Preliminary results

Sirius Minerals Plc

Peter McLennan(General Manager - Commercial)

Tel: +44 8455 240 247

Email: [email protected]

NOMAD/ Joint Broker

Joint Brokers

Joint Brokers

Media Enquiries

Macquarie Capital (Europe) Limited

Liberum Capital Limited

Jefferies Hoare Govett

Pelham Bell Pottinger

Steve Baldwin, Sam Small

Michael Rawlinson, Clayton Bush

Peter Bacchus, Thomas Rider

Charles Vivian,

Lorna Spears

Tel: +44 20 3037 2000

Tel: +44 20 3100 2222

Tel: +44 20 7029 8000

Tel: +44 20 7861 3232

Consolidated Income Statement

for the year ended 31 March 2012

2012

2011

Notes

£000s

£000s

Continuing operations

Revenue

-

-

Administrative expenses

(63,274)

(7,713)

Summary of administrative expenses:

Impairment charges

3

(57,143)

(732)

Acquisition costs

-

(48)

Exploration costs expensed

-

(497)

Other administrative costs

(6,131)

(6,436)

Operating loss

(63,274)

(7,713)

Finance income

164

45

Loss before taxation

(63,110)

(7,668)

Taxation

3,006

578

Loss for the financial year

(60,104)

(7,090)

Loss per share:

Basic and diluted

4

(5.6)p

(1.0)p

Consolidated Statement of Comprehensive Income

for the year ended 31 March 2012

2012

2011

£000s

£000s

Loss for the year

(60,104)

(7,090)

Other comprehensive income

Exchange differences on translating foreign operations

484

1,161

Other comprehensive income for the year

484

1,161

Total comprehensive loss for the year

(59,620)

(5,929)

Total comprehensive loss shown above is fully attributable to equity shareholders of the parent in both years.

Consolidated Statement of Financial Position

as at 31 March 2012

2012

2011

ASSETS

Notes

£000s

£000s

Non-current assets

Plant and equipment

253

36

Intangible assets

5

46,442

91,197

Total non-current assets

46,695

91,233

Current assets

Other receivables

1,703

307

Cash and cash equivalents

54,271

21,010

Loans and receivables

1,500

-

Total current assets

57,474

21,317

TOTAL ASSETS

104,169

112,550

EQUITY AND LIABILITIES

Equity

Share capital

6

3,348

2,581

Share premium account

147,238

95,658

Share based payment reserve

7,691

6,343

Retained earnings

(70,804)

(10,700)

Foreign exchange reserve

7,217

6,733

Total equity

94,690

100,615

Non-current liabilities

Deferred tax liability

6,628

9,701

Current liabilities

Trade and other payables

2,851

2,234

Total liabilities

9,479

11,935

TOTAL EQUITY AND LIABILITIES

104,169

112,550

Consolidated Statement of Changes in Equity

for the year ended 31 March 2012

Share

capital

£000s

Share

premium

account

£000s

Share

based

payments

reserve

£000s

Retained

earnings

£000s

Foreign

exchange

reserve

£000s

Equity

share-

holders'

funds

£000s

Minority interests

£000s

Total

equity

£000s

At 31 March 2010

1,658

47,959

1,575

(3,610)

5,572

53,154

-

53,154

Loss for the financial year

-

-

-

(7,090)

-

(7,090)

-

(7,090)

Foreign exchange differences on translation of foreign operations

-

-

-

-

1,161

1,161

-

1,161

Total comprehensive income for the year

-

-

-

(7,090)

1,161

(5,929)

-

(5,929)

On acquisition

-

-

-

-

-

-

-

-

Share capital issued in the year

923

48,626

-

-

-

49,549

-

49,549

Share issue costs

-

(927)

-

-

-

(927)

-

(927)

Share based payments

-

-

4,809

-

-

4,809

-

4,809

Exercised options

-

-

(41)

-

-

(41)

-

(41)

At 31 March 2011

2,581

95,658

6,343

(10,700)

6,733

100,615

-

100,615

Loss for the financial year

-

-

-

(60,104)

-

(60,104)

-

(60,104)

Foreign exchange differences on translation of foreign operations

-

-

-

-

484

484

-

484

Total comprehensive income for the year

-

-

-

(60,104)

484

(59,620)

-

(59,620)

Share capital issued in the year

767

54,288

-

-

-

55,055

-

55,055

Share issue costs

-

(2,708)

-

-

-

(2,708)

-

(2,708)

Share based payments

-

-

1,348

-

-

1,348

-

1,348

At 31 March 2012

3,348

147,238

7,691

(70,804)

7,217

94,690

-

94,690

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

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

Foreign exchange reserve records exchanges differences which arise on translation of foreign operations with a functional currency other than Sterling.

