15 Aug 2013 07:00
15 August 2013
Sirius Minerals Plc
Preliminary results for the year ended 31 March 2013 (unaudited)
The Directors of Sirius Minerals Plc (AIM: SXX, OTCQX: SRUXY) ("Sirius" or the "Company") are pleased to announce the preliminary results for Sirius and its subsidiaries ("the Group") for the year ended 31 March 2013.
Key highlights
· Completion of the Detailed Scoping Study confirming the technical and economic viability of the York Potash Project, followed by completion of the Pre-Feasibility Study that simplified and significantly reduced capital cost of the Project.
· JORC compliant Maiden Inferred Resource announced and subsequently increased to 2.2 billion tonnes of 82.4% Polyhalite within just 5% of the York Potash project area
· Mineral rights secured over 95% of the project area.
· Launch of the onshore mining planning approval process and submission of draft documents for pipeline approval process.
· Achieved offshore mining approval - one of the five key approvals required for the York Potash Project.
· Appointment of Jason Murray as Finance Director and Chief Financial Officer.
· Appointment of Gordon Cowe as Development Director.
· Signing of a marketing agreement with KEYTRADE AG, one of the world's leading fertilizer trading, distribution and marketing companies, to market up to 1.75 million tonnes per annum of polyhalite in key regions of Central and South America (excluding Brazil), South East Asia, as well as specific countries in Europe and Africa.
· Launch of the York Potash Foundation.
Post balance sheet events
· Exploration drilling program completed.
· JORC compliant mineral resource increased to 2.66bn tonnes of 85.7% grade polyhalite within an area representing 7% of the York Potash Project area of interest - the largest and highest grade in the world. Upgrade of 820 million tonnes of polyhalite at an average grade of 87.3% to Indicated Category.
· Crop studies results announced, validating polyhalite as an effective, valuable fertilizer that outperforms traditional potassium chloride ("MOP") in some circumstances.
· Major offtake contract for the sale of 1mtpa of polyhalite for 10 years from 2017 to China based Yunnan TCT Yong-Zhe Company Limited.
· Framework Sales Agreements ("FSA's") with fertilizer distributors and manufacturers for 310,000 tonnes per annum in the UK and Europe, and a further 700,000 tonnes per annum of FSAs and letters of intent in various countries including Mexico, Chile, Ecuador, Thailand and Indonesia.
· Convertible security financing of up to £25 million secured with New York based Institutional Investor.
Financials
The Group's year-end cash and cash equivalents position as at 31 March 2013 was approximately £18 million (2012: £54 million). The Group's loss for the year ended 31 March 2013 was approximately £8.6m (2012: £60.1 million). The current position of the Company has been bolstered by the recent financing announced on 12 August 2013.
Annual Report & Accounts and AGM
The Annual Report & Accounts and Notice of Annual General Meeting ("AGM") will be posted to shareholders at the end of August and a copy will be published on the Company's website www.siriusminerals.com.
The AGM will be held at 11.30am on Tuesday 24 September 2013 at the Royal York Hotel, Station Road, North Yorkshire, York, YO24 1AA and the Notice for the AGM will be found in the Annual Report when published.
For further information, please contact:
Sirius Minerals Plc | |||
Investor Relations
| Tel: +44 8455 240 247
| Email: | ir@siriusminerals.com |
NOMAD/ Joint Broker | Joint Broker | Media Enquiries | |
Macquarie Capital (Europe) Limited | Liberum Capital Limited | Pelham Bell Pottinger | |
Steve Baldwin, Raj Khatri | Michael Rawlinson, Clayton Bush | Charles Vivian, Lorna Spears | |
Tel: +44 20 3037 2000 | Tel: +44 20 3100 2222 | Tel: +44 20 7861 3232 | |
About Sirius Minerals Plc
Sirius Minerals is a globally diversified potash development company. Its primary focus is to bring on stream major potash mining facilities through the acquisition and development of projects overlying recognised potash deposits. Today it holds properties in the United Kingdom (North Yorkshire) and the United States (North Dakota). 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.
CHAIRMAN'S STATEMENT
Dear Shareholders,
I am pleased to submit to you my second annual Chairman's Statement for Sirius Minerals Plc after a year of significant accomplishments for the Group.
