TIDMSXX
RNS Number : 0950O
Sirius Minerals plc
16 August 2017
16 August 2017
Sirius Minerals Plc
Half year results for period ended 30 June 2017
Sirius Minerals Plc ("Sirius" or the "Company") today announces
the unaudited half year results for Sirius and its subsidiaries
(the "Group") for the six-month period ended 30 June 2017.
Business highlights
-- The development of the Woodsmith Mine and its associated
infrastructure is on time and on budget.
-- Enablement works completed for the Woodsmith Mine and formal
commencement of development notice issued by the local planning
authority.
-- Admission to trading on London Stock Exchange Plc's Main
Market and inclusion in the FTSE 250 index.
-- Launch of the Sirius Minerals Foundation's first community funding programme.
-- Shaft sinking contract formally awarded to AMC in July (post balance date).
Financial review
-- The Group's operating loss for the period was GBP14.7m
compared to GBP4.7m in the prior corresponding period, reflecting a
general increase in Group activity following commencement of
development.
-- Due to IFRS fair valuation requirements relating to elements
of the stage 1 financing the 57% increase in the Company's share
price in the period has caused a total loss of GBP151.3m being
recorded for the period. The fair valuation adjustments driving the
loss are non-cash in nature. Further detail relating to the fair
valuation adjustments can be found on page 5.
-- The Company has deployed GBP121m during the six-month period
ended 30 June 2017 for Project development of which GBP48.3m was
capital expenditure.
-- Total funds at the end of June 2017 were GBP584.6m,
comprising bank deposits and cash equivalents of GBP491.0m and
restricted cash of GBP93.6m.
Chris Fraser, Managing Director and CEO of Sirius, comments:
"The half year has been marked by excellent progress on the
development of Woodsmith Mine and associated infrastructure. With
highways and enablement works completed, and site preparation into
the latter stages, we eagerly anticipate the commencement of shaft
sinking activities. Good progress has also been made at Lockwood
Beck, the intermediate site for the mineral transport system.
"We are continuing detailed dialogue with commercial partners
around the world, as interest in future supplies of our POLY4
product remains strong. These discussions are supported by
ever-present and expanding research and development work, which
will support customers and farmers in the years to come. We also
continue to add the skills we need to our team to progress our work
quickly, safely and efficiently."
Analyst conference call
Sirius Minerals' Chief Financial Officer, Thomas Staley, will
host a conference call for investors and analysts at 9.30 am today.
Any analysts wishing to ask questions on the call can receive dial
in details by emailing sirius@tavistock.co.uk.
The call can be listened to live, by clicking on the link below.
A replay will be available on the Company's website in due
course.
http://event.onlineseminarsolutions.com/wcc/r/1484277-1/0EDCAACE9E264914F4D5CEDD5231FA36?partnerref=rss-events
For further information, please contact:
Sirius Minerals Plc Tristan Pottas Tel: +44 845
Investor Relations Email: ir@siriusminerals.com 524 0247
Manager
-------------------- ------------------------------ -------------
Media enquiries Jos Simson Tel: +44 20
Tavistock Emily Fenton 7920 3150
-------------------- ------------------------------ -------------
About Sirius Minerals Plc
Sirius Minerals Plc is the fertilizer development company
focused on the construction and development of its North Yorkshire
polyhalite project in the United Kingdom (the "Project"). It
believes the Project represents the world's largest high-grade
known deposit of polyhalite, a multi-nutrient form of potash
containing potassium, sulphur, magnesium and calcium. Incorporated
in 2003, Sirius Minerals Plc's shares are traded on the London
Stock Exchange's Main Market. Further information on the Company
can be found at: www.siriusminerals.com.
Forward-looking statements
This document is intended to focus on matters which are relevant
to the interests of shareholders in the Company. The purpose of
this document is to assist shareholders in assessing the strategies
adopted and performance delivered by the Company and the potential
for those strategies to succeed. It should not be relied upon by
any other party or for any other purpose.
Forward-looking statements are made in good faith, based on a
number of assumptions concerning future events and information
available to the directors at the time of their approval of this
report. These forward-looking statements should be treated with
caution due to the inherent uncertainties underlying any such
forward-looking information. The user of this document should not
rely unduly on these forward-looking statements, which are not a
guarantee of performance and which are subject to a number of
uncertainties and other events, many of which are outside of the
Company's control and could cause actual events to differ
materially from those in these statements. No guarantee can be
given of future results, levels of activity, performance or
achievements.
BUSINESS REVIEW
Project development
The safety of employees and contractors remains a key focus for
the Group. It has been another positive six months with no
recordable incidents during the period. As the level of activity
increases, the level of safety vigilance also increases. During the
period additional safety personnel have joined both the Group and
its contractors. The Board, management and wider team continue to
place safety at the centre of decision-making processes.
The Group is making good progress with the development of the
Woodsmith Mine and its associated infrastructure (the "Project").
The Project remains on time and on budget. The Project team, both
through Group employees at headquarters and contractor partners on
site, has grown considerably in the past six months as construction
activities ramp up.
Highways enablement works commenced in January 2017 facilitating
safe and smooth access to the Woodsmith Mine site and Lockwood
Beck. Site preparation at the Woodsmith Mine is ongoing with
completed works including site access, groundwater protection and
shaft sinking platform construction (for the production and
services shafts). Site preparation activities have also commenced
at the Lockwood Beck site to support future shaft-sinking for the
mineral transport system.
