26 Jul 2012 07:00
26 July 2012
Sirius Minerals Plc
Preliminary results for the year ended 31 March 2012
The Directors of Sirius Minerals Plc (AIM: SXX, OTCQX: SRUXY) ("Sirius" or the "Company"), the globally diversified potash development group, are pleased to announce the preliminary results for Sirius and its subsidiaries ("the Group") for the year ended 31 March 2012.
Key highlights
·; Commencement of York Potash drilling programme. Drilling completed at three boreholes, SM1, SM2 and SM3.
·; £55 million of equity capital raisedthrough a placement to new and existing institutional investors.
·; Appointment of Russell Scrimshaw as Chairman and Chris Catlow as Deputy Chairman.
·; Board strengthened further with the appointments of former UK Cabinet Minister, Lord Hutton, the CEO of Network Rail, Sir David Higgins and former Chief Geologist of Boulby Potash Mine, Peter Woods as non-executive directors.
·; Appointment of Graham Clarke former Managing Director of Cleveland Potash Limited, the UK's only potash mine, as Operations Director.
Post balance sheet events
·; Completion of the Detailed Scoping Study confirming the technical and economic viability of the York Potash Project.
·; Release of the Maiden Inferred Resource of 1.35 billion tonnes of 88.7% polyhaliteconfirming the York Potash deposit as the largest and highest grade resource of polyhalite in the world, based on 2% of the project area.
·; Completion of deflection drilling at SM3A and preliminary results for SM4 and SM4A deflection.
·; Appointment of Jason Murray as Finance Director and Chief Financial Officer.
·; Appointment of Alan Watling as Managing Director York Potash, responsible for leading the project through feasibility studies to construction and delivery of the York Potash Project into production.
·; Launch of the York Potash Foundation.
Financials
The Group's year-end cash and cash equivalents position was £54.3 million which will be used to fund completion of the drilling program and feasibility studies for the York Potash Project. The increased level of development activity during the year and impairment charges to the Group's tenements in Adavale and Canning, Australia and Dakota, USA lead to a loss after taxation for the year ended 31 March 2012 of £60.1m (2011: £7.1m). The impairment charges reflect the Group's focus on its flagship York Potash Project, which we believe will deliver the greatest value for shareholders.
Chris Fraser, Managing Director and CEO of Sirius said:
"In the past year, Sirius has successfully confirmed the world-class potential of its flagship York Potash Project and has built the foundations to deliver financing, construction and production as quickly as possible. Sirius has come a long way and the level of intensity will continue to escalate as we progress through feasibility into construction.
"Whilst recognising the work and focus required over the next year, I am confident that Sirius has the people with the necessary skills, determination and energy to achieve our goals for York Potash. I would like to thank the entire team and our shareholders for each and everyone's support and hard work to bring us closer to the delivery of Sirius as the New Potash Powerhouse."
For further information, please contact:
Sirius Minerals Plc | |||
Peter McLennan(General Manager - Commercial)
| Tel: +44 8455 240 247
| Email: info@siriusminerals.com | |
NOMAD/ Joint Broker | Joint Brokers | Joint Brokers | Media Enquiries |
Macquarie Capital (Europe) Limited | Liberum Capital Limited | Jefferies Hoare Govett | Pelham Bell Pottinger |
Steve Baldwin, Sam Small | Michael Rawlinson, Clayton Bush | Peter Bacchus, Thomas Rider | Charles Vivian, Lorna Spears |
Tel: +44 20 3037 2000 | Tel: +44 20 3100 2222 | Tel: +44 20 7029 8000 | Tel: +44 20 7861 3232 |
About Sirius Minerals Plc
Sirius Minerals is a globally diversified Potash development group. Its primary focus is to bring on stream major Potash mining facilities through the acquisition and development of projects overlying recognised Potash deposits. It is developing the flagship York Potash Project in North Yorkshire, United Kingdom and also holds properties in the United States, and Australia.
Incorporated in 2003, Sirius Minerals' shares are traded on the London Stock Exchange's AIM market. Its shares are also traded in the United States on the OTCQX through a sponsored ADR facility. Further information on the Company can be found at www.siriusminerals.com.
