BISICHI MINING
PLC
Results for the
year ended 31 December 2016
Summary:
Reported EBITDA: |
£2,400,000 (2015: £1,400,000) |
Adjusted EBITDA*: |
£1,500,000 (2015: £1.700,000) |
· Full
year results impacted by both mining challenges and a supressed
coal market for most of the year.
· Exciting
development of new opencast reserves at Black Wattle Colliery
· Coal
processing infrastructure improvements to be completed by the end
of the second quarter of 2017
· Physical
demand for coal remains strong with coal prices having improved
significantly
· Reported
EBITDA benefited from revaluation gain on UK property of £0.4
million (2015: £0.2m) and exchange rate gains of £0.4 million
(2015: loss of £0.5 million)
· UK
property portfolio continues to perform well with voids at only
1.79%
· Final
Dividend proposed of 3p per share, taking full year dividend to 4p
per share
· Dividend
yield of 5.4% at year end share price
Chairman, Sir Michael Heller,
comments:
"In 2017 we continue to make strong progress in developing our
new opencast reserves at Black Wattle and coal prices have improved
significantly. We therefore remain highly confident about the
prospects for our South African coal mining operations and their
ability to contribute to our group earnings and cash
generation.”
For further information, please call:
Andrew Heller or Garrett Casey, Bisichi Mining PLC 020 7415
5030
BISICHI MINING PLC
ANNUAL REPORT 2016
Committed to generating sustainable value in
South Africa
Earnings before interest, tax, depreciation and
amortisation (EBITDA) of
£2.4million
(2015: £1.4 million)
Operating profit before depreciation, fair value
adjustments and exchange movements (Adjusted EBITDA) of
£1.5million
(2015: £1.7 million)
Dividend yield of
5.4%
at year end share price.
Strategic report
The directors present the Strategic
Report of the company for the year ending 31
December 2016. The aim of the Strategic Report is to provide
shareholders with the ability to assess how the Directors have
performed their duty to promote the success of the company for the
collective benefit of shareholders.
Chairman’s Statement
For the year ended 31 December
2016, your company achieved earnings before interest, tax,
depreciation and amortisation (EBITDA) of £2.4million (2015: £1.4
million) and operating profit before depreciation, fair value
adjustments and exchange movements (Adjusted EBITDA) of £1.5million
(2015: £1.7 million).
In 2017 we continue to make strong progress in developing our
new opencast reserves at Black Wattle and coal prices have improved
significantly. We therefore remain highly confident about the
prospects for our South African coal mining operations and their
ability to contribute to our group earnings and cash
generation.
A fuller explanation on the performance of our mining operations
for the year can be found within the Mining Review and Financial
& Performance Review sections of this report.
The company’s UK retail property portfolio, which underpins the
group and which is managed actively by London & Associated Properties Plc,
continues to perform well, with average rental yields for the
portfolio remaining stable during the year. A fuller explanation of
the portfolio’s valuation results and financial position are
discussed in the Financial & Performance Review and Directors
report. Looking forward, management will continue to look for
opportunities to strengthen and develop
the company’s UK retail property portfolio.
Finally, your directors have decided to hold the dividend at the
2015 level and will recommend to you, our shareholders, a final
dividend of
3p (2015: 3p) payable on Friday 28 July
2017 to shareholders registered at the close of business on
7 July 2017 making the total for the
year 4p (2015: 4p). Based on the 2016 year end share price, this
represents a 5.4% yield, which is at the high end of the
mining sector.
On behalf of the Board and shareholders, I would like to
thank all of our staff for their hard work during the course
of the year.
Sir Michael Heller
Chairman
26 April 2017
Principal activity, strategy &
business model
The company carries on business as a mining company and its
principal activity is coal mining in South Africa. The company’s strategy is to
create and deliver long terms sustainable value to all our
stakeholders through our business model which can be broken down
into three key areas
1 Acquisition &
investment |
2 Production &
sustainability |
3 Processing &
marketing |
Strategy
The group actively seeks new opportunities to extend the life of
mine of its existing mining operations or develop new independent
mining operations in South Africa. The group aims to achieve this
through new commercial arrangements and the acquisition of
additional coal reserves nearby to or independent from our existing
mining operations. |
Strategy
The group strives to mine its coal reserves in an economical and
sustainable manner that delivers long term value to all our
stakeholders. |
Strategy
The group seeks to achieve additional value from its mining
investments through the washing, transportation and marketing of
coal into both the domestic and export markets. |
In addition to the three key areas outlined above, we seek to
balance the high risk of our mining operations with a dependable
cash flow and capital appreciation from our UK property investment
operations. The company invests in retail property across the UK.
The UK property portfolio is managed by London & Associated Properties PLC whose
responsibility is to actively manage the portfolio to improve
rental income and thus enhance the value of the portfolio over
time.
Mining Review
The overall performance of Black Wattle, our South African coal
mining operation, was effected by both mining challenges and a
supressed coal market for most of 2016. Looking forward into 2017,
management will look to ensure production from our newly developed
opencast areas is increased in order to benefit from the improved
prices achievable for our coal.
Production and operations
For the first half of 2016 Black Wattle continued to supplement
production from its own reserves with coal mined at Blue
Nightingale under an agreement to purchase Run of Mine coal.
Unfortunately, the quality of the Blue Nightingale coal
deteriorated as the reserve came to an end and the higher Rand cost
per tonne produced, along with supressed coal prices, impacted on
overall earnings during the first half of the year.
In anticipation of the Blue Nightingale reserve coming to an
end, management plans were already in place to increase production
from Black Wattle’s own reserves. Part of this plan entailed
increasing the production from an existing opencast area at Black
Wattle as well as the development of a new opencast area to replace
the coal purchased from Blue Nightingale.
In these new opencast areas we have had to deal with stone
contamination issues which have affected both yield and mining
production through the washing plant. This impacted on sales
volumes and earnings in the second half of the year.
We are pleased to report that management have initiated various
infrastructure improvements to the coal washing plant which will be
completed by the end of the second quarter of 2017 and will deal
with these issues. The new infrastructure will assist in reducing
stone contamination through the plant and will allow Black Wattle
to mine at a higher rate of production at our opencast areas and
increase yield.
As a result of the lower production in the second half of the
year, overall Run of Mine production from Black Wattle decreased in
2016, with total production for the year of 1.26million metric
tonnes (2015: 1.58million metric tonnes). As part of Black Wattle’s
mining plan, the opencast areas that we began to develop in 2016
will be mined throughout 2017. We expect improved volumes of
production to come from these reserves from the second half of
2017.
Main trends/markets
During 2016 management continued to sell coal into both the
export and domestic market. Black Wattle’s export sales were via
Richards Bay Coal Terminal and primarily under the Quattro
programme, which allows junior black-economic empowerment coal
producers direct access to the coal export market via Richards Bay
Coal Terminal. We would like to thank Vunani Limited, our
black economic empowered shareholders at Black Wattle, for managing
and developing this opportunity.
The general downturn in commodity and energy prices experienced
in recent years continued for most of 2016. However, in the last
few months of the year, a surge in international coal prices along
with increased demand in both the export and domestic market, began
to have a positive impact on the prices achievable for our
coal.
At the beginning of 2016, the average weekly price of Free on
Board (FOB) Coal from Richards Bay Coal Terminal (API4) was
$50. For the first half of 2016 the
API4 price remained largely range bound between $50 and $60. In the third quarter of the year,
improvements in the US Dollar linked export price were largely
offset by a reversal of the depreciation of the South African Rand.
However at the end of the third quarter, a shortage of coal on the
international seaborne market resulted in a surge in the API4 price
to new levels. API4 prices rose from around $65 in September
2016 to a peak of over $100 in
November 2016, before stabilising at
$85 by the end of the year.
In the domestic market, a similar increase in demand in the last
quarter of 2016 impacted positively on prices achievable for our
coal going into 2017. These improved domestic prices are expected
to remain stable as long as the shortage of coal in the domestic
market continues.
Overall, the decrease in group revenue, compared to the prior
year, can mainly be attributable to the lower Run of Mine
production at Black Wattle as explained above; offsetting the
impact of the higher prices achievable for our coal in the last
quarter.
Looking forward into 2017, both the export and domestic coal
prices have continued to remain stable at these higher levels and
we continue to see strong demand for our coal in both markets.
Sustainable development
Black Wattle continues to strive to conduct business in a safe,
environmentally and socially responsible manner. Some highlights of
our Health, Safety and Environment performance in 2016:
• Black Wattle Colliery recorded one Lost Time Injury
during 2016 (2015: Two).
• No cases of Occupational Diseases were recorded.
• Zero claims for the Compensation for Occupational Diseases
were submitted.
We continue to adhere and make progress in terms of our Social
and Labour Plan and our various BEE initiatives. A fuller
explanation of these can be found in our Sustainable Development
Report on page 8.
Prospects
Looking forward to 2017, management will continue to focus on
improving production from our newly developed opencast area and
keeping our cost of production low.
Although production in the first quarter of the year to date has
been impacted by higher than expected seasonal rains, the various
infrastructure improvements initiated at Black Wattle remain on
track to be completed by the end of the second quarter of 2017.
With strong demand and improved prices achievable for our coal, we
believe the group is in a strong position to achieve significant
value from our South African mining operations especially in the
second half of 2017.
Andrew Heller
Managing Director
26 April 2017
Sustainable development
The group is fully committed to ensuring the sustainability of
both our UK and South African mining operations and delivering long
term value to all our stakeholders.
Health, Safety & Environment
(HSE)
Black Wattle is committed to creating a safe and healthy working
environment for its employees and the health and safety of our
employees is of the utmost importance.
HSE performance in 2016:
• No cases of Occupational Diseases were recorded.
• Zero claims for the Compensation for Occupational Diseases
were submitted.
• No machines operating at Black Wattle exceeded the regulatory
noise level.
• Black Wattle Colliery recorded one Lost time Injuries during
2016.
In addition to the required personnel appointments and
assignment of direct health and safety responsibilities on the
mine, a system of Hazard Identification and Risk Assessments has
been designed, implemented and maintained at Black Wattle.
Health and Safety training is conducted on an ongoing basis. We
are pleased to report all employees to date have received training
in hazard identification and risk assessment in their work
areas.
A medical surveillance system is also in place which provides
management with information used in determining measures to
eliminate, control and minimise employee health risks and hazards
and all Occupational Health hazards are monitored on an ongoing
basis.
Various systems to enhance the current HSE strategy have been
introduced as follows:
• In order to improve hazard identification before the
commencing of tasks, mini risk assessment booklets have been
distributed to all mine employees and long term contractors on the
mine.
• Dover testing is conducted for all operators. Dover testing is
a risk detection and accident reduction tool which identifies
employees’ problematic areas in their fundamental skills in order
to receive appropriate training.
• Ongoing basic rigging training is being conducted for all
washing plant personnel.
• A Job Safety Analysis form is utilised to ensure effective
identification of hazards in the workplace.
• In order to capture and record investigation findings from
incidents, an incident recording sheet is utilised by line
management and contractors.
• Black Wattle Colliery utilises ICAM (Incident Cause Analysis
Method).
• Ongoing training on conveyor belt operation is being conducted
with all employees involved with this discipline.
Black wattle colliery social and
labour plan (slp) progress
Black Wattle Colliery is committed to true transformation and
empowerment as well as poverty eradication within the surrounding
and labour providing communities.
Black Wattle is committed to providing opportunities for the
sustainable socio-economic development of its stakeholders, such
as:
• Employees and their families, through Skills Development,
Education Development, Human Resource Development, Empowerment and
Progression Programmes.
• Surrounding and labour sending communities, through Local
Economic Development, Rural and Community Development, Housing and
Living Condition, Enterprise Development and Procurement
Programmes.
• Empowerment partners, through Broad-Based Black Economic
Empowerment (BBBEE) and Joint Ventures with Historically
Disadvantaged South African (HDSA) new mining entrants and
enterprises.
• The company engages in ongoing consultation with its
stakeholders to develop strong company-employee relationships,
strong company-community relationships and strong company-HDSA
enterprise relationships.
The key focus areas in terms of the detailed SLP programmes were
updated as follows:
• Implementation of new action plans, projects, targets and
budgets were established through regular workshops with all
stakeholders.
• A comprehensive desktop socio-economic assessment was
undertaken on baseline data of the Steve Tshwete Local Municipality
(STLM) and Nkangala District Municipality (NDM).
• Black Wattle has drawn up a new SLP Plan for the next five
years (2017 – 2021).
• The current Black Wattle Colliery Local Economic Development
(LED) programmes were upgraded, and new LED projects were selected
in consultation with the key stakeholders from the STLM.
• An appropriate forum was established on the mine and a process
initiated for the consultation, empowerment and participation of
the employee representatives in the Black Wattle Colliery SLP
process.
• Included within the new SLP Plan is a new LED project in the
Mhluzi township called Mhluzi Design Printing. The primary focus is
to provide printing and embroidery services to local businesses.
Three supply contracts have already been concluded with business
being conducted with two schools as well as a local South African
Military base.
• Black Wattle Colliery has concluded extensive work on various
Agricultural projects as well as the E-Bag Recycling projects. The
E-Bag Recycling project aims to minimize the environmental impact
of post-consumer Polyethylene Terephthalate plastic (PET) on the
South African landscape. The project was awarded the PET
Entrepreneur award for 2013. To date in 2016, the E-Bag recycling
project has initiated up to 70 local community jobs in the region.
Black Wattle Colliery has entered into a joint venture project with
Enviroserve Waste Management to further develop and ensure the
future sustainability of this project.
• Various upgrades were initiated at the Evergreen School nearby
to Black Wattle including the erection of new toilet facilities for
the boys and girls, which formed part of the mines portable skills
development programme for our employees.
Social, community and human rights
issues
The group believes that it is in the shareholders’ interests to
consider social and human rights issues when conducting business
activities both in the UK and South
Africa.
Environment & Environment
Management Programme
South
Africa
Under the terms of the mine’s Environmental Management Programme
approved by the Department of Mineral Resource (“DMR”),
Black Wattle undertakes a host of environmental protection
activities to ensure that the approved Environmental Management
Plan is fully implemented. In addition to these routine activities,
Black Wattle regularly carries out environmental monitoring
activities on and around the mine, including evaluation of ground
water quality, air quality, noise and lighting levels, ground
vibrations, air blast monitoring, and assessment of visual impacts.
In addition to this Black Wattle also does quarterly monitoring of
all boreholes around the mine to ensure that no contaminated water
filters through to the surrounding communities.
Black Wattle is fully compliant with the regulatory requirements
of the Department of Water Affairs and Forestry and has an approved
water use licence.
Black Wattle Colliery has substantially improved its water
management by erecting and upgrading all its pollution control dams
in consultation with the Department of Water Affairs and
Forestry.
A performance assessment audit was conducted to verify
compliance to our Environmental Management Programme and no
significant deviations were found.
United
Kingdom
The group’s UK activities are principally property investment
whereby we provide premises which are rented to retail businesses.
We seek to provide those tenants with good quality premises from
which they can operate in an efficient and environmentally sound
manner.
Procurement
Black Wattle is a level 4 contributor to B-BBEE and has achieved
a 100% BEE procurement recognition level. In compliance with the
Mining Charter and the Mineral and Petroleum Resource Development
Act, Black Wattle has implemented a BBBEE-focussed procurement
policy which strongly encourages our suppliers to establish and
maintain BBBEE credentials. At present, BBBEE companies provide
approximately 80 percent of Black Wattle’s equipment
and services.
We closely monitor our monthly expenditure and welcome potential
BBBEE suppliers to compete for equipment and service contracts at
Black Wattle.
Employment
As part of Black Wattle’s commitment to the South African
government Mining Charter, the company seeks to:
• Expand opportunities for historically disadvantaged South
Africans (HDSAs), including women, to enter the mining and minerals
industry and benefit from the extraction and processing of the
country’s resources;
• Utilise the existing skills base for the empowerment of HDSAs;
and
• Expand the skills base of HDSAs in order to serve the
community.
In addition Black Wattle is committed to achieving the goals of
the South African Employment Equity Act and is pleased to report
the following:
• Black Wattle Colliery has exceeded the 10 percent women in
management and core mining target.
• Black Wattle Colliery has achieved 22 percent women in core
mining.
• 94 percent of the women at Black Wattle Colliery are HDSA
females.
Black Wattle Colliery has successfully submitted their annual
Employment Equity Report to the Department of Labour.
In terms of staff training some highlights for 2016
were:
• 17 employees were trained in ABET (Adult Basic Educational
Training) on various levels;
• An additional 5 disabled women continued their training on
ABET level one and two.
• 4 HDSA Females have completed and qualified in their
respective apprenticeships at the mine.
• Black Wattle had several of the staff of Silver Solutions CC,
a black owned private contractor on the mine, trained to become
competent to perform plastic pipe welding. The mine makes extensive
use of their services in this area.
Employment terms and conditions for our employees based at our
UK office and at our South African mining operations are regulated
by and are operated in compliance with all relevant prevailing
national and local legislation. Employment terms and conditions
provided to mining staff meet or exceed the national average. The
group’s mining operations and coal washing plant facility are
labour intensive and unionised. During the year no labour disputes,
strikes or wage negotiations disrupted production or had a
significant impact on earnings. The group’s relations to date with
labour representatives and labour related unions continue to remain
strong.
In terms of directors, employees and gender representation, at
the year end the group had 6 directors (6 male, 0 female), 7
senior managers (6 male, 1 female) and 187 employees (143 male, 44
female).
Green House Gas reporting
We have reported on all of the emission sources required under
the Companies Act 2006 (Strategic Report and Directors’ Reports)
Regulations.
The group has employed the Operational Control boundary
definition to outline our carbon footprint boundary. Included
within that boundary are Scope 1 & 2 emissions from coal
extraction and onsite mining processes for Black Wattle Colliery.
We have not measured and reported on our Scope 3 emissions sources.
Excluded from the footprint boundary are emission sources
considered non material by the group, including refrigerant use
onsite.
We have used the GHG Protocol Corporate Accounting and Reporting
Standard (revised edition) and a methodology adapted from the
Intergovernmental Panel on Climate Change (2006) to calculate
fugitive emissions from surface coal mining activities. Further
emission factors were used from UK Government’s GHG Conversion
Factors for company Reporting 2016.
The group’s carbon footprint: |
2016
CO2e
Tonnes |
2015
CO2e
Tonnes |
Emissions source: |
|
|
Scope 1 Combustion of fuel & operation of facilities |
11,860 |
10,571 |
Scope 1 Emissions from coal mining activities |
22,171 |
27,789 |
Scope 2 Electricity, heat, steam and cooling purchased for own
use |
8,530 |
7,571 |
Total |
42,561 |
45,931 |
Intensity: |
|
|
Intensity 1 Tonnes of CO2 per pound sterling of revenue |
0.0019 |
0.0018 |
Intensity 2 Tonnes of CO2 per tonne of coal produced |
0.034 |
0.029 |
Principal risks
& uncertainties
PRINCIPAL
RISK |
PERFORMANCE AND MANAGEMENT OF THE
RISK |
COAL
PRICE RISK
The group is exposed to coal price risk as its future revenues will
be derived based on contracts or agreements with physical off-take
partners at prices that will be determined by reference to market
prices of coal at delivery date.
The group’s South African mining operational earnings are
significantly dependent on movements in both the export and
domestic coal price.
The price of export sales is derived from a US Dollar-denominated
export coal price and therefore the price achievable in South
African Rands can be influenced by movements in exchange rates and
overall global demand and supply.
The domestic market coal prices are denominated in South African
Rand and are primarily dependant on local demand and supply. |
The group primarily
focuses on managing its underlying production costs to mitigate
coal price volatility as well as from time to time entering into
forward sales contracts with the goal of preserving future revenue
streams. The group has not entered into any such contracts in 2016
and 2015.
The group’s export and domestic sales are determined based on the
ability to deliver the quality of coal required by each market and
Quattro programme quotas, together with the market factors set out
opposite. Volumes of export sales achieved during the year were
primarily dependent on the mine’s ability to produce the higher
quality of coal required for export as well as allowable quotas
under the Quattro programme and overall global demand. The volume
of domestic market sales achieved during the year were primarily
dependant on local demand and supply as well as the mine’s ability
to produce the lower overall quality of coal required. |
MINING
RISK
As with many mining operations, the reserve that is mined has the
risk of not having the qualities and accessibility expected from
geological and environmental analysis. This can have a negative
impact on revenue and earnings as the quality and quantity of coal
mined and sold by our mining operations may be lower than
expected. |
This risk is managed by engaging
independent geological experts, referred to in the industry as the
“Competent Person”, to determine the estimated reserves and their
technical and commercial feasibility for extraction. In addition,
management engage Competent Persons to assist management in the
production of detailed life of mine plans as well as in the
monitoring of actual mining results versus expected performance and
management’s response to variances. The group continued to engage
an independent Competent Person in the current year. Refer to page
5 for details of mining performance. |
PRINCIPAL RISK |
PERFORMANCE AND
MANAGEMENT OF THE RISK |
CURRENCY
RISK
The group’s operations are sensitive to currency movements,
especially those between the South African Rand, US Dollar and
British Pound. These movements can have a negative impact on the
group’s mining operations revenue as noted above, as well as
operational earnings.
The group is exposed to currency risk in regard to the Sterling
value of inter-company trading balances with its South African
operations. It arises as a result of the retranslation of Rand
denominated inter-company trade receivable balances into Sterling
that are held within the UK and which are payable by South African
Rand functional currency subsidiaries.
The group is exposed to currency risk in regard to the
retranslation of the group’s South African functional currency net
assets to the Sterling reporting functional currency of the group.
A weakening of the South African Rand against Sterling can have a
negative impact on the financial position and net asset values
reported by the group. |
Export
sales within the group’s South African operations are derived from
a US Dollar-denominated export coal price. A weakening of the US
Dollar can have a negative impact on the South African Rand prices
achievable for coal sold by the group’s South African mining
operations. This in turn can have a negative impact on the group’s
mining operations revenue as well as operational earnings as the
group’s mining operating costs are Rand denominated. In order to
mitigate this, the group may enter into forward sales contracts in
local currencies with the goal of preserving future revenue
streams. The group has not entered into any such contracts in 2016
and 2015.
Although it is not the group’s policy to obtain forward contracts
to mitigate foreign exchange risk on inter-company trading balances
or on the retranslation of the group’s South African functional
currency net assets, management regularly review the requirement to
do so in light of any increased risk of future volatility.
Refer to the ‘Financial Review’ for details of significant currency
movement impacts in the year. |
NEW RESERVES AND
MINING PERMISSIONS
The life of the mine, acquisition of additional reserves,
permissions to mine (including ongoing and once-off permissions)
and new mining opportunities in South Africa generally are
contingent on a number of factors outside of the group’s control
such as approval by the Department of Mineral Resources, the
Department of Water Affairs and Forestry and other regulatory or
state owned entities.
In addition, the group’s South African operations are subject to
the government Mining Charter.
Any regulatory changes to the Mining Charter, or failure to meet
existing targets, could adversely affect the mine’s ability to
retain its mining rights in South Africa. |
The
maintenance of compliance with permits includes factors such as
environmental management, health and safety, labour laws and Black
Empowerment legislation; as failure to maintain appropriate
controls and compliance may in turn result in the withdrawal of the
necessary permissions to mine. The management of these regulatory
risks and performance in the year is noted on page 15 under the
headings environmental risk, health & safety risk and labour
risk. Additionally, in order to mitigate this risk, the group
strives to provide adequate resources to this area including the
employment of adequate personnel and the utilisation of third party
consultants competent in regulatory compliance related to mining
rights and mining permissions
The group also continues to actively seek new opportunities to
expand it mining operations in South Africa through the acquisition
of additional coal reserves and new commercial arrangements with
existing mining right holders. |
POWER SUPPLY
RISK
The current utility provider for power supply in South Africa is
the government run Eskom. Eskom continues to undergo capacity
problems resulting in power cuts and lack of provision of power
supply to new projects. Any power cuts or lack of provision of
power supply to the group’s mining operations may disrupt mining
production and impact on earnings. |
The group’s mining
operations have to date not been affected by power cuts. However
the group manages this risk through regular monitoring of Eskom’s
performance and ongoing ability to meet power requirements. In
addition, the group continues to assess the ability to utilise
diesel generators as an alternative means of securing power in the
event of power outages. |
FLOODING
RISK
The group’s mining operations are susceptible to seasonal flooding
which could disrupt mining production and impact on earnings. |
Management monitors
water levels on an ongoing basis and various projects have been
completed, including the construction of additional dams, to
minimise the impact of this risk as far as possible. Refer to page
6 for details of the effect of flooding in early 2017. |
|
|
|
PRINCIPLE RISK |
PERFORMANCE AND MANAGEMENT OF THE RISK |
ENVIRONMENTAL RISK
The group’s South African mining operations are required to adhere
to local environmental regulations. Any failure to adhere to local
environmental regulations, could adversely affect the mine’s
ability to mine under its mining right in South Africa. |
In line with all South African mining
companies, the management of this risk is based on compliance with
the Environment Management Plan. In order to ensure compliance, the
group strives to provide adequate resources to this area including
the employment of personnel and the utilisation of third party
consultants competent in regulatory compliance related to
environmental management.
