TIDMYCA
RNS Number : 3730T
Yellow Cake PLC
22 July 2022
22 July 2022
Yellow Cake plc ("Yellow Cake" or the "Company")
Annual Results for the year ended 31 March 2022
Highlights
- Continued improvement in the market for U(3) O(8) with the spot price increasing 89% from
USD30.65/lb on 31 March 2021 to USD57.90/lb[1] on 31 March 2022.
- Increase of 203% in the value of the Company's holding of U(3) O(8) during the financial year
to USD916.7 million(1) as at 31 March 2022, as a result of the appreciation in the uranium
price and a net increase in the volume of uranium held from 9.86 million lb of U(3) O(8) to
15.83 million lb of U(3) O(8.)
- Profit after tax of USD417.3 million for the year ended 31 March 2022 (2021: USD29.9 million).
- Raised USD236.6 million (GBP171.7 million) during the financial year through share placings
in June and October 2021, after raising USD138.5 million (GBP99.3 million) in March 2021.
Applied the proceeds of the three placings to acquire 8.35 million lb of U(3) O(8) during
the financial year and an additional 0.95 million lb of U(3) O(8) post year-end.[2]
- Net asset value of USD1,069.0 million (GBP4.42 per share)[3] as at 31 March 2022 (2021: USD421.4
million (GBP2.38 per share)).
- Completed a USD3 million share buyback programme following the year-end, repurchasing 566,833
shares between 4 April and 6 May 2022 (now held in treasury) at a volume weighted average
price of GBP4.15 per share (USD5.27 per share) and a volume weighted average discount to net
asset value of 10.4%, effectively acquiring exposure to uranium at a discount to the commodity
spot price.
- Holding of 18.81 million lb of U(3) O(8) as at 21 July 2022 (including 2.97 million lb of
U(3) O(8) received post year-end) acquired at an average cost of USD31.11/lb.(3)
- Increase of 47% in the value of the Company's holding of 18.81 million lb of U(3) O(8) as
at 15 July 2022 to USD860.4 million[4], relative to the average acquisition cost of USD585.1
million (USD31.11/lb).[5]
Andre Liebenberg, CEO of Yellow Cake, said ;
"I am very pleased to report on another year of considerable
progress. We have remained focused on our strategy to buy and hold
uranium, providing investors with the opportunity to directly
participate in the continued rise in the price of the commodity,
which in turn has generated consistent returns for our
shareholders.
In 2021, we raised approximately USD375 million to acquire 8.35
million lb of uranium during the financial year, which with an
additional purchase after year-end, means we now own 18.81 million
lb, doubling the amount since the end of the 2021 financial
year.
The confidence we have in our longer term outlook remains very
strong and this is driven by the same supply demand fundamentals
that have supported the performance to date. We expect to see a
sustained increase in uranium demand and price increases in years
to come as the global demand for clean energy highlights the need
for nuclear energy. We have seen very positive policy developments
in the US, the EU and in China as nuclear is increasingly
recognised as a core way to urgently address climate change. Yet
despite a clear growing demand picture and recent prise rises,
supply remains severely constrained, and looks set to get even
tighter as utility companies around the world start to address
their future uncovered fuel requirements. Yellow Cake is very well
placed to capitalise on these market characteristics."
ENQUIRIES:
Yellow Cake plc
Andre Liebenberg, CEO Carole Whittall, CFO
Tel: +44 (0) 153 488 5200
Nominated Adviser and Joint Broker: Canaccord Genuity
Limited
Henry Fitzgerald-O'Connor James Asensio
Gordon Hamilton
Tel: +44 (0) 207 523 8000
Joint Broker: Berenberg
Matthew Armitt Jennifer Lee
Detlir Elezi
Tel: +44 (0) 203 207 7800
Financial Adviser: Bacchus Capital Advisers
Peter Bacchus Richard Allan
Tel: +44 (0) 203 848 1640
Investor Relations: Powerscourt
Peter Ogden Molly Melville
Tel: +44 (0) 7793 858 211
ABOUT YELLOW CAKE
Yellow Cake is a London-quoted company, headquartered in Jersey,
which offers exposure to the uranium spot price. This is achieved
through its strategy of buying and holding physical triuranium
octoxide (" U(3) O(8) "). It may also seek to add value through
other uranium related activities. Yellow Cake seeks to generate
returns for shareholders through the appreciation of the value of
its holding of U(3) O(8) and its other uranium related activities
in a rising uranium price environment. The business is
differentiated from its peers by its ten-year Framework Agreement
for the supply of U(3) O(8) with Kazatomprom, the world's largest
uranium producer. Yellow Cake currently holds 18.81 million pounds
of U(3) O(8) , all of which is held in storage in Canada and
France.
FORWARD LOOKING STATEMENTS
Certain statements contained herein are forward looking
statements and are based on current expectations, estimates and
projections about the potential returns of the Company and the
industry and markets in which the Company will operate, the
Directors' beliefs and assumptions made by the Directors. Words
such as "expects", "anticipates", "should", "intends", "plans",
"believes", "seeks", "estimates", "projects", "pipeline", "aims",
"may", "targets", "would", "could" and variations of such words and
similar expressions are intended to identify such forward looking
statements and expectations. These statements are not guarantees of
future performance or the ability to identify and consummate
investments and involve certain risks, uncertainties and
assumptions that are difficult to predict, qualify or quantify.
Therefore, actual outcomes and results may differ materially from
what is expressed in such forward looking statements or
expectations. Among the factors that could cause actual results to
differ materially are: uranium price volatility, difficulty in
sourcing opportunities to buy or sell U(3) O(8) , foreign exchange
rates, changes in political and economic conditions, competition
from other energy sources, nuclear accident, loss of key personnel
or termination of the services agreement with 308 Services Limited,
changes in the legal or regulatory environment, insolvency of
counterparties to the Company's material contracts or breach of
such material contracts by such counterparties. These
forward-looking statements speak only as at the date of this
announcement. The Company expressly disclaims any obligation or
undertaking to disseminate any updates or revisions to any forward
looking statements contained herein to reflect any change in the
Company's expectations with regard thereto or any change in events,
conditions or circumstances on which any such statements are based
unless required to do so by applicable law or the AIM Rules.
Chairman's statement
The trends underlying the widening global imbalance between
uranium supply and demand that motivated Yellow Cake's formation in
2018 strengthened during 2021 and into 2022. The tragedy of war in
Ukraine crystallised energy security concerns, given Russia's role
as a key supplier of fossil fuels across Europe and its position in
the nuclear fuel cycle.
Social unrest stemming from high fuel prices in January 2022 in
Kazakhstan, the world's largest producer of uranium with
historically close ties to Russia, emphasised the concentrated
nature of uranium production. Russia is also a significant supplier
of enriched uranium to US and European nuclear utilities and the
possible ramifications of sanctions on uranium fuel production in
Russia and the availability of nuclear fuel remain of concern.
These developments have highlighted the need for national energy
policies to consider both the cost of energy and security of
supply. The increased global focus on climate change and broader
environmental, social and governance (ESG) issues has added carbon
emissions as another important factor in national energy policy and
resulted in a comprehensive review of the benefits of nuclear
energy.
Nuclear energy's low carbon lifecycle emissions, reliable
baseload profile and good fit with renewable energy sources are
recognised in energy plans from rapidly developing countries such
as China and India as well as in positive policy shifts in the US,
UK, Japan and many countries in Europe. Several countries are now
rethinking their positions on phasing out nuclear power, with
Belgium deciding to extend the operating life of two reactors that
were scheduled to shut down in 2025[6].
While, thankfully, the direct human impact of COVID-19 appears
to be receding, the ongoing effects of the pandemic on uranium
supply through disruptions to global supply chains and rising costs
for certain products and services continue to be felt.
Strong interest in uranium equities
Increased investor interest led to a marked increase in activity
in the uranium spot market from traders, investment firms and
junior mining companies, resulting in a rapid and sustained
increase in the spot price of U(3) O(8) , which has more than
doubled since Yellow Cake listed. The Company took advantage of the
strong market support through two oversubscribed equity raises in
the 2022 financial year to raise USD230 million (after costs), the
proceeds of which were deployed to significantly increase its
holdings of U(3) O(8) .
Realising returns for investors
Yellow Cake was established to provide investors with long-term
exposure to the uranium spot price through a liquid and
publicly-quoted vehicle. The Company's low-cost outsourced business
model minimises cost leakage and limits risk exposure from the
uranium production chain. The long-term partnership with
Kazatomprom is a key strategic advantage that provides access to
material volumes of uranium at the prevailing market price and is
particularly important as we transition to an undersupplied
market.
Yellow Cake aims to realise a return for investors from the
appreciation in value of the Company's U(3) O(8) holdings. Periods
when the Company's shares trade above net asset value provide an
opportunity to raise capital to invest in additional uranium. When
the shares trade below net asset value, as they did from
mid-January this year, equity issues would be dilutive for existing
shareholders. In these cases, the Board considers share buybacks to
be an effective means of increasing shareholders' exposure to
uranium at a discount to the commodity spot price.
Accordingly, the Board implemented a programme to repurchase the
Company's ordinary shares commencing on 4 April 2022, which
concluded on 6 May 2022 with the acquisition of 566,833 shares,
returning USD3 million to shareholders.
While the Board reserves the right to declare a dividend as and
when deemed appropriate, the Company does not currently expect to
issue dividends on a regular or fixed basis. The Board is not
declaring a dividend for this financial year.
In the second half of the year, the Board conducted a review of
the Company's strategy in the context of the prevailing conditions
and outlook for the uranium market. The review included an
assessment of the appropriateness of Yellow Cake's corporate
structure, ability to source additional U(3) O(8) volumes beyond
the Kazatomprom option, opportunities for maximising value from the
physical uranium already owned and the Company's ultimate strategic
goal. The review concluded that the current strategy and corporate
structure remain appropriate.
Share issues
Yellow Cake held two General Meetings during the financial year
, in June 2021 and January 2022, to obtain shareholder approval to
renew the Board's authorities to allot additional ordinary shares
ahead of the Annual General Meetings (AGMs) in September 2021 and
2022. These renewals were necessary to allow Yellow Cake to take
advantage of opportunities to acquire uranium once the shares
issued under the authority obtained at the preceding AGMs were
almost fully utilised.
The Company placed 25 million new ordinary shares on 21 June
2021 and an additional 30 million new ordinary shares on 29 October
2021. These share issues, together with the issue in March 2021 (in
the 2021 financial year), enabled Yellow Cake to acquire 9 million
lb of U(3) O(8) , nearly doubling the Company's holdings by June
2022 to 18.8 million lb, or 15% of 2021 global annual
production.