Over the past year a large proportion of our effort has focused on preparing our submission for the onshore mining approval required for the York Potash Project. A huge amount of work has been undertaken to deliver a vast array of technical studies and designs for our world leading proposals. Whilst the planning decision for the mine was targeted for the middle of this calendar year which is outside of the financial year for this report, it would be wrong not to comment on this critical objective for the York Potash Project. Requesting a delay to the most recent targeted approval date was not an easy decision to make and is very frustrating for all, most especially our loyal shareholders and staff. However, it is absolutely right that the Company properly, and in appropriate detail, addresses all outstanding concerns brought to our attention by the various key and interested parties. Our final submission must and will be robust, and as complete and expert as possible, in order to achieve the positive planning decision on the application.
Recently Uralkali, the world's largest potash producer, made certain statements that have created significant uncertainties in the global potash industry. These statements related to an intention to end its joint marketing arrangement with Belarus (BPC) and to increase its production levels from its operations towards capacity. Should these statements be followed by actions then it would be contrary to past behaviour by Uralkali where it has managed production volumes to the benefit of better pricing. Whilst it is too early to foresee the ultimate longer term effect on the industry of this single producer's actions, it is my view that our shareholders should remain confident that our project will be at, or near, the bottom end of the cost curve for potassium based materials. Our polyhalite product is positioned advantageously in the market compared to traditional potassium chloride, it is absolutely saleable and, critically, the expected returns on the project, even at potentially reduced long-term prices, remains very attractive.
It is true that for very large ground-breaking projects of this nature the path to success is not always smooth - and we have experienced several bumps in the road in recent times. But the essence of the outcomes we are setting out to achieve remain exactly the same; a world-class, large scale, potassium based fertilizer business that will deliver huge economic and social benefits for the UK, our global customers, our employees, partners and, very importantly, our shareholders.
This last year has also seen the world witness a heightened awareness of the critical issue and strategic importance of food security, with a particular focus on the use of fertilizers to improve agricultural productivity. This has recently been highlighted within China with a specific forum held at the very important 2013 Boao Conference on the subject of food security. Around a dozen world leaders were present at the conference including new Chinese leader Xi Jinping. Both Chris Fraser and I were invited to participate in key panel forums. It is a testimony to the credibility of the Company in Asia that I participated in a 'Future Food Security' panel with such eminent panellists as the Chinese Agricultural Minister, the Deputy Prime Minister of Thailand and the CEO's of major global food companies such as Pepsico and Mars. In addition, at the People's Congress in China earlier this year, strong priority was given to boosting agricultural productivity and yields to increase food production in the Plan for National Economic and Social Development.
Globally, the Food and Agriculture Organisation released a report predicting that more than twice as much meat, fruit and vegetables will be required by 2050 to meet the demand of a growing population. Earlier this year, prominent business figure Bill Gates noted that "innovations that are guided by smallholder farms, adapted to local circumstances, and sustainable for the economy and environment will be necessary to ensure food security in the future". These issues are at the heart of the strategy in place for the Company moving forward with development of the York Potash Project.
In late 2012, the Company announced a simplified development approach for the York Potash Project publishing a Pre-Feasibility Study for the phase 1 development that focused on producing 5mtpa of granulated polyhalite. This followed from positive market engagement with customers and a realisation of the benefits of balanced fertilization to address nutrient deficiencies in soils around the world.
Our global crop study program has made significant progress over the past year to commercially validate the benefits of polyhalite in addressing these deficiencies through multi-nutrient solutions. The board's decision to revise the strategy has lowered risk and enhanced value for the Company and created further flexibility to expand the product portfolio at a later date.
The Group has also witnessed acceptance of our polyhalite product as highlighted by the marketing agreement signed with global fertilizer trader KEYTRADE AG for up to 1.75 million tonnes per annum and the signing of initial framework sales agreements in Europe and the UK for around 310,000 million tonnes per annum. This provided a strong prelude to the signing of the major offtake agreement in China for 1 million tonnes per annum of polyhalite for 10 years from 2017. This offtake agreement, signed in June 2013 with TCT from Yunnan Province in China, is a major milestone for the Company and further demonstrates the demand for polyhalite and the outstanding potential of the York Potash Project.
Since announcing the revised product strategy, the Company has made good progress in the feasibility studies which will guide the construction of the York Potash Project. We were pleased to announce the appointment of Gordon Cowe as Development Director, who has more than 25 years' experience with major resource projects, to lead these efforts. Gordon is now well ensconced in North Yorkshire and, besides his project development work, is also leading our approvals work.
