Share Name Share Symbol Market Type Share ISIN Share Description
Sirius Minerals LSE:SXX London Ordinary Share GB00B0DG3H29 ORD 0.25P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  +0.33p +1.35% 24.70p 24.66p 24.70p 24.75p 23.50p 23.50p 1,976,264 11:15:08
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Mining 0.0 -23.4 -0.9 - 1,102.39

Sirius Minerals plc Half year results for period ended 30 June 2017

16/08/2017 7:00am

UK Regulatory (RNS & others)


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Sirius Minerals plc

16 August 2017

16 August 2017

Sirius Minerals Plc

Half year results for period ended 30 June 2017

Sirius Minerals Plc ("Sirius" or the "Company") today announces the unaudited half year results for Sirius and its subsidiaries (the "Group") for the six-month period ended 30 June 2017.

Business highlights

-- The development of the Woodsmith Mine and its associated infrastructure is on time and on budget.

-- Enablement works completed for the Woodsmith Mine and formal commencement of development notice issued by the local planning authority.

-- Admission to trading on London Stock Exchange Plc's Main Market and inclusion in the FTSE 250 index.

   --      Launch of the Sirius Minerals Foundation's first community funding programme. 
   --      Shaft sinking contract formally awarded to AMC in July (post balance date). 

Financial review

-- The Group's operating loss for the period was GBP14.7m compared to GBP4.7m in the prior corresponding period, reflecting a general increase in Group activity following commencement of development.

-- Due to IFRS fair valuation requirements relating to elements of the stage 1 financing the 57% increase in the Company's share price in the period has caused a total loss of GBP151.3m being recorded for the period. The fair valuation adjustments driving the loss are non-cash in nature. Further detail relating to the fair valuation adjustments can be found on page 5.

-- The Company has deployed GBP121m during the six-month period ended 30 June 2017 for Project development of which GBP48.3m was capital expenditure.

-- Total funds at the end of June 2017 were GBP584.6m, comprising bank deposits and cash equivalents of GBP491.0m and restricted cash of GBP93.6m.

Chris Fraser, Managing Director and CEO of Sirius, comments:

"The half year has been marked by excellent progress on the development of Woodsmith Mine and associated infrastructure. With highways and enablement works completed, and site preparation into the latter stages, we eagerly anticipate the commencement of shaft sinking activities. Good progress has also been made at Lockwood Beck, the intermediate site for the mineral transport system.

"We are continuing detailed dialogue with commercial partners around the world, as interest in future supplies of our POLY4 product remains strong. These discussions are supported by ever-present and expanding research and development work, which will support customers and farmers in the years to come. We also continue to add the skills we need to our team to progress our work quickly, safely and efficiently."

Analyst conference call

Sirius Minerals' Chief Financial Officer, Thomas Staley, will host a conference call for investors and analysts at 9.30 am today. Any analysts wishing to ask questions on the call can receive dial in details by emailing sirius@tavistock.co.uk.

The call can be listened to live, by clicking on the link below. A replay will be available on the Company's website in due course.

http://event.onlineseminarsolutions.com/wcc/r/1484277-1/0EDCAACE9E264914F4D5CEDD5231FA36?partnerref=rss-events

For further information, please contact:

 
 Sirius Minerals Plc   Tristan Pottas                  Tel: +44 845 
  Investor Relations    Email: ir@siriusminerals.com       524 0247 
  Manager 
--------------------  ------------------------------  ------------- 
 Media enquiries       Jos Simson                       Tel: +44 20 
  Tavistock             Emily Fenton                      7920 3150 
--------------------  ------------------------------  ------------- 
 

About Sirius Minerals Plc

Sirius Minerals Plc is the fertilizer development company focused on the construction and development of its North Yorkshire polyhalite project in the United Kingdom (the "Project"). It believes the Project represents the world's largest high-grade known deposit of polyhalite, a multi-nutrient form of potash containing potassium, sulphur, magnesium and calcium. Incorporated in 2003, Sirius Minerals Plc's shares are traded on the London Stock Exchange's Main Market. Further information on the Company can be found at: www.siriusminerals.com.

Forward-looking statements

This document is intended to focus on matters which are relevant to the interests of shareholders in the Company. The purpose of this document is to assist shareholders in assessing the strategies adopted and performance delivered by the Company and the potential for those strategies to succeed. It should not be relied upon by any other party or for any other purpose.

Forward-looking statements are made in good faith, based on a number of assumptions concerning future events and information available to the directors at the time of their approval of this report. These forward-looking statements should be treated with caution due to the inherent uncertainties underlying any such forward-looking information. The user of this document should not rely unduly on these forward-looking statements, which are not a guarantee of performance and which are subject to a number of uncertainties and other events, many of which are outside of the Company's control and could cause actual events to differ materially from those in these statements. No guarantee can be given of future results, levels of activity, performance or achievements.

BUSINESS REVIEW

Project development

The safety of employees and contractors remains a key focus for the Group. It has been another positive six months with no recordable incidents during the period. As the level of activity increases, the level of safety vigilance also increases. During the period additional safety personnel have joined both the Group and its contractors. The Board, management and wider team continue to place safety at the centre of decision-making processes.

The Group is making good progress with the development of the Woodsmith Mine and its associated infrastructure (the "Project"). The Project remains on time and on budget. The Project team, both through Group employees at headquarters and contractor partners on site, has grown considerably in the past six months as construction activities ramp up.

Highways enablement works commenced in January 2017 facilitating safe and smooth access to the Woodsmith Mine site and Lockwood Beck. Site preparation at the Woodsmith Mine is ongoing with completed works including site access, groundwater protection and shaft sinking platform construction (for the production and services shafts). Site preparation activities have also commenced at the Lockwood Beck site to support future shaft-sinking for the mineral transport system.