Consolidated Income Statement |
for the year ended 31 March 2012 |
2012 | 2011 | ||
Notes | £000s | £000s | |
Continuing operations | |||
Revenue | - | - | |
Administrative expenses | (63,274) | (7,713) | |
Summary of administrative expenses: | |||
Impairment charges | 3 | (57,143) | (732) |
Acquisition costs | - | (48) | |
Exploration costs expensed | - | (497) | |
Other administrative costs | (6,131) | (6,436) | |
Operating loss | (63,274) | (7,713) | |
Finance income | 164 | 45 | |
Loss before taxation | (63,110) | (7,668) | |
Taxation | 3,006 | 578 | |
Loss for the financial year | (60,104) | (7,090) | |
Loss per share: | |||
Basic and diluted | 4 | (5.6)p | (1.0)p |
Consolidated Statement of Comprehensive Income |
for the year ended 31 March 2012 |
2012 | 2011 | |
£000s | £000s | |
Loss for the year | (60,104) | (7,090) |
Other comprehensive income | ||
Exchange differences on translating foreign operations | 484 | 1,161 |
Other comprehensive income for the year | 484 | 1,161 |
Total comprehensive loss for the year | (59,620) | (5,929) |
Total comprehensive loss shown above is fully attributable to equity shareholders of the parent in both years. |
Consolidated Statement of Financial Position |
as at 31 March 2012 |
2012 | 2011 | ||
ASSETS | Notes | £000s | £000s |
Non-current assets | |||
Plant and equipment | 253 | 36 | |
Intangible assets |
5 | 46,442 | 91,197 |
Total non-current assets | 46,695 | 91,233 | |
Current assets | |||
Other receivables | 1,703 | 307 | |
Cash and cash equivalents | 54,271 | 21,010 | |
Loans and receivables | 1,500 | - | |
Total current assets | 57,474 | 21,317 | |
TOTAL ASSETS | 104,169 | 112,550 | |
EQUITY AND LIABILITIES | |||
Equity | |||
Share capital | 6 | 3,348 | 2,581 |
Share premium account | 147,238 | 95,658 | |
Share based payment reserve | 7,691 | 6,343 | |
Retained earnings | (70,804) | (10,700) | |
Foreign exchange reserve | 7,217 | 6,733 | |
Total equity | 94,690 | 100,615 | |
Non-current liabilities | |||
Deferred tax liability | 6,628 | 9,701 | |
Current liabilities | |||
Trade and other payables | 2,851 | 2,234 | |
Total liabilities | 9,479 | 11,935 | |
TOTAL EQUITY AND LIABILITIES | 104,169 | 112,550 |
Consolidated Statement of Changes in Equity |
for the year ended 31 March 2012 |
Share capital £000s |
Share premium account £000s | Share based payments reserve £000s |
Retained earnings £000s |
Foreign exchange reserve £000s | Equity share- holders' funds £000s |
Minority interests £000s |
Total equity £000s | |
At 31 March 2010 | 1,658 | 47,959 | 1,575 | (3,610) | 5,572 | 53,154 | - | 53,154 |
Loss for the financial year | - | - | - | (7,090) | - | (7,090) | - | (7,090) |
Foreign exchange differences on translation of foreign operations | - | - | - | - | 1,161 | 1,161 | - | 1,161 |
|
|
|
| |||||
Total comprehensive income for the year | - | - | - | (7,090) | 1,161 | (5,929) | - | (5,929) |
On acquisition | - | - | - | - | - | - | - | - |
Share capital issued in the year | 923 | 48,626 | - | - | - | 49,549 | - | 49,549 |
Share issue costs | - | (927) | - | - | - | (927) | - | (927) |
Share based payments | - | - | 4,809 | - | - | 4,809 | - | 4,809 |
Exercised options | - | - | (41) | - | - | (41) | - | (41) |
At 31 March 2011 | 2,581 | 95,658 | 6,343 | (10,700) | 6,733 | 100,615 | - | 100,615 |
Loss for the financial year | - | - | - | (60,104) | - | (60,104) | - | (60,104) |
Foreign exchange differences on translation of foreign operations | - | - | - | - | 484 | 484 | - | 484 |
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|
|
| |||||
Total comprehensive income for the year | - | - | - | (60,104) | 484 | (59,620) | - | (59,620) |
Share capital issued in the year | 767 | 54,288 | - | - | - | 55,055 | - | 55,055 |
Share issue costs | - | (2,708) | - | - | - | (2,708) | - | (2,708) |
Share based payments | - | - | 1,348 | - | - | 1,348 | - | 1,348 |
At 31 March 2012 | 3,348 | 147,238 | 7,691 | (70,804) | 7,217 | 94,690 | - | 94,690 |
The share premium account is used to record the excess proceeds over nominal value on the issue of shares. |
