2,681) (3,472)
--------------------------------------------------- ---------------------------- -------------------------------
Changes in working capital:
Increase in trade and other receivables (29) (73)
Increase in trade and other payables 3,216 14
--------------------------------------------------- ---------------------------- -------------------------------
Cash generated from/(used in) operating activities 506 (3,531)
--------------------------------------------------- ---------------------------- -------------------------------
Interest received 3 104
--------------------------------------------------- ---------------------------- -------------------------------
Cash generated from/(used in) operating activities 509 (3,427)
--------------------------------------------------- ---------------------------- -------------------------------
Cash flows from investing activities
Purchase of uranium 4 (15,025) (30,409)
Proceeds of sale of uranium 4 9,960 -
--------------------------------------------------- ---------------------------- -------------------------------
Net cash used in investing activities (5,065) (30,409)
--------------------------------------------------- ---------------------------- -------------------------------
Cash flows from financing activities
Proceeds from issue of shares 9 138,500 33,765
Issue costs paid 9 (3,504) (1,419)
Share buyback programme 11 (10,732) (726)
--------------------------------------------------- ---------------------------- -------------------------------
Net cash generated from financing activities 124,264 31,620
--------------------------------------------------- ---------------------------- -------------------------------
Net increase/(decrease) in cash and cash
equivalents during the year 119,708 (2,216)
Cash and cash equivalents at the beginning of the
year 6,481 8,750
Effect of exchange rate changes (30) (53)
--------------------------------------------------- ---------------------------- -------------------------------
Cash and cash equivalents at the end of the year 126,159 6,481
=================================================== ============================ ===============================
Notes to the Financial Statements
For the year ended 31 March 2021
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 created 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.
2. Summary of significant accounting policies
Basis of preparation
The financial information has been prepared in accordance with
International Accounting Standards in conformity with the
requirements of the Companies Act 2006.
In accordance with Section 105 of The Companies (Jersey) Law
1991, the Company confirms that the financial information for the
period ended 31 March 2021 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 International
Financial Reporting Standards ("IFRS").
The statutory accounts for the period ended 31 March 2021 have
been audited and approved, but have not yet been filed.
The Company's audited financial statements for the period ended
31 March 2021 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 2021.
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 audited financial statements.
The COVID-19 pandemic has had a material impact on the general
economy and a number of the Company's counterparties. The Company's
operations however 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.
After taking into account the Company's post year end
commitments to purchase USD109,999,982 of U(3) O(8) and to sell
USD10,000,000 of U(3) O(8) , the Company considered that as at 31
March 2021 it had sufficient cash balances to meet approximately
4.5 years of working capital requirements before it would need to
raise additional funds. The Company has no debt or hedge
liabilities on its balance sheet.
On 21 June 2021, after year end, the Company issued 25 million
new ordinary shares raising net proceeds of GBP60.6 million (USD
equivalent: 84.0 million net of costs of USD2.9 million. The
Company will apply the net proceeds to the purchase of additional
uranium and towards working capital and general corporate
purposes.
The Company aims to retain three years' of working capital
requirements following an equity issuance and may therefore apply
some of its cash balances which are in excess of three years'
working capital requirements to the purchase of additional uranium,
subject to value.
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 sale 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.
The Company also recognised a derivative financial liability in
the scope of IFRS 9. This financial instrument is recognised at
fair value and value changes are recognised in profit and loss.
Fair value has been determined based on the expected option payoff
using a Monte Carlo simulation produced by an independent financial
valuation company.
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.
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 accounting estimates in the year are the assumptions made in
valuing the derivative financial liability. These assumptions are
set out in note 7 and the carrying value of the derivative
financial liability is USD3,361,000 as at 31 March 2021 (31 March
2020: USD2,587,000).
Judgements
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 (period ended 31 March 2020:
USD nil).
3. MANAGEMENT OF FINANCIAL RISKS
Financial risk factors
The Company's financial assets and liabilities comprise of cash,
derivatives, 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 and derivative financial
liability 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 USD15,104,910.
Likewise, if the value rose by 5% the profit after tax would have
increased by USD15,104,910.
Economic Risk
The COVID-19 pandemic is an ongoing situation and will continue
to have a significant impact on the global economy and many
businesses across the world. The Company's operations however
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.
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 USD126,159,065
(31 March 2020: USD6,480,946).
