Annual
Report
for the year ended
31 March
2022
CLICK TO ENTER
What is Yellowcake?
Yellowcake is a solid form of mixed uranium oxide
that is generally yellow in colour. It is produced
from uranium ore from mining or in-situ leaching.
Yellowcake is shipped from the mine and
processed at licenced facilities for conversion,
enrichment and fabrication into nuclear fuel.
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCE Contents
At a glance
Strategic report
Governance
Financial statements
Yellow Cake at a glance
Investment case
2
3
Highlights
What we do
Chairman’s statement
Our strategy
4
5
6
9
Corporate governance report
Board of directors
40
41
Financial statements
Corporate information
73
98
Report of the Audit Committee 53
Directors’ remuneration report 55
Our business model
19
Directors’ report
Directors’ responsibility
statement
Independent auditor’s report
Environmental, social
and governance
CEO statement
CFO’s review
Risk management
Viability
20
24
27
31
39
63
65
67
1
Yellow Cake Annual Report 2022YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCE Yellow Cake at a glance
Yellow Cake plc is a London-quoted company that provides investors with direct
exposure to the uranium market through our physical holding of uranium oxide
concentrate (U3O8).
U3O8 price USD/lb
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20
10
0
Bought 350 000 lb @
USD32.38 Jul 2021
Bought 343,053 lb @
USD29.15 May 2021
Bought
200 000 lb
@ USD32.28
Aug 2021
Sold 348,068 lb @ USD28.73 to URC
under option agreement April 2021
Sold 300 000 lb @ USD33.20 to
fund share buyback June 2020
Bought 350 000 lb @ USD23.30
August 2018
Bought 2.0m lb
@ USD 46.32
Sold 2.0m lb @
USD 40.01 under
Kazatomprom
option agreement
Nov 2021
Bought 950 000 lb
@ USD 47.58
June 2022
Bought 8.1m lb @ USD21.01
July 2018
Bought 1.175m lb @ USD25.88
May 2019
Bought 440,000 lb @ USD27.34
and 100,000 lb @ USD29.95
March 2021
Bought 3.5m lb
@ USD28.95
June 2021
Bought back 2.0m lb @
USD 43.25 under
Kazatomprom option
agreement May 2022
Bought 2.0m lb
@
USD 32.23
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London-
quoted
on AIM
Headquarters in Jersey
18.81 million lb of U3O8 held as at 21 July 2022, acquired at an average cost of USD31.11/lb2
2
• Yellow Cake plc was established to
create an opportunity for investors to
profit from an anticipated rise in the
uranium price arising from the short-
and medium-term supply and demand
asymmetry.
• Geopolitical events in 2022, including
unrest in Kazakhstan and the Russian
invasion of Ukraine, highlighted the
concentrated nature of nuclear fuel
supply and increased the focus on
national energy security.
• Net zero carbon emission commitments
are likely to increase the proportion
of nuclear energy required by 2050,
particularly in developing markets.
• The Company’s long-term Framework
Agreement for supply of U3O8
with Kazatomprom, the world’s
largest uranium producer1, enables
Yellow Cake plc to access up to
USD100 million of uranium annually
from Kazatomprom at the prevailing
spot price until 2027.
• The Company’s low-cost outsourced
business model provides access to
corporate functions and industry
expertise while minimising cost
leakage.
• We also aim to exploit opportunities
arising from uranium ownership and
uranium-based financial initiatives
such as commodity location swaps,
streaming and royalties and believe
we are well positioned to do so.
1.
2.
World Nuclear Association, Uranium and Nuclear
Power in Kazakhstan (June 2022).
Average cost calculated based on a first-in,
first-out methodology.
Yellow Cake Annual Report 2022YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCE Investment case
Long-term Framework
Agreement with
Kazatomprom,
the world’s largest
uranium producer,
provides access to
USD100 million a year
of U3O8 at the prevailing
spot price.
Low-cost structure
and outsourced
business model.
Provides investors with exposure to the
uranium spot price without the operating risks
associated with exploration, development,
mining or processing.
Positioned to benefit
from ongoing supply-
side constraints
and increasing nuclear
energy demand.
Strong board
and management.
Creates liquidity for investors in a
traditionally illiquid commodity.
3
Yellow Cake Annual Report 2022YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCE Highlights
Profit after tax of
USD417.3 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 U3O8 during the financial
year and an additional 0.95 million lb of U3O8
post-year end.3
Increase of 203% in the value
of the Company’s holding of
U3O8 during the financial year to
USD916.7 million4
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 U3O8 to 15.83 million lb
of U3O8.
Net asset value of
USD1,069.0 million
(GBP4.42 per share)6
as at 31 March 2022
(2021: USD421.4 million (GBP2.38 per share)).
Holding of
18.81 million lb
Increase of
47%
of U3O8 as at 21 July 2022 (including 2.97 million lb of
U3O8 received post year-end) acquired at an average
cost of USD31.11/lb2.
in the value of the Company’s holding of 18.81 million lb of U3O8 as at 15 July 2022
to USD860.4 million5, relative to the average acquisition cost of USD585.1 million
(USD31.11/lb)2.
2. Average cost calculated based on a first-in, first-out methodology.
3. During the financial year, Yellow Cake purchased 8.35 million lb of U3O8 and purchased an additional 0.95 million lb of U3O8 post-year
end. Under option arrangements entered into in 2018, the Company disposed of 2.37 million lb of U3O8 during the financial year and
repurchased 2.02 million lb of this U3O8 post-year end.
4. 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.
5. Based on the daily spot price of USD45.75 /lb published by UxC LLC on 15 July 2022.
6. Net 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
for the year ended 31 March 2022
(2021: USD29.9 million).
USD3 million
share buyback
programme
Following the year-end, repurchased
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.
Continued improvement
in the market for U3O8
with the spot price increasing
89%
from USD30.65/lb on 31 March 2021
to USD57.90/lb4 on 31 March 2022.
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 What we do
Yellow Cake plc (the “Company”) is a London-quoted company on AIM,
headquartered and incorporated in Jersey, established in 2018 to acquire and hold
physical uranium in the form of U3O8.
As at 21 July 2022, the Company
owned 18.81 million lb of U3O8
(15.83 million lb of U3O8 as at
31 March 2022) which was stored
at licenced conversion facilities at
Cameco’s Port Hope/Blind River
facility in Ontario, Canada, and
Orano Cycle’s Malvési/Tricastin
storage facility in France.
The Company’s business model
minimises cost leakage by
outsourcing administrative
services and securing access to
industry knowledge and expertise.
This includes a services contract
with 308 Services Limited and
competitive storage contracts
with licenced converters.
Yellow Cake’s ten-year Framework
Agreement with Kazatomprom,
the world’s largest uranium
producer and one of the world’s
lowest cost uranium producers,
enables Yellow Cake to access
U3O8 at an undisturbed spot price.
The agreement confers the right to
purchase up to USD100 million of
U3O8 each year from Kazatomprom
to 2027 at a price to be agreed
before the purchase is announced
to the market so that the purchase
price is not disturbed by market
anticipation of a significant
uranium purchase.
5
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 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.
Nuclear is becoming more broadly recognised as a reliable, safe
and low carbon energy source at a time when energy security
concerns are crystallising.
The marked increase in activity in the uranium spot market
from traders, investment firms and junior mining companies
resulted in a rapid and sustained increase in the spot price of
U3O8, which has more than doubled since Yellow Cake listed.
The Lord St John of Bletso
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 20256.
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.
7. World Nuclear News; “Extended Operation of Two Belgian Reactors Approved”;
21 March 2022.
6
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 Chairman’s statement continued
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
U3O8, 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 U3O8.
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 U3O8 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.
U3O8 price history since listing (USD/lb)
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Source: UxC LLC
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 U3O8
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.
7
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 U3O8,
nearly doubling the Company’s holdings by June 2022 to
18.8 million lb, or 15% of 2021 global annual production.
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 Chairman’s statement continued
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.
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.
More information on shareholders’ concerns, the Board’s
response and other engagements with stakeholders is
available in the Corporate Governance Report on page 48.
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
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. An
overview of the assessment and its conclusions is available
on pages 20 to 23.
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 specific 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
8
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 Our strategy
Yellow Cake's strategy is to buy and hold physical U3O8, thereby providing investors with liquid
exposure to the resurging uranium price. The Company’s strategic relationship with Kazatomprom,
the world’s largest and lowest-cost producer1, allows for value accretive growth through the
ten-year Framework Agreement to 2027, which gives Yellow Cake the right to purchase up to
USD100 million of U3O8 annually, at the prevailing spot price.
Our approach is to raise capital to invest in additional uranium
when the Company’s shares trade above net asset value.
When the shares trade at a significant discount to net asset
value, share buybacks provide an opportunity to increase
shareholders’ exposure to uranium at a discount to the
commodity spot price.
The Company has no operating assets, does not enter
into hedging arrangements and has no exposure to the
risks associated with exploration, development, mining or
processing. The low-cost structure minimises cost leakage by
outsourcing administrative services.
Yellow Cake’s model leverages the expertise and market
knowledge of the Company’s executive management and
service providers to generate additional value through
uranium-related transactional activities, such as uranium
location swaps, and assesses other operational and financial
transactions to secure exposure to uranium, including
streaming and royalties.
The Board of Directors comprises an experienced team committed to ensuring the highest standards of corporate governance, with a
focus on creating and protecting value for shareholders.
U3O8 price history (USD/lb)
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Yellow Cake listing
0
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Source: UxC LLC
9
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022
Yellow Cake listed in July 2018 at a time
when the uranium market price had
traded sideways for an extended period
despite the supply-demand disconnect
implying a strong recovery over time.
The shift in sentiment towards nuclear
energy in the context of net zero
carbon commitments together with
the impact of COVID-19, unrest in
Kazakhstan and the invasion of Ukraine
by Russia emphasised the supply/
demand imbalance and the U3O8 price
has started to adjust. The section that
follows discusses these developments
and the longer-term trends that suggest
further upside.
Our strategy continued
Canada
10%
Sweden
Finland
Kazakhstan
46%
Russia
Uzbekistan
7%
United
Kingdom
Netherlands
Germany
Belarus
Czechia
Slovakia
Hungary
Ukraine
Belgium
France
Switzerland
Slovenia
Romania
Bulgaria
United States
Mexico
Spain
Rest of the World
17%
Armenia
Iran
Pakistan
United Arab
Emirates
India
China
Japan
South
Korea
Taiwan
Brazil
Namibia
12%
Australia
8%
Argentina
South Africa
Uranium production
Uranium consumption
In 2021, five countries produced 83%
of the world’s uranium8
There are nuclear reactors in
33 countries, with the USA, France
and China currently accounting
for just over half of global operable
reactor capacity9
Reactors under construction/
planned/proposed represent a
135% increase in global capacity,
with the biggest contributors to
this growth planned in9:
Kazakhstan
Namibia
Canada
Australia
Uzbekistan
8.
9.
UxC Weekly "2021 U3O8 Production Review", 09/05/22.
World Nuclear Association/ World Nuclear Power Reactors & Uranium Requirements
(May 2022).
Rest of the world
(10 countries)
46%
12%
10%
8%
7%
USA
France
China
Japan
Russia
17%
South Korea
Rest of world
(27 countries)
10
24%
16%
13%
8%
7%
6%
26%
China
India
Russia
United Kingdom
Saudi Arabia
Japan
Rest of the world
(31 countries)
48%
9%
9%
5%
3%
3%
23%
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 Our strategy continued
The nuclear fuel value chain
Uranium ore is processed into yellowcake (U3O8), which is further refined before conversion into
a gas (uranium hexafluoride – UF6) at five facilities in the United States, Canada, France, Russia
and China10. Russia accounts for 38% of total global conversion capacity currently utilised.
The enrichment process uses centrifuges to increase the concentration of U-235, the main
fissile isotope of uranium, from its natural concentration of around 0.7% to around 3.5% to 5%,
the level required for use as a fuel in most nuclear reactors. Uranium enrichment is a sensitive
technology from a nuclear non-proliferation standpoint and is tightly controlled. Around 90% of
the world’s enrichment capacity is located in China, France, Russia, the United Kingdom and the
United States11, with Russia accounting for 43% of global enrichment capacity.11
Different reactor designs use specific fuel assemblies usually supplied by the reactor
vendors, most of which own fuel fabricators. In the fuel fabrication process12, enriched UF6
is converted into uranium dioxide (UO2) that is used in the nuclear fuel bundles. Significant
fuel fabrication capacity is located in China, France, Russia, the United Kingdom, the United
States, Japan, Canada and India.
The complexity of the nuclear fuel cycle means that from uranium mine to nuclear reactor
can take up to 18 months13.
Mining
Uranium is mined using in-situ
leaching, open pit and
underground mining
Uranium ore is processed
to produce uranium oxide
concentrate U3O8
Conversion
Conversion plants convert
physical U3O8 from powder
form into natural uranium
hexafluoride gas (UF6)
Enrichment
Fuel fabrication
Gaseous uranium (UF6) is enriched,
raising the uranium-235 isotope
from the natural level of 0.7% to the
range of 3.5% to 5% required for use
in nuclear reactors
Enriched UF6 is converted to uranium
dioxide powder which is fabricated
into fuel rods and then fuel rod
bundles
Fuel bundles are placed into nuclear
reactors owned by utility companies
Nuclear power utilities refuel on average around every 18 months14 and hold uranium
inventories as working inventory (being enriched, or fabricated into fuel) or strategic inventory
(forward requirements held in the event of supply disruption). These utilities secure the majority
of their uranium purchases through long-term contracts directly with producers, converters
and enrichers (three to five years in advance and for delivery over an extended period, usually
five years). The balance is purchased in the spot market (defined as delivery within a year) which
generally trades at a discount to the term contract prices. The long term nature of the front end
of the nuclear fuel cycle (mine to reactor), the extended refuelling cycle and stockpiles held at
utilities contribute to the lag before short-term supply shocks reflect in spot price. Typically,
around 80% to 85% of utilities’ uranium purchases are contracted, although current contracting
levels are significantly lower (see page 15).
10. World Nuclear Association, Conversion Enrichment and Fabrication/Conversion and Deconversion (updated January 2022).
11. World Nuclear Association, Conversion Enrichment and Fabrication/Uranium Enrichment (updated September 2020).
12. World Nuclear Association, Conversion Enrichment and Fabrication/Fuel Fabrication (updated October 2021).
13. OECD-NEA, The Economics of the Nuclear Fuel Cycle (1994).
14. World Nuclear Association, Nuclear Fuel Cycle Overview (updated April 2021).
11
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 Our strategy continued
The Uranium market
Miners
Production of 123 Mlb uranium oxide (U3O8) in 202115
Producers bought 13.0 Mlb from the 2021 spot market16
Secondary supplies
Spot market
A record 101.8 Mlb of U3O8 traded on the spot market in 202116
Traders and
financial buyers
Utilities
Global
1. Utilities 2021 reactor requirements 177.5Mlb
of U3O8
17
Combined US/EU Utilities (data from CY2020)
1.
Total US/EU uranium deliveries (spot/term)
for 2020 – 81.7Mlb18, 19
2. Expected 2022 reactor requirements 162.5Mlb9
2. Uranium delivered under long-term/multi-year
3. Total 2021 spot purchases by nuclear utilities
(global) – 17.5Mlb (17% of total spot market
volume – 101.8Mlb)16
purchase agreements – 68.0Mlb (83.2%)
(average price – USD34.62/lb)18, 19
15. UxC Weekly “2021 U3O8 Production Review”
09/05/22.
16. UxC Weekly “2021 Uranium Spot Market Review”,
24/01/22.
17. World Nuclear Association/ World Nuclear Power
Reactors & Uranium Requirements (August 2021).
18. Euratom Supply Agency Annual Report 2020.
19. US Energy Information Administration 2020
Uranium Marketing Annual Report (May 2021).
12
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 Our strategy continued
Demand side drivers
+ Long-term growth in global energy demand
+ Strong growth forecast for nuclear in the large developing economies in Asia
+ Low carbon emission energy source supports 2050/2060 country emission targets
+
Increased focus on energy security in light of geopolitical developments driving
a rethink in energy policies previously moving away from nuclear
+ Delivers reliable and predictable electricity to complement renewable sources
+ Advances in small modular reactor (SMR) design reduce facility costs and footprint
+
+ Contracting by nuclear power utilities for future uranium purchases is currently
Increased activity in the spot market from financial intermediaries
at low levels and expected to increase
+ Resolution of recent US policy uncertainty and bipartisan support for nuclear in the US
—— Resistance regarding perceived potential environmental and safety impacts
Supply side drivers
—— Concentrated resources (three countries produce 68% of the world’s annual
uranium) increase the risk of supply disruptions due to geopolitical events
or other developments (e.g. COVID-19, Kazakhstan unrest, Russia/Ukraine)
—— Significant historical resources reached end of life in 2021 (Ranger and Akouta)
—— Exploration and development of new resources has been uneconomic during an
extended period of depressed uranium prices
—— Inflation, supply chain disruptions for essential inputs and industry skills shortages
are increasing the cost of restarting idled capacity and developing new resources
—— Producers continue to show supply discipline at current prices
+ Secondary supply from stockpiles and enrichers offsets some of the
production shortfall
Nuclear energy remains a key and growing element
of global energy supply
Uranium is primarily used in the production of electricity in nuclear power plants.
The US is currently the largest user of uranium, accounting for 28% of global uranium
demand and nuclear contributes 20% of the country’s total electricity compared to
the global average of around 10%.
17
Uranium requirements (percentage of world demand)
28
15
13
9
7
30
25
20
15
10
5
0
3
2
2
2
USA
China
France
Russia
South
Korea
Ukraine
Canada
Japan
United
Kingdom
Other
Source: World Nuclear Association9
13
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 Our strategy continued
There are currently 439 reactors operable worldwide with a capacity of 390 GWe1120.
An additional 152 reactors (158 GWe) are currently under construction or planned.
49% of the nuclear capacity currently under construction is in China, Russia and India,
and 73% of capacity additions planned is in those countries. All three countries are
currently heavily reliant on fossil fuel energy sources and nuclear is likely to have a strong
role to play in their future energy mix if they are to meet carbon emission reduction
targets. While nuclear energy produces 21% of Russia’s electricity, India only derives 3%
of its energy from nuclear and China 5%. Reactors are also being built or planned in many
emerging markets including Bangladesh, Belarus, Egypt, Turkey and the UAE.
Current and future reactors (MWe)
120 000
100 000
80 000
60 000
40 000
20 000
0
China
USA
France
Russia
Japan
South
Korea
India
Ukraine
United
Kingdom
Canada
Other
Current operable
Under construction
Planned
Source: World Nuclear Association9
From 1998 to 2020, the number of new reactors coming online (105) slightly exceeded old
plants being retired (103) and the increased size of the new reactors installed resulted in a
marginal increase in capacity9. In recent years, many nuclear reactors have been uprated
to increase their capacity and operating licences have been extended beyond the initially
planned lives of various facilities. The WNA has concluded that there are currently no
firm projections for retirements in the next two decades, but the WNA’s reference case
conservatively estimates 123 reactors closing by 2040 compared to 308 coming online.
Nuclear and net-zero carbon emissions21
The energy sector accounts for around three-quarters of current greenhouse gas emissions
and has an integral role to play in the global response to climate change. The 26th Conference
of the Parties (COP26) of the United Nations Framework Convention on Climate Change in
November 2021 saw a strengthening commitment from countries and companies to achieve
net-zero emissions by 2050. Nuclear power is not only an efficient, secure and very low
carbon source of energy, but its reliability and predictability make it an excellent complement
for renewable sources of energy that supports grid stability.
The International Energy Agency scenarios show that nuclear energy, as one of the largest
sources of low-carbon electricity today, will be essential to achieve this transition. Nuclear
power is forecast to double by 2050, remaining just under 10% of total electricity generation
in the Net Zero Emissions by 2050 Scenario, with the rate of construction of new nuclear
capacity quadrupling compared to the last decade. Two-thirds of new nuclear power
capacity will be built in emerging market and developing economies with the fleet of reactors
quadrupling to 2050. Advanced economies will rely more on lifetime extensions for existing
reactors as one of the most cost-effective sources of low-carbon electricity, with new
construction likely to be more reliant on small modular reactors (SMRs).
Despite nuclear energy’s very low operating costs relative to most other forms of energy,
high new-build costs and lengthy construction schedules of traditional nuclear power
facilities have constrained growth in some developed markets. Significant investments are
being made in developing SMR solutions that typically have generation capacities below
400 MW per unit. These reactors are less technically challenging to construct, quicker
to build, easier to fund and could be sited on existing approved nuclear power facilities due
to their relatively small size. SMRs and other advanced reactor designs are moving towards
full-scale demonstration and have scalable designs and lower upfront costs. They also
provide improved flexibility in operation as well as their potential to provide outputs in
addition to electricity, such as hydrogen and heat.
20. World Nuclear Association, Nuclear Generation by Country (updated June 2021).
21. Net Zero by 2050, IEA (October 2021).
14
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 Our strategy continued
Utility long-term contracts need to be replaced
Typically, around 80% to 85% of utilities’ uranium purchases are contracted, however,
currently only around 70%18 of European and 44%19 of US utilities’ 2026 uranium
requirements are currently contracted. In the last few years, the US policy issues that
may have contributed to the delay in long-term contracting were resolved and the volume
of term contracting by US utilities was the highest since 2009, although total volumes
remained below the average of the six years before 202022.
Future contracted coverage rate of US and European utilities
120
100
80
60
40
20
103
92
104
91
116
93
77
70
71
67
44
40
67
28
2022
2023
2024
2025
2026
2027
2028
US utilities coverage
EU utilities coverage
57
24
2029
22. UxC Weekly "Term Contracting Review" 31/01/22.
23. https://www.energy.gov/articles/doe-seeks-applications-bids-6-billion-civil-nuclear-credit-program.