Governance
Yellow Cake's Board of Directors appreciates that long-term
value can only be created by taking an approach that looks beyond
financial performance to consider the Company's broader
environmental, social and governance performance. We are committed
to good governance and high ethical standards.
The Company applies the principles and provisions of the UK
Corporate Governance Code 2018 (the " Code ") to the degree
appropriate to the size and nature of its business. The Code of
Conduct sets the operational and performance requirements for
Yellow Cake's employees, directors, business partners, contractors
and advisers, and promotes the Company's key values of dignity,
diversity, business integrity, compliance and accountability.
The small scale and simplicity of the organisation enhances
effective governance and oversight, and ensures good communication.
Compliance policies are regularly reviewed and updated to ensure
continued alignment with the latest developments in corporate
governance requirements and guidelines. Policies and measures are
in place to prevent the opportunity for bribery or inducements, and
include a whistleblowing policy.
The Board plays an active role in overseeing the Company's
activities and met ten times during the year to 31 March 2022.
Meetings were also held by the Audit, Remuneration and Nomination
Committees during the period to discharge their duties as set out
in their terms of reference.
Although Yellow Cake does not have a material direct social and
environmental impact, the Company conducts the necessary due
diligence on suppliers and business partners to ensure that they
share our commitment to responsible business practices. Yellow Cake
has a zero-tolerance approach to bribery, corruption and unethical
practices.
The Board welcomes the increased global attention on climate
change and mitigating the effects of global warming.
In line with Yellow Cake's commitment to ESG principles, we
commission an annual external and independent assessment of our ESG
practices and those of our primary suppliers.
Stakeholder engagement
The Board recognises the importance of regular engagement with
stakeholders and the Company proactively facilitates opportunities
for dialogue. The Executive Directors address day-to-day queries
raised by stakeholders and the chairs of the Board Committees seek
engagement with shareholders on significant matters related to
their areas of responsibility when required. The Chairman is
available to the Company's major shareholders to discuss
governance, strategy and performance. Feedback on all stakeholder
engagements is regularly communicated to the Board and informs its
deliberations.
The resolution for the re-election of Emily Manning to the Board
of the Company received less than 80% of votes in favour at the AGM
in September 2021. In accordance with the recommendations of the
Code, Yellow Cake approached the majority of those major
shareholders who voted against the resolution to understand their
speci c concerns. The Company did not receive any substantive
feedback from the major shareholders but understands that their
votes were primarily influenced by the stance taken by the proxy
advisor regarding Ms Manning's independence and membership of the
Audit and Remuneration Committees.
The Board undertook a rigorous evaluation and concluded that Ms
Manning is independent of both character and judgment and makes a
valuable contribution to Board discussions while also providing
effective challenge to management and the wider Board.
Nevertheless, Ms Manning retired from the Audit and Remuneration
Committee, but remains a Director of the Company.
Appreciation
In closing, I would like to thank my colleagues on the Board for
their support and for their thorough and extensive contribution
during the year. On behalf of the Board, I would like to extend our
appreciation to Yellow Cake's shareholders and investors for their
continued support and strong interest in the share issues during
the year.
The Lord St John of Bletso
Chairman
CEO statement
The past year has been an exciting period for the global uranium
market and Yellow Cake. The uranium market appears to have made the
transition from a long period of oversupply to a situation of
undersupply, with little evidence to suggest that it will rebalance
in the foreseeable future. Uranium supply remains under pressure
following years of under-investment in developing new resources,
continued discipline from major producers not to sell into an
oversupplied market and the recent permanent closure of significant
production sources in Niger and Australia.
We expect rising global inflation and supply chain disruptions
since the start of COVID -19 to lead to increased exploration,
development and production costs that will further increase the
incentive price of new production. The availability and cost of
skilled labour are also becoming major factors in new uranium mine
development.
Demand factors strengthened throughout 2021 as nuclear's role in
meeting the long-term increase in future energy demand during the
transition to a low carbon future is becoming increasingly
recognised by governments around the world. Uncertainty regarding
US policy issues that overhung the market for the last several
years has been removed. The Biden administration's Build Back
Better Bill includes significant support to existing nuclear
facilities, enrichment programmes and research into advanced
reactors.
The high price of fossil fuels and Europe's reliance on Russian
natural gas and oil have highlighted energy security as a
counterargument against prematurely closing nuclear facilities.
Progress in developing advanced reactors and small modular reactors
(SMRs) is opening up new opportunities for nuclear by reducing
upfront costs and construction times, where most of the lifecycle
carbon emissions from nuclear occur. During the year, the world's
first commercial SMR started feeding electricity into the grid in
China's Shandong province[7].
After many years of limited long-term contracting by nuclear
utilities, activity in the term uranium market started to increase
as utilities appear to be realising that uranium availability could
become an issue by mid-decade.
Improved sentiment drives spot volumes and uranium equities
The shift in the supply/demand dynamic led to improved sentiment
and strong demand for uranium investments. Sprott's launch of its
uranium trust in mid-2021 raised USD2 billion and enabled purchases
of 38.6 million lb in the spot market to date. In October, ANU
Energy OEIC Ltd, another physical uranium fund, was launched to
raise an initial USD50 million and raise a further USD500 million
to be invested in physical uranium. In May 2022, ANU Energy raised
an initial USD74 million in its first round of funding, which was
USD24 million more than initially planned. Junior uranium producers
also entered the spot market to procure uranium in support of
long-term contracting strategies and to hold uranium as an
investment, acquiring an estimated 6 to 7 million lb, in addition
to near-term buying by major producers.
Implications of the Russian invasion
The future impacts on nuclear fuel markets as a result of the
economic sanctions against Russia remain uncertain. Recent reported
utility data shows that US nuclear utilities relied on Russian
origin/sources for 15% of uranium and 22% of uranium enrichment
services from 2016 to 2020[8]. US nuclear utilities are reportedly
lobbying the US government to continue to allow nuclear fuel
imports from Russia to maintain low electricity prices. The EURATOM
Supply Agency (ESA) reported that European Union (EU) nuclear
utilities had even greater reliance on Russian sources, purchasing
over 17% of uranium and 29% of enrichment services over the same
five year period (2016-2020)[9].
The direct effect of the war in Ukraine on Yellow Cake's
operations and financial position has to this point been limited.
All U(3) O(8) to which the Company has title and has paid for is
held at the Cameco storage facility in Canada and the Orano storage
facility in France.
While part of Kazatomprom's production is transported through
Russia, the Company is unaware of any restrictions on Kazatomprom's
activities related to the supply of its products to Yellow Cake.
There are nevertheless risks associated with both transit through
the territory of Russia and the delivery of cargo by sea vessels,
which could adversely impact future deliveries from Kazatomprom.
Kazatomprom have publicly stated that they have an alternative
supply route which was established in 2018, should the route
through St Petersburg no longer be viable.
The delivery of the contracted 2 million lb of U(3) O(8) from
Kazatomprom in May 2022 and a further 950,000 lb of U(3) O(8) in
June 2022 were completed in accordance with agreed schedules.
Payment either follows delivery or is managed via escrow, so there
is no credit risk for Yellow Cake attached to these deliveries. The
Company does not anticipate any restrictions on being able to make
further purchases under its option agreement with Kazatomprom
should it wish to do so.
Uranium market activity
Spot market volumes in the 2021 calendar year exceeded the
record volumes of 2020, reaching approximately 102 million lb of
U(3) O(8) (CY2020: 95 million lb). Much of this volume was driven
by non-utilities, with buying by primary producers, financial
funds, trading companies and junior uranium companies accounting
for 83% of volumes.
The uranium spot market price started 2021 at USD30.00/lb and
ended the year 40% up at USD42.05/lb, after hitting a nine-year
high in mid-September of USD50.50/lb. After tracking sideways to
slightly down in the first two months of 2022, the spot uranium
price rose sharply in the last week of February in response to the
Russian invasion of Ukraine. On 31 March 2022, the spot price was
USD57.90/lb and decreased to USD45.75 /lb by 15 July 2022.
Aggregate long-term uranium contracting in CY2021 increased to
around 70 million lb U(3) O(8) from 57 million lb in CY2020, but
remained at relatively low levels compared to CY2019 (96.2 million
lb) and CY2018 (90.5 million lb). Cameco announced that the company
had added 70 million lb U(3) O(8) to its term contract portfolio
since January 2021 with 40 million lb U(3) O(8) of that total being
finalised in January 2022 alone ([10]) . Market uncertainty created
by the Russian invasion of Ukraine resulted in significant upward
pressure on longer-term price indicators with the long-term price
increasing by over 23% in the first half of CY2022 and the
three-year and five-year forward prices rising by 25% and 28%
respectively.
Increase in Yellow Cake's U(3) O(8) holdings
Strong investor interest in uranium equities allowed Yellow Cake
to raise a further USD236.6 million through two oversubscribed
share placements in June and October 2021. Together with USD138.5
million raised at the end of the previous financial year, these
funds were used to exercise the Kazatomprom 2021 option to acquire
USD100 million of uranium and to buy additional uranium from
Kazatomprom and in the spot market, increasing Yellow Cake's
holdings of U(3) O(8) by a further 9 million lb to 18.8 million lb
on a pro forma basis.
Company share price
The Company's shares ended the 2022 financial year 44% up on the
prior year and traded at a premium to net asset value for most of
the financial year before dropping below net asset value from
mid-January 2022 to year-end. The Board approved a share buyback
programme in April 2022, which acquired 566,833 ordinary shares,
increasing shareholders' exposure to uranium on a per share basis
and returning USD3 million.
The fair value of the Company's holding of U(3) O(8) increased
by USD614.6 million in the year to 31 March 2022. At year-end
Yellow Cake's net asset value increased by 154% and net asset value
per share increased to GBP4.42 per share over the period. The
Company delivered a net profit after tax for the year of USD417.3
million and ended the year with cash and cash equivalents of
USD153.1 million on the balance sheet. The CFO's Review that
follows provides more information regarding the Company's financial
results for the period.
Stakeholder relationships
We engage with stakeholders, particularly shareholders,
investors, analysts and the media, on an ongoing basis through
investor conferences, conference calls, investor briefings with
industry experts, media briefings and interviews to improve the
understanding of the Company and the industry. The June share
placement included a retail component that was very well supported
and we are pleased with the increased representation of retail
shareholders, which in June 2022 comprised 29% of the share
register.