The share based payment reserve is used to record the share based payments made by the Group. |
Foreign exchange reserve records exchanges differences which arise on translation of foreign operations with a functional currency other than Sterling. |
Consolidated Statement of Cash Flows |
for the year ended 31 March 2012 |
2012 | 2011 | ||
Notes | £000s | £000s | |
Cash outflow used in operating activities | (5,503) | (622) | |
Cash flow from investing activities | |||
Purchase of intangible assets | (12,386) | (3,148) | |
Purchase of plant and equipment | (270) | (37) | |
Acquisition of subsidiary, net of cash acquired | - | (372) | |
Loan to third party | (1,500) | - | |
Net cash used in investing activities | (14,156) | (3,557) | |
Cash flow from financing activities | |||
Proceeds from issue of shares | 55,055 | 24,342 | |
Share issue costs | (2,708) | (927) | |
Finance income | 164 | 45 | |
Net cash generated from financing activities | 52,511 | 23,460 | |
Net increase in cash and cash equivalents | 32,852 | (19,281) | |
Cash and cash equivalents at beginning of the year | 21,010 | 1,782 | |
Effect of foreign exchange rate changes | 409 | (53) | |
Cash and cash equivalents at end of the year | 54,271 | 21,010 |
Notes to the Accounts
1. | Basis of preparation |
This announcement has been prepared in accordance with the Group's accounting policies, which in turn are in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union ("EU") applied in accordance with the provisions of the Companies Act 2006.
IFRS is subject to amendment and interpretation by the International Accounting Standards Board ("IASB") and the IFRS Interpretations Committee and there is an ongoing process of review and endorsement by the European Commission. The accounting policies comply with each IFRS that is mandatory for accounting periods ended 31 March 2012.
2. | Segmental analysis |
Management has determined the operating segments by considering the business from both a geographic and product perspective. For management purposes, the Group is currently organised into two operating divisions: resource evaluation and exploitation and environmental solutions. These divisions are the business segments for which the Group reports its segment information internally to the Board of Directors. The Group's operations are predominantly in the United Kingdom, the United States of America and Australia.
UK
| United States of America
| Australia
| ||||||
Resource evaluation and | Resource evaluation and | Resource evaluation and | ||||||
Environmental | Environmental |
Consolidation | ||||||
exploration | exploration | solutions | exploration | solutions | Unallocated | adjustments | Total | |
£000s | £000s | £000s | £000s | £000s | £000s | £000s | £000s | |
Year ended 31 March 2012 | ||||||||
Operating loss | (672) | (5,175) | (181) | (52,545) | (293) | (51,772) | 47,364 | (63,274) |
Finance costs | - | - | - | - | - | - | - | - |
Finance income | 9 | 4 | - | - | 2 | 149 | - | 164 |
Loss before taxation | (663) | (5,171) | (181) | (52,545) | (291) | (51,623) | 47,364 | (63,110) |
Taxation | 512 | - | - | 2,494 | - | - | - | 3,006 |
Loss for the year from continuing operations | (151) | (5,171) | (181) | (50,051) | (291) | (51,623) |
47,364 | (60,104) |
Total assets | 46,908 | 969 | - | 3,335 | 29 | 70,127 | (17,199) | 104,169 |
Total liabilities | (22,038) | (5,180) | (182) | (1,697) | (162) | (2,962) | 22,742 | (9,479) |
Net assets | 24,870 | (4,211) | (182) | 1,638 | (133) | 67,165 | 5,543 | 94,690 |
Capital expenditure | 11,526 | 770 | - | 258 | - | 102 | - | 12,656 |
Depreciation and amortisation | 38 | - | - | - | - | 21 |
- | 59 |
Impairment charge | - | 4,945 | 178 | 51,770 | 250 | - | - | 57,143 |
UK
| United States of America
| Australia
| |||||||||||||
Resource evaluation and exploration | Resource evaluation and exploration | Environmental solutions | Resource evaluation and exploration | Environmental solutions | Unallocated |
Consolidation adjustments | Total | ||||||||
£000s | £000s | £000s | £000s | £000s | £000s | £000s | |||||||||