The Company has progressed the exploration borehole and testing of the production shaft. This builds on the information captured during the Group's own exploration phase and helps to continually inform the ongoing shaft design work. In addition, a near surface geotechnical programme has been completed and the results are being incorporated into the mine design. A programme of boreholes and seismic work to support the mineral transport system's detailed design work has also commenced.

The Company's shaft sinking contractor, AMC, have continued with detailed design of the shafts including associated surface facilities such as the production and service shaft winder buildings. Diaphragm walling ("D-walling") preparation activities have commenced including the mobilisation of the rigs and planning for the support infrastructure such as the concrete batch plant, welfare facilities, workshops and offices.

The winding equipment required for main shaft sinking activities has been ordered and delivery is expected in the new year in time for the main sink to commence.

Corporate

The Company has continued to expand its sales and marketing team with regional leads, who are now established in their individual markets, in North America, South America, South-East Asia and Europe. Commercial discussions are continuing in these key regions regarding sales of the Company's POLY4 product, as well as in key growth markets such as Africa. Each of these opportunities represent material volume prospects in key markets for Sirius.

To support the ongoing sales effort together with long-term customer relationships, the Company's research and development programme has expanded. It continues to validate the four cornerstones of the POLY4 value proposition: efficiency, effectiveness, flexibility and sustainability. During the past six months a range of further opportunities for new crops and markets were identified. To date the Company has completed over 200 trials on 27 varieties of crops in 17 countries.

In April 2017 the Group delivered on its long standing commitment to move from the AIM market. The Group achieved a premium listing on the Official List of the UK Listing Authority and its shares were admitted to trading on the London Stock Exchange's Main Market for listed securities. The Board continues to believe that this move raises the Company's global profile, increases its trading liquidity and provides the Company with a greater range of potential investors for its ordinary shares. Following the admission to the Main Market the Company was added to the FTSE 250 index in June.

The Sirius Minerals Foundation, the charity set up as a community fund in 2012 to share revenues generated by the Woodsmith Mine, has launched its first grant programme. This is after receiving its first funding of GBP2m from the Company, which is intended to fund community projects during the construction period.

Post balance date

Since the half year end the Group formally awarded the shaft sinking scope of work to Associated Mining Construction UK Ltd ("AMC"). The scope encompasses approximately three quarters of the mine site development ("MSD") line item outlined in the stage 1 financing plan. The remainder of the MSD line item relates to site preparation work, provision of utilities to site and shaft bottom development.

The target price of AMC's scope is consistent with the allocated project budget and the target date for reaching both first polyhalite and practical completion is within the dates outlined in the project schedule.

The commercial arrangement with AMC is one of risk sharing with financial incentives for completing the scope of work under budget and ahead of schedule, and there are also financial penalties should completion be late or above the target price. The cost of this work is expected to be incurred in a combination of currencies with approximately 55% in GBP, 30% in EUR and 15% in CAD. The Group is in the process of appropriately mitigating foreign exchange exposures relating to the EUR and CAD costs.

FINANCIAL REVIEW

The Group's operating loss for the period was GBP14.7m compared to GBP4.7m in the prior corresponding period, with the increased loss being driven by an increase in activity following the completion of the stage 1 financing. The Group has historically made a loss which has been largely reflective of the Group's approach to expensing certain types of indirect costs through the development phase and this practice has continued since construction commenced.

During the six-month period ended 30 June 2017 the Group made a total loss of GBP151.3m compared to a loss of GBP4.1m for the equivalent six-month period in 2016. The following table sets out the main drivers of the Group's loss for the period.

 
 GBPm                                      H1 2017   H1 2016 
----------------------------------------  --------  -------- 
 Operating loss                             (14.7)     (4.7) 
----------------------------------------  --------  -------- 
 Net interest expense                        (1.8)       0.1 
 Fair value loss on derivative             (133.3)         - 
  instruments 
            Attributable to convertible    (111.9)         - 
             bond 
            Attributable to royalty         (21.4)         - 
             financing 
 Foreign exchange losses                     (1.5)         - 
  on net debt 
 Taxation                                        -       0.5 
----------------------------------------  --------  -------- 
 Loss for the financial 
  period                                   (151.3)     (4.1) 
----------------------------------------  --------  -------- 
 

As can be seen from the table, the main driver of the loss is the fair value re-measurement of the derivatives associated with the convertible bond and, to a lesser extent, the royalty financing. These derivative liabilities increase in size as the share price of the Company increases. With the share price increasing by 57% over the period, the size of the loss attributable to the derivatives has increased materially. As the convertible bonds are converted and the royalty financing is drawn, these derivative liabilities will be reclassified from liabilities to equity and require no cash settlement by the Group.

The Company has deployed GBP121m during the period for the purposes of developing the Project. The table below breaks out the key items:

 
 GBPm                           H1 2017 
 Operating costs                 (14.7) 
 Capital expenditure             (28.3) 
 Incurred but unpaid capital 
  expenditure                    (20.0) 
 Local authorities' security 
  requirements                   (34.7) 
 Financing costs                 (23.4) 
-----------------------------  -------- 
 Total Project use of 
  funds                         (121.1) 
-----------------------------  -------- 
 

Total capital expenditure incurred for the period was GBP48.3m with a significant portion of that unpaid as at the balance sheet date. In addition to this, numerous financial commitments for items such as the permanent winders and D-walling activities have been made and these items are not reflected in the financial statements. The local authorities' security requirements reflect a combination of providing reinstatement security for construction works and the security requirements of the Section 106 agreement.