The achievements made by the Company this year could not have been achieved without the dedication of our Managing Director and CEO, Chris Fraser. Chris and his team have worked tirelessly to develop world-class designs and strategies for the Project. Following the announcement of the revised development strategy and the appointment of Gordon Cowe, I am pleased to confirm that we now have all key management team members in place to oversee the transition from planning and development to construction and production. I would also like to thank members of the Board of Directors for their diligence alongside the management team in reaching critical milestones over the past financial year.
The share price performance of Sirius over the 2012/13 Financial Year increased by over 41% and reflected the positive support for our evolution in strategy and significant progress made on the York Potash Project. Unfortunately, the delay in a planning decision and more significantly the recent statements by Uralkali (noted above) has seen the share price come under downward pressure. We are continuing to advance the project with recent agreements with customers, suppliers and financiers. It is no comfort but the large majority of existing potash producers and other potash developers have also seen a substantial loss in market value. I have personally increased my shareholding in Sirius over the past year, reflecting the continued confidence I have in the Company and the highly skilled management team.
The consolidated financial statements for the year ended 31 March 2013 have been prepared under the going concern assumption however the Directors recognise that there are a number of material uncertainties inherent in the York Potash Project specifically the final results of feasibility studies, obtaining appropriate planning permissions and securing long term project finance for the project. The impact of these on the Directors' consideration of the going concern assumption is set out in Note 1 to this announcement.
Although beyond the financial year, the securing of a £25 million convertible security financing in August 2013 was an important step forward. This financing demonstrated confidence in the on-going development of the York Potash Project at a time when there was increased volatility in the potash sector. The funds will enable the Company to continue the necessary work needed to secure the required approvals, in addition to other development initiatives including global crop trials that we expect will further demonstrate the unique value of polyhalite and further de-risk the project.
More broadly I would like to thank all who have supported us through the on-going planning approval process including landowners, local councils, members of the community and government, industry experts, business people, and shareholders. The overwhelmingly positive response received towards the development of the York Potash Project has been very gratifying.
It will be an exciting year ahead for the Group as we move towards approval of the onshore mining plan and the infrastructure elements of the York Potash Project and ultimately construction. The Board and management team have already demonstrated outstanding dedication to development of the project that will need to be sustained as we continue to face challenges moving forward. Once we have worked through the current set of challenges, we expect to see a substantial increase in activity and employment in the local area that will provide a much needed boost to the regional economy. I continue to strongly believe that the York Potash Project will provide a multi-generational, environmentally friendly, economic and social stimulus to North Yorkshire and the UK as well as a sustainable positive contribution to the issue of global food security.
THANK YOU FOR YOUR INTEREST AND SUPPORT
Russell Scrimshaw
Chairman
CONSOLIDATED INCOME STATEMENT |
for the year ended 31 March 2013 |
2013 | 2012 | ||
Notes | £000s | £000s | |
Revenue | - | - | |
Administrative expenses | (15,175) | (63,274) | |
Summary of administrative expenses: | |||
Impairment charge | 3 | (2,947) | (57,143) |
Other administrative costs | (12,228) | (6,131) | |
Operating loss | (15,175) | (63,274) | |
Finance income | 603 | 164 | |
Loss before taxation | (14,572) | (63,110) | |
Taxation | 5,984 | 3,006 | |
Loss for the financial year | (8,588) | (60,104) | |
Loss per share: | |||
Basic and diluted | 4 | (0.6)p | (5.6)p |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME |
for the year ended 31 March 2013 |
2013 | 2012 | ||
£000s | £000s | ||
Loss for the financial year attributable to owners of the parent | (8,588) | (60,104) | |