The Company has progressed the exploration borehole and testing
of the production shaft. This builds on the information captured
during the Group's own exploration phase and helps to continually
inform the ongoing shaft design work. In addition, a near surface
geotechnical programme has been completed and the results are being
incorporated into the mine design. A programme of boreholes and
seismic work to support the mineral transport system's detailed
design work has also commenced.
The Company's shaft sinking contractor, AMC, have continued with
detailed design of the shafts including associated surface
facilities such as the production and service shaft winder
buildings. Diaphragm walling ("D-walling") preparation activities
have commenced including the mobilisation of the rigs and planning
for the support infrastructure such as the concrete batch plant,
welfare facilities, workshops and offices.
The winding equipment required for main shaft sinking activities
has been ordered and delivery is expected in the new year in time
for the main sink to commence.
Corporate
The Company has continued to expand its sales and marketing team
with regional leads, who are now established in their individual
markets, in North America, South America, South-East Asia and
Europe. Commercial discussions are continuing in these key regions
regarding sales of the Company's POLY4 product, as well as in key
growth markets such as Africa. Each of these opportunities
represent material volume prospects in key markets for Sirius.
To support the ongoing sales effort together with long-term
customer relationships, the Company's research and development
programme has expanded. It continues to validate the four
cornerstones of the POLY4 value proposition: efficiency,
effectiveness, flexibility and sustainability. During the past six
months a range of further opportunities for new crops and markets
were identified. To date the Company has completed over 200 trials
on 27 varieties of crops in 17 countries.
In April 2017 the Group delivered on its long standing
commitment to move from the AIM market. The Group achieved a
premium listing on the Official List of the UK Listing Authority
and its shares were admitted to trading on the London Stock
Exchange's Main Market for listed securities. The Board continues
to believe that this move raises the Company's global profile,
increases its trading liquidity and provides the Company with a
greater range of potential investors for its ordinary shares.
Following the admission to the Main Market the Company was added to
the FTSE 250 index in June.
The Sirius Minerals Foundation, the charity set up as a
community fund in 2012 to share revenues generated by the Woodsmith
Mine, has launched its first grant programme. This is after
receiving its first funding of GBP2m from the Company, which is
intended to fund community projects during the construction
period.
Post balance date
Since the half year end the Group formally awarded the shaft
sinking scope of work to Associated Mining Construction UK Ltd
("AMC"). The scope encompasses approximately three quarters of the
mine site development ("MSD") line item outlined in the stage 1
financing plan. The remainder of the MSD line item relates to site
preparation work, provision of utilities to site and shaft bottom
development.
The target price of AMC's scope is consistent with the allocated
project budget and the target date for reaching both first
polyhalite and practical completion is within the dates outlined in
the project schedule.
The commercial arrangement with AMC is one of risk sharing with
financial incentives for completing the scope of work under budget
and ahead of schedule, and there are also financial penalties
should completion be late or above the target price. The cost of
this work is expected to be incurred in a combination of currencies
with approximately 55% in GBP, 30% in EUR and 15% in CAD. The Group
is in the process of appropriately mitigating foreign exchange
exposures relating to the EUR and CAD costs.
FINANCIAL REVIEW
The Group's operating loss for the period was GBP14.7m compared
to GBP4.7m in the prior corresponding period, with the increased
loss being driven by an increase in activity following the
completion of the stage 1 financing. The Group has historically
made a loss which has been largely reflective of the Group's
approach to expensing certain types of indirect costs through the
development phase and this practice has continued since
construction commenced.
During the six-month period ended 30 June 2017 the Group made a
total loss of GBP151.3m compared to a loss of GBP4.1m for the
equivalent six-month period in 2016. The following table sets out
the main drivers of the Group's loss for the period.
GBPm H1 2017 H1 2016
---------------------------------------- -------- --------
Operating loss (14.7) (4.7)
---------------------------------------- -------- --------
Net interest expense (1.8) 0.1
Fair value loss on derivative (133.3) -
instruments
Attributable to convertible (111.9) -
bond
Attributable to royalty (21.4) -
financing
Foreign exchange losses (1.5) -
on net debt
Taxation - 0.5
---------------------------------------- -------- --------
Loss for the financial
period (151.3) (4.1)
---------------------------------------- -------- --------
As can be seen from the table, the main driver of the loss is
the fair value re-measurement of the derivatives associated with
the convertible bond and, to a lesser extent, the royalty
financing. These derivative liabilities increase in size as the
share price of the Company increases. With the share price
increasing by 57% over the period, the size of the loss
attributable to the derivatives has increased materially. As the
convertible bonds are converted and the royalty financing is drawn,
these derivative liabilities will be reclassified from liabilities
to equity and require no cash settlement by the Group.
The Company has deployed GBP121m during the period for the
purposes of developing the Project. The table below breaks out the
key items:
GBPm H1 2017
Operating costs (14.7)
Capital expenditure (28.3)
Incurred but unpaid capital
expenditure (20.0)
Local authorities' security
requirements (34.7)
Financing costs (23.4)
----------------------------- --------
Total Project use of
funds (121.1)
----------------------------- --------
Total capital expenditure incurred for the period was GBP48.3m
with a significant portion of that unpaid as at the balance sheet
date. In addition to this, numerous financial commitments for items
such as the permanent winders and D-walling activities have been
made and these items are not reflected in the financial statements.