Total funds at the end of June 2017 were GBP584.6m, comprising bank deposits and cash equivalents of GBP491.0m and restricted cash of GBP93.6m. The following table provides a breakdown of movements through the period in total funds, split between available cash (comprising cash and cash equivalents and bank deposits) and restricted cash:

 
                        Available   Restricted   Total 
 GBPm                      cash        cash       funds 
 Opening balance            582.4         82.9    665.3 
 Operating costs           (14.7)            -   (14.7) 
 Capital expenditure 
  (paid only)              (28.3)            -   (28.3) 
 Local authorities' 
  commitments              (34.7)         34.7        - 
 Financing costs            (1.4)       (20.0)   (21.4) 
 Working capital and 
  other                     (0.6)            -    (0.6) 
 FX revaluation            (11.7)        (4.0)   (15.7) 
---------------------  ----------  -----------  ------- 
 Closing balance            491.0         93.6    584.6 
---------------------  ----------  -----------  ------- 
 

Total cash holdings are split approximately 55% GBP, 45% USD and 5% EUR.

A number of convertible bond conversion notices were received during the period resulting in 22% of the initial bonds being converted. Because of these conversions, 283m shares were issued during the period. 1,564 bonds remain outstanding with an aggregate face value of US$313m.

PRINCIPAL RISKS AND UNCERTANTIES

There are a number of potential risks and uncertainties that could have a material impact on the Group's performance over the remaining six months of the financial period. The majority of the principal risks facing the Group remain unchanged from those set out on pages 32 to 35 of our annual report and accounts for the year ended 31 December 2016 ("2016 Annual Report"). However, certain principal risks and uncertainties have been updated. In accordance with the Disclosure and Transparency Rules ("DTR"), newly identified business risks and those that have materially changed since the last annual report and accounts are required to be disclosed.

 
     Principal                Description                            Mitigation 
        risks 
-------------------  -----------------------------  -------------------------------------------- 
 Government           In many nations, given                    The Company seeks to 
  relations            the importance of                         build positive relationships 
                       food security for                         with foreign governments 
                       them, policy decisions                    where there is significant 
                       on fertilizer use                         state interest in the 
                       could make significant                    fertilizer sector. The 
                       differences to import                     Company will continue 
                       levels.                                   to work closely with 
                       Similarly, governmental                   the UK Department for 
                       support in key export                     Trade to assist with 
                       markets is of significant                 this process where appropriate. 
                       assistance in establishing 
                       long-term trade deals 
                       for our product. 
-------------------  -----------------------------  -------------------------------------------- 
 Customer             The majority of current                   The Company continues 
  viability            and future customers                    to expand its portfolio 
                       have business lines                       of customers both in 
                       in agriculture beyond               terms of size and geographically 
                       just fertilizer -                        to leverage the risk. 
                       changes to any of 
                       these can have an 
                       impact on fertilizer 
                       business units. 
-------------------  -----------------------------  -------------------------------------------- 
 Product              The process of registering     The Company has begun 
  registration         the product varies             the process of registering 
                       in complexity from             its product in various 
                       country to country             regions where current 
                       and region to region.          customer agreements 
                       There is no guarantee          are in place. It has 
                       that these registrations       also begun the early 
                       will be forthcoming.           registration process 
                                                      to have its product 
                                                      validated and ultimately 
                                                      registered in markets 
                                                      such as India, where 
                                                      time associated to trial 
                                                      work is part of the 
                                                      process. 
-------------------  -----------------------------  -------------------------------------------- 
 Construction         The Project may experience     Detailed planning will 
  delays(1)            construction and schedule      be carried out continuously 
                       delays due to unforeseen       by the management and 
                       technical issues.              external consultants 
                                                      as part of the Project's 
                                                      continued development 
                                                      to mitigate and de-risk 
                                                      the Project during construction. 
                                                      The Company also continues 
                                                      to pursue all acceleration 
                                                      options available to 
                                                      reduce the time required 
                                                      to reach first production. 
                                                      Contractors are incentivised 
                                                      to bring their scopes 
                                                      forward. 
-------------------  -----------------------------  -------------------------------------------- 
 Employee             Our business depends           The Company continues 
  relations(2)         on attracting and              to support its employees 
                       retaining skilled              and contractors ensuring 
                       employees and contractors.     safe working environment 
                       A loss of skilled              and encouraging a positive 
                       employees and/or a             work-life balance. Regular 
                       breakdown in relations         communication is maintained 
                       and communication              and all employees and 
                       could result in disruptions    contractors are updated 
                       to operations.                 on the Project's progress 
                                                      and news through weekly 
                                                      meetings, in-house newsletters, 
                                                      and senior management 
                                                      team emails. 
-------------------  -----------------------------  -------------------------------------------- 
 Contractors          The performance of                      An active and experienced 
  and suppliers(2)     our contractors and                      management team is in 
                       suppliers is critical                    place with a focus on 
                       to the success of                   being clear about expectations, 
                       the project. Performance                 verifying performance, 
                       issues or a lack of                       and doing everything 
                       alignment could introduce                 possible within the 
                       cost and schedule                         contracts to ensure 
                       risks to the Project.                the success of our contractors 
                                                                    and suppliers. 
                                                                 In working with the 
                                                               contractors, the Company 
                                                                is focused on ensuring 
                                                                 that contractors are 
                                                                operating within their 
                                                               area of specialisation, 
                                                             that their senior management 
                                                             are engaged in the Project, 
                                                              that regular communication 
                                                                 and progress updates 
                                                                 are maintained, and 
                                                               that major construction 
                                                             contractors are incentivised 
                                                                around the success of 
                                                                     the Project. 
                                                               This risk would manifest 
                                                                itself in cost, delay 
                                                                  or quality issues. 
-------------------  -----------------------------  -------------------------------------------- 
    Construction      The Project may experience                The Company has a strong 
  cost overruns(1)     construction cost                         focus on cost, and the 
                       overruns due to unforeseen                prices received from 
                       technical issues or                       contractors and suppliers 
                       scope change.                             so far have been in 
                                                                 line with the DFS. In 
                                                                 addition, the Project 
                                                                 was costed with a significant 
                                                                 contingency and escalation 
                                                                 provisions in case of 
                                                                 cost pressures. The 
                                                                 fall in the value of 
                                                                 the pound also provides 
                                                                 comfort in this area. 
                                                                 As further detailed 
                                                                 engineering is carried 
                                                                 out and contracts are 
                                                                 awarded this risk decreases. 
-------------------  -----------------------------  -------------------------------------------- 
 Safety               A significant safety                      The Company is set up 
  and environmental    or environmental incident                to manage these items 
  performance(1)       would affect the delivery                 effectively, and the 
                       of the Project and                       Company will continue 
                       the Company's reputation.                 to support its teams 
                                                                 in providing a safe 
                                                              work environment. Ongoing 
                                                                 focus areas include 
                                                                leadership activities, 
                                                                work with contractors, 
                                                                developing the culture 
                                                                 of the project team, 
                                                               and the control of major 
                                                                       hazards. 
                                                               The Company continuously 
                                                                assesses the risk and 
                                                                ensures that the right 
                                                               people are in the right 
                                                                 place. Nonetheless, 
                                                            the Company is not complacent 
                                                               about the risks in this 
                                                                        area. 
-------------------  -----------------------------  -------------------------------------------- 
 