Consolidated Statement of Cash Flows

for the year ended 31 March 2012

2012

2011

Notes

£000s

£000s

Cash outflow used in operating activities

(5,503)

(622)

Cash flow from investing activities

Purchase of intangible assets

(12,386)

(3,148)

Purchase of plant and equipment

(270)

(37)

Acquisition of subsidiary, net of cash acquired

-

(372)

Loan to third party

(1,500)

-

Net cash used in investing activities

(14,156)

(3,557)

Cash flow from financing activities

Proceeds from issue of shares

55,055

24,342

Share issue costs

(2,708)

(927)

Finance income

164

45

Net cash generated from financing activities

52,511

23,460

Net increase in cash and cash equivalents

32,852

(19,281)

Cash and cash equivalents at beginning of the year

21,010

1,782

Effect of foreign exchange rate changes

409

(53)

Cash and cash equivalents at end of the year

54,271

21,010

1.

Basis of preparation

2.

Segmental analysis

UK

United States of America

Australia

Resource

evaluation and

Resource

evaluation and

Resource

evaluation and

Environmental

Environmental

Consolidation

exploration

exploration

solutions

exploration

solutions

Unallocated

adjustments

Total

£000s

£000s

£000s

£000s

£000s

£000s

£000s

£000s

Year ended 31 March 2012

Operating loss

(672)

(5,175)

(181)

(52,545)

(293)

(51,772)

47,364

(63,274)

Finance costs

-

-

-

-

-

-

-

-

Finance income

9

4

-

-

2

149

-

164

Loss before taxation

(663)

(5,171)

(181)

(52,545)

(291)

(51,623)

47,364

(63,110)

Taxation

512

-

-

2,494

-

-

-

3,006

Loss for the year from continuing operations

(151)

(5,171)

(181)

(50,051)

(291)

(51,623)

47,364

(60,104)

Total assets

46,908

969

-

3,335

29

70,127

(17,199)

104,169

Total liabilities

(22,038)

(5,180)

(182)

(1,697)

(162)

(2,962)

22,742

(9,479)

Net assets

24,870

(4,211)

(182)

1,638

(133)

67,165

5,543

94,690

Capital expenditure

11,526

770

-

258

-

102

-

12,656

Depreciation and amortisation

38

-

-

-

-

21

-

59

Impairment charge

-

4,945

178

51,770

250

-

-

57,143

UK

United States of America

Australia

Resource

evaluation and

exploration

Resource

evaluation and

exploration

Environmental

solutions

Resource

evaluation and

exploration

Environmental

solutions

Unallocated

Consolidation

adjustments

Total

£000s

£000s

£000s

£000s

£000s

£000s

£000s

Year ended 31 March 2011

Operating loss

(301)

(406)

(18)

(124)

(4)

(6,860)

-

(7,713)

Finance costs

-

-

-

-

-

-

-

-

Finance income

-

-

-

3

-

42

-

45

Loss before taxation

(301)

(406)

(18)

(121)

(4)

(6,818)

-

(7,668)

Taxation

-

-

-

529

49

-

-

578

(Loss)/profit for the year from continuing operations

(301)

(406)

(18)

408

45

(6,818)

-

(7,090)

Total assets

32,406

5,067

177

54,832

307

24,805

(5,044)

112,550

Total liabilities

(7,385)

(4,147)

(180)

(3,573)

(153)

(1,541)

5,044

(11,935)

Net assets

25,021

920

(3)

51,259

154

23,264

-

100,615

Capital expenditure

25,652

2,882

-

166

-

37

-

28,737

Depreciation and

amortisation

-

-

-

1

-

1

-

2

Impairment charge

-

-

-

-

-

732

-

732

Acquisition costs

-

-

-

-

-

48

-

48

Exploration expensed

365

132

-

-

-

-

-

497

3.

Summary of administrative expenses

The Group made impairment charges of £16,601,000 in Auspotash Corporation, £171,000 in Queensland Potash Pty Limited, £20,475,000 in Adavale Holdings Pty Limited, £14,523,000 in Derby Salts Pty Limited, £173,000 in Bicarb Sequestration Pty Limited, £77,000 in CO2 Energy Storage Pty Limited, £4,945,000 in Dakota Salts LLC and £178,000 in CO2 Energy Storage Limited. The focus of the Group is the flagship York Potash project and consistent with this focus, the Group has written down the value of the remainder of the portfolio. With each impairment, the intangible exploration assets and any goodwill held by the relevant companies were impaired. The total expense recognised within the income statement in relation to impairment charges is £57,143,000 (2011: £732,000) (see note 5).