The local authorities' security requirements reflect a combination
of providing reinstatement security for construction works and the
security requirements of the Section 106 agreement.
Total funds at the end of June 2017 were GBP584.6m, comprising
bank deposits and cash equivalents of GBP491.0m and restricted cash
of GBP93.6m. The following table provides a breakdown of movements
through the period in total funds, split between available cash
(comprising cash and cash equivalents and bank deposits) and
restricted cash:
Available Restricted Total
GBPm cash cash funds
Opening balance 582.4 82.9 665.3
Operating costs (14.7) - (14.7)
Capital expenditure
(paid only) (28.3) - (28.3)
Local authorities'
commitments (34.7) 34.7 -
Financing costs (1.4) (20.0) (21.4)
Working capital and
other (0.6) - (0.6)
FX revaluation (11.7) (4.0) (15.7)
--------------------- ---------- ----------- -------
Closing balance 491.0 93.6 584.6
--------------------- ---------- ----------- -------
Total cash holdings are split approximately 55% GBP, 45% USD and
5% EUR.
A number of convertible bond conversion notices were received
during the period resulting in 22% of the initial bonds being
converted. Because of these conversions, 283m shares were issued
during the period. 1,564 bonds remain outstanding with an aggregate
face value of US$313m.
PRINCIPAL RISKS AND UNCERTANTIES
There are a number of potential risks and uncertainties that
could have a material impact on the Group's performance over the
remaining six months of the financial period. The majority of the
principal risks facing the Group remain unchanged from those set
out on pages 32 to 35 of our annual report and accounts for the
year ended 31 December 2016 ("2016 Annual Report"). However,
certain principal risks and uncertainties have been updated. In
accordance with the Disclosure and Transparency Rules ("DTR"),
newly identified business risks and those that have materially
changed since the last annual report and accounts are required to
be disclosed.
Principal Description Mitigation
risks
------------------- ----------------------------- --------------------------------------------
Government In many nations, given The Company seeks to
relations the importance of build positive relationships
food security for with foreign governments
them, policy decisions where there is significant
on fertilizer use state interest in the
could make significant fertilizer sector. The
differences to import Company will continue
levels. to work closely with
Similarly, governmental the UK Department for
support in key export Trade to assist with
markets is of significant this process where appropriate.
assistance in establishing
long-term trade deals
for our product.
------------------- ----------------------------- --------------------------------------------
Customer The majority of current The Company continues
viability and future customers to expand its portfolio
have business lines of customers both in
in agriculture beyond terms of size and geographically
just fertilizer - to leverage the risk.
changes to any of
these can have an
impact on fertilizer
business units.
------------------- ----------------------------- --------------------------------------------
Product The process of registering The Company has begun
registration the product varies the process of registering
in complexity from its product in various
country to country regions where current
and region to region. customer agreements
There is no guarantee are in place. It has
that these registrations also begun the early
will be forthcoming. registration process
to have its product
validated and ultimately
registered in markets
such as India, where
time associated to trial
work is part of the
process.
------------------- ----------------------------- --------------------------------------------
Construction The Project may experience Detailed planning will
delays(1) construction and schedule be carried out continuously
delays due to unforeseen by the management and
technical issues. external consultants
as part of the Project's
continued development
to mitigate and de-risk
the Project during construction.
The Company also continues
to pursue all acceleration
options available to
reduce the time required
to reach first production.
Contractors are incentivised
to bring their scopes
forward.
------------------- ----------------------------- --------------------------------------------
Employee Our business depends The Company continues
relations(2) on attracting and to support its employees
retaining skilled and contractors ensuring
employees and contractors. safe working environment
A loss of skilled and encouraging a positive
employees and/or a work-life balance. Regular
breakdown in relations communication is maintained
and communication and all employees and
could result in disruptions contractors are updated
to operations. on the Project's progress
and news through weekly
meetings, in-house newsletters,
and senior management
team emails.
------------------- ----------------------------- --------------------------------------------
Contractors The performance of An active and experienced
and suppliers(2) our contractors and management team is in
suppliers is critical place with a focus on
to the success of being clear about expectations,
the project. Performance verifying performance,
issues or a lack of and doing everything
alignment could introduce possible within the
cost and schedule contracts to ensure
risks to the Project. the success of our contractors
and suppliers.
In working with the
contractors, the Company
is focused on ensuring
that contractors are
operating within their
area of specialisation,
that their senior management
are engaged in the Project,
that regular communication
and progress updates
are maintained, and
that major construction
contractors are incentivised
around the success of
the Project.
This risk would manifest
itself in cost, delay
or quality issues.
------------------- ----------------------------- --------------------------------------------
Construction The Project may experience The Company has a strong
cost overruns(1) construction cost focus on cost, and the
overruns due to unforeseen prices received from
technical issues or contractors and suppliers
scope change. so far have been in
line with the DFS. In
addition, the Project
was costed with a significant
contingency and escalation
provisions in case of
cost pressures. The
fall in the value of
the pound also provides
comfort in this area.
As further detailed
engineering is carried
out and contracts are
awarded this risk decreases.
------------------- ----------------------------- --------------------------------------------
Safety A significant safety The Company is set up
and environmental or environmental incident to manage these items
performance(1) would affect the delivery effectively, and the
of the Project and Company will continue
the Company's reputation. to support its teams
in providing a safe
work environment. Ongoing
focus areas include
leadership activities,
work with contractors,
developing the culture
of the project team,
and the control of major
hazards.
