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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Bisichi Plc | LSE:BISI | London | Ordinary Share | GB0001012045 | ORD 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 12.50 | 16.13% | 90.00 | 85.00 | 95.00 | 92.50 | 80.00 | 80.00 | 97,329 | 11:35:58 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Investors, Nec | 95.11M | 17.61M | 1.6496 | 0.55 | 9.61M |
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TIDMBISI
BISICHI PLC
Results for the year ended 31 December 2022
Summary:
Reported EBITDA: £40.0million (2021: £5.8million)
Adjusted EBITDA: £39.4million (2021: £5.0million)
· The substantial increase in group earnings and cash generation during the
year can be attributed to a very strong performance from the Group's South
African coal processing operations.
· Group revenue improved significantly in 2022 despite limitations in coal
exports from South Africa during the second half of the year.
· Andrew Heller appointed Executive Chairman following the death of Sir Michael
Heller on 30th January 2023.
· In light of the strong results achieved for the year and the performance of
the South African operations, the Directors propose a total year-end dividend
per share of 12p (2021: 6p) made up a final dividend of 4p (2021: 4p) and a
special dividend of 8p (2021: 2p). This takes the total dividends per share for
the year to 22p (2021: 6p).
Chairman, Andrew Heller, comments:
"I am very pleased to report to shareholders our results for the year ended 31
December 2022. The increase in group earnings and cash generation during the
year can be attributed to a strong performance from our South African coal
processing operations. On behalf of the Board, our late Chairman, and
shareholders, I would like to thank all of our staff for their hard work and
dedication during the course of the year"
For further information, please call:
Andrew Heller or Garrett Casey, Bisichi PLC 020 7415 5030
BISICHI PLC
ANNUAL REPORT 2022
A TRIBUTE TO
SIR MICHAEL HELLER Kt MA
Chairman 1981-2023
It was with great sadness that the Board of Bisichi announced the death of its
Chairman, Sir Michael Heller Kt MA (1936-2023) on the 30th January 2023.
Cambridge-educated Sir Michael qualified as an accountant, but became a
businessman and philanthropist of considerable stature, whose achievements were
recognised with a knighthood in 2013. Instrumental in the development of
several companies, including Bisichi, Sir Michael's focussed direction and
decision making, wise advice and moral compass, were pivotal to the Company's
success and will be sorely missed. Meticulously watching cash flow, and
ensuring that the Company always had regular income, was the cornerstone of Sir
Michael's business strategy. To a very great degree, this explains why Bisichi
has performed so well when so many of its peers no longer exist. Fortunately,
despite being unwell and in hospital, Sir Michael was able to appreciate the
Company's success in 2022. In his typically humorous fashion, he took enormous
pleasure in telling the nurses at his bedside how well the Company had done.
The greatest legacy that the Board can give him is to continue the work that he
so tirelessly put in to the development of the Company, and to continue its
growth. Thank you Sir Michael for everything that you have done: the Company is
greatly indebted to you.
Strategic report
Strategic report
The Directors present the Strategic Report of the company for the year ending
31 December 2022. 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.
STRATEGIC REPORT
Chairman's Statement
I am very pleased to report to shareholders that for the year ended 31 December
2022, your company made a profit before interest, tax, depreciation and
amortisation (EBITDA) of £40.0million (2021: £5.8million) and an operating
profit before depreciation, fair value adjustments and exchange movements
(Adjusted EBITDA) of £39.4million (2021: £5.0million). These strong earnings
for the Group can be attributed to a strong performance from Sisonke Coal
Processing, the Group's South African coal processing operation which benefited
from significantly improved prices in all its markets.
During the year, a disconnect in global energy markets contributed to an
increase in the weekly Free on Board (FOB) coal price from Richards Bay Coal
Terminal (API4 price) from $125 per metric tonne at the end of 2021 to a peak
of over $360 in August. Overall, the API4 price averaged $273 in 2022 compared
to $125 in 2021. The higher export prices achievable for our coal along with
higher domestic prices, particularly during the second half of the year,
contributed significantly to the increase in Group revenue and profitability
during the year. Revenues for the year would have been even better if we had
not encountered constraints in transporting coal for export on the South
African rail network, constraints which were beyond our control. For this
reason, exports during the year decreased to 262,000 metric tonnes compared to
320