Carrying amount < 1 year 1 to 2 years 2 to 10 years
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) - -
As at 31 March 2020 USD'000 USD'000 USD'000 USD'000
============================= =============== ================= ============ =============
Cash and cash equivalents 6,481 6,481 - -
Other creditors and accruals (392) (392) - -
============================= =============== ================= ============ =============
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 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 2021 USD'000 USD'000 USD'000 USD'000
============================= ======= ================= ======= =======
Investment in uranium 302,098 - - 302,098
Uranium derivative liability - (3,361) - (3,361)
As at 31 March 2020
============================= ======= ================= ======= =======
Investment in uranium 263,489 - - 263,489
Uranium derivative liability - (2,587) - (2,587)
============================= ======= ================= ======= =======
4. Investment in uranium
Fair Value
USD'000
As at 31 March 2019 217,366
======================= ===========
Purchase of U(3) O(8) 30,409
Change in fair value 15,714
----------------------- -----------
As at 31 March 2020 263,489
----------------------- -----------
Purchase 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
======================= ===========
The value of the Company's investment in U(3) O(8) is based on
the month end spot price for U(3) O(8) of USD30.65/lb as published
by UxC LLC on 29 March 2021 (2020: USD27.40/lb as published by UxC
LLC on 30 March 2020).
Purchase of uranium
The Company has purchased a total of 10,156,385 lb of U(3) O(8)
at an average price of USD22.01/lb. The total cash consideration
for the purchases was USD223,588,600 made up as follows:
- Purchase of 8,091,385 lb of U (3) O(8) from Kazatomprom
at IPO on 5 July 2018 for a cash consideration of USD170,000,000
under a 10-year Framework Agreement (the "Initial Purchase").
- A second purchase of 350,000 lb from Kazatomprom for a cash
consideration of USD8,155,000.
- A third purchase of 1,175,000 lb from Kazatomprom on 31
May 2019 under the Framework Agreement for a cash consideration
of USD30,409,000.
- On 23 March 2021, the Company purchased 440,000 lb of U(3)
O(8) for a cash consideration of USD12,029,600.
- On 30 March 2021, the Company purchased a further 100,000
lb of U(3) O(8) for a cash consideration of USD2,995,000.
Post year-end purchases of uranium
On 3 March 2021, the Company committed to purchase a further
3,454,231 lb of U(3) O(8) from Kazatomprom under the Framework
Agreement for a cash consideration of USD99,999,987. The Company
took delivery of the uranium on 21 June 2021, at which point legal
title passed to the Company.
On 20 May 2021, the Company completed the purchase of and took
title to 343,053 lb of U(3) O(8) in the market at a price of
USD29.15/lb for total consideration of USD9,999,995.
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 will take delivery of this uranium between July and
August 2021.
The Company expects to conclude an agreement with Kazatomprom to
purchase a further 2.0 million lb of U(3) O(8) at a price of
USD32.23/lb for a total consideration of USD64.5 million for
delivery between October and December 2021, pursuant to
Kazatomprom's offer of 12 June 2021.
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.
During the year, the Company entered into the following location
swap transactions:
1) On 3 April 2020, a location swap agreement was entered into
to exchange 100,000 lb of U(3) O(8) , earning an exchange
fee of USD20,000. On 20 April 2020, the Company transferred
100,000 lb of U(3) O(8) from the Cameco facility to the
Orano facility in satisfaction of its obligations under
this location swap agreement.
2) On 24 July 2020, a series of location swap agreements were
entered into to exchange 500,000 lb of U(3) O(8) located
at Cameco's storage facility in Canada for an equal volume
of U(3) O(8) located at Orano's storage facility in France
for a period of six months to 29 January 2021. At the end
of the term, the U(3) O(8) was to be swapped back to its
original location. In consideration, Yellow Cake received
proceeds of USD1.0 million, net of costs and commissions
(gross proceeds of USD1,125,000).
On 2 October 2020, the Company agreed to defer the date
of the reverse location swap date by four months. This location
swap was reversed in May 2021 when the Company again received
the same volume of uranium in Canada in exchange for uranium
held in France. In consideration for the extension of the
reverse swap transaction, the Company received an additional
fee of USD90,000 net of costs and commissions upon completion
of the reverse swap transaction.
Sale of uranium
On 26 June 2020, the Company sold 200,000 lb of U(3) O(8) to
Cameco at a price of USD33.20/lb for a total cash consideration of
USD6,640,000.
On 29 June 2020, the company sold a further 100,000 lb of U(3)
O(8) to Cameco at a price of USD33.20/lb for a total cash
consideration of USD3,320,000.