The Company continuously
assesses the risk and
ensures that the right
people are in the right
place. Nonetheless,
the Company is not complacent
about the risks in this
area.
------------------- ----------------------------- --------------------------------------------
(1) Construction risk was disclosed as a principal risk in our
2016 Annual Report. This risk has now been divided into three
separate risks: a renamed Construction delays risk (previously
called Delays in our 2016 Annual Report); and two new risks:
Construction costs overruns and Safety and environmental
performance.
(2) Employer and contractor relations risk was disclosed as a
principal risk in our 2016 Annual Report. This risk has now been
separated into two separate risks: Employee relations and
Contractors and suppliers.
In addition to the principal risks and uncertainties listed
above there may be additional risks unknown to Sirius and other
risks, currently believed to be immaterial, which could turn out to
be material. These risks, whether they materialise individually or
simultaneously, could significantly affect the Group's business and
financial results.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
In the directors' opinion:
These condensed consolidated interim financial statements have
been prepared in accordance with IAS 34 Interim Financial Reporting
as adopted by the European Union and the Disclosure and
Transparency Rules ("DTR") of the Financial Conduct Authority in
the United Kingdom, using the most appropriate accounting policies
for the Company's business and supported by reasonable and prudent
judgements.
The condensed consolidated interim financial statements give a
true and fair view of Sirius Minerals Plc's financial position as
at 30 June 2017 and of its performance. The directors confirm that
this interim management report includes a fair review of the
information required by DTR 4.2.7R and DTR 4.2.8R, namely:
-- An indication of important events that have occurred during
the first six months and their impact on the condensed set of
financial statements, and a description of the principal risks and
uncertainties for the remaining six months of the financial year;
and
-- Material related-party transactions in the first six months
and any material changes in the related-party transactions
described in the last annual report.
Signed by order of the Board.
Chris Fraser
Managing Director and CEO
15 August 2017
Thomas Staley
Finance Director
15 August 2017
INDEPENT REVIEW REPORT TO SIRIUS MINERALS Plc
Report on the condensed interim unaudited consolidated financial
statements
Our conclusion
We have reviewed Sirius Minerals Plc's condensed interim
unaudited consolidated financial statements (the "interim financial
statements") for the six-month period ended 30 June 2017. Based on
our review, nothing has come to our attention that causes us to
believe that the interim financial statements are not prepared, in
all material respects, in accordance with International Accounting
Standard 34, "Interim Financial Reporting", as adopted by the
European Union and the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority.
What we have reviewed
The interim financial statements comprise:
-- The condensed consolidated statement of financial position as at 30 June 2017;
-- The condensed consolidated statement of comprehensive income for the period then ended;
-- The condensed consolidated statement of cash flows for the period then ended;
-- The condensed consolidated statement of changes in equity for the period then ended; and
-- The explanatory notes to the interim financial statements.
The interim financial statements included in the condensed
interim unaudited consolidated financial statements have been
prepared in accordance with International Accounting Standard 34,
"Interim Financial Reporting", as adopted by the European Union and
the Disclosure Guidance and Transparency Rules sourcebook of the
United Kingdom's Financial Conduct Authority.
As disclosed in note 1 to the interim financial statements, the
financial reporting framework that has been applied in the
preparation of the full annual financial statements of the Group is
applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The condensed interim unaudited consolidated financial
statements, including the interim financial statements, is the
responsibility of, and has been approved by, the directors. The
directors are responsible for preparing the condensed interim
unaudited consolidated financial statements in accordance with the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority.
Our responsibility is to express a conclusion on the interim
financial statements in the condensed interim unaudited
consolidated financial statements based on our review. This report,
including the conclusion, has been prepared for and only for the
Company for the purpose of complying with the Disclosure Guidance
and Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority and for no other purpose. We do not, in giving
this conclusion, accept or assume responsibility for any other
purpose or to any other person to whom this report is shown or into
whose hands it may come save where expressly agreed by our prior
consent in writing.
What a review of interim financial statements involves
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2010, "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the condensed
interim unaudited consolidated financial statements and considered
whether it contains any apparent misstatements or material
inconsistencies with the information in the interim financial
statements.
PricewaterhouseCoopers LLP
Chartered Accountants
Leeds
15 August 2017
a) The maintenance and integrity of the Sirius Minerals Plc
website is the responsibility of the directors; the work carried
out by the auditors does not involve consideration of these matters
and, accordingly, the auditors accept no responsibility for any
changes that may have occurred to the interim financial statements
since they were initially presented on the website.
b) Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
for the six months ended 30 June 2017
Six months Six months Year
to June to June ended
2017 2016 Dec 2016
(unaudited) (unaudited) (audited)
Restated* Restated*
Note GBP000s GBP000s GBP000s
------------- ------------- -----------
Revenue - - -
Operating costs (14,732) (4,665) (16,858)
------------------------------------- ----- ------------- ------------- -----------
Operating loss (14,732) (4,665) (16,858)
Net finance (expense)/income 4 (136,573) 120 (6,564)
Loss before taxation (151,305) (4,545) (23,422)
Taxation - 477 468
------------------------------------- ----- ------------- ------------- -----------
Loss for the financial period (151,305) (4,068) (22,954)
------------------------------------- ----- ------------- ------------- -----------
Other comprehensive income:
Items that may be reclassified
subsequently to profit or loss:
Exchange differences on translating
foreign operations 12 17 18
Cash flow hedging movement 151 - -
Other comprehensive income
for the period 163 17 18
------------------------------------- ----- ------------- ------------- -----------
Total comprehensive loss for
the period attributable to
the owners of the Company (151,142) (4,051) (22,936)
------------------------------------- ----- ------------- ------------- -----------
Loss per share:
Basic and diluted (pence) 3 (3.60) (0.18) (0.93)
------------------------------------- ----- ------------- ------------- -----------
* Operating costs and net finance (expense)/income have been
restated following the change in accounting policy described in
note 10.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION as at 30 June 2017
30 June 31 December
2017 2016
(unaudited) (audited)
ASSETS Note GBP000s GBP000s
--------------------------------- ----- ------------- ------------
Non-current assets
Intangible assets 5 11,929 150,204
Property, plant and equipment 6 204,660 6,138
Restricted cash 71,713 55,283
--------------------------------- ----- ------------- ------------
Total non-current assets 288,302 211,625
--------------------------------- ----- ------------- ------------
Current assets
Derivative financial instrument - 1,041
Restricted cash 21,850 27,641
Other receivables 5,403 840
Bank deposits 212,202 322,188
Cash and cash equivalents 278,827 260,157
--------------------------------- ----- ------------- ------------
Total current assets 518,282 611,867
--------------------------------- ----- ------------- ------------
TOTAL ASSETS 806,584 823,492
--------------------------------- ----- ------------- ------------
EQUITY AND LIABILITIES
Equity
Share capital 11,123 10,412
Share premium account 674,503 590,723
Share-based payment reserve 6,807 6,114
Accumulated losses (263,566) (112,261)
Other reserves 1,447 1,284
--------------------------------- ----- ------------- ------------
Total equity 430,314 496,272
--------------------------------- ----- ------------- ------------
Current liabilities
Convertible loan 326,887 321,366
Derivative financial instrument 20,348 -
Trade and other payables 29,035 5,854
--------------------------------- ----- ------------- ------------
Total liabilities 376,270 327,220
--------------------------------- ----- ------------- ------------
TOTAL EQUITY AND LIABILITIES 806,584 823,492
--------------------------------- ----- ------------- ------------
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six-month period ended 30 June 2017
(unaudited)
Share capital Share premium Share-based Accumulated Other reserves Total
account payments losses
reserve
GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s
At 1 January
2017 10,412 590,723 6,114 (112,261) 1,284 496,272
Loss for the
financial
period - - - (151,305) - (151,305)
Other
comprehensive
expense - - - - 163 163
Transactions
with owners:
Shares issued
on conversion
of
convertible
bonds 708 83,513 - - - 84,221
Share-based
payments 3 267 693 - - 963
----------------- -------------- ----------------- ---------------- ----------------- --------------- ----------
At 30 June 2017 11,123 674,503 6,807 (263,566) 1,447 430,314
----------------- -------------- ----------------- ---------------- ----------------- --------------- ----------
for the six-month period ended 30 June 2016
(unaudited)
Share capital Share premium Share-based Accumulated Other reserves Total
account payments reserve losses
GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s
At 1 January 2016 5,737 240,874 7,624 (90,339) 1,266 165,162
Loss for the
financial period - - - (4,068) - (4,068)
Other
comprehensive
expense - - - - 17 17
Transactions with
owners:
Share issue 12 - - - - 12
Share issue
costs - (42) - - - (42)
Share-based
payments 20 1,418 (1,469) 684 - 653
------------------ -------------- ----------------- ----------------- ----------------- --------------- --------
At 30 June 2016 5,769 242,250 6,155 (93,723) 1,283 161,734
------------------ -------------- ----------------- ----------------- ----------------- --------------- --------
The share premium account is used to record the excess proceeds
over nominal values on the issue of shares.
The share-based payment reserve is used to record the
share-based payments made in the Group.
Other reserves comprise the foreign exchange reserve (which
arises on translation of foreign operations with a functional
currency other than sterling) of GBP1,296,000 (30 June 2016:
GBP1,283,000) and the cash flow hedge reserve (which accumulates
unrecognised gains or losses of instruments designated in cash flow
hedge relationships) of GBP151,000 (30 June 2016: nil).
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
for the six-month period ended 30 June 2017
First First Full
half half year
2017 2016 2016
(unaudited) (unaudited) (audited)
Restated* Restated*
GBP000s GBP000s GBP000s
Cash outflow from operating
activities
Continuing operations
Operating loss (14,732) (4,665) (16,858)
Adjustments for:
Depreciation and amortisation 81 30 57
Share-based payments 341 653 844
Changes in working capital (1,030) (360) (407)
----------------------------------------- ------------- ------------- -----------
Cash used in continuing operations (15,340) (4,342) (16,364)
Tax credit received - 477 468
----------------------------------------- ------------- ------------- -----------
Net cash used in operating
activities (15,340) (3,865) (15,896)
----------------------------------------- ------------- ------------- -----------
Cash flow from investing
activities
Purchase of intangible assets (1,188) (8,392) (12,108)
Purchase of property, plant
and equipment (27,127) (14) (4,346)
Purchase of bank deposits - - (320,187)
Redemption of bank deposits 103,894 - -
Interest received 1,228 79 441
Net cash generated from/(used
in) investing activities 76,807 (8,327) (336,200)
----------------------------------------- ------------- ------------- -----------
Cash flow from financing
activities
Repayment of borrowings - - (748)
Proceeds from convertible
loan - - 319,923
Purchase of restricted cash (34,712) - (81,580)
Redemption of restricted 20,014 - -
cash
Interest paid (20,014) (9) (19)
Proceeds from issue of shares - 12 371,445
Share issue costs (925) (42) (18,370)
Convertible loan issue costs (2,419) - (9,158)
Net cash (used in)/generated
from financing activities (38,056) (39) 581,493
----------------------------------------- ------------- ------------- -----------
Net increase/(decrease) in
cash and cash equivalents 23,411 (12,231) 229,397
Cash and cash equivalents
at the beginning of the period 260,157 29,093 29,093
(Loss)/gain from foreign
exchange (4,741) 67 1,667
Cash and cash equivalents
at end of the period 278,827 16,929 260,157
----------------------------------------- ------------- ------------- -----------
* Operating loss has been restated following the change in
accounting policy described in note 10.