(1) Construction risk was disclosed as a principal risk in our 2016 Annual Report. This risk has now been divided into three separate risks: a renamed Construction delays risk (previously called Delays in our 2016 Annual Report); and two new risks: Construction costs overruns and Safety and environmental performance.

(2) Employer and contractor relations risk was disclosed as a principal risk in our 2016 Annual Report. This risk has now been separated into two separate risks: Employee relations and Contractors and suppliers.

In addition to the principal risks and uncertainties listed above there may be additional risks unknown to Sirius and other risks, currently believed to be immaterial, which could turn out to be material. These risks, whether they materialise individually or simultaneously, could significantly affect the Group's business and financial results.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

In the directors' opinion:

These condensed consolidated interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union and the Disclosure and Transparency Rules ("DTR") of the Financial Conduct Authority in the United Kingdom, using the most appropriate accounting policies for the Company's business and supported by reasonable and prudent judgements.

The condensed consolidated interim financial statements give a true and fair view of Sirius Minerals Plc's financial position as at 30 June 2017 and of its performance. The directors confirm that this interim management report includes a fair review of the information required by DTR 4.2.7R and DTR 4.2.8R, namely:

-- An indication of important events that have occurred during the first six months and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

-- Material related-party transactions in the first six months and any material changes in the related-party transactions described in the last annual report.

Signed by order of the Board.

Chris Fraser

Managing Director and CEO

15 August 2017

Thomas Staley

Finance Director

15 August 2017

INDEPENT REVIEW REPORT TO SIRIUS MINERALS Plc

Report on the condensed interim unaudited consolidated financial statements

Our conclusion

We have reviewed Sirius Minerals Plc's condensed interim unaudited consolidated financial statements (the "interim financial statements") for the six-month period ended 30 June 2017. Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are not prepared, in all material respects, in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

What we have reviewed

The interim financial statements comprise:

   --     The condensed consolidated statement of financial position as at 30 June 2017; 
   --     The condensed consolidated statement of comprehensive income for the period then ended; 
   --     The condensed consolidated statement of cash flows for the period then ended; 
   --     The condensed consolidated statement of changes in equity for the period then ended; and 
   --     The explanatory notes to the interim financial statements. 

The interim financial statements included in the condensed interim unaudited consolidated financial statements have been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

As disclosed in note 1 to the interim financial statements, the financial reporting framework that has been applied in the preparation of the full annual financial statements of the Group is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

Responsibilities for the interim financial statements and the review

Our responsibilities and those of the directors

The condensed interim unaudited consolidated financial statements, including the interim financial statements, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the condensed interim unaudited consolidated financial statements in accordance with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

Our responsibility is to express a conclusion on the interim financial statements in the condensed interim unaudited consolidated financial statements based on our review. This report, including the conclusion, has been prepared for and only for the Company for the purpose of complying with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority and for no other purpose. We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

What a review of interim financial statements involves

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2010, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

We have read the other information contained in the condensed interim unaudited consolidated financial statements and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements.

PricewaterhouseCoopers LLP

Chartered Accountants

Leeds

15 August 2017

a) The maintenance and integrity of the Sirius Minerals Plc website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the interim financial statements since they were initially presented on the website.

b) Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

 
 CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE 
  INCOME 
 for the six months ended 30 June 2017 
 
                                                 Six months     Six months         Year 
                                                    to June        to June        ended 
                                                       2017           2016     Dec 2016 
                                                (unaudited)    (unaudited)    (audited) 
                                                                 Restated*    Restated* 
                                        Note        GBP000s        GBP000s      GBP000s 
                                              -------------  -------------  ----------- 
 Revenue                                                  -              -            - 
 Operating costs                                   (14,732)        (4,665)     (16,858) 
-------------------------------------  -----  -------------  -------------  ----------- 
 Operating loss                                    (14,732)        (4,665)     (16,858) 
 
 
 Net finance (expense)/income             4       (136,573)            120      (6,564) 
 Loss before taxation                             (151,305)        (4,545)     (23,422) 
 
 Taxation                                                 -            477          468 
-------------------------------------  -----  -------------  -------------  ----------- 
 Loss for the financial period                    (151,305)        (4,068)     (22,954) 
-------------------------------------  -----  -------------  -------------  ----------- 
 
 Other comprehensive income: 
 Items that may be reclassified 
  subsequently to profit or loss: 
 Exchange differences on translating 
  foreign operations                                     12             17           18 
 Cash flow hedging movement                             151              -            - 
 Other comprehensive income 
  for the period                                        163             17           18 
-------------------------------------  -----  -------------  -------------  ----------- 
 Total comprehensive loss for 
  the period attributable to 
  the owners of the Company                       (151,142)        (4,051)     (22,936) 
-------------------------------------  -----  -------------  -------------  ----------- 
 
 Loss per share: 
 Basic and diluted (pence)               3           (3.60)         (0.18)       (0.93) 
-------------------------------------  -----  -------------  -------------  ----------- 
 
 

* Operating costs and net finance (expense)/income have been restated following the change in accounting policy described in note 10.