In respect of the above two disposals, a premium of USD0.60/lb
to the prevailing June 2020 month-end spot price of USD32.60/lb (as
published by UxC, LLC), or USD180,000, has been recognised in the
statement of comprehensive income. This premium represents the
cumulative disposal proceeds of USD9,960,000 less the carrying
value at the respective dates of disposal of USD9,780,000, being
the premium on spot price (and therefore carrying value) that was
realised on disposal.
For illustrative purposes, this sale of uranium resulted in an
effective "realised gain" of USD3,657,000 since the U(3) O(8) was
originally purchased, being the sales proceeds USD9,960,000 less
the "acquisition cost" of USD6,303,000, 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 to the
date of sale.
Post year-end 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.
The following table provides an analysis of the Company's
investment in U(3) O(8) at 31 March 2021:
Quantity Fair Value
Location lb USD'000
========== ========== ===========
Canada 9,256,385 283,708
France 600,000 18,390
---------- ---------- -----------
Total 9,856,385 302,098
========== ========== ===========
Post year end uranium related transactions
Quantity Fair Value
Location lb USD'000
================================== =========== ===========
As at 31 March 2021 9,856,385 302,098
URC sale transaction (348,068) (10,000)
Spot market purchase transaction 343,053 10,000
Kazatomprom purchase transaction 3,454,231 100,000
---------------------------------- ----------- -----------
Total 13,305,601 402,098
================================== =========== ===========
The above transactions do not include purchase commitments by
the Company which have not yet completed.
5. Trade and other receivables
As at 31 March 2021 As at 31 March 2020
USD'000 USD'000
================== ================================= =================================
Other receivables 119 89
------------------ --------------------------------- ---------------------------------
119 89
================== ================================= =================================
6. Cash and cash equivalents
Cash and cash equivalents as at 31 March 2021 were held with
Citi Bank Europe plc in a variable interest account with full
access. Balances at the end of the period were USD125,685,604 and
GBP337,918, a total of USD126,159,065 equivalent (31 March 2020:
USD6,480,061 and GBP714, a total of USD6,480,964 equivalent).
7. Uranium derivative liability
As part of the Initial Purchase mentioned in note 4 above, the
purchase price was 2.5% below the spot price, resulting in the
Company receiving a discount of USD4,250,000. 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
of U (3) O(8) at the prevailing uranium spot price less an
aggregate discount of USD6,525,000 (the "Repurchase Option"). The
Repurchase Option can be exercised from 4 July 2021 (being three
years from the date at which the Company took delivery of the
Initial Purchase inventory) if the U(3) O(8) spot price exceeds
USD37.50/lb for a period of 14 consecutive days. The option expires
on 30 June 2027.
The Company has the option to purchase from Kazatomprom all or a
portion of the volume repurchased by Kazatomprom under the
Repurchase Option. The Company's option may be exercised in whole
or in part and in one or more separate exercises during the year
commencing on the delivery date for the Repurchase Option and
ending on 30 June 2027.
The value of the option granted to Kazatomprom has been
determined at USD3,361,000 as at 31 March 2021 (31 March 2020:
USD2,587,000) based on the exercised Repurchase Option.
A valuation date spot price of USD30.65 per lb and volatility of
20.0% were used to simulate spot price as at 4 July 2021 (date at
which the option may first be exercised). After which monthly
volatility of 6.0% was used to simulate monthly prices to 30 June
2027. The derivative financial liability is classified within level
2 of the fair value hierarchy as at 31 March 2021.
8. Trade and other payables
As at As at
31 March
2021 31 March 2020
USD'000 USD'000
================================ ========= ==============
Uranium purchase consideration 2,995 -
Other creditors and accruals 626 392
-------------------------------- --------- --------------
3,621 392
================================ ========= ==============
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 2019 76,176,630 762 1,007
================================== =========== ========= =========
Issued 12 April 2019 12,039,086 120 157
---------------------------------- ----------- --------- ---------
Share capital as at 31 March 2020 88,215,716 882 1,164
================================== =========== ========= =========
Issued 2 March 2021 44,525,014 445 621
---------------------------------- ----------- --------- ---------
Share capital as at 31 March 2021 132,740,730 1,327 1,785
================================== =========== ========= =========
Share premium
GBP'000 USD'000
================================== =========== ========= =========
Share premium as at 31 March 2019 145,384 192,248
================================== =========== ========= =========
Proceeds of issue of shares 25,764 33,608
Share issue costs (1,192) (1,419)
---------------------------------- ----------- --------- ---------
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
================================== =========== ========= =========
The Company has one class of shares which carry no right to
fixed income.