To date, Black Wattle is fully compliant with the regulatory
requirements of the Department of Water Affairs and Forestry and
has an approved water use licence. Further details of the group’s
Environment Management Programme are disclosed in the Sustainable
development report on page 9. |
HEALTH & SAFETY RISK
Attached to mining there are inherent health and safety risks. Any
such safety incidents disrupt operations, and can slow or even stop
production. In addition, the group’s South African mining
operations are required to adhere to local Health and Safety
regulations. |
The group has a comprehensive Health and Safety
programme in place to mitigate this risk. Management strive to
create an environment where Health and safety of our employees is
of the utmost importance. Our Health & Safety programme
provides clear guidance on the standards our mining operation is
expected to achieve. In addition, management receive regular
updates on how our mining operations are performing. Further
details of the group’s Health and Safety Programme are disclosed in
the Sustainable development report on page 8. |
LABOUR RISK
The group’s mining operations and coal washing plant facility are
labour intensive and unionised. Any labour disputes, strikes or
wage negotiations may disrupt production and impact earnings. |
In order to mitigate this risk, the
group strives to ensure open and transparent dialogue with
employees across all levels. In addition, appropriate channels of
communication are provided to all employment unions at Black Wattle
to ensure effective and early engagement on employment matters, in
particular wage negotiations and disputes.
Refer to the ‘Employment’ section on page 12 for further
details. |
CASHFLOW RISK
Commodity price risk, currency volatility and the uncertainties
inherent in mining may result in favourable or unfavourable
cashflows. |
In order to mitigate this, we seek to balance the
high risk of our mining operations with a dependable cash flow from
our UK property investment operations which are actively managed by
London & Associated Properties PLC. Due to the long term nature
of the leases, the effect on cash flows from property investment
activities are expected to remain stable as long as tenants remain
in operation. Refer to page 20 for details of the property
portfolio performance. |
PROPERTY VALUATION RISK
Fluctuations in property values, which are reflected in the
Consolidated Income Statement and Balance Sheet, are dependent on
an annual valuation of commercial properties. A fall in UK
commercial property can have a marked effect on the profitability
and the net asset value of the group as well as impact on covenants
and other loan agreement obligations. |
The group utilises the services of London &
Associated Properties PLC whose responsibility is to actively
manage the portfolio to improve rental income and thus enhance the
value of the portfolio over time. In addition, management regularly
monitor banking covenants and other loan agreement obligations as
well as the performance of our property assets in relation to the
overall market over time. Refer to page 20 for details of the
property portfolio performance. |
Financial & performance review
The movement in the Group’s Adjusted EBITDA from £1.7million in
2015 to £1.5million in 2016 can mainly be attributable to the lower
Run of Mine production at Black Wattle offsetting the impact of the
higher prices achievable for our coal in the last quarter. As we
continue into 2017, the group’s financial position remains strong
and we expect to achieve significant additional value from our
existing mining operations as noted in the Mining Review.
EBITDA, adjusted EBITDA and mining production are used as key
performance indicators for the group and its mining activities as
the group has a strategic focus on the long term development of its
existing mining reserves and the acquisition of additional mining
reserves in order to realise shareholder value. Whilst
profit/(loss) before tax is considered as one of the key
performance indicators of the group, the profitability of the group
and the group’s mining activities can be impacted by the volatile
and capital intensive nature of the mining sector. Accordingly,
EBITDA and adjusted EBITDA are primarily used as key performance
indicators as they are indicative of the value associated with the
group’s mining assets expected to be realised over the long term
life of the group’s mining reserves. In addition, for the group’s
property investment operations, the net property valuation and net
property revenue are utilised as key performance indicators as the
group’s substantial property portfolio reduces the risk profile for
shareholders by providing stable cash generative UK assets and
access to capital appreciation.
Key performance indicators
The key performance indicators for the group are: |
2016
£’000 |
2015
£’000 |
For the group: |
|
|
Operating profit before depreciation, fair value
adjustments and exchange movements (adjusted EBITDA) |
1,516 |
1,717 |
EBITDA |
2,415 |
1,365 |
Profit/(loss) before tax |
346 |
(147) |
For our property investment
operations: |
|
|
Net property valuation (excluding joint
ventures) |
13,245 |
12,800 |
Net property revenue (excluding joint
ventures) |
1,084 |
1,014 |
For our mining activities: |
|
|
Operating profit before depreciation, fair value
adjustments and exchange movements (adjusted EBITDA) |
755 |
996 |
EBITDA |
1,204 |
499 |
|
Tonnes
‘000 |
Tonnes
‘000 |
Mining production |
1,260 |
1,580 |
The key performance indicators of the group
can
be reconciled as follows: |
Mining
£’000 |
Property
£’000 |
Other
£’000 |
2016
£’000 |
2015
£’000 |
Revenue |
21,703 |
1,084 |
28 |
22,815 |
25,655 |
Mining and washing costs |
(16,184) |
- |
- |
(16,184) |
(19,177) |
Other operating costs excluding depreciation |
(4,764) |
(348) |
(3) |
(5,115) |
(4,761) |
Operating profit before depreciation, fair
value adjustments and exchange movements (adjusted EBITDA) |
755 |
736 |
25 |
1,516 |
1,717 |
Exchange movements |
449 |
- |
- |
449 |
(497) |
Fair value adjustments |
- |
445 |
12 |
457 |
214 |
Operating profit excluding depreciation |
1,204 |
1,181 |
37 |
2,422 |
1,434 |
Share of (loss)/profit in joint venture |
- |
(7) |
- |
(7) |
69 |
Loss on reclassification of asset as held for
sale |
- |
- |
- |
- |
(138) |
EBITDA |
1,204 |
1,174 |
37 |
2,415 |
1,365 |
Net interest movement |
|
|
|
(284) |
(228) |
Depreciation |
|
|
|
(1,785) |
(1,284) |
Profit/(loss) before tax |
|
|
|
346 |
(147) |
Adjusted EBITDA is used as a key indicator of the trading
performance of the group and its operating segments before the
impact of depreciation, fair value adjustments and foreign exchange
movements. The group’s operating segments include its South African
mining operations and UK property investments. The performance of
these two operating segments are discussed in more detail
below.
The group achieved EBITDA for the year of £2.4million (2015:
£1.4million). The movement compared to the prior year can mainly be
attributable to revaluation gains on our UK investment property of
£0.4million (2015: £0.2million) and exchange rate gains of
£0.4million (2015: loss of £0.5million) related to the rand
denominated intercompany balances held by the company with our
South African mining subsidiary.
Depreciation for the year, related to our mining operations,
increased to £1.8million (2015: £1.3million). This increase can
mainly be attributable to capital expenditure incurred during 2016
in developing our new opencast areas. This increase impacted on the
group’s overall profit before tax reported of £0.3million (2015:
loss of £0.1million).
SOUTH AFRICAN MINING OPERATIONS
Performance
The key performance indicators of the group’s South African
mining
operations are presented in South African Rand and UK
Sterling as follows: |
South African Rand |
UK Sterling |
2016
R’000 |
2015
R’000 |
2016
£’000 |
2015
£’000 |
Revenue |
432,481 |
479,903 |
21,703 |
24,608 |
Mining and washing costs |
(322,505) |
(373,982) |
(16,184) |
(19,177) |
Operating profit before other operating costs and
depreciation |
109,976 |
105,921 |
5,519 |
5,431 |
Other operating costs (excluding
depreciation) |
|
|
(4,764) |
(4,435) |
Operating profit before depreciation, fair
value adjustments and exchange movements (adjusted EBITDA) |
|
|
755 |
996 |
Exchange movements |
|
|
449 |
(497) |
EBITDA |
|
|
1,204 |
499 |
|
2016
‘000 |
2015
‘000 |
Mining production in tonnes |
1,260 |
1,580 |
|
2016
R |
2015
R |
Revenue per tonne |
343 |
302 |
Mining and washing costs per tonne |
(256) |
(235) |
Operating profit per tonne before other operating
costs and depreciation |
87 |
67 |
Total revenue for the group’s mining operations for the year
increased on a per tonne basis from R303 in 2015 to R343 with the
improved South African Rand prices achievable for our coal in the
second half of the year, and in particular the last quarter. As a
result of the overall lower Run of Mine production, overall revenue
for the group’s South African mining operations decreased in the
year to R432.5million (2015: R480.0million).
Total mining and washing costs for the group decreased from
R374.0million in 2015 to R322.5million in 2016. This decrease can
also mainly be attributable to the lower Run of Mine production in
the second half of the year. The overall increase in cost per tonne
from R304 per tonne to R343 per tonne can mainly be attributable to
the deterioration of the Blue nightingale reserve in the first half
of the year and the impact on mining production and washing costs
as a result of the stone contamination issues in the second half of
the year.
Other operating costs (excluding depreciation) of £4.8million
(2015: £4.4million) include general administrative costs as well as
administrative salaries and wages related to our South African
mining operations that are incurred both in South Africa and in the UK. These costs are
not significantly impacted by movements in mining production and
the increase during the year was in line with management’s
expectations and local inflation.
Overall, the group’s South African mining operations achieved an
adjusted EBITDA of £0.8million (2015: £1.0million) with the lower
Run of Mine production for the year offsetting the impact of the
higher prices achievable for our coal.
The volatility in the South African Rand continued to impact on
earnings during the year. Although our mining activities achieved
an EBITDA of £1.2million (2015: £0.5million), this result, compared
to the prior year, was positively impacted by an exchange rate gain
of £0.4million in the current year compared to an exchange rate
loss of £0.5million incurred during the prior year. These exchange
movements can mainly be attributable to the retranslation of Rand
denominated inter-company trade receivable balances with our South
African mining operations that are held within the UK.
A further explanation of the mines operational performance can
be found in the Mining Review on page 5.
Other mining Investments
The group holds a £1.8million (2015: £1.2million) investment in
Ezimbokodweni Mining (Pty) Limited made up of a £1.35million loan
(2015: £0.9million) and a £0.45million (2015: £0.3million) joint
venture investment. The increase in the overall investment,
compared to the prior year, can mainly be attributable to exchange
rate gains on translation of year end South African Rand balances
into Sterling of £0.5million. The carrying value of the investment
is dependent upon the completion of the acquisition of the Pegasus
coal project (“the project”) in South
Africa and details of the background to the transaction,
significant developments and the significant judgment applied in
determining that the transaction will ultimately complete are set
out in the financial statements on page 60. The carrying value of
the underlying project is supported by its coal reserves and Life
of Mine plan and is considered appropriate given the underlying
economic value of the project.
Uk property investment
Performance
The group’s portfolio is managed actively by London & Associated properties plc and
continues to perform well with voids across the portfolio at the
low level of 1.79%. Overall, the group achieved Net Property
revenue (excluding joint ventures) of £1.09million (2015:
£1.01million). The increase, compared to the prior year, can mainly
be attributable to the contribution to revenue from our new retail
property in Northampton, which was
acquired in October 2015.
The property portfolio was externally valued at 31 December 2016 and the value of UK investment
properties attributable to the group at year end was £13.25 million
(2015: £12.8million). This increase, compared to the prior year,
can also mainly be attributable to our new retail property in
Northampton which was valued at
£1.35million (2015: £1.0million) at year end. Certain units within
the property have recently undergone complete refurbishment and the
property has achieved increased rental levels from its re-let
units.
Joint venture property investments
The group holds a £0.9million (2015: £0.9million) joint venture
investment in Dragon Retail Properties Limited, a UK property
investment company. In March 2016,
the group disposed of its joint venture investment in Langney
Shopping Centre in Eastbourne for
£1.14million in cash. The investment was classified as a
non-current asset held for sale within the group’s consolidated
balance sheet in the prior period with a loss on discontinued
operations in 2015 of £0.1million.
The open market value of the company’s share of investment
properties included within its joint venture investment in Dragon
Retail Properties is £1.3million (2015: £1.3million) and within
non-current assets held for sale is £nil (2015: £2.3million).
Overall, the group achieved net property revenue of £1.2million
(2015: £1.3million) for the year which includes the company’s share
of net property revenue from its investment in joint ventures of
£86,000 (2015: £86,000) and non-current assets held for sale of
£nil
(2015: £172,000).
Loans
South
Africa
In South Africa, the group
holds a R80million (South African Rand) structured trade finance
facility with Absa Bank Limited, a South African subsidiary of
Barclays Bank PLC. The facility is renewable annually at 30 June
and is secured against inventory, debtors and cash that are held in
the group’s South African operations. This facility comprises of a
R60million revolving loan to cover the fluctuating working capital
requirements of the group’s South African operations, and a fully
drawn R20million loan facility to cover guarantee requirements
related to the group’s South African mining operations. The Board
anticipate the facility will be renewed again this year.
United
Kingdom
In December 2014, the group signed
a £6 million term loan facility with Santander. The Loan is secured
against the group’s UK retail property portfolio. The facility has
a five year term, and is repayable at the end of the term. The
interest cost of the loan is 2.35% above LIBOR. During the year the
group breached a loan to value covenant on the bank loan and a
payment of £123,300 (2015: £nil) was made against the loan during
the year and the covenant breach was remediated. This covenant is
intact at the year end.
Cashflow & financial
position
The following table summarises the main components of the
consolidated cashflow for the year: |
Year ended
31 December
2016
£’000 |
Year ended
31 December
2015
£’000 |
Cash flow generated from operations before
working capital and other items |
1,625 |
1,869 |
Cash flow from operating activities |
2,614 |
1,731 |
Cash flow from investing activities |
(1,691) |
(2,888) |
Cash flow from financing activities |
(521) |
(584) |
Net (decrease) / increase in cash and cash
equivalents |
402 |
(1,741) |
Cash and cash equivalents at 1 January |
(626) |
719 |
Exchange adjustment |
(666) |
396 |
Cash and cash equivalents at 31
December |
(890) |
(626) |
Cash and cash equivalents at 31 December
comprise: |
|
|
Cash and cash equivalents as presented in the balance sheet |
2,444 |
1,608 |
Bank overdrafts (secured) |
(3,334) |
(2,234) |
|
(890) |
(626) |
Cash flow generated from operating activities of £2.6million
(2015: £1.7 million) increased compared to the prior year as a
result of an increase in working capital of £1.4million (2015:
£0.1million) for the year, mainly attributable to an increase in
trade payables of £1.4million as a result of an increase in trade
payables related to mining production costs at our new opencast
operations at Black Wattle which offset the reduced adjusted EBITDA
of the group’s South African mining operations as outlined
above.
Investing cashflows primarily reflect the net effect of capital
expenditure during the year of £2.9million (2015: £3.0million)
which can mainly be attributable to development costs at our new
opencast operations at Black Wattle and the disposal of its joint
venture investment in Langney Shopping Centre for £1.14million in
cash. As at year end the group’s mining reserves, plant and
equipment had a net asset value of £8.5million (2015: £5.4million).
In addition to movements in capital expenditure and depreciation
during the year, the increase in value of the group’s mining
reserves, plant and equipment can be attributed to exchange rate
gains on translation of the group’s South African assets into
Sterling of £2.1million (2015: loss of £1.4million).
Cash outflows from financing activities included dividends paid
to shareholders of £0.4million (2015: 0.4 million) and a
£0.1million payment against the company’s UK loan facility with
Santander.
Overall, the group managed to achieve an overall increase in
cash and cash equivalents of £0.4million (2015: decrease of
£1.7million) for the year. After taking into account an exchange
loss of £0.7million on the translation of the group’s year end net
cash borrowings that were held in South African Rands, the group’s
net balance owing of cash and cash equivalents (including bank
overdrafts) at year end was £0.9 million (2015: £0.6million).
The group has considerable financial resources available at
short notice including cash and cash equivalents (excluding bank
overdrafts) of £2.4million (2015: £1.6million), investments
available for sale of £0.8million (2015: £0.6million) and its £2m
loan to Dragon Retail Properties Limited which accrues annual
interest at 6.875 per cent.
The net assets of the group reported as at year end were
£17.0million (2015: £15.6million). Total assets increased from
£31.1million to £36.9million mainly due to the capital expenditure
noted above, property fair value uplifts and the impact of exchange
rate gains on retranslation of assets held by the South African
mining subsidiary. Liabilities increased from £15.5million to
£19.9million primarily due to the increased trade payables noted
above and the effect of exchange rate movements on liabilities held
by the South African mining subsidiary. The overall exchange gain
recorded through the translation reserve on translation of the
group’s South African net assets at year end was £1.0million (2015:
loss of £1.1million).
Further details on the group’s cashflow and financial position
are stated in the Consolidated Cashflow Statement on page 57 and
the Consolidated Balance Sheet on page 54.
Future prospects
As we continue into 2017, the group’s financial position remains
strong. The group expects to achieve significant additional value
from our existing mining operations. In addition, the group seeks
to expand its operations in South
Africa through the acquisition of additional coal reserves.
Further information on the outlook of the company can be found in
both the Chairman’s Statement on page 2 and the Mining Review on
page 5 which form part of the Strategic Report.
Signed on behalf of the Board of Directors
Garrett Casey
Finance Director
26 April 2017
Governance
Management team
1 Sir Michael Heller
Chairman
Bisichi Mining PLC
2 Andrew Heller
Managing Director
Bisichi Mining PLC
Managing Director
Black Wattle Colliery
3 Christopher Joll
Senior Independent Director
Chairman Audit and Remuneration Committees
4 Garrett Casey
Finance Director
Bisichi Mining PLC
Director Black Wattle Colliery
5 Robert Grobler
Director of Mining
Bisichi Mining PLC
Director Black Wattle Colliery
6 Ethan Dube
Director
Black Wattle Colliery
7 Nico Serfontein
Mine Manager
Black Wattle Colliery
Directors and advisors
* Sir Michael
Heller
MA, FCA (Chairman)
Andrew R Heller
MA, ACA
(Managing Director)
Garrett Casey
CA (SA)
(Finance Director)
Robert
Grobler
Pr Cert Eng
(Director of mining)
O+ Christopher A Joll
MA
(Non-executive)
Christopher Joll was appointed a Director on 1 February 2001. He has held a number of
non-executive directorships of quoted and un-quoted companies
and is currently senior partner of MJ2 Events LLP an event
management business.
O * John A Sibbald
BL
(Non-executive)
John Sibbald has been a Director
since 1988. After qualifying as a Chartered Accountant he spent
over 20 years in stockbroking, specialising in mining and
international investment.
* Member of the nomination committee
+ Senior independent director
O Member of the audit, nomination and remuneration
committees.
Secretary and registered office
Garrett Casey CA (SA)
24 Bruton Place
London W1J 6NE
Black Wattle Colliery Directors
Andrew Heller
(Managing Director)
Ethan Dube
Robert Grobler
Garrett Casey
Property portfolio asset manager
James Charlton BSc MRICS
Company Registration
Company registration No. 112155 (Incorporated in England and Wales)
Website
www.bisichi.co.uk
E-mail
admin@bisichi.co.uk
Auditor
BDO LLP
Principal bankers
United Kingdom
Santander UK PLC
National Westminster Bank PLC
Investec
PLC
South Africa
ABSA Bank (SA)
First National Bank (SA)
Standard Bank
(SA)
Corporate solicitors
United Kingdom
Fladgate LLP, London
Memery Crystal, London
Olswang LLP, London
South Africa
Tugendhaft Wapnick Banchetti and Partners, Johannesburg
Hogan Lovells, Johannesburg
Brandmullers Attorneys, Middelburg
Stockbrokers
Shore Capital & Corporate Ltd
Registrars and transfer office
Capita Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent, BR3 4TU
Telephone 0871 664 0300
(Calls cost 12p per minute + network extras) or
+44 (0) 208 639 3399 for overseas callers
www.capitaassetservices.com
Email: ssd@capitaregistrars.com
Five year summary
|
2016
£’000 |
2015
£’000 |
2014
£’000 |
2013
£’000 |
2012
£’000 |
Consolidated income statement items |
|
|
|
|
|
Revenue |
22,815 |
25,655 |
26,500 |
35,105 |
35,962 |
Operating profit/(loss) |
637 |
150 |
1,364 |
123 |
2,568 |
Profit/(loss) before tax |
346 |
(147) |
1,568 |
102 |
2,190 |
Trading profit/(loss) before tax |
(74) |
(188) |
1,157 |
17 |
2,808 |
Revaluation and impairment profit/(loss) before
tax |
420 |
41 |
411 |
85 |
(618) |
EBITDA |
2,415 |
1,365 |
4,609 |
3,039 |
4,684 |
Operating profit before depreciation, fair value
adjustments and exchange movements (adjusted EBITDA) |
1,516 |
1,717 |
4,276 |
3,834 |
5,484 |
|
|
|
|
|
|
Consolidated balance sheet items |
|
|
|
|
|
Investment properties |
13,245 |
12,800 |
11,575 |
11,559 |
11,612 |
Fixed asset investments |
2,703 |
2,112 |
4,090 |
4,370 |
4,309 |
|
15,948 |
14,912 |
15,665 |
15,929 |
15,921 |
Available for sale investments |
781 |
594 |
796 |
822 |
787 |
|
16,729 |
15,506 |
16,461 |
16,751 |
16,708 |
Other assets less liabilities less non-controlling
interests |
(72) |
(196) |
854 |
(123) |
607 |
Total equity attributable to equity
shareholders |
16,657 |
15,310 |
17,315 |
16,628 |
17,315 |
Net assets per ordinary share
(attributable) |
156.0p |
143.4p |
162.2p |
156.3p |
164.0p |
Dividend per share |
4.00p |
4.00p |
4.00p |
4.00p |
4.00p |
Financial calendar
7 June 2017 |
Annual General Meeting |
28 July 2017 |
Payment of final dividend for 2016
(if approved) |
Late August 2017 |
Announcement of half-year results
to 30 June 2017 |
Late April 2018 |
Announcement of results for year ending
31 December 2017 |
Directors’ report
The directors submit their report together with the audited
financial statements for the year ended 31 December 2016.
Activities and review of business
The group continues its mining activities. Income for the year
was derived from sales of coal from its South African operations.
The group also has a property investment portfolio for which it
receives rental income.
The results for the year and state of affairs of the group and
the company at 31 December 2016 are
shown on pages 51 to 92 and in the Strategic Report on pages 2 to
23. Future developments and prospects are also covered in the
Strategic Report. Over 99 per cent. of staff are employed in the
South African coal mining industry – employment matters and health
and safety are dealt with in the Strategic Report.
The management report referred to in the Director’s
responsibilities statement encompasses this Directors’ Report and
Strategic Report on pages 2 to 23.
Corporate responsibility
Environment
The environmental considerations of the group’s South African
coal mining operations are covered in the Strategic Report on pages
2 to 23.
The group’s UK activities are principally property investment
whereby premises are provided for rent to retail businesses. The
group seeks to provide those tenants with good quality premises
from which they can operate in an efficient and environmentally
friendly manner. Wherever possible, improvements, repairs and
replacements are made in an environmentally efficient manner and
waste re-cycling arrangements are in place at all the company’s
locations.
Greenhouse Gas Emissions
Details of the group’s greenhouse gas emissions for the year
ended 31 December 2016 can be found
on page 12 of the Strategic Report.
Employment
The group’s policy is to attract staff and motivate employees by
offering competitive terms of employment. The group provides equal
opportunities to all employees and prospective employees including
those who are disabled. The Strategic Report gives details of the
group’s activities and policies concerning the employment,
training, health and safety and community support and social
development concerning the group’s employees in South Africa.
Dividend policy
An interim dividend for 2016 of 1p was paid on 5 February 2017 (Interim 2015: 1p). The directors
recommend the payment of a final dividend for 2016 of 3p per
ordinary share (2015: 3p) making a total dividend for 2016 of 4p
(2015: 4p).
Subject to shareholder approval, the total dividend per ordinary
share for 2016 will be 4p per ordinary share.
The final dividend will be payable on Friday 28 July 2017 to shareholders registered at the
close of business on 7 July 2017.
Investment properties
The investment property portfolio is stated at its open market
value of £13,245,000 at 31 December
2016 (2015: £12,800,000) as valued by professional external
valuers. The open market value of the company’s share of investment
properties included within its investments in joint ventures is
£1,315,000 (2015: £1,334,000) and within non-current assets held
for sale is £nil (2015: £2,286,000).
Financial instruments
Note 22 to the financial statements sets out the risks in
respect of financial instruments. The Board reviews and agrees
overall treasury policies, delegating appropriate authority to the
managing director. Financial instruments are used to manage the
financial risks facing the group. Treasury operations are reported
at each Board meeting and are subject to weekly internal
reporting.
Directors
The directors of the company for the whole year were Sir
Michael Heller, A R Heller, G J
Casey, C A Joll, R J Grobler (a South African citizen), and J A
Sibbald.
The director retiring by rotation is Mr G J Casey who offers
himself for re-election. Mr GJ Casey has been an executive director
of the company since 2010. He is a chartered accountant and has a
contract of employment determinable at three months’ notice. The
board recommends the re-election of GJ Casey.
No director had any material interest in any contract or
arrangement with the company during the year other than as shown in
this report.
Directors’ shareholdings
The interests of the directors in the shares of the company,
including family and trustee holdings where appropriate, are shown
on
page 38 of the Annual Remuneration Report.
Substantial
interests
The following have advised that they have an interest in 3 per
cent. or more of the issued share capital of the company as at
26 April 2017:
London & Associated
Properties PLC – 4,432,618 shares representing 41.52 per cent. of
the issued capital. (Sir Michael
Heller is a director and shareholder of London & Associated Properties PLC).