 
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION as at 30 June 2017 
 
                                                 30 June   31 December 
                                                    2017          2016 
                                             (unaudited)     (audited) 
  ASSETS                             Note        GBP000s       GBP000s 
 ---------------------------------  -----  -------------  ------------ 
  Non-current assets 
  Intangible assets                   5           11,929       150,204 
  Property, plant and equipment       6          204,660         6,138 
  Restricted cash                                 71,713        55,283 
 ---------------------------------  -----  -------------  ------------ 
  Total non-current assets                       288,302       211,625 
 ---------------------------------  -----  -------------  ------------ 
  Current assets 
  Derivative financial instrument                      -         1,041 
  Restricted cash                                 21,850        27,641 
  Other receivables                                5,403           840 
  Bank deposits                                  212,202       322,188 
  Cash and cash equivalents                      278,827       260,157 
 ---------------------------------  -----  -------------  ------------ 
  Total current assets                           518,282       611,867 
 ---------------------------------  -----  -------------  ------------ 
  TOTAL ASSETS                                   806,584       823,492 
 ---------------------------------  -----  -------------  ------------ 
  EQUITY AND LIABILITIES 
  Equity 
  Share capital                                   11,123        10,412 
  Share premium account                          674,503       590,723 
  Share-based payment reserve                      6,807         6,114 
  Accumulated losses                           (263,566)     (112,261) 
  Other reserves                                   1,447         1,284 
 ---------------------------------  -----  -------------  ------------ 
  Total equity                                   430,314       496,272 
 ---------------------------------  -----  -------------  ------------ 
  Current liabilities 
  Convertible loan                               326,887       321,366 
  Derivative financial instrument                 20,348             - 
  Trade and other payables                        29,035         5,854 
 ---------------------------------  -----  -------------  ------------ 
  Total liabilities                              376,270       327,220 
 ---------------------------------  -----  -------------  ------------ 
  TOTAL EQUITY AND LIABILITIES                   806,584       823,492 
 ---------------------------------  -----  -------------  ------------ 
 

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 
 for the six-month period ended 30 June 2017 
 (unaudited) 
                    Share capital      Share premium       Share-based        Accumulated   Other reserves       Total 
                                             account          payments             losses 
                                                               reserve 
                          GBP000s            GBP000s           GBP000s            GBP000s          GBP000s     GBP000s 
 At 1 January 
  2017                     10,412            590,723             6,114          (112,261)            1,284     496,272 
 Loss for the 
  financial 
  period                        -                  -                 -          (151,305)                -   (151,305) 
 Other 
  comprehensive 
  expense                       -                  -                 -                  -              163         163 
 Transactions 
 with owners: 
   Shares issued 
    on conversion 
    of 
    convertible 
    bonds                     708             83,513                 -                  -                -      84,221 
   Share-based 
    payments                    3                267               693                  -                -         963 
-----------------  --------------  -----------------  ----------------  -----------------  ---------------  ---------- 
 At 30 June 2017           11,123            674,503             6,807          (263,566)            1,447     430,314 
-----------------  --------------  -----------------  ----------------  -----------------  ---------------  ---------- 
 
 
 for the six-month period ended 30 June 2016 
 (unaudited) 
                     Share capital      Share premium        Share-based        Accumulated   Other reserves     Total 
                                              account   payments reserve             losses 
                           GBP000s            GBP000s            GBP000s            GBP000s          GBP000s   GBP000s 
 At 1 January 2016           5,737            240,874              7,624           (90,339)            1,266   165,162 
 Loss for the 
  financial period               -                  -                  -            (4,068)                -   (4,068) 
 Other 
  comprehensive 
  expense                        -                  -                  -                  -               17        17 
 Transactions with 
 owners: 
   Share issue                  12                  -                  -                  -                -        12 
   Share issue 
    costs                        -               (42)                  -                  -                -      (42) 
   Share-based 
    payments                    20              1,418            (1,469)                684                -       653 
------------------  --------------  -----------------  -----------------  -----------------  ---------------  -------- 
 At 30 June 2016             5,769            242,250              6,155           (93,723)            1,283   161,734 
------------------  --------------  -----------------  -----------------  -----------------  ---------------  -------- 
 

The share premium account is used to record the excess proceeds over nominal values on the issue of shares.

The share-based payment reserve is used to record the share-based payments made in the Group.

Other reserves comprise the foreign exchange reserve (which arises on translation of foreign operations with a functional currency other than sterling) of GBP1,296,000 (30 June 2016: GBP1,283,000) and the cash flow hedge reserve (which accumulates unrecognised gains or losses of instruments designated in cash flow hedge relationships) of GBP151,000 (30 June 2016: nil).