Other comprehensive (loss)/income | |||
Exchange differences on translating foreign operations | (53) | 484 | |
Other comprehensive (loss)/income for the year | (53) | 484 | |
Total comprehensive loss for the year | (8,641) | (59,620) |
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 2013 |
2013 | 2012 | ||
ASSETS | Notes | £000s | £000s |
Non-current assets | |||
Property, plant and equipment | 926 | 253 | |
Intangible assets | 5 | 73,743 | 46,442 |
Total non-current assets | 74,669 | 46,695 | |
Current assets | |||
Other receivables | 958 | 1,703 | |
Loans and receivables | 915 | 1,500 | |
Cash and cash equivalents | 17,980 | 54,271 | |
Total current assets | 19,853 | 57,474 | |
TOTAL ASSETS | 94,522 | 104,169 | |
EQUITY AND LIABILITIES | |||
Equity | |||
Share capital | 6 | 3,359 | 3,348 |
Share premium account | 147,763 | 147,238 | |
Share based payment reserve | 10,345 | 7,691 | |
Accumulated losses | (79,392) | (70,804) | |
Foreign exchange reserve | 7,164 | 7,217 | |
Total equity | 89,239 | 94,690 | |
Non-current liabilities | |||
Deferred tax liability | 659 | 6,628 | |
Current liabilities | |||
Trade and other payables | 4,624 | 2,851 | |
Total liabilities | 5,283 | 9,479 | |
TOTAL EQUITY AND LIABILITIES | 94,522 | 104,169 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY |
for the year ended 31 March 2013 |
Share | Equity | ||||||
Share | based | Foreign | share- | ||||
Share | premium | payments | Accumulated | exchange | holders' | ||
capital | account | reserve | losses | reserve | funds | ||
Notes | £000s | £000s | £000s | £000s | £000s | £000s | |
At 31 March 2011 | 2,581 | 95,658 | 6,343 | (10,700) | 6,733 | 100,615 | |
Loss for the financial year | - | - | - | (60,104) | - | (60,104) | |
Foreign exchange differences on | |||||||
translation of foreign operations | - | - | - | - | 484 | 484 | |
Total comprehensive (loss)/income for the year | - | - | - | (60,104) | 484 | (59,620) | |
Share capital issued in the year | 767 | 54,288 | - | - | - | 55,055 | |
Share issue costs | - | (2,708) | - | - | - | (2,708) | |
Share based payments | - | - | 1,348 | - | - | 1,348 | |
At 31 March 2012 | 3,348 | 147,238 | 7,691 | (70,804) | 7,217 | 94,690 | |
Loss for the financial year | - | - | - | (8,588) | - | (8,588) | |
Foreign exchange differences on | |||||||
translation of foreign operations | - | - | - | - | (53) | (53) | |
Total comprehensive (loss)/income for the year | - | - | - | (8,588) | (53) | (8,641) | |
Exercised options | 6 | 11 | 525 | - | - | - | 536 |
Share based payments | - | - | 2,654 | - | - | 2,654 | |
At 31 March 2013 | 3,359 | 147,763 | 10,345 | (79,392) | 7,164 | 89,239 |
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 2013 |
2013 | 2012 | ||
Notes | £000s | £000s | |
Cash outflow from operating activities | (6,849) | (5,503) | |
Cash flow from investing activities | |||
Purchase of intangible assets | 5 | (30,116) | (12,386) |
Purchase of plant and equipment | (857) | (270) | |
Loan to third party | 585 | (1,500) | |
Net cash generated from/(used in) investing activities | (30,388) | (14,156) | |
Cash flow from financing activities | |||
Proceeds from issue of shares | 6 | 536 | 55,055 |
Share issue costs | - | (2,708) | |
Finance income/(costs) | 603 | 164 | |
Net cash generated from financing activities | 1,139 | 52,511 | |
Net (decrease)/increase in cash and cash equivalents | (36,098) | 32,852 | |
Cash and cash equivalents at beginning of the year | 54,271 | 21,010 | |
Effect of foreign exchange rate changes | (193) | 409 | |
Cash and cash equivalents at end of the year | 17,980 | 54,271 |
NOTES TO THE PRELIMINARY ANNOUNCEMENT |
1. BASIS OF PREPARATION | ||||||||||||||||||||||||||||||||||||||||||
In preparing this financial information, management has used the principal accounting policies that will be detailed in the Group's Annual Report and which are unchanged from the prior year. The results shown for 2013 are unaudited. The financial information contained in this announcement does not constitute statutory accounts within the meaning of Section 435 of the Companies Act 2006.
Statutory accounts of the Company in respect of the financial year ended 31 December 2012, upon which the Company's auditors have given a report which was unqualified and did not contain a statement under Section 237(2) of the Companies Act 2006, have been delivered to the Registrar of Companies.
For the year ended 31 March 2013 we anticipate our auditors to issue a modified but not qualified audit report reflecting the material uncertainties over the Director's application of the going concern assumption in preparing the Group's financial statements, outlined below.