24. www.nytimes.com/2020/09/23/world/asia/china-climate-change.
25. www.eia.gov/international/analysis/country/CHN.
26. Bloomberg, "China's Climate Goals Hinge on a $440 Billion Nuclear Buildout", 2 November 2021.
27. World Nuclear News: "Macron: Nuclear "absolutely key" to France's future", 13 October 2021.
28. Reuters: "Macron says France will build new nuclear energy reactors," 9 November 2021.
29. European Commission – press release, "EU Taxonomy: Commission begins expert consultations on Complementary Delegated Act
covering certain nuclear and gas activities", 1 January 2022.
30. Technical assessment of nuclear energy with respect to the "do no significant harm" criteria of Regulation (EU) 2020/852
("Taxonomy Regulation"), (August 2021).
National energy policy is shifting in favour of nuclear in some
of the biggest users of uranium
Recent shifts in sentiment have led to a more positive national and regional policy outlook
for nuclear energy, particularly in the US, China and France, which together currently account
for nearly 60% of global uranium requirements.
A number of acts recently signed into law or currently under discussion by the US House
and Senate indicate bipartisan support for nuclear energy and promote further research
and development in the industry. In April, the US Department of Energy (DOE) announced
plans to seek applications and sealed bid submissions under the Bipartisan Infrastructure
Law’s USD6 billion Civil Nuclear Credit Program, which supports the continued operation
of commercial nuclear reactors which may be under economic threat and in danger of
premature closure23. The announcement stated that “The Biden-Harris Administration
has identified the nation’s current fleet of reactors as a vital resource to achieve net-zero
emissions economy-wide by 2050”.
President Xi Jinping announced China’s commitment to achieving net zero emissions by
2060, with CO2 emissions peaking no later than 203024. China is already the world’s largest
producer and consumer of energy25 and is planning at least 150 new reactors in the next
15 years, more than the rest of the world has built in the past 35 years26.
In October 2021, French President Emmanuel Macron announced that nuclear power must
continue to play a major role in France’s energy program27 and in November he stated that
France would build additional nuclear reactors to support energy independence with the
expectation that construction of six new reactors would be announced in the near future28.
During the calendar year, the European Commission undertook consultations to draft a
Taxonomy Complementary Delegated Act covering gas and nuclear activities29 in support
of the EU taxonomy for sustainable finance, which will shape future national energy policy
across the region. The Commission stated that there is a role for natural gas and nuclear as
a means to facilitate the transition towards a predominately renewable-based future. Under
the proposed taxonomy rules, nuclear projects permitted until 2045 will be classified as
green, on the condition that countries can safely dispose of the toxic waste and do not create
significant harm to the environment30. In July 2022, the European Parliament voted on and
approved the draft taxonomy, moving it closer to passing into law.
15
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 Our strategy continued
Spot volumes hit a new record in 202116
Spot market volumes in the 2021 calendar year broke the record volumes of 2020, reaching
approximately 102 million lb of U3O8 (CY2020: 95 million lb). Much of this volume was driven
by non-utilities, with buying by producers, financial funds and junior uranium companies
accounting for 83%.
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 term contracting in CY2021 increased to around 70 million lb U3O8 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).
The acceptance of nuclear energy’s role in the global commitment to net zero emissions
and increased focus on energy security is expected to support further demand, particularly
given the need for US and European utilities to secure long-term contract coverage.
With significant additions to the global nuclear fleet currently under construction,
we expect a sustainable return to buying from utilities.
Supply-side drivers
The ability of the global supply of uranium to respond to increases in demand is constrained
by both the extended nature of the nuclear fuel value chain (see page 11) and concentrated
supply. 52% of the world’s uranium resources are located in Australia, Kazakhstan and
Canada31 and together these countries produced 64% of global uranium mined production in
2021. COVID-19 led to production in 2020 falling to the lowest level in more than a decade at
122 million lb of U3O8, with a marginal increase to 123 million lb in 202115.
Uranium supply-demand balance
250
200
150
100
50
0
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
Secondary supply
Operation
Closed operation
Operation on hold
Probable project
Demand
Source: MineSpans (May 2022)
31. NEA/IAEA (2021), Uranium 2020: Resources, Production and Demand, OECD Publishing, Paris, https://doi.org/10.1787/d82388ab-en.
16
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022
Our strategy continued
Primary production has not met market demand for uranium for an extended period and the
primary supply deficit reached a new record before narrowing slightly in 2021. In the first
quarter of 2021, production ceased at two significant resources in Australia32 and Niger33 that
together produced nearly 500 million lb of U3O8 over their operational lives. Producers have
been disciplined in shutting down or suspending selected operations to manage supply while the
uranium price disincentivised production. Since 2014, an estimated 77.6 million lb of U3O8 has
been removed from the market through production curtailments34.
Despite the increase in spot and term uranium prices, they are not yet at prices that are likely
to incentivise the development of new resources. Increasing global inflation, ongoing supply
chain disruptions, industry skills shortages and more realistic mine planning and assessments
are likely to keep the incentive price for the majority of new uranium mining projects above
current levels.
Secondary supply of uranium comes from commercial and government inventories, enricher
underfeeding, and depleted uranium tails recovery35. The supply gap is currently being
covered mainly by underfeeding at enrichment facilities and utility/producer inventory draw-
down, but secondary supplies are declining and may not be sufficient to fill the supply deficit.
With uranium demand set to increase to 2050 in line with current forecasts for nuclear
power growth, a significant supply deficit is forecast by 2030 unless additional supply is
brought online36.
COVID-19
While the impact of COVID-19 affected both uranium demand and supply, the supply side
was affected more significantly. Market demand for U3O8 increased marginally, while 2020
primary production decreased by 15%15 and the primary supply deficit increased to 30%
of market demand. In 2021, the impact of the pandemic continued to be felt in decreased
production in Canada and Kazakhstan as well as in the ongoing disruptions to global supply
chains that affected availability of key inputs and capital equipment.
Developments in Kazakhstan and Ukraine
Civil unrest in Kazakhstan in January saw mass protests in reaction to increased fuel
prices. Clashes between protestors and Kazakh security forces led to a nationwide state
of emergency, enforced with the support of an estimated 2 500–3 000 Russian troops.
Uranium production and transport operations in the country remained unaffected, although
Kazatomprom cautioned that possible supply chain disruptions could occur especially for the
importation of materials deemed critical to in-situ recovery (ISR) uranium production as well
as the exportation of the final product. It is expected that nuclear utilities could reassess their
risk management programmes as relates to uranium purchases from Kazakhstan.
Russia’s invasion of Ukraine in February has not had a material direct impact to date on the
Company’s operations. All U3O8 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 the Company.
Yellow Cake has to date received deliveries from Kazatomprom in accordance with agreed
delivery schedules.
32. Energy Resources of Australia, “Processing Operations at ERA’s Ranger Mine Conclude”, 8 January 2021.
33. Orano, “A New Stage Commences for the COMINAK Mine in Niger,” 31 March 2021.
34. MineSpans (September 2021).
35. World Nuclear Association, Supply of Uranium (August 2019).
36. MineSpans May 2022.
17
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 Our strategy continued
The stringent economic sanctions imposed by the European Union and United States on
Russian companies and individuals include bans on the import of oil, liquified natural gas and
coal from Russia, but do not currently directly impact the global nuclear fuel trade, although
the situation continues to evolve. US nuclear utilities are reportedly lobbying the Biden
Administration requesting that nuclear fuel imports from Russia continue to be allowed in
order to maintain low electricity prices37. However, the US Congress tabled legislation in
March that would specifically ban the importation of Russian-sourced nuclear fuel to US
nuclear utilities38. Recent utility data shows that US nuclear utilities relied on Russian origin/
sources for 15% of uranium and 22% of uranium enrichment services supplied to US utilities
from 2016 to 202039, while EU nuclear utilities purchased over 17% of uranium and 29% of
enrichment services from Russia over the same period40.
The energy vulnerabilities revealed by the invasion of Ukraine, especially for the EU, has led
to a global reassessment of the role of nuclear power and national plans for the phase-out of
existing nuclear generating capacity. Most notably, Belgium’s federal government took the
decision to grant a ten-year extension for operations at two of its nuclear reactors which had
been slated to shut down in 20256. In the US, there is increased urgency to establish a national
strategic uranium reserve to mitigate the potential harm caused by a disruption in foreign
supplied material41.
Outlook
Absent a material and sustained increase in the long-term uranium price, supply deficits
are likely to continue with a significant shortfall predicted by 2030. Yellow Cake is uniquely
positioned to benefit from demand growth and supply-side pressure and the likely resulting
uranium price increases. We remain confident in the long-term outlook for the commodity, as
demand is expected to continue to exceed supply.
37. Reuters “Exclusive: US Utilities push White House not to sanction Russian Uranium”, March 2022.
38. https://stauber.house.gov/media/press-releases/stauber-colleagues-introduce-bipartisan-bill-ban-uranium-exports-russia.
39. US Department of Energy ‘2020 Uranium Marketing Annual Report’, May 2021.
40. Euratom Supply Agency Annual Reports 2016 - 2020.
41. UxC Weekly "Winter Market Survey", 04/04/22.
18
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 Our business model
Yellow Cake aims to maximise investor exposure to the uranium price, ensure high standards
of corporate governance and minimise costs through an outsourced business model that
provides cost-effective access to uranium supply, intellectual capital, expertise and storage
facilities. This model is built on key strategic and contractual relationships with industry players.
Kazatomprom Framework Agreement
Kazatomprom is the world’s largest producer
of uranium and one of the lowest cost producers
of uranium.
Yellow Cake’s long-term Framework Agreement
with Kazatomprom gives the Company the right to
purchase up to USD100 million of U3O8 each year
to 2027 at a price agreed prior to announcing the
purchase to the market. In the financial year ended
31 March 2021, Yellow Cake exercised the full
USD100 million of its option for 2021, taking delivery
in June 2021.
The Company can also source additional uranium
from Kazatomprom, other producers or the spot
market if advantageous.
Cameco Storage Contract
Most of Yellow Cake’s current holding of
18.81 million lb of U3O8 is held in a storage
account at Cameco’s Port Hope/Blind River
facility in Ontario, Canada.
Storage rates have been negotiated to achieve
significant cost savings and support the
Company’s low-cost operating structure.
The Company enters into transactions such as
location swaps from time to time, when this is
commercially advantageous.
Orano Cycle Storage Contract
Yellow Cake stores the balance of its uranium
at Orano Cycle's Malvési/Tricastin facility.
308 Services Ltd
A uranium specialist company focused on the uranium
commodity markets. 308 Services complements Yellow Cake’s
executive management with significant expertise and market
knowledge, and supports the Company in procurement and other
uranium transactions.
19
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 Environmental, social and governance
Highlights
The Board recognises the importance of
environmental, social and governance (ESG)
considerations in assessing the Company’s
performance and the value it creates. In
its deliberations, the Board considers the
impact of the Company’s activities on society,
the environment and Yellow Cake’s reputation.
Yellow Cake’s direct social and environmental impact is minimal due to the nature of the
Company’s business model and activities. The key sources of ESG risk for Yellow Cake relate
to its strategic partners that supply uranium and provide storage facilities and procurement
advice. Yellow Cake has a zero-tolerance approach to bribery and corruption and seeks to build
mutually beneficial working relationships with our suppliers, with a preference for suppliers
that can demonstrate alignment with our standards and that promote such standards among
their own suppliers. The Supplier Standards Policy sets out Yellow Cake’s standards in the
areas of health and safety, business integrity and legal compliance, labour and human rights,
environmental stewardship, treatment of host communities, and reporting. Due diligence is
conducted on suppliers and business partners to identify potential risks in their governance
and environmental, social and ethical practices.
An important participant
in the transition to a low
carbon economy
Strong female representation
at the management and
board level
The highest levels of safety
in the storage of uranium
A skilled, committed
and independent board
20
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 Environmental, social and governance continued
Product responsibility
The mining of the uranium that Yellow Cake holds has similar
environmental and social impacts to those of most metal
or mineral mines, and is regulated according to the social,
environmental, safety and occupational health regulations
relevant to the country of operation.
While uranium ore and U3O8 are only mildly radioactive,
prolonged exposure can cause damage. However, uranium
is toxic chemically and is therefore handled and contained
to prevent inhalation or ingestion. Later in the nuclear
fuel value chain, concentration and enrichment increases
radioactivity and toxicity.
The 18.8 million lb of U3O8 owned by Yellow Cake is stored
in metal drums in storage accounts at licenced storage
facilities at Cameco’s Port Hope/Blind River operation in
Canada and Orano Cycle’s Malvési/Tricastin site in France.
Yellow Cake occasionally enters into location swap
agreements and other uranium-based financial initiatives.
To date, these transactions have not involved the physical
transportation of uranium and were completed by book
transfer.
Radiation monitoring and safe working practices are
in place at Kazatomprom. The management systems at
Kazatomprom’s operations, Cameco’s Port Hope/Blind River
facilities and Orano’s Malvési/Tricastin facilities are aligned
with OHSAS 18001 or ISO 45001 (occupational health and
safety management systems) and ISO 14001 (environmental
management systems). Kazatomprom received certification
in terms of ISO 14001 and ISO 45001 in 2021.
ESG reporting boundary and
identification of material issues
Yellow Cake follows the UN Guiding Principles on
Business and Human Rights and the OECD Guidelines
for Multinational Enterprises in determining topic
boundaries for reporting ESG. In assessing the Company’s
ESG impacts, Yellow Cake takes into account both direct
impacts and indirect impacts arising from our business
relationships with suppliers.
External ESG assessment
As part of Yellow Cake’s commitment to adherence to
ESG principles, each year the Company commissions an
external and independent assessment of its practices, with
regard to the Company itself as well as operations along its
supply chain. This assessment was conducted by PRISM,
an independent emerging markets risk consultancy with
extensive experience in the mining and, oil and gas industries.
PRISM’s review included a review of Yellow Cake’s ESG
performance against the following methodologies:
• United Nations Sustainable Development Goals (UNSDG)
• Global Reporting Initiative (GRI) Standards
as relevant to the Company’s financial conditions and
operations. These consist of:
• Social Capital: Human Rights and Community Relations
• Human Capital: Employee Engagement, Diversity, and
Inclusion; Employee Health and Safety
• Leadership and Governance: Business Ethics; Competitive
Behaviour; Management of the Legal and Regulatory
Environment
The assessment conducted by PRISM covered ESG
risks associated with Yellow Cake’s primary supplier, the
Republic of Kazakhstan’s state uranium mining company
Kazatomprom, over the 2021 financial year. The review
also assessed the practices of Yellow’s Cake storage
suppliers: Cameco in Canada and Orano in France. Research
of information in the public domain and enquiries with
industry and third sector sources were conducted as part
of the analysis. Kazatomprom also made available high-
level managers from departments in relevant areas of
responsibility.
Based on the benchmarks and principles of the above leading
ESG standards setters and frameworks, PRISM identified
the following key assessment areas for the review of Yellow
Cake’s ESG risks linked to its primary suppliers:
• Task Force on Climate-Related Disclosures (TCFD)
• Environment: Emissions, Water Use, Nuclear Assets
• Sustainability Accounting Standards Board framework
• Social Responsibility: Human Rights and Community
(SASB)
Relations
Within the SASB framework, given Yellow Cake’s unique
business model, the Company’s operations do not align
with all guidelines for the 77 industries recognised by SASB
standards. The assessment was therefore focused on SASB
sustainability issues identified by Yellow Cake and PRISM
• Employees: Health and Safety, Education, Diversity
• Business Model: Resilience, Innovation, Procurement,
Ethics
• Risk Management: Regulatory and Political Environment
21
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 Environmental, social and governance continued
Social
• Yellow Cake continues to implement and expand its
Governance
• Yellow Cake’s Board is committed to corporate
policies on employee and stakeholder well-being, including
health and safety, equal opportunities, and whistleblowing
protection.
• Yellow Cake partners Kazatomprom, Cameco, and Orano
have well-developed standards for the health, safety, and
well-being of its employees, which are regularly assessed
by both regulators and external monitors. In the case of
Kazatomprom, the company has taken measures to reduce
health and safety incident levels.
• All partners have maintained extensive measures to
reduce outbreaks of COVID-19 at their facilities in line
with relevant regulations.
• Kazatomprom has increased its investments into employee
training as well as health and safety. Though the company
is a significant contributor to regional budgets and has
close ties with local communities, Kazatomprom should
further its work on aligning its social commitments to the
UNSDGs.
• Kazatomprom does not infringe upon the human rights
of its employees, contractors, or the citizens of the
communities where it operates. The company plans to
develop a full Policy on Human Rights in 2022.
governance, with strong attendance and a high frequency
of meetings.
• Independent directors comprise 71 per cent of Yellow
Cake’s Board of Directors.
• Women are strongly represented in the Company,
making up 43 per cent of the Board and 50 per cent of
management.
• Yellow Cake has a zero-tolerance policy towards
corruption, bribery, unethical practices, and anti-
competitive behaviour and enlists independent assessors
to monitor compliance.
• The Company commissions independent assessments
of corporate governance at Kazatomprom as well as
associated political risks. These reports have emphasised
the need for Kazatomprom to continue on its path
of improving governance and introducing greater
transparency within its operations.
Key findings from the report include:
PRISM’s review indicated that ESG is integrated into
Kazatomprom’s core strategic framework and that the
company continues to make progress with expanding
its disclosure and achieving its sustainability targets.
Kazatomprom publishes information on its ESG
performance in its Integrated Annual Report in accordance
with GRI guidelines and sets numerous UNSDG aims for
itself. Kazatomprom is a corporate leader in Kazakhstan
in aligning its policies with global standards. Cameco and
Orano continue to improve their ESG performance and
expand their strategies beyond legislative and regulatory
requirements.
Environment
• Given Yellow Cake’s significant role in the nuclear power
industry, it is a key participant in the global energy
transition.
• Although Yellow Cake does not directly engage in
mining operations or handle inventory, the Company is
committed to the reduction of ESG risks throughout its
supply chain by commissioning independent reviews of its
suppliers and contractors.
• Primary supplier Kazatomprom uses in-situ recovery for
uranium extraction, a method producing fewer emissions
than other methods.
• In the 2021 financial year, Kazatomprom disclosed its
Scope 2 emissions for the first time and announced that
it is developing a Decarbonisation Strategy to achieve
carbon neutrality in its operations.
• However, Kazatomprom is at an early stage in this
process, and therefore Yellow Cake will continue to
monitor progress on reducing CO2 emissions and
expanding disclosure.
22
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 Environmental, social and governance continued
Yellow Cake’s direct and indirect ESG impacts are set out in the table below:
Environment
Social
Governance
• Yellow Cake’s primary business serving the nuclear power
industry makes it an important participant in the global
transition to a carbon-free economy.
• Yellow Cake has put in place a range of policies to ensure
employee and stakeholder protection and wellbeing,
including on equal opportunities, health and safety,
and whistleblowing.
• Independent directors comprise 71% of Yellow Cake’s
Board of Directors. There is also strong female
representation at Board (43%) and management (50%)
level.
• While Yellow Cake does not engage in mining activities or
directly handle inventory, it is committed to the reduction
of the risk to the environment among its chief supplier and
main contractors.
• Yellow Cake regularly monitors its partners using the
Sustainability Accounting Standards Board (SASB)
standards and United Nations Sustainable Development
Goals (UNSDGs) to ensure the health, safety, and
wellbeing of partner employees.
• Yellow Cake’s Board is active and engaged, with a high
frequency of meetings and strong attendance.
• In the 2022 financial year, Yellow Cake commissioned an
independent review of the environmental risks related to its
primary supplier, Kazakhstan’s state uranium mining
company Kazatomprom.
• Kazatomprom’s use of in-situ recovery for uranium
extraction is a non-invasive form of production that limits
the impact on the environment.
• Yellow Cake has strong policies that minimise the risk of
misconduct, including on bribery and corruption, anti-
competitive behaviour, money laundering and economic
sanctions.
• Yellow Cake also commissioned independent reviews of the
governance at Kazatomprom and political risks associated
with the entity.
23
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 CEO statement
Strong investor interest in uranium equities allowed
Yellow Cake to raise USD236.6 million through two
oversubscribed share placements. The Company purchased an
additional 9 million lb of U3O8 during the year.
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
24
Andre Liebenberg
first commercial SMR started feeding electricity into the
grid in China’s Shandong province42.
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 with plans to
raise an initial USD50 million and with the intention to raise
42. Bloomberg, "New reactor spotlights China's push to lead way in nuclear power",
21 December 2021.
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 Aggregate long-term uranium contracting in CY2021
increased to around 70 million lb U3O8 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 U3O8 to its term contract portfolio since
January 2021 with 40 million lb U3O8 of that total being
finalised in January 2022 alone43. 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.
43. Cameco 2021 Management’s discussion and analysis, 9 February 2022.
CEO statement continued
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 202038. 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)40.
The direct effect of the war in Ukraine on Yellow Cake’s
operations and financial position has to this point been
limited. All U3O8 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 U3O8 from
Kazatomprom in May 2022 and a further 950,000 lb of U3O8
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 U3O8 (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.
25
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 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 U3O8 and through share
buybacks when the share is trading materially below net asset value.
Andre Liebenberg
Chief Executive Officer
CEO statement continued
Increase in Yellow Cake’s U3O8 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 U3O8 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 U3O8 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 GBP 4.42 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.
26
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 CFO’s review
The value of Yellow Cake's uranium
holding increased during the
financial year by USD614.6 million to
USD916.7 million as a result of the
net acquisition of USD181.3 million
of U3O8 and an increase in fair value
of USD433.3 million.