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

for the six-month period ended 30 June 2017

 
 
                                                   First          First         Full 
                                                    half           half         year 
                                                    2017           2016         2016 
                                             (unaudited)    (unaudited)    (audited) 
                                                              Restated*    Restated* 
                                                 GBP000s        GBP000s      GBP000s 
 Cash outflow from operating 
  activities 
 Continuing operations 
 Operating loss                                 (14,732)        (4,665)     (16,858) 
 Adjustments for: 
   Depreciation and amortisation                      81             30           57 
   Share-based payments                              341            653          844 
   Changes in working capital                    (1,030)          (360)        (407) 
-----------------------------------------  -------------  -------------  ----------- 
 Cash used in continuing operations             (15,340)        (4,342)     (16,364) 
 Tax credit received                                   -            477          468 
-----------------------------------------  -------------  -------------  ----------- 
 Net cash used in operating 
  activities                                    (15,340)        (3,865)     (15,896) 
-----------------------------------------  -------------  -------------  ----------- 
 
 Cash flow from investing 
  activities 
 
 Purchase of intangible assets                   (1,188)        (8,392)     (12,108) 
 Purchase of property, plant 
  and equipment                                 (27,127)           (14)      (4,346) 
 Purchase of bank deposits                             -              -    (320,187) 
 Redemption of bank deposits                     103,894              -            - 
 Interest received                                 1,228             79          441 
 Net cash generated from/(used 
  in) investing activities                        76,807        (8,327)    (336,200) 
-----------------------------------------  -------------  -------------  ----------- 
 
 Cash flow from financing 
  activities 
 Repayment of borrowings                               -              -        (748) 
 Proceeds from convertible 
  loan                                                 -              -      319,923 
 Purchase of restricted cash                    (34,712)              -     (81,580) 
 Redemption of restricted                         20,014              -            - 
  cash 
 Interest paid                                  (20,014)            (9)         (19) 
 Proceeds from issue of shares                         -             12      371,445 
 Share issue costs                                 (925)           (42)     (18,370) 
 Convertible loan issue costs                    (2,419)              -      (9,158) 
 Net cash (used in)/generated 
  from financing activities                     (38,056)           (39)      581,493 
-----------------------------------------  -------------  -------------  ----------- 
 
 Net increase/(decrease) in 
  cash and cash equivalents                       23,411       (12,231)      229,397 
 Cash and cash equivalents 
  at the beginning of the period                 260,157         29,093       29,093 
 (Loss)/gain from foreign 
  exchange                                       (4,741)             67        1,667 
 Cash and cash equivalents 
  at end of the period                           278,827         16,929      260,157 
-----------------------------------------  -------------  -------------  ----------- 
 

* Operating loss has been restated following the change in accounting policy described in note 10.

NOTES TO THE FINANCIAL STATEMENTS

1. ACCOUNTING POLICIES

BASIS OF PREPARATION

These condensed interim unaudited consolidated financial statements for the six-month period ended 30 June 2017 comprise Sirius Minerals Plc (the "Company") and its subsidiaries (together referred to as the "Group"). The financial information included in this interim financial report for the six months ended 30 June 2017 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006 and is unaudited. The comparative information for the six months ended 30 June 2016 is also unaudited. The comparative figures for the year ended 31 December 2016 have been extracted from the Group's financial statements, as filed with the Registrar of Companies, on which the auditors gave an unqualified opinion, did not contain an emphasis of matter paragraph and did not make a statement under section 498 of the Companies Act 2006. The Group's operations are not seasonal in nature. These condensed consolidated interim financial statements have been reviewed, not audited.

This consolidated interim financial report for the six months ended 30 June 2017 has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority and IAS 34 Interim Financial Reporting (as adopted by the EU). The report should be read in conjunction with the Group's financial statements for the year ended 31 December 2016, available on the Group's website (www.siriusminerals.com), which were prepared in accordance with IFRSs as adopted by the EU.

GOING CONCERN

These condensed interim unaudited consolidated financial statements have been prepared under the going concern assumption.

As a result of the stage 1 fundraising completed during November 2016, the Group was able to commence significant development work on its polyhalite project in North Yorkshire (the "Project") during January 2017 with latest cash flow forecasts indicating that the Group has sufficient assets to meet its planned liabilities as they fall due until 2019. The Group has no restrictions on the use of its cash and cash equivalents or bank deposits (upon their maturity).

The Group has publicly announced its intention to conduct stage 2 of fundraising in 2018 in order to raise sufficient further funds to complete development of the Project and reach commercial production, which will ultimately allow the Group to generate sufficient cash to sustain itself as a going concern for the foreseeable future. The directors are confident of a positive outcome to the stage 2 financing negotiations and have mandated a group of six financial institutions on the basis of a non-binding but mutually-agreed term sheet. At the same time, the Infrastructure and Projects Authority (formally IUK) confirmed its interest in supporting the stage 2 financing for the Project.

Having assessed the principal risks and having regard for the above, the directors consider it appropriate to adopt the going concern basis of accounting in preparing its consolidated financial statements.

NEW AND AMED STANDARDS ADOPTED BY THE GROUP

There are no new standards, amendments to existing standards or interpretations issued but not effective for the financial year beginning 1 January 2017 that have been early adopted, nor are any expected to have a material impact on the Group when they do become effective.

2. SEGMENTAL ANALYSIS

Management has determined the operating segments by considering the business from both a geographic and activity perspective. The Group is organised into one business division: the UK segment which consists of Project related activities and the corporate operations. This division is the segment for which the Group reports information internally to the board of directors. The Group's operations are predominantly in the UK.

As a result of the disclosure requirements required under IFRS 8 Operating Segments, the disclosures are already included in the primary statements.

3. LOSS PER SHARE

Basic loss per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.

For all periods presented, the Group's potentially dilutive ordinary share equivalents (being share options issued under equity-settled share-based payment schemes, the convertible loan, and share options issued to Hancock British Holdings Limited under the royalty financing arrangement) have an anti-dilutive effect on loss per share and have therefore not been included in determining the total weighted average number of ordinary shares outstanding for the purposes of calculating diluted loss per share.