Sir Michael Heller – |
330,117 shares representing 3.09 per cent. of the
issued capital. |
A R Heller – |
785,012 shares representing 7.35 per cent. of the
issued capital. |
Cavendish Asset Management
Limited – |
1,906,360 shares representing 17.86 per cent. of
the issued share capital. |
James Hyslop – |
341,126 shares representing 3.20 per
cent. of the issued share capital. |
Disclosure of information to
auditor
The directors in office at the date of approval of the financial
statements have confirmed that as far as they are aware that there
is no relevant audit information of which the auditor is unaware.
Each of the directors has confirmed that they have taken all
reasonable steps they ought to have taken as directors to make
themselves aware of any relevant audit information and to establish
that it has been communicated to the auditor.
Corporate governance
The Board acknowledges the importance of the guidelines set out
in the Quoted Companies Alliance (QCA) published Corporate
Governance Code and complies with these so far as is appropriate
having regard to the size and nature of the company. The paragraphs
below set out how the company has applied this guidance during the
year.
Principles of corporate governance
The group’s Board appreciates the value of good corporate
governance not only in the areas of accountability and risk
management, but also as a positive contribution to business
prosperity. The Board endeavours to apply corporate governance
principles in a sensible and pragmatic fashion having regard to the
circumstances of the group’s business. The key objective is to
enhance and protect shareholder value.
Board structure
During the year the Board comprised the executive chairman, the
managing director, two other executive directors and two
non-executive directors. Their details appear on page 27.
The Board is responsible to shareholders for the proper
management of the group. The Directors’ responsibilities statement
in respect of the accounts is set out on page 49. The non-executive
directors have a particular responsibility to ensure that the
strategies proposed by the executive directors are fully
considered. To enable the Board to discharge its duties, all
directors have full and timely access to all relevant information
and there is a procedure for all directors, in furtherance of
their duties, to take independent professional advice, if
necessary, at the expense of the group. The Board has a formal
schedule of matters reserved to it and meets bi-monthly.
The Board is responsible for overall group strategy, approval of
major capital expenditure projects and consideration of significant
financing matters.
The following Board committees, which have written terms of
reference, deal with specific aspects of the group’s affairs:
• The nomination committee is chaired by Christopher Joll and
comprises the non-executive directors and the executive chairman.
The committee is responsible for proposing candidates for
appointment to the Board, having regard to the balance and
structure of the Board. In appropriate cases recruitment
consultants are used to assist the process. Each director is
subject to re-election at least every three years.
• The remuneration committee is responsible for making
recommendations to the Board on the company’s framework of
executive remuneration and its cost. The committee determines the
contractual terms, remuneration and other benefits for each of the
executive directors, including performance related bonus schemes,
pension rights and compensation payments. The Board itself
determines the remuneration of the non-executive directors. The
committee comprises the non-executive directors. It is chaired by
Christopher Joll. The company’s executive chairman is normally
invited to attend meetings. The report on directors’ remuneration
is set out on pages 35 to 42.
• The audit committee comprises the two non-executive directors
and is chaired by Christopher Joll. Its prime tasks are to review
the scope of external audit, to receive regular reports from the
company’s auditor and to review the half-yearly and annual accounts
before they are presented to the Board, focusing in particular on
accounting policies and areas of management judgment and
estimation. The committee is responsible for monitoring the
controls which are in force to ensure the integrity of the
information reported to the shareholders. The committee acts as a
forum for discussion of internal control issues and contributes to
the Board’s review of the effectiveness of the group’s internal
control and risk management systems and processes. The committee
also considers annually the need for an internal audit function. It
advises the Board on the appointment of external auditors and on
their remuneration for both audit and non-audit work, and discusses
the nature and scope of the audit with the external auditors. The
committee, which meets formally at least twice a year, provides a
forum for reporting by the group’s external auditors.
Meetings are also attended, by invitation, by the company
chairman, managing director and finance director.
• The audit committee also undertakes a formal assessment of the
auditors’ independence each year which includes:
• a review of non-audit services provided to the group and
related fees;
• discussion with the auditors of a written report detailing all
relationships with the company and any other parties that could
affect independence or the perception of independence;
• a review of the auditors’ own procedures for ensuring the
independence of the audit firm and partners and staff involved in
the audit, including the regular rotation of the audit partner;
and
• obtaining written confirmation from the auditors that, in
their professional judgement, they are independent.
The audit committee report is set out on page 46.
An analysis of the fees payable to the external audit firm in
respect of both audit and non-audit services during the year is set
out in Note 4 to the financial statements.
Performance evaluation – board,
board committees and directors
The performance of the board as a whole and of its committees
and the non-executive directors is assessed by the chairman and the
managing director and is discussed with the senior independent
director. Their recommendations are discussed at the nomination
committee prior to proposals for re-election being recommended to
the Board. The performance of executive directors is discussed and
assessed by the remuneration committee. The senior independent
director meets regularly with the chairman and both the executive
and non-executive directors individually outside of formal
meetings. The directors will take outside advice in reviewing
performance but have not found this necessary to date.
Independent directors
The senior independent non-executive director is Christopher
Joll. The other independent non-executive director is
John Sibbald.
Christopher Joll has been a non-executive director for over
fifteen years and John Sibbald has
been a non-executive director for over twenty five years. The Board
encourages Christopher Joll and John
Sibbald to act independently. The board considers that their
length of service and connection with the company’s public
relations advisers, does not, and has not, resulted in their
inability or failure to act independently. In the opinion of the
Board, Christopher Joll and John Sibbald continue to fulfil
their role as independent non-executive directors.
The independent directors regularly meet prior to Board
meetings to discuss corporate governance issues.
Board and board committee meetings
The number of meetings during 2016 and attendance at regular
Board meetings and Board committees was as follows:
|
|
Meetings
held |
Meetings Attended |
Sir Michael Heller |
Board
Nomination committee |
5
1 |
5
1 |
A R Heller |
Board
Audit committee |
5
2 |
5
2 |
G J Casey |
Board
Audit committee |
5
2 |
5
2 |
R J Grobler |
Board |
5 |
1 |
C A Joll |
Board
Audit committee
Nomination committee
Remuneration committee |
5
2
1
1 |
5
2
1
1 |
J A Sibbald |
Board
Audit committee
Nomination committee
Remuneration committee |
5
2
1
1 |
5
2
1
1 |
Internal control
The directors are responsible for the group’s system of internal
control and review of its effectiveness annually. The Board has
designed the group’s system of internal control in order to provide
the directors with reasonable assurance that its assets are
safeguarded, that transactions are authorised and properly recorded
and that material errors and irregularities are either prevented or
would be detected within a timely period. However, no system of
internal control can eliminate the risk of failure to achieve
business objectives or provide absolute assurance against material
misstatement or
loss.
The key elements of the control system in operation are:
• the Board meets regularly with a formal schedule of matters
reserved to it for decision and has put in place an organisational
structure with clearly defined lines of responsibility and with
appropriate delegation of authority;
• there are established procedures for planning, approval and
monitoring of capital expenditure and information systems for
monitoring the group’s financial performance against approved
budgets and forecasts;
• UK property and financial operations are closely monitored by
members of the Board and senior managers to enable them to assess
risk and address the adequacy of measures in place for its
monitoring and control. The South African operations are closely
supervised by the UK based executives through daily, weekly and
monthly reports from the directors and senior officers in
South Africa. This is supplemented
by monthly visits by the UK based finance director to the South
African operations which include checking the integrity of
information supplied to the UK. The directors are guided by the
internal control guidance for directors issued by the Institute of
Chartered Accountants in England
and Wales.
During the period, the audit committee has reviewed the
effectiveness of internal control as described above. The Board
receives periodic reports from its committees.
There are no significant issues disclosed in the Annual Report
for the year ended 31 December 2016
(and up to the date of approval of the report) concerning material
internal control issues. The directors confirm that the Board has
reviewed the effectiveness of the system of internal control as
described during the period.
Communication with shareholders
Communication with shareholders is a matter of priority.
Extensive information about the group and its activities is given
in the Annual Report, which is made available to shareholders.
Further information is available on the company’s website,
www.bisichi.co.uk. There is a regular dialogue with institutional
investors. Enquiries from individuals on matters relating to their
shareholdings and the business of the group are dealt with
informatively and promptly.
Takeover directive
The company has one class of share capital, ordinary shares.
Each ordinary share carries one vote. All the ordinary shares rank
pari passu. There are no securities issued in the company which
carry special rights with regard to control of the company. The
identity of all substantial direct or indirect holders of
securities in the company and the size and nature of their holdings
is shown under the “Substantial interests” section of this report
above.
A relationship agreement dated 15
September 2005 (the “Relationship Agreement”) was entered
into between the company and London & Associated Properties PLC (“LAP”)
in regard to the arrangements between them whilst LAP is a
controlling shareholder of the company. The Relationship Agreement
includes a provision under which LAP has agreed to exercise the
voting rights attached to the ordinary shares in the company
owned by LAP to ensure the independence of the Board of directors
of the company.
Other than the restrictions contained in the Relationship
Agreement, there are no restrictions on voting rights or on the
transfer of ordinary shares in the company. The rules governing the
appointment and replacement of directors, alteration of the
articles of association of the company and the powers of the
company’s directors accord with usual English company law
provisions. Each director is re-elected at least every three years.
The company is not party to any significant agreements that take
effect, alter or terminate upon a change of control of the company
following a takeover bid. The company is not aware of any
agreements between holders of its ordinary shares that may result
in restrictions on the transfer of its ordinary shares or on voting
rights.
There are no agreements between the company and its directors or
employees providing for compensation for loss of office or
employment that occurs because of a takeover bid.
The Bribery Act 2010
The Bribery Act 2010 came into force on 1
July 2011, and the Board took the opportunity to implement a
new Anti-Bribery Policy. The company is committed to acting
ethically, fairly and with integrity in all its endeavours and
compliance of the code is closely monitored.
Annual General Meeting
The annual general meeting of the company (“Annual General
Meeting”) will be held at 24 Bruton Place, London W1J 6NE on Wednesday, 7 June 2017 at 11.00
a.m. Resolutions 1 to 8 will be proposed as ordinary
resolutions. More than 50 per cent. of shareholders’ votes cast
must be in favour for those resolutions to be passed. Resolutions 9
to 11 will be proposed as special resolutions. At least 75 per
cent. of shareholders’ votes cast must be in favour for those
resolutions to be passed.
The directors consider that all of the resolutions to be put to
the meeting are in the best interests of the company and its
shareholders as a whole. The Board recommends that shareholders
vote in favour of all resolutions.
Please note that the following paragraphs are only summaries of
certain resolutions to be proposed at the Annual General Meeting
and not the full text of the resolutions. You should therefore read
this section in conjunction with the full text of the resolutions
contained in the notice of Annual General Meeting.
Remuneration policy (Resolution 3)
Resolution 3 is to approve the new remuneration policy of the
Company for the three year period from the date of this Annual
General Meeting in compliance with section 439A of the Companies
Act 2006. The vote on the remuneration policy is binding in nature
in that the company may not make a remuneration payment or payment
for loss of office to a person who is, is to be, or has been a
director of the Company unless that payment is consistent with the
approved remuneration policy, or has otherwise been approved by a
resolution of members. If resolution 3 is passed, the remuneration
policy will take effect from the conclusion of the Annual General
Meeting. The remuneration policy will be put to shareholders again
no later than the Company’s annual general meeting in 2020.
Directors’ authority to allot shares
(Resolution 8)
In certain circumstances it is important for the company to be
able to allot shares up to a maximum amount without needing to seek
shareholder approval every time an allotment is required. Paragraph
8.1.1 of resolution 8 would give the directors the authority to
allot shares in the company and grant rights to subscribe for, or
convert any security into, shares in the company up to an aggregate
nominal value of £355,894. This represents approximately 1/3 (one
third) of the ordinary share capital of the company in issue
(excluding treasury shares) at 26 April
2017 (being the last practicable date prior to the
publication of this Directors’ Report). Paragraph 8.1.2 of
resolution 8 would give the directors the authority to allot shares
in the company and grant rights to subscribe for, or convert any
security into, shares in the company up to a further aggregate
nominal value of £355,894, in connection with a pre-emptive rights
issue. This amount represents approximately 1/3 (one third) of the
ordinary share capital of the company in issue (excluding treasury
shares) at 26 April 2017 (being the
last practicable date prior to the publication of this Directors’
Report).
Therefore, the maximum nominal value of shares or rights to
subscribe for, or convert any security into, shares which may be
allotted or granted under resolution 8 is £711,788.
Resolution 8 complies with guidance issued by the Investment
Association (IA).
The authority granted by resolution 8 will expire on
31 August 2018 or, if earlier, the
conclusion of the next annual general meeting of the company. The
directors have no present intention to make use of this authority.
However, if they do exercise the authority, the directors intend to
follow emerging best practice as regards its use as recommended by
the IA.
Disapplication of pre-emption rights
(Resolution 9)
A special resolution will be proposed at the Annual General
Meeting in respect of the disapplication of pre-emption rights.
Shares allotted for cash must normally first be offered to
shareholders in proportion to their existing shareholdings. The
directors will, at the forthcoming Annual General Meeting seek
power to allot equity securities (as defined by section 560 of the
Companies Act 2006) or sell treasury shares for cash as if the
pre-emption rights contained in Section 561 of the Companies Act
2006 did not apply:
(a) in relation to pre-emptive offers and offers to
holders of other equity securities if required by the rights of
those securities or as the directors otherwise consider necessary,
up to a maximum nominal amount of £355,894 which represents
approximately 1/3 (one third) of the ordinary share capital of the
company in issue (excluding treasury shares) and, in relation to
rights issues only, up to a maximum additional amount of £355,894
which represents approximately 1/3 (one third) of the ordinary
share capital of the company in issue (excluding treasury shares),
in each case as at 26 April 2017
(being the last practicable date prior to the publication of this
Directors’ Report); and
(b) in any other case, up to a maximum nominal amount of
£53,384 which represents approximately 5 per cent. of the ordinary
share capital of the company in issue (excluding treasury shares)
as at 26 April 2017 (being the last
practicable date prior to the publication of this Directors’
Report).
In compliance with the guidelines issued by the Pre-emption
group, the directors will ensure that, other than in relation to a
rights issue, no more than 7.5 per cent. of the issued ordinary
shares (excluding treasury shares) will be allotted for cash on a
non-pre-emptive basis over a rolling three year period unless
shareholders have been notified and consulted in advance.
The power in resolution 9 will expire when the authority given
by resolution 8 is revoked or expires.
The directors have no present intention to make use of this
authority.
Notice of General Meetings
(Resolution 10)
Resolution 10 will be proposed to allow the company to call
general meetings (other than an Annual General Meeting) on 14 clear
days’ notice. A resolution in the same terms was passed at the
Annual General Meeting in 2016. The notice period required by the
Companies Act 2006 for general meetings of the company is 21 days
unless shareholders approve a shorter notice period, which cannot
however be less than 14 clear days. Annual General Meetings must
always be held on at least 21 clear days’ notice. It is intended
that the flexibility offered by this resolution will only be used
for time-sensitive, non-routine business and where merited in the
interests of shareholders as a whole. The approval will be
effective until the company’s next Annual General Meeting, when it
is intended that a similar resolution will be proposed. In order to
be able to call a general meeting on less than 21 clear days’
notice, the company must make a means of electronic voting
available to all shareholders for that meeting.
Purchase of own Ordinary Shares
(Resolution 11)
The effect of resolution 11 would be to renew the directors’
current authority to make limited market purchases of the company’s
ordinary shares of 10 pence each. The
power is limited to a maximum aggregate number of 1,067,683
ordinary shares (representing approximately 10 per cent. of the
company’s issued share capital as at 26
April 2017 (being the last practicable date prior to
publication of this Directors’ Report)). The minimum price
(exclusive of expenses) which the company would be authorised to
pay for each ordinary share would be 10
pence (the nominal value of each ordinary share). The
maximum price (again exclusive of expenses) which the company would
be authorised to pay for an ordinary share is an amount equal to
105 per cent. of the average market price for an ordinary share for
the five business days preceding any such purchase.
The authority conferred by resolution 11 will expire at the
conclusion of the company’s next annual general meeting or 15
months from the passing of the resolution, whichever is the
earlier. Any purchases of ordinary shares would be made by means of
market purchase through the London Stock Exchange. If granted, the
authority would only be exercised if, in the opinion of the
directors, to do so would result in an increase in earnings per
share or net asset value per share and would be in the best
interests of shareholders generally. In exercising the authority to
purchase ordinary shares, the directors may treat the shares that
have been bought back as either cancelled or held as treasury
shares (shares held by the company itself). No dividends may be
paid on shares which are held as treasury shares and no voting
rights are attached to them.
As at 26 April 2017 (being the
last practicable date prior to the publication of this Directors’
Report) the total number of new ordinary shares over which options
have been granted was 380,000 shares representing 3.56 per cent. of
the company’s issued share capital (excluding treasury shares) as
at that date. Such number of options to subscribe for new ordinary
shares would represent approximately 3.95 per cent. of the reduced
issued share capital of the company (excluding treasury shares)
assuming full use of the authority to make market purchases sought
under resolution 11.
Donations
No political or charitable donations were made during the year
(2015: Nil).
Going concern
The group’s business activities, together with the factors
likely to affect its future development are set out in the
Chairman’s Statement on the preceding page 2, the Mining Review on
pages 5 to 6 and its financial position is set out on page 21 of
the Strategic Report. In addition Note 22 to the financial
statements includes the group’s treasury policy, interest rate
risk, liquidity risk, foreign exchange risks and credit risk.
The group has prepared cash flow forecasts which demonstrate
that the group has sufficient resources to meet its liabilities as
they fall due for at least the next 12 months.
In South Africa, a structured
trade finance facility for R80million is held by Black Wattle
Colliery (Pty) Limited (“Black Wattle”) with Absa Bank Limited, a
South African subsidiary of Barclays Bank PLC. The facility is
renewable annually at 30 June and is secured against inventory,
debtors and cash that are held in the group’s South African
operations. The Directors do not foresee any reason why the
facility will not continue to be renewed at the next renewal date,
in line with prior periods and based on their banking
relationships. This facility comprises of a R60million revolving
loan to cover the working capital requirements of the group’s South
African operations, and a R20million loan facility to cover
guarantee requirements related to the group’s South African mining
operations.
The directors expect that the improved coal market conditions
experienced by Black Wattle Colliery, its direct mining asset, in
the last quarter of 2016 and the first quarter of 2017 will be
similar for at least the next 12 months. The directors therefore
have a reasonable expectation that the mine will continue to
achieve positive levels of cash generation for the group for at
least the next 12 months. As a consequence, the directors believe
that the group is well placed to manage its South African business
risks successfully.
In the UK, a £6 million term loan facility repayable in 2019 is
held with Santander Bank PLC. The loan is secured against the
company’s UK retail property portfolio. The debt package has a five
year term and is repayable at the end of the term. The interest
cost of the loan is 2.35% above LIBOR.
If required, the group has sufficient financial resources
available at short notice including cash, available-for-sale
investments and its £2m loan to Dragon Retail Properties Limited
which is repayable on demand. In addition its investment property
assets benefit from long term leases with the majority of its
tenants.
As a result of the banking facilities held as well as the
acceptable levels of profitability and cash generation the group’s
South African operations are expected to achieve for at least the
next 12 months, the Directors believe that the group has adequate
resources to continue in operational existence for the foreseeable
future and that the group is well placed to manage its business
risks. Thus they continue to adopt the going concern basis of
accounting in preparing the annual financial statements.
By order of the board
G.J Casey
Secretary
24 Bruton Place
London W1J 6NE
26 April 2017
Statement of the Chairman
of the remuneration committee
The remuneration committee presents
its report for the year ended 31 December 2016, which this
year is presented in two parts in accordance regulations.
The first part is the Annual Remuneration Report which details
remuneration awarded to directors and non-executive directors
during the year. The shareholders will be asked to approve the
Annual Remuneration Report as an ordinary resolution (as in
previous years) at the AGM in June 2017.
The current remuneration policy, which details the remuneration
policy for directors, can be found at www.bisichi.co.uk. The
current remuneration policy was subject to a binding vote which was
approved by shareholders at the AGM in June
2014. The approval will continue to apply for a 3 year
period up to the AGM on 7 June 2017.
The second part, is the new Remuneration Policy Report which can
be found on page 43. The new remuneration policy is subject to a
binding vote which will be proposed to shareholders at the AGM on
7 June 2017. Once approved, the
approval of the new policy will apply for a 3 year period effective
from the conclusion of the AGM on 7 June 2017.
The new policy is very much in line with the previous policy.
Both of the above reports have been prepared in accordance with The
Large and Medium-sized Companies and Groups (Accounts and Reports)
(Amendment) Regulations 2013.
The company’s auditors, BDO LLP are required by law to audit
certain disclosures and where disclosures have been audited they
are indicated as such.
Christopher Joll
Chairman – remuneration committee
24 Bruton Place
London W1J 6NE
26 April 2017
Annual remuneration report
The following information has been audited:
Single total figure of remuneration for the year ended
31 December 2016:
|
Salaries
and Fees
£’000 |
Bonuses
£’000 |
Benefits
£’000 |
Pension
£’000 |
Total
before
Share
options
£’000 |
Share
options
£’000 |
Total
2016
£’000 |
Executive Directors |
|
|
|
|
|
|
|
Sir Michael Heller |
75 |
- |
- |
- |
75 |
- |
75 |
A R Heller |
450 |
300 |
68 |
32 |
850 |
- |
850 |
G J Casey |
133 |
100 |
14 |
18 |
265 |
- |
265 |
R Grobler |
154 |
60 |
14 |
8 |
236 |
- |
236 |
Non–Executive Directors |
|
|
|
|
|
|
|
C A Joll* |
30 |
- |
- |
- |
30 |
- |
30 |
J A Sibbald* |
2 |
- |
3 |
- |
5 |
- |
5 |
Total |
844 |
460 |
99 |
58 |
1,461 |
- |
1,461 |
*Members of the remuneration committee for the year ended
31 December 2016
Single total figure of remuneration for the year ended
31 December 2015:
|
Salaries
and Fees
£’000 |
Bonuses
£’000 |
Benefits
£’000 |
Pension
£’000 |
Total
before
Share
options
£’000 |
Share
options
£’000 |
Total
2015
£’000 |
Executive Directors |
|
|
|
|
|
|
|
Sir Michael Heller |
75 |
- |
- |
- |
75 |
- |
75 |
A R Heller |
450 |
300 |
67 |
36 |
853 |
59 |
912 |
G J Casey |
133 |
100 |
15 |
18 |
266 |
59 |
325 |
R Grobler |
146 |
62 |
14 |
7 |
229 |
- |
229 |
Non–Executive Directors |
|
|
|
|
|
|
|
C A Joll* |
30 |
- |
- |
- |
30 |
- |
30 |
J A Sibbald* |
2 |
- |
3 |
- |
5 |
- |
5 |
Total |
836 |
462 |
99 |
61 |
1,458 |
118 |
1,576 |
*Members of the remuneration committee for the year ended
31 December 2015
In addition, in the year ended 31
December 2015, A Heller received £109,000 in cash on
cancellation of share options representing the increase in value of
the shares under option at the cancellation date.
Summary of directors’ terms |
Date of contract |
Unexpired term |
Notice period |
Executive directors |
|
|
|
Sir Michael Heller |
November 1972 |
Continuous |
6 months |
A R Heller |
January 1994 |
Continuous |
3 months |
G J Casey |
June 2010 |
Continuous |
3 months |
R J Grobler |
April 2008 |
Continuous |
3 months |
Non-executive directors |
|
|
|
C A Joll |
February 2001 |
Continuous |
3 months |
J A Sibbald |
October 1988 |
Continuous |
3 months |
Pension schemes and
incentives
Two (2015: two) directors have benefits under money purchase
pension schemes. Contributions in 2016 were £58,000 (2015:
£61,000), see table above.
Scheme interests awarded during the
year
No scheme interests were awarded in the year ended 31 December 2016.
The 2015 single figure share based payment charge of £118,000
relates to the 300,000 share options granted to A R Heller and G J
Casey in 2015 which vested in 2015. £9,000 of this charge was
expensed in the financial statements in the prior year as an IFRS 2
charge as part of the £31,000 accounting charge which also included
charges in respect of other options which had fully vested prior to
2015. There were no vesting conditions attached to these share
options and therefore the £118,000 should have been fully expensed
in 2015 under IFRS2. As the above error is not considered to be
material to the current or prior year financial statements the
remaining £109,000 of the charge has been expensed in the current
year and therefore the error has been corrected in the current
period. The correction referred to above does not affect the
information in this section of the annual report, which was
correctly stated in both 2015 and 2016.
Share option schemes
The company currently has one “Unapproved” Share Option Schemes
which is not subject to HM Revenue and Customs (HMRC) approval. The
“2010 Scheme” was approved by shareholders on 7 June 2011. The “2012 Scheme” was approved by
the remuneration committee of the company on 28 September 2012. Existing options over ordinary
shares under the 2006 scheme lapsed during the year.
|
Number of share
options |
|
|
|
|
|
Option
price* |
1 January
2016 |
Options
lapsed
in
2016 |
31
December
2016 |
Exercisable
from |
Exercisable
to |
The 2006 Scheme |
|
|
|
|
|
|
A R Heller |
237.05p |
275,000 |
(275,000) |
- |
4/10/2009 |
3/10/2016 |
Employee |
237.05p |
50,000 |
(50.000) |
- |
4/10/2009 |
3/10/2016 |
The 2010 Scheme |
|
|
|
|
|
|
G J Casey |
202.05p |
80,000 |
- |
80,000 |
31/08/2013 |
30/08/2020 |
The 2012 Scheme |
|
|
|
|
|
|
A R Heller |
87.01p |
150,000 |
- |
150,000 |
18/09/2015 |
17/09/2025 |
G J Casey |
87.01p |
150,000 |
- |
150,000 |
18/09/2015 |
17/09/2025 |
*Middle market price at date of grant
No consideration is payable for the grant of options under the
Unapproved Share Option Scheme.