Carole Whittall
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.
I am pleased to present the
following audited financial
statements for the year to
31 March 2022 and report
a number of highlights:
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 U3O8 during the financial year at an average price
of USD34.13/lb and an aggregate consideration of
USD284.9 million.
27
Profit after tax of
USD417.3 million
(2021: USD29.9 million)
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 U3O8 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%.
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 CFO’s review continued
Uranium transactions
Yellow Cake started the financial year with a holding of
9.86 million lb of U3O8. On 28 April 2021, 348,068 lb of U3O8
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 U3O8 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 U3O8 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 U3O8 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 U3O8 from Curzon Uranium Limited at a price of
USD46.32/lb. In October, the Company agreed to purchase
0.95 million lb of U3O8 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
U3O8 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 U3O8 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 U3O8 from Kazatomprom at a price of
USD32.23/lb.
The increase in the fair value of the Company’s uranium
investment of USD433.3 million during the year was
attributable to:
As at 31 March 2022, the Company’s uranium investment
comprised 15.83 million lb of U3O8, a net increase
of 5.98 million lb of U3O8 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 U3O8 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 U3O8 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
U3O8 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).
• an increase of USD13.02/lb in the carrying value of the
2.37 million lb of U3O8 sold during the financial year
(as the U3O8 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 U3O8 held by the Company during the
entire financial year (as the underlying price of U3O8
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 U3O8 acquired by the
Company during the financial year for an average price of
USD34.13/lb (as the underlying price of U3O8 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
U3O8 (2021: USD0.3 million); and
• Operating costs of a recurring nature of USD4.5 million
(2021: USD2.9 million), comprising.
28
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 CFO’s review continued
– 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
In 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 U3O8 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.
29
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 CFO’s review continued
The value of Yellow Cake’s 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 share44 or
USD1,069.0 million, consisting of 15.83 million lb of U3O8 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 share46, consisting of 18.81 million lb45 of U3O8 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
44. 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.
45. As at 31 March 2022, Yellow Cake held 15,832,755 lb of U3O8. Adjustments for purchases completed after 31 March 2022 include the addition
of 2.02 million lb of U3O8 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 U3O8 purchased from Kazatomprom for a cash consideration of US$45.2 million and received on 30 June 2022.
46. 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 daily USD/GBP exchange rate of 1.1855 and the daily spot price published by UxC LLC on 15 July 2022.
Net asset value (NAV) and NAV per share
1 069,0
834,3
4,42
2,92
528,8
3,31
675,0
3,26
2,39
2,53
2,25
2,18
2,32
2,11
237,5 246,6 222,9 243,7 252,2 245,3
2,45
267,1
2,00
200,0
2,44
421,5
2,56
315,7
279,9 280,5
2,49
2,38
Listing
2018/09/30
2018/12/31
2019/03/31
2019/06/30
2019/09/30
2019/12/31
2020/03/31
2020/06/30
2020/09/30
2020/12/31
2021/03/31
2021/06/30
2021/09/30
2021/12/31
2022/03/31
Net asset value (USDm)
Net asset value per share (GBP)
£6.0
£5.0
£4.0
£3.0
£2.0
£1.0
$1 200
$1 100
$1 000
$900
$800
$700
$600
$500
$400
$300
$200
$100
30
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 Risk management
How we manage risk in
our business
The Board sets Yellow Cake’s business strategy and has overall
responsibility for risk assessment. The Company’s approach to
risk management aims to mitigate risk to an acceptable level
to execute the strategy and create value for all stakeholders.
The Board has mandated the Audit Committee to keep the
Company’s internal control and risk management systems
under review and to report to the Board.
The committee reviews the system of internal controls
and regularly assesses its effectiveness, with input from
the external auditor regarding issues identified during its
engagement, particularly feedback relating to any control
weaknesses and the responses from management to
these issues.
The Executive Directors perform periodic risk assessments
to identify and quantify the risks that face the Company’s
operations and functions, and to evaluate the adequacy of
the prevention, monitoring and mitigation practices in place
for those risks. The Board reviews the risk assessment and
risk management processes for completeness and accuracy,
carefully considers the Company’s risk register and receives
regular updates from management.
Principal risks and uncertainties
The Board has carried out a robust assessment of the principal risks facing the Company, including those that would threaten
its business model, future performance, solvency or liquidity.
Operational
risks
Geopolitical
risks
Corporate
risks
Industry
risks
Environmental,
social
and governance
risks
Financial
risks
1. Counterparty
5. Geopolitical
6. Key personnel
8. Regulatory
regime
10. Environmental
13. Uranium price
risk
risk
7. Key service
providers
9. Industry
11. Social risk
14. Foreign
12. Governance
exchange risk
15. Taxation risk
risk
developments
2. Cash flow risk
3. Operating risk
4. COVID-19 risk
Changes to the 2022 risk register
The risk review during the year resulted in the following changes to the 2022 risk register:
• The description of Risk 4 (COVID-19) was updated for developments in the pandemic and its impact on the industry
and the Company. The risk rating was downgraded from High to Medium.
• Geopolitical developments (Risks 5a and b) were added following Russia's invasion of Ukraine.
• Governance risk (Risk 12) was split into governance risk (12a) and bribery and corruption risk (12b).
31
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 Risk management continued
The table below shows the principal risks currently facing the Company, including those that could threaten its business model, future performance, solvency or liquidity. Risk levels are
determined based on an evaluation of the probability and consequence of individual risks.
Nature and impact of risk
Operational risks
1.
Counterparty risk
While considered unlikely, the counterparties to the
Company’s key contracts may become insolvent or
otherwise unable to fulfil their contractual obligations.
(a) The Company engages in the purchase of U3O8 from
third parties, in particular Kazatomprom
(b) The Company has contracts in place for the storage
of its U3O8 with Cameco for storage at Cameco’s
Port Hope/Blind River facility and with Orano for
storage at Orano’s Malvési/Tricastin storage facility
in France. There is a risk that Cameco or Orano
could become insolvent.
(c) There is a risk that the storage facilities could
be destroyed.
(d) The Company maintains cash balances in its current
accounts in amounts that are material to the
Company. The risk exists that the bank may not be
able to repay the Company’s cash or a fraud event
occurs.
How we manage the risk
Under the Kazatomprom Framework Agreement, the Company is required to pay for any purchases
of physical uranium ten days after taking delivery of the uranium. This ensures the company is better able
to manage any potential credit exposure.
A force majeure event under the Kazatomprom Framework Agreement, or the Company no longer being
able to make purchases under the Agreement, would adversely impact Yellow Cake’s ability to procure
future purchases of uranium at an undisturbed market price under that agreement. If that occurred, if
Yellow Cake wished to purchase further uranium, it would need to enter into new supply contracts for
uranium with producers and/or to purchase uranium in the spot market. Yellow Cake recognises that any
new contracts or spot market purchases may not provide equivalent access to undisturbed uranium prices
or volumes as provided by the Kazatomprom contract.
As the remaining term of the Kazatomprom Framework Agreement reduces, the contract risk reduces.
The Company retains ownership of the U3O8 while in storage and would therefore retain ownership
through any potential insolvency event in relation to Cameco or Orano (although it cannot be guaranteed
that, in the event of a Cameco or Orano insolvency event, a third party would not seek to challenge the
Company’s title to its U3O8). Yellow Cake maintains a watching brief on the credit rating and financial health
of Cameco and Orano.
Cameco and Orano have contractual undertakings to either provide replacement U3O8 or pay Yellow Cake
the replacement volume of such U3O8 in the event of a loss of Yellow Cake’s inventory. As such, Yellow Cake
does not have third party insurance arrangements in place to insure this risk. Cameco and Orano are not
liable for consequential losses.
Cash balances are held with Citibank, a major global financial institution. Current accounts are operated by
Langham Hall Fund Management (Jersey) Limited. The risk of fraud and embezzlement of funds is mitigated
by multiple signatory and authorisation protocols in place with Langham Hall Fund Management (Jersey)
Limited.
Risk level
High
Medium
High
Medium
32
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 Risk management continued
Nature and impact of risk
How we manage the risk
Risk level
Medium
2.
3.
4.
Cash flow risk
Yellow Cake may, in the future, have insufficient funds
to pay operating expenses.
The Company continues to review and evaluate opportunities related to the ownership of uranium and
other uranium-related activities, and may, from time to time, enter into transactions or arrangements which
generate cash to support the Company’s business.
Operating risk
The Company does not currently have any operating risk
associated with the development or operation of primary
or secondary mining operations, nor does the Company
face risks associated with the transportation of
uranium. As the Company reviews streaming, royalty or
other opportunities, the Company may, should it choose
to proceed with such opportunities, be exposed to
certain operating risks to which the counterparties to the
Company in such agreements are themselves
exposed. The Company’s operating risk relates primarily
to the execution of purchase and sale transactions
and other commercial contracts.
COVID-19
The COVID-19 pandemic disrupted uranium mining in
2020 and 2021, and has had an effect on global supply
chains. Future waves that result in an extended
shutdown could affect the Company’s business model,
ability to access capital and continue in business.
The Company is unlevered and seeks to maintain sufficient working capital to fund its ongoing operations.
The Company has the right to sell, trade, lend, or otherwise commercialise some of its holdings of uranium
in a manner which would provide cash to support its operations.
During the review and diligence phase of evaluating potential opportunities the Company considers
potential risks and identifies ways to mitigate these potential risks.
Low
Where potential risks are identified the Company will use appropriate contractual mechanisms to protect
its interests. Additionally, the Company may choose to price in risk which cannot be mitigated in order to
ensure that the risk/reward balance is appropriate.
The Company’s day-to-day operations have not been affected by COVID-19, given that Yellow Cake has
no physical operations and the executive team is already home-based. As at 31 March 2022, Yellow Cake
had sufficient cash balances to meet approximately two years of working capital requirements, after taking
into account commitments to purchase USD132.7 million worth of U3O8 after the year end and a share
buyback programme completed after the year end, before it would need to raise additional funds for
working capital. The Company has no debt or hedges on the balance sheet. It is possible that COVID-19
impacts on Kazatomprom’s mining operations could cause longer lead times for Yellow Cake’s uranium
purchases.
Medium
33
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 Risk management continued
Nature and impact of risk
Geopolitical risks
5(a). Geopolitical developments
The stringent economic sanctions imposed by the
European Union and United States on Russian companies
and individuals have to date not directly impacted the
global nuclear fuel trade, although the situation
continues to evolve. The future impacts on nuclear fuel
markets as a result of the economic sanctions against
Russia remain uncertain. The risk exists that secondary
sanctions could be imposed on the Company’s suppliers,
precluding future purchases from these sources.
(b).
Some of Kazatomprom’s products are transported
through the Russian Federation. At present the Company
is unaware of any restrictions related to the supply of
products to end customers. However, such restrictions
may apply in future.
Corporate risks
6.
7.
Key personnel
The Company is reliant on its Executive Directors and
other key personnel. Any change to the Company’s
management and service providers may have a negative
impact on its business.
Key service providers
The Services Agreement with 308 Services Limited may
be terminated by either party on one year’s notice.
How we manage the risk
Kazatomprom has business relationships with Rosatom, including a 50% interest in a joint venture with
Rosatom’s Uranium One in respect of the Budenovskoye uranium deposit, and a uranium processing
agreement with the Uranium Enrichment Centre, located in Russia.
Sanctions imposed by various countries against Russia have not directly affected the uranium and nuclear
industry to date. However, it is understood that Kazatomprom has mitigation plans with regards to these
business interests. The risk of secondary sanctions applying to Kazatomprom is therefore considered low.
It is understood that around 50% of Kazatomprom’s attributable production is shipped to western
convertors in large part via St Petersburg, and this route continues to operate. However, Kazatomprom
has advised that it has developed an alternative trans-Caspian transport route, which completely excludes
Russian territory. Logistics constraints may impact future delivery schedules.
The Company believes that its executive team, as well as the Board of Directors are dedicated to the
long-term growth of the Company. However, in the event that any of these persons elects to leave
the Company or discontinue provision of services, the Company is confident in its ability to find suitable
replacements.
The Company believes that its advisers in 308 Services Limited are dedicated to the long-term growth of
the Company. The Company does not expect that 308 Services Limited will elect to terminate its contract;
however, in the event that such an event were to occur, the Company is confident in the ability of its
executive management to find a suitable replacement.
Additionally, the Company has the benefit of, and is the direct counterparty to its purchase contract with
Kazatomprom and its storage contracts with Cameco and Orano. 308 Services is not a party to these
agreements.
Risk level
High
High
Low
Low
34
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 Risk management continued
Nature and impact of risk
Industry risks
How we manage the risk
8.
9.
Regulatory regime
Changes in laws around the ownership of uranium, or
increased regulation or change in government policy
around uranium and nuclear power generation, could
adversely affect the Company’s business.
Industry
The Company’s operations are focused around uranium
and uranium-related activities. Nuclear accidents could
impact the future prospects for nuclear power, the key
source of demand for U3O8.
Risk level
High
The Company believes it is unlikely in the near- to medium-term that a significant change to the laws or
regulations around the ownership or transfer of ownership of uranium or generation of nuclear power will
occur. Additionally, as the Company’s exposure is focused in Western Europe (where the Company is based
and where some of the Company’s U3O8 inventory is held) and North America (where the rest of the
Company’s U3O8 inventory is held), any changes, however unlikely, would be expected to be transparent
and conducted in a legal manner which would have limited impact on the Company’s value.
The Company keeps a watching brief, with the advice of counsel and 308 Services Limited, on changes
of legislation that may impact its business.
The nuclear industry operates with one of the highest margins of safety in the world, with a number
of safeguards and redundancies built into processes in order to reduce public health and safety risks.
High
There are limited steps that the Company can undertake to impact the activities of other companies.
35
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 Risk management continued
Nature and impact of risk
How we manage the risk
Environmental, social and governance risks
10.
Environmental
The Company operates in the resources sector, which
is under increasing scrutiny from investors and other
stakeholders with regards to how it manages its
environmental responsibilities. Negative environmental
trends in the resources sector could cause a significant
withdrawal of capital and affect the share prices of listed
companies in the sector and their ability to access equity
capital markets.
Yellow Cake does not carry out exploration, development or mining operations, but is exposed to environmental
risk via its suppliers, particularly through its partnership with Kazatomprom. The Company has limited influence
over the activities of its suppliers but is committed to more responsible mining practices that mitigate the risk of
climate change and damage to the environment. To ensure this, Yellow Cake regularly monitors its partners’
environmental performance. Specifically, it appraises Kazatomprom’s record with regard to greenhouse gas
emissions, water management, waste and hazardous materials, radiation and safety, decommissioning of mining
sites and land management. Cameco and Orano, as storage providers to Yellow Cake, are also monitored for
environmental compliance and efficient use of resources.
Yellow Cake’s Supplier Standards Policy sets out the Company’s position and expectation of its suppliers
regarding their environmental, social and governance practices. Kazatomprom is listed on the London Stock
Exchange (LSE) and Cameco is listed on the Toronto Stock Exchange (TSX). Listing on these exchanges require a
commitment to good corporate governance and responsible environmental and social practices. Cameco’s
storage facilities are subject to strict licencing requirements by the Canadian Nuclear Safety Commission
regarding the health and safety of the public and the environment. Orano is majority owned by the French
Government and applies a comprehensive Safety-Environment policy based on Operational Excellence.
Risk level
High
11.
Social
Yellow Cake is exposed indirectly to social risk via its
suppliers. Negative social trends in the resources sector
could cause a significant withdrawal of capital and affect
the share prices of listed companies in the sector and
their ability to access equity capital markets.
Yellow Cake regularly monitors its partners’ exposure to social risk by analysing incidents involving injury
or fatality, storage facilities management, and response to COVID-19. Kazatomprom is a significant
employer and tax contributor in Kazakhstan and Yellow Cake monitors its programmes of education and
training as well as employee diversity and inclusion. Yellow Cake assesses Kazatomprom’s human rights
compliance and community relations particularly with regard to its mine closures. Yellow Cake will only
continue to partner with companies with a good track record on social issues.
High
Yellow Cake’s Supplier Standards Policy sets out the Company’s position and expectation of its suppliers
regarding their environmental, social and governance practices. Kazatomprom is listed on the London Stock
Exchange (LSE) and Cameco is listed on the Toronto Stock Exchange (TSX). Listing on these exchanges
require a commitment to good corporate governance and responsible environmental and social practices.
Cameco’s storage facilities are subject to strict licencing requirements by the Canadian Nuclear Safety
Commission regarding the health and safety of the public and the environment. Orano is majority owned by
the French Government. The company's Health, Safety and Radiation Protection policy aims to continuously
improve the group's results and strengthen preventative actions.
36
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 Risk management continued
Nature and impact of risk
12(a). Governance
Yellow Cake is exposed indirectly to governance risk via
Kazatomprom being based in Kazakhstan, a country
which could be affected by political instability. As
Kazatomprom is a State-Owned Enterprise, a change in
the political leadership could negatively impact its
corporate governance record should Kazatomprom’s
management and board become less independent. There
is a risk that political instability could also initiate a
challenge to contracts held between the Company and
Kazatomprom.
How we manage the risk
Kazatomprom is listed on the FCA’s standard list in the UK. It is not required to comply with the UK
Corporate Governance Code, although it is required to comply with relevant provisions of the FCA’s Listing
Rules and the Disclosure and Transparency Rules.
Yellow Cake complies with the UK Corporate Governance Code insofar as appropriate given the Company’s
size, business, stage of development and resources, explains areas of non-compliance in its Annual Report,
and regularly assesses its chief supplier Kazatomprom’s corporate governance practices.
The Company does not have assets in Kazakhstan and any deterioration in governance of Kazatomprom
is only likely to impact on the future of its uranium supply contract. Yellow Cake closely monitors the extent
of political risk and its effect on Kazatomprom’s corporate governance performance.
Yellow Cake’s Supplier Standards Policy sets out the Company’s position and expectation of its suppliers
regarding their environmental, social and governance practices.
Risk level
Medium
(b). Bribery and corruption in the geographical regions in
which the Company conducts business could materially
adversely affect its business, results of operations and
financial condition.
Relations with suppliers is overseen by Yellow Cake’s management and board, who are informed by regular
due diligence. The Company has a zero tolerance towards bribery and corruption. In terms of the Economic
Sanctions Policy approved by the Board in June 2022, counterparties, connected parties and the ultimate
source of uranium in a transaction are subject to risk-based due diligence to identify money laundering
and economic sanctions risks.
Medium
Financial risks
13. Uranium price
The uranium price is volatile and affected by factors
beyond the Company’s control.
A protracted period of weak uranium prices may limit
the Company’s ability to raise capital or fund itself.
The Company believes that uranium is structurally underpriced, and while the price may be volatile in
the short term, over a longer time frame the Company believes the price of uranium will increase.
Medium
The Company retains sufficient working capital to support its operations through short-term fluctuations.
If necessary, the Company could realise some of its uranium inventory to fund working capital.
14.
15.
Foreign exchange
The Company raises funds in Sterling while its functional
currency is the US Dollar.
The Company maintains the majority of its cash resources in US Dollars and converts funds raised in
Sterling to US Dollars as soon as practicable. However, prior to funds from a capital raise being settled,
the Company is exposed to fluctuations in the GBP/USD exchange rate, but only for short durations.
Taxation
Changes in the tax position of the Company could adversely
affect the Company. There is a risk that a country in which
the Company operates changes its tax legislation, rules or
policies to the detriment of the Company.
The Company manages this risk through complying with all tax regulations and ensuring that its local
accounting policies are in line with regional requirements.
The Company receives regular tax advice and opinions from its advisors and accountants to ensure
it is aware of, and can mitigate the effects on its tax position of, any changes in regulation.
Low
High
37
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 Risk management continued
y
t
i
l
i
b
a
b
o
r
P
Very Likely
(5)
Likely
(4)
Possible
(3)
Unlikely
(2)
Rare
(1)
High Risk
1 a
1 c
5 a
5 b
8
9
10
11
15
Counterparty risk
Counterparty risk
Geopolitical risk
Geopolitical risk
Regulatory regime
Industry risk
Environmental risk
Social risk
Taxation risk
12
b
13
Medium
1 b 1 d
4
3
6
7
14
Low
Extreme
High
15
5 a
9
10
11
12
a
2
1
a
5
b
8
1
c
Very Minor (1)
Minor (2)
Moderate (3)
Major (4)
Catastrophic (5)
Consequence
Low Risk
3
6
7
Operating risk
Key personnel
Key service providers
14
Foreign exchange risk
Medium Risk
b
d
1
1
2
4
a
b
12
12
13
Counterparty risk
Counterparty risk
Cash flow risk
COVID-19
Governance risk
Governance risk
Uranium price risk
38
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 Risk management continued
Viability
The ultimate success of Yellow Cake depends on its ability
to accretively grow its uranium holdings. Given the nature
of the Company’s operations, which are not significantly
income generative, the Company relies on the proceeds of
its regular capital raises to acquire uranium and also to set
aside sufficient cash to meet approximately three years’
working capital requirements.
The Directors’ assessment of the Company’s viability
covered a three-year period to March 2025, which the
Directors believe is an appropriate timescale for existing
and potential risks and opportunities to crystalise. The
choice of a three-year viability period is also related to
our policy to generally retain up to three years of working
capital requirements following each equity raise. Our cost
forecasts are therefore also carried out on the basis of this
time horizon.
The viability statement focusses on the existing business
of the Company and its ability to meet current contractual
commitments and operating costs from current cash
balances and, in “severe but plausible” scenarios, by realising
or borrowing against a portion of its uranium holdings. The
Directors consider that within a three-year time horizon,
the Company can reasonably expect to secure additional
working capital as required through further equity
issuances, debt or the realisation of a portion of its uranium
holdings.