On 2 March 2021, the Company issued a total of 43,001,944 new
ordinary shares to existing and new institutional investors and
1,523,070 new ordinary shares to retail investors, at a price of
GBP2.23 per share. The Company incurred listing expenses,
comprising of commissions and professional adviser fees totalling
USD4,185,705 of which USD3,504,355 have been taken to the share
premium account. Additional placing costs of USD681,350 have been
recognised in the statement of comprehensive income. Net proceeds
from the placing were GBP96,289,989 (USD equivalent:
134,313,908).
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.
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
in the form of nominal-cost options, which will vest and become
exercisable no earlier than one year after grant or in cash.
The 2020 annual bonus award, 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. Following the ongoing uncertainty
in the market, the grant of the second tranche of the 2020 annual
bonus award was further deferred until after the Company's Annual
General Meeting on 8 September 2021. The grant of the second
tranche will be made on 26 July 2021.
Set out below is the summary of the first tranche of the annual
bonus awards as granted to directors granted on 8 July 2020 in
relation to the year ended 31 March 2020:
Expired/
Opening Granted/ forfeited/ Closing
Director Grant date Exercise date Exercise price balance Exercised other balance
============= =========== ============== =============== ============== ========== ============= ==============
A Liebenberg 08/07/2020 08/07/2021 GBP0.01 - 27,392 - 27,392
C Whittall 08/07/2020 08/07/2021 GBP0.01 - 21,913 - 21,913
------------- ----------- -------------- --------------- -------------- ---------- ------------- --------------
Total - 49,305 - 49,305
=========================================================== ============== ========== ============= ==============
A Black-Scholes option pricing model was used to determine the
fair value the bonus awards. The valuation model inputs used to
determine the fair value at the grant date are as follows:
Share price Expected Risk-free Fair value at Fair value at
Grant date Exercise date at grant date Exercise price volatility interest rate grant date grant date*
=========== ============== ============= ============== ============= ============= ============= =============
08/07/2020 08/07/2021 GBP2.26 GBP0.01 30% (0.01%) GBP110,690 USD152,708
=========== ============== ============= ============== ============= ============= ============= =============
* The USD equivalent is derived using the FX rate as at the date
of reporting.
No annual bonus in the form of share based payments was awarded
in relation to the year ended 31 March 2021.
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). The face value (exercise price of
the options multiplied by the number of options granted) of shares
subject to the grants may be up to 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.
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 2021 financial year:
Expired/
Exercise Opening Granted/ forfeited/ Closing
Director Grant date Exercise date price balance exercised other 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 (no. options) 152,064 - - 152,064
=========================================================== ============= ============= ============ =============
Total fair value as at the grant date* USD63,565
=========================================================== ============= ============= ============ =============
* The USD equivalent is derived using the FX rate as at the date
of reporting.
Expired/
Exercise Opening Granted/ forfeited/ Closing
Director Grant date Exercise date price balance exercised other 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 (no. options) - 140,871 - 140,871
=========================================================== =========== ============ ============ =============
Total fair value as at the grant date* USD46,837
=========================================================================== ============ ============ =============
* 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:
Fair value
Share price Risk-free at grant Fair value at
at grant Exercise Expected interest date grant date
Grant date Exercise date date price volatility rate GBP USD
============= ============== ============= ============== ============= ============ ============ =============
24/02/2020 24/02/2023 GBP1.95 GBP1.97 25% 0.40% GBP46,075 USD63,565
08/07/2020 08/07/2023 GBP2.26 GBP2.88 30% (0.08%) GBP33,950 USD46,837
============= ============== ============= ============== ============= ============ ============ =============
The Remuneration Committee resolved to review the long-term
incentive plan and as a consequence no grant of long-term incentive
options will be made for the time being in respect of the 2022
financial year.
11. Treasury shares
Number GBP'000 USD'000
==================================== ========= ======= =======
Treasury shares as at 31 March 2019 - - -
------------------------------------ --------- ------- -------
Purchased in the year 309,788 565 726
------------------------------------ --------- ------- -------
Treasury shares as 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
==================================== ========= ======= =======
On 22 January 2020, the Company initiated a share buyback
programme to purchase up to USD2 million of the Company's ordinary
shares (the "Programme") during an initial period of three
months.