NOTES TO THE FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES
BASIS OF PREPARATION
These condensed interim unaudited consolidated financial
statements for the six-month period ended 30 June 2017 comprise
Sirius Minerals Plc (the "Company") and its subsidiaries (together
referred to as the "Group"). The financial information included in
this interim financial report for the six months ended 30 June 2017
does not constitute statutory accounts as defined in section 434 of
the Companies Act 2006 and is unaudited. The comparative
information for the six months ended 30 June 2016 is also
unaudited. The comparative figures for the year ended 31 December
2016 have been extracted from the Group's financial statements, as
filed with the Registrar of Companies, on which the auditors gave
an unqualified opinion, did not contain an emphasis of matter
paragraph and did not make a statement under section 498 of the
Companies Act 2006. The Group's operations are not seasonal in
nature. These condensed consolidated interim financial statements
have been reviewed, not audited.
This consolidated interim financial report for the six months
ended 30 June 2017 has been prepared in accordance with the
Disclosure and Transparency Rules of the Financial Conduct
Authority and IAS 34 Interim Financial Reporting (as adopted by the
EU). The report should be read in conjunction with the Group's
financial statements for the year ended 31 December 2016, available
on the Group's website (www.siriusminerals.com), which were
prepared in accordance with IFRSs as adopted by the EU.
GOING CONCERN
These condensed interim unaudited consolidated financial
statements have been prepared under the going concern
assumption.
As a result of the stage 1 fundraising completed during November
2016, the Group was able to commence significant development work
on its polyhalite project in North Yorkshire (the "Project") during
January 2017 with latest cash flow forecasts indicating that the
Group has sufficient assets to meet its planned liabilities as they
fall due until 2019. The Group has no restrictions on the use of
its cash and cash equivalents or bank deposits (upon their
maturity).
The Group has publicly announced its intention to conduct stage
2 of fundraising in 2018 in order to raise sufficient further funds
to complete development of the Project and reach commercial
production, which will ultimately allow the Group to generate
sufficient cash to sustain itself as a going concern for the
foreseeable future. The directors are confident of a positive
outcome to the stage 2 financing negotiations and have mandated a
group of six financial institutions on the basis of a non-binding
but mutually-agreed term sheet. At the same time, the
Infrastructure and Projects Authority (formally IUK) confirmed its
interest in supporting the stage 2 financing for the Project.
Having assessed the principal risks and having regard for the
above, the directors consider it appropriate to adopt the going
concern basis of accounting in preparing its consolidated financial
statements.
NEW AND AMED STANDARDS ADOPTED BY THE GROUP
There are no new standards, amendments to existing standards or
interpretations issued but not effective for the financial year
beginning 1 January 2017 that have been early adopted, nor are any
expected to have a material impact on the Group when they do become
effective.
2. SEGMENTAL ANALYSIS
Management has determined the operating segments by considering
the business from both a geographic and activity perspective. The
Group is organised into one business division: the UK segment which
consists of Project related activities and the corporate
operations. This division is the segment for which the Group
reports information internally to the board of directors. The
Group's operations are predominantly in the UK.
As a result of the disclosure requirements required under IFRS 8
Operating Segments, the disclosures are already included in the
primary statements.
3. LOSS PER SHARE
Basic loss per share is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the period.
For all periods presented, the Group's potentially dilutive
ordinary share equivalents (being share options issued under
equity-settled share-based payment schemes, the convertible loan,
and share options issued to Hancock British Holdings Limited under
the royalty financing arrangement) have an anti-dilutive effect on
loss per share and have therefore not been included in determining
the total weighted average number of ordinary shares outstanding
for the purposes of calculating diluted loss per share.