The viability assessment takes account of the Company’s
current financial position, operations and contractual
commitments. The financial position includes the Company’s
cash balances, unleveraged balance sheet and realisable
uranium holdings. Potential financial and operational
impacts of the principal risks and uncertainties set out
on pages 31 to 38 in severe but plausible scenarios were
assessed. These included the impact of movements in the
uranium price, foreign exchange fluctuations and operating
risks, including the ongoing impact of COVID-19 and
geopolitical developments in Russia and Ukraine. Risk can
never be fully eliminated, but can be mitigated to a level
which the Directors are prepared to accept as necessary to
execute the Company’s strategy.
The Company prepares detailed annual budgets against
which performance is assessed and regularly reviews its
medium-term working capital projections. Cash balances
are usually retained sufficient to cover at least three years’
working capital requirements following a placing of shares
or other capital raise. 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.
As at 31 March 2022, Yellow Cake had sufficient cash
balances to meet approximately two years of working capital
requirements, after taking into account commitments to
purchase USD132.7 million worth of U3O8 after the year
end and the share buyback programme completed after
the year end, before it would need to raise additional funds
for working capital. The Company has no debt or hedges
on the balance sheet. The Company’s operating expenses
are in part linked to the underlying price of uranium. A 10%
increase in the U3O8 price would increase the Company’s
operating expenses by approximately 3% and reduce the
Company’s estimated working capital balance by less than a
month.
Based on this assessment, the Directors have a reasonable
expectation that the Company will be able to continue
in operation and meet all liabilities as they fall due up to
March 2025.
39
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 Corporate governance report
Yellow Cake plc has elected to comply with the principles
and provisions of the UK Corporate Governance Code 2018
(the “Code”) insofar as appropriate given the Company’s size,
business, stage of development and resources. As Yellow
Cake’s business continues to evolve, the Company will seek to
ensure that its governance processes and procedures evolve
appropriately and in a manner that protects the interests of
the Company and its shareholders.
Jersey law places a range of obligations and responsibilities
on the directors of a Jersey company, which arise principally
under Jersey customary law, under the Companies (Jersey)
Law 1991 and under the Company’s articles of association
(the “Articles”).
Governance structure
The Board is collectively responsible for promoting and
safeguarding the long-term sustainable success of the
Company, and for setting the Company’s purpose, strategy
and values. The Board assesses the basis on which the
Company generates and preserves value over the long term.
The Board is supported by, and delegates certain matters to,
the Audit, Remuneration and Nomination Committees.
Shareholders
The Board
Audit Committee
Remuneration Committee
Nomination Committee
40
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 Board of directors
Non-Executive Directors
The Lord St John of Bletso (65)
Independent Non-Executive Director
and Chairman
Anthony St John has been a long-standing
Crossbench Independent Member of the
House of Lords. He has served on many
Parliamentary Select Committees and
is Vice Chairman of both the All-Party
Parliamentary Africa Group and the
All-Party South Africa Group. He qualified
as a Solicitor in South Africa and worked
for over 20 years in the City of London.
He serves as a director and adviser to several
UK listed and unlisted companies, including
IDH plc and Smithson Investment Trust.
Amongst his business interests, his
expertise has focused on corporate
governance, financial restructuring and
disruptive technologies. In addition to
Yellow Cake plc, he is also Chairman of
Strand Hanson.
Lord St John holds a Master of Law (LLM)
in Chinese and Maritime Law from London
University as well as degrees in BA,
B.SocSc and B.Proc in South Africa.
Sofia Bianchi (65)
Independent Non-Executive Director
The Hon Alexander Downer (70)
Independent Non-Executive Director
Alan Rule (60)
Independent Non-Executive Director
Emily Manning (34)
Independent Non-Executive Director
The Hon Alexander Downer AC served
as Australian High Commissioner to the
United Kingdom from 2014 to 2018.
He has had a long and distinguished
political career in Australia, serving as
Australia’s Minister for Foreign Affairs,
from 1996 to 2007, making him Australia’s
longest- serving Foreign Minister. Mr
Downer also served as Opposition Leader
and leader of the Australian Liberal Party
from 1994 to 1995, and he was Member of
the Australian Parliament for Mayo for over
20 years. He was appointed a Companion
of the Order of Australia in 2013 and was
awarded the Centenary Medal in 2001. He is
Executive Chair of the International School
for Government at King's College London.
Alexander Downer holds a Bachelor of
Arts (BA) (Hons) in Politics and Economics
from Newcastle University.
Alan Rule has more than 20 years’ experience
as a Chief Financial Officer and Company
Secretary in the mining industry in Australia
and Africa. He has considerable experience
in international debt and equity financing
of mining projects, implementation of
accounting controls and systems, governance
and regulatory requirements, and mergers
and acquisitions. He recently stepped
down as Chief Financial Officer of ASX-
listed Australian lithium producer, Galaxy
Resources Limited. His previous positions
have also included CFO of uranium producer
Paladin Energy Limited, Sundance Resources
Limited, Mount Gibson Limited, Western
Metals Limited and St Barbara Mines Limited.
Alan Rule holds a Bachelor of Commerce
(B.Com) and a Bachelor of Accountancy
(B.Acc) from the University of the
Witwatersrand and is a Fellow of the Institute
of Chartered Accountants (FCA) in Australia.
Emily Manning has more than 12 years of
experience in the Jersey finance industry,
with a background in real estate, funds,
corporate and private clients. Emily acts
as a Client Director of Langham Hall Fund
Management (Jersey) Limited and holds
directorships with a number of real estate
and private equity-based boards with a focus
on commercial retail, private and residential
development and European industrial
logistics. She previously held directorships
for a number of listed and regulated funds
and real estate companies, including board
positions with some of London’s largest real
estate developments, and oversaw capital
markets transactions as part of a portfolio
worth over USD13 billion assets under
management.
Emily brings to the board comprehensive
knowledge of the running and regulations
of Jersey structures with a strong
understanding of internal governance and
company secretarial experience. Emily has
been a Principal Person with the Jersey
Financial Services Commission since
2018 and holds her ICSA Diploma table
4 qualification.
Sofia Bianchi is the Founding Partner
of Atlante Capital Partners, an advisory
and turn-around specialist in emerging
markets. She was previously Head of
Special Situations, as well as a member
of the Investment Committee for Debt
and Infrastructure, at the CDC Group plc,
a development finance institution. Prior to
this, she was Head of Special Situations at
BlueCrest Capital Management.
Sofia Bianchi served as a Deputy
Managing Director of the Emerging Africa
Infrastructure Fund with Standard Bank
London. From 1994 to 2002 Sofia held
senior positions with the European Bank
for Reconstruction and Development.
She has extensive experience in banking,
fund management and mergers and
acquisitions. As a company director she
has been advising boards on strategy, value
creation, corporate finance, corporate
governance and ESG.
Sofia Bianchi has held several independent
non-executive directorships. Among
others she was the Chair of the corporate
governance and nominating committee at
Endeavour Mining plc from 2019 to 2022
and she also served on the board of Kenmare
Resources plc as senior independent director
from 2008 to 2017.
Sofia Bianchi holds a Bachelor of Arts
in Economics from George Washington
University and a Master’s in Business
Administration (MBA) from the
Wharton School.
41
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 Board of directors
Executive Directors
Andre Liebenberg (60)
Executive Director and Chief Executive Officer
Carole Whittall (50)
Executive Director and Chief Financial Officer
Andre Liebenberg is an experienced mining
industry professional and has extensive
investor marketing, finance, business
development and leadership experience.
He has spent over 25 years in private equity
and investment banking, and held senior
roles within BHP Billiton and most recently
at QKR Corporation, where he was Chief
Financial Officer. Andre’s previous roles
within BHP Billiton included Acting President
for BHP Billiton’s Energy Coal division, Chief
Financial Officer for the Energy Coal division,
the Head of Group Investor Relations and
Chief Financial Officer for the Diamonds and
Specialty Products division. These roles were
based in London, Melbourne and Sydney.
Prior to joining BHP Billiton, Andre worked
for UBS in London and the Standard Bank
Group in Johannesburg.
Andre Liebenberg is a non-executive director
of Zeta Resources Limited.
He holds a Bachelor of Science (B.Sc) Elec.
Eng. from the University of Cape Town and
a Master in Business Administration (MBA)
from the University of Cape Town.
Carole Whittall is a director and co-founder
of Mining Strategies Limited, which provides
M&A and transaction advisory services to the
metals and mining sector. She has 25 years’
management, corporate finance and mergers
and acquisitions experience in the metals and
mining sector. Most recently, she was Vice
President, Head of M&A at ArcelorMittal
Mining and a member of its Mining Executive
Team, responsible for global M&A,
government relations and corporate and
social responsibility, and served as a board
member of subsidiary companies and joint
ventures. Previously, she was with Rio Tinto
where she held various senior commercial
and business development roles. Her prior
career was with JP Morgan and Standard
Corporate and Merchant Bank in corporate
finance.
Carole Whittall holds a Bachelor of Science
(B.Sc) (Hons) Geology from the University
of Cape Town and a Master in Business
Administration (MBA) from the London
Business School.
Board Composition
2
5
Executive Directors
Non-Executive Directors
Board Composition
Board Diversity
Board Tenure
1
2
3
5
4
6
Executive Directors
Non-Executive Directors
Male
Female
1 year
3-5 years
4
Board Diversity
3
Male
Female
42
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 Corporate governance report continued
Compliance with the Code
The Company considers that it was compliant with the majority of the provisions of the Code during the year to 31 March 2022. The following table references where the Company’s application
of the Code’s principles are available in this report and explains areas of non-compliance, which mainly reflect the Company’s current size, stage of development and the scale and complexity of
its activities. The Company’s Board of Directors (the “Board”) keeps any instances of non-compliance under review.
Part 1: Board leadership and company purpose
References
Areas of non-compliance
The Governance structure section on pages 40 to 49
provides information regarding the members, structure
and activities of the Board.
Provision 5 – Yellow Cake’s workforce comprises its two Executive Directors and it is consequently not considered necessary
to establish formal mechanisms for engagement with the Company’s workforce. Yellow Cake’s Remuneration Committee is
responsible for monitoring the size and nature of the Company’s workforce to determine, among other things, the appropriate
level of engagement required by the Company with its workforce and whether the role and responsibilities of that committee
should be expanded to include consideration of additional workforce-related matters. If Yellow Cake’s workforce increased
significantly in the future, the Company would favour mandating one of its Non-Executive Directors with responsibility for
representing the interests of the workforce (alongside their other duties).
Part 2: Division of responsibilities
References
The Division of responsibilities section on page 50
contains information on the division of responsibilities
among the Board.
Areas of non-compliance
Provision 12 – The Board does not consider it necessary or desirable to appoint a Senior Independent Director at this stage,
given the scale and complexity of the Company’s activities. Those actions set out in the Code to be taken by a Senior Independent
Director, including the recommendation that the Non-Executive Directors should meet at least annually with the Senior
Independent Director without the chair present to appraise the chair’s performance, will be taken by the Board as a whole.
Provision 13 – While the Chairman will hold meetings with the Non-Executive Directors without the Executive Directors present
as and when appropriate and required, it is not currently anticipated that such meetings will take place on a regular basis due
to the scale and complexity of the Company’s current activities.
Provision 15 – The Company does not require individual Directors to seek prior approval of the Board before undertaking
additional external appointments. This is due to the nature and extent of the Company’s activities, the relatively few Board
meetings held each year and the benefit to the Company of directors' complementary roles in the sector. Such appointments are
required to be disclosed to the Board. As the Company’s business develops, the Board will periodically assess whether such policy
continues to be appropriate.
43
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 Corporate governance report continued
Part 3: Composition, succession and evaluation
References
Areas of non-compliance
More information regarding the Board’s composition,
succession and evaluation are available in the
Governance structure section on pages 40 to 49 as well
as in the discussion of the Nomination Committee on
pages 51 and 52.
Provision 21 – The Directors complete annual self-assessments to appraise the performance of the Board as a whole and
feedback from the results is implemented, where relevant. Given the Company’s size, stage of development and the scale and
complexity of its activities, the Company does not consider it necessary at this point to conduct an externally facilitated board
evaluation. The Board may also undergo periodic informal assessment processes. Each of the Audit, Remuneration and
Nomination Committees reviews its effectiveness annually, in accordance with their terms of reference.
Part 4: Audit, risk and internal control
References
Areas of non-compliance
The role of the Board in this area is primarily shown in the
Report of the Audit Committee on page 53, with further
detail on the Company’s strategic objectives and key risks
to the business being set out in the Strategic Report on
pages 4 to 39.
Provision 25 – The Company does not currently have an internal audit function due to the current size and complexity of its
activities. The decision as to whether or not to establish an internal audit function shall be made by the Board upon the
recommendation of the Audit Committee. The Audit Committee considers annually whether there is a need for an internal audit
function, taking into account the growth of the Company, the scale, diversity and complexity of the Company’s activities and the
number of employees, as well as cost and benefit considerations.
Part 5: Remuneration
References
Pages 55 to 62 disclose the Company’s remuneration
policy and the Report of the Remuneration Committee.
Areas of non-compliance
Provision 33 – The Remuneration Committee does not conduct a separate review of workforce remuneration and related policies
and the alignment of incentives and rewards with culture as Yellow Cake’s workforce currently comprises its two Executive
Directors. Yellow Cake’s Remuneration Committee has been mandated to monitor the size and nature of the Company’s
workforce in order to determine, among other things, whether the role and responsibilities of the Remuneration Committee
should be expanded to include consideration of additional workforce-related matters.
44
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 Corporate governance report continued
Roles and responsibilities
Certain authorities have been delegated by the Board to
the Board Committees and to the CEO and CFO, who are
responsible for the day-to-day management of the business.
The Board reserves certain decisions to ensure it retains
proper direction and control of the Company, and monitors
delivery against the Company’s strategy. These include:
• Approval of financial statements, dividends and
significant changes in accounting practices;
• Board membership and powers, including the
appointment and removal of Board members,
determining the terms of reference of the Board and
establishing the overall control framework;
• Senior management and subsidiary Board appointments
and remuneration;
• Key commercial matters;
• Risk assessment;
• Financial matters including the approval of the budget
and financial plans, changes to the Company’s capital
structure, the Company’s business strategy, acquisitions
and disposals of businesses and capital expenditure; and
• Other matters including health and safety policy,
insurance and legal compliance.
The Board is led by the Chairman and comprises two
Executive Directors (the CEO and the CFO) and five
Independent Non-Executive Directors (including the
Chairman). In the year to 31 March 2022, at least half of the
board, excluding the Chairman, was made up of Independent
Non-Executive Directors.
Directors
• The Lord St John of Bletso (Chairman)
• Sofia Bianchi
• The Hon Alexander Downer
• Emily Manning
• Alan Rule
• Andre Liebenberg
• Carole Whittall
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Executive Director and CEO
Executive Director and CFO
Further detail on the Board members and their skills and experience can be found on pages 41 and 42.
The Board meets formally at least four times a year and is supported by the Audit, Remuneration and Nomination Committees.
In the year to 31 March 2022, the Board met 10 times.
Date of
appointment
Board
Audit
Committee
Remuneration
Committee
Nomination
Committee
Attendance
percentage
Meeting attendance
Number of meetings
The Lord St John of Bletso
(Chairman)
Sofia Bianchi
1 June 2018
1 June 2018
The Hon Alexander Downer
1 June 2018
Emily Manning
Alan Rule
31 March 2021
1 June 2018
Andre Liebenberg (CEO)
1 June 2018
Carole Whittall (CFO)
1 June 2018
Attendance percentage
10
10
10
9
9
10
10
10
97%
2
N/A
2
2
1
2
N/A
N/A
100%
4
3
4
4
4
4
N/A
N/A
95%
1
1
1
1
1
1
N/A
N/A
100%
93%
100%
94%
94%
100%
100%
100%
Any Director who has concerns which cannot be resolved about the running of the Company, or a proposed action, will ensure
that their concerns are recorded in the Board minutes at these meetings.
45
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 Corporate governance report continued
Board focus areas in 2021/2022
The primary focus of Board deliberations during the 2022
financial year included:
• Review and approval of the decision to place additional
shares in June and October 2021 and to apply the
proceeds to purchase additional uranium;
• Review and approval of the 2021 financial statements
and the decision to not declare a dividend for the year;
• Review and approval of the share buyback programme
that commenced in April 2022;
• Review of the Company’s strategy in the context of
prevailing conditions and the outlook for the uranium
market; and
• Assessment of the independence of Ms Manning
following engagements with shareholders that voted
against her re-election at the Annual General Meeting
(see page 49).
Board appointments and
succession planning
The Nomination Committee oversees appointments to the
Board and succession planning for both the Board and senior
management, which are based on merit and objective criteria,
including an assessment of the balance of skills, knowledge,
experience and diversity of the Board. In accordance with
the Code, all Directors voluntarily submit themselves for re-
election on an annual basis, notwithstanding the provisions in
the Articles, which state that they shall be required to retire
at the first Annual General Meeting after appointment and,
thereafter, every three years.
It is intended that the Chairman should not remain in his
post for a period of more than nine years from the date of his
appointment to the Board.
Service agreements for the Non-Executive Directors are
terminable on 90 days’ notice (by either party) and are
available for inspection at the Company’s registered office.
Directors’ development
A comprehensive set of policies and manuals on regulatory
and compliance matters is in place and has been adopted
by the Board. The Directors received training on regulatory
and compliance matters ahead of the Company’s admission
to AIM in 2018 and set aside time at least once annually at
their regular Board meetings for supplementary training and
updates. Directors undergo a formal induction process on
appointment, have access to the Company Secretary and are
entitled to seek professional advice at the Company’s expense
in connection with the affairs of the Company or the discharge
of their Directors’ duties. The appointment and removal of the
Company Secretary is a matter for the Board as a whole.
The Directors conduct an annual evaluation process to
appraise the performance of the Board that assesses
areas including the Board’s role and responsibilities, the
appointment process, Board effectiveness, Board meetings,
the Board Chairman and the Company’s ethics. The Board
will monitor whether an externally facilitated appraisal
should be implemented as the Company’s business develops.
In addition, the Board may undergo periodic informal
assessment processes. In accordance with their terms of
reference, each of the Audit, Remuneration and Nomination
Committees reviews its effectiveness annually.
Ethics and integrity
The Company’s values are set by the Board and are available
in the Code of Conduct (www.yellowcakeplc.com/about/
code-of-conduct/). The Directors seek to uphold those values
in their dealings with each other and when dealing with
third parties on the Company’s behalf. The Board is mindful
of the need to ensure that Yellow Cake’s values and culture
are maintained as its business evolves and will continue to
assess and monitor the Company’s culture, taking or seeking
assurances as to corrective action where necessary.
A whistleblowing policy is in place that sets out the Company’s
commitment to conducting its business openly and honestly,
encourages all staff to report any wrongdoing that falls short
of the Company’s standards and commits the Company
to treat all such disclosures in a confidential and sensitive
manner. The policy outlines the protection and support
available for whistleblowers. As Yellow Cake’s workforce
comprises two Executive Directors (the CEO and CFO), there
is currently no separate whistleblowing channel in place as
these Directors can raise any concerns directly with the Audit
Committee and Board.
Conflicts of interest
The Articles contain provisions governing conflicts of interest,
including a restriction on Directors’ ability to vote on certain
contracts and arrangements in which they are interested.
The Directors’ service agreements require the Directors to
devote sufficient time to fulfil their duties to the Company.
The Directors hold external directorships and/or are partners
in various partnerships, and the Board is comfortable that
these external positions do not negatively affect the time they
devote to the Company.
46
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 Corporate governance report continued
Regulatory matters
The Company’s share-dealing code for Directors and
employees aligns with the provisions of the Market
Abuse Regulation relating to dealings in the Company’s
securities. The code sets out clearance procedures and
additional provisions for persons discharging managerial
responsibilities. The Company’s dealing policy defines
the obligations of Directors and employees in relation
to conduct regarding the use of inside information,
and provides a summary of applicable laws and
possible sanctions in terms of the market abuse regime.
The Company will take all reasonable steps to ensure
compliance with the code and policy.
Yellow Cake’s disclosure policy sets out the Company’s
key internal procedures, systems and controls that aim
to ensure that the Company complies with its obligations
relating to inside information under the Market Abuse
Regulation, the guidance set out in the Disclosure Guidance
and Transparency Rules of the Financial Conduct Authority
and the Company’s obligations relating to price-sensitive
information under the AIM Rules for Companies.
Anti-money laundering, anti-
bribery and corruption policy
Yellow Cake is committed to acting professionally, fairly and
with integrity in all business dealings and relationships, and
has a zero-tolerance for bribery and corrupt activities. The
Company recognises the importance of preventing money
laundering and terrorism financing and is committed to the
highest standards of anti-money laundering and combating
terrorist financing.
Economic sanctions and
money laundering
It is Yellow Cake’s policy to comply with all applicable
requirements of economic sanctions and trade control
laws and regulations. All counterparties and connected
parties will be screened through risk-based due diligence
on an ongoing basis and before the Company enters into a
counterparty relationship or engages in a transaction. The
screening aims to identify money laundering or economic
sanctions risk by identifying persons who are blocked or
subject to economic sanctions restrictions maintained by
the United Kingdom, European Union, United States or the
United Nations Security Council. The Company may also
screen the ultimate source of uranium in a transaction and
other persons with whom the Company has dealings.
Diversity and inclusion
The Company values diversity and inclusion, and
is committed to promoting equal opportunities in
employment. It complies with all relevant anti-discrimination
laws. Employees and job applicants are treated equally
regardless of age, disability, gender reassignment, marital
or civil partner status, pregnancy or maternity, race, colour,
nationality, ethnic or national origin, religion or belief, sex or
sexual orientation. Recruitment and promotion will be
conducted on the basis of merit, against objective criteria
that avoid unfair discrimination.