Performance conditions:
The exercise of options under the Unapproved Share Option
Schemes, for certain option issues, is subject to the satisfaction
of objective performance conditions specified by the remuneration
committee, which will conform to institutional shareholder
guidelines and best practice provisions in force from time to time.
The performance conditions for the 2010 scheme, agreed by members
on 31 August 2010, requires growth in
net assets over a three year period to exceed the growth in the
retail price index by a scale of percentages. There are no
performance conditions attached to the 2012 Unapproved Share Option
scheme.
Payments to past directors
No payments were made to past directors in the year ended
31 December 2016.
Payments for loss of office
No payments for loss of office were made in the year ended
31 December 2016.
Statement of directors’ shareholding
and share interest
Directors’ interests
The interests of the directors in the shares of the company,
including family and trustee holdings where appropriate, were as
follows:
|
Beneficial |
Non-beneficial |
|
31.12.2016 |
1.1.2016 |
31.12.2016 |
1.1.2016 |
Sir Michael Heller |
148,783 |
148,783 |
181,334 |
181,334 |
A R Heller |
785,012 |
785,012 |
- |
- |
C A Joll |
- |
- |
- |
- |
J A Sibbald |
- |
- |
- |
- |
R J Grobler |
- |
- |
- |
- |
G J Casey |
40,000 |
40,000 |
- |
- |
The following section is
unaudited.
The following graph illustrates the company’s performance
compared with a broad equity market index over a ten year period.
Performance is measured by total shareholder return. The directors
have chosen the FTSE All Share Mining index as a suitable index for
this comparison as it gives an indication of performance against a
spread of quoted companies in the same sector.
The middle market price of Bisichi Mining PLC ordinary shares at
31 December 2016 was 74p
(2015-77.5p). During the year the share price ranged between 52.50p
and 80.00p.
Remuneration of the Managing Director
over the last ten years
The table below demonstrates the remuneration of the holder of
the office of Managing Director for the last ten years for the
period from 1 January 2007 to 31
December 2016.
Year |
Managing
Director |
Managing Director
Single total figure of
remuneration
£’000 |
Annual bonus payout
against maximum
opportunity*
% |
Long-term incentive
vesting rates against
maximum opportunity*
% |
2016 |
A R Heller |
850 |
22% |
N/A |
2015 |
A R Heller |
912 |
22% |
N/A |
2014 |
A R Heller |
862 |
22% |
N/A |
2013 |
A R Heller |
614 |
N/A |
N/A |
2012 |
A R Heller |
721 |
N/A |
N/A |
2011 |
A R Heller |
626 |
N/A |
N/A |
2010 |
A R Heller |
568 |
N/A |
N/A |
2009 |
A R Heller |
817 |
N/A |
N/A |
2008 |
A R Heller |
961 |
N/A |
N/A |
2007 |
A R Heller |
716 |
N/A |
N/A |
Bisichi Mining PLC does not have a Chief Executive so the table
includes the equivalent information for the Managing Director.
*There were no formal criteria or conditions to apply in
determining the amount of bonus payable or the number of shares to
be issued prior to 2014.
Percentage change in remuneration of
director undertaking role of Managing Director
|
Managing Director
£’000 |
UK based employees
£’000 |
|
2016 |
2015 |
% change |
2016 |
2015 |
% change |
Base salary |
450 |
450 |
0% |
208 |
208 |
0% |
Benefits |
68 |
67 |
1% |
14 |
15 |
(6%) |
Bonuses |
300 |
300 |
0% |
100 |
100 |
0% |
Bisichi Mining PLC does not have a Chief Executive so the table
includes the equivalent information for the Managing Director.
The comparator group chosen is all UK based employees as the
remuneration committee believe this provides the most accurate
comparison of underlying increases based on similar annual bonus
performances utilised by the group.
Relative importance of spend on
pay
The total expenditure of the group on remuneration to all
employees (see Notes 29 and 8 to the financial statements) is shown
below:
|
2016
£’000 |
2015
£’000 |
Employee remuneration |
5,321 |
5,094 |
Distribution to shareholders |
427 |
427 |
Statement of implementation of new
remuneration policy
The new remuneration policy will be approved at the AGM on
7 June 2017. The policy will take
effect from the conclusion of the AGM and will apply for 3 years
unless changes are deemed necessary by the Remuneration committee.
The company may not make a remuneration payment or payment for loss
of office to a person who is, is to be, or has been a director of
the company unless that payment is consistent with the approved
remuneration policy, or has otherwise been approved by a resolution
of members.
Consideration by the directors of
matters relating to directors’ remuneration
The remuneration committee considered the executive directors
remuneration and the board considered the non-executive directors
remuneration in the year ended 31 December
2016. No increases were awarded and no external advice was
taken in reaching this decision.
Shareholder voting
At the Annual General Meeting on 10 June
2016, there was an advisory vote on the resolution to
approve the remuneration report, other than the part containing the
remuneration policy. In addition, on 11 June
2014 there was a binding vote on the resolution to approve
the current remuneration policy the results of which are detailed
below:
|
% of votes
for |
% of votes
against |
No of votes
withheld |
Resolution to approve the Remuneration Report (10
June 2016) |
99.96% |
0.04% |
1,859,302 |
Resolution to approve the Remuneration Policy (11
June 2014) |
98.75% |
1.04% |
5,405 |
Service contracts
All executive directors have full-time contracts of employment
with the company. Non-executive directors have contracts of
service. No director has a contract of employment or contract of
service with the company, its joint venture or associated companies
with a fixed term which exceeds twelve months. Directors notice
periods (see page 37 of the annual remuneration report) are set in
line with market practice and of a length considered sufficient to
ensure an effective handover of duties should a director leave the
company.
All directors’ contracts as amended from time to time, have run
from the date of appointment. Service contracts are kept at the
registered office.
Remuneration policy table
The remuneration policy table below is an extract of the group’s
current remuneration policy on directors’ remuneration, which was
approved by a binding vote at the 2014 AGM. The approved
policy took effect from 11 June 2014. A copy of the full
policy can be found at www.bisichi.co.uk.
Element |
Purpose |
Policy |
Operation |
Opportunity and performance conditions |
Executive directors |
Base
salary |
To recognise:
Skills
Responsibility
Accountability
Experience
Value |
Considered by remuneration committee
on appointment
Set at a level considered appropriate to attract, retain motivate
and reward the right individuals |
Reviewed annually
Paid monthly in cash |
There is no prescribed maximum salary
or maximum rate of increase
No specific performance conditions are attached to base
salaries |
Pension |
To provide competitive retirement
benefits |
Company contribution offered
at up to 10% of base salary as part of overall remuneration
package |
The contribution payable
by the company is included in the director’s contract of
employment
Paid into money purchase schemes |
Company contribution offered at up to
10% of base salary as part of overall remuneration package
No specific performance conditions are attached to pension
contributions |
Benefits |
To provide a competitive benefits
package |
Contractual benefits can
include but are not limited to:
Car or car allowance
Group health cover
Death in service cover
Permanent health insurance |
The committee retains the discretion
to approve changes in contractual benefits in exceptional
circumstances or where factors outside the control of the group
lead to increased costs (e.g. medical inflation) |
The costs associated with benefits
offered are closely controlled and reviewed on an annual basis
No specific performance conditions are attached to contractual
benefits
The value of benefits for each director for the year ended 31
December 2016 is shown in the table on page 36 |
Annual
Bonus |
To reward and incentivise |
In assessing the performance of the
executive team, and in particular to determine whether bonuses are
merited the remuneration committee takes into account the overall
performance of the business
Bonuses are generally offered in cash |
The remuneration committee determines
the level of bonus
on an annual basis applying such performance conditions and
performance measures
as it considers appropriate |
The current maximum bonus opportunity
will not exceed 200% of base salary in any one year, but the
remuneration committee reserves the power to award up to 300% in an
exceptional year
Performance conditions will be assessed on an annual basis. The
performance measures applied may be financial, non-financial,
corporate, divisional or individual and in such proportion as the
remuneration committee considers appropriate |
Share Options |
To provide executive directors with a
long-term interest in the company |
Granted under existing
schemes (see page 37) |
Offered at appropriate times by the
remuneration committee |
Entitlement to share options is not
subject to any performance conditions
Share options will be offered by the remuneration committee as
appropriate
There are no maximum levels for share options offered |
Element |
Purpose |
Policy |
Operation |
Opportunity and performance
conditions |
Non-executive directors |
Base
salary |
To recognise:
Skills
Experience
Value |
Considered by the board
on appointment
Set at a level considered appropriate to attract, retain
and motivate the individual
Experience and time required for the role are considered on
appointment |
Reviewed annually |
There is no prescribed
maximum salary or maximum rate of increase
No specific performance conditions are attached to base
salaries |
Pension |
|
No pension offered |
|
|
Benefits |
|
No benefits offered except to one
non-executive director
who is eligible for health cover (see annual remuneration report
page 36) |
|
The costs associated with
the benefit offered is closely controlled and reviewed on an annual
basis
No specific performance conditions are attached to contractual
benefits |
Share Options |
|
Non-executive directors do not
participate in the share option schemes |
|
|
|
|
|
|
|
|
|
|
|
The remuneration committee consider the performance measures
outlined in the table above to be appropriate measures of
performance and that the KPI’s chosen align the interests of the
directors and shareholders.
Remuneration Policy
The remuneration policy below is the
group’s new remuneration policy on directors’ remuneration, which
will be proposed for a binding vote at the 2017 AGM.
If approved it is intended that the policy take effect
from the conclusion of the AGM on 7
June 2017.
In setting the policy, the Remuneration Committee has taken the
following into account:
• The need to attract, retain and motivate individuals of a
calibre who will ensure successful leadership and management of the
company
• The group’s general aim of seeking to reward all employees
fairly according to the nature of their role and their
performance
• Remuneration packages offered by similar companies within the
same sector
• The need to align the interests of shareholders as a whole
with the long-term growth of the group; and
• The need to be flexible and adjust with operational changes
throughout the term of this policy
The remuneration of non-executive directors is determined by the
board, and takes into account additional remuneration for services
outside the scope of the ordinary duties of non-executive
directors.
Future policy table
Element |
Purpose |
Policy |
Operation |
Opportunity and performance conditions |
Executive directors |
Base salary |
To recognise:
Skills
Responsibility
Accountability
Experience
Value |
Considered by
remuneration committee on appointment.
Set at a level considered appropriate to attract, retain motivate
and reward the right individuals. |
Reviewed annually
Paid monthly in cash |
No individual director will be
awarded a base salary in excess of £700,000 per annum.
No specific performance conditions are attached to base
salaries. |
Pension |
To provide competitive retirement benefits |
Company contribution offered at up to
10% of base salary as part of overall remuneration package |
The contribution payable
by the company is included in the
director’s contract of employment.
Paid into money purchase schemes |
Company contribution offered at up to
10% of base salary as part of overall remuneration package.
No specific performance conditions are attached to pension
contributions |
Benefits |
To provide a competitive benefits
package |
Contractual benefits can
include but are not limited to:
Car or car allowance
Group health cover
Death in service cover
Permanent health insurance |
The committee retains the
discretion
to approve changes in contractual benefits in exceptional
circumstances or where factors outside the control of the Group
lead to increased
costs (e.g. medical inflation) |
The costs associated with benefits
offered are closely controlled and reviewed on an annual basis.
No director will receive benefits of a value in excess of 30% of
his base salary.
No specific performance conditions are attached to contractual
benefits.
The value of benefits for each director for the year ended
31 December 2016 is shown in the table on page 36. |
Annual Bonus |
To reward and incentivise |
In assessing the
performance of the executive team, and in particular to determine
whether bonuses are merited the remuneration committee takes into
account the overall performance of the business.
Bonuses are generally offered in cash |
The remuneration committee determines
the level of bonus on an annual basis applying such performance
conditions and performance measures as it considers
appropriate |
The current maximum bonus opportunity
will not exceed 200% of base salary in any one year, but the
remuneration committee reserves the power to award up to 300% in an
exceptional year.
Performance conditions will be assessed on an annual basis. The
performance measures applied may be financial, non-financial,
corporate, divisional or individual and in such proportion as the
remuneration committee considers appropriate |
Element |
Purpose |
Policy |
Operation |
Opportunity and performance
conditions |
Executive directors
(Continued) |
Share Options |
To provide executive directors with a
long-term interest in the company |
Granted under existing schemes (see page 37) |
Offered at appropriate times by the
remuneration committee |
Entitlement to share
options is not subject to any specific performance conditions.
Share options will be offered by the remuneration committee as
appropriate.
The aggregate number of shares over which options may be granted
under all of the company’s option schemes (including any options
and awards granted under the company’s employee share plans) in any
period of ten years, will not exceed, at the time of grant, 10% of
the ordinary share capital of the company from time to time. In
determining the limits no account shall be taken of any shares
where the right to acquire the shares has been released, lapsed or
has otherwise become incapable of exercise.
The company currently has two Share Option Schemes (see page 37).
The performance conditions for the 2010 scheme requires growth in
net assets over a three year period to exceed the growth in the
retail price index by a scale of percentages. For the 2012 scheme
the remuneration committee has the ability to impose performance
criteria in respect of any new share options granted, however there
is no requirement to do so. There are no performance conditions
attached to the options already issued under the 2012 scheme. |
Non-executive directors |
Base salary |
To recognise:
Skills
Experience
Value |
Considered by the board on
appointment.
Set at a level considered appropriate to attract, retain and
motivate the individual.
Experience and time required for the role are considered on
appointment. |
Reviewed annually |
No individual director
will be awarded a base salary in excess of £40,000 per annum.
No specific performance conditions are attached to base
salaries. |
Pension |
|
No pension offered |
|
|
Benefits |
|
No benefits offered except
to one non-executive director who is eligible for health
cover (see annual remuneration report
page 36) |
The committee retains the discretion
to approve changes in contractual benefits in exceptional
circumstances or where factors outside the control of the Group
lead to increased costs (e.g. medical inflation) |
The costs associated with
the benefit offered is closely controlled and reviewed on an annual
basis.
No director will receive benefits of a value in excess of the
higher of 30% of his base salary or £10,000.
No specific performance conditions are attached to contractual
benefits. |
Share Options |
|
Non-executive directors do not participate in the
share option schemes |
|
|
|
|
|
|
|
|
|
|
Notes to the future policy table
In order to ensure that shareholders have sufficient clarity
over director remuneration levels, the company has, where possible,
specified a maximum that may be paid to a director in respect of
each component of remuneration. There have been no other
significant changes made to the future policy from the previous
remuneration policy. The remuneration committee consider the
performance measures outlined in the table above to be appropriate
measures of performance and that the KPI’s chosen align the
interests of the directors and shareholders.
For details of remuneration of other company employees please
see page 45.
Remuneration scenarios
An indication of the possible level of remuneration that would
be received by each Executive Director in the year commencing
7 June 2017 in accordance with the
directors’ remuneration policy is shown below.
Assumptions
Minimum
Consists of base salary, benefits and pension.
Base salary, benefits and pension for 2017 are assumed at the
levels included in the single total figure remuneration table for
the year ended 31 December 2016 on
page 36.
On target
Based on the average percentage bonus awarded to the individual
in the three years ending on 31 December
2016. As outlined in the policy table above, the
remuneration committee has discretion to award bonuses of up to
200% of base salary in any one year (up to 300% in an exceptional
year).
Base salary, benefits and pension for 2017 are assumed at the
levels included in the single total figure remuneration table for
the year ended 31 December 2016 on
page 36.
Maximum
Based on maximum remuneration receivable of 300% of base salary
awarded as bonus in an exceptional year.
Base salary, benefits and pension for 2017 are assumed at the
levels included in the single total figure remuneration table for
the year ended 31 December 2016 on
page 36.
Approach to recruitment
remuneration
All appointments to the board are made on merit. The components
of a new director’s remuneration package (who is recruited within
the life of the approved remuneration policy) would comprise base
salary, pension, benefits, annual bonus and opportunity to be
granted share options as outlined above and the company’s approach
to such appointments are detailed with in the future policy table
above. The company will pay such levels of remuneration to new
directors that would enable the company to attract appropriately
skilled and experienced individuals that is not in the opinion of
the remuneration committee excessive.
Service contracts
All executive directors have full-time contracts of employment
with the company. Non-executive directors have contracts of
service. No director has a contract of employment or contract of
service with the company, its joint venture or associated companies
with a fixed term which exceeds twelve months. Directors’ notice
periods (see page 37 of the annual remuneration report) are set in
line with market practice and of a length considered sufficient to
ensure an effective handover of duties should a director leave
the company.
All directors’ contracts as amended from time to time, have run
from the date of appointment. Service contracts are kept at the
registered office.
Policy on payment for loss of
office
There are no contractual provisions agreed prior to 27 June 2012 that could impact on a termination
payment. Termination payments will be calculated in accordance with
the existing contract of employment or service contract. It is the
policy of the remuneration committee to issue employment contracts
to executive directors with normal commercial terms and without
extended terms of notice which could give rise to extraordinary
termination payments.
Consideration of employment conditions
elsewhere in the Group
In setting this policy for directors’ remuneration the
remuneration committee has been mindful of the company’s objective
to reward all employees fairly according to their role, performance
and market forces. In setting the policy for Directors’
remuneration the remuneration committee has considered the pay and
employment conditions of the other employees within the group. No
formal consultation has been undertaken with employees in drawing
up the policy. The remuneration committee has not used formal
comparison measures.
Consideration of shareholder views
No shareholder views have been taken into account when
formulating this policy. In accordance with the new regulations, an
ordinary resolution for approval of this policy will be put to
shareholders at the AGM in June
2017.
Audit committee report
The committee’s terms of reference
have been approved by the board and follow published guidelines,
which are available from the company secretary. The audit committee
comprises the two non-executive directors, Christopher Joll
(chairman), an experienced financial PR executive and John Sibbald, a retired chartered
accountant.
The Audit Committee’s prime tasks are to:
• review the scope of external audit, to receive regular reports
from the auditor and to review the half-yearly and annual accounts
before they are presented to the board, focusing in particular on
accounting policies and areas of management judgment and
estimation;
• monitor the controls which are in force to ensure the
integrity of the information reported to the shareholders;
• assess key risks and to act as a forum for discussion of risk
issues and contribute to the board’s review of the effectiveness of
the group’s risk management control and processes;
• act as a forum for discussion of internal control issues and
contribute to the board’s review of the effectiveness of the
group’s internal control and risk management systems and
processes;
• consider each year the need for an internal audit
function;
• advise the board on the appointment of external auditors and
rotation of the audit partner every five years, and on their
remuneration for both audit and non-audit work, and discuss the
nature and scope of their audit work;
• participate in the selection of a new external audit partner
and agree the appointment when required;
• undertake a formal assessment of the auditors’ independence
each year which includes:
~ a review of non-audit services provided to the
group and related fees;
~ discussion with the auditors of a written report
detailing all relationships with the company and any other parties
that could affect independence or the perception of
independence;
~ a review of the auditors’ own procedures for
ensuring the independence of the audit firm and partners and staff
involved in the audit, including the regular rotation of the audit
partner; and
~ obtaining written confirmation from the auditors
that, in their professional judgement, they are independent.
Meetings
The committee meets prior to the annual audit with the external
auditors to discuss the audit plan and again prior to the
publication of the annual results. These meetings are attended by
the external audit partner, managing director, director of finance
and company secretary. Prior to bi-monthly board meetings the
members of the committee meet on an informal basis to discuss any
relevant matters which may have arisen. Additional formal meetings
are held as necessary.
During the past year the committee:
• met with the external auditors, and discussed their report to
the Audit Committee;
• approved the publication of annual and half-year financial
results;
• considered and approved the annual review of internal
controls;
• decided that due to the size and nature of operation there was
not a current need for an internal audit function;
• agreed the independence of the auditors and approved their
fees for both audit and not-audit services as set out in note 4 to
the financial statements.
FINANCIAL
REPORTING
As part of its role, the Audit Committee assessed the audit
findings that were considered most significant to the financial
statements, including those areas requiring significant judgment
and/or estimation. When assessing the identified financial
reporting matters, the committee assessed quantitative materiality
primarily by reference to the carrying value of the group’s total
assets, given that the group operates a principally asset based
business. The Board also gave consideration to the value of
revenues generated by the group, given the importance of
production, and its Adjusted EBITDA, given that it is a key trading
KPI, when determining quantitative materiality. The qualitative
aspects of any financial reporting matters identified during the
audit process were also considered when assessing their
materiality. Based on the considerations set out above we have
considered quantitative errors individually or in aggregate in
excess of approximately £325,000 to £375,000 to be material.
External
Auditors
BDO LLP held office throughout the year. In the United Kingdom the company is provided with
extensive administration and accounting services by London & Associated Properties PLC which
has its own audit committee and employs a separate firm of external
auditors, RSM UK Audit LLP (Formerly Baker Tilly UK Audit LLP). In
South Africa Grant Thornton (Jhb)
Inc. acts as the external auditor to the South African companies,
and the work of that firm was reviewed by BDO LLP for the purpose
of the group audit.
Christopher Joll
Chairman – audit committee
24 Bruton Place
London W1J 6NE
26 April 2017
Valuers’ certificates
To the directors of Bisichi Mining
PLC
In accordance with your instructions we have carried out a
valuation of the freehold property interests held as at
31 December 2016 by the company as
detailed in our Valuation Report dated 31
December 2016.
Having regard to the foregoing, we are of the opinion that the
open market value as at 31 December
2016 of the interests owned by the company was £13,245,000
being made up as follows:
|
£’000 |
Freehold |
10,550 |
Leasehold |
2,695 |
|
13,245 |
Leeds
31 December 2016 |
Carter Towler
Regulated by Royal Institute of Chartered Surveyors |
Directors’ responsibilities
statement
The directors are responsible for
preparing the annual report and the financial statements in
accordance with applicable law and regulations.
Company law requires the directors to prepare financial
statements for each financial year. Under that law the directors
are required to prepare the group financial statements in
accordance with International Financial Reporting Standards as
adopted by the European Union and have elected to prepare the
company financial statements in accordance with United Kingdom
Generally Accepted Accounting Practice (United Kingdom Accounting
Standards and applicable law). Under company law the directors must
not approve the financial statements unless they are satisfied that
they give a true and fair view of the state of affairs of the group
and company and of the profit or loss for the group for that
period.
In preparing these financial statements, the directors are
required to:
• select suitable accounting policies and then apply them
consistently;
• make judgements and accounting estimates that are reasonable
and prudent;
• state with regard to the group financial statements whether
they have been prepared in accordance with IFRSs as adopted by the
European Union subject to any material departures disclosed and
explained in the financial statements;
• state with regard to the parent company financial statements,
whether applicable UK accounting standards have been followed,
subject to any material departures disclosed and explained in the
financial statements;
• prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the company and the
group will continue in business; and
• prepare a director’s report, a strategic report and director’s
remuneration report which comply with the requirements of the
Companies Act 2006.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the company’s
transactions and disclose with reasonable accuracy at any time the
financial position of the company and enable them to ensure that
the financial statements comply with the Companies Act 2006 and, as
regards the group financial statements, Article 4 of the IAS
Regulation. They are also responsible for safeguarding the assets
of the company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities. The
Directors are responsible for ensuring that the annual report and
accounts, taken as a whole, are fair, balanced, and understandable
and provides the information necessary for shareholders to assess
the group’s performance, business model and strategy.
Website publication
The directors are responsible for ensuring the annual report and
the financial statements are made available on a website. Financial
statements are published on the company’s website in accordance
with legislation in the United
Kingdom governing the preparation and dissemination of
financial statements, which may vary from legislation in other
jurisdictions. The maintenance and integrity of the company’s
website is the responsibility of the directors. The directors’
responsibility also extends to the ongoing integrity of the
financial statements contained therein.
Directors’ responsibilities pursuant
to DTR4
The directors confirm to the best of their knowledge:
• the group financial statements have been prepared in
accordance with International Financial Reporting Standards (IFRSs)
as adopted by the European Union and Article 4 of the IAS
Regulation and give a true and fair view of the assets,
liabilities, financial position and profit and loss of the
group.
• the annual report includes a fair review of the development
and performance of the business and the financial position of the
group and the parent company, together with a description or the
principal risks and uncertainties that they face.
Independent auditor’s report
To the members of Bisichi Mining
PLC
We have audited the financial statements of Bisichi Mining PLC
for the year ended 31 December 2016
which comprise the consolidated income statement, the consolidated
statement of other comprehensive income, the consolidated balance
sheet, the consolidated statement of changes in shareholders’
equity, the consolidated cash flow statement, the parent company
balance sheet, the parent company statement of changes in equity
and the related notes. The financial reporting framework that has
been applied in the preparation of the group financial statements
is applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union.
The financial reporting framework that has been applied in
preparation of the parent company financial statements is
applicable law and United Kingdom Accounting Standards (United
Kingdom Generally Accepted Accounting Practice).
This report is made solely to the company’s members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
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.