Changes in accounting policy and disclosures (a) New and amended standards adopted by the Group There are no IFRSs or IFRIC interpretations that are effective for the first time for the financial year beginning on 1 January 2012 that have had a material impact on the Group. (b) New standards and interpretations not yet adopted
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2. SEGMENTAL ANALYSIS |
Management has determined the operating segments by considering the business from both a geographic and activity perspective. The Group is currently organised into three business divisions: resource evaluation and exploration, environmental solutions and corporate operations. These divisions are the segments for which the Group reports information internally to the Board of Directors. The Group's operations are predominantly in the United Kingdom. |
UK | United States of America | Australia | |||||
Resource | Resource | Resource | |||||
evaluation and | evaluation and | Environmental | evaluation and | Environmental | Corporate | ||
exploration | exploration | solutions | exploration | solutions | operations | Total | |
£000s | £000s | £000s | £000s | £000s | £000s | £000s | |
Year ended 31 March 2013 | |||||||
Operating loss | (3,171) | (1,821) | 6 | (3,146) | 19 | (7,062) | (15,175) |
Finance costs | - | - | - | - | - | - | - |
Finance income | 80 | - | - | 3 | - | 520 | 603 |
Loss before taxation | (3,091) | (1,821) | 6 | (3,143) | 19 | (6,542) | (14,572) |
Tax credits | 5,473 | - | - | 511 | - | - | 5,984 |
Loss for the year from continuing operations | 2,382 | (1,821) | 6 | (2,632) | 19 | (6,542) | (8,588) |
Total assets | 83,534 | 78 | - | 61 | 1 | 10,848 | 94,522 |
Total liabilities | (4,236) | (81) | - | (4) | - | (962) | (5,283) |
Net assets | 79,298 | (3) | - | 57 | 1 | 9,886 | 89,239 |
Capital expenditure | 30,830 | - | - | - | - | 143 | 30,973 |
Depreciation and amortisation | 150 | - | - | - | - | 48 | 198 |
Impairment charge | - | 895 | (6) | 3,206 | - | (1,148) | 2,947 |
UK | United States of America | Australia | |||||
Resource | Resource | Resource | |||||
evaluation and | evaluation and | Environmental | evaluation and | Environmental | Corporate | ||
exploration | exploration | solutions | exploration | solutions | operations | Total | |
£000s | £000s | £000s | £000s | £000s | £000s | £000s | |
Year ended 31 March 2012 | |||||||
Operating loss | (672) | (5,175) | (181) | (52,545) | (293) | (4,408) | (63,274) |
Finance costs | - | - | - | - | - | - | - |
Finance income | 9 | 4 | - | - | 2 | 149 | 164 |
Loss before taxation | (663) | (5,171) | (181) | (52,545) | (291) | (4,259) | (63,110) |
Taxation | 512 | - | - | 2,494 | - | - | 3,006 |
Loss for the year from continuing operations | (151) | (5,171) | (181) | (50,051) | (291) | (4,259) | (60,104) |
Total assets | 46,908 | 963 | - | 2,025 | 7 | 54,266 | 104,169 |
Total liabilities | (8,238) | (177) | - | (571) | (1) | (492) | (9,479) |
Net assets | 38,670 | 786 | - | 1,454 | 6 | 53,774 | 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 |
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. |
2013 | 2012 | |
£000s | £000s | |
Loss for the purposes of basic earnings per share being net loss attributable to equity shareholders of the parent | (8,588) | (60,104) |
Loss for the purpose of diluted earnings per share | (8,588) | (60,104) |
2013 | 2012 | |
Number | Number | |
000s | 000s | |
Number of shares | ||
Weighted average number of ordinary shares for the purpose of basic and diluted earnings per share | 1,340,885 | 1,082,989 |
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: |
2013 | 2012 | |
Number | Number | |
000s | 000s | |
Number of shares | ||
Weighted average number of ordinary shares for the purposes of diluted earnings per share | 1,387,323 | 1,147,453 |
Basic and diluted loss per share | (0.6)p | (5.6)p |
5. INTANGIBLE ASSETS |
Exploration | |||||
costs and rights | Goodwill | Software | Total | ||
Group | £000s | £000s | £000s | £000s | |
Cost | |||||
At 1 April 2011 | 82,748 | 9,134 | - | 91,882 | |
Additions | 12,338 | - | 48 | 12,386 | |
Foreign exchange movement | 63 | (55) | - | 8 | |
At 1 April 2012 | 95,149 | 9,079 | 48 | 104,276 | |
Additions | 30,085 | - | 31 | 30,116 | |
Foreign exchange movement | 152 | - | - | 152 | |
As at 31 March 2013 | 125,386 | 9,079 | 79 | 134,544 | |
Provision for permanent diminution in value | |||||
At 1 April 2011 | (685) | - | - | (685) | |
Impairment | (54,707) | (2,436) | - | (57,143) | |
Amortisation | - | - | (6) | (6) | |
At 1 April 2012 | (55,392) | (2,436) | (6) | (57,834) | |
Impairment | (2,947) | - | - | (2,947) | |
Amortisation | - | - | (20) | (20) | |
At 31 March 2013 | (58,339) | (2,436) | (26) | (60,801) | |
Net book value | |||||
31 March 2013 | 67,047 | 6,643 | 53 | 73,743 | |
31 March 2012 | 39,757 | 6,643 | 42 | 46,442 | |
GOODWILL |
The goodwill acquired in January 2011 as part of the business combination relating to York Potash Ltd 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 Ltd 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. A growth rate of 2 per cent was incorporated into the discount rate. |