Yellow Cake’s equal opportunities policy is applied to all
aspects of its operations, including recruitment, pay and
conditions, training, appraisals, promotion, conduct at work,
disciplinary and grievance procedures, and termination of
employment.
47
43% of Yellow Cake Directors are women, including the
Chief Financial Officer, and the Company therefore exceeds
the gender diversity requirements proposed by the UK
Financial Conduct Authority.
Risk management
Prudent and effective controls are in place to assess and
manage risks effectively, supported by appropriate measures
for whistleblowing and to manage conflicts of interest.
The Board has overall responsibility for the Company’s risk
management and determines the nature and extent of the
principal risks the Company is willing to accept to achieve
its long-term strategic objectives. The Audit Committee is
mandated to keep under review the Company’s internal control
and risk management systems and to report to the Board.
The Executive Directors undertake a regular assessment
to identify and quantify the risks that face the Company’s
operations and functions, and to assess the adequacy of the
prevention, monitoring and mitigation practices in place
for those risks. The Board reviews the risk assessment and
risk management processes carried out by the Executive
Directors for completeness and accuracy, and receives
regular updates from management.
More information on the Company’s risk management
processes, the primary risks and opportunities facing the
Company and the internal control system is available on
pages 31 to 38 and on page 64.
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 Corporate governance report continued
Shareholders and other
stakeholders
The Board values its dialogue with stakeholders. As a
Jersey-registered company, Yellow Cake is not required to
prepare a s172 statement in accordance with UK legislation.
However, it remains the policy of the Company to comply
with high standards of corporate governance and we have
voluntarily chosen to report how we take our stakeholders
into consideration in running the business.
Yellow Cake’s stakeholders include its shareholders,
investors, analysts, employees (the Company’s two
Executive Directors), regulators, suppliers and customers.
In performing their duties, the Directors consider and aim to
act in a way they consider, in good faith, would be most likely
to promote the success of the Company for the benefit of
its members as a whole (having regard to the stakeholders
and matters set out in s172(1)(a-f) of the UK Companies Act,
2006 and Article 74(1) of the Companies (Jersey) Law 1991).
In particular, the Board considers the following:
• The likely long-term consequences of any decision.
As described in the Viability Statement on page 39,
the Company prepares detailed annual budgets against
which performance is assessed, and regularly reviews
its medium-term working capital projections. The
Company aims to retain cash balances sufficient to cover
approximately three years’ working capital requirements
following a placing of shares or other capital raise.
• The interests of the Company’s employees. Our talented,
experienced and motivated Executive Directors (being
the only employees of the Company) are key to the
success of our Company. Yellow Cake is committed to
employing a diverse and balanced team to ensure an
effective and talented workforce at all levels of the
organisation, including the Board. The value we place
on equal opportunities and diversity of ideas, skills,
knowledge, experience, culture, ethnicity and gender
is evident in our daily operations and formalised in our
policies and procedures. Our recruitment policy is to
appoint individuals based on their skills, experience and
suitability to the role, as well as their contribution to
promoting diversity in the workforce.
• The need to foster the Company’s business relationships
with suppliers, customers and others. Our focus on
long-term strategic thinking, and ability to foster close
working relationships with our key strategic suppliers and
advisers, in particular Kazatomprom, enable Yellow Cake
to build deep and valuable relationships that help us to
fulfil our strategy. Refer to page 19 for more information
on Yellow Cake’s key business relationships.
• The impact of the Company’s activities on society, the
environment and Yellow Cake’s reputation. Due to the
nature of the Company’s activities, its direct social and
environmental impact is minimal. The Board nevertheless
conducts due diligence on the Company’s suppliers and
business partners to ensure that they take a responsible
approach to governance and environmental, social and
ethical practices. Further information can be found on
pages 20 to 23.
• The importance of maintaining the Company’s reputation
for high standards of business conduct. Yellow Cake is
a Jersey-incorporated, Jersey tax domiciled Company
which is quoted on AIM. Notwithstanding the reduced
requirements of an AIM listing, we are committed to
complying with the applicable regulatory requirements in
both Jersey and the UK, and operating to high standards
of corporate governance. This Corporate Governance
report illustrates how the Board and its Committees
support business activities while maintaining a strong
governance culture.
• The need to act fairly between members of the Company.
The Board of Directors is committed to behaving in
a responsible manner toward our shareholders and
treating them fairly and equally, so they too may
benefit from the successful delivery of our strategy.
The Chairman and Non-Executive Directors meet
regularly as part of the Board's responsibility to ensure
all shareholders are treated equally.
The Company proactively facilitates opportunities for
engagement with its stakeholders, particularly with
shareholders, investors and analysts, by participating in
investor roadshows and conferences, conference calls,
investor briefings with industry experts, media briefings,
interviews, presentations and at the Annual General
Meeting. Day-to-day queries raised by stakeholders are
addressed by either the CEO or the CFO. The Chairman
is also available to the Company’s major shareholders to
discuss governance, strategy and performance, and ensures
that the views of shareholders are clearly communicated to
the Board.
The chairs of the Board Committees will seek engagement
with shareholders on significant matters related to their
areas of responsibility when relevant. The outcomes of
meetings between members of the Board and shareholders
are regularly communicated to the Board (including the
Non-Executive Directors), including at Board meetings.
Should 20% or more of shareholder votes be cast against
the Board’s recommendation for a resolution, the Company
48
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 Corporate governance report continued
will follow the consultation and other requirements set
out in the Code. At the 2021 Annual General Meeting held
on 8 September 2021, all but one of the resolutions were
passed with more than 80% shareholder approval.
2021 Director re-election
As announced following the Annual General Meeting,
the resolution for the re-election of Emily Manning to the
Board of the Company received less than 80% of votes
in favour. In accordance with the recommendations of
the Code, Yellow Cake approached major shareholders
representing 90% of the votes cast against the resolution
to understand their specific concerns.
The Company did not receive any substantive feedback
from the major shareholders but understands that their
votes were primarily influenced by the proxy analysis report
released by ISS, the proxy advisor, ahead of the AGM.
ISS reported that they considered Emily Manning to be
non-independent because she is the Client Director at
Langham Hall Fund Management (Jersey) Ltd (“Langham
Hall”), which has an administration agreement with Yellow
Cake and was paid USD173,802 for services provided
during the 2021 financial year. ISS further noted that Ms
Manning sat on the Audit and Remuneration Committees
and it is not UK best practice for non-independent directors
to sit on such committees for a company of this size.
The Board undertook a rigorous evaluation to assess the
independence of Ms Manning, including (but not limited to) a
review of each of the seven indicators of non-independence
outlined in Provision 10 of the Code. In particular, the
Board noted that Yellow Cake’s business relationship
with Langham Hall is not of a particularly material nature
to Langham Hall, that Ms Manning is not a shareholder,
partner or executive director of Langham Hall, that she
does not directly benefit from any fees paid by the Company
to Langham Hall and that no element of Ms Manning’s
compensation from Langham Hall is tied to her role as a
director of Yellow Cake.
Following the evaluation, the Board remains of the opinion
that Ms Manning is independent of both character and
judgment, and that she makes a valuable contribution to
Board discussions while also providing effective challenge
to management and the wider Board. Further, her 12 years
of experience in the Jersey finance industry as well as her
comprehensive knowledge of the running and regulations
of Jersey structures make her a very suitable director
and member of the Audit and Remuneration Committees.
Nevertheless, the Board recognises that certain significant
investors place reliance on the recommendations of ISS
with regards to voting decisions. Ms Manning has therefore
retired from the Audit and Remuneration Committees but
remains a Director of the Company.
General meetings
The upsized share placing of circa USD140 million in March
2021 almost fully utilised the Company’s authorities to
allot and issue new shares obtained at the Annual General
Meeting in 2020, which restricted its ability to issue further
new shares on an opportunistic basis prior to the renewal
of the annual authorities at its 2021 Annual General
Meeting. A General Meeting was held on 10 June 2021 at
which the requisite shareholder approval was achieved to
renew authorities to allot up to 25 million new ordinary
shares prior to the Annual General Meeting in September
2021. On 17 June 2021, the Company announced that
an additional 25 million new ordinary shares were issued,
49
raising gross proceeds of USD86.9 million. On 27 October
2021, Yellow Cake announced that 30 million new ordinary
shares were placed, raising USD149.7 million. The proceeds
of both placings allowed the Company to take advantage of
very favourable market conditions for uranium to increase
its holdings of U3O8.
The October placement substantially utilised the Company’s
authorities to allot and issue new shares obtained at the
2021 Annual General Meeting, limiting its ability to fully
exercise its 2022 option with Kazatomprom and to make
further spot market purchases prior to the Company’s 2022
Annual General Meeting, expected to be held in September
2022. Yellow Cake accordingly announced a General
Meeting that was held on 27 January 2022, at which the
requisite shareholder approval was achieved to renew the
Company’s allotment authorities to ensure that it can fully
exercise its 2022 option with Kazatomprom and to act
opportunistically should it identify further opportunities in
the market for the purchase of additional uranium.
Annual general meeting
Yellow Cake’s 2022 Annual General Meeting will be held at
10:30 a.m. on 7 September 2022 at St Brelade’s Bay Hotel,
La Route de la Baie, St Brelade, Jersey CI, JE3 8EF. The
notice of the Annual General Meeting will be available on our
website and includes the full text of the separate resolutions
proposed in respect of each substantive issue, together with
accompanying explanatory notes and important information.
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 Company Secretary
LHJ Secretaries Limited provides company secretarial
services to the Company and advises the Board on all
governance matters. Directors have unfettered access
to the Company Secretary and removal of the Company
Secretary is a matter for the Board as a whole.
Board committees
The terms of reference of the three Board committees are
available for inspection at the Company’s registered office
and on our website at www.yellowcakeplc.com/investors/
the-board/board-committees.
In accordance with their terms of reference, each of the
committees reviews its effectiveness annually.
Corporate governance report continued
Division of responsibilities
The roles of Chairman and CEO of Yellow Cake are separate and clearly delineated, and the Chairman meets the independence
criteria set out in the Code. A written statement of the division of responsibilities between the Chairman and the CEO is in place and
was approved by the Board.
Role and responsibilities of the Chairman
Role and responsibilities of the CEO
Role and responsibilities of the CFO
• Leads the Board and is responsible for
its effectiveness, including by
facilitating active participation by all
members of the Board;
• Ensures effective communication
between the Directors more generally
to promote a culture of openness and
debate;
• Ensures that the Board has the
necessary information to fulfil its duties
and that Board meetings are
effectively run;
• Promotes and oversees the highest
standards of corporate governance; and
• Provides support and counsel to the
CEO and CFO if requested.
• Sets corporate strategy and the
direction of the Company, in
conjunction with the Board;
• Organises the day-to-day
operations of the Company;
• Oversees risk management;
• Manages corporate actions;
• Ensures that the Company
maintains compliance with all
relevant regulatory bodies; and
• Has a key role in stakeholder
engagement in the Company,
including managing investor
relations and engagement with
investors, and engaging with
suppliers, prospective suppliers,
regulators and prospective
providers of capital.
• Has overall responsibility for
financial reporting, including
budgets, monthly reports and
annual accounts;
• Sets the Company’s tax policy;
• Maintains adequate control
procedures;
• Supports the CEO regarding risk
management, compliance and
corporate actions; and
• Also plays a key role in stakeholder
engagement initiatives.
The Board does not currently consider it necessary or desirable to appoint a senior independent director, given the stage of the
Company’s development, and the responsibilities of the senior independent director are shared between the Non-Executive
Directors.
More information regarding the role and responsibilities of the Chairman, Board, CEO and CFO is available on our website at
https://www.yellowcakeplc.com/wp-content/uploads/2019/07/Role-of-Board-Chairman-CEO-and-CFO-.pdf
50
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 Corporate governance report continued
Audit Committee
Audit Committee members
Alan Rule (Chairman)
Sofia Bianchi
The Hon Alexander Downer
Independent
Non-Executive Director
Independent
Non-Executive Director
Independent
Non-Executive Director
The Audit Committee comprises three Independent
Non-Executive Directors and assists the Board in fulfilling
its responsibilities by, inter alia, reviewing and monitoring
the integrity of the financial statements of the Company,
ensuring that the Company’s financial statements comply
with the requirements of the Code and overseeing
the Company’s relationship with its external auditor.
The committee is also mandated to keep under review
the Company’s internal control and risk management
systems and to report to the Board. In line with the
recommendations of the Code, the Board Chairman is not a
member of the Audit Committee.
The Chief Financial Officer and external auditor are invited
to meetings of the Audit Committee on a regular basis and
other non-members may be invited to attend all or part of
any meeting as and when appropriate.
Emily Manning was appointed to the Audit Committee
on 28 April 2021 and retired from the Committee on
1 March 2022, as discussed on page 49.
The Audit Committee meets at least twice each financial
year and has unrestricted access to the Company’s auditor.
During the year under review, the committee met twice and
attendance is shown on page 45.
More information on the roles and responsibilities of
the Audit Committee and its activities during the year
to 31 March 2022 is available in the Report of the Audit
Committee on pages 53 and 54.
Remuneration Committee
Remuneration Committee members
The Hon Alexander Downer
(Chairman)
Independent
Non-Executive Director
The Lord St John of Bletso
Sofia Bianchi
Alan Rule
Independent
Non-Executive Director
Independent
Non-Executive Director
Independent
Non-Executive Director
The Remuneration Committee’s responsibilities include
setting the remuneration policy for Executive Directors and
for determining the total individual remuneration package
of the Chairman and the executive directors. In determining
remuneration policy, the committee takes account of the
need to align executive remuneration to the Company’s
purpose and values and to clearly link this to the successful
delivery of the Company’s long-term strategy.
The Remuneration Committee comprises four Independent
Non-Executive Directors. It is intended that any person who
is appointed as the Chair of the Remuneration Committee in
the future should have at least 12 months’ experience serving
on a Remuneration Committee prior to appointment.
Emily Manning was appointed to the Remuneration
Committee on 28 April 2021 and retired from the committee
on 8 September 2021, as discussed on page 49.
More information on the roles and responsibilities of the
Remuneration Committee and its activities during the year is
available in the Director’s Remuneration Report on page 55.
Nomination Committee
Nomination Committee members
The Lord St John of Bletso
(Chairman)
The Hon Alexander Downer
Sofia Bianchi
Emily Manning
Alan Rule
Independent
Non-Executive Director
Independent
Non-Executive Director
Independent
Non-Executive Director
Independent
Non-Executive Director
Independent
Non-Executive Director
The Nomination Committee comprises the Independent
Non-Executive Directors and meets at least once each year.
During the year under review, the committee met once and
attendance at this meeting is shown on page 45.
51
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 Corporate governance report continued
The Nomination Committee assists the Board in fulfilling its
responsibilities by, inter alia, reviewing the structure, size and
composition of the Board, as well as the Board Committees.
When evaluating the composition of the Board, the
committee considers the length of service of the Board as a
whole and any requirements as to tenure set out in the Code.
The committee oversees appointments to the Board and is
responsible for overseeing a diverse pipeline for succession
to both the Board and senior management. Appointments
and succession plans are based on merit and objective
criteria, and new appointments to the Board are subject
to a rigorous approval process. Within this context, the
committee aims to promote diversity of gender, social and
ethnic backgrounds, cognitive and personal strengths.
The committee’s terms of reference stipulate that the
chairman of the Nomination Committee will not chair
the committee when dealing with the appointment of
his successor.
It is intended that an external search consultant will
generally be used for the appointment of the Chairman
or a non-executive director, although the Nomination
Committee may deviate from this where appropriate to
ensure, for example, that an incoming appointee has at least
the equivalent skill set of an outgoing appointee.
The duties of the Nomination Committee include:
• regularly reviewing the structure, size and composition
(including the skills, knowledge, experience and diversity)
of the Board and making recommendations to the Board
with regard to any changes;
• succession planning for Executive and Non-Executive
Directors and in particular for the key roles of Chairman
and Chief Executive;
• identifying and nominating candidates to fill Board
vacancies for the approval of the Board when these arise;
• reviewing the leadership needs of the Company,
both Executive and Non-Executive; and
• making recommendations to the Board regarding:
– membership of Board Committees in consultation
with the chairpersons of those committees;
– the re-appointment of any Non-Executive Director
at the conclusion of their specified term;
– the re-election by shareholders of any Director
under the re-election provisions of the Code or the
“retirement by rotation” provisions in the Articles; and
– matters relating to the continuation in office of any
Director including the suspension or termination of
service of an Executive Director as an employee of the
Company subject to the provisions of the law and their
service contract.
Nomination Committee focus areas
in 2021/2022
During the year under review the primary focus areas of
the Nomination Committee included:
• reviewing the leadership needs of the Company; and
• reviewing the requirements for annual re-election
of Directors under the Code for the financial year
commencing 1 April 2021.
The Nomination Committee recommended to the Board
that each of the Directors be submitted for re-election at
the Annual General Meeting on 7 September 2022.
52
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 Report of the Audit Committee
The Audit Committee gives due consideration to applicable
laws and regulations, the provisions of the Code, the
requirements of the Companies (Jersey) Law 1991 and the
requirements of the London Stock Exchange’s rules for AIM
companies, as appropriate. The Chairman of the committee
reports formally to the Board on its proceedings after each
meeting on all matters within its duties and responsibilities,
and how it has discharged its responsibilities. He makes
himself available at the Annual General Meeting to answer
questions concerning the committee’s work.
The three Independent Non-Executive Directors that
serve on the Audit Committee all have relevant financial
experience through the various leadership roles they
have held. The Chairman of the committee is a Fellow of
the Institute of Chartered Accountants of Australia and
New Zealand. Details of the Directors’ qualifications and
experience are available on pages 41 and 42.
The committee conducts an annual review of its
effectiveness as well as its constitution and terms
of reference to ensure it is operating at maximum
effectiveness. Changes arising from these reviews are
recommended to the Board for approval.
The Audit Committee has access to sufficient resources
to carry out its duties, including access to the Company
Secretary for assistance as required.
The committee’s full terms of reference are available on our
website at www.yellowcakeplc.com/investors/the-board/
board-committees.
Key duties of the Audit Committee include:
• reviewing the consistency of, and any changes to,
accounting policies both on a year-on-year basis and across
the Company, and reviewing whether the Company has
followed appropriate accounting standards and made
appropriate estimates and judgements, taking into account
the views of the external auditor;
• reviewing the Company’s internal financial controls
and internal control and risk management systems;
• reviewing the adequacy and security of the Company’s
whistleblowing facilities for employees and contractors,
and ensuring that these facilities allow for investigation
and appropriate follow up action in respect of any reports
made;
• reviewing the Company’s systems, procedures and
controls for detecting fraud, the Company’s anti-money
laundering and bribery systems and controls, and the
adequacy and effectiveness of its compliance function,
including with regard to economic sanctions regulations;
• considering annually whether there is a need for an
internal audit function, taking into account the growth of
the Company, the scale, diversity and complexity of the
Company’s activities and the number of employees, as well
as cost and benefit considerations;
• making recommendations to the Board (to be put to
shareholders for approval at the Annual General Meeting)
in relation to the appointment of the external auditor;
• managing and overseeing the relationship with the
external auditor, including their terms of engagement
and remuneration; and
• meeting regularly with the external auditor and reviewing
• monitoring the integrity of the Company’s financial
their findings.
reporting;
Financial reporting
The Audit Committee reviewed and assessed the Company’s
financial reporting in the 2022 financial year, including its
half-year report, results announcements and this Annual
Report. This review included, where appropriate:
• an assessment of the consistency of, and changes to,
accounting policies, estimates and judgements;
• the methods used to account for significant or unusual
transactions;
• the appropriateness of the accounting standards used;
• obtaining independent tax advice;
• the clarity and completeness of disclosures and the
context in which statements are made; and
• a review of material disclosures regarding audit and
risk management in the financial statements, including
in the strategic report and this corporate governance
statement.
In reviewing the Company’s financial statements, the Audit
Committee considered the Company’s accounting policies,
particularly in relation to the uranium investment, and the
accounting estimates and judgements as described on pages
78 to 81. In addition to the publicly released reports, the
committee’s review covered management reports as well as
reports from and discussions with the external auditor.
The Audit Committee provided comment and feedback
on this Annual Report before finalisation and approval.
The review concluded that, taken as a whole, this Annual
Report is fair, balanced and understandable and provides
the information necessary for shareholders to assess the
Company’s position, performance, business model and
strategy.
53
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 Report of the Audit Committee continued
Internal audit
The Audit Committee annually considers the need for
an internal audit function in the context of the growth of
the Company, the scale, diversity and complexity of the
Company’s activities and the number of employees, as well
as cost and benefit considerations. The Audit Committee
has concluded that it is currently not necessary for the
Company to have an internal audit function given that the
business operates from a single site and has a high degree of
senior oversight by the CEO and CFO.
External auditor
The Audit Committee oversees the Company’s relationship
with the external auditor, RSM UK Audit LLP, who have
been the Company’s external auditor since its listing in
2018. The committee has recommended to the Board that
shareholders be asked to approve the re-appointment
of RSM UK Audit LLP as auditor at the Annual General
Meeting. The Audit Committee discharged its duties
regarding the Company’s interactions with its external
auditor in accordance with its terms of reference during the
year to 31 March 2022, including:
• approving the engagement of the external auditor;
• reviewing and approving the annual audit plan;
• meeting regularly with the external auditor.