Respective responsibilities of
directors and auditors
As explained more fully in the statement of directors’
responsibilities, the directors are responsible for the preparation
of the financial statements and for being satisfied that they give
a true and fair view. Our responsibility is to audit and express an
opinion on the financial statements in accordance with applicable
law and International Standards on Auditing (UK and Ireland). Those standards require us to comply
with the Financial Reporting Council’s (FRC’s) Ethical Standards
for Auditors.
Scope of the audit of the financial
statements
A description of the scope of an audit of financial statements
is provided on the FRC’s website at
www.frc.org.uk/auditscopeukprivate.
Opinion on financial statements
In our opinion:
• the financial statements give a true and fair view of the
state of the group’s and the parent company’s affairs as at
31 December 2016 and of the group’s
profit for the year then ended;
• the group financial statements have been properly prepared in
accordance with IFRSs as adopted by the European Union;
• the parent company financial statements have been properly
prepared in accordance with United Kingdom Generally Accepted
Accounting Practice; and
• the financial statements have been prepared in accordance with
the requirements of the Companies Act 2006; and, as regards the
group financial statements, Article 4 of the IAS Regulation.
Opinion on other matters prescribed
by the Companies Act 2006
In our opinion, the part of the directors’ remuneration report
to be audited has been properly prepared in accordance with the
Companies Act 2006.
In our opinion, based on the work undertaken in the course of
the audit;
• the information given in the strategic report and directors’
report for the financial year ended 31
December 2016 for which the financial statements are
prepared is consistent with the financial statements; and
• the strategic report and directors’ report have been prepared
in accordance with applicable legal requirements.
Matters on which we are required to
report by exception
In the light of the knowledge and understanding of the group and
the parent company and its environment obtained in the course of
the audit, we have not identified material misstatements in the
strategic report or the directors’ report.
Under the Companies Act 2006 we are required to report to you
if, in our opinion:
• adequate accounting records have not been kept by the parent
company, or returns adequate for our audit have not been received
from branches not visited by us; or
• the parent company financial statements and the part of the
directors’ remuneration report to be audited are not in agreement
with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by
law are not made; or
• we have not received all the information and explanations we
require for our audit.
Ryan Ferguson
(senior statutory auditor)
For and on behalf of BDO LLP,
statutory auditor
London, United Kingdom
28 April 2017
BDO LLP is a limited liability partnership registered in
England and Wales
(with registered number OC305127).
Financial statements
Consolidated income statement
for the year ended 31 December 2016
|
Notes |
2016
Trading
£’000 |
2016
Revaluations and
impairment
£’000 |
2016
Total
£’000 |
2015
Trading
£’000 |
2015
Revaluations and
impairment
£’000 |
2015
Total
£’000 |
Group revenue |
1 |
22,815 |
- |
22,815 |
25,655 |
- |
25,655 |
Operating costs |
2 |
(21,299) |
- |
(21,299) |
(23,938) |
- |
(23,938) |
Operating profit before depreciation, fair value
adjustments and exchange movements |
|
1,516 |
- |
1,516 |
1,717 |
- |
1,717 |
Depreciation |
2 |
(1,785) |
- |
(1,785) |
(1,284) |
- |
(1,284) |
Operating (loss)/profit before fair value
adjustments and exchange movements |
1 |
(269) |
- |
(269) |
433 |
- |
433 |
Exchange gains/(losses) |
|
449 |
- |
449 |
(497) |
- |
(497) |
Increase in value of investment properties |
3 |
- |
445 |
445 |
- |
225 |
225 |
Increase/(decrease) in value of other
investments |
|
- |
12 |
12 |
- |
(11) |
(11) |
Operating profit/(loss) |
1 |
180 |
457 |
637 |
(64) |
214 |
150 |
Share of profit/(loss) in joint ventures |
12 |
30 |
(37) |
(7) |
104 |
(35) |
69 |
Loss on reclassification of asset as held for
sale |
14 |
- |
- |
- |
- |
(138) |
(138) |
Profit before interest and taxation |
|
210 |
420 |
630 |
40 |
41 |
81 |
Interest receivable |
|
270 |
- |
270 |
245 |
- |
245 |
Interest payable |
6 |
(554) |
- |
(554) |
(473) |
- |
(473) |
(Loss)/profit before tax |
4 |
(74) |
420 |
346 |
(188) |
41 |
(147) |
Taxation |
7 |
150 |
(89) |
61 |
(84) |
(24) |
(108) |
Profit/(loss) for the year |
|
76 |
331 |
407 |
(272) |
17 |
(255) |
Attributable to: |
|
|
|
|
|
|
|
Equity holders of the company |
|
148 |
331 |
479 |
(276) |
17 |
(259) |
Non-controlling interest |
27 |
(72) |
- |
(72) |
4 |
- |
4 |
(Loss)/profit for the year |
|
76 |
331 |
407 |
(272) |
17 |
(255) |
Profit/(loss) per share – basic |
9 |
|
|
4.48p |
|
|
(2.43p) |
Profit/(loss) per share – diluted |
9 |
|
|
4.48p |
|
|
(2.43p) |
Trading gains and losses reflect all the trading activity on
mining and property operations. Revaluation gains and losses
reflects the revaluation of investment properties and other assets
within the group and any proportion of these amounts within Joint
Ventures, together with impairment loss on reclassification of
assets to held for sale. The total column represents the
consolidated income statement presented in accordance with IAS
1.
Consolidated statement of other
comprehensive income
for the year ended 31 December 2016
|
2016
£’000 |
2015
£’000 |
Profit/(loss) for the year |
407 |
(255) |
Other comprehensive income/(expense): |
|
|
Items that may be subsequently recycled to the
income statement: |
|
|
Exchange differences on translation of foreign
operations |
1,106 |
(1,167) |
Gain/(loss) on available for sale investments |
193 |
(202) |
Taxation |
(13) |
41 |
Other comprehensive income/(expense) for the
year net of tax |
1,286 |
(1,328) |
Total comprehensive income/(expense) for the
year net of tax |
1,693 |
(1,583) |
Attributable to: |
|
|
Equity shareholders |
1,665 |
(1,500) |
Non-controlling interest |
28 |
(83) |
|
1,693 |
(1,583) |
Consolidated balance sheet
at 31 December
2016
|
Notes |
2016
£’000 |
2015
£’000 |
Assets |
|
|
|
Non-current assets |
|
|
|
Value of investment properties |
10 |
13,245 |
12,800 |
Fair value of head lease |
31 |
181 |
194 |
Investment properties |
|
13,426 |
12,994 |
Mining reserves, plant and equipment |
11 |
8,520 |
5,374 |
Investments in joint ventures accounted for using
equity method |
12 |
1,321 |
1,198 |
Loan to joint venture |
12 |
1,350 |
900 |
Other investments |
12 |
32 |
14 |
Total non-current assets |
|
24,649 |
20,480 |
Current assets |
|
|
|
Inventories |
16 |
1,721 |
1,049 |
Trade and other receivables |
17 |
7,246 |
6,187 |
Corporation tax recoverable |
|
32 |
29 |
Available for sale investments |
18 |
781 |
594 |
Cash and cash equivalents |
|
2,444 |
1,608 |
Non-current assets held for sale |
14 |
- |
1,168 |
Total current assets |
|
12,224 |
10,635 |
Total assets |
|
36,873 |
31,115 |
|
Notes |
2016
£’000 |
2015
£’000 |
Liabilities |
|
|
|
Current liabilities |
|
|
|
Borrowings |
20 |
(3,358) |
(2,267) |
Trade and other payables |
19 |
(6,950) |
(4,234) |
Current tax liabilities |
|
(18) |
- |
Total current liabilities |
|
(10,326) |
(6,501) |
Non-current liabilities |
|
|
|
Borrowings |
20 |
(5,876) |
(5,940) |
Provision for rehabilitation |
21 |
(1,236) |
(847) |
Finance lease liabilities |
31 |
(181) |
(194) |
Deferred tax liabilities |
23 |
(2,248) |
(2,002) |
Total non-current liabilities |
|
(9,541) |
(8,983) |
Total liabilities |
|
(19,867) |
(15,484) |
Net assets |
|
17,006 |
15,631 |
Equity |
|
|
|
Share capital |
24 |
1,068 |
1,068 |
Share premium account |
|
258 |
258 |
Translation reserve |
|
(1,751) |
(2,757) |
Available for sale reserve |
|
60 |
(120) |
Other reserves |
25 |
683 |
574 |
Retained earnings |
|
16,339 |
16,287 |
Total equity attributable to equity
shareholders |
|
16,657 |
15,310 |
Non-controlling interest |
27 |
349 |
321 |
Total equity |
|
17,006 |
15,631 |
These financial statements were approved and authorised for
issue by the board of directors on 26 April
2017 and signed on its behalf by:
A R
Heller
G J
Casey
Company Registration No. 112155
Director
Director
Consolidated statement of changes
in shareholders’ equity
for the year ended 31 December 2016
|
Share
capital
£’000 |
Share
Premium
£’000 |
Translation
reserves
£’000 |
Available-
for-sale reserves
£’000 |
Other
reserves
£’000 |
Retained
earnings
£’000 |
Total
£’000 |
Non-
controlling
interest
£’000 |
Total
equity
£’000 |
Balance at 1 January 2015 |
1,068 |
258 |
(1,677) |
41 |
652 |
16,973 |
17,315 |
404 |
17,719 |
Revaluation and impairments |
- |
- |
- |
- |
- |
17 |
17 |
- |
17 |
Trading |
- |
- |
- |
- |
- |
(276) |
(276) |
4 |
(272) |
Profit/(loss) for the year |
- |
- |
- |
- |
- |
(259) |
(259) |
4 |
(255) |
Other comprehensive expense |
- |
- |
(1,080) |
(161) |
- |
- |
(1,241) |
(87) |
(1,328) |
Total comprehensive expense for the year |
- |
- |
(1,080) |
(161) |
- |
(259) |
(1,500) |
(83) |
(1,583) |
Dividend (note 8) |
- |
- |
- |
- |
- |
(427) |
(427) |
- |
(427) |
Share options charge |
- |
- |
- |
- |
31 |
- |
31 |
- |
31 |
Share options cancelled |
- |
- |
- |
- |
(109) |
- |
(109) |
- |
(109) |
Balance at 1 January 2016 |
1,068 |
258 |
(2,757) |
(120) |
574 |
16,287 |
15,310 |
321 |
15,631 |
Revaluation and impairments |
- |
- |
- |
- |
- |
331 |
331 |
- |
331 |
Trading |
- |
- |
- |
- |
- |
148 |
148 |
(72) |
76 |
Profit/(loss) for the year |
- |
- |
- |
- |
- |
479 |
479 |
(72) |
407 |
Other comprehensive income |
- |
- |
1,006 |
180 |
- |
- |
1,186 |
100 |
1,286 |
Total comprehensive income for the year |
- |
- |
1,006 |
180 |
- |
479 |
1,665 |
28 |
1,693 |
Dividend (note 8) |
- |
- |
- |
- |
- |
(427) |
(427) |
- |
(427) |
Share options charge (note 26) |
- |
- |
- |
- |
109 |
- |
109 |
- |
109 |
Balance at 31 December 2016 |
1,068 |
258 |
(1,751) |
60 |
683 |
16,339 |
16,657 |
349 |
17,006 |
Consolidated cash flow statement
for the year ended 31 December 2016
|
Year ended
31 December
2016
£’000 |
Year ended
31 December
2015
£’000 |
Cash flows from operating activities |
|
|
Operating profit |
637 |
150 |
Adjustments for: |
|
|
Depreciation |
1,785 |
1,284 |
Share based payments |
109 |
31 |
Unrealised gain on investment properties |
(445) |
(225) |
Unrealised (gain)/loss on other investments and other
write-offs |
(12) |
132 |
Exchange adjustments |
(449) |
497 |
Cash flow before working capital |
1,625 |
1,869 |
Change in inventories |
(258) |
393 |
Change in trade and other receivables |
224 |
(212) |
Change in trade and other payables |
1,396 |
(71) |
Cash generated from operations |
2,987 |
1,979 |
Interest received |
121 |
115 |
Interest paid |
(448) |
(363) |
Income tax paid |
(46) |
- |
Cash flow from operating activities |
2,614 |
1,731 |
Cash flows from investing activities |
|
|
Acquisition of reserves, property, plant and
equipment |
(2,859) |
(2,992) |
Share of profit in joint ventures |
30 |
104 |
Disposal of non-current asset held for sale |
1,138 |
- |
Cash flow from investing activities |
(1,691) |
(2,888) |
Cash flows from financing activities |
|
|
Borrowings drawn |
37 |
18 |
Borrowings repaid |
(131) |
(66) |
Equity dividends paid |
(427) |
(427) |
Cancelled share options |
- |
(109) |
Cash flow from financing activities |
(521) |
(584) |
Net increase / (decrease) in cash and cash
equivalents |
402 |
(1,741) |
Cash and cash equivalents at 1 January |
(626) |
719 |
Exchange adjustment |
(666) |
396 |
Cash and cash equivalents at 31
December |
(890) |
(626) |
Cash and cash equivalents at 31 December
comprise: |
|
|
Cash and cash equivalents as presented in the balance sheet |
2,444 |
1,608 |
Bank overdrafts (secured) |
(3,334) |
(2,234) |
|
(890) |
(626) |
Group accounting policies
for the year ended 31 December 2016
Basis of accounting
The results for the year ended 31
December 2016 have been prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted by
the European Union and with those parts of the Companies Act 2006
applicable to companies reporting under IFRS. In applying the
group’s accounting policies and assessing areas of judgment and
estimation materiality is applied as detailed on page 47
of the Audit Committee Report. The principal accounting
policies are described below:
The group financial statements are presented in £ sterling
and all values are rounded to the nearest thousand pounds (£000)
except when otherwise stated.
The functional currency for each entity in the group, and for
joint arrangements and associates, is the currency of the country
in which the entity has been incorporated. Details of which country
each entity has been incorporated can be found in note 15 for
subsidiaries and Note 13 for joint arrangements and associates.
The exchange rates used in the accounts were as follows:
|
£1 Sterling:
Rand |
£1 Sterling:
Dollar |
|
2016 |
2015 |
2016 |
2015 |
Year-end rate |
16.9472 |
22.9067 |
1.23321 |
1.47634 |
Annual average |
19.9269 |
19.5017 |
1.35477 |
1.51750 |
Going concern
The group has prepared cash flow forecasts which demonstrate
that the group has sufficient resources to meet its liabilities as
they fall due for at least the next 12 months.
In South Africa, a structured
trade finance facility for R80million is held by Black Wattle
Colliery (Pty) Limited (“Black Wattle”) with Absa Bank Limited, a
South African subsidiary of Barclays Bank PLC. The facility is
renewable annually at 30 June and is secured against inventory,
debtors and cash that are held in the group’s South African
operations. The Directors do not foresee any reason why the
facility will not continue to be renewed at the next renewal date,
in line with prior periods and based on their banking
relationships. This facility comprises of a R60million revolving
loan to cover the working capital requirements of the group’s South
African operations, and a R20million loan facility to cover
guarantee requirements related to the group’s South African mining
operations.
The directors expect that that the improved coal market
conditions experienced by Black Wattle Colliery, its direct mining
asset, in the last quarter of 2016 and the first quarter of 2017
will be similar going into the remainder of 2017. The directors
therefore have a reasonable expectation that the mine will achieve
positive levels of cash generation for the group in 2017. As a
consequence, the directors believe that the group is well placed to
manage its South African business risks successfully.
In the UK, a £6 million term loan facility repayable in 2019 is
held with Santander Bank PLC. The loan is secured against the
company’s UK retail property portfolio. The amount repayable on the
loan at year end was £5.9million (2015: £5.9million). The debt
package has a five year term and is repayable at the end of the
term. The interest cost of the loan is 2.35% above LIBOR.
If required, the group has sufficient financial resources
available at short notice including cash, available-for-sale
investments and its £2m loan to Dragon Retail Properties Limited
which is repayable on demand. In addition its investment property
assets benefit from long term leases with the majority of its
tenants.
As a result of the banking facilities held as well as the
acceptable levels of profitability and cash generation the group’s
South African operations is expected to achieve in 2017, the
Directors believe that the group has adequate resources to continue
in operational existence for the foreseeable future and that the
group is well placed to manage its business risks. Thus they
continue to adopt the going concern basis of accounting in
preparing the annual financial statements.
International Financial Reporting
Standards (IFRS)
The Group has adopted all of the new and revised Standards and
Interpretations issued by the International Accounting Standards
Board (“IASB”) that are relevant to its operations and effective
for accounting periods beginning 1 January
2016. The adoption of these new and revised Standards and
Interpretations had no material effect on the profit or loss or
financial position of the Group.
The Group has not adopted any Standards or Interpretations in
advance of the required implementation dates.
IFRS 15 ‘Revenue from Contracts with Customers’ was issued by
the IASB in May 2014. It is effective
for accounting periods beginning on or after 1 January 2018. The new standard will replace
existing accounting standards, and provides enhanced detail on the
principle of recognising revenue to reflect the transfer of goods
and services to customers at a value which the company expects to
be entitled to receive. The standard also updates revenue
disclosure requirements. The standard was endorsed by the EU on
22 September 2016. The Directors are
continuing to assess the impact of IFRS 15 on the results of the
Group and the impact of adopting this standard cannot be reliably
estimated until this work is substantially complete.
IFRS 9 was published in July 2014
and will be effective for the group from 1
January 2018. The standard was endorsed by the EU on
22 November 2016. It is applicable to
financial assets and financial liabilities, and covers the
classification, measurement, impairment and de-recognition of
financial assets and financial liabilities together with a new
hedge accounting model. The Directors are continuing to assess the
impact on the results of the Group.
IFRS 16 ‘Leases’ – IFRS 16 ‘Leases’ was issued by the IASB in
January 2016 and is effective for
accounting periods beginning on or after 1
January 2019. The new standard will replace IAS 17 ‘Leases’
and will eliminate the classification of leases as either operating
leases or finance leases and, instead, introduce a single lessee
accounting model. The standard has yet to be endorsed by the EU.
The Standard Provides a single lessee accounting model, specifying
how leases are recognised, measured, presented and disclosed. The
Directors are currently evaluating the financial and operational
impact of this standard. The review of the impact of IFRS 16 will
require an assessment of all leases and the impact of adopting this
standard cannot be reliably estimated until this work is
substantially complete.
The Directors do not anticipate that the adoption of the other
standards and interpretations not listed above will have a material
impact on the accounts. Certain of these standards and
interpretations will, when adopted, require addition to or
amendment of disclosures in the accounts.
We are committed to improving disclosure and transparency and
will continue to work with our different stakeholders to ensure
they understand the detail of these accounting changes. We continue
to remain committed to a robust financial policy
Key judgements and estimates
Areas where key estimates and judgements are considered to have
a significant effect on the amounts recognised in the financial
statements include:
Life of mine and reserves
The directors consider their judgements and estimates
surrounding the life of the mine and its reserves to have the most
significant effect on the amounts recognised in the financial
statements and to be the area where the financial statements are at
most risk of a material adjustment due to estimation uncertainty.
The life of mine remaining is currently estimated at 5 years. This
life of mine is based on the groups existing coal reserves and
excludes future run of mine coal purchases and coal reserve
acquisitions. The group’s coal reserves are subject to assessment
by an independent Competent Person and impact assessments of the
carrying value of property, plant and equipment, depreciation
calculations and rehabilitation and decommissioning provisions.
There are numerous uncertainties inherent in estimating coal
reserves and changes to these assumptions may result in restatement
of reserves. These assumptions include factors such as commodity
prices, production costs and yield.
Depreciation, amortisation of mineral
rights, mining development costs and plant & equipment
The annual depreciation/amortisation charge is dependent on
estimates, including coal reserves and the related life of mine,
expected development expenditure for probable reserves, the
allocation of certain assets to relevant ore reserves and estimates
of residual values of the processing plant. The charge can
fluctuate when there are significant changes in any of the factors
or assumptions used, such as estimating mineral reserves which in
turn affects the life of mine or the expected life of reserves.
Estimates of proven and probable reserves are prepared by an
independent Competent Person. Assessments of
depreciation/amortisation rates against the estimated reserve base
are performed regularly. Details of the depreciation/amortisation
charge can be found in note 11.
Provision for mining rehabilitation
including restoration and de-commissioning costs
A provision for future rehabilitation including restoration and
decommissioning costs requires estimates and assumptions to be made
around the relevant regulatory framework, the timing, extent and
costs of the rehabilitation activities and of the risk free rates
used to determine the present value of the future cash outflows.
The provisions, including the estimates and assumptions contained
therein, are reviewed regularly by management. The group engages an
independent expert to assess the cost of restoration and
decommissioning annually as part of management’s assessment of the
provision. Details of the provision for mining rehabilitation can
be found in note 21.
Impairment
Property, plant and equipment representing the group’s mining
assets in South Africa are
reviewed for impairment whenever events or changes in circumstances
indicate that the carrying value may not be fully recoverable. The
impairment test is performed using the approved Life of Mine plan
and those future cash flow estimates are discounted using asset
specific discount rates and are based on expectations about future
operations. The impairment test requires estimates about production
and sales volumes, commodity prices, proven and probable reserves
(as assessed by the Competent Person), operating costs and capital
expenditures necessary to extract reserves in the approved Life of
Mine plan. Changes in such estimates could impact recoverable
values of these assets. Details of the carrying value of property,
plant and equipment can be found in note 11.
The impairment test indicated significant headroom as at
31 December 2016 and therefore no
impairment is considered appropriate. The key assumptions include:
coal prices, including domestic coal prices based on recent pricing
and assessment of market forecasts for export coal; production
based on proven and probable reserves assessed by the independent
Competent Person and an increase in yield of 8% associated with new
mining areas based on assessments by the Competent Person and
empirical data. A 50% reduction in average forecast coal export
prices or a 15% reduction in yield would give rise to a breakeven
scenario. If export coal prices reduce by 10% a 5.25 % decrease in
yield below expectation would be required to create breakeven
scenario. However, the directors consider the forecasted yield
levels to be achievable.
Fair value measurements of
investment properties
An assessment of the fair value of investment properties, is
required to be performed. In such instances, fair value
measurements are estimated based on the amounts for which the
assets and liabilities could be exchanged between market
participants. To the extent possible, the assumptions and inputs
used take into account externally verifiable inputs. However, such
information is by nature subject to uncertainty. The directors note
that the fair value measurement of the investment properties, can
be considered to be less judgemental where external valuers have
been used and as a result of the nature of the underlying assets.
The fair value of investment property is set out in note 10, whilst
the carrying value of investments in joint ventures which
themselves include investment property held at fair value by the
joint venture is set out at note 12.
Carrying value of Ezimbokodweni joint
venture
The group holds a £1.8million (2015: £1.2million) net investment
in Ezimbokodweni Mining (Pty) Limited (“Ezimbokodweni”) made up of
a £1.35million loan (2015: £0.9million) and a £0.45million (2015:
£0.3million) joint venture investment. The carrying value of the
investment is dependent upon the completion of the acquisition of
the Pegasus coal project (“the project”) in South Africa.
Although the South African Department of Mineral Resources
(“DMR”) has previously approved the transfer of legal title for the
reserve to Ezimbokodweni, a proposed sale and purchase agreement
has been negotiated and a deposit paid for the project, the
conclusion of the transaction has been delayed pending the
commercial transfer of the prospecting right from the current
owners of the project to Ezimbokodweni. Previous negotiations to
complete the commercial acquisition of the project have been beset
by various delays outside the control of the group. More recently,
Ezimbokodweni has indicated to the current owners of the project
their ability to fund and complete the transaction via a consortium
of newly proposed shareholders of Ezimbokodweni. The proposed
consortium include Anglo American PLC, Butsunani Energy Investment
Holdings, Vunani Limited, our BEE partner in Black Wattle, and
Bisichi Mining PLC. The consortium meets the Black Economic
Empowerment requirements as required for the transaction as per the
DMR. The current owners of the project have very recently notified
Ezimbokodweni that they do not wish to divest the project at this
stage and, accordingly, the Board have considered the likelihood of
the acquisition ultimately completing in due course as part of its
assessment of the carrying value of the investment in
Ezimbokodweni. The Board remain committed to engaging with the
current owners, the DMR and relevant stakeholders in order to
conclude the transaction and plan further discussions with these
parties in the near future.
In light of the previously approved legal transfer from the DMR,
our understanding of the potential concerns the DMR may have if
current owners do not ultimately divest of the asset and the
support expressed for the transaction by the DMR as an important
stakeholder, the Board remain confident of the transaction
completing in due course. The Board has exercised significant
judgement in forming its assessment that the transaction will
ultimately complete. We will continue to evaluate the status of our
investment on an ongoing basis as the planned engagement with the
relevant stakeholders is undertaken. However at present, we believe
the group is still able to achieve significant value from the
project in excess of its carrying value.
The carrying value of the net investment in the joint venture
was tested for impairment based on the economic model for the
project and no impairment indicators were considered to exist in
terms of the underlying value of the asset. The carrying value of
the underlying project is supported by its coal reserves and life
of mine plan and is considered appropriate given the underlying
economic value of the project.
Basis of consolidation
The group accounts incorporate the accounts of Bisichi Mining
PLC and all of its subsidiary undertakings, together with the
group’s share of the results of its joint ventures. Non-controlling
interests in subsidiaries are presented separately from the equity
attributable to equity owners of the parent company. On acquisition
of a non-wholly owned subsidiary, the non-controlling shareholders’
interests are initially measured at the non-controlling interests’
proportionate share of the fair value of the subsidiaries net
assets. Thereafter, the carrying amount of non-controlling
interests is the amount of those interests at initial recognition
plus the non-controlling interests’ share of subsequent changes in
equity. For subsequent changes in ownership in a subsidiary that do
not result in a loss of control, the consideration paid or received
is recognised entirely in equity.