The cash flow projections are based on long term plans covering the expected life of the operation. The Indicated Resource of 820 million tonnes of polyhalite determines an expected mine life of 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 10 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 Ltd's recoverable amount is based would cause its value to fall short of its carrying amount as at 31 March 2013. |
IMPAIRMENT |
The impairment charge to exploration costs and rights of £2,947,000 relates to Adavale Holdings Pty Limited and Dakota Salts LLC (see note 4 of the Annual Report). At the year end, the intangible assets in Adavale Holdings Pty Limited and Dakota Salts LLC were fully impaired. |
6. SHARE CAPITAL |
2013 | 2012 | |
£000s | £000s | |
Allotted and called up | ||
1,343,583,310 (2012: 1,339,033,310) ordinary shares of 0.25p each | 3,359 | 3,348 |
On 15 October 2012 the Company issued 2,550,000 new ordinary shares of 0.25p each at a price of 17.5p per share, realising £446,250, following the exercise of share options. |
On 1 November 2012 the Company issued 2,000,000 new ordinary shares of 0.25p each at a price of 4.5p per share, realising £90,000, following the exercise of share options. |
7. ACCOUNTING ESTIMATES AND JUDGEMENTS |
The critical accounting estimates and judgements made by the Group regarding the future or other key sources of estimation, uncertainty and judgement that may have a significant risk of giving rise to a material adjustment to the carrying values of assets and liabilities within the next financial year are: |
IMPAIRMENT OF EXPLORATION AND EVALUATION ASSETS |
At each reporting date, the Group assesses whether there is any indication that an asset may be impaired. Where an indication of impairment exists, the Group makes a formal estimate of recoverable amount. Where the carrying amount of an asset exceeds its recoverable amount the asset is considered impaired and is written down to its recoverable amount. |
Recoverable amount is the greater of fair value less costs to sell and value in use. It is determined for an individual asset unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case, the recoverable amount is determined for the cash-generating unit to which the asset belongs. |
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. |
GOODWILL |
The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy. The recoverable amounts of cash-generated units will be determined based on value-in-use calculations. These calculations will require the use of estimates (see note 11). |
SHARE BASED PAYMENTS |
In determining the fair value of equity settled share based payments and the related charge to the income statement, the Group makes assumptions about future events and market conditions. In particular, judgement must be made as to the likely number of shares that will vest and the fair value of each award granted. The fair value is determined using a valuation model which is dependent on further estimates, including the Group's future dividend policy, the timing with which options will be exercised and the future volatility in the price of similar potash companies. Such assumptions are based on publicly available information and reflect market expectations and advice taken from qualified personnel. Different assumptions about these factors to those made by the Group could materially affect the reported value of share based payments.
|
The financial information set out in this announcement does not comprise the Group's statutory accounts for the years ended 31 March 2013 or 31 March 2012. |
The financial information has been extracted from the statutory accounts of the Group for the year ended 31 March 2012. 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 2012 have been delivered to the Registrar of Companies. The statutory accounts for the year ended 31 March 2013 will be finalised on the basis of the financial 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. |
8. PRINCIPAL RISKS AND UNCERTAINTIES |
The principal risks and uncertainties for the Group are the same risks and uncertainties that will be referred to and discussed in the Group's Annual Report. These risks are;
· Exploration, development and production risk, · Mineral title risk · Permitting risk · Commodity price risk · Liquidity risk · Currency risk · Competitor risk · Product risk
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9. RESPONSIBILITY STATEMENT OF THE DIRECTORS ON THE ANNUAL REPORT |
The Responsibility Statement below has been prepared by the Board of directors in connection with the Company's full Annual Report for the year ended 31 December 2012. Certain parts thereof are not included within this announcement.
We confirm to the best of our knowledge;
· the financial statements, prepared in accordance with IFRS as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit of the Company and the undertakings included in the consolidation taken as a whole; and · the management report, which is incorporated into the directors' report, includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties they face.
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