At the Programme's inception, the Company's shares were trading
at a material discount to its underlying net asset value. The
Yellow Cake Board therefore took the decision to implement a share
buyback programme as a means of effectively acquiring exposure to
uranium at a discount to the commodity spot price and delivering
value to its shareholders.
On 30 April 2020, the Company extended the Programme to the
earlier of 21 July 2020 or the date on which USD2 million had been
incurred in the purchase of the Company's shares.
On 8 July 2020, the Company announced an enlargement of the
Programme to purchase an additional number of shares for an
aggregate consideration of up to USD10 million over three months,
given that the Company's shares continued to trade at a significant
discount to net asset value. The duration of the Programme was
subsequently extended to 30 October 2020 and completed on that
date.
The share buyback programme concluded on 31 October 2020, with a
total of 4,156,385 shares acquired at an average price of GBP2.13
per share, for a total cost of USD11.5 million (GBP8.8 million) and
a weighted average discount to net asset value of 21%. All the
shares repurchased are held in treasury.
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.
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 USD1,123,870 (31 March
2020: USD1,017,413) to 308 Services.
308 Services is also entitled to receive commissions equivalent
to 0.5% of the transaction value in respect of 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. Therefore, the Company has elected
to include a provisional commission of USD75,123 within these
financial statements in respect of the uranium purchase
transactions completed by the Company in March 2021 equal to 0.5%
of the value transacted.
During the period, commissions and provisional commissions
payable to 308 Services totalled USD282,296 (31 March 2020:
USD152,045).
13. Other operating expenses
1 April 2020 1 April 2019
to 31 March 2021 to 31 March 2020
USD'000 USD'000
======================================== =============================== ===============================
Professional fees 687 682
Management Salaries and Directors' fees 535 557
Other expenses 443 470
Auditor's fees 74 47
---------------------------------------- ------------------------------- -------------------------------
1,739 1,756
======================================== =============================== ===============================
14 Taxation
1 April 2020 1 April 2019
to 31 March 2021 to 31 March 2020
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.
15. Related party transactions
During the year, the Company incurred USD173,802 (31 March 2020:
USD161,317) of administration fees payable to Langham Hall Fund
Management (Jersey) Limited ("Langham Hall"). Alexandra
Nethercott-Parkes was an employee of Langham Hall and served as a
Non-Executive Director of the Company from 18 July 2019 up to the
date of her resignation on 31 March 2021, for which she has
received no Directors' fees. 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 2021 there were no amounts due to
Langham Hall (31 March 2020: USDnil).
The key management personnel are the directors and as there are
no other employees, their remuneration is represented by
'management salaries and director fees' in the Statement of
Comprehensive Income.
The following Directors own ordinary shares in the Company:
Name Number of ordinary shares % of share capital as at 31 March 2021
============================ ========================= ======================================
The Lord St John of Bletso* 26,302 0.02%
Sofia Bianchi 13,186 0.01%
The Hon Alexander Downer 29,925 0.02%
Emily Manning - 0.00%
Alexandra Nethercott-Parkes - 0.00%
Alan Rule 18,837 0.01%
Andre Liebenberg 73,207 0.06%
Carole Whittall 11,302 0.01%
---------------------------- ------------------------- --------------------------------------
Total 172,759 0.13%
============================ ========================= ======================================
* 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 2020 1 April 2019
to to
31 March 2021 31 March 2020
============================================================================ ============== ==============
Profit for the year (USD'000) 29,911 12,509
Weighted average number of shares during the year - Basic* 89,017,413 87,823,408
---------------------------------------------------------------------------- -------------- --------------
Weighted average number of shares during the year - Diluted* 89,308,071 87,837,764
---------------------------------------------------------------------------- -------------- --------------
Earnings per share attributable to the equity owners of the Company (USD):
Basic 0.34 0.14
Diluted 0.33 0.14
============================================================================ ============== ==============
* The weighted average number of shares excludes treasury
shares.
17. Events after the reporting date
On 3 March 2021, the Company gave notice to Kazatomprom to
exercise its option to purchase 3,454,231 lb of U(3) O(8) at a
price of USD28.95/lb for a total cash consideration of
USD99,999,987. The Company took delivery of the uranium on 21 June
2021, at which point legal title passed to the Company.
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, when
legal title passed to the company.
On 6 May 2021, the Company committed to purchase 343,053 lb of
U(3) O(8) at a price of USD29.15/lb for a total cash consideration
of USD9,999,995. The transaction completed on 20 May 2021, when
legal title passed to the company.