The definition of control assumes the simultaneous fulfilment of
the following three criteria:
• The parent company holds decision-making power over the
relevant activities of the investee,
• The parent company has rights to variable returns from the
investee, and
• The parent company can use its decision-making power to affect
the variable returns.
Investees are analysed for their relevant activities and
variable returns, and the link between the variable returns and the
extent to which their relevant activities could be influenced in
order to ensure the definition is correctly applied.
Revenue
Revenue comprises sales of coal and property rental income.
Revenue is recognised when the customer has a legally binding
obligation to settle under the terms of the contract and has
assumed all significant risks and rewards of ownership.
Revenue is only recognised on individual sales of coal when all
of the significant risks and rewards of ownership have been
transferred to a third party. Export revenue is generally
recognised when the product is delivered to the export terminal
location specified by the customer, at which point the customer
assumes risks and rewards under the contract. Domestic coal
revenues are generally recognised on collection by the customer
from the mine when loaded into transport, where the customer pays
the transportation costs.
Rental income which excludes services charges recoverable from
tenants, is recognised in the group income statement on a
straight-line basis over the term of the lease. This includes the
effect of lease incentives.
Expenditure
Expenditure is recognised in respect of goods and services
received. Where coal is purchased from third parties at point of
extraction the expenditure is only recognised when the coal is
extracted and all of the significant risks and rewards of ownership
have been transferred.
Investment
properties
Investment properties comprise freehold and long leasehold land
and buildings. Investment properties are carried at fair value in
accordance with IAS 40 ‘Investment Properties’. Properties are
recognised as investment properties when held for long-term rental
yields, and after consideration has been given to a number of
factors including length of lease, quality of tenant and covenant,
value of lease, management intention for future use of property,
planning consents and percentage of property leased. Investment
properties are revalued annually by professional external surveyors
and included in the balance sheet at their fair value. Gains or
losses arising from changes in the fair values of assets are
recognised in the consolidated income statement in the period to
which they relate. In accordance with IAS 40, investment properties
are not depreciated. The fair value of the head leases is the net
present value of the current head rent payable on leasehold
properties until the expiry of the lease.
Mining reserves, plant and
equipment
The cost of property, plant and equipment comprises its purchase
price and any costs directly attributable to bringing the asset to
the location and condition necessary for it to be capable of
operating in accordance with agreed specifications. Freehold land
is not depreciated. Other property, plant and equipment is stated
at historical cost less accumulated depreciation. The cost
recognised includes the recognition of any decommissioning assets
related to property, plant and equipment.
Mine reserves and development cost
The purpose of mine development is to establish secure working
conditions and infrastructure to allow the safe and efficient
extraction of recoverable reserves. Depreciation on mine
development is not charged until production commences or the assets
are put to use. On commencement of full commercial production,
depreciation is charged over the life of the associated mine
reserves extractable using the asset on a unit of production basis.
The unit of production calculation is based on tonnes mined as a
ratio to proven and probable reserves and also includes future
forecast capital expenditure. The cost recognised includes the
recognition of any decommissioning assets related to mine
development.
Post production stripping
In surface mining operations, the group may find it necessary to
remove waste materials to gain access to coal reserves prior to and
after production commences. Prior to production commencing,
stripping costs are capitalised until the point where the
overburden has been removed and access to the coal seam commences.
Subsequent to production, waste stripping continues as part of
extraction process as a run of mine activity. There are two
benefits accruing to the group from stripping activity during the
production phase: extraction of coal that can be used to produce
inventory and improved access to further quantities of material
that will be mined in future periods. Economic coal extracted is
accounted for as inventory. The production stripping costs relating
to improved access to further quantities in future periods are
capitalised as a stripping activity asset, if and only if, all of
the following are met:
• it is probable that the future economic benefit associated
with the stripping activity will flow to the group;
• the group can identify the component of the ore body for which
access has been improved; and
• the costs relating to the stripping activity associated with
that component or components can be measured reliably.
In determining the relevant component of the coal reserve for
which access is improved, the group componentises its mine into
geographically distinct sections or phases to which the stripping
activities being undertaken within that component are allocated.
Such phases are determined based on assessment of factors such as
geology and mine planning.
The group depreciates deferred costs capitalised as stripping
assets on a unit of production method, with reference the tons
mined and reserve of the relevant ore body component or phase. The
cost is recognised within Mine development costs within the balance
sheet.
Other assets and depreciation
The cost, less estimated residual value, of other property,
plant and equipment is written off on a straight-line basis over
the asset’s expected useful life. This includes the washing plant
and other key surface infrastructure. Residual values and useful
lives are reviewed, and adjusted if appropriate, at each balance
sheet date. Changes to the estimated residual values or useful
lives are accounted for prospectively. Heavy surface mining and
other plant and equipment is depreciated at varying rates depending
upon its expected usage.
The depreciation rates generally applied are:
Mining equipment |
5 – 10 per cent per annum, but shorter of its
useful life or the life of the mine |
Motor vehicles |
25 – 33 per cent per annum |
Office equipment |
10 – 33 per cent per annum |
Provisions
Provisions are recognised when the group has a present
obligation as a result of a past event which it is probable will
result in an outflow of economic benefits that can be reliably
estimated.
A provision for rehabilitation of the mine is initially recorded
at present value and the discounting effect is unwound over time as
a finance cost. Changes to the provision as a result of changes in
estimates are recorded as an increase / decrease in the provision
and associated decommissioning asset. The decommissioning asset is
depreciated in line with the group’s depreciation policy over the
life of mine. The provision includes the restoration of the
underground, opencast, surface operations and de-commissioning of
plant and equipment. The timing and final cost of the
rehabilitation is uncertain and will depend on the duration of the
mine life and the quantities of coal extracted from the
reserves.
Employee benefits
Share based remuneration
The company operates a share option scheme. The fair value of
the share option scheme is determined at the date of grant. This
fair value is then expensed on a straight-line basis over the
vesting period, based on an estimate of the number of shares that
will eventually vest. The fair value of options granted is
calculated using a binomial or Black-Scholes-Merton model. Payments
made to employees on the cancellation or settlement of options
granted are accounted for as the repurchase of an equity interest,
ie as a deduction from equity. Details of the share options in
issue are disclosed in the Directors’ Remuneration Report on page
37 under the heading Share option schemes which is within the
audited part of that report.
Pensions
The group operates a defined contribution pension scheme. The
contributions payable to the scheme are expensed in the period to
which they relate.
Foreign currencies
Monetary assets and liabilities are translated at year end
exchange rates and the resulting exchange rate differences are
included in the consolidated income statement within the results of
operating activities if arising from trading activities, including
inter-company trading balances and within finance cost/income if
arising from financing.
For consolidation purposes, income and expense items are
included in the consolidated income statement at average rates, and
assets and liabilities are translated at year end exchange rates.
Translation differences arising on consolidation are recognised in
other comprehensive income. Foreign exchange differences on
intercompany loans are recorded in other comprehensive income when
the loans are not considered as trading balances and are not
expected to be repaid in the foreseeable future. Where foreign
operations are disposed of, the cumulative exchange differences of
that foreign operation are recognised in the consolidated income
statement when the gain or loss on disposal is recognised.
Transactions in foreign currencies are translated at the
exchange rate ruling on transaction date.
Financial instruments
The group classifies financial instruments, or their component
parts, on initial recognition as a financial asset, a financial
liability or an equity instrument in accordance with the substance
of the contractual arrangement.
Bank loans and overdrafts
Bank loans and overdrafts are included as financial liabilities
on the group balance sheet at the amounts drawn on the particular
facilities net of the unamortised cost of financing. Interest
payable on those facilities is expensed as finance cost in the
period to which it relates.
Finance lease liabilities
Finance lease liabilities arise for those investment properties
held under a leasehold interest and accounted for as investment
property. The liability is initially calculated as the present
value of the minimum lease payments, reducing in subsequent
reporting periods by the apportionment of payments to the
lessor.
Available for sale investments
Financial assets available for sale are measured at fair value.
Any changes in fair value above cost are recognised in other
comprehensive income and accumulated in the available-for-sale
reserve. For any changes in fair value below cost a provision for
impairment is recognised in the profit or loss account.
Other investments classified as non-current available for sale
investments comprise of shares in listed companies and are carried
at fair value.
Trade receivables
Trade receivables do not carry any interest and are stated at
their nominal value as reduced by appropriate allowances for
estimated recoverable amounts as the interest that would be
recognised from discounting future cash payments over the short
payment period is not considered to be material.
Trade payables
Trade payables are not interest bearing and are stated at their
nominal value, as the interest that would be recognised from
discounting future cash payments over the short payment period is
not considered to be material.
Other financial assets and
liabilities
The groups other financial assets and liabilities not disclosed
above are accounted for at amortised cost.
Joint ventures
Investments in joint ventures, being those entities over whose
activities the group has joint control, as established by
contractual agreement, are included at cost together with the
group’s share of post-acquisition reserves, on an equity basis.
Dividends received are credited against the investment. Joint
control is the contractually agreed sharing of control over an
arrangement, which exists only when decisions about relevant
strategic and/or key operating decisions require unanimous consent
of the parties sharing control. Control over the arrangement is
assessed by the group in accordance with the definition of control
under IFRS 10. Loans to joint ventures are classified as
non-current assets when they are not expected to be received in the
normal working capital cycle. The loan to Ezimbokodweni is included
in joint ventures as a part of net investment in joint venture as
it is not expected to be repaid in the foreseeable future, as the
recoverability of which is dependent upon the acquisition of the
Pegasus coal project in South
Africa and development over its life of mine. Trading
receivables and payables to joint ventures are classified as
current assets and liabilities.
Inventories
Inventories are stated at the lower of cost and net realisable
value. Cost includes materials, direct labour and overheads
relevant to the stage of production. Cost is determined using the
weighted average method. Net realisable value is based on estimated
selling price less all further costs to completion and all relevant
marketing, selling and distribution costs.
Impairment
Whenever events or changes in circumstance indicate that the
carrying amount of an asset may not be recoverable an asset is
reviewed for impairment. A review involves determining whether the
carrying amounts are in excess of their recoverable amounts. An
asset’s recoverable amount is determined as the higher of its fair
value less costs of disposal and its value in use. Such reviews are
undertaken on an asset-by-asset basis, except where assets do not
generate cash flows independent of other assets, in which case the
review is undertaken on a cash generating unit basis.
If the carrying amount of an asset exceeds its recoverable
amount An asset’s carrying value is written down to its estimated
recoverable amount (being the higher of the fair value less cost to
sell and value in use) if that is less than the asset’s carrying
amount. Any change in carrying value is recognised in the
comprehensive income statement.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax bases used in
the tax computations, and is accounted for using the balance sheet
liability method. Deferred tax liabilities are generally recognised
for all taxable temporary differences and deferred tax assets are
recognised to the extent that it is probable that taxable profits
will be available against which deductible temporary differences
can be utilised. In respect of the deferred tax on the revaluation
surplus, this is calculated on the basis of the chargeable gains
that would crystallise on the sale of the investment portfolio as
at the reporting date. The calculation takes account of indexation
on the historical cost of the properties and any available capital
losses.
Deferred tax is calculated at the tax rates that are expected to
apply in the period when the liability is settled or the asset is
realised. Deferred tax is charged or credited in the group income
statement, except when it relates to items charged or credited
directly to other comprehensive income, in which case it is also
dealt with in other comprehensive income.
Dividends
Dividends payable on the ordinary share capital are recognised
as a liability in the period in which they are approved.
Cash and cash equivalents
Cash comprises cash in hand and on-demand deposits. Cash and
cash equivalents comprises short-term, highly liquid investments
that are readily convertible to known amounts of cash and which are
subject to an insignificant risk of changes in value and original
maturities of three months or less. The cash and cash equivalents
shown in the cashflow statement are stated net of bank
overdrafts.
Assets held for sale
Non-current assets, or disposal groups comprising assets and
liabilities, are classified as held-for-sale if it is highly
probable that they will be recovered primarily through sale rather
through continuing use. Such assets, or disposal groups, are
generally measured at the lower of their carrying amount and fair
value less costs of sell. Any impairment loss on a disposal group
is allocated first to goodwill, and then to the remaining assets
and liabilities on a pro rata basis, except that no loss is
allocated to inventories, financial assets, deferred tax assets,
employee benefit assets, investment property which continue to be
measured in accordance with the group’s other accounting
policies.
Impairment losses on initial classification as held-for-sale and
subsequent gains and losses on remeasurement are recognised in
profit or loss. Once classified as held-for-sale, intangible assets
and property, plant and equipment are no longer amortised or
depreciated, and any equity-accounted investment is no longer
equity accounted.
Segmental reporting
For management reporting purposes, the group is organised into
business segments distinguishable by economic activity. The group’s
only business segments are mining activities and investment
properties. These business segments are subject to risks and
returns that are different from those of other business segments
and are the primary basis on which the group reports its segment
information. This is consistent with the way the group is managed
and with the format of the group’s internal financial reporting.
Significant revenue from transactions with any individual customer,
which makes up 10 percent or more of the total revenue of the
group, is separately disclosed within each segment. All coal
exports are sales to coal traders at Richard Bay’s terminal in
South Africa with the risks and
rewards passing to the coal trader at the terminal. Whilst the coal
traders will ultimately sell the coal on the international markets
the Company has no visibility over the ultimate destination of the
coal. Accordingly, the export sales are recorded as South African
revenue.
Notes to the financial statements
for the year ended 31 December 2016
1. SEGMENTAL REPORTING
|
2016 |
Business analysis |
Mining
£’000 |
Property
£’000 |
Other
£’000 |
Total
£’000 |
Significant revenue customer A |
14,543 |
- |
- |
14,543 |
Significant revenue customer B |
4,581 |
- |
- |
4,581 |
Significant revenue customer C |
445 |
- |
- |
445 |
Other revenue |
2,134 |
1,084 |
28 |
3,246 |
Segment revenue |
21,703 |
1,084 |
28 |
22,815 |
Operating (loss)/profit before fair value
adjustments & exchange movements |
(1,030) |
736 |
25 |
(269) |
Revaluation of investments & exchange
movements |
449 |
445 |
12 |
906 |
Operating (loss)/profit and segment
result |
(581) |
1,181 |
37 |
637 |
Segment assets |
15,082 |
13,889 |
2,781 |
31,752 |
|
|
|
|
|
Unallocated assets |
|
|
|
|
– Non-current assets |
|
|
|
6 |
– Cash & cash equivalents |
|
|
|
2,444 |
Total assets excluding investment in joint
ventures and assets held for sale |
|
|
|
34,202 |
Segment liabilities |
(8,098) |
(2,320) |
(215) |
(10,633) |
Borrowings |
(3,424) |
(5,810) |
- |
(9,234) |
Total liabilities |
(11,522) |
(8,130) |
(215) |
(19,867) |
Net assets |
|
|
|
14,335 |
Non segmental assets |
|
|
|
|
– Investment in joint ventures |
|
|
|
1,321 |
– Loan to joint venture |
|
|
|
1,350 |
– Non-current asset held for sale |
|
|
|
- |
Net assets as per balance sheet |
|
|
|
17,006 |
Geographic analysis |
United
Kingdom
£’000 |
South
Africa
£’000 |
Total
£’000 |
Revenue |
1,112 |
21,703 |
22,815 |
Operating profit/(loss) and segment result |
1,231 |
(595) |
636 |
Non-current assets excluding investments |
13,432 |
8,517 |
21,949 |
Total net assets |
12,291 |
4,715 |
17,006 |
Capital expenditure |
1 |
2,858 |
2,859 |
|
2015 |
Business analysis |
Mining
£’000 |
Property
£’000 |
Other
£’000 |
Total
£’000 |
Significant revenue customer A |
14,126 |
- |
- |
14,126 |
Significant revenue customer B |
2,561 |
- |
- |
2,561 |
Significant revenue customer C |
1,545 |
- |
- |
1,545 |
Other revenue |
6,376 |
1,014 |
33 |
7,423 |
Segment revenue |
24,608 |
1,014 |
33 |
25,655 |
Operating (loss)/profit before fair value
adjustments & exchange movements |
(288) |
690 |
31 |
433 |
Revaluation of investments & exchange
movements |
(497) |
225 |
(11) |
(283) |
Operating (loss)/profit and segment
result |
(785) |
915 |
20 |
150 |
Segment assets |
10,102 |
13,525 |
2,594 |
26,221 |
|
|
|
|
|
Unallocated assets |
|
|
|
|
– Non-current assets |
|
|
|
20 |
– Cash & cash equivalents |
|
|
|
1,608 |
Total assets excluding investment in joint
ventures and assets held for sale |
|
|
|
27,849 |
Segment liabilities |
(4,865) |
(2,183) |
(229) |
(7,277) |
Borrowings |
(2,280) |
(5,927) |
- |
(8,207) |
Total liabilities |
(7,145) |
(8,110) |
(229) |
(15,484) |
Net assets |
|
|
|
12,365 |
Non segmental assets |
|
|
|
|
– Investment in joint ventures |
|
|
|
1,198 |
– Loan to joint venture |
|
|
|
900 |
– Non-current asset held for sale |
|
|
|
1,168 |
Net assets as per balance sheet |
|
|
|
15,631 |
Geographic analysis |
United
Kingdom
£’000 |
South
Africa
£’000 |
Total
£’000 |
Revenue |
1,047 |
24,608 |
25,655 |
Operating profit/(loss) and segment result |
935 |
(785) |
150 |
Non-current assets excluding investments |
13,013 |
5,355 |
18,368 |
Total net assets |
12,272 |
3,359 |
15,631 |
Capital expenditure |
1,002 |
1,990 |
2,992 |
2. OPERATING COSTS
|
2016
£’000 |
2015
£’000 |
Mining |
16,184 |
19,177 |
Property |
211 |
111 |
Cost of sales |
16,395 |
19,288 |
Administration |
6,689 |
5,934 |
Operating costs |
23,084 |
25,222 |
The direct property costs are: |
|
|
Ground rent |
10 |
10 |
Direct property expense |
177 |
71 |
Bad debts |
24 |
30 |
|
211 |
111 |
Operating costs above include depreciation of £1,785,000 (2015:
£1,284,000).
3. GAIN ON REVALUATION OF INVESTMENT
PROPERTIES
The reconciliation of the investment surplus to the gain on
revaluation of investment properties in the income statement is set
out below:
|
2016
£’000 |
2015
£’000 |
Investment surplus |
458 |
226 |
Loss on valuation movement in respect of head
lease payments |
(13) |
(1) |
Gain on revaluation of investment
properties |
445 |
225 |
4. (LOSS)/PROFIT BEFORE TAXATION
(Loss)/profit before taxation is arrived at after charging:
|
2016
£’000 |
2015
£’000 |
Staff costs (see note 29) |
5,321 |
5,094 |
Depreciation |
1,785 |
1,284 |
Exchange (gain)/loss |
(449) |
497 |
Fees payable to the company’s auditor for the
audit of the company’s annual accounts |
40 |
31 |
Fees payable to the company’s auditor and its
associates for other services: |
|
|
The audit of the company’s subsidiaries pursuant to
legislation |
10 |
8 |
Audit related services |
32 |
2 |
The directors consider the auditors were best placed to provide
the above audit related services which refer to regulatory matters.
The audit committee reviews the nature and extent of non-audit
services to ensure that independence is maintained.
5. DIRECTORS’ EMOLUMENTS
Directors’ emoluments are shown in the Directors’ remuneration
report on page 36 which is within the audited part of that
report.
6. INTEREST PAYABLE
|
2016
£’000 |
2015
£’000 |
On bank overdrafts and bank loans |
395 |
364 |
Unwinding of discount |
78 |
79 |
Other interest payable |
81 |
30 |
Interest payable |
554 |
473 |
7. TAXATION
|
2016
£’000 |
2015
£’000 |
|
|
|
(a) Based on the results for the year: |
|
|
Current tax - UK |
10 |
- |
Current tax - Overseas |
60 |
- |
Corporation tax – adjustment in respect of prior
year – UK |
- |
(23) |
Corporation tax – adjustment in respect of prior
year – Overseas |
- |
3 |
Current tax |
70 |
(20) |
Deferred tax |
(131) |
128 |
Total tax in income statement (credit) /
charge |
(61) |
108 |
The 2016 deferred tax recognised in income of £131,000 includes
a credit of £168,000 arising on the correction of an error in the
calculation of deferred tax in 2015 related to the accounting of a
deferred tax liability incorrectly recognised in respect of
management fees. The company has adjusted the effect of this error
in its 2016 financial statements by reducing the tax charge for the
year by £168,000 and reducing the associated deferred tax liability
as it is not considered to be material to the current or prior year
financial statements.
(b) Factors affecting tax charge for
the year:
The corporation tax assessed for the year is different from that
at the standard rate of corporation tax in the United Kingdom of 20% (2015: 20.25%).
The differences are explained below:
Profit/(Loss) on ordinary activities before
taxation |
346 |
(147) |
Tax on profit on ordinary activities at 20% (2015:
20.25%) |
69 |
(30) |
Effects of: |
|
|
Expenses not deductible for tax purposes |
20 |
21 |
Capital gains on disposal |
153 |
- |
Adjustment to tax rate |
(117) |
(63) |
Other differences |
(32) |
200 |
Adjustment in respect of prior years |
(154) |
(20) |
Total tax |
(61) |
108 |
(c) Analysis of United Kingdom and overseas tax:
United Kingdom tax included in
above:
|
2016
£’000 |
2015
£’000 |
Corporation tax |
10 |
- |
Adjustment in respect of prior years |
- |
(23) |
Current tax |
10 |
(23) |
Deferred tax |
8 |
12 |
|
18 |
(11) |
Overseas tax included in above: |
|
|
Corporation tax |
60 |
- |
Adjustment in respect of prior years |
- |
3 |
Current tax |
60 |
3 |
Deferred tax |
(139) |
116 |
|
(79) |
119 |
8. DIVIDENDS PAID
|
2016
Per share |
2016
£’000 |
2015
Per share |
2015
£’000 |
Dividends paid during the year relating to the
prior period |
4.00p |
427 |
4.00p |
427 |
Dividends relating to the current period: |
|
|
|
|
Interim dividend for 2016 paid on 10 February
2017 |
1.00p |
107 |
1.00p |
107 |
Proposed final dividend for 2016 |
3.00p |
320 |
3.00p |
320 |
|
4.00p |
427 |
4.00p |
427 |
The dividends relating to the current period are not accounted
for until they have been approved at the Annual General Meeting.
The amount, in respect of 2016, will be accounted for as an
appropriation of retained earnings in the year ending 31 December 2017.
9. PROFIT/(LOSS) AND
DILUTED PROFIT/(LOSS) PER SHARE
Both the basic and diluted (loss)/profit per share calculations
are based on a profit/(loss) of £479,000 (2015: loss: £259,000).
The basic profit/(loss) per share has been calculated on a weighted
average of 10,676,839 (2015: 10,676,839) ordinary shares being in
issue during the period. The diluted profit/(loss) per share has
been calculated on the weighted average number of shares in issue
of 10,676,839 (2015: 10,676,839) plus the dilutive potential
ordinary shares arising from share options of nil (2015: nil)
totalling 10,676,839 (2015: 10,676,839).
Share options exercisable as at 31
December 2016 do not have a dilutive effect as the average
market price of ordinary shares during the period does not exceed
the exercise price of the options. Dilutive potential ordinary
shares of 34,973 were excluded from the calculation of diluted
ordinary shares for the 2015 year end as there was no dilutive
effect due to the loss for the prior year.
10. INVESTMENT PROPERTIES
|
Freehold
£’000 |
Long
Leasehold
£’000 |
Total
£’000 |
Valuation at 1 January 2016 |
10,150 |
2,650 |
12,800 |
Additions |
- |
- |
- |
Revaluation |
400 |
45 |
445 |
Valuation at 31 December 2016 |
10,550 |
2,695 |
13,245 |
|
|
|
|
Valuation at 1 January 2015 |
8,925 |
2,650 |
11,575 |
Acquisition |
960 |
- |
960 |
Additions |
40 |
- |
40 |
Revaluation |
225 |
- |
225 |
Valuation at 31 December 2015 |
10,150 |
2,650 |
12,800 |
|
|
|
|
Historical cost |
|
|
|
At 31 December 2016 |
5,823 |
728 |
6,551 |
At 31 December 2015 |
5,823 |
728 |
6,551 |
Long leasehold properties are those for which the unexpired term
at the balance sheet date is not less than 50 years. All investment
properties are held for use in operating leases and all properties
generated rental income during the period.
Freehold and Long Leasehold properties were externally
professionally valued at 31 December on an open market basis
by:
|
2016
£’000 |
2015
£’000 |
Carter Towler |
13,245 |
12,800 |
The valuations were carried out in accordance with the
Statements of Asset Valuation and Guidance Notes published by The
Royal Institution of Chartered Surveyors.
Each year external valuers are appointed by the Executive
Directors on behalf of the Board. The valuers are selected based
upon their knowledge, independence and reputation for valuing
assets such as those held by the group.
Valuations are performed annually and are performed consistently
across all investment properties in the group’s portfolio. At each
reporting date appropriately qualified employees of the group
verify all significant inputs and review the computational outputs.
Valuers submit their report to the Board on the outcome of each
valuation round.