Outlook
The then looming disconnect between the medium- to long-term
supply of uranium forecast at Yellow Cake's IPO is becoming more
widely evident as demand for nuclear energy is increasingly
supported by the transition to a low carbon economy and the more
immediate need to improve energy security. Even with the run up in
spot uranium prices in March 2022, the incentive price for new
supply of uranium remains higher and rising as a result of
inflation and supply chain disruptions.
With secondary activity resulting in a thinning uranium spot
market, increasing concerns about supply security and the diversity
of supply portfolios, and long-term contracting still at relatively
low levels, we are seeing strong uranium demand from nuclear
utilities.
These factors should result in continued strong demand for
uranium and support a continued increase in uranium prices. Yellow
Cake is well positioned to make the most of opportunities to
realise value for investors both through increasing its holding of
U(3) O(8) and through share buybacks when the share is trading
materially below net asset value.
Andre Liebenberg
Chief Executive Officer
CFO's review
Following the upsized share placing at the end of the 2021
financial year (USD138.5 million) and the high level of investor
interest in uranium, Yellow Cake undertook two more share
placements in June (USD86.9 million) and October (USD149.7
million). The proceeds of the three placings were applied to fully
exercise the Company's 2021 option to purchase USD100 million of
U(3) O(8) from Kazatomprom under the Framework Agreement, to
purchase additional uranium from Kazatomprom and in the spot market
and to fund related expenses and working capital.
From mid-January 2022, the Company's shares traded at a material
discount to its underlying net asset value and the Board took the
decision in April 2022 to implement a share buyback programme as a
means of effectively acquiring exposure to uranium at a discount to
the commodity spot price. Under the programme, the Company acquired
566,833 shares after the reporting date at a volume weighted
average discount to the Company's pro forma net asset value of
10.4%.
I am pleased to present the following audited financial
statements for the year to 31 March 2022 and report a number of
highlights:
- An increase in the value of the Company's uranium holding
of USD614.6 million from USD302.1 million at 31 March 2021
to USD916.7 million at 31 March 2022;
- Gross proceeds of USD236.6 million from share placings in
June and October 2021, in addition to gross proceeds of
USD138.5 million from a share placing in March 2021;
- Concluded purchases of 8.35 million lb of U(3) O(8) during
the financial year at an average price of USD34.13/lb and
an aggregate consideration of USD284.9 million; and
- Profit after tax of USD417.3 million (2021: USD29.9 million).
Uranium transactions
Yellow Cake started the financial year with a holding of 9.86
million lb of U(3) O(8) . On 28 April 2021, 348,068 lb of U(3) O(8)
was transferred to Uranium Royalty Corp. under the terms of the
subscription agreement entered into at the time of Yellow Cake's
IPO in July 2018. On 20 May 2021, Yellow Cake completed the
purchase of 343,053 lb of U(3) O(8) in the spot market at a price
of USD29.15/lb for total consideration of USD10.0 million.
On 21 June 2021, the Company took delivery of 3.45 million lb of
U(3) O(8) under the terms of the Kazatomprom option exercised in
the previous financial year. In July 2021, the Company concluded
agreements to purchase a further 550,000 lb of U(3) O(8) in the
spot market at an average price of USD32.35/lb for a total
consideration of USD17.8 million. The Company took delivery of this
uranium in July and August 2021.
In November 2021, Yellow Cake purchased 2.0 million lb of U(3)
O(8) from Curzon Uranium Limited at a price of USD46.32/lb. In
October, the Company agreed to purchase 0.95 million lb of U(3)
O(8) from Kazatomprom at a price of USD47.58/lb, which was
delivered on 30 June 2022.
In November 2021, Kazatomprom exercised its Repurchase Option at
a price of USD43.25/lb less an aggregate discount of USD6.6
million, and took delivery of 2.02 million lb of U(3) O(8) from
Yellow Cake. At the same time, Yellow Cake exercised its Buyback
Option for the same quantity of uranium at a price of USD43.25/lb
and took delivery of the 2.02 million lb of U(3) O(8) from
Kazatomprom in May 2022. The net impact of the Repurchase Option
and Buyback Option transactions was a pay-out by the Company to
Kazatomprom of USD6.6 million.
On 4 December 2021, Yellow Cake took delivery of 2.0 million lb
of U(3) O(8) from Kazatomprom at a price of USD32.23/lb.
As at 31 March 2022, the Company's uranium investment comprised
15.83 million lb of U(3) O(8) , a net increase of 5.98 million lb
of U(3) O(8) during the financial year. The completion of agreed
purchases post year-end resulted in the Company's uranium
investment increasing to 18.81 million lb of U(3) O(8) on 30 June
2022.
Uranium-related gains
Yellow Cake made total uranium-related gains of USD424.1 million
in the year to 31 March 2022 (2021: USD33.9 million). This
comprised an increase in the fair value of the Company's uranium
investment of USD433.3 million (2021: USD33.4 million), USD0.1
million in location swap fees (2021: USD1.1 million), and a premium
to the prevailing spot price of USD0.1 million on the disposal of
0.34 million lb of U(3) O(8) to Uranium Royalty Corp. These gains
were partially offset by a discount to the prevailing spot price of
USD6.1 million on the disposal of 2.02 million lb of U(3) O(8) in
satisfaction of the Kazatomprom Repurchase Option and an increase
in the fair value of a uranium derivative liability related to the
Repurchase Option of USD3.2 million (detailed in note 7 of this
report).
The increase in the fair value of the Company's uranium
investment of USD433.3 million during the year was attributable
to:
- an increase of USD13.02/lb in the carrying value of the
2.37 million lb of U(3) O(8) sold during the financial year
(as the U(3) O(8) spot price increased from USD30.65/lb
at the beginning of the financial year to an average of
USD43.67/lb as at the disposal dates);
- an increase of USD27.25/lb in the carrying value of the
7.48 million lb of U(3) O(8) held by the Company during
the entire financial year (as the underlying price of U(3)
O(8) increased from USD30.65/lb to USD57.90/lb over this
period); and
- an increase of USD23.77/lb in the carrying value of the
additional 8.35 million lb of U(3) O(8) acquired by the
Company during the financial year for an average price of
USD34.13/lb (as the underlying price of U(3) O(8) increased
to USD57.90/lb as at the end of the financial year).
Operating performance
Yellow Cake delivered profit after tax for the year of USD417.3
million (2021: USD29.9 million).
Expenses for the year of USD6.9 million (2021: USD4.0 million)
recognised in the Statement of Comprehensive Income included the
following costs:
- USD0.5 million in costs related to Yellow Cake's share placings
(2021: USD0.7 million);
- USD1.9 million in commissions payable to 308 Services Limited
in relation to the purchases by Yellow Cake of U(3) O(8)
(2021: USD0.3 million); and
- Operating costs of a recurring nature of USD4.5 million
(2021: USD2.9 million), comprising: - Procurement and market consultancy fees (holding fees and
storage incentive fees) paid to 308 Services Limited of
USD2.1 million (2021: USD1.1 million) (detailed in note
12); and
- Other operating costs of USD2.4 million (2021: USD1.7 million).
Operating expenses of a recurring nature of USD4.5 million
represent approximately 0.4% of the Company's net asset value as at
31 March 2022 (2021: 0.7%).
Share buyback programme
On 4 April 2022, Yellow Cake announced the initiation of a share
buyback programme to purchase up to USD3 million of the Company's
ordinary shares commencing on 4 April 2022. Given that the
Company's shares had traded at a material discount to its
underlying net asset value since mid-January 2022, the Yellow Cake
Board resolved to implement a share buyback programme as a means of
effectively acquiring exposure to uranium at a discount to the
uranium spot price. Shares were purchased when the closing
mid-market share price of the Company in any given day represented
a discount of 10% or more to the Company's pro forma net asset
value at that time.
Under the programme, the Company acquired 566,833 shares between
4 April and 6 May 2022, at a volume weighted average price of
GBP4.15 per share and at a volume weighted average discount to the
Company's pro forma net asset value of 10.4%. The shares
repurchased are held in treasury.
The Company does not propose to declare a dividend for the
year.
Share placings
On 21 June 2021 the Company issued 23,947,009 new ordinary
shares to existing and new institutional investors and 1,052,991
new ordinary shares to retail investors, at a price of GBP2.50 per
share, equal to a 1% premium to the Company's estimated net asset
value per share at the date of the offering. The Company raised net
proceeds of GBP60.6 million (USD equivalent: USD84.0 million net of
costs of USD2.9 million). In October 2021, Yellow Cake successfully
completed an issue of a further 30 million new ordinary shares to
existing and new institutional shareholders at a price of GBP3.64
per share, equal to a 1% premium to the Company's estimated net
asset value per share at the date of the offering. The issue raised
net proceeds of GBP106.0 million (USD145.7 million).
Balance sheet and cash flow
The share placings in March, June and October 2021 raised net
proceeds of USD363.9 million and USD284.9 million was applied to
purchasing uranium during the financial year, while USD45.2 million
was applied to purchasing uranium post year-end. In November 2021,
Yellow Cake sold 2.02 million lb of U(3) O(8) in satisfaction of
the Kazatomprom Repurchase Option and received a cash consideration
of USD80.9 million. Following the exercise of its Buyback Option,
the Company purchased the same quantity of uranium from Kazatomprom
for USD87.5 million in May 2022.
The value of Yellow Cake's U(3) O(8) uranium holding increased
by 203% to USD916.7 million at year-end compared to USD302.1
million at the end of the 2021 financial year, as a result of the
appreciation in the uranium price and a net increase in the volume
of uranium held. As at 31 March 2022, Yellow Cake had cash of
USD153.1 million (2021: USD126.2 million).
Yellow Cake's net asset value at 31 March 2022 was GBP 4.42 per
share[11] or USD1,069.0 million, consisting of 15.83 million lb of
U(3) O(8) valued at a spot price of USD57.90/ lb, cash and cash
equivalents of USD153.1 million and other net current assets and
liabilities of USD0.9 million.
Yellow Cake's estimated net asset value on 15 July 2022 was
USD877.0 million or GBP4.04 per share [12] , consisting of 18.81
million lb[13] of U(3) O(8) valued at the daily price of
USD45.75/lb published by UxC LLC on 15 July 2022, cash and cash
equivalents of USD153.1 million and other net current assets and
liabilities of USD0.9 million as at 31 March 2022, less the
consideration of USD132.7 million paid for purchases completed
after the end of the financial year, less USD3.0 million incurred
under the share buyback programme after financial year-end.