Six months to June 2017 Six months Year ended
to June Dec 2016
2016
(unaudited) (unaudited) (audited)
GBP000s GBP000s GBP000s
---------------------------------- ------------------------ ------------- -----------
Loss for the purposes of basic
and diluted earnings per share 151,305 4,068 22,954
Weighted average number of
ordinary shares for the purpose
of basic and
diluted earnings per share
(number in thousands) 4,197,174 2,294,696 2,472,762
---------------------------------- ------------------------ ------------- -----------
Basic and diluted loss per share
(pence) 3.60 0.18 0.93
---------------------------------- ------------------------ ------------- -----------
4. NET FINANCE (EXPENSE)/INCOME
Six months Six months Year ended
to June to June Dec 2016
2017 2016
(unaudited) (unaudited) (audited)
GBP000s GBP000s GBP000s
--------------------------------- ------------- ------------- -----------
Interest income 1,969 79 448
Interest income capitalised (1,050) - -
on qualifying assets
Interest expense (15,071) (9) (2,858)
Interest expense capitalised 12,426 - -
on qualifying assets
Fair value loss on convertible
loan embedded derivative (111,895) - (5,744)
Fair value (loss)/gain on
royalty financing derivative (21,389) - 1,041
Foreign exchange (losses)/gains
on net debt (1,563) 50 549
--------------------------------- ------------- ------------- -----------
Net finance (expense)/income (136,573) 120 (6,564)
--------------------------------- ------------- ------------- -----------
During January 2017 the Group commenced significant development
work at its Project. After this point all interest expense incurred
has been capitalised, net of all interest income earned on the
temporary re-investment of those borrowings prior to
utilisation.
5. INTANGIBLE ASSETS
30 June 30 June 31 Dec
2017 2016 2016
(unaudited) (unaudited) (audited)
GBP000s GBP000s GBP000s
------------------------------ ------------- ------------- -----------
Net book value
At beginning of period 150,204 137,970 137,970
Additions 4,329 7,926 12,234
Transfers to property, plant
and equipment (142,548) - -
Amortisation (56) - -
------------------------------ ------------- ------------- -----------
At end of period 11,929 145,896 150,204
------------------------------ ------------- ------------- -----------
6. PROPERTY, PLANT AND EQUIPMENT
30 June 30 June 31 Dec
2017 2016 2016
(unaudited) (unaudited) (audited)
GBP000s GBP000s GBP000s
--------------------------- ------------- ------------- -----------
Net book value
At beginning of period 6,138 1,849 1,849
Additions 55,999 14 4,346
Transfers from intangible
assets 142,548 - -
Depreciation (25) (30) (57)
--------------------------- ------------- ------------- -----------
At end of period 204,660 1,833 6,138
--------------------------- ------------- ------------- -----------
During January 2017 the Group commenced significant development
work at its Project. All exploration costs and rights in relation
to the Project previously capitalised by the Group have been
transferred from intangible assets to property, plant and equipment
from that date since the technical feasibility and commercial
viability of the Project had clearly been demonstrated. All
subsequent development expenditure on the Project has been
capitalised within property, plant and equipment.
At 30 June 2017 the Group had contracted but unrecognised
capital expenditure commitments of GBP32,010,000.
7. NET CASH
30 June 30 June 31 Dec
2017 2016 2016
(unaudited) (unaudited) (audited)
GBP000s GBP000s GBP000s
-------------------------------- ------------- ------------- -----------
At beginning of period 386,336 28,345 28,345
Net increase/(decrease) in
cash and cash equivalents 23,411 (12,231) 229,397
Net cash flows from restricted
cash and bank deposits (89,196) - 401,767
New debt issued - - (270,909)
Interest expense (15,071) - -
Interest paid 20,014 - (2,839)
Conversions of convertible 51,658 - -
loan
Foreign exchange differences (642) 67 575
-------------------------------- ------------- ------------- -----------
At end of period 376,510 16,181 386,336
-------------------------------- ------------- ------------- -----------
Net cash is defined by the Group as being the total value of
cash and cash equivalents, restricted cash and bank deposits, less
all interest-bearing debt. Interest bearing debt includes only the
host loan element of the $400m convertible loan and not the
embedded conversion derivative on the basis that embedded
derivative is unlikely to ever be settled in cash by the Group.
During the six-month period, conversion notices in respect of
21.8% of the $400m convertible loan were delivered by convertible
loan holders to the Group, leading to the creation of 283,405,497
new ordinary shares in the Company. As at 30 June 2017 65,669,698
of these ordinary shares had been created but not yet issued to
convertible loan holders, with delivery of these shares being made
to convertible loan holders on 4 July 2017.
As at 30 June 2017 the Group had 4,389,633,265 ordinary shares
in public issuance (December 2016: 4,164,514,405).
8. FINANCIAL INSTRUMENTS
Designated into Loans and At fair value Financial Total
30 June 2017 cash flow hedge receivables through profit and liabilities at
(unaudited) relationships loss amortised cost
GBP000s GBP000s GBP000s GBP000s GBP000s
--------------------- ------------------- -------------------- ------------------- ------------------- ----------
Financial assets
Restricted cash - 93,563 - - 93,563
Bank deposits - 212,202 - - 212,202
Cash and cash
equivalents 21,485 257,342 - - 278,827
21,485 563,107 - - 584,592
--------------------- ------------------- -------------------- ------------------- ------------------- ----------
Financial
liabilities
Convertible loan - - (118,805) (208,082) (326,887)
Derivative financial
instrument - - - (20,348) (20,348)
Trade and other
payables - - - (29,035) (29,035)
- - (118,805) (257,465) (376,270)
--------------------- ------------------- -------------------- ------------------- ------------------- ----------
Net financial
assets/
(liabilities) 21,485 563,107 (118,805) (257,465) 208,322
--------------------- ------------------- -------------------- ------------------- ------------------- ----------
Loans and receivables At fair value through Financial liabilities at Total
31 December 2016 (audited) profit and loss amortised cost
GBP000s GBP000s GBP000s GBP000s
--------------------------- ---------------------- -------------------------- ------------------------- ----------
Financial assets
Derivative financial
instrument - 1,041 - 1,041
Restricted cash 82,924 - - 82,924
Bank deposits 322,188 - - 322,188
Cash and cash equivalents 260,157 - - 260,157
665,269 1,041 - 666,310
--------------------------- ---------------------- -------------------------- ------------------------- ----------
Financial liabilities
Convertible loan - (42,433) (278,933) (321,366)
Trade and other payables - - (5,854) (5,854)
- (42,433) (284,787) (327,220)
--------------------------- ---------------------- -------------------------- ------------------------- ----------
Net financial
assets/(liabilities) 665,269 (41,392) (284,787) 339,090
--------------------------- ---------------------- -------------------------- ------------------------- ----------
IFRS 13 Fair Value Measurement requires financial instruments to
be grouped into a fair value hierarchy based on the lowest level
input that is significant to the fair value measurement. The three
levels of the hierarchy are:
-- Level 1 - quoted prices (unadjusted) based on active markets
for identical assets or liabilities;
-- Level 2 - inputs other than quoted prices included within
level 1 that are observable for the asset or liability, either
directly (that is, prices) or indirectly (that is, derived from
prices);
-- Level 3 - inputs for the asset or liability that are not based on observable market data.