The committee also met with the external auditor
without management being present, to discuss their
remit and any issues arising from the audit;
• reviewing the findings of the audit of the financial
statements for the year ended 31 March 2022 with the
external auditor;
• reviewing the management representation letter
requested by the external auditor before it was signed
by management and management’s response to the
auditor’s findings and recommendations; and
• reviewing the effectiveness of the audit process.
Given the size and nature of the Company’s business, the
Audit Committee is able to work directly with the auditor
to assess its effectiveness, and also received feedback from
the CFO. The year under review is the Company’s fourth
financial year and consequently there are no current plans
to put the appointment of its auditor through a formal
tender process.
Non-audit services
A formal policy is in place to govern non-audit services
provided by the external auditor to safeguard independence
and objectivity. In the current year, there were no non-audit
services performed by RSM (2021: none).
Whistleblowing
While Yellow Cake has a whistleblowing policy
(see page 46), the Company’s workforce comprises
two Executive Directors (the CEO and CFO) who can raise
any concerns directly with the Audit Committee and Board
and there is currently no separate whistleblowing channel in
place. No whistleblowing reports were received by the Audit
Committee during the year.
Risk management and
internal control
The Audit Committee is mandated by the Board to keep the
Company’s internal control and risk management systems
under review. These systems support the integrity of the
financial reporting process and the preparation of accounts,
and include policies and procedures to ensure that adequate
accounting records are maintained and transactions are
recorded accurately and fairly to permit the preparation
of financial statements in accordance with IFRS. The key
elements of the Company’s system of internal controls are
discussed on page 64 of this report.
The committee reviews the system of internal controls and
regularly assesses its effectiveness. The feedback provided
by the external auditor regarding issues identified during its
engagement informs the committee’s assessment, particularly
feedback relating to any control weaknesses and the
responses from management to these issues. During the year
the committee reviewed the Company’s risk management
and material controls, including financial, operational and
compliance controls, and concluded that these were effective
and appropriate given the size and nature of the Company.
2022/2023 focus areas
The primary focus areas for the Audit Committee in the year
ahead will be:
• financial reporting;
• risk management; and
• internal controls.
Alan Rule
Audit Committee Chair
21 July 2022
54
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 Directors’ remuneration report
Dear Shareholder,
It is with great pleasure that I present the Company’s
Directors’ Remuneration Report for the year ended
31 March 2022.
Yellow Cake’s remuneration policy is designed to attract,
retain and motivate the quality of Directors and employees
required to develop and implement the Company’s business
strategy and run a successful and sustainable business for
the benefit of all stakeholders.
The Company’s remuneration policy, outlined on pages 57
and 58, is consistent with the Company’s values, culture,
remuneration philosophy and business strategy. Above all,
it has been designed to be simple. The remuneration policy
which was applied in the year under review was developed
in the 2019 financial year with the assistance of independent
remuneration consultants, MM&K Limited. MM&K provides
no other services to, and has no other connection with, the
Company.
Remuneration outcomes for the
year under review
Yellow Cake plc’s workforce comprises only two employees,
its CEO and CFO. The management culture is to focus on
successful outcomes, and the Company’s business strategy
is to achieve this by investing in long- term holdings of U308.
The remuneration policy comprises three components:
• a base salary;
• an annual bonus to reward achievement of key
performance indicators; and
• a long-term incentive in the form of share options based
on the estimated net asset value of the Company at grant
date or the market price, whichever is higher.
The short- and long-term incentives were designed
to reward growth and take account of risks through
equity participation, and to align executive rewards with
shareholder returns.
The year under review is the third year in which the current
remuneration policy has been applied. The Board evaluated
the performance of the Executive Management of the
Company against the corporate objectives agreed by the
Board at the beginning of the financial year, with the annual
bonuses for the year based on executive performance
measured against a scorecard of performance targets, a
summary of which was included in the 2021 annual report.
Based on this assessment, the Remuneration Committee
determined to award a cash bonus equal to 70% of base
salary. Further detail is provided on pages 58 and 59.
No long-term incentive awards vested in the year under
review.
As a result of the Remuneration Committee’s planned
review of the long-term incentive plan, no grant of long-term
incentive options were made in respect of the 2022 financial
year.
55
Review of the remuneration
policy
The Remuneration Committee undertook a review of
the executive remuneration policy during the 2022
financial year to ensure that the remuneration packages
on offer appropriately reward management. The review
by independent remuneration consultants Deloitte LLP
took into account market data and insights. Following the
committee’s review, from 1 April 2022, the remuneration
policy will comprise the following three components:
• a base salary;
• an annual bonus of up to 50% of base salary for the
CEO and CFO, typically paid in cash, based on the
achievement of key strategic objectives; and
• a long-term incentive in the form of share options of
up to 75% of base salary for the CEO and 45% of base
salary for the CFO. The exercise price for awards will
continue to be based on the estimated net asset value
of the Company at grant date or the market price,
whichever is higher.
The Remuneration Committee reviewed the base salaries
of the Executive Directors and proposed to increase
these from USD212,300 to USD240,000 (13% increase)
for the Chief Executive Officer and from USD165,000 to
USD170,000 (3% increase) for the Chief Financial Officer
for the financial year ending 31 March 2023. The CEO's
salary for the 2023 financial year is 12% above his 2020
salary level. The CFO's salary for the 2023 financial is 1%
lower than her 2020 salary.
Alexander Downer
Remuneration Committee Chair
21 July 2022
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 Directors’ remuneration report continued
Responsibilities of the
Remuneration Committee
The Remuneration Committee is responsible for, among
other things, determining the total individual remuneration
package of the Chairman and the Executive Directors in
accordance with the terms of the Company’s remuneration
policy, determined in conjunction with the Board.
The committee comprises four Independent Non-Executive
Directors and meets at least twice a year. During the year
under review, the committee met four times. Details of
the committee members and their record of attendance at
meetings during the year are available on page 45.
Key duties of the Remuneration Committee include:
• determining and agreeing with the Board the policy for
the remuneration of the Chairman of the Board and
the Executive Directors, including pension rights and
compensation payments;
• recommending and monitoring the level and structure of
remuneration for senior management;
• within the terms of the agreed policy and in consultation
with the Chairman and/or CEO as appropriate,
determining the total individual remuneration package
of the Chairman and the Executive Directors;
• ensuring there is an appropriate level of engagement
with the CEO and CFO (currently the Company’s only
employees) to monitor the continued effectiveness of the
Company’s remuneration policy and practice; and
• reviewing the operation of share option schemes and the
granting of such options.
The full terms of the reference for the committee are available
on our website at www.yellowcakeplc.com/ investors/the-
board/board-committees.
The remuneration of Non-Executive Directors is a matter
for the Board or the Shareholders, within the limits set in the
Articles. No Director is involved in any decisions as to their
own remuneration.
Activities during 2021/2022
During the year to 31 March 2022, the Remuneration
Committee discharged its duties by:
• reviewing and approving the Executive Directors’ annual
bonus performance scorecard for the 2022 financial year;
• undertaking a comprehensive review of the Company’s
executive remuneration policy, with the support of
external consultants and recommending a revised policy
for future years; and
• reviewing relevant provisions of the Code.
2022/2023 Focus areas
The main objectives for the Remuneration Committee in the
financial year ending 31 March 2023 will be to:
• review and approve the Executive Director annual bonus
performance against the scorecard for the 2023 financial
year;
• review the short-term and long-term incentive scheme
to ensure continued alignment with the Company’s
strategy; and
• maintain an ongoing review of remuneration levels and
structures for Executive Directors, the Chairman and
Non-Executive Directors.
56
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 Directors’ remuneration report continued
Annual report on Directors’ remuneration
This report describes the Company’s remuneration policy and remuneration outcomes for Executive Directors for the year ended 31 March 2022.
The table below describes the components of the Company’s remuneration policy for Executive Directors and as such provides the framework for their future remuneration.
Remuneration element Purpose, link to strategy and operation
Opportunity and performance metrics
Remuneration Committee discretion
Salary
A base annual salary is essential to attract and
retain key executives. It is reviewed annually
based on:
• role, experience and individual performance;
• external market practices; and
• the general economic environment.
Benefits and pension
Directors are not entitled to any non-cash
benefits or company pension contributions.
Annual Bonus
The annual bonus rewards achievement of annual
key performance indicators (KPIs). Bonus awards
are determined after the relevant year-end based
on the committee’s assessment of achievement
against the KPI targets.
Long-term Incentive
The long-term incentive aims to align the interests
of management and shareholders, and encourages
retention. Long-term incentives may be granted
annually and currently take the form of market-
priced share options.
Salaries are benchmarked to the relevant market median, taking account of
the individual’s time commitments to the Company.
Salaries may be reviewed annually by
the committee.
The committee sets annual targets and weightings, and performance is
measured over a single financial year.
Prior to 1 April 2022, an annual bonus of up to 100% of salary could be
awarded for exceptional performance. Where a bonus award was granted,
this was normally in the form of nil-cost or nominal-cost share options,
although the committee could at its discretion award a cash annual bonus in
lieu of shares, having regard the Company’s cash position.
Effective from 1 April 2022, the annual bonus will normally be paid in cash
(unless circumstances at year end are such that payment in cash is not
appropriate in which case the award will be in shares) and will be capped at
a maximum of 50% of salary.
Prior to 1 April 2022, the exercise price of the options multiplied by the
number of options granted was capped at 125% of salary. Effective from
1 April 2022, this cap was changed to 75% of salary for the CEO and 45% of
salary for the CFO.
Vesting is subject to an underpin based on satisfactory business and
individual performance and the share price exceeding the prevailing net
asset value at the date of grant. The exercise price per share is set at the
higher of the average market price in the week prior to the grant date and
the estimated net asset value per share on the grant date.
The committee may make upwards
and downwards adjustments to bonus
awards to ensure they are consistent
with the underlying performance of the
business or to give effect to malus or
clawback provisions.
Performance targets may be amended
if there is a significant event which
causes the committee to believe that
the original targets are no longer
achievable or appropriate.
The committee retains the discretion
to give effect to malus and clawback
provisions, and to impose performance
conditions on the vesting of incentive
awards, should it wish to do so.
57
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 Directors’ remuneration report continued
Executive directors’ recruitment
policy
Remuneration packages for new Executive Directors
will be determined by the Remuneration Committee and
designed in accordance with the remuneration policy,
provided that the committee, in consultation with the
Nomination Committee, may exercise its discretion to
depart from the policy described above if necessary to
secure the recruitment of a new Executive Director.
Terms of the Executive Directors’
service contracts
Executive Directors are engaged on rolling service
contracts, which provide for three months’ written notice of
termination from either the individual or the Company.
Termination policy
Any compensation payment made to an Executive Director
for termination of employment will be determined with
reference to the terms of the individual’s service agreement,
the rules of any incentive plan in which the individual is a
participant and the individual’s obligation to mitigate loss.
Non-Executive Directors’
appointment and remuneration
The remuneration of Non-Executive Directors is
determined by the Board in accordance with the
Company’s articles of association and does not include
performance-related incentives. Non-Executive Directors
are engaged by letter of appointment terminable on three
months’ written notice from either the individual or the
Company.
Implementation of the
remuneration policy in
2021/2022
Salary in respect of the 2022 financial
year
The salaries applicable at the beginning of the 2021 and 2022
financial years and proposed base salary for the financial year
ending 31 March 2023 are shown in the table below:
Annual bonus awards in respect
of the 2022 financial year
The annual bonus calculation for the 2022 financial year
assessed:
• Corporate performance, comprising:
— cost effective growth in the Company’s uranium
inventory;
— effective capital raising and funding of uranium
purchases;
Base salary
2021
USD'000
2022
USD'000
2023
USD'000
— financial control and risk management;
— reporting and budgeting; and
Chief Executive Officer
Chief Financial Officer
215.0
172.0
212.3
165.0
240.0
170.0
Annual bonus
The annual bonus is based on commercial targets and was
capped at 100% of base salary for the 2022 financial year,
subject to performance, as determined by the Board. The
bonus awards take the form of nil-cost or nominal cost options
(which normally vest and become exercisable not earlier than
one year after grant) or cash.
There are currently no outstanding bonus options. Bonuses
in respect of the 2021 and 2022 financial year were granted
in the form of cash.
Bonus options granted in respect of the 2020 financial year
(described in note 10 of the financial statements) were
exercised on 26 July 2021 and resulted in a gross gain of
USD182,172 to the CEO and USD145,735 to the CFO on the
date of exercise.
— actions to address any discount to net asset value.
• Reputation, stakeholder engagement and investor
relations, comprising:
— implementation of an effective investor relations
programme;
— engagement with equity and debt providers;
— ongoing management of the ESG framework, policies
and reporting; and
— engagement with suppliers, prospective suppliers
and regulators and other stakeholders and potential
stakeholders as appropriate.
During the year ended 31 March 2022, the Executive
Directors led two successful equity placements, raising
circa USD237 million at a share price above the prevailing
net asset value per share and implemented transactions
(completed or committed) that increased the Company’s
U3O8 holdings by approximately 91%. The Company’s
shareholder base broadened significantly and more retail
investors were added to the share register.
58
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 Directors’ remuneration report continued
Significant shareholder engagement was undertaken with a
view to maintaining investor interest against a backdrop of
fundamental changes in the uranium market.
The Executive Directors responded to the impending launch
of the Sprott Physical Uranium Trust by implementing a
USD87 million equity raise in the month prior to the Trust’s
launch. These actions led to the purchase of 2.6 million lb of
U3O8 at a price of USD32.26/lb prior to the significant spot
market purchase by the Sprott Physical Uranium Trust and
the significant spot price rise subsequently.
The Remuneration Committee considers that these actions
have created significant shareholder value, notably through
the equity raise and the subsequent use of these proceeds
to purchase 9.3 million lb of U3O8, during the financial year
and after year end, increasing the Company’s holdings
to 18.81 million lb of U3O8 acquired at an average cost of
USD31.11/lb1. Operating costs were effectively managed
to budget. As such, the Remuneration Committee considers
that the Executive Directors have delivered effectively
against the KPIs outlined in the performance scorecard for
the 2022 financial year.
Based on the performance scorecard for the 2022 financial
year, the Remuneration Committee has resolved at its
discretion to award bonuses, equivalent to 70% of base
salary, as set out below. The bonuses will be paid in cash.
Chief Executive Officer
Chief Financial Officer
USD’000
148.6
115.5
Annual bonus awards in respect of
the 2023 financial year
The Remuneration Committee reviewed the annual bonus
performance scorecard for the 2023 financial year.
The maximum annual bonus opportunity for the 2023
financial year was set at 50% of base salary, based on
satisfactory business and individual performance, as
determined by the Board, in the following areas:
• Corporate performance, comprising:
— management of the discount to net asset value
related to actions such as share buybacks, strategic
transactions and net asset value accretive uranium
purchases;
— cost effective growth in the Company’s uranium
inventory and effective capital raising to fund the
uranium purchases;
— financial control and risk management; and
— reporting and budgeting.
• Reputation, stakeholder engagement and investor
relations, comprising:
— execution of an effective investor relations programme;
— engagement with equity and debt providers;
— ongoing management of the ESG framework, policies
and reporting; and
— engagement with suppliers, prospective suppliers
and regulators and other stakeholders and potential
stakeholders as appropriate.
Long-term incentive
The long-term incentive is a share option scheme that
grants options to acquire shares in the Company exercisable
not earlier than three years after grant, save in certain
circumstances including a change of control of the Company.
The options expire ten years after the date of grant and are
subject to a post-vesting holding period of not less than two
years (although permission may be granted to sell shares
in order to meet tax liabilities). Prior to 1 April 2022, in
respect of any annual grant of long-term incentive options,
the exercise price of the options multiplied by the number of
options granted was capped at 125% of salary. Effective from
the 2023 financial year, this cap was changed to 75% of salary
for the CEO and 45% of salary for the CFO.
The long-term incentive award relating to a financial year is
usually granted at the beginning of that financial year. The
exercise price per share is set at the higher of the average
market price in the week prior to the grant date and the
estimated net asset value per share on the grant date.
The long-term incentive options are exercisable if the share
price at the exercise date is greater than the net asset value
per share as at the date of grant and subject to continued
employment by the Company. The Remuneration Committee
retains the discretion to impose additional performance
conditions on the vesting of incentive awards, should it wish
to do so.
59
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 Directors’ remuneration report continued
Long-term incentive awards in respect of the 2022 financial year
As a result of the Remuneration Committee’s planned review of the long-term incentive plan, no grant of long-term incentive options were made in respect of the 2022 financial year.
Details of the long-term incentive options held by the Executive Directors at year end are as follows:
Share options
awarded
Date of award
Exercise price
Value at award date
USD’000
Vesting date
Chief Executive Officer
– FY2020
– FY2021
– FY2022
Total
Chief Financial Officer
– FY2020
– FY2021
– FY2022
Total
84,480
78,262
–
162,742
67,584
62,609
–
130,193
24 February 2020
8 July 2020
–
24 February 2020
8 July 2020
–
GBP2.13
GBP2.88
–
GBP2.13
GBP2.88
–
34
25
–
59
27
20
–
47
24 February 2023
8 July 2023
–
24 February 2023
8 July 2023
–
The long-term incentive options shown in the table above are exercisable three years after the date of grant and must be held for a further two years.
Long-term incentive awards in respect of the 2023 financial year
Prior to 1 April 2022, the exercise price of the options multiplied by the number of options granted annually was capped at 125% of salary. Effective from 1 April 2022, the scheme was changed
such that the exercise price multiplied by the number of long-term incentive options granted annually is capped at 75% of base salary for the CEO and 45% of base salary for the CFO. The options
vest at the end of a three-year period after issue and the exercise price remains set at the higher of share price or net asset value per share at the date of grant.
Vesting is subject to an underpin based on satisfactory business and individual performance, and the share price exceeding the prevailing net asset value at the time of grant. The options have a
two-year post-vesting holding requirement.
60
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 Directors’ remuneration report continued
Directors’ total combined remuneration for the year ended
31 March 2022
During the financial year, the Board reviewed the independent Non-Executive Directors’
compensation, further to a market review based on data prepared by independent
remuneration consultants. With effect from 22 October 2021, the Chairman’s annual fee was
increased from USD50,000 to GBP85,000 a year, while the other Non-Executive Directors’
fees were increased from USD40,000 to GBP45,000 a year. In addition, Alexander Downer
and Alan Rule each receive an additional GBP10,000 as chairs of the Remuneration and Audit
Committee respectively.
Salaries
and fees
USD’000
(A)
Annual
Bonus
USD’000
(B)
LTIP
USD’000
(A)+(B)
Total
Variable
Pay
USD’000
207
161
79
49
55
55
Note 1
606
149
116
–
–
–
–
–
265
–
–
–
–
–
–
–
–
149
116
–
–
–
–
–
265
Total
USD’000
356
277
79
49
55
55
Note 1
871
Director
Executive Directors
Andre Liebenberg
Carole Whittall
Non-Executive Directors
The Lord St John of Bletso
Sofia Bianchi
Alexander Downer
Alan Rule
Emily Manning
Total
The annual bonus indicated above in respect of the year to 31 March 2022 was granted after the year-end.
As a result of the Remuneration Committee’s planned review of the long-term incentive plan, no grant of long-term incentive options were made in
respect of the 2022 financial year.
During the year to 31 March 2022, the second tranche of the share bonus award in respect of the 2020 financial year, which was allocated on 8 July
2020 and which had been deferred, was granted. The second tranche of the 2020 annual bonus award comprised an award of 20,879 nominal cost
options in favour of the CEO and 16,703 in favour of the CFO, as detailed in note 10 of the financial statements.
Note 1: Ms Manning’s services were supplied pursuant to an administration agreement between the Company and Langham Hall Fund Management
(Jersey) Limited dated 18 December 2017 and amended on 7 January 2019. The annual administration fee payable by the Company under such
agreement in the year ended 31 March 2022 is USD186,056 (31 March 2021: USD173,802).
61
Directors’ total combined remuneration for the year ended
31 March 2021
Salaries
and fees
USD’000
(A)
Annual
Bonus
USD’000
(B)
LTIP
USD’000
(A)+(B)
Total
Variable
Pay
USD’000
204
161
50
40
40
40
Note 1
Note 1
535
58
45
–
–
–
–
–
–
25
20
–
–
–
–
–
–
83
65
–
–
–
–
–
–
103
45
148
Total
USD’000
287
226
50
40
40
40
Note 1
Note 1
683
Director
Executive Directors
Andre Liebenberg
Carole Whittall
Non-Executive Directors
The Lord St John of Bletso
Sofia Bianchi
Alexander Downer
Alan Rule
Emily Manning
Alexandra Nethercott- Parkes†
Total
The amounts indicated for the LTIP above correspond to the fair value as at the grant date, detailed in note 10 of the financial statements.
Note 1: Ms Manning’s and Ms Nethercott-Parkes’ services were supplied pursuant to an administration agreement between the Company and
Langham Hall Fund Management (Jersey) Limited dated 18 December 2017 and amended on 7 January 2019. The annual administration fee
payable by the Company under such agreement in the year ended 31 March 2021 is USD173,802 (31 March 2020: USD161,317).
† Ms Nethercott-Parkes resigned from the Yellow Cake Board effective 31 March 2021
No Director received any non-cash benefits or pension provision. There were no payments to
past Directors and no payments of compensation for loss of office in the year under review.
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 Directors’ remuneration report continued
Total shareholder return (TSR) performance
The performance of the Company’s ordinary shares compared with the FTSE AIM All Share
Index (the “Index”) for the financial year to 31 March 2022 is shown in the graph below:
Total shareholder return (%)
Statement of directors’ share interests
The number of shares held by each Director in the Company as at 31 March 2022 is shown in the
table below. There is no shareholding requirement for Directors. As at 21 July 2022, there
had been no changes in the directors' share interests.