Carole Whittall
Chief Financial Officer
Financial statements
Statement of Financial Position
As at As at
31 March 2022 31 March 2021
Notes USD '000 USD '000
================================================= ====== =============
ASSETS
Non-current assets
Investment in uranium 4 916,717 302,098
Total non-current assets 916,717 302,098
================================================== ===== ============= =============
Current assets
Trade and other receivables 5 130 119
Cash and cash equivalents 6 153,136 126,159
================================================== ===== ============= =============
Total current assets 153,266 126,278
================================================== ===== ============= =============
Total assets 1,069,983 428,376
================================================== ===== ============= =============
LIABILITIES
Current liabilities
Trade and other payables 8 (970) (3,621)
Uranium derivative liability 7 - (3,361)
================================================== ===== ============= =============
Total current liabilities (970) (6,982)
================================================== ===== ============= =============
Total liabilities (970) (6,982)
================================================== ===== ============= =============
NET ASSETS 1,069,013 421,394
================================================== ===== ============= =============
Equity
Attributable to the equity owners of the Company
Share capital 9 2,544 1,785
Share premium 9 588,181 358,812
Share-based payment reserve 10 122 141
Treasury shares 11 (11,219) (11,458)
Retained earnings 489,385 72,114
================================================== ===== ============= =============
TOTAL EQUITY 1,069,013 421,394
================================================== ===== ============= =============
The financial statements of Yellow Cake plc and the related
notes were approved by Directors on 21 July 2022 and were signed on
its behalf by:
Andre Liebenberg
Chief Executive Officer
Statement of Comprehensive Income
Year ended Year ended
31 March 2022 31 March 2021
Notes USD '000 USD '000
=============================================================================== ===== =============
Uranium investment gains
Fair value movement of investment in uranium 4 433,274 33,365
Uranium swap income 4 100 1,145
Fair value movement of uranium derivative liability 7 (3,193) (774)
(Discount)/premium to spot price on disposals of uranium 4 (6,058) 180
=============================================================================== ===== ============= =============
Uranium investment gains 424,123 33,916
=============================================================================== ===== ============= =============
Expenses
Share-based payments 10 (220) (139)
Equity offering expenses 9 (534) (681)
Commission on uranium transactions 12 (1,884) (282)
Procurement and market consultancy fees 12 (2,130) (1,124)
Other operating expenses 13 (2,180) (1,739)
=============================================================================== ===== ============= =============
Total expenses (6,948) (3,965)
====================================================================================== ============= =============
Bank interest income 11 3
Gain/(loss) on foreign exchange 85 (43)
=============================================================================== ===== ============= =============
Profit before tax attributable to the equity owners of the Company 417,271 29,911
=============================================================================== ===== ============= =============
Tax expense 14 - -
=============================================================================== ===== ============= =============
Profit and total comprehensive income for the year after tax attributable to
the equity owners
of the Company 417,271 29,911
=============================================================================== ===== ============= =============
Basic earnings per share attributable to the equity owners of the Company (USD) 16 2.60 0.34
Diluted earnings per share attributable to the equity owners of the Company
(USD) 16 2.59 0.33
=============================================================================== ===== ============= =============
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
2020 1,164 224,437 2 (726) 42,203 267,080
================ ===== ============= ============= =============== =============== =============== ============
Total
comprehensive
income after
tax for the
year - - - - 29,911 29,911
Transactions
with owners:
Shares issued 9 621 137,879 - - - 138,500
Share issue
costs 9 - (3,504) - - - (3,504)
Share-based
payments 10 - - 139 - - 139
Purchase of own
shares 11 - - - (10,732) - (10,732)
================ ===== ============= ============= =============== =============== =============== ============
As at 31 March
2021 1,785 358,812 141 (11,458) 72,114 421,394
================ ===== ============= ============= =============== =============== =============== ============
Total
comprehensive
income after
tax for the
year - - - - 417,271 417,271
Transactions
with owners:
Shares issued 9 759 235,818 - - - 236,577
Share issue
costs 9 - (6,449) - - - (6,449)
Share-based
payments 10 - - 220 - - 220
Exercise of
bonus options 11 - - (239) 239 - -
================ ===== ============= ============= =============== =============== =============== ============
As at 31 March
2022 2,544 588,181 122 (11,219) 489,385 1,069,013
================ ===== ============= ============= =============== =============== =============== ============
Statement of Cash Flows
1 April 2021 1 April 2020
to to
31 March 2022 31 March 2021
Notes USD'000 USD'000
=========================================================== ===== =============
Cash flows from operating activities
Profit after tax 417,271 29,911
Adjustments for:
Discount/(premium) to spot price on disposal 7, 4 6,058 (180)
Change in fair value of investment in uranium 4 (433,274) (33,365)
Change in fair value of uranium derivative liability 7 3,193 774
Share-based payments 10 220 139
(Gain)/loss on foreign exchange (85) 43
Interest income (11) (3)
=========================================================== ===== ============= =============
Operating profit before changes in working capital (6,628) (2,681)
================================================================== ============= =============
Changes in working capital:
Increase in trade and other receivables (11) (29)
(Decrease)/increase in trade and other payables (2,607) 3,216
=========================================================== ===== ============= =============
Cash (used in)/generated from operating activities (9,246) 506
================================================================== ============= =============
Interest received 11 3
================================================================== ============= =============
Cash (used in)/generated from operating activities (9,235) 509
================================================================== ============= =============
Cash flows from investing activities
Purchase of uranium 4 (284,890) (15,025)
Proceeds of sale of uranium 4 90,934 9,960
=========================================================== ===== ============= =============
Net cash used in investing activities (193,956) (5,065)
================================================================== ============= =============
Cash flows from financing activities
Proceeds from issue of shares 9, 11 236,577 138,500
Issue costs paid 9 (6,449) (3,504)
Share buyback programme 11 - (10,732)
=========================================================== ===== ============= =============
Net cash generated from financing activities 230,128 124,264
================================================================== ============= =============
Net increase in cash and cash equivalents during the year 26,937 119,708
Cash and cash equivalents at the beginning of the year 126,159 6,481
Effect of exchange rate changes 40 (30)
=========================================================== ===== ============= =============
Cash and cash equivalents at the end of the year 153,136 126,159
================================================================== ============= =============
Notes to the Financial Statements
For the year ended 31 March 2022
General information
1.
Yellow Cake plc (the "Company") was incorporated in Jersey,
Channel Islands on 18 January 2018. The address of the registered
office is Liberation House, Castle Street, St Helier, Jersey, JE1
2LH.
The Company operates in the uranium sector and was established
to purchase and hold U(3) O(8) . The strategy of the Company is to
invest in long-term holdings of U(3) O(8) and not to actively
speculate with regards to short-term changes in the price of U(3)
O(8) .
The Company was admitted to list on the London Stock Exchange
AIM market ("AIM") on 5 July 2018.
On 22 June 2022, the Company's shares were admitted to trading
on the OTCQX, the highest tier of the US over-the-counter
market.
Summary of significant accounting policies
2.
Basis of preparation
The financial information has been prepared in accordance with
UK-adopted International Accounting Standards ("IFRS").
In accordance with Section 105 of The Companies (Jersey) Law
1991, the Company confirms that the financial information for the
period ended 31 March 2022 is derived from the Company's audited
financial statements and that these are not statutory accounts and,
as such, do not contain all information required to be disclosed in
the financial statements prepared in accordance with IFRS.
The statutory accounts for the period ended 31 March 2022 have
been audited and approved, but have not yet been filed.
The Company's audited financial statements for the period ended
31 March 2022 received an unqualified audit opinion and the
auditor's report contained no statement under section 113B (3) and
(6) of The Companies (Jersey) Law 1991.
The financial information contained within this preliminary
statement was approved and authorised for issue by the Board on 21
July 2022.
The principal accounting policies adopted are set out below.
New and revised standards
At the date of approval of these financial statements there are
no new or revised standards that are in issue but not yet effective
and are relevant to the financial statements of the Company.
The principal accounting policies adopted are set out below.
Going concern
The Directors, having considered the Company's objectives and
available resources along with its projected income and expenditure
for at least twelve months from the date of approval of the audited
financial statements, are satisfied that the Company has adequate
resources to continue in operational existence for the foreseeable
future. Accordingly, the directors have adopted the going-concern
basis in preparing these financial statements.
The Board continues to monitor the ongoing impact of the
COVID-19 pandemic on Yellow Cake's activities, the uranium
industry, and the world economy. The Company's operations were not
significantly affected during the first and second waves of the
pandemic as the Company has no physical operations and the
executive team was already home-based. The business continuity
plans implemented at the Company's key service providers have to
date been effective in enabling them to continue to provide all key
support services that were provided to the Company prior to the
pandemic outbreak. To date, Yellow Cake's suppliers and other
counterparties have been able to meet their obligations to the
Company.
In addition, the Board has considered the impact of the conflict
in Ukraine and sanctions imposed against Russia and Belarus in its
going-concern assessment for the Company.
After taking into account the Company's post year-end
commitments to purchase USD132,689,090 of U(3) O(8) , the Company
considered that as at 31 March 2022, it had sufficient working
capital to meet approximately two years of operating expenses
before it would need to raise additional funds. The Company had no
debt or hedge liabilities on its balance sheet as at 31 March 2022.
The Company usually aims to retain three years' of working capital
requirements following an equity issuance. Following the Company's
most recent equity issuance in October 2021, the Board resolved in
April 2022 to apply USD3 million to a share buyback programme to
purchase the Company's shares at a discount to net asset value,
thus retaining a lower amount of working capital.
Sale of uranium and uranium swaps
The income in respect of disposals of uranium is recognised at
the point when the significant risks and rewards of ownership and
legal title have been transferred to the buyer. At the point of
disposal the carrying value of the uranium, being the spot price,
is derecognised from the balance sheet.
The gain or loss on disposal of uranium is calculated as the
difference between the sales price and the carrying value, being
the spot price, at the point of sale. This gain or loss is
reflected as a premium or discount to the spot price on a separate
line in the statement of comprehensive income during the period in
which the disposal occurs.
The Company has entered into certain uranium location swap
agreements under which it has agreed to exchange, by way of book
transfer, an equal quantity of uranium between specified storage
facilities. In certain instances, the location swap is temporary
and the uranium will be swapped back to the original location at
the end of an agreed term. Where the swap is temporary and for a
fixed term, the income which the Company is entitled to receive in
consideration for the swap is recognised over the term of the swap,
in line with the substance of the transaction and delivery of the
related performance obligations.
Investments in uranium
Acquisitions of U(3) O(8) are initially recorded at cost net of
transaction costs incurred and are recognised in the Company's
statement of financial position on the date the risks and rewards
of ownership pass to the Company, which is the date that the legal
title to the uranium passes.
After initial recognition, investments in U(3) O(8) are measured
at fair value based on the most recent month-end spot price for
U(3) O(8) published by UxC LLC.
IFRS lacks specific guidance in respect of accounting for
investments in uranium. As such the Directors of the Company have
considered the requirements of International Accounting Standard 1
"Presentation of Financial Statements" and International Accounting
Standard 8 "Accounting Policies, Changes in Accounting Estimates
and Errors" to develop and apply an accounting policy. The
Directors of the Company consider that measuring the investment in
U(3) O(8) at fair value provides information that is most relevant
to the economic decision-making of users. This is consistent with
International Accounting Standard 40 Investment Property, which
allows for assets held for long-term capital appreciation to be
presented at fair value.
Foreign currency translation
Functional and presentation currency
The financial statements are presented in United States Dollars
("USD") which is also the functional currency of the Company.
These financial statements are presented to the nearest round
thousand, unless otherwise stated.
Foreign currency translation
Transactions denominated in foreign currencies are translated
into USD at the rate of exchange ruling at the date of the
transaction.
Monetary assets and liabilities denominated in foreign
currencies at the reporting date are translated into USD at the
rate of exchange ruling at the reporting date. Foreign exchange
gains or losses arising on translation are recognised through
profit or loss in the statement of comprehensive income.
Financial instruments
Financial assets and financial liabilities are recognised when
the Company becomes a party to the contractual provisions of the
instrument. The Company shall offset financial assets and financial
liabilities if the Company has a legally enforceable right to set
off the recognised amounts and intends to settle on a net
basis.
The carrying amount of the Company's financial assets and
financial liabilities are a reasonable approximation of their fair
values due to the short-term nature of these instruments.
Financial assets
The Company's financial assets comprise trade and other
receivables. These assets are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active
market. They are initially recognised at fair value and
subsequently carried at amortised cost using the effective interest
method, less any provision for impairment.
Cash and cash equivalents comprise cash in hand and short-term
deposits in banks with an original maturity of three months or
less.
Financial liabilities
The Company's financial liabilities comprise trade and other
payables. They are initially recognised at fair value and
subsequently carried at amortised cost using the effective interest
method.
In prior periods the Company also recognised a derivative
financial liability in the scope of IFRS 9. This financial
instrument was recognised at fair value and value changes
recognised in profit and loss. The fair value of the Repurchase
Option was determined based on the expected option payoff using a
Monte Carlo simulation produced by an independent financial
valuer.
Share capital
The Company's ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of shares are
recognised in equity as a deduction from proceeds of the share
issue.
Treasury shares
The Company's treasury shares are classified as equity. Treasury
shares are accounted for at cost and shown as a deduction from
equity in a separate reserve. Transfers from treasury shares are
recognised at the weighted average of the cost of acquiring the
treasury shares.
Share-based payments
Where the Company issues equity instruments to external parties
or employees as consideration for services received, the statement
of comprehensive income is charged with the fair value of the goods
and services received, except where services are directly
attributable to the issue of shares, in which case the fair value
of such amounts is recognised in equity as a deduction from share
premium.
Equity-settled transactions are awards of shares, or options
over shares, that are provided to employees in exchange for the
rendering of services.
Equity-settled transactions are measured at fair value on grant
date. Fair value is independently determined using a Black-Scholes
option pricing model that takes into account the exercise price,
the term of the option, the impact of dilution, the share price at
grant date and expected price volatility of the underlying share,
the expected dividend yield and the risk free interest rate for the
term of the option, together with non-vesting conditions that do
not determine whether the consolidated entity receives the services
that entitle the employees to receive payment. No account is taken
of any other vesting conditions.
The cost of equity-settled transactions is recognised as an
expense with a corresponding increase in equity over the vesting
period. The cumulative charge to profit or loss is calculated based
on the grant date fair value of the award, the best estimate of the
number of awards that are likely to vest and the expired portion of
the vesting period. The amount recognised in profit or loss for the
period is the cumulative amount calculated at each reporting date
less amounts already recognised in previous periods.
Market conditions are taken into consideration in determining
fair value. Therefore, any awards subject to market conditions are
considered to vest irrespective of whether or not that market
condition has been met, provided all other conditions are
satisfied.
If equity-settled awards are modified, as a minimum an expense
is recognised as if the modification has not been made. An
additional expense is recognised, over the remaining vesting
period, for any modification that increases the total fair value of
the share-based compensation benefit as at the date of
modification.
If the non-vesting condition is within the control of the
Company or employee, the failure to satisfy the condition is
treated as a cancellation. If the condition is not within the
control of the Company or employee and is not satisfied during the
vesting period, any remaining expense for the award is recognised
over the remaining vesting period, unless the award is
forfeited.
If an equity-settled award is cancelled, it is treated as if it
has vested on the date of cancellation, and any remaining expense
is recognised immediately. If a new replacement award is
substituted for the cancelled award, the cancelled and new awards
are treated as if they were a modification.
Taxation
As the Company is managed and controlled in Jersey it is liable
to be charged to tax at a rate of 0% under schedule D of the Income
Tax (Jersey) Law 1961 as amended.
Expenses
Expenses are accounted for on an accruals basis.
Segmental reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker is responsible for allocating
resources and assessing performance of the operating segments and
has been identified as the Board of Directors of the Company.
The Company is organised into a single operating segment being
the holding of U(3) O(8) for long-term capital appreciation.
Critical accounting judgments and estimation uncertainty
The preparation of financial statements requires management to
make judgments, estimates and assumptions that affect the
application of accounting policies and the reported amounts of
assets, liabilities, income and expenses.
Estimates and judgements are continually evaluated and are based
on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the
circumstances. Revisions to accounting estimates are recognised in
the year in which the estimate is revised and in any future years
affected.
The resulting accounting estimates will, by definition, seldom
equate to the related actual results.
Accounting estimates
The key accounting estimates in prior periods were the
assumptions made in valuing the uranium derivative liability. The
option in favour of Kazatomprom was exercised on 22 November 2021
and as such the estimation is no longer present at the year-end.
Refer to note 7 for details of the derivative liability and the
exercise of the option by Kazatomprom.
Judgements
The Company receives regular tax advice and opinions from its
advisors and accountants to ensure it is aware of, and can seek to
mitigate the effects on its tax position of, changes in regulation.
While the Company stores its uranium in storage facilities in
Canada and France, the Company does not carry on business in either
of these jurisdictions. The directors have considered the tax
implications of the Company's operations and have reached judgement
that no tax liability has arisen during the year (year ended 31
March 2021: USD nil).
Management of financial risks
3.
Financial risk factors
The Company's financial assets and liabilities comprise of cash,
receivables and payables that arise directly from its operations.
The accounting policies in note 2 include criteria for the
recognition and the basis of measurement applied for financial
assets and liabilities. Note 2 also includes the basis on which
income and expenses arising from financial assets and liabilities
are recognised and measured.
The Company's assets and liabilities have been primarily
categorised as assets and liabilities at amortised cost, with the
exception of the investment in uranium being held at fair value.
The carrying amounts of all such instruments are as stated in their
respective notes.
Market risk
The fair value or future cash flows of a financial instrument
may fluctuate because of changes in market prices. This market risk
comprises two elements - interest rate risk and other price risk
and arises mainly from the changes in values of the investment of
uranium and derivatives.
Interest rate risk
Any cash balances are held on variable rate bank accounts or in
money market funds yielding rates of interest dependent on the base
rate of the applicable institution or fund return.
Price risk and sensitivity
If the value of the investment in uranium fell by 5% at the
year-end, the profit after tax would decrease by USD45,835,826
(year ended 31 March 2021: USD15,104,910). Likewise, if the value
rose by 5% the profit after tax would have increased by
USD45,835,826 (year ended 31 March 2021: USD15,104,910).
Economic risk
The COVID-19 pandemic continues to have a significant impact on
the global economy and many businesses across the world. The
Company's operations continue to remain unaffected by COVID-19,
given that it has no physical operations and the executive team is
already home-based. The Company's key service providers have put in
place effective business continuity plans that have enabled them to
continue with the provision of all key support services that were
provided to the Company prior to the pandemic outbreak.
Geopolitical events that occurred in Kazakhstan and
Russia/Ukraine during the last quarter of the Company's financial
year have not had a material impact to date on the Company's
operations, nor affected its financial position. The Company's
counterparties are not subject to sanctions. While the Company has
purchased and intends to continue to purchase U(3) O(8) from
Kazatomprom, the Kazakh national atomic company, all U(3) O(8) to
which the Company has title and has paid for, is held at the Cameco
storage facility in Canada and the Orano storage facility in
France.
The Company exercised its Buyback Option with Kazatomprom under
which it acquired 2,022,846 lb of U(3) O(8) from Kazatomprom which
was delivered to the Company at the Cameco storage facility in
Canada on 19 May 2022. In addition the Company entered into an
agreement to purchase 950,000 lb of U(3) O(8) from Kazatomprom,
which was delivered to the Company at the Cameco storage facility
in Canada on 30 June 2022. Payment was released to Kazatomprom
following delivery to the Company.
While part of Kazatomprom's production is transported through
Russia, the Company is unaware of any restrictions on Kazatomprom's
activities related to the supply of its products to the Company.
The Company has to date received deliveries from Kazatomprom in
accordance with agreed delivery schedules. There are nevertheless
risks associated with both transit through the territory of Russia
and the delivery of cargo by sea vessels, which could adversely
impact future deliveries from Kazatomprom.
Liquidity risk
This is the risk that the Company will encounter in realising
assets or otherwise raising funds to meet financial commitments.
Prudent liquidity risk management involves maintaining sufficient
liquidity and short-term investment securities, being able to raise
funds based on suitably adapted lines of credit and a capacity to
unwind market positions.
At year-end, the liquidity of the Company is composed of either
bank account or bank deposits, for a total amount of USD153,136,073
(31 March 2021: USD126,159,065).
The Company's cash and cash equivalents are held with Citibank
Europe PLC, which is rated A+ (2020: A+) according to ratings
agency Fitch.
Carrying amount < 1 year 1 to 2 years 2 to 10 years
As at 31 March 2022 USD'000 USD'000 USD'000 USD'000
=============================
Cash and cash equivalents 153,136 153,136 - -
Other creditors and accruals (970) (970) - -
As at 31 March 2021 USD'000 USD'000 USD'000 USD'000
============================= ===================== ======== ============= =============
Cash and cash equivalents 126,159 126,159 - -
Other creditors and accruals (3,621) (3,621) - -
============================= ===================== ======== ============= =============
F air value estimation
Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between
market participants at the measurement date, regardless of whether
that price is directly observable or estimated using another
valuation technique. In estimating the fair value of an asset or
liability, the Company takes into account the characteristics of
the asset or liability at the measurement date. IFRS 13 Fair Value
Measurement requires the Company to classify fair value
measurements using fair value hierarchy that reflects the
significance of the inputs used in making the measurements. The
fair value hierarchy has the following levels:
1 Quoted prices (unadjusted) in active markets for identical
- assets or liabilities (level 1);
2 Inputs other than quoted prices included within level
- 1 that are observable for the asset or liability, either
directly (that is, as prices) or indirectly (that is,
derived from prices) (level 2); and
3 Inputs for the asset or liability that are not based on
- observable market data (that is, unobservable inputs)
(level 3).
The level to the fair value hierarchy within which the fair
value measurement is categorised in its entirety is determined on
the basis of the lowest level input that is significant of an input
is assessed against the fair value measurement in its entirety. If
a fair value measurement uses observable inputs that require
significant adjustment based on unobservable inputs, that
measurement is a level 3 measurement. Assessing the significance of
a particular input to the fair value measurement in its entirety
requires judgement, considering factors specific to the asset or
liability. The following table analyses within the fair value
hierarchy the Company's financial assets and liabilities (by class)
measured at fair value.
Assets and liabilities Level 1 Level 2 Level 3 Total
As at 31 March 2022 USD'000 USD'000 USD'000 USD'000
=============================
Investment in uranium 916,717 - - 916,717
Uranium derivative liability - - - -
As at 31 March 2021
============================= ======= ======= ======= =======
Investment in uranium 302,098 - - 302,098
Uranium derivative liability - (3,361) - (3,361)
============================= ======= ======= ======= =======
4. Investment in uranium
Fair Value
USD'000
=========================
As at 31 March 2020 263,489
========================= ==========
Acquisition of U(3) O(8) 15,024
Change in fair value 33,365
Sale of U(3) O(8) (9,780)
========================= ==========
As at 31 March 2021 302,098
========================= ==========
Acquisition of U(3) O(8) 284,890
Change in fair value 433,274
Sale of U(3) O(8) (103,545)
========================= ==========
As at 31 March 2022 916,717
========================= ==========
The value of the Company's investment in U(3) O(8) is based on
the daily spot price for U(3) O(8) of USD57.90/lb as published by
UxC LLC on 31 March 2022 (2021: month-end spot price of USD30.65/lb
as published by UxC LLC on 29 March 2021).
The value of the Company's investment in U(3) O(8) in prior
years was based on the month-end spot price for U(3) O(8) which was
published by UxC LLC on the last Monday of each calendar month.
With increasing liquidity in the uranium spot market and greater
availability of daily pricing data, UxC LLC has commenced the
publication of a daily U(3) O(8) spot price, which the Company
believes more accurately represents the period end market price of
the Company's uranium investment.
As at 31 March 2022, the Company:
- had purchased a total of 18,503,669 lb of U(3) O(8) at an
average cost of USD 27.48/lb;
- had disposed of 2,670,914 lb of U(3) O(8) at an average
selling price of USD 40.23/lb that had been acquired at
an average price of USD 21.01/lb, assuming a first in first
out methodology; and
- held a total of 15,832,755 lb of U(3) O(8) acquired at an
average cost of USD28.57/lb for a net total cash consideration
of USD452.4 million, assuming a first in first out methodology.
Purchase of uranium
The Company completed the following purchase transactions during
the year:
- 20 May 2021 - 343,053 lb of U(3) O(8) at price of USD29.15/lb,
in the spot market, for a cash consideration of USD9,999,995;
- 21 June 2021 - 3,454,231 lb of U(3) O(8) at price of USD28.95/lb,
from Kazatomprom for a cash consideration of USD99,999,987
in exercise of the 2021 option under the Kazatomprom Framework
Agreement;
- 21 July 2021 - 250,000 lb of U(3) O(8) at an average price
of USD32.39/lb, in the spot market, for a cash consideration
of USD8,097,500;
- 27 July 2021 - 100,000 lb of U(3) O(8) at a price of USD32.37/lb,
in the spot market, for a cash consideration of USD3,237,000;
- 3 August 2021 - 200,000 lb of U(3) O(8) at a price of 32.28/lb,
in the spot market, for a cash consideration of USD6,456,000;
- 5 November 2021 - 500,000 lb of U(3) O(8) at a price of
USD46.32/lb, in the spot market, for a cash consideration
of USD23,160,000;
- 12 November 2021 - 500,000 lb of U(3) O(8) at a price of
USD46.32/lb, in the spot market, for a cash consideration
of USD23,160,000;
- 22 November 2021 - 500,000 lb of U(3) O(8) at a price of
USD46.32/lb, in the spot market, for a cash consideration
of USD23,160,000;
- 29 November 2021 - 500,000 lb of U(3) O(8) at a price of
USD46.32/lb, in the spot market, for a cash consideration
of USD23,160,000; and
- 4 December 2021 - 2,000,000 lb of U(3) O(8) at a price of
USD32.23/lb, in the spot market, for a cash consideration
of USD64,460,000.
Post year-end purchases of uranium
As part of the "Buyback Option" detailed in note 7, Yellow Cake
bought back from Kazatomprom, 2,022,846 lb of U(3) O(8) at
USD43.25/lb when the spot price was USD46.25/lb . This was received
by the Company at the Cameco storage facility in Canada on 19 May
2022.
Pursuant to Kazatomprom's offer of 26 October 2021, the Company
entered into an agreement with Kazatomprom to purchase 950,000 lb
of U(3) O(8) for a total consideration of USD45,201,000
(USD47.58/lb), which the Company received on 30 June 2022 at which
point the risks and rewards of ownership transferred to the
Company.
Location swaps
Since May 2018, Yellow Cake has held an account with Cameco
Corporation ("Cameco") for the storage of uranium owned by the
Company at Cameco's facilities at Blind River and Port Hope,
Ontario in Canada.
On 15 November 2019, the Company entered into an agreement with
Orano Cycle ("Orano") to open a holding account for the storage of
uranium owned by the Company at Orano's conversion facility at the
Malvési and Tricastin sites in France.
On 3 April, 24 July and 27 October 2020, the Company entered a
series of location swap agreements to exchange 600,000 lb of U(3)
O(8) between these locations. In consideration, Yellow Cake
received proceeds of USD1,090,000, net of costs and commissions
(gross proceeds USD1,225,000), of which USD90,000, net of costs and
commissions (gross proceeds of USD100,000), was recognised during
the period.
Sale of uranium
On 30 March 2021, the Company accepted Uranium Royalty Corp's
option exercise notice to purchase 348,068 lb of U(3) O(8) from the
Company at a price of USD28.73/lb for a total consideration of
USD10,000,000. The transaction completed on 28 April 2021. In
respect of the above disposal, a premium of USD0.03/lb to the
prevailing daily spot price of USD 28.70/lb on 28 April 2021 (as
published by UxC, LLC), or USD10,442 in aggregate, has been
recognised in the statement of comprehensive income. This premium
represents the cumulative disposal proceeds of USD10,000,000 less
the carrying value at the date of disposal of USD9,989,558, being
the premium to the spot price (and therefore the carrying value)
that was realised on disposal.
For illustrative purposes, since the U(3) O(8) was originally
purchased, the above sales of uranium resulted in an effective
"realised gain" of USD2,687,091. This being the total sales
proceeds of USD10,000,000 less the "acquisition cost" of
USD7,312,909, where the "acquisition cost" is estimated by applying
a "first in first out" methodology to the cost of all uranium
purchases made by the Company, as at the transaction date.
In respect of the sale of uranium to Kazatomprom under the
Repurchase Option (described in note 7 of the Financial
Statements), an additional discount of USD3.00/lb to the prevailing
daily spot price of USD46.25/lb on the date that the transaction
took place (as published by UxC, LLC), or USD6,068,538 in
aggregate, was recognised in the statement of comprehensive income.
This discount represents the cumulative disposal proceeds of
USD87,488,089 less the carrying value at the date of sale of
USD93,556,628, being the discount to the spot price (and therefore
the carrying value) that was realised on the sale. The discount
represents the difference in the spot price prevailing when the
Repurchase Option was exercised and the date that the Repurchase
Option transaction completed.
The following table provides an analysis of the Company's
investment in U(3) O(8) at 31 March 2022:
Quantity Fair Value
Location lb USD'000
========= ========== ==========
Canada 15,532,755 899,347
France 300,000 17,370
========= ========== ==========
Total 15,832,755 916,717
========= ========== ==========
Post year-end uranium related transactions
Quantity Cost
lb USD'000
================================================ ========= =======
Exercise of Buyback Option, (19 May 2022) 2,022,846 87,488
Kazatomprom purchase transaction (30 June 2022) 950,000 45,201
================================================ ========= =======
Total 2,972,846 132,689
================================================ ========= =======
Trade and other receivables
5.
As at As at
31 March 2022 31 March 2021
USD'000 USD'000
================== =============
Other receivables 130 119
================== ============= =============
Total 130 119
================== ============= =============
6. Cash and cash equivalents
Cash and cash equivalents as at 31 March 2022 were held with
Citi Bank Europe plc in a variable interest account with full
access. Balances at the end of the year were USD152,243,206 and
GBP337,918, a total of USD153,136,073 equivalent (31 March 2021:
USD126,159,065 equivalent).
7. Uranium derivative liability
As part of the initial purchase on 5 July 2018 of 8,091,385 lb
of U(3) O(8) from Kazatomprom under a ten-year Framework Agreement
with Kazatomprom, the Company benefited from a purchase price which
was 2.5% below the spot price, resulting in the Company receiving
an aggregate discount of approximately USD4.3 million. In exchange
for this discount, the Company provided to Kazatomprom an option to
repurchase up to 25% of the Initial Purchase volume of 8,091,385 lb
U(3) O(8) at the prevailing uranium spot price less an aggregate
discount of approximately USD6.55 million (the "Repurchase
Option"). The Repurchase Option could only be exercised if the U(3)
O(8) spot price exceeded USD37.50 /lb for a period of 14
consecutive days (the "Pricing Condition"), starting three years
from 5 July 2018 and expiring on 30 June 2027 and was exercisable
within 60 days of the Pricing Condition being met. The Company had
a corresponding option (the "Buyback Option") to purchase from
Kazatomprom all or a portion of the volume repurchased by
Kazatomprom under the Repurchase Option at the prevailing spot
price.
The Pricing Condition was met in September 2021 and the
following transactions took place during the year in satisfaction
of Repurchase Option and Buyback Option rights and obligations:
- Purchase by Kazatomprom from Yellow Cake of 2,022,846 lb
of U(3) O(8) at USD43.25/lb less an aggregate discount of
USD6.55 million, delivered on 22 November 2021; and
- Repurchase by Yellow Cake from Kazatomprom of the 2,022,846
lb of U(3) O(8) at USD43.25/lb, delivered on 19 May 2022.
Following the exercise of the option detailed above, the uranium
derivative liability had been settled as at 31 March 2022 and has
therefore been de-recognised (31 March 2021: fair value of
USD3,361,000).
In respect of the above sale of uranium to Kazatomprom under the
Repurchase Option, an additional discount of USD3.00/lb to the
prevailing daily spot price of USD46.25/lb on the date that the
transaction took place (as published by UxC, LLC), or USD6,068,538
in aggregate, was recognised in the statement of comprehensive
income. This discount represents the cumulative disposal proceeds
of USD87,488,089 less the carrying value at the date of sale of
USD93,556,628, being the discount to the spot price (and therefore
the carrying value) that was realised on the sale. The discount
represents the difference in the spot price prevailing when the
Repurchase Option was exercised and the date that the Repurchase
Option transaction completed.
The Company exercised its Buyback Option with Kazatomprom under
the terms of which it bought back the full 2,022,846 lb of U(3)
O(8) from Kazatomprom on 19 May 2022 at USD43.25/lb and recovered
the above discount of USD3.00/lb as the prevailing spot price
increased to USD47.40/lb on 19 May 2022. As such no gain or loss
overall has occurred in respect of the exercise of the Repurchase
and Buyback Options other than settling the derivative
liability.
Trade and other payables
8.
As at As at
31 March 2022 31 March 2021
USD'000 USD'000
=============================== =============
Uranium purchase consideration - 2,995
Other payables and accruals 970 626
=============================== ============= =============
Total 970 3,621
=============================== ============= =============
Share capital
9.
Authorised :
10,000,000,000 ordinary shares of GBP0.01
Issued and fully paid:
Ordinary shares
Number GBP'000 USD'000
================================== =========== ======= ==============
Share capital as at 31 March 2020 88,215,716 882 1,164
================================== =========== ======= ==============
Shares issued in the year 44,525,014 445 621
================================== =========== ======= ==============
Share capital as at 31 March 2021 132,740,730 1,327 1,785
================================== =========== ======= ==============
Shares issued in the year 55,000,000 550 759
================================== =========== ======= ==============
Share capital as at 31 March 2022 187,740,730 1,877 2,544
================================== =========== ======= ==============
The number of shares in issue above includes the 4,069,498
Treasury shares - refer to Note 11.
Share premium
GBP'000 USD'000
================================== ======= =======
Share premium as at 31 March 2020 169,956 224,437
================================== ======= =======
Proceeds of issue of shares 98,846 137,879
Share issue costs (2,512) (3,504)
================================== ======= =======
Share premium as at 31 March 2021 266,290 358,812
================================== ======= =======
Proceeds of issue of shares 171,150 235,818
Share issue costs (4,684) (6,449)
================================== ======= =======
Share premium as at 31 March 2022 432,756 588,181
================================== ======= =======
The Company has one class of shares which carry no right to
fixed income.
On 21 June 2021, the Company issued a total of 23,947,009 new
ordinary shares to existing and new institutional investors and
1,052,991 new ordinary shares to retail investors, at a price of
GBP2.50 per share, raising gross proceeds of GBP62,500,000 (USD
equivalent: 86,906,250). The Company incurred listing expenses,
comprising of commissions and professional adviser fees totalling
USD2,606,464 of which USD2,362,648 have been taken to the share
premium account. Additional placing costs of USD243,816 have been
recognised in the statement of comprehensive income. Net proceeds
from the placing were GBP60,624,895 (USD equivalent:
84,083,736).
On 29 October 2021, the Company issued a total of 30,000,000 new
ordinary shares to existing and new institutional investors, at a
price of GBP3.64 per share, raising gross proceeds of
GBP109,200,000 (USD equivalent: 149,669,520). The Company incurred
listing expenses, comprising of commissions and professional
adviser fees totalling USD4,376,355 of which USD4,085,717 have been
taken to the share premium account. Additional placing costs of
USD290,638 have been recognised in the statement of comprehensive
income. Net proceeds from the placing were GBP106,006,979 (USD
equivalent: 145,694,325).
10. Share-based payments
The Company implemented an equity-settled share-based
compensation plan in 2019 which provides for the award of long-term
incentives and an annual bonus to management personnel. During the
year USD220,285 was recognised in the statement of comprehensive
income in relation to share-based payments (31 March 2021:
USD138,887).
Annual bonus
The annual bonus award in relation to a financial year is
usually granted following publication of the Company's audited
annual results for that financial year. In respect of the 2021 and
2022 financial years, annual bonuses were paid in cash and no
share-based annual bonus awards were made.
The annual bonus awards in respect of the year to 31 March 2020
were granted in the form of nominal-cost options, which usually
would vest and become exercisable no earlier than one year after
grant. The annual bonus award in respect of the year ended 31 March
2020, based on performance criteria, was based on commercial
targets and was reduced from the maximum award of 100% of base
salary to 70%. This was primarily due to the uncertainties that
prevailed in mid-2020, arising from the COVID-19 pandemic and the
resulting impact on the global economy.
The 2020 annual bonus award was split into two tranches of 35%
of base salary each, both with a vesting date of 8 July 2021, with
the first award made on 8 July 2020 and the second deferred until
after the Company's Annual General Meeting on 2 September 2020,
having regard to the uncertainty created by COVID-19 at the time of
finalisation of the 2020 awards. The grant of the second tranche
was made on 26 July 2021, after the Company's closed period and
therefore after the vesting date. Set out below is the summary of
the annual bonus awards as granted to directors granted on 8 July
2020 and 26 July 2021 respectively:
Expired/
Exercise Opening forfeited/ Closing
Director Grant date Exercise date price balance Granted Exercised other balance
============= =========== ============= ============= ============ ======= ========= ============ ============
A Liebenberg 08/07/2020 26/07/2021 GBP0.01 27,392 - (27,392) - -
C Whittall 08/07/2020 26/07/2021 GBP0.01 21,913 - (21,913) - -
A Liebenberg 26/07/2021 26/07/2021 GBP0.01 - 20,879 (20,879) - -
C Whittall 26/07/2021 26/07/2021 GBP0.01 - 16,703 (16,703) - -
============= =========== ============= ============= ============ ======= ========= ============ ============
Total 49,305 37,582 (86,887) - -
======================================================== ============ ======= ========= ============ ============
The options exercised on 26 July 2021 were settled with 86,887
shares held in treasury.
A Black-Scholes option pricing model was used to determine the
fair value of the first tranche of bonus awards. As the second
tranche of bonus options was granted after the vesting date, for
the reasons set out above, their fair value is calculated as the
share price at the grant date less the exercise price (rather than
based on a Black-Scholes option pricing model); as the second
tranche bonus options were exercisable upon grant, their intrinsic
value on the grant date was equal to the market value of the
underlying shares on that date.
The valuation model inputs used to determine the fair value at
the grant date are as follows:
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 26/07/2021 GBP2.26 GBP0.01 30% (0.01%) GBP110,690 USD145,690
=========== ============== ============= ============== ============= ============= ============= =============
26/07/2021 26/07/2021 GBP3.29 GBP0.01 n/a n/a GBP123,081 USD161,999
=========== ============== ============= ============== ============= ============= ============= =============
* The USD equivalent is derived using the FX rate as at the date of reporting.
Long-term incentive
The long-term incentive is in the form of options granted to
acquire shares in the Company that will become exercisable not
earlier than three years after grant (save in certain circumstances
including a change of control of the Company) and will expire 10
years after the date of grant. The option exercise price has been
determined to be the net asset value per share at the grant date of
the shares placed under option. The options are subject to a
post-vesting holding period of not less than two years (although
sufficient shares may be sold on exercise in order to meet tax
liabilities arising at vesting). Prior to 1 April 2022, the
exercise price of the options multiplied by the number of options
granted was capped at 125% of salary. Each option gives the right
to acquire one share in the Company. The long-term incentive award
relating to a financial year is usually granted at the beginning of
that financial year. The exercise of each of the long-term
incentive options is conditional upon the share price as at the
exercise date being equal to or greater than the net asset value
per share of the Company as at the date of grant.
The Remuneration Committee resolved to review the long-term
incentive plan and therefore no grant of long-term incentive
options was made in respect of the 2022 financial year.
Set out below is the summary of the long-term incentive options
awarded on 24 February 2020 in relation to the year ended 31 March
2020 and on 8 July 2020 in relation to the year ended 31 March
2021:
Expired/
Exercise Opening forfeited/ Closing
Director Grant date Vesting date price balance Granted 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 152,064 152,064
========================================= ============ =========== ========= =========== =========== ===========
Total fair value as at the grant date* USD 60,644
========================================= ============ =========== ========= =========== =========== ===========
* The USD equivalent is derived using the FX rate as at the date of reporting.
Expired/
Exercise Opening forfeited/ Closing
Director Grant date Vesting date price balance Granted 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 140,871 140,871
========================================== ============= ============ ======= ========= =========== ============
Total fair value as at the grant date* USD 44,685
========================================== ============= ============ ======= ========= =========== ============
* The USD equivalent is derived using the FX rate as at the date of reporting.
Subsequent to the grant of the 2020 and 2021 long term incentive
awards, the plan was amended such that the exercise price per share
represents the estimated net asset value per share on the grant
date.
This has resulted in the exercise price of the options granted
on 24 February 2020 being increased from GBP1.97 per share (being
the average of the mid-market closing price of the ordinary shares
of the Company on AIM over the five consecutive dealing days
immediately preceding the grant date) to GBP2.13 per share (being
the estimated net asset value per share of the Company on 24
February 2020). The exercise price of the long-term incentive
options granted on 8 July 2020 has also been increased from GBP2.18
per share (being the average of the mid-market closing price of the
ordinary shares of the Company on AIM over the five consecutive
dealing days immediately preceding the grant date) to GBP2.88 per
share (being the estimated net asset value per share of the Company
on 8 July 2020).
The exercise price for the long-term incentive options granted
on 24 February 2020 was amended after the grant date such that the
fair value of these options was reduced, as measured immediately
before and after this modification. In accordance with IFRS 2, this
reduction in fair value is not taken into account and the Company
will continue to measure the amount recognised for services
received as consideration for the incentive options, based on the
grant date fair value.
A Black-Scholes option pricing model was used to determine the
fair value of the long-term incentive options. The valuation model
inputs used to determine the fair value at the grant date are as
follows:
Fair value at Fair value at
Share price at Expected Risk-free grant date grant date
Grant date Vesting date grant date Exercise price volatility interest rate GBP USD*
=========== ============= ============== ============== ============= ============= ============= =============
24/02/2020 24/02/2023 GBP1.95 GBP1.97 25% 0.40% GBP46,075 USD60,644
08/07/2020 08/07/2023 GBP2.26 GBP2.88 30% (0.08%) GBP33,950 USD44,685
=========== ============= ============== ============== ============= ============= ============= =============
* The USD equivalent is derived using the FX rate as at the date of reporting.
11. Treasury shares
Number GBP'000 USD'000
======================================== ========= ======= =======
Treasury shares as at 31 March 2020 309,788 565 726
======================================== ========= ======= =======
Purchased in the year 3,846,597 8,301 10,732
======================================== ========= ======= =======
Treasury shares as at 31 March 2021 4,156,385 8,866 11,458
======================================== ========= ======= =======
Exercise of bonus options (86,887) (185) (239)
======================================== ========= ======= =======
Treasury shares as at 31 March 2022 4,069,498 8,681 11,219
======================================== ========= ======= =======
During the year, options granted to executive management were
exercised on 26 July 2021 and settled with 86,887 shares held in
treasury. The reduction in the value of treasury shares resulting
from the exercise of bonus options has been calculated based on the
weighted average acquisition cost of the treasury shares.
On 4 April 2022, Yellow Cake announced the initiation of a share
buyback programme to purchase up to USD3 million of the Company's
Ordinary Shares over 30 calendar days commencing on 4 April 2022
(the "Programme"). Given that the Company's shares traded at a
material discount to its underlying net asset value since
mid-January this year, the Yellow Cake Board resolved to implement
a share buyback programme as a means of effectively acquiring
exposure to uranium at a discount to the commodity spot price.
Shares were purchased when the closing mid-market share price of
the Company in any given day represented a discount of 10% or more
to the Company's pro formanet asset value at that time. Under the
Programme, following the year-end, the Company acquired 566,833
shares between 4 April and 6 May 2022, at a volume weighted average
purchase price of GBP4.15 per share or USD3.0 million in aggregate
and at a volume weighted average discount to the Company's pro
formanet asset value of 10.4%.
12. Commissions, procurement and consultancy fees
308 Services Limited ("308 Services") provides procurement
services to the Company relating to the sourcing of U(3) O(8) and
other uranium transactions and in securing competitively priced
converter storage services.
Under the terms of the agreement entered into between the
Company and 308 Services on 30 May 2018, 308 Services is entitled
to receive (i) a Holding Fee comprised of a Fixed Fee of USD275,000
per calendar year plus a Variable Fee equal to 0.275% per annum of
the amount by which the value of the Company's holdings of U(3)
O(8) exceeds USD100 million and (ii) an Annual Storage Incentive
Fee equal to 33% of the difference between the amount obtained by
multiplying the Target Storage Cost (initially set at USD0.12 /lb
per year) by the volume of U(3) O(8) (in pounds) owned by the
Company on 31 December of each respective year and the total
converter storage fees paid by the Company in the preceding
calendar year.
The Company considers Holding Fees and Storage Incentive Fees to
be costs of an ongoing nature. During the period the Company paid
Holding Fees and Storage Incentive Fees of USD 2,129,617 (31 March
2021: USD1,123,870) to 308 Services.
308 Services is also entitled to receive a commission equivalent
to 0.5% of the transaction value in respect of sale and purchase
transactions completed at the request of the Yellow Cake Board.
In addition, if the purchase price paid by the Company in
respect of such a purchase transaction is in the lowest quartile of
the range of reported uranium spot prices in the calendar year in
which the transaction completed, 308 Services is entitled to
receive, at the beginning of the following calendar year, an
additional commission of 0.5% of the value of the uranium
transacted. If the purchase price paid by the Company in respect of
such a purchase transaction is in the second lowest quartile of the
range of reported uranium spot prices in the calendar year in which
the transaction completed, 308 Services is entitled to receive, at
the beginning of the following calendar year, an additional
commission of 0.25% of the value of the uranium transacted. If the
purchase price is in the top half of the range for the calendar
year in which the transaction completed, no additional commission
will be payable to 308 Services.
During the period, commissions payable to 308 Services totalled
USD1,884,453 (31 March 2021: USD282,296).
13. Other operating expenses
Year ended 31 March 2022 Year ended 31 March 2021
USD '000 USD '000
================================================= ========================
Professional fees 769 687
Management cash compensation and directors' fees 709 535
Other expenses 603 443
Auditor's fees 99 74
================================================= ======================== ========================
Total 2,180 1,739
================================================= ======================== ========================
14 Taxation
Year ended
Year ended 31 March 2022 31 March 2021
USD '000 USD '000
Tax expense for the year - -
======================== ======================== ==============
Total - -
======================== ======================== ==============
As the Company is managed and controlled in Jersey it is liable
to be charged tax at a rate of 0% under schedule D of the Income
Tax (Jersey) Law 1961 as amended.
Related party transactions
15.
During the year, the Company incurred USD186,056 (31 March 2021:
USD173,802) of administration fees payable to Langham Hall Fund
Management (Jersey) Limited ("Langham Hall"). Emily Manning is an
employee of Langham Hall and has served as a Non-Executive Director
of the Company since 31 March 2021, for which she has received no
Directors' fees. As at 31 March 2022, there were no amounts due to
Langham Hall (31 March 2021: USD nil).
The key management personnel are the Directors and there are no
other employees. Their remuneration is detailed in note 13 and
represented within 'Other operating expenses' in the Statement of
Comprehensive Income.
The following Directors own ordinary shares in the Company as at
31 March 2022:
Name Number of ordinary shares % of share capital
============================ ========================= ==================
The Lord St John of Bletso* 26,302 0.01%
Sofia Bianchi 13,186 0.01%
The Hon Alexander Downer 29,925 0.02%
Emily Manning - -
Alan Rule 18,837 0.01%
Andre Liebenberg 121,478 0.06%
Carole Whittall 49,918 0.03%
============================ ========================= ==================
Total 259,646 0.14%
============================ ========================= ==================
* The Lord St John of Bletso's shares are held through African
Business Solutions Limited, in which he holds 100% of the
Ordinary
Shares.
While the Non-Executive Directors hold shares in the Company,
the holdings are considered sufficiently small so as not to impinge
on their independence.
16. Earnings per share
1 April 2021 1 April 2020
to to
31 March 2022 31 March 2021
=========================================================================== =============
Profit for the year (USD '000) 417,271 29,911
Weighted average number of shares during the year - Basic* 160,754,398 89,017,413
Weighted average number of shares during the year - Diluted* 161,046,530 89,308,071
=========================================================================== ============= =============
Earnings per share attributable to the equity owners of the Company (USD):
Basic 2.60 0.34
Diluted 2.59 0.33
=========================================================================== ============= =============
* The weighted average number of shares excludes treasury shares.
17. Events after the reporting
date
The Company initiated a share buyback programme on 4 April 2022,
following the year-end, and acquired 566,833 shares between 4 April
and 6 May 2022, at a volume weighted average purchase price of
GBP4.15 per share or USD3.0 million in aggregate and at a volume
weighted average discount to the Company's pro formanet asset value
of 10.4%.
As part of the "Buyback Option" detailed in note 7, Yellow Cake
bought back from Kazatomprom 2,022,846 lb of U(3) O(8) at a cost of
USD43.25/lb or USD87,488,090 in aggregate. This was received by the
Company at the Cameco storage facility in Canada on 19 May
2022.
Pursuant to Kazatomprom's offer of 26 October 2021, the Company
entered into an agreement with Kazatomprom to purchase 950,000 lb
of U(3) O(8) for a total consideration of USD45,201,000
(USD47.58/lb), which was delivered on 30 June 2022.
On 22 June 2022, the Company's shares were admitted to trading
on the OTCQX, the highest tier of the US over-the-counter
market
[1] . Based on the month-end spot price of USD30.65/lb published
by UxC LLC on 31 March 2021 and the daily spot price of USD57.90/lb
published by UxC LLC on 31 March 2022.
[2] . During the financial year, Yellow Cake purchased 8.35
million lb of U(3) O(8) and purchased an additional 0.95 million lb
of U(3) O(8) post-year-end. Under option arrangements entered into
in 2018, the Company disposed of 2.37 million lb of U(3) O(8)
during the financial year and repurchased 2.02 million lb of this
U(3) O(8) post year-end.
[3] . N et asset value per share as at 31 March 2022 is
calculated assuming 187,740,730 ordinary shares in issue less
4,069,498 shares held in treasury, the Bank of England's daily
USD/GBP exchange rate of 1.3162 as at 31 March 2022 and the daily
spot price published by UxC LLC on 31 March 2022.
[4] . Based on the daily spot price of USD45.75/lb published by UxC LLC on 15 July 2022
[5] . Average cost calculated based on a first-in, first-out methodology.
[6] . World Nuclear News; "Extended Operation of Two Belgian Reactors Approved"; 21 March 2022.
[7] . B loomberg, "New reactor spotlights China's push to lead
way in nuclear power", 21 December 2021.
[8] . US Department of Energy '2020 Uranium Marketing Annual Report', May 2021.
[9] . Euratom Supply Agency Annual Reports 2016 - 2020.
[10] . Cameco 2021 Management's discussion and analysis, 9
February 2022.
[11] . Net asset value per share on 31 March 2022 is calculated
assuming 187,740,730 ordinary shares in issue less 4,069,498 shares
held in treasury, the Bank of England's daily USD/GBP exchange rate
of 1.3162 on 31 March 2022 and the daily spot price published by
UxC LLC on 31 March 2022.
[12] . Net asset value per share on 15 July 2022 is calculated
assuming 187,740,730 ordinary shares in issue less 4,636,331 shares
held in treasury, a USD/GBP exchange rate of 1.1855 and the daily
spot price published by UxC LLC on 15 July 2022.
[13] . A s at 31 March 2022, Yellow Cake held 15,832,755 lb of
U(3) O(8) . Adjustments for purchases completed after 31 March 2022
include the addition of 2.02 million lb of U(3) O(8) bought back
from Kazatomprom for a cash consideration of US$87.5 million and
received on 19 May 2022, and 0.95 million lb of U(3) O(8) purchased
from Kazatomprom for a cash consideration of US$45.2 million and
received on 30 June 2022.
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END
FR BKDBQDBKBQOB
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