Valuations take into account tenure, lease terms and structural
condition. The inputs underlying the valuations include market rent
or business profitability, likely incentives offered to tenants,
forecast growth rates, yields, EBITDA, discount rates, construction
costs including any specific site costs (for example section 106),
professional fees, developer’s profit including contingencies,
planning and construction timelines, lease regear costs, planning
risk and sales prices based on known market transactions for
similar properties to those being valued.
Valuations are based on what is determined to be the highest and
best use. When considering the highest and best use a valuer will
consider, on a property by property basis, its actual and potential
uses which are physically, legally and financially viable. Where
the highest and best use differs from the existing use, the valuer
will consider the cost and likelihood of achieving and implanting
this change in arriving at its valuation.
There are often restrictions on Freehold and Leasehold property
which could have a material impact on the realisation of these
assets. The most significant of these occur when planning
permission or lease extension and renegotiation of use are required
or when a credit facility is in place. These restrictions are
factored in the property’s valuation by the external valuer.
IFRS 13 sets out a valuation hierarchy for assets and
liabilities measured at fair value as follows:
Level 1: valuation based on inputs on quoted market
prices in active markets
Level 2: valuation based on inputs other than quoted
prices included within level 1 that maximise the use of observable
data directly or from market prices or indirectly derived from
market prices.
Level 3: where one or more inputs to valuations are not
based on observable market data
The inter-relationship between key unobservable inputs and the
groups’ properties is detailed in the table below:
Class of property Level 3 |
Valuation technique |
Key
unobservable inputs |
Carrying/
fair value
2016
£’000 |
Carrying/
fair value
2015
£’000 |
Range
(weighted
average)
2016 |
Range
(weighted
average)
2015 |
Freehold – external valuation |
Income capitalisation |
Estimated rental
value per sq ft p.a |
10,550 |
10,150 |
£7 – £27
(£20) |
£7 – £27
(£19) |
|
|
Equivalent Yield |
|
|
7.8% – 11.0%
(8.9%) |
8.0% – 12.6%
(9.2%) |
Long leasehold – external valuation |
Income capitalisation |
Estimated rental
value per sq ft p.a |
2,695 |
2,650 |
£8 – £8
(£8) |
£8 – £8
(£8) |
|
|
Equivalent yield |
|
|
7.6% – 7.6%
(7.6%) |
7.5% – 7.5%
(7.5%) |
At 31 December 2016 |
|
|
13,245 |
12,800 |
|
|
There are interrelationships between all these inputs as they
are determined by market conditions. The existence of an increase
in more than one input would be to magnify the input on the
valuation. The impact on the valuation will be mitigated by the
interrelationship of two inputs in opposite directions, for
example, an increase in rent may be offset by an increase in
yield.
The table below illustrates the impact of changes in key
unobservable inputs on the carrying / fair value of the group’s
properties:
|
Estimated rental
value
10% increase or decrease |
Equivalent
yield
25 basis point contraction or expansion |
|
2016
£’000 |
2015
£’000 |
2016
£’000 |
2015
£’000 |
Freehold – external valuation |
1,055 / (1,055) |
1,015 / (1,015) |
316 / (298) |
300 / (263) |
Long Leasehold – external valuation |
270 / (270) |
265 / (265) |
92 / (86) |
92 / (86) |
11. MINING RESERVES, PLANT AND
EQUIPMENT
|
Mining
reserves
£’000 |
Mining
equipment and development costs
£’000 |
Motor
vehicles
£’000 |
Office
equipment
£’000 |
Total
£’000 |
Cost at 1 January 2016 |
995 |
15,453 |
150 |
120 |
16,718 |
Exchange adjustment |
350 |
5,858 |
47 |
19 |
6,274 |
Additions |
- |
2,814 |
38 |
7 |
2,859 |
Disposals |
- |
(401) |
- |
- |
(401) |
Cost at 31 December 2016 |
1,345 |
23,724 |
235 |
146 |
25,450 |
|
|
|
|
|
|
Accumulated depreciation at 1 January 2016 |
949 |
10,201 |
99 |
95 |
11,344 |
Exchange adjustment |
336 |
3,824 |
28 |
14 |
4,202 |
Charge for the year |
2 |
1,746 |
27 |
10 |
1,785 |
Disposals |
- |
(401) |
- |
- |
(401) |
Accumulated depreciation at 31 December
2016 |
1,287 |
15,370 |
154 |
119 |
16,930 |
Net book value at 31 December 2016 |
58 |
8,354 |
81 |
27 |
8,520 |
|
|
|
|
|
|
Cost at 1 January 2015 |
1,266 |
17,539 |
169 |
115 |
19,089 |
Exchange adjustment |
(271) |
(4,048) |
(30) |
(12) |
(4,361) |
Additions |
- |
1,964 |
11 |
17 |
1,992 |
Disposals |
- |
(2) |
- |
- |
(2) |
Cost at 31 December 2015 |
995 |
15,453 |
150 |
120 |
16,718 |
|
|
|
|
|
|
Accumulated depreciation at 1 January 2015 |
1,149 |
11,705 |
77 |
94 |
13,025 |
Exchange adjustment |
(256) |
(2,679) |
(17) |
(11) |
(2,963) |
Charge for the year |
56 |
1,177 |
39 |
12 |
1,284 |
Disposals |
- |
(2) |
- |
- |
(2) |
Accumulated depreciation at 31 December
2015 |
949 |
10,201 |
99 |
95 |
11,344 |
Net book value at 31 December 2015 |
46 |
5,252 |
51 |
25 |
5,374 |
12. INVESTMENTS HELD AS NON-CURRENT
ASSETS
|
2016
Net investment in joint
ventures
assets
£’000 |
2016
Other
£’000 |
2015
Net investment
in joint
ventures
assets
£’000 |
2015
Other
£’000 |
At 1 January |
1,198 |
29 |
2,898 |
156 |
Transfer to non-current asset held for sale |
- |
- |
(1,168) |
- |
Written off |
- |
- |
- |
(126) |
Share of gain in investment |
- |
6 |
- |
- |
Dividends received |
- |
- |
(105) |
- |
Exchange adjustment |
130 |
1 |
(358) |
(1) |
Share of (loss)/gain in joint ventures |
(7) |
- |
69 |
- |
Loss on reclassification of non-current asset held
for sale |
- |
- |
(138) |
- |
Net assets at 31 December |
1,321 |
36 |
1,198 |
29 |
|
|
|
|
|
Loan to joint venture (Ezimbokodweni): |
|
|
|
|
At 1 January |
900 |
- |
1,040 |
- |
Exchange adjustments |
336 |
- |
(235) |
- |
Additions - interest |
114 |
- |
95 |
- |
At 31 December |
1,350 |
- |
900 |
- |
At 31 December |
2,671 |
36 |
2,098 |
29 |
|
|
|
|
|
Provision for diminution in value: |
|
|
|
|
At 1 January |
- |
(15) |
- |
(4) |
Transfer |
- |
- |
- |
- |
Exchange adjustment |
- |
(1) |
- |
- |
Write back/(down) of investment |
- |
12 |
- |
(11) |
At 31 December |
- |
(4) |
- |
(15) |
Net book value at 31 December |
2,671 |
32 |
2,098 |
14 |
|
2016
£’000 |
2015
£’000 |
Net book value of unquoted investments |
- |
- |
Net book and market value of investments listed on
overseas stock exchanges |
32 |
14 |
|
32 |
14 |
The amounts written off in 2015 were expensed as part of other
operating costs.
13. JOINT VENTURES
Dragon Retail Properties Limited
The company owns 50% of the issued share capital of Dragon
Retail Properties Limited, an unlisted property investment company.
At year end, the carrying value of the investment held by the group
was £866,000 (2015: £873,000). The remaining 50% is held by
London & Associated Properties
PLC. Dragon Retail Properties Limited is incorporated in
England and Wales and its registered address is 24 Bruton
Place, London, W1J 6NE. It has
issued share capital of 500,000 (2015: 500,000) ordinary shares of
£1 each. No dividends were received during the period.
Ezimbokodweni Mining (Pty) Ltd
The company owns 49% of the issued share capital of
Ezimbokodweni Mining (Pty) Limited (“Ezimbokodweni”), an unlisted
coal exploration and development company. The company is
incorporated in South Africa and
its registered address is Samora Machel
Street, Bethal Road, Middelburg, Mpumalanga, 1050. It has
issued share capital of 100 (2015: 100) ordinary shares of
ZAR1 each. No dividends were received
during the period. Included within the carrying value of the net
investment in the joint venture assets in note 12 is a loan to
Ezimbokodweni of £1,350,000 (2015: £900,000) and an equity
investment of £455,000 (2015: £325,000). The loan bears interest at
the South African prime overdraft rate plus 1.5%. The loan is
unsecured and repayable on demand. Refer to page 60 for details of
the significant judgment regarding the carrying value of the
asset.
Langney Shopping Centre Unit Trust
Prior to 11 March 2016, the
company owned 12.5% of the units of Langney Shopping Centre Unit
Trust, an unlisted property unit trust incorporated in Jersey.
12.5% of the units in the trust were held by London & Associated Properties PLC and 75%
were held by Columbus UK GP limited, a partner acting on behalf of
Columbus UK Real Estate Fund. On the 11
March 2016, the company disposed of its investment in
Langney Shopping Centre Unit Trust. The net proceeds from the sale
were £1,168,000 which includes £30,000 of dividends received. At
31 December 2015, the investment was
transferred from investment in joint ventures to non-current asset
held for sale in the balance sheet. At year end, the share of the
net assets of the trust held by the group were £nil (2015:
£1,168,000) which includes a loss on the reclassification of the
asset to held for sale in the amount of £nil (2015: £138,000).
|
Dragon
50%
£’000 |
Ezimbokodweni
49%
£’000 |
2016
£’000 |
2015
£’000 |
Turnover |
86 |
- |
86 |
258 |
Profit and loss |
|
|
|
|
Profit/(loss) before depreciation, interest and
taxation |
12 |
- |
12 |
(80) |
Depreciation and amortisation |
(13) |
- |
(13) |
(7) |
Loss before interest and taxation |
(1) |
- |
(1) |
(87) |
Interest Income |
69 |
- |
69 |
69 |
Interest expense |
(85) |
- |
(85) |
(121) |
Loss before taxation |
(17) |
- |
(17) |
(139) |
Taxation |
10 |
- |
10 |
70 |
Loss after taxation |
(7) |
- |
(7) |
(69) |
Balance sheet |
|
|
|
|
Non-current assets |
1,326 |
1,346 |
2,672 |
4,530 |
Cash and cash equivalents |
58 |
3 |
61 |
67 |
Other current assets |
1,165 |
- |
1,165 |
1,311 |
Current borrowings |
- |
- |
- |
(6) |
Other current liabilities |
(1,039) |
(1,349) |
(2,388) |
(2,037) |
Net current assets |
184 |
(1,346) |
(1,162) |
(665) |
Non-current borrowings |
(603) |
- |
(603) |
(1,772) |
Other non-current liabilities |
(41) |
- |
(41) |
(52) |
Share of net assets at 31 December |
866 |
- |
866 |
2,041 |
Reconciliation of net assets to carrying value
of joint venture assets: |
|
|
|
|
Share of net assets at 31 December |
866 |
- |
866 |
2,041 |
Pre-acquisition costs capitalised |
- |
455 |
455 |
325 |
Transfer to non-current assets held for sale |
- |
- |
- |
(1,168) |
Carrying value of joint venture assets at 31
December |
866 |
455 |
1,321 |
1,198 |
14. NON-CURRENT ASSETS HELD FOR
SALE
|
2016
£’000 |
2015
£’000 |
Investment in Langney Shopping Centre Unit
Trust |
|
|
Balance at 1 January |
1,168 |
- |
Transfer |
- |
1,168 |
Disposal |
(1,168) |
- |
|
- |
1,168 |
On the 11 March 2016, the company
disposed of its investment in Langney Shopping Centre Unit Trust,
an unlisted property unit trust incorporated in Jersey. At year
end, the company owned 12.5% of the units of the trust. The net
proceeds from the sale were £1,138,000 (excluding dividend of
£30,000). At year end, the company’s share of the net assets of the
trust were £nil (2015: £1,168,000). A loss on reclassification of
the asset as held for sale of £nil (2015: £138,000) was recorded
during the year.
15. SUBSIDIARY COMPANIES
The company owns the following ordinary share capital of the
subsidiaries which are included within the consolidated financial
statements:
|
Activity |
Percentage of
share capital |
Registered address |
Country of
incorporation |
Mineral Products Limited |
Share dealing |
100% |
24 Bruton Place, London, W1J6NE |
England and Wales |
Bisichi (Properties) Limited |
Property |
100% |
24 Bruton Place, London, W1J6NE |
England and Wales |
Bisichi Northampton Limited |
Property |
100% |
24 Bruton Place, London, W1J6NE |
England and Wales |
Bisichi Trustee Limited |
Property |
100% |
24 Bruton Place, London, W1J6NE |
England and Wales |
Urban First (Northampton) Limited |
Property |
100% |
24 Bruton Place, London, W1J6NE |
England and Wales |
Bisichi Mining (Exploration) Limited |
Holding company |
100% |
24 Bruton Place, London, W1J6NE |
England and Wales |
Ninghi Marketing Limited |
Dormant |
90.1% |
24 Bruton Place, London, W1J6NE |
England and Wales |
Bisichi Mining Managements Services Limited |
Dormant |
100% |
24 Bruton Place, London, W1J6NE |
England and Wales |
Black Wattle Colliery (Pty) Limited |
Coal mining |
62.5% |
Samora Machel Street, Bethal Road,
Middelburg, Mpumalanga, 1050 |
South Africa |
Bisichi Coal Mining (Pty) Limited |
Coal mining |
100% |
Samora Machel Street, Bethal Road,
Middelburg, Mpumalanga, 1050 |
South Africa |
Black Wattle Klipfontein (Pty) Limited |
Coal mining |
62.5% |
Samora Machel Street,
Bethal Road,
Middelburg, Mpumalanga, 1050 |
South Africa |
Amandla Ehtu Mineral Resource
Development (Pty) Limited |
Dormant |
70% |
Samora Machel Street,
Bethal Road,
Middelburg, Mpumalanga, 1050 |
South Africa |
Details on the non-controlling interest in subsidiaries are
shown under note 27.
16. INVENTORIES
|
2016
£’000 |
2015
£’000 |
Coal |
|
|
Washed |
1,139 |
778 |
Run of mine |
83 |
110 |
Work in progress |
458 |
122 |
Other |
41 |
39 |
|
1,721 |
1,049 |
17. TRADE AND OTHER RECEIVABLES
|
2016
£’000 |
2015
£’000 |
Amounts falling due within one year: |
|
|
Trade receivables |
4,076 |
3,500 |
Amount owed by joint venture |
2,000 |
2,140 |
Other receivables |
754 |
490 |
Prepayments and accrued income |
416 |
57 |
|
7,246 |
6,187 |
18. AVAILABLE FOR SALE INVESTMENTS
|
2016
£’000 |
2015
£’000 |
Market value of listed Investments: |
|
|
Listed in Great Britain |
721 |
568 |
Listed outside Great Britain |
60 |
26 |
|
781 |
594 |
Original cost of listed investments |
737 |
737 |
Unrealised surplus / defecit of market value
versus cost |
44 |
(143) |
The Directors have reviewed the individual investments for
impairment and do not consider the investments which are below cost
to be impaired.
19. TRADE AND OTHER PAYABLES
|
2016
£’000 |
2015
£’000 |
Trade payables |
3,610 |
1,982 |
Amounts owed to joint ventures |
192 |
223 |
Other payables |
1,422 |
1,279 |
Accruals |
1,493 |
540 |
Deferred Income |
233 |
210 |
|
6,950 |
4,234 |
20. FINANCIAL LIABILITIES –
BORROWINGS
|
Current |
Non-current |
|
2016
£’000 |
2015
£’000 |
2016
£’000 |
2015
£’000 |
Bank overdraft (secured) |
3,334 |
2,234 |
- |
- |
Bank loan (secured) |
24 |
33 |
5,876 |
5,940 |
|
3,358 |
2,267 |
5,876 |
5,940 |
|
2016
£’000 |
2015
£’000 |
Bank overdraft and loan instalments by reference
to the balance sheet date: |
|
|
Within one year |
3,358 |
2,267 |
From one to two years |
26 |
27 |
From two to five years |
5,850 |
5,913 |
|
9,234 |
8,207 |
Bank overdraft and loan analysis by origin: |
|
|
United Kingdom |
5,810 |
5,927 |
Southern Africa |
3,424 |
2,280 |
|
9,234 |
8,207 |
The United Kingdom bank loans
and overdraft are secured by way of a first charge over the
investment properties in the UK which are included in the financial
statements at a value of £13,245,000. During the year the group
breached a loan to value covenant on the bank loan. The group made
a £123,300 payment against the loan and remediated the covenant
breach. This covenant is intact at the year end.
The South African bank loans are secured by way of a first
charge over specific pieces of mining equipment, inventory and the
debtors of the relevant company which holds the loan which are
included in the financial statements at a value of £6,057,000.
Consistent with others in the mining and property industry, the
group monitors its capital by its gearing levels. This is
calculated as the net debt (loans less cash and cash equivalents)
as a percentage of equity. At year end the gearing of the group was
calculated as follows:
|
2016
£’000 |
2015
£’000 |
Total debt |
9,234 |
8,207 |
Less cash and cash equivalents |
(2,444) |
(1,608) |
Net debt |
6,790 |
6,599 |
Total equity attributable to shareholders of
the parent |
16,657 |
15,310 |
Gearing |
40.8% |
43.1% |
21. PROVISION FOR REHABILITATION
|
2016
£’000 |
2015
£’000 |
As at 1 January |
847 |
930 |
Exchange adjustment |
311 |
(162) |
Unwinding of discount |
78 |
79 |
As at 31 December |
1,236 |
847 |
22. FINANCIAL INSTRUMENTS
Total financial assets and
liabilities
The group’s financial assets and liabilities are as follows,
representing both the fair value and the carrying value:
|
Loans and
receivables
£’000 |
Financial Liabilities
measured at
amortised cost
£’000 |
Available for sale investments
£’000 |
2016
£’000 |
2015
£’000 |
Cash and cash equivalents |
2,444 |
- |
- |
2,444 |
1,608 |
Current available for sale investments |
- |
- |
781 |
781 |
594 |
Non-current available for sale investments |
- |
- |
32 |
32 |
14 |
Trade and other receivables |
6,830 |
- |
- |
6,830 |
6,954 |
Bank borrowings and overdraft |
- |
(9,234) |
- |
(9,234) |
(8,207) |
Finance leases |
- |
(181) |
- |
(181) |
(194) |
Other liabilities |
- |
(6,735) |
- |
(6,735) |
(4,024) |
|
9,274 |
(16,150) |
813 |
(6,063) |
(3,255) |
Available for sale investments are held at fair value and fall
under level 1 of the fair value hierarchy into which fair value
measurements are recognised in accordance with the levels set out
in IFRS 7. The comparative figures for 2015 fall under the same
category of financial instrument as 2016.
The carrying amount of short term (less than 12 months) trade
receivable and other liabilities approximates its fair values. The
fair value of non-current borrowings in note 20 approximates its
carrying value and was determined under level 2 of the fair value
hierarchy and is estimated by discounting the future contractual
cash flows at the current market interest rates for UK borrowings
and for the South African overdraft facility. The fair value of the
finance lease liabilities in note 31 approximates its carrying
value and was determined under level 2 of the fair value hierarchy
and is estimated by discounting the future contractual cash flows
at the current market interest rates.
Treasury policy
Although no derivative transactions were entered into during the
current and prior year, the group may use derivative transactions
such as interest rate swaps and forward exchange contracts as
necessary in order to help manage the financial risks arising from
the group’s activities. The main risks arising from the group’s
financing structure are interest rate risk, liquidity risk, market
risk, credit risk, currency risk and commodity price risk. There
have been no changes during the year of the main risks arising from
the group’s finance structure. The policies for managing each of
these risks and the principal effects of these policies on the
results are summarised below.
Interest rate risk
Interest rate risk is the risk that the value of a financial
instrument or cashflows associated with the instrument will
fluctuate due to changes in market interest rates. Interest rate
risk arises from interest bearing financial assets and liabilities
that the group uses. Treasury activities take place under
procedures and policies approved and monitored by the Board to
minimise the financial risk faced by the group. Interest bearing
assets comprise cash and cash equivalents which are considered to
be short-term liquid assets and loans to joint ventures. Interest
bearing borrowings comprise bank loans, bank overdrafts and
variable rate finance lease obligations. The rates of interest vary
based on LIBOR in the UK and PRIME in South Africa.
As at 31 December 2016, with other
variables unchanged, a 1% increase or decrease in interest rates,
on investments and borrowings whose interest rates are not fixed,
would respectively change the profit/loss for the year by £56,000
(2015: £67,000). The effect on equity of this change would be an
equivalent decrease or increase for the year of £56,000 (2015:
£67,000).
Liquidity risk
The group’s policy is to minimise refinancing risk. Efficient
treasury management and strict credit control minimise the costs
and risks associated with this policy which ensures that funds are
available to meet commitments as they fall due. As at year end the
group held borrowing facilities in the UK in Bisichi Mining PLC and
in South Africa in Black Wattle
Colliery (Pty) Ltd.
The following table sets out the maturity profile of the
financial liabilities as at 31 December:
|
2016
£’000 |
2015
£’000 |
Within one year |
10,658 |
6,692 |
From one to two years |
239 |
213 |
From two to five years |
6,277 |
6,464 |
Beyond five years |
125 |
133 |
|
17,299 |
13,502 |
The following table sets out the maturity profile of the
financial liabilities as at 31 December maturing within one
year:
|
2016
£’000 |
2015
£’000 |
Within one month |
2,119 |
606 |
From one to three months |
2,926 |
2,709 |
From four to twelve months |
5,613 |
3,377 |
|
10,658 |
6,692 |
In South Africa, a structured
trade finance facility for R80million was signed by Black Wattle
Colliery (Pty) Limited in October
2013 with Absa Bank Limited, a South African subsidiary of
Barclays Bank PLC. The facility is renewable annually at 30 June
and is secured against inventory, debtors and cash that are held by
Black Wattle Colliery (Pty) Limited.
This facility comprises of a R60million revolving loan to cover
the working capital requirements of the group’s South African
operations, and a R20million loan facility to cover guarantee
requirements related to the group’s South African mining
operations. The interest cost of the loan is at the South African
prime lending rate.
In December 2014, the group signed
a £6 million term loan facility with Santander. The Loan is secured
against the group’s UK retail property portfolio. The debt package
has a five year term and is repayable at the end of the term. The
interest cost of the loan is 2.35% above LIBOR.
As a result of the above agreed banking facilities, the
Directors believe that the group is well placed to manage its
liquidity risk.
Credit risk
The group is mainly exposed to credit risk on its cash and cash
equivalents, trade and other receivables and amounts owed by joint
ventures as per the balance sheet. The maximum exposure to credit
risk is represented by the carrying amount of each financial asset
in the balance sheet which at year end amounted to £9,274,000
(2015: £8,562,000). The group’s credit risk is primarily
attributable to its trade receivables. The group had amounts due
from its significant revenue customers at the year end that
represented 85% of the trade receivables balance. These amounts
have been subsequently settled.
Trade debtor’s credit ratings are reviewed regularly. The group
only deposits surplus cash with well-established financial
institutions of high quality credit standing. As at year end the
amount of trade receivables held past due date was £157,000 (2015:
£144,000). To date, the amount of trade receivables held past due
date that has not subsequently been settled is £134,000 (2015:
£136,000). Management have no reason to believe that this amount
will not be settled.
Financial assets maturity
On 31 December 2016, cash at bank
and in hand amounted to £2,444,000 (2015: £1,608,000) which is
invested in short term bank deposits maturing within one year
bearing interest at the bank’s variable rates. Cash and cash
equivalents all have a maturity of less than 3 months.
Foreign exchange risk
All trading is undertaken in the local currencies except for
certain export sales that commenced during 2016 which are invoiced
in dollars. It is not the group’s policy to obtain forward
contracts to mitigate foreign exchange risk on these contracts as
payment terms are within 15 days of invoice or earlier. Funding is
also in local currencies other than inter-company investments and
loans and it is also not the group’s policy to obtain forward
contracts to mitigate foreign exchange risk on these amounts.
During 2016 and 2015 the group did not hedge its exposure of
foreign investments held in foreign currencies.
The directors consider there to be no significant risk from
exchange rate movements of foreign currencies against the
functional currencies of the reporting companies within the group,
excluding inter-company balances. The principle currency risk to
which the group is exposed in regard to inter-company balances is
the exchange rate between Pounds sterling and South African Rand.
It arises as a result of the retranslation of Rand denominated
inter-company trade receivable balances held within the UK which
are payable by South African Rand functional currency
subsidiaries.
Based on the group’s net financial assets and liabilities as at
31 December 2016, a 25% strengthening
of Sterling against the South African Rand, with all other
variables held constant, would decrease the group’s profit after
taxation by £435,000 (2015: £344,000). A 25% weakening of Sterling
against the South African Rand, with all other variables held
constant would increase the group’s profit after taxation by
£725,000 (2015: £573,000).
The 25% sensitivity has been determined based on the average
historic volatility of the exchange rate for 2015 and 2016.