 
                                      Six months to June 2017     Six months   Year ended 
                                                                       to June     Dec 2016 
                                                                          2016 
                                                    (unaudited)    (unaudited)    (audited) 
                                                        GBP000s        GBP000s      GBP000s 
   ----------------------------------  ------------------------  -------------  ----------- 
    Loss for the purposes of basic 
     and diluted earnings per share                     151,305          4,068       22,954 
    Weighted average number of 
     ordinary shares for the purpose 
     of basic and 
     diluted earnings per share 
     (number in thousands)                            4,197,174      2,294,696    2,472,762 
   ----------------------------------  ------------------------  -------------  ----------- 
    Basic and diluted loss per share 
     (pence)                                               3.60           0.18         0.93 
   ----------------------------------  ------------------------  -------------  ----------- 
 

4. NET FINANCE (EXPENSE)/INCOME

 
                                      Six months     Six months   Year ended 
                                         to June        to June     Dec 2016 
                                            2017           2016 
                                     (unaudited)    (unaudited)    (audited) 
                                         GBP000s        GBP000s      GBP000s 
---------------------------------  -------------  -------------  ----------- 
 Interest income                           1,969             79          448 
 Interest income capitalised             (1,050)              -            - 
  on qualifying assets 
 Interest expense                       (15,071)            (9)      (2,858) 
 Interest expense capitalised             12,426              -            - 
  on qualifying assets 
 Fair value loss on convertible 
  loan embedded derivative             (111,895)              -      (5,744) 
 Fair value (loss)/gain on 
  royalty financing derivative          (21,389)              -        1,041 
 Foreign exchange (losses)/gains 
  on net debt                            (1,563)             50          549 
---------------------------------  -------------  -------------  ----------- 
 Net finance (expense)/income          (136,573)            120      (6,564) 
---------------------------------  -------------  -------------  ----------- 
 

During January 2017 the Group commenced significant development work at its Project. After this point all interest expense incurred has been capitalised, net of all interest income earned on the temporary re-investment of those borrowings prior to utilisation.

5. INTANGIBLE ASSETS

 
 
                                      30 June        30 June       31 Dec 
                                         2017           2016         2016 
                                  (unaudited)    (unaudited)    (audited) 
                                      GBP000s        GBP000s      GBP000s 
------------------------------  -------------  -------------  ----------- 
 Net book value 
 At beginning of period               150,204        137,970      137,970 
 Additions                              4,329          7,926       12,234 
 Transfers to property, plant 
  and equipment                     (142,548)              -            - 
 Amortisation                            (56)              -            - 
------------------------------  -------------  -------------  ----------- 
 At end of period                      11,929        145,896      150,204 
------------------------------  -------------  -------------  ----------- 
 

6. PROPERTY, PLANT AND EQUIPMENT

 
 
                                   30 June        30 June       31 Dec 
                                      2017           2016         2016 
                               (unaudited)    (unaudited)    (audited) 
                                   GBP000s        GBP000s      GBP000s 
---------------------------  -------------  -------------  ----------- 
 Net book value 
 At beginning of period              6,138          1,849        1,849 
 Additions                          55,999             14        4,346 
 Transfers from intangible 
  assets                           142,548              -            - 
 Depreciation                         (25)           (30)         (57) 
---------------------------  -------------  -------------  ----------- 
 At end of period                  204,660          1,833        6,138 
---------------------------  -------------  -------------  ----------- 
 

During January 2017 the Group commenced significant development work at its Project. All exploration costs and rights in relation to the Project previously capitalised by the Group have been transferred from intangible assets to property, plant and equipment from that date since the technical feasibility and commercial viability of the Project had clearly been demonstrated. All subsequent development expenditure on the Project has been capitalised within property, plant and equipment.

At 30 June 2017 the Group had contracted but unrecognised capital expenditure commitments of GBP32,010,000.

7. NET CASH

 
 
                                        30 June        30 June       31 Dec 
                                           2017           2016         2016 
                                    (unaudited)    (unaudited)    (audited) 
                                        GBP000s        GBP000s      GBP000s 
--------------------------------  -------------  -------------  ----------- 
 At beginning of period                 386,336         28,345       28,345 
 Net increase/(decrease) in 
  cash and cash equivalents              23,411       (12,231)      229,397 
 Net cash flows from restricted 
  cash and bank deposits               (89,196)              -      401,767 
 New debt issued                              -              -    (270,909) 
 Interest expense                      (15,071)              -            - 
 Interest paid                           20,014              -      (2,839) 
 Conversions of convertible              51,658              -            - 
  loan 
 Foreign exchange differences             (642)             67          575 
--------------------------------  -------------  -------------  ----------- 
 At end of period                       376,510         16,181      386,336 
--------------------------------  -------------  -------------  ----------- 
 

Net cash is defined by the Group as being the total value of cash and cash equivalents, restricted cash and bank deposits, less all interest-bearing debt. Interest bearing debt includes only the host loan element of the $400m convertible loan and not the embedded conversion derivative on the basis that embedded derivative is unlikely to ever be settled in cash by the Group.

During the six-month period, conversion notices in respect of 21.8% of the $400m convertible loan were delivered by convertible loan holders to the Group, leading to the creation of 283,405,497 new ordinary shares in the Company. As at 30 June 2017 65,669,698 of these ordinary shares had been created but not yet issued to convertible loan holders, with delivery of these shares being made to convertible loan holders on 4 July 2017.

As at 30 June 2017 the Group had 4,389,633,265 ordinary shares in public issuance (December 2016: 4,164,514,405).