Year ended 31 March 2011 | |||||||||||||||
Operating loss | (301) | (406) | (18) | (124) | (4) | (6,860) | - | (7,713) | |||||||
Finance costs | - | - | - | - | - | - | - | - | |||||||
Finance income | - | - | - | 3 | - | 42 | - | 45 | |||||||
Loss before taxation | (301) | (406) | (18) | (121) | (4) | (6,818) | - | (7,668) | |||||||
Taxation | - | - | - | 529 | 49 | - | - | 578 | |||||||
(Loss)/profit for the year from continuing operations | (301) | (406) | (18) | 408 | 45 | (6,818) |
- | (7,090) | |||||||
Total assets | 32,406 | 5,067 | 177 | 54,832 | 307 | 24,805 | (5,044) | 112,550 | |||||||
Total liabilities | (7,385) | (4,147) | (180) | (3,573) | (153) | (1,541) | 5,044 | (11,935) | |||||||
Net assets | 25,021 | 920 | (3) | 51,259 | 154 | 23,264 | - | 100,615 | |||||||
Capital expenditure | 25,652 | 2,882 | - | 166 | - | 37 | - | 28,737 | |||||||
Depreciation and | |||||||||||||||
amortisation | - | - | - | 1 | - | 1 |
- | 2 | |||||||
Impairment charge | - | - | - | - | - | 732 | - | 732 | |||||||
Acquisition costs | - | - | - | - | - | 48 | - | 48 | |||||||
Exploration expensed | 365 | 132 | - | - | - | - | - | 497 | |||||||
3. | Summary of administrative expenses
|
The Group made impairment charges of £16,601,000 in Auspotash Corporation, £171,000 in Queensland Potash Pty Limited, £20,475,000 in Adavale Holdings Pty Limited, £14,523,000 in Derby Salts Pty Limited, £173,000 in Bicarb Sequestration Pty Limited, £77,000 in CO2 Energy Storage Pty Limited, £4,945,000 in Dakota Salts LLC and £178,000 in CO2 Energy Storage Limited. The focus of the Group is the flagship York Potash project and consistent with this focus, the Group has written down the value of the remainder of the portfolio. With each impairment, the intangible exploration assets and any goodwill held by the relevant companies were impaired. The total expense recognised within the income statement in relation to impairment charges is £57,143,000 (2011: £732,000) (see note 5). | |
4. | Loss per share |
Basic loss per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year. | |
Given the Group's reported loss for the year, share options are not taken into account when determining the weighted average number of ordinary shares in issue during the year and therefore the basic and diluted earnings per share are the same. | |
2012 | 2011 | |
£000s | £000s | |
Loss for the purposes of basic earnings per share being net loss attributable to equity shareholders of the parent | (60,104) | (7,090) |
Loss for the purpose of diluted earnings per share | (60,104) | (7,090) |
2012 Number 000s | 2011 Number 000s | |
Number of shares | ||
Weighted average number of ordinary shares for the purpose of basic and diluted earnings per share | 1,082,989 | 733,827 |
If the Company's share options were taken into consideration in respect of the Company's weighted average number of ordinary shares for the purpose of diluted earnings per share, it would be as follows: |
2012 | 2011 | |
Number | Number | |
000s | 000s | |
Number of shares | ||
Weighted average number of ordinary shares for the purposes of diluted earnings per share | 1,147,453 | 790,939 |
Basic and diluted loss per share | (5.6)p | (1.0)p |
5. | Intangible assets |
Exploration | ||||
costs and rights | Goodwill | Software | Total | |
£000s | £000s | £000s | £000s | |
Cost | ||||
At 1 April 2010 | 52,446 | 2,528 | - | 54,974 |
Additions | 3,148 | - | - | 3,148 |
Additions acquired on acquisition of subsidiary | 25,552 | 6,644 | - | 32,196 |
Foreign exchange movement | 1,602 | (38) | - | 1,564 |
As at 31 March 2011 | 82,748 | 9,134 | - | 91,882 |
Additions | 12,338 | - | 48 | 12,386 |
Additions acquired on acquisition of subsidiary | - | - | - | - |
Foreign exchange movement | 63 | (55) | - | 8 |
As at 31 March 2012 | 95,149 | 9,079 | 48 | 104,276 |
Provision for impairment/amortisation | ||||
At 1 April 2010 | (682) | - | - | (682) |
Impairment | (3) | - | - | (3) |
At 31 March 2011 | (685) | - | - | (685) |
Impairment/amortisation | (54,707) | (2,436) | (6) | (57,149) |
At 31 March 2012 | (55,392) | (2,436) | (6) | (57,834) |