The table below shows the currency profiles of cash and cash
equivalents:
|
2016
£’000 |
2015
£’000 |
Sterling |
1,717 |
1,135 |
South African Rand |
725 |
470 |
US Dollar |
2 |
3 |
|
2,444 |
1,608 |
Cash and cash equivalents earn interest at rates based on LIBOR
in Sterling and Prime in Rand.
The tables below shows the currency profiles of net monetary
assets and liabilities by functional currency of the group:
2016: |
Sterling
£’000 |
South
African
Rands
£’000 |
Sterling |
(2,522) |
- |
South African Rand |
36 |
(2,262) |
US Dollar |
35 |
- |
|
(2,451) |
(2,262) |
2015: |
Sterling
£’000 |
South
African
Rands
£’000 |
Sterling |
(3,221) |
- |
South African Rand |
89 |
(136) |
US Dollar |
13 |
- |
|
(3,119) |
(136) |
23. DEFERRED TAXATION
|
2016
£’000 |
2015
£’000 |
Balance at 1 January 2015 |
2,002 |
2,208 |
Recognised in income |
(131) |
128 |
Recognised in comprehensive income |
13 |
(41) |
Exchange adjustment |
364 |
(293) |
|
2,248 |
2,002 |
The deferred tax balance comprises the
following: |
|
|
Revaluation of properties |
715 |
626 |
Capital allowances |
2,361 |
1,487 |
Short term timing difference |
(184) |
43 |
Unredeemed capital deductions |
(642) |
(121) |
Losses and other deductions |
(2) |
(33) |
|
2,248 |
2,002 |
Refer to note 7 for details of adjustments in respect of the
prior year deferred tax in the current year.
24. SHARE CAPITAL
|
2016
£’000 |
2015
£’000 |
Authorised: 13,000,000 ordinary shares of 10p
each |
1,300 |
1,300 |
Allotted and fully paid:
|
2016
Number of
ordinary
shares |
2015
Number of
ordinary
shares |
2016
£’000 |
2015
£’000 |
At 1 January and outstanding at 31 December |
10,676,839 |
10,676,839 |
1,068 |
1,068 |
25. OTHER RESERVES
|
2016
£’000 |
2015
£’000 |
Equity share options |
597 |
488 |
Net investment premium on share capital in joint
venture |
86 |
86 |
|
683 |
574 |
26. SHARE BASED PAYMENTS
Details of the share option scheme are shown in the Directors’
remuneration report on page 37 under the heading Share option
schemes which is within the audited part of this report. Further
details of the share option schemes are set out below.
The Bisichi Mining PLC Unapproved Option Schemes:
Year of grant |
Subscription
price per share |
Period within
which options
exercisable |
Number of share
for which options
outstanding at
31 December 2015 |
Number of
share options
lapsed
during year |
Number of share
for which options
outstanding at
31 December 2016 |
2006 |
237.5p |
Oct 2009 – Oct
2016 |
325,000 |
(325,000) |
- |
2010 |
202.5p |
Aug 2013 – Aug
2020 |
80,000 |
- |
80,000 |
2015 |
87.0p |
Sep 2015 – Sep 2025 |
300,000 |
- |
300,000 |
The exercise of options under the Unapproved Share Option
Schemes, for certain option issues, is subject to the satisfaction
of objective performance conditions specified by the remuneration
committee, which will conform to institutional shareholder
guidelines and best practice provisions in force from time to time.
The performance conditions for the 2010 scheme, agreed by members
on 31 August 2010 respectively,
requires growth in net assets over a three year period to exceed
the growth of the retail prices index by a scale of percentages.
There are no performance or service conditions attached to 2015
options which are outstanding at 31 December
2016 which vested in 2015.
|
2016
Number |
2016
Weighted
average
exercise price |
2015
Number |
2015
Weighted
average
exercise price |
Outstanding at 1 January |
705,000 |
133.1p |
598,000 |
167.1p |
Granted during the year |
- |
- |
300,000 |
87.0p |
Lapsed during the year |
(325,000) |
237.5p |
(193,000) |
34.0p |
Outstanding at 31 December |
380,000 |
111.3p |
705,000 |
133.1p |
Exercisable at 31 December |
380,000 |
111.3p |
705,000 |
133.1p |
The 2016 share based payment charge of £109,000 relates to the
remaining grant date fair value in respect of the 300,000 share
options granted to A R Heller and G J Casey in 2015, with a
corresponding entry to the share based payment reserve. There were
no vesting conditions attached to these share options and therefore
they should have been fully expensed in 2015, rather than spread
over the estimated life of the options. As the error is not
considered to be material to the current or prior year financial
statements it has been corrected in the current period.
27. NON-CONTROLLING INTEREST
|
2016
£’000 |
2015
£’000 |
As at 1 January |
321 |
404 |
Share of (loss)/profit for the year |
(72) |
4 |
Exchange adjustment |
100 |
(87) |
As at 31 December |
349 |
321 |
The non-controlling interest comprises of a 37.5% shareholding
in Black Wattle Colliery (Pty) Ltd. A coal mining company
incorporated in South Africa.
Summarised financial information reflecting 100% of the underlying
subsidiary’s relevant figures, is set out below.
|
2016
£’000 |
2015
£’000 |
Revenue |
21,703 |
24,608 |
Expenses |
(22,185) |
(24,582) |
Profit for the year |
(482) |
26 |
Other comprehensive Income |
- |
- |
Total comprehensive income for the
year |
(482) |
26 |
Balance sheet |
|
|
Non-current assets |
8,516 |
5,355 |
Current assets |
8,600 |
5,932 |
Current liabilities |
(12,151) |
(7,156) |
Non-current liabilities |
(2,635) |
(1,988) |
Net assets at 31 December |
2,330 |
2,143 |
The non-controlling interest relates to the disposal of a 37.5%
shareholding in Black Wattle Colliery (Pty) Ltd in 2010. The total
issued share capital in Black Wattle Colliery (Pty) Ltd was
increased from 136 shares to 1,000 shares at par of R1 (South
African Rand) through the following shares issue:
- a subscription for 489 ordinary shares at par by Bisichi
Mining (Exploration) Limited increasing the number of shares held
from 136 ordinary shares to a total of 625 ordinary shares;
- a subscription for 110 ordinary shares at par by Vunani Mining
(Pty) Ltd;
- a subscription for 265 “A” shares at par by Vunani Mining
(Pty) Ltd
Bisichi Mining (Exploration) Limited is a wholly owned
subsidiary of Bisichi Mining PLC incorporated in England and Wales.
Vunani Mining (Pty) Ltd is a South African Black Economic
Empowerment company and minority shareholder in Black Wattle
Colliery (Pty) Ltd.
The “A” shares rank pari passu with the ordinary shares save
that they will have no dividend rights until such time as the
dividends paid by Black Wattle Colliery (Pty) Ltd on the ordinary
shares subsequent to 30 October 2008
will equate to R832,075,000.
A non-controlling interest of 15% in Black Wattle Colliery (Pty)
Ltd is recognised for all profits distributable to the 110 ordinary
shares held by Vunani Mining (Pty) Ltd from the date of issue of
the shares (18 October 2010). An
additional non-controlling interest will be recognised for all
profits distributable to the 265 “A” shares held by Vunani Mining
(Pty) Ltd after such time as the profits available for
distribution, in Black Wattle Colliery (Pty) Ltd, before any
payment of dividends after 30 October
2008, exceeds R832,075,000.
28. RELATED PARTY TRANSACTIONS
|
At 31
December |
During the
year |
|
Amounts
owed
to related
party
£’000 |
Amounts
owed
by related
party
£’000 |
Costs
recharged
(to)/by
related
party
£’000 |
Cash paid
(to)/by
related
party
£’000 |
Related party: |
|
|
|
|
London & Associated Properties PLC (note
(a)) |
35 |
- |
138 |
(162) |
Langney Shopping Centre Unit Trust (note (b)) |
- |
- |
- |
64 |
Dragon Retail Properties Limited (note (c)) |
123 |
(2,000) |
(174) |
150 |
Ezimbokodweni Mining (Pty) Limited (note (d)) |
- |
(1,350) |
(114) |
- |
As at 31 December 2016 |
158 |
(3,350) |
(150) |
52 |
|
|
|
|
|
London & Associated Properties PLC (note
(a)) |
59 |
- |
138 |
(82) |
Langney Shopping Centre Unit Trust (note (b)) |
- |
(64) |
- |
104 |
Dragon Retail Properties Limited (note (c)) |
223 |
(2,076) |
(180) |
21 |
Ezimbokodweni Mining (Pty) Limited (note (d)) |
- |
(897) |
(94) |
- |
As at 31 December 2015 |
282 |
(3,037) |
(136) |
43 |
(a) London &
Associated Properties PLC – London & Associated Properties PLC is a
substantial shareholder and parent company of Bisichi Mining PLC.
Property management, office premises, general management,
accounting and administration services are provided for Bisichi
Mining PLC and its UK subsidiaries.
(b) Langney Shopping Centre Unit Trust – Langney
Shopping Centre Unit Trust is an unlisted property unit trust
incorporated in Jersey. On the 11 March
2016, the company disposed of its investment in Langney
Shopping Centre Unit Trust.
(c) Dragon Retail Properties Limited – (“Dragon”)
is owned equally by the company and London & Associated
Properties PLC. Dragon is accounted as a joint venture and is
treated as a non-current asset investment. During 2012 the company
lent £2million to Dragon at 6.875 per cent annual interest which
has been classified as a trading balance and which is unsecured and
payable on demand.
(d) Ezimbokodweni Mining (Pty) Limited – Ezimbokodweni
Mining is a prospective coal production company based in
South Africa. Ezimbokodweni Mining
(Pty) Limited is a joint venture and a loan to the joint venture is
treated as part of the net investment in the joint venture. Further
details on the net investment in Ezimbokodweni can be found in note
13.
Details of key management personnel compensation and interest in
share options are shown in the Directors’ Remuneration Report on
pages 36 and 37 under the headings Directors’ remuneration, Pension
schemes and incentives and Share option schemes which is within the
audited part of this report. Refer also to note 26 for details of
IFRS 2 charges. The total employers’ national insurance paid in
relation to the remuneration of key management was £143,000 (2015:
157,000). In 2012 a loan was made to one of the directors, Mr A R
Heller, for £116,000. Interest is payable on the Director’s Loan at
a rate of 6.14 per cent. There is no fixed repayment date for the
Director’s Loan. The loan amount outstanding at year end was
£71,000 (2015: £86,000) and a repayment of £15,000 (2015: £15,000)
was made during the year.
The non-controlling interest to Vunani Limited is shown in note
27. In addition, the group holds an investment in Vunani Limited
classified as non-current available for sale investments with a
fair value of £32,000 (2015: £14,000).
29. EMPLOYEES
|
2016
£’000 |
2015
£’000 |
The average weekly numbers of employees of the
group during the year were as follows: |
|
|
Production |
185 |
191 |
Administration |
15 |
17 |
|
200 |
208 |
Staff costs during the year were as follows: |
|
|
Salaries |
4,864 |
4,682 |
Social security costs |
148 |
160 |
Pension costs |
200 |
221 |
Share based payments |
109 |
31 |
|
5,321 |
5,094 |
30. CAPITAL COMMITMENTS
|
2016
£’000 |
2015
£’000 |
Commitments for capital expenditure approved but
not contracted for at the year end |
- |
306 |
Commitments for capital expenditure approved and
contracted for at the year end |
762 |
- |
Share of commitment of capital expenditure in
joint venture |
1,489 |
1,102 |
31. HEAD LEASE COMMITMENTS AND FUTURE
PROPERTY LEASE RENTALS
Present value of head leases on properties
|
Minimum lease
payments |
Present value of
minimum lease
payments |
|
2016
£’000 |
2015
£’000 |
2016
£’000 |
2015
£’000 |
Within one year |
11 |
12 |
11 |
12 |
Second to fifth year |
45 |
48 |
36 |
45 |
After five years |
1,436 |
1,549 |
134 |
137 |
|
1,492 |
1,609 |
181 |
194 |
Discounting adjustment |
(1,311) |
(1,415) |
- |
- |
Present value |
181 |
194 |
181 |
194 |
The Company has one finance lease contract for an investment
property. The remaining term for the leased investment property is
132 years. The annual rent payable is the higher of £7,500 or
6.25% of the revenue derived from the leased assets.
The group leases out its investment properties under operating
leases The Group has entered into operating leases on its
investment property portfolio consisting mainly of commercial
properties. These leases have terms of between 1 and 69 years. All
leases include a clause to enable upward revision of the rental
charge on an annual basis according to prevailing market
conditions.
The future aggregate minimum rentals receivable under
non-cancellable operating leases are as follows:
|
2016
£’000 |
2015
£’000 |
Within one year |
981 |
923 |
Second to fifth year |
2,533 |
2,699 |
After five years |
9,262 |
9,786 |
|
12,776 |
13,408 |
32. CONTINGENT LIABILITIES
Bank guarantees have been issued by the bankers of Black Wattle
Colliery (Pty) Limited on behalf of the company to third parties.
The guarantees are secured against the assets of the company
and have been issued in respect of the following:
|
2016
£’000 |
2015
£’000 |
Rail siding |
63 |
47 |
Rehabilitation of mining land |
1,364 |
1,009 |
Water & electricity |
57 |
42 |
Company balance sheet
at 31 December
2016
|
Notes |
2016
£’000 |
2015
£’000 |
Fixed assets |
|
|
|
Tangible assets |
35 |
51 |
20 |
Investment in joint ventures |
36 |
847 |
1,810 |
Other investments |
36 |
7,599 |
7,577 |
|
|
8,497 |
9,407 |
Current assets |
|
|
|
Debtors – amounts due within one year |
37 |
3,253 |
3,296 |
Debtors – amounts due in more than one year |
37 |
843 |
659 |
Bank balances |
|
1,118 |
1,031 |
|
|
5,214 |
4,986 |
Creditors – amounts falling due within one
year |
38 |
(1,328) |
(1,301) |
Net current assets |
|
3,886 |
3,685 |
Total assets less current liabilities |
|
12,383 |
13,092 |
Creditors – amounts falling due in more than one
year – term bank loan |
38 |
- |
(9) |
Provision for liabilities and charges |
39 |
(18) |
(182) |
Net assets |
|
12,365 |
12,901 |
Capital and reserves |
|
|
|
Called up share capital |
24 |
1,068 |
1,068 |
Share premium account |
|
258 |
258 |
Available for sale reserve |
|
6 |
- |
Other reserves |
|
598 |
489 |
Retained earnings |
33 |
10,435 |
11,086 |
Shareholders’ funds |
|
12,365 |
12,901 |
The loss for the financial year, before dividends, was £224,000
(2015: profit of £36,000)
The company financial statements were approved and authorised
for issue by the board of directors on 26
April 2017 and signed on its behalf by:
A R
Heller
G J
Casey
Company Registration No. 112155
Director
Director
Company statement of changes in
equity
for the year ended 31 December 2016
|
Share
capital
£’000 |
Share
premium
£’000 |
Available for sale reserve
£’000 |
Other
reserve
£’000 |
Retained
earnings
£’000 |
Shareholders
funds
£’000 |
Balance at 1 January 2015 |
1,068 |
259 |
- |
566 |
11,477 |
13,370 |
Dividend paid |
- |
- |
- |
- |
(427) |
(427) |
Share option charge |
- |
(1) |
- |
32 |
- |
31 |
Share option cancelled |
- |
- |
- |
(109) |
- |
(109) |
Profit and total comprehensive income for the
year |
- |
- |
- |
- |
36 |
36 |
Balance at 1 January 2016 |
1,068 |
258 |
- |
489 |
11,086 |
12,901 |
Dividend paid |
- |
- |
- |
- |
(427) |
(427) |
Share option charge |
- |
- |
- |
109 |
- |
109 |
Profit and total comprehensive income for the
year |
- |
- |
6 |
- |
(224) |
(218) |
Balance at 31 December 2016 |
1,068 |
258 |
6 |
598 |
10,435 |
12,365 |
Company accounting policies
for the year ended 31 December 2016
The following are the main accounting policies of the
company:
Basis of preperation
The financial statements have been prepared in accordance with
Financial Reporting Standard 100 Application of Financial Reporting
Requirements and Financial Reporting Standard 101 Reduced
Disclosure Framework. The principal accounting policies adopted in
the preparation of the financial statements are set out below.
The financial statements have been prepared on a historical cost
basis, except for the revaluation of investment property and
financial instruments.
Disclosure exemptions adopted
In preparing these financial statements the company has taken
advantage of all disclosure exemptions conferred by FRS 101.
Therefore these financial statements do not include:
• certain comparative information as otherwise required by EU
endorsed IFRS;
• certain disclosures regarding the company’s capital;
• a statement of cash flows;
• the effect of future accounting standards not yet adopted;
• the disclosure of the remuneration of key management
personnel; and
• disclosure of related party transactions with the company’s
wholly owned subsidiaries.
In addition, and in accordance with FRS 101, further disclosure
exemptions have been adopted because equivalent disclosures are
included in the company’s Consolidated Financial Statements.
Dividends received
Dividends are credited to the profit and loss account when
received.
Depreciation
Provision for depreciation on tangible fixed assets is made in
equal annual instalments to write each item off over its useful
life. The rates generally used are:
Motor vehicles 25 – 33 per
cent
Office equipment 10 – 33 per cent
Joint ventures
Investments in joint ventures, being those entities over whose
activities the group has joint control as established by
contractual agreement, are included at cost, less impairment.
Other Investments
Investments of the company in subsidiaries are stated in the
balance sheet as fixed assets at cost less provisions for
impairment.
Other investments comprising of shares in listed companies are
classified as non-current available for sale investments and are
carried at fair value. Any changes in fair value above cost are
recognised in other comprehensive income and accumulated in the
available-for-sale reserve. For any changes in fair value below
cost a provision for impairment is recognised in the profit or loss
account.
Foreign currencies
Monetary assets and liabilities expressed in foreign currencies
have been translated at the rates of exchange ruling at the balance
sheet date. All exchange differences are taken to the profit and
loss account.
Financial instruments
Details on the group’s accounting policy for financial
instruments can be found on page 63.
Deferred taxation
Details on the group’s accounting policy for deferred taxation
can be found on page 64.
Leased assets and obligations
All leases are “Operating Leases” and the annual rentals are
charged to the profit and loss account on a straight line basis
over the lease term. Rent free periods or other incentives received
for entering into a lease are accounted for over the period of the
lease so as to spread the benefit received over the lease term.
Pensions
Details on the group’s accounting policy for pensions can be
found on page 62.
Share based remuneration
Details on the group’s accounting policy for share based
remuneration can be found on page 62. Details of the share options
in issue are disclosed in the directors’ remuneration report on
page 37 under the heading share option schemes which is within the
audited part of this report.
33. PROFIT & LOSS ACCOUNT
A separate profit and loss account for Bisichi Mining PLC has
not been presented as permitted by Section 408(2) of the Companies
Act 2006. The loss for the financial year, before dividends, was
£224,000 (2015: profit of £36,000)
Details of share capital are set out in note 24 of the group
financial statements and details of the share options are shown in
the Directors’ Remuneration Report on page 36 under the heading
Share option schemes which is within the audited part of this
report and note 26 of the group financial statements.
34. DIVIDENDS
Details on dividends can be found in note 8 in the group
financial statements.
35. TANGIBLE FIXED ASSETS
|
Leasehold
Property
£’000 |
Motor
vehicles
£’000 |
Office
equipment
£’000 |
Total
£’000 |
Cost at 1 January 2016 |
- |
37 |
67 |
104 |
Revaluation |
45 |
- |
- |
45 |
Cost at 31 December 2016 |
45 |
37 |
67 |
149 |
|
|
|
|
|
Accumulated depreciation at 1 January 2016 |
- |
27 |
57 |
84 |
Charge for the year |
- |
10 |
4 |
14 |
Accumulated depreciation at 31 December 2016 |
- |
37 |
61 |
98 |
Net book value at 31 December 2016 |
45 |
- |
6 |
51 |
Net book value at 31 December 2015 |
- |
10 |
10 |
20 |
Leasehold property consists of a single unit with a long
leasehold tenant. The term remaining on the lease is 43 years.
36. INVESTMENTS
|
Joint
ventures
shares
£’000 |
Shares in subsidiaries
£’000 |
Loans
£’000 |
Other
investments
£’000 |
Total
£’000 |
Cost at 1 January 2016 |
1,810 |
6,356 |
1,208 |
26 |
7,590 |
Invested during year |
- |
- |
3 |
- |
3 |
Sale of investment |
(963) |
- |
- |
- |
- |
Unrealised surplus of market value verses
cost |
- |
- |
- |
6 |
6 |
Cost at 31 December 2016 |
847 |
6,356 |
1,211 |
32 |
7,599 |
|
|
|
|
|
|
Provision for impairment: |
|
|
|
|
|
As at 1 January |
- |
- |
- |
(13) |
(13) |
Reversal of impairment during the year |
- |
- |
- |
13 |
13 |
As at 31 December 2016 |
- |
- |
- |
- |
- |
Net book value at 31 December 2016 |
847 |
6,356 |
1,211 |
32 |
7,599 |
Net book value at 31 December 2015 |
1,810 |
6,356 |
1,208 |
13 |
7,577 |
On the 11 March 2016, the company
disposed of its joint venture investment in Langney Shopping Centre
Unit Trust. Further information relating to the disposal of Langney
Shopping Centre Unit Trust can be found in Note 14.
Investments in subsidiaries are detailed in note 15. In the
opinion of the directors the aggregate value of the investment in
subsidiaries is not less than the amount shown in these financial
statements.
Other investments comprise £32,000 (2015: £13,000) shares.
37. DEBTORS
|
2016
£’000 |
2015
£’000 |
Amounts due within one year: |
|
|
Amounts due from subsidiary undertakings |
1,006 |
1,003 |
Trade receivables |
7 |
16 |
Other debtors |
89 |
81 |
Joint venture |
2,070 |
2,140 |
Prepayments and accrued income |
81 |
56 |
|
3,253 |
3,296 |
|
|
|
Amounts due in more than one year: |
|
|
Amounts due from subsidiary undertakings |
843 |
659 |
Deferred taxation |
- |
- |
|
843 |
659 |
38. CREDITORS
|
2016
£’000 |
2015
£’000 |
Amounts falling due within one year: |
|
|
Bank loan (secured) |
- |
8 |
Amounts due to subsidiary undertakings |
359 |
365 |
Joint venture |
192 |
223 |
Current taxation |
- |
- |
Other taxation and social security |
26 |
3 |
Other creditors |
592 |
574 |
Accruals and deferred income |
159 |
128 |
|
1,328 |
1,301 |
|
|
|
Amounts falling due in more than one
year: |
|
|
Bank loan (secured) |
- |
9 |
|
2016
£’000 |
2015
£’000 |
Bank and other loan instalments by reference to
the balance sheet date: |
|
|
|
|
|
Within one year |
- |
8 |
From one to two years |
- |
7 |
From two to five years |
- |
2 |
|
- |
17 |
39. PROVISIONS FOR LIABILITIES
|
2016
£’000 |
2015
£’000 |
Deferred taxation: |
|
|
Balance at 1 January |
182 |
- |
Provision |
(164) |
182 |
Transfer |
- |
- |
|
18 |
182 |
40. RELATED PARTY TRANSACTIONS
|
At 31 December |
During the
year |
At 31 December |
Amounts owed
by related party
£’000 |
Costs recharged /
accrued (to)/ by related party
£’000 |
Cash paid (to)/ by
related party
£’000 |
Related party: |
|
|
|
Black Wattle Colliery (Pty) Ltd (note (a)) |
(1,934) |
(1,421) |
644 |
Ninghi Marketing Limited (note (b)) |
(102) |
- |
- |
As at 31 December 2016 |
(2,036) |
(1,421) |
644 |
Black Wattle Colliery (Pty) Ltd (note (a)) |
(1,157) |
(653) |
1,812 |
Ninghi Marketing Limited (note (b)) |
(102) |
- |
- |
As at 31 December 2015 |
(1,259) |
(653) |
1,812 |
(a)
Black Wattle Colliery (Pty) Ltd – Black Wattle Colliery
(Pty) Ltd is a coal mining company based in South Africa.
(b)
Ninghi Marketing Limited – Ninghi Marketing Limited is a
dormant coal marketing company incorporated in England & Wales.
Black Wattle Colliery (PTY) Ltd and NInghi Marketing Limited are
subsidiaries of the company.
In addition to the above, the company has issued a company
guarantee of R17,000,000 (2015: R17,000,000) (South African Rand)
to the bankers of Black Wattle Colliery (Pty) Ltd in order to cover
bank guarantees issued to third parties in respect of the
rehabilitation of mining land.
A provision of £102,000 has been raised against the amount owing
by Ninghi Marketing Limited in prior years as the company is
dormant.
In 2012 a loan was made to one of the directors, Mr A R Heller,
for £116,000. Further details on the loan can be found in Note 28
of the group financial statements.
Under FRS 101, the company has taken advantage of the exemption
from disclosing transactions with other wholly owned group
companies. Details of other related party transactions are given in
note 28 of the group financial statements.
41. EMPLOYEES
|
2016
£’000 |
2015
£’000 |
The average weekly numbers of employees of the
company during the year were as follows: |
|
|
Directors & administration |
5 |
5 |
|
|
|
Staff costs during the year were as follows: |
|
|
Salaries |
1,125 |
1,239 |
Social security costs |
148 |
160 |
Pension costs |
65 |
90 |
Share based payments |
109 |
31 |
|
1,447 |
1,520 |