The only assets or liabilities held by the Group that are
measured at fair value are the embedded derivative recognised as
part of the convertible loan and the derivative financial liability
(2016: asset) in respect of the royalty financing arrangement with
Hancock British Holdings Limited. These derivatives have both been
assessed to be level 2 financial liabilities. This is because the
derivatives themselves are not traded on an active market and their
fair values have been determined by valuation techniques that use
observable market data. The fair value of the royalty financing
derivative is estimated using the Company's share price and
forecast exchange rates at each reporting date. The fair value of
the convertible loan embedded derivative is the difference between
the estimated fair value of cash flows due under the host loan at
an appropriate market discount rate (based on bond yield of
entities with comparable credit profiles) and the market price of
the bonds at each reporting date. The valuation methods used are
the same as those applied and disclosed as at 31 December 2016.
The carrying value of all assets and liabilities reported in the
above tables is the same as their fair value, except for the
convertible loans, where the fair value at 30 June 2017 was
GBP340,238,000 (2016: GBP334,679,000) compared to a carrying value
at 30 June 2017 of GBP326,887,000 (2016: GBP321,366,000). The fair
value of the convertible bonds has been estimated by reference to
the mid-price of the bonds' quoted price at each measurement date
multiplied by the number of bonds outstanding which represents a
level 1 measurement.
9. RELATED PARTY TRANSACTIONS
The Group has not entered into any related party transactions in
the first six months of the year, except for directors' and key
management compensation.
10. ACCOUNTING POLICIES
Except for the two policies listed below, all accounting
policies applied by the Group in the preparation of these interim
financial statements are consistent with those applied and
disclosed in the financial statements for the year ended 31
December 2016.
Finance costs
Interest on borrowings directly relating to the financing of
qualifying assets in the course of construction is added to the
capitalised cost of those projects under "Capital works in
progress", until such time as the assets are substantially ready
for their intended use or sale. Where funds have been borrowed
specifically to finance a project, the amount capitalised
represents the actual borrowing costs incurred. Where the funds
used to finance a project form part of general borrowings, the
amount capitalised is calculated using a weighted average of rates
applicable to relevant general borrowings of the Group during the
period. All other borrowing costs are recognised in the income
statement in the period in which they are incurred.
Change in accounting policy
From 1 January 2017 the Group has elected to change its
accounting policy in accounting for foreign exchange revaluation
gains and losses in relation to cash, restricted cash and bank
deposits. Previously these were classified within operating costs
but the Group has now chosen to classify these within net finance
costs. This is on the basis that such gains and losses are more
representative of outcomes from the Group's financing strategy
rather than a part of underlying operating costs.
The Group has made this restatement from 1 January 2016 in these
financial statements, resulting in an increase in reported
operating costs and finance income of GBP50,000 for the six months
ended 30 June 2016 and GBP4,986,000 for the year ended 31 December
2016. The effect on the current period has been a decrease in
operating costs and increase in finance costs of GBP15,784,000.
This change in accounting policy has not led to any change in any
balance on the statement of financial position nor statement of
changes in equity in any comparative period.
11. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGMENTS
The preparation of interim financial statements requires
management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported
amounts of assets and liabilities, income and expense. Actual
results may differ from these estimates.
In preparing these condensed consolidated interim financial
statements, the significant judgements made by management in
applying the Group's accounting policies and the key sources of
estimation uncertainty were the same as those that applied to the
consolidated financial statements for the year ended 31 December
2016.
12. EVENTS AFTER THE REPORTING PERIOD
Between July 1 and 11 August 2017, the Company received exercise
notices in relation to 12 of its convertible bonds leading to the
issuance of 7,802,340 new ordinary shares and the reclassification
to equity of a further GBP2,508,000 of convertible bond liabilities
reported at 30 June 2017.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR BRGDISUBBGRU
(END) Dow Jones Newswires
August 16, 2017 02:00 ET (06:00 GMT)
Sirius Minerals (LSE:SXX)
Historical Stock Chart
From Apr 2024 to May 2024
Sirius Minerals (LSE:SXX)
Historical Stock Chart
From May 2023 to May 2024