Name
Number of ordinary shares
% of share capital
(excluding treasury shares)
0,6
0,5
0,4
0,3
0,2
0,1
0,0
(0,1)
(0,2)
(0,3)
48,38%
The Lord St John of Bletso*
Sofia Bianchi
The Hon Alexander Downer
Alan Rule
Alexandra Nethercott-Parkes
Andre Liebenberg
Carole Whittall
(13,51%)
Total
26,302
13,186
29,925
18,837
–
121,478
49,918
259,646
0.01
0.01
0.02
0.01
–
0.06
0.03
0.14
April
2021
May
2021
June
2021
July
2021
August
2021
September
2021
October
2021
November
2021
December
2021
January
2021
February
2022
March
2022
FTSE AIM all share
YCA
* 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.
Alexander Downer
Remuneration Committee Chair
21 July 2022
62
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 Directors’ report
The Directors of Yellow Cake plc (the “Company”) present
their report and the audited financial statements for the
Company for the year ended 31 March 2022. The financial
statements of the Company have been prepared in
accordance with UK-adopted International Accounting
Standards.
Principal activities
Yellow Cake plc was incorporated in Jersey, Channel Islands
on 18 January 2018. The Company operates in the uranium
sector and was created to purchase and hold U3O8 and to
exploit other uranium-related opportunities. The strategy of
the Company is to invest long term in holdings of U3O8 and
not to actively speculate with regards to short-term changes
in the price of U3O8.
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.
Results for the period
The results of the Company for the year are set out on
pages 74 to 97.
Business review and future
developments
The Strategic Report on pages 4 to 39 provides a review of
the year’s activities, operations, future developments and
key risks.
Dividends
The Directors do not recommend an ordinary dividend for
the year.
Events after the reporting date
As part of the “Buyback Option” detailed in note 7,
Yellow Cake bought back 2,022,846 lb of U3O8 from
Kazatomprom at USD43.25/lb, which was delivered on 19
May 2022.
Under the share buyback programme initiated on 4 April
2022, detailed in note 11, 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
proforma net asset value of 10.4%.
Pursuant to Kazatomprom's offer of 26 October 2021,
the Company entered into an agreement with Kazatomprom
to purchase 950,000 lb of U3O8 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.
Financial risk management
Details of financial risk management are provided in note 3
to the financial statements.
Directors
The Directors who held office during the period and
subsequently were as follows:
• The Lord St John of Bletso (Chairman)
• Sofia Bianchi
• The Hon Alexander Downer
• Alan Rule
• Andre Liebenberg
• Carole Whittall
• Emily Manning
Directors’ interests
The Audit and Remuneration Committee reports are
available on pages 53 and 55 respectively.
Details of the Directors’ interests in the Company’s shares
can be found in the remuneration report on page 62.
There are no outstanding loans granted by any member of
the Company to the Directors or any guarantees provided
by the Company for the benefit of the Directors.
No Director has or has had any interest in any transaction
which is or was unusual in its nature or conditions or which is
or was significant in respect of the business of the Company
and which was effected by the Company during the current
or immediately preceding financial year, or which was
effected during an earlier financial year and remains in any
respect outstanding or unperformed.
Directors’ indemnities
The Company maintains appropriate insurance cover in
respect of legal action against its Directors.
63
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 Directors’ report continued
Political and charitable
contributions
The Company made no charitable or political contributions
during the year.
Internal control
The Board is responsible for the Company’s risk
management and internal control systems, and has
mandated the Audit Committee to keep these systems
under review and to report to the Board.
The controls in place are appropriate to the size and nature
of the business, and to the risks relevant to it. They include
controls over financial, operational and compliance risks.
The Audit Committee reviews the system of internal
controls together with reports from the external auditor
regarding issues identified during its engagement,
particularly those relating to any control weaknesses,
and the responses from management.
The Company’s system of internal control is designed to
provide the Directors with reasonable, but not absolute,
assurance that the Company will not be hindered in
achieving its business objectives, or in the orderly and
legitimate conduct of its business, by circumstances
that may reasonably be foreseen. However, no system
of internal control can eliminate the possibility of poor
judgement in decision-making, human error, fraud or other
unlawful behaviour, management overriding controls, or
the occurrence of unforeseeable circumstances and the
resulting potential for material misstatement or loss.
Corporate governance
The corporate governance report on pages 40 to 52 forms
part of this Directors’ report.
Going-concern
The Company has not been significantly affected by
COVID-19 as the Company has no physical operations and
the executive team was already home-based. Yellow Cake’s
operations, financial position and ability to source additional
U3O8 have to date been unaffected by the war in Ukraine.
We currently do not anticipate any restrictions on being able
to make further purchases under the option agreement with
Kazatomprom.
As at 31 March 2022, Yellow Cake had sufficient cash
balances to meet approximately two years of working capital
requirements, after taking into account commitments to
purchase USD132.7 million worth of U3O8 after the year end
and a share buyback programme completed after year end,
before it would need to raise additional funds.
The Directors, having considered the Company’s objectives
and available resources along with its projected income and
expenditure for at least 12 months from the date of approval
of the 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 key elements of the control system in operation are as
follows:
• The Board meets regularly with a formal schedule of
matters reserved to it for decision.
• The Company has an organisational structure and has
put in place operating protocols and procedures ensuring
clear lines of responsibility and appropriate delegation of
authority.
• The Board monitors the Company’s financial performance
against budgets and forecasts.
• The Executive Directors undertake a regular assessment
process, to identify and quantify the risks that face the
Company’s operations and functions, and to assess the
adequacy of the prevention, monitoring and mitigation
practices in place for those risks.
• The Board is responsible for reviewing the risk assessment
and risk management processes for completeness and
accuracy.
• The Board receives regular updates from management
in addition to carefully considering the Company’s risk
register at regular intervals.
• There are no significant issues disclosed in the report and
financial statements for the year ended 31 March 2022
and up to the date of approval of the report and financial
statements that have required the Board to deal with any
related material internal control issues.
The Directors confirm that the Board has reviewed the
effectiveness of the system of internal control during the
year and concluded that the controls and procedures are
adequate. The Board will continue to review the adequacy of
the Company’s internal controls and will test the controls and
procedures again during the 2023 financial year.
64
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 Directors’ report continued
Purchase of own 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 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 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 proforma 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
proforma net asset value of 10.4%.
Substantial shareholdings
As at 15 June 2022, Yellow Cake had 187,740,730 in
issue of which 4,636,331 shares were held in treasury.
The Company was aware of the following holdings of 3% or
more in the Company’s issued share capital.
Shareholder
MM Asset Management
Kopernik Global Investors
Global X Management Company
Interactive Brokers (EO)
ALPS Advisors
Hargreaves Lansdown,
stockbrokers (EO)
Brandes Investment Partners
Uranium Royalty Corporation
Clearstream, Luxembourg
(beneficial ownership undisclosed)
Number
of shares
19,900,028
10,021,129
9,934,107
9,476,805
8,869,146
8,093,628
7,761,508
6,957,431
Share-
holding
(%)
10.87
5.47
5.43
5.18
4.84
4.42
4.24
3.80
5,615,005
3.07
Statement of disclosure to the
auditor
The Directors have taken the necessary steps to make
themselves aware of the information needed by the external
auditor for the purposes of its audit and to establish that the
auditor is aware of that information. The Directors are not
aware of any relevant audit information of which the auditor
is unaware.
Auditor appointment
RSM UK Audit LLP was the auditor during the year
under review and have expressed their willingness to
continue as auditor of the Company. A resolution for their
reappointment will be proposed at the forthcoming Annual
General Meeting.
Directors’ responsibility
statement
The Directors are responsible for preparing the Annual
Report and the Financial Statements in accordance with
applicable laws and regulations.
The Companies (Jersey) Law 1991 requires directors
to prepare Financial Statements for each financial year
in accordance with any generally accepted accounting
principles. The Directors have elected to use UK-adopted
International Accounting Standards. The Company’s
financial statements are required by law to give a true and
fair view of the state of affairs of the Company at the year-
end and of the profit or loss for the year then ended.
In preparing these financial statements, the Directors are
required to:
• select suitable accounting policies and then apply them
consistently;
• make judgements and estimates that are reasonable and
prudent;
• state whether the financial statements have been
prepared in accordance with IFRS;
• present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information; and
• make an assessment of the Company’s ability to continue
as a going-concern.
65
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 Directors’ report continued
The Directors are responsible for keeping accounting
records which are sufficient to show and explain the
Company’s transactions and are such as to disclose with
reasonable accuracy at any time the financial position of
the Company and enable them to ensure that the financial
statements prepared by the Company comply with the
requirements of the Companies (Jersey) Law 1991. They are
also responsible for safeguarding the assets of the Company
and, accordingly, for taking reasonable steps to further the
prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and
integrity of the corporate and financial information included
on the Company’s website. Information published on the
website is accessible in many countries, and legislation in
Jersey and the relevant provisions of the AIM Rules for
Companies governing the preparation and dissemination
of financial statements may differ from legislation and the
rules in other jurisdictions. The Directors’ responsibility
also extends to the continued integrity of the financial
statements contained therein.
The Directors have reviewed this Annual Report and have
concluded that, taken as a whole, it is fair, balanced and
understandable and provides the information necessary
for shareholders to assess the Company’s position,
performance, business model and strategy.
By order of the Board
Andre Liebenberg
Chief Executive Officer
21 July 2022
66
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 Independent auditor’s report
Independent auditor’s report to the members of Yellow Cake plc
Summary of our audit approach
Key audit matters • Investment in uranium
Materiality
• Overall materiality: $12,200,000 (2021: $6,140,000)
• Performance materiality: $9,190,000 (2021: $4,600,000), with specific performance materiality of
$506,000 applied to all items in the Statement of Comprehensive Income other than the fair value
movement in the investment in uranium
Scope
Our audit procedures covered 100% of total assets and 100% of profit before tax.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due
to fraud) we identified, including those which had the greatest effect on the overall audit strategy, the allocation of resources
in the audit and directing the efforts of the engagement team. These matters were addressed in the context of our audit of
the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these
matters.
Opinion
We have audited the financial statements of Yellow Cake
plc (the ‘company’) for the year ended 31 March 2022
which comprise the Statement of Financial Position, the
Statement of Comprehensive Income, the Statement of
Changes in Equity, the Statement of Cash Flows and notes
to the financial statements, including significant accounting
policies. The financial reporting framework that has been
applied in their preparation is applicable law and UK-
adopted International Accounting Standards.
In our opinion the financial statements:
• give a true and fair view of the state of the company’s
affairs as at 31 March 2022 and of its profit for the year
then ended;
• have been properly prepared in accordance with UK-
adopted International Accounting Standards; and
• have been properly prepared in accordance with the
requirements of the Companies (Jersey) Law 1991.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Our responsibilities under those standards are further
described in the Auditor’s responsibilities for the audit
of the financial statements section of our report. We
are independent of the company in accordance with the
ethical requirements that are relevant to our audit of the
financial statements in the UK, including the FRC’s Ethical
Standard as applied to listed entities and we have fulfilled
our other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for
our opinion.
67
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 Independent auditor’s report continued
Investment in uranium
Key audit matter description
The Company’s business model is based on holding investments in uranium. The Company’s accounting policy is that uranium is held at fair value based on the
most recent month-end spot rate price for U3O8 published by UxC LLC. At 31 March 2022, the Company’s investment in uranium was valued at $916,717,000
(2021: $302,098,000).
The Company’s holding of uranium is held by third parties and valuation of the investment in uranium is considered to be a key audit matter because errors
in measurement of quantity or use of an inaccurate period-end price could result in a material misstatement of the value of the Company’s investment
in uranium.
How the matter was addressed in
the audit
Details of the Company’s investment in uranium are disclosed in note 4 in the financial statements.
Our response to the risk included:
• obtaining direct third-party confirmation of the quantity of uranium held at 31 March 2022;
• corroborating the purchases and disposals of uranium during the year and consideration of the accounting treatment applied to these transactions;
• corroboration of the price used to value the investment at 31 March 2022 to published market price information and recalculation of the fair value; and
• consideration of the appropriateness of the Company’s accounting policy and disclosures made in the financial statements.
Our application of materiality
When establishing our overall audit strategy, we set certain thresholds which help us to determine the nature, timing and extent of our audit procedures. When evaluating whether the effects of
misstatements, both individually and on the financial statements as a whole, could reasonably influence the economic decisions of the users we take into account the qualitative nature and the
size of the misstatements. Based on our professional judgement, we determined materiality as follows:
Overall materiality
$12,200,000 (2021: $6,140,000)
Basis for determining overall
materiality
1.14% (2021: 1.43%) of total assets
Rationale for benchmark applied The company’s business model is based on long-term holding of investments in uranium, which represents the majority of total assets. Total assets is
therefore considered to be the most appropriate benchmark for overall materiality.
Performance materiality
Performance materiality: $9,190,000 (2021: $4,600,000), with specific performance materiality of $506,000 applied to all items in the Statement of
Comprehensive Income other than the fair value movement in the investment in uranium.
Basis for determining
performance materiality
75% (2021: 75%) of overall materiality, with specific materiality applied to all items in the Statement of Comprehensive Income other than the fair value
movement in the investment in uranium being determined based on 7.5% of total expenses.
Reporting of misstatements to
the Audit Committee
Misstatements in excess of $122,000 and misstatements below that threshold that, in our view, warranted reporting on qualitative grounds.
68
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 Independent auditor’s report continued
An overview of the scope of
our audit
The company has been subject to a full scope audit. The
audit was scoped to ensure that we obtained sufficient
and appropriate audit evidence in respect of the
significant business operations of the Company and the
appropriateness of the going-concern assumption used in
the preparation of the financial statements.
Conclusions relating to
going concern
In auditing the financial statements, we have concluded that
the directors’ use of the going-concern basis of accounting
in the preparation of the financial statements is appropriate.
Our evaluation of the directors’ assessment of the company’s
ability to continue to adopt the going-concern basis of
accounting included audit of three-year forecasts prepared by
management and corroboration of cash balances.
Based on the work we have performed, we have not identified
any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
company’s ability to continue as a going-concern for a period
of at least 12 months from when the financial statements are
authorised for issue.
In relation to the entities reporting on how they have applied
the UK Corporate Governance Code, we have nothing
material to add or draw attention to in relation to the directors’
statement in the financial statements about whether the
directors considered it appropriate to adopt the going-concern
basis of accounting.
Our responsibilities and the responsibilities of the directors
with respect to going-concern are described in the relevant
sections of this report.
Other information
The other information comprises the information included
in the annual report, other than the financial statements and
our auditor’s report thereon. The directors are responsible
for the other information contained within the annual
report. Our opinion on the financial statements does not
cover the other information and, except to the extent
otherwise explicitly stated in our report, we do not express
any form of assurance conclusion thereon.
Our responsibility is to read the other information and,
in doing so, consider whether the other information is
materially inconsistent with the financial statements
or our knowledge obtained in the course of the audit
or otherwise appears to be materially misstated. If
we identify such material inconsistencies or apparent
material misstatements, we are required to determine
whether this gives rise to a material misstatement in the
financial statements themselves. If, based on the work
we have performed, we conclude that there is a material
misstatement of this other information, we are required to
report that fact.
We have nothing to report in this regard.
Matters on which we are
required to report by exception
We have nothing to report in respect of the following
matters in relation to which the Companies (Jersey) Law
1991 requires us to report to you if, in our opinion:
• proper accounting records have not been kept by the
company or proper returns adequate for our audit have
not been received from branches not visited by us; or
• the financial statements are not in agreement with the
accounting records and returns; or
• we have failed to obtain any information or explanation
that, to the best of our knowledge and belief, was
necessary for our audit.
Corporate governance statement
We have reviewed the directors’ statement in relation to
going-concern, longer-term viability and that part of the
Corporate Governance Statement relating to the company’s
voluntary compliance with the provisions of the UK
Corporate Governance Code.
Based on the work undertaken as part of our audit, we have
concluded that each of the following elements of the
Corporate Governance Statement is materially consistent
with the financial statements or our knowledge obtained
during the audit:
• Directors’ statement with regards the appropriateness of
adopting the going-concern basis of accounting and any
material uncertainties identified.
• Directors’ explanation as to its assessment of the
company’s prospects, the period this assessment covers
and why this period is appropriate.
• Directors’ statement on whether it has a reasonable
expectation that the company will be able to continue in
operation and meets its liabilities.
• Directors’ statement on fair, balanced and
understandable.
• Board’s confirmation that it has carried out a robust
assessment of the emerging and principal risks.
• The section of the annual report that describes the
review of effectiveness of risk management and internal
control systems.
• The section describing the work of the audit committee.
69
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 In identifying and assessing risks of material misstatement
in respect of irregularities, including fraud, the audit
engagement team:
• obtained an understanding of the nature of the industry
and sector, including the legal and regulatory frameworks
that the company operates in and how the company is
complying with the legal and regulatory frameworks;
• inquired of management, and those charged with
governance, about their own identification and
assessment of the risks of irregularities, including any
known actual, suspected or alleged instances of fraud;
• discussed matters about non-compliance with laws
and regulations and how fraud might occur including
assessment of how and where the financial statements
may be susceptible to fraud.
Independent auditor’s report continued
Responsibilities of directors
As explained more fully in the directors’ responsibility
statement set out on page 65, the directors are responsible
for the preparation of the financial statements and for being
satisfied that they give a true and fair view, and for such
internal control as the directors determine is necessary to
enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the company’s ability to continue
as a going-concern, disclosing, as applicable, matters related
to going-concern and using the going-concern basis of
accounting unless the directors either intend to liquidate
the company or to cease operations, or have no realistic
alternative but to do so.
Auditor’s responsibilities for the
audit of the financial statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not
a guarantee that an audit conducted in accordance with ISAs
(UK) will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial
statements.
The extent to which the audit was
considered capable of detecting
irregularities, including fraud
Irregularities are instances of non-compliance with laws
and regulations. The objectives of our audit are to obtain
sufficient appropriate audit evidence regarding compliance
with laws and regulations that have a direct effect on the
determination of material amounts and disclosures in the
financial statements, to perform audit procedures to help
identify instances of non-compliance with other laws and
regulations that may have a material effect on the financial
statements, and to respond appropriately to identified
or suspected non-compliance with laws and regulations
identified during the audit.
In relation to fraud, the objectives of our audit are to
identify and assess the risk of material misstatement of
the financial statements due to fraud, to obtain sufficient
appropriate audit evidence regarding the assessed risks
of material misstatement due to fraud through designing
and implementing appropriate responses and to respond
appropriately to fraud or suspected fraud identified during
the audit.
However, it is the primary responsibility of management,
with the oversight of those charged with governance,
to ensure that the entity’s operations are conducted in
accordance with the provisions of laws and regulations and
for the prevention and detection of fraud.
70
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 Independent auditor’s report continued
The most significant laws and regulations were determined as follows:
Legislation/Regulation
Additional audit procedures performed by the audit engagement team included:
UK-adopted International Accounting
Standards and Companies (Jersey)
Law 1991
UK Corporate Governance Code
Tax compliance regulations
Review of the financial statement disclosures and testing to supporting
documentation.
Completion of disclosure checklists to identify areas of non-compliance.
Review of financial statement disclosures against the requirements of the UK
Corporate Governance Code.
Inspection of advice received from external tax advisors and review of their
assessment of the tax implications of activities in different jurisdictions.
Use of our report
This report is made solely to the company’s members, as
a body, in accordance with Article 113A of the Companies
(Jersey) Law 1991. Our audit work has been undertaken
so that we might state to the company’s members those
matters we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility
to anyone other than the company and the company’s
members as a body, for our audit work, for this report, or for
the opinions we have formed.
The areas that we identified as being susceptible to material misstatement due to fraud were:
Risk
Audit procedures performed by the audit engagement team:
Management override of controls
Testing the appropriateness of journal entries and other adjustments.
Assessing whether the judgements made in making accounting estimates are
indicative of a potential bias.
Evaluating the business rationale of any significant transactions that are unusual or
outside the normal course of business.
A further description of our responsibilities for the audit of the financial statements is included in appendix 1 of this auditor’s
report. This description, forms part of our auditor’s report.
Graham Ricketts
For and on behalf of RSM UK Audit LLP, Auditor
Chartered Accountants
25 Farringdon Street
London
EC4A 4AB
21 July 2022
71
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 Independent auditor’s report continued
Appendix 1: Auditor’s
responsibilities for the audit of
the financial Statements
As part of an audit in accordance with ISAs (UK), we
exercise professional judgement and maintain professional
scepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of
the financial statements, whether due to fraud or error,
design and perform audit procedures responsive to those
risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk
of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error as fraud
may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to
the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the
company’s internal control.
• Evaluate the appropriateness of accounting policies used
and the reasonableness of accounting estimates and
related disclosures made by the directors.
• Conclude on the appropriateness of the directors’ use of
the going-concern basis of accounting and, based on the
audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast
significant doubt on the company’s ability to continue as a
going-concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial
statements or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the
audit evidence obtained up to the date of our auditor’s
report. However, future events or conditions may cause
the company to cease to continue as a going-concern.
• Evaluate the overall presentation, structure and content
of the financial statements, including the disclosures,
and whether the financial statements represent the
underlying transactions and events in a manner that
achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding
the financial information of the entities or business
activities within the company to express an opinion on
the consolidated financial statements. We are responsible
for the direction, supervision and performance of the
audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance
regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including
any significant deficiencies in internal control that we
identify during our audit.
We also provide those charged with governance with a
statement that we have complied with relevant ethical
requirements regarding independence, including the
FRC’s Ethical Standard as applied to listed entities, and
communicate with them all relationships and other
matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.