8. FINANCIAL INSTRUMENTS

 
                           Designated into             Loans and        At fair value            Financial       Total 
  30 June 2017             cash flow hedge           receivables   through profit and       liabilities at 
  (unaudited)                relationships                                       loss       amortised cost 
                                   GBP000s               GBP000s              GBP000s              GBP000s     GBP000s 
---------------------  -------------------  --------------------  -------------------  -------------------  ---------- 
 Financial assets 
 Restricted cash                         -                93,563                    -                    -      93,563 
 Bank deposits                           -               212,202                    -                    -     212,202 
 Cash and cash 
  equivalents                       21,485               257,342                    -                    -     278,827 
                                    21,485               563,107                    -                    -     584,592 
---------------------  -------------------  --------------------  -------------------  -------------------  ---------- 
 Financial 
 liabilities 
 Convertible loan                        -                     -            (118,805)            (208,082)   (326,887) 
 Derivative financial 
  instrument                             -                     -                    -             (20,348)    (20,348) 
 Trade and other 
  payables                               -                     -                    -             (29,035)    (29,035) 
                                         -                     -            (118,805)            (257,465)   (376,270) 
---------------------  -------------------  --------------------  -------------------  -------------------  ---------- 
 Net financial 
  assets/ 
  (liabilities)                     21,485               563,107            (118,805)            (257,465)     208,322 
---------------------  -------------------  --------------------  -------------------  -------------------  ---------- 
 
 
                              Loans and receivables       At fair value through   Financial liabilities at       Total 
 31 December 2016 (audited)                                     profit and loss             amortised cost 
                                            GBP000s                     GBP000s                    GBP000s     GBP000s 
---------------------------  ----------------------  --------------------------  -------------------------  ---------- 
 Financial assets 
 Derivative financial 
  instrument                                      -                       1,041                          -       1,041 
 Restricted cash                             82,924                           -                          -      82,924 
 Bank deposits                              322,188                           -                          -     322,188 
 Cash and cash equivalents                  260,157                           -                          -     260,157 
                                            665,269                       1,041                          -     666,310 
---------------------------  ----------------------  --------------------------  -------------------------  ---------- 
 Financial liabilities 
 Convertible loan                                 -                    (42,433)                  (278,933)   (321,366) 
 Trade and other payables                         -                           -                    (5,854)     (5,854) 
                                                  -                    (42,433)                  (284,787)   (327,220) 
---------------------------  ----------------------  --------------------------  -------------------------  ---------- 
 Net financial 
  assets/(liabilities)                      665,269                    (41,392)                  (284,787)     339,090 
---------------------------  ----------------------  --------------------------  -------------------------  ---------- 
 

IFRS 13 Fair Value Measurement requires financial instruments to be grouped into a fair value hierarchy based on the lowest level input that is significant to the fair value measurement. The three levels of the hierarchy are:

-- Level 1 - quoted prices (unadjusted) based on active markets for identical assets or liabilities;

-- Level 2 - inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, prices) or indirectly (that is, derived from prices);

   --      Level 3 - inputs for the asset or liability that are not based on observable market data. 

The only assets or liabilities held by the Group that are measured at fair value are the embedded derivative recognised as part of the convertible loan and the derivative financial liability (2016: asset) in respect of the royalty financing arrangement with Hancock British Holdings Limited. These derivatives have both been assessed to be level 2 financial liabilities. This is because the derivatives themselves are not traded on an active market and their fair values have been determined by valuation techniques that use observable market data. The fair value of the royalty financing derivative is estimated using the Company's share price and forecast exchange rates at each reporting date. The fair value of the convertible loan embedded derivative is the difference between the estimated fair value of cash flows due under the host loan at an appropriate market discount rate (based on bond yield of entities with comparable credit profiles) and the market price of the bonds at each reporting date. The valuation methods used are the same as those applied and disclosed as at 31 December 2016.

The carrying value of all assets and liabilities reported in the above tables is the same as their fair value, except for the convertible loans, where the fair value at 30 June 2017 was GBP340,238,000 (2016: GBP334,679,000) compared to a carrying value at 30 June 2017 of GBP326,887,000 (2016: GBP321,366,000). The fair value of the convertible bonds has been estimated by reference to the mid-price of the bonds' quoted price at each measurement date multiplied by the number of bonds outstanding which represents a level 1 measurement.

9. RELATED PARTY TRANSACTIONS

The Group has not entered into any related party transactions in the first six months of the year, except for directors' and key management compensation.

10. ACCOUNTING POLICIES

Except for the two policies listed below, all accounting policies applied by the Group in the preparation of these interim financial statements are consistent with those applied and disclosed in the financial statements for the year ended 31 December 2016.

Finance costs

Interest on borrowings directly relating to the financing of qualifying assets in the course of construction is added to the capitalised cost of those projects under "Capital works in progress", until such time as the assets are substantially ready for their intended use or sale. Where funds have been borrowed specifically to finance a project, the amount capitalised represents the actual borrowing costs incurred. Where the funds used to finance a project form part of general borrowings, the amount capitalised is calculated using a weighted average of rates applicable to relevant general borrowings of the Group during the period. All other borrowing costs are recognised in the income statement in the period in which they are incurred.

Change in accounting policy

From 1 January 2017 the Group has elected to change its accounting policy in accounting for foreign exchange revaluation gains and losses in relation to cash, restricted cash and bank deposits. Previously these were classified within operating costs but the Group has now chosen to classify these within net finance costs. This is on the basis that such gains and losses are more representative of outcomes from the Group's financing strategy rather than a part of underlying operating costs.

The Group has made this restatement from 1 January 2016 in these financial statements, resulting in an increase in reported operating costs and finance income of GBP50,000 for the six months ended 30 June 2016 and GBP4,986,000 for the year ended 31 December 2016. The effect on the current period has been a decrease in operating costs and increase in finance costs of GBP15,784,000. This change in accounting policy has not led to any change in any balance on the statement of financial position nor statement of changes in equity in any comparative period.

11. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGMENTS

The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

In preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 31 December 2016.

12. EVENTS AFTER THE REPORTING PERIOD

Between July 1 and 11 August 2017, the Company received exercise notices in relation to 12 of its convertible bonds leading to the issuance of 7,802,340 new ordinary shares and the reclassification to equity of a further GBP2,508,000 of convertible bond liabilities reported at 30 June 2017.

This information is provided by RNS

The company news service from the London Stock Exchange

END

IR BRGDISUBBGRU

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August 16, 2017 02:00 ET (06:00 GMT)

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