4.

Loss per share

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

Given the Group's reported loss for the year, share options are not taken into account when determining the weighted average number of ordinary shares in issue during the year and therefore the basic and diluted earnings per share are the same.

2012

2011

£000s

£000s

Loss for the purposes of basic earnings per share being net loss attributable to equity shareholders of the parent

(60,104)

(7,090)

Loss for the purpose of diluted earnings per share

(60,104)

(7,090)

2012

Number

000s

2011

Number

000s

Number of shares

Weighted average number of ordinary shares for the purpose of basic and diluted earnings per share

1,082,989

733,827

If the Company's share options were taken into consideration in respect of the Company's weighted average number of ordinary shares for the purpose of diluted earnings per share, it would be as follows:

2012

2011

Number

Number

000s

000s

Number of shares

Weighted average number of ordinary shares for the purposes of diluted earnings per share

1,147,453

790,939

Basic and diluted loss per share

(5.6)p

(1.0)p

5.

Intangible assets

Exploration

costs and rights

Goodwill

Software

Total

£000s

£000s

£000s

£000s

Cost

At 1 April 2010

52,446

2,528

-

54,974

Additions

3,148

-

-

3,148

Additions acquired on acquisition of subsidiary

25,552

6,644

-

32,196

Foreign exchange movement

1,602

(38)

-

1,564

As at 31 March 2011

82,748

9,134

-

91,882

Additions

12,338

-

48

12,386

Additions acquired on acquisition of subsidiary

-

-

-

-

Foreign exchange movement

63

(55)

-

8

As at 31 March 2012

95,149

9,079

48

104,276

Provision for impairment/amortisation

At 1 April 2010

(682)

-

-

(682)

Impairment

(3)

-

-

(3)

At 31 March 2011

(685)

-

-

(685)

Impairment/amortisation

(54,707)

(2,436)

(6)

(57,149)

At 31 March 2012

(55,392)

(2,436)

(6)

(57,834)

Net book value

31 March 2012

39,757

6,643

42

46,442

31 March 2011

82,063

9,134

-

91,197

Goodwill

The goodwill acquired in January 2011 as part of the business combination relating to York Potash Limited has been allocated to the cash generating unit (CGU) of resource evaluation and exploitation in the geographical location of the UK, which is expected to benefit from the business combination.

The recoverable amount of the goodwill on the acquisition of York Potash Limited has been assessed by reference to value in use. The valuation is based on cash flow projections that incorporate best estimates of selling prices, production rates, future capital expenditure and production costs. The growth rate was incorporated into the discount rate.

The cash flow projections are based on long-term plans covering the expected life of the operation. The expected life is more than 25 years. The valuations are particularly sensitive to changes in assumptions about selling prices, volumes of production and operating costs. Long-term average selling prices are forecast taking account of market data in respect of potash and management's current expectations. Forecasts of volumes of production and operating costs are based on management's current expectations.

Discount rates represent an estimate of the rate the market would apply having regard to the time value of money and the risks specific to the asset for which the future cash flow estimates have not been adjusted. A discount rate of 8 per cent, which is considered to be appropriate for a project of this nature and size, has been applied to the pre-tax cash flows.

No reasonably possible change in the key assumptions on which York Potash Limited's recoverable amount is based would cause its value to fall short of its carrying amount as at 31 March 2012.

Impairment

The impairment charge to exploration costs and rights of £54,707,000 relates to Auspotash Corporation, Queensland Potash Pty Limited, Adavale Holdings Pty Limited, Derby Salts Pty Limited, Bicarb Sequestration Pty Limited, CO2 Energy Storage Pty Limited, Dakota Salts LLC and CO2 Energy Storage Limited (see note 3).The impairment charge to goodwill of £2,436,000 relates to Auspotash Corporation. Auspotash Corporation, Queensland Potash Pty Limited, Derby Salts Pty Limited, Bicarb Sequestration Pty Limited, CO2 Energy Storage Pty Limitedand CO2 Energy Storage Limitedwhich were fully impaired. Adavale Holdings Pty Limited and Dakota Salts LLC were impaired by reference to fair value.

6.

Share capital

2012

2011

£000s

£000s

Allotted and called up

1,339,033,000 (2011: 1,032,578,000) ordinary shares of 0.25p each

3,348

2,581

On 23 November 2011 the Company issued 900,000 new ordinary shares of 0.25p each at a price of 6p per share, realising £55,000, following the exercise of share options.

On 31 January 2012 the Company issued 305,555,555 new ordinary shares of 0.25p each at a price of 18p per share, realising£55,000,000, in a share placing. Costs in relation to the share placing were £2,708,000.