From the matters communicated with those charged with
governance, we determine those matters that were of
most significance in the audit of the consolidated financial
statements of the current period and are therefore the key
audit matters. We describe these matters in our auditor’s
report unless law or regulation precludes public disclosure
about the matter or when, in extremely rare circumstances,
we determine that a matter should not be communicated
in our report because the adverse consequences of doing
so would reasonably be expected to outweigh the public
interest benefits of such communication.
72
YELLOW CAKE AT A GLANCEFINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEYellow Cake Annual Report 2022 FINANCIAL STATEMENTS
73
Financial
statements
73 Financial statements
98 Corporate information
Yellow Cake Annual Report 2022FINANCIAL STATEMENTSGOVERNANCEYELLOW CAKE AT A GLANCESTRATEGIC REPORT STATEMENT OF FINANCIAL POSITION
ASSETS
Non-current assets
Investment in uranium
Total non-current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Uranium derivative liability
Total current liabilities
Total liabilities
NET ASSETS
Equity
Attributable to the equity owners of the Company
Share capital
Share premium
Share-based payment reserve
Treasury shares
Retained earnings
TOTAL EQUITY
As at
31 March 2022
USD ‘000
As at
31 March 2021
USD ‘000
Notes
4
5
6
8
7
9
9
10
11
916,717
916,717
130
153,136
153,266
1,069,983
(970)
–
(970)
(970)
302,098
302,098
119
126,159
126,278
428,376
(3,621)
(3,361)
(6,982)
(6,982)
1,069,013
421,394
2,544
588,181
122
(11,219)
489,385
1,069,013
1,785
358,812
141
(11,458)
72,114
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
74
Yellow Cake Annual Report 2022FINANCIAL STATEMENTSGOVERNANCEYELLOW CAKE AT A GLANCESTRATEGIC REPORT STATEMENT OF COMPREHENSIVE INCOME
Uranium investment gains
Fair value movement of investment in uranium
Uranium swap income
Fair value movement of uranium derivative liability
(Discount)/premium to spot price on disposals of uranium
Uranium investment gains
Expenses
Share-based payments
Equity offering expenses
Commission on uranium transactions
Procurement and market consultancy fees
Other operating expenses
Total expenses
Bank interest income
Gain/(loss) on foreign exchange
Profit before tax attributable to the equity owners of the Company
Tax expense
Profit and total comprehensive income for the year after tax attributable to the equity owners of the Company
Basic earnings per share attributable to the equity owners of the Company (USD)
Diluted earnings per share attributable to the equity owners of the Company (USD)
75
Year ended
31 March 2022
USD ‘000
Year ended
31 March 2021
USD ‘000
Notes
4
4
7
4
10
9
12
12
13
14
16
16
433,274
100
(3,193)
(6,058)
424,123
(220)
(534)
(1,884)
(2,130)
(2,180)
(6,948)
11
85
417,271
–
417,271
2.60
2.59
33,365
1,145
(774)
180
33,916
(139)
(681)
(282)
(1,124)
(1,739)
(3,965)
3
(43)
29,911
–
29,911
0.34
0.33
Yellow Cake Annual Report 2022FINANCIAL STATEMENTSGOVERNANCEYELLOW CAKE AT A GLANCESTRATEGIC REPORT STATEMENT OF CHANGES IN EQUITY
Attributable to the equity owners of the Company
Notes
Share capital
USD’000
Share premium
USD’000
Share based
payment reserve
USD’000
As at 31 March 2020
1,164
224,437
Total comprehensive income after tax
for the year
Transactions with owners:
Shares issued
Share issue costs
Share-based payments
Purchase of own shares
As at 31 March 2021
Total comprehensive income after tax
for the year
Transactions with owners:
Shares issued
Share issue costs
Share-based payments
Exercise of bonus options
As at 31 March 2022
9
9
10
11
9
9
10
11
–
621
–
–
–
1,785
–
759
–
–
–
2,544
–
137,879
(3,504)
–
–
358,812
–
235,818
(6,449)
–
–
588,181
2
–
–
–
139
–
141
–
–
–
220
(239)
122
Treasury shares
USD’000
(726)
Retained
earnings
USD’000
42,203
Total
equity
USD’000
267,080
–
29,911
29,911
–
-
–
(10,732)
(11,458)
–
–
–
–
239
–
–
–
–
72,114
138,500
(3,504)
139
(10,732)
421,394
417,271
417,271
–
–
–
–
236,577
(6,449)
220
–
(11,219)
489,385
1,069,013
76
Yellow Cake Annual Report 2022FINANCIAL STATEMENTSGOVERNANCEYELLOW CAKE AT A GLANCESTRATEGIC REPORT STATEMENT OF CASH FLOWS
Cash flows from operating activities
Profit after tax
Adjustments for:
Discount/(premium) to spot price on disposal
Change in fair value of investment in uranium
Change in fair value of uranium derivative liability
Share-based payments
(Gain)/loss on foreign exchange
Interest income
Operating profit before changes in working capital
Changes in working capital:
Increase in trade and other receivables
(Decrease)/increase in trade and other payables
Cash (used in)/generated from operating activities
Interest received
Cash (used in)/generated from operating activities
Cash flows from investing activities
Purchase of uranium
Proceeds of sale of uranium
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Issue costs paid
Share buyback programme
Net cash generated from financing activities
Net increase in cash and cash equivalents during the year
Cash and cash equivalents at the beginning of the year
Effect of exchange rate changes
Cash and cash equivalents at the end of the year
77
Notes
7, 4
4
7
10
4
4
9, 11
9
11
1 April 2021
to
31 March 2022
USD’000
1 April 2020
to
31 March 2021
USD’000
417,271
6,058
(433,274)
3,193
220
(85)
(11)
(6,628)
(11)
(2,607)
(9,246)
11
(9,235)
(284,890)
90,934
(193,956)
236,577
(6,449)
–
230,128
26,937
126,159
40
153,136
29,911
(180)
(33,365)
774
139
43
(3)
(2,681)
(29)
3,216
506
3
509
(15,025)
9,960
(5,065)
138,500
(3,504)
(10,732)
124,264
119,708
6,481
(30)
126,159
Yellow Cake Annual Report 2022FINANCIAL STATEMENTSGOVERNANCEYELLOW CAKE AT A GLANCESTRATEGIC REPORT NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2022
1. GENERAL INFORMATION
Yellow Cake plc (the “Company”) was incorporated in Jersey, Channel Islands on 18 January 2018. The address of the registered office is Liberation House, Castle Street, St Helier, Jersey,
JE1 2LH.
The Company operates in the uranium sector and was established to purchase and hold U3O8. The strategy of the Company is to invest in long-term holdings of U3O8 and not to actively
speculate with regards to short-term changes in the price of U3O8.
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.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation
These audited financial statements of the Company for the year 1 April 2021 to 31 March 2022 have been prepared in accordance with the UK-adopted International Accounting
Standards (“IFRS”).
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 U3O8, 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.
78
Yellow Cake Annual Report 2022FINANCIAL STATEMENTSGOVERNANCEYELLOW CAKE AT A GLANCESTRATEGIC REPORT NOTES TO THE FINANCIAL STATEMENTS CONTINUED
For the year ended 31 March 2022
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 U3O8 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 U3O8 are measured at fair value based on the most recent month-end spot price for U3O8 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 U3O8 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.
79
Yellow Cake Annual Report 2022FINANCIAL STATEMENTSGOVERNANCEYELLOW CAKE AT A GLANCESTRATEGIC REPORT 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 and share premium
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.
80
Yellow Cake Annual Report 2022NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFor the year ended 31 March 2022FINANCIAL STATEMENTSGOVERNANCEYELLOW CAKE AT A GLANCESTRATEGIC REPORT 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 U3O8 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).
81
Yellow Cake Annual Report 2022NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFor the year ended 31 March 2022FINANCIAL STATEMENTSGOVERNANCEYELLOW CAKE AT A GLANCESTRATEGIC REPORT 3. MANAGEMENT OF FINANCIAL RISKS
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 U3O8
from Kazatomprom, the Kazakh national atomic company, all U3O8 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 U3O8 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 U3O8 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.
82
Yellow Cake Annual Report 2022NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFor the year ended 31 March 2022FINANCIAL STATEMENTSGOVERNANCEYELLOW CAKE AT A GLANCESTRATEGIC REPORT 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.
As at 31 March 2022
Cash and cash equivalents
Other creditors and accruals
As at 31 March 2021
Cash and cash equivalents
Other creditors and accruals
Fair value estimation
Carrying amount
USD’000
153,136
(970)
< 1 year
USD’000
153,136
(970)
1 to 2 years
USD’000
2 to 10 years
USD’000
–
–
–
–
USD’000
USD’000
USD’000
USD’000
126,159
(3,621)
126,159
(3,621)
–
–
–
–
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.
83
Yellow Cake Annual Report 2022NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFor the year ended 31 March 2022FINANCIAL STATEMENTSGOVERNANCEYELLOW CAKE AT A GLANCESTRATEGIC REPORT Assets and liabilities
As at 31 March 2022
Investment in uranium
Uranium derivative liability
As at 31 March 2021
Investment in uranium
Uranium derivative liability
4.
INVESTMENT IN URANIUM
As at 31 March 2020
Acquisition of U3O8
Change in fair value
Sale of U3O8
As at 31 March 2021
Acquisition of U3O8
Change in fair value
Sale of U3O8
As at 31 March 2022
Level 1
USD’000
916,717
–
302,098
–
Level 2
USD’000
Level 3
USD’000
–
–
–
(3,361)
–
–
–
–
Total
USD’000
916,717
–
302,098
(3,361)
Fair Value
USD’000
263,489
15,024
33,365
(9,780)
302,098
284,890
433,274
(103,545)
916,717
The value of the Company’s investment in U3O8 is based on the daily spot price for U3O8 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).
84
Yellow Cake Annual Report 2022NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFor the year ended 31 March 2022FINANCIAL STATEMENTSGOVERNANCEYELLOW CAKE AT A GLANCESTRATEGIC REPORT The value of the Company’s investment in U3O8 in prior years was based on the month-end spot price for U3O8 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 U3O8 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 U3O8 at an average cost of USD27.48/lb.
Had disposed of 2,670,914 lb of U3O8 at an average selling price of USD40.23/lb that had been acquired at an average price of USD21.01/lb, assuming a first in first out methodology; and
Held a total of 15,832,755 lb of U3O8 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 U3O8 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 U3O8 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 U3O8 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 U3O8 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 U3O8 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 U3O8 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 U3O8 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 U3O8 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 U3O8 at a price of USD46.32/lb, in the spot market, for a cash consideration of USD23,160,000.
4 December 2021 – 2,000,000 lb of U3O8 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 U3O8 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 U3O8 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.
85
Yellow Cake Annual Report 2022NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFor the year ended 31 March 2022FINANCIAL STATEMENTSGOVERNANCEYELLOW CAKE AT A GLANCESTRATEGIC REPORT 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 U3O8 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 U3O8 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 U3O8 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 U3O8 at 31 March 2022:
Location
Canada
France
Total
86
Quantity
lb
15,532,755
300,000
15,832,755
Fair Value
USD’000
899,347
17,370
916,717
Yellow Cake Annual Report 2022NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFor the year ended 31 March 2022FINANCIAL STATEMENTSGOVERNANCEYELLOW CAKE AT A GLANCESTRATEGIC REPORT Post year end uranium related transactions
Exercise of Buyback Option, (19 May 2022)
Kazatomprom purchase transaction (30 June 2022)
Total
5. TRADE AND OTHER RECEIVABLES
Other receivables
Total
6. CASH AND CASH EQUIVALENTS
Quantity
lb
2,022,846
950,000
2,972,846
Cost
USD’000
87,488
45,201
132,689
As at
31 March 2022
USD’000
As at
31 March 2021
USD’000
130
130
119
119
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).
87
Yellow Cake Annual Report 2022NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFor the year ended 31 March 2022FINANCIAL STATEMENTSGOVERNANCEYELLOW CAKE AT A GLANCESTRATEGIC REPORT 7. URANIUM DERIVATIVE LIABILITY
As part of the initial purchase on 5 July 2018 of 8,091,385 lb of U3O8 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 U3O8 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 U3O8 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 U3O8 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 U3O8 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 U3O8 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.
8. TRADE AND OTHER PAYABLES
Uranium purchase consideration
Other payables and accruals
Total
88
As at
31 March 2022
USD’000
As at
31 March 2021
USD’000
–
970
970
2,995
626
3,621
Yellow Cake Annual Report 2022NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFor the year ended 31 March 2022FINANCIAL STATEMENTSGOVERNANCEYELLOW CAKE AT A GLANCESTRATEGIC REPORT 9. SHARE CAPITAL
Authorised:
10,000,000,000 ordinary shares of GBP0.01
Issued and fully paid:
Ordinary shares
Share capital as at 31 March 2020
Shares issued in the year
Share capital as at 31 March 2021
Shares issued in the year
Share capital as at 31 March 2022
The number of shares in issue above includes the 4,069,498 Treasury shares – refer to Note 11.
Share premium
Share premium as at 31 March 2020
Proceeds of issue of shares
Share issue costs
Share premium as at 31 March 2021
Proceeds of issue of shares
Share issue costs
Share premium as at 31 March 2022
The Company has one class of shares which carry no right to fixed income.
89
Number
GBP’000
USD’000
88,215,716
44,525,014
132,740,730
55,000,000
187,740,730
882
445
1,327
550
1,877
GBP’000
169,956
98,846
(2,512)
266,290
171,150
(4,684)
432,756
1,164
621
1,785
759
2,544
USD’000
224,437
137,879
(3,504)
358,812
235,818
(6,449)
588,181
Yellow Cake Annual Report 2022NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFor the year ended 31 March 2022FINANCIAL STATEMENTSGOVERNANCEYELLOW CAKE AT A GLANCESTRATEGIC REPORT 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:
Director
Grant date
Exercise date
Exercise price Opening balance
Granted
Exercised
Expired/
forfeited/other
Closing balance
A Liebenberg
C Whittall
A Liebenberg
C Whittall
Total
08/07/2020
08/07/2020
26/07/2021
26/07/2021
26/07/2021
26/07/2021
26/07/2021
26/07/2021
GBP0.01
GBP0.01
GBP0.01
GBP0.01
27,392
21,913
–
–
49,305
–
–
20,879
16,703
37,582
(27,392)
(21,913)
(20,879)
(16,703)
(86,887)
–
–
–
–
–
–
–
–
–
–
The options exercised on 26 July 2021 were settled with 86,887 shares held in treasury.
90
Yellow Cake Annual Report 2022NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFor the year ended 31 March 2022FINANCIAL STATEMENTSGOVERNANCEYELLOW CAKE AT A GLANCESTRATEGIC REPORT 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:
Grant date
Exercise date
08/07/2020
26/07/2021
26/07/2021
26/07/2021
Share price
at grant date
GBP2.26
GBP3.29
Exercise price
GBP0.01
GBP0.01
Expected
volatility
Risk-free
interest rate
Fair value
at grant date
Fair value
at grant date*
30%
n/a
(0.01%)
GBP110,690
USD145,690
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.
91
Yellow Cake Annual Report 2022NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFor the year ended 31 March 2022FINANCIAL STATEMENTSGOVERNANCEYELLOW CAKE AT A GLANCESTRATEGIC REPORT 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:
Grant date
Vesting date
Exercise price Opening balance
Granted
Exercised
forfeited/other Closing balance
Expired/
24/02/2020
24/02/2020
24/02/2023
24/02/2023
GBP2.13
GBP2.13
84,480
67,584
152,064
–
–
–
–
Grant date
Vesting date
Exercise price Opening balance
Granted
Exercised
forfeited/other Closing balance
08/07/2020
08/07/2020
08/07/2023
08/07/2023
GBP2.88
GBP2.88
78,262
62,609
140,871
-
-
–
–
84,480
67,584
152,064
60,644
–
–
USD
Expired/
-
-
USD
78,262
62,609
140,871
44,685
Total fair value as at the grant date*
* The USD equivalent is derived using the FX rate as at the date of reporting.
Director
A Liebenberg
C Whittall
Total
Director
A Liebenberg
C Whittall
Total
Total fair value as at the grant date*
* The USD equivalent is derived using the FX rate as at the date of reporting.
92
Yellow Cake Annual Report 2022NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFor the year ended 31 March 2022FINANCIAL STATEMENTSGOVERNANCEYELLOW CAKE AT A GLANCESTRATEGIC REPORT 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:
Grant date
Vesting date
24/02/2020
08/07/2020
24/02/2023
08/07/2023
* The USD equivalent is derived using the FX rate as at the date of reporting.
Share price
at grant date
GBP1.95
GBP2.26
Exercise price
GBP1.97
GBP2.88
Expected
volatility
Risk-free
interest rate
25%
30%
0.40%
(0.08%)
Fair value
at grant date
GBP
GBP46,075
GBP33,950
Fair value
at grant date
USD*
USD60,644
USD44,685
93
Yellow Cake Annual Report 2022NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFor the year ended 31 March 2022FINANCIAL STATEMENTSGOVERNANCEYELLOW CAKE AT A GLANCESTRATEGIC REPORT 11. TREASURY SHARES
Treasury shares as at 31 March 2020
Purchased in the year
Treasury shares as at 31 March 2021
Exercise of bonus options
Treasury shares as at 31 March 2022
Number
309,788
3,846,597
4,156,385
86,887
4,069,498
GBP’000
USD’000
565
8,301
8,866
(185)
8,681
726
10,732
11,458
(239)
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.
In 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 forma net 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 forma net asset value of 10.4%.
94
Yellow Cake Annual Report 2022NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFor the year ended 31 March 2022FINANCIAL STATEMENTSGOVERNANCEYELLOW CAKE AT A GLANCESTRATEGIC REPORT 12. COMMISSION, PROCUREMENT AND CONSULTANCY FEES
308 Services Limited (“308 Services”) provides procurement services to the Company relating to the sourcing of U3O8 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 U3O8 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 U3O8 (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
Professional fees
Management cash compensation and directors’ fees
Other expenses
Auditor’s fees
Total
95
Year ended
31 March 2022
USD ‘000
Year ended
31 March 2021
USD ‘000
769
709
603
99
2,180
687
535
443
74
1,739
Yellow Cake Annual Report 2022NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFor the year ended 31 March 2022FINANCIAL STATEMENTSGOVERNANCEYELLOW CAKE AT A GLANCESTRATEGIC REPORT
14. TAXATION
Tax expense for the year
Total
Year ended
31 March 2022
USD ‘000
Year ended
31 March 2021
USD ‘000
–
–
–
–
As the Company is managed and controlled in Jersey it is liable to be charged tax at a rate of 0% under schedule D of the Income Tax (Jersey) Law 1961 as amended.
15. RELATED PARTY TRANSACTIONS
During the year, the Company incurred 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
The Lord St John of Bletso*
Sofia Bianchi
The Hon Alexander Downer
Emily Manning
Alan Rule
Andre Liebenberg
Carole Whittall
Total
Number of
ordinary shares
% of share capital
26,302
13,186
29,925
–
18,837
121,478
49,918
259,646
0.01%
0.01%
0.02%
–
0.01%
0.06%
0.03%
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.
96
Yellow Cake Annual Report 2022NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFor the year ended 31 March 2022FINANCIAL STATEMENTSGOVERNANCEYELLOW CAKE AT A GLANCESTRATEGIC REPORT 16. EARNINGS PER SHARE
Profit for the year (USD ‘000)
Weighted average number of shares during the year – Basic*
Weighted average number of shares during the year – Diluted*
Earnings per share attributable to the equity owners of the Company (USD):
Basic
Diluted
* The weighted average number of shares excludes treasury shares.
17. EVENTS AFTER THE REPORTING DATE
1 April 2021
to
31 March 2022
1 April 2020
to
31 March 2021
417,271
160,754,398
161,046,530
29,911
89,017,413
89,308,071
2.60
2.59
0.34
0.33
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 forma net 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 U3O8 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 U3O8 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.
97
Yellow Cake Annual Report 2022NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFor the year ended 31 March 2022FINANCIAL STATEMENTSGOVERNANCEYELLOW CAKE AT A GLANCESTRATEGIC REPORT CORPORATE INFORMATION
Jersey Solicitors to the Company
Mourant Ozannes
22 Grenville Street
St Helier
Jersey, JE4 8PX
Auditor to the Company
RSM UK Audit LLP
25 Farringdon Street
London, EC4A 4AB
Registrars
Link Market Services (Jersey) Limited
12 Castle Street
St Helier
Jersey, JE2 3RT
Principal Bankers
Citibank Europe
1 North Wall Quay
Dublin 1, Ireland
Media Advisors
Powerscourt
1 Tudor Street
London, EC4Y 0AH
Head Office and Registered Office
3rd Floor, Liberation House
Castle Street
St Helier
Jersey, JE1 2LH
Company Secretary
LHJ Secretaries Limited
3rd Floor, Liberation House
Castle Street
St Helier
Jersey, JE1 2LH
Nominated Advisor and Joint Broker
Canaccord Genuity Limited
88 Wood Street
London, EC2V 7QR
Joint Broker
Joh. Berenberg, Gossler & Co. KG, London Branch
60 Threadneedle Street
London, EC2R 8HP
Financial Advisor
Bacchus Capital Advisers Limited
6 Adam Street
London, WC2N 6AD
Legal Advisors to the Company as to English and US Law
Linklaters LLP
One Silk Street
London, EC2Y 8HQ
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Yellow Cake Annual Report 2022FINANCIAL STATEMENTSGOVERNANCEYELLOW CAKE AT A GLANCESTRATEGIC REPORT
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Yellow Cake Annual Report 2022FINANCIAL STATEMENTSGOVERNANCEYELLOW CAKE AT A GLANCESTRATEGIC REPORT YELLOW CAKE AT A GLANCE
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
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