On 21 June 2021, the Company issued 25 million new ordinary
shares at a price of GBP2.50 per share, raising net proceeds of
GBP60.6 million (USD equivalent: 84.0 million net of costs of
USD2.9 million). The Company intends to apply the proceeds to the
following transactions:
-- 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 will take delivery of this uranium between July and
August 2021.
-- The Company expects to conclude an agreement with Kazatomprom
to purchase a further 2.0 million lb of U(3) O(8) at a price of
USD32.23/lb for a total consideration of USD64.5 million for
delivery between October and December 2021, pursuant to
Kazatomprom's offer of 12 June 2021.
[1] Based on the month end spot price of USD30.65/lb published by UxC LLC on 29 March 2021.
[2] Based on 9.86 million lbs U(3) O(8) held on 31 March 2021
and excludes net additional post year-end purchases of 3.45 million
lb U(3) O(8) .
[3] During the financial year, Yellow Cake purchased 540,000 lb
U(3) O(8) for a cash consideration of USD15.0 million and committed
to purchase 3,454,231 lb U(3) O(8) from Kazatomprom for a cash
consideration of USD100.000 million and took delivery of the
uranium on 21 June 2021. During the financial year, Yellow Cake
also committed to sell 348,068 lb U(3) O(8) to Uranium Royalty
Corp. for a cash consideration of USD10.0 million. The Uranium
Royalty Corp. transaction completed on 28 April 2021. On 20 May
2021 Yellow Cake completed the purchase of 343,053 lb U(3) O(8) in
the market for a cash consideration of USD10.0 million.
[4] Net asset value per share on 31 March 2021 is calculated
assuming 132,740,730 ordinary shares in issue less 4,156,385 shares
held in treasury, the Bank of England's daily USD/GBP exchange rate
of 1.3796 on 31 March 2021 and the month-end spot price published
by UxC LLC on 29 March 2021.
[5] Based on the weekly spot price published by UxC LLC on 12
July 2021 and 13,305,601 lb U(3) O(8) held by the Company on that
date.
[6] European Commission Joint Research Centre, Technical
assessment of nuclear energy with respect to the 'do no significant
harm' criteria of Regulation (EU) 2020/852 ('Taxonomy Regulation'),
European Commission Joint Research Centre.
[7] World Nuclear Association: The Nuclear Fuel Report 2019.
[8] International Energy Agency: www.iea.org/countries.
[9] World Nuclear Association, World Nuclear Power Reactors and Uranium Requirements (May 2021).
[10] UxC Weekly "2020 U3O8 Production Review, 26 April 2021.
[11] World Nuclear Association, Country Profiles/Countries G -
N/Niger, World Nuclear Association, Country Profiles/Countries A -
F/Australi a.
[12] UxC Weekly "2020 Uranium Spot Market Review," 25 January
2021.
[13] UxC Weekly "2020 U3O8 Production Review,"26 April 2021.
[14] UxC Weekly, 21 January 2021.
[15] Month-end spot price published by UxC LLC on 29 June
2020.
[16] Net asset value per share on 31 March 2021 is calculated
assuming 132,740,730 ordinary shares in issue less 4,156,385 shares
held in treasury, the Bank of England's daily USD/GBP exchange rate
of 1.3796 on 31 March 2021 and the month-end spot price published
by UxC LLC on 29 March 2021.
[17] As at 31 March 2021, Yellow Cake held 9,856,385 lb U(3)
O(8) . Adjustments for purchases completed after 31 March 2021
include the addition of 3,454,231 lb U(3) O(8) that Yellow Cake
purchased from Kazatomprom for a cash consideration of USD100.0
million (delivered on 21 June 2021), the addition of 343,053 lb
U(3) O(8) which Yellow Cake purchased in the market for a cash
consideration of USD10.0 million (completed on 20 May 2021) and the
deduction of 348,068 lb U(3) O(8) which Yellow Cake sold to Uranium
Royalty Corp. for a cash consideration of USD10.0 million
(completed on 28 April 2021). Yellow Cake's estimated net asset
value per share as at 12 July 2021 was calculated assuming
157,740,730 ordinary shares in issue less 4,156,385 shares held in
treasury on that date and the Bank of England USD/GBP exchange rate
of 1.3894.
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END
FR DKFBKNBKBCOD
(END) Dow Jones Newswires
July 19, 2021 02:00 ET (06:00 GMT)
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