Net book value | ||||
31 March 2012 | 39,757 | 6,643 | 42 | 46,442 |
31 March 2011 | 82,063 | 9,134 | - | 91,197 |
Goodwill |
The goodwill acquired in January 2011 as part of the business combination relating to York Potash Limited has been allocated to the cash generating unit (CGU) of resource evaluation and exploitation in the geographical location of the UK, which is expected to benefit from the business combination. |
The recoverable amount of the goodwill on the acquisition of York Potash Limited has been assessed by reference to value in use. The valuation is based on cash flow projections that incorporate best estimates of selling prices, production rates, future capital expenditure and production costs. The growth rate was incorporated into the discount rate. |
The cash flow projections are based on long-term plans covering the expected life of the operation. The expected life is more than 25 years. The valuations are particularly sensitive to changes in assumptions about selling prices, volumes of production and operating costs. Long-term average selling prices are forecast taking account of market data in respect of potash and management's current expectations. Forecasts of volumes of production and operating costs are based on management's current expectations. |
Discount rates represent an estimate of the rate the market would apply having regard to the time value of money and the risks specific to the asset for which the future cash flow estimates have not been adjusted. A discount rate of 8 per cent, which is considered to be appropriate for a project of this nature and size, has been applied to the pre-tax cash flows. |
No reasonably possible change in the key assumptions on which York Potash Limited's recoverable amount is based would cause its value to fall short of its carrying amount as at 31 March 2012. |
|
Impairment |
The impairment charge to exploration costs and rights of £54,707,000 relates to Auspotash Corporation, Queensland Potash Pty Limited, Adavale Holdings Pty Limited, Derby Salts Pty Limited, Bicarb Sequestration Pty Limited, CO2 Energy Storage Pty Limited, Dakota Salts LLC and CO2 Energy Storage Limited (see note 3).The impairment charge to goodwill of £2,436,000 relates to Auspotash Corporation. Auspotash Corporation, Queensland Potash Pty Limited, Derby Salts Pty Limited, Bicarb Sequestration Pty Limited, CO2 Energy Storage Pty Limitedand CO2 Energy Storage Limitedwhich were fully impaired. Adavale Holdings Pty Limited and Dakota Salts LLC were impaired by reference to fair value. |
6. |
Share capital |
2012 | 2011 | |
£000s | £000s | |
Allotted and called up | ||
1,339,033,000 (2011: 1,032,578,000) ordinary shares of 0.25p each | 3,348 | 2,581 |
On 23 November 2011 the Company issued 900,000 new ordinary shares of 0.25p each at a price of 6p per share, realising £55,000, following the exercise of share options. |
On 31 January 2012 the Company issued 305,555,555 new ordinary shares of 0.25p each at a price of 18p per share, realising£55,000,000, in a share placing. Costs in relation to the share placing were £2,708,000. |
7. Financial information
The financial information set out in this announcement does not comprise the Group's statutory accounts for the years ended 31 March 2012 or 31 March 2011.
The financial information has been extracted from the statutory accounts of the Group for the year ended 31 March 2011. The auditors reported on those accounts; their report was unqualified and did not contain a statement under either Section 498 (2) or Section 498 (3) of the Companies Act 2006 and did not include references to any matters to which the auditor drew attention by way of emphasis.
The statutory accounts for the year ended 31 March 2011 have been delivered to the Registrar of Companies. The statutory accounts for the year ended 31 March 2012 will be finalised on the basis of thefinancial information presented by the Directors in this preliminary announcement and will be delivered to the Registrar of Companies following the Company's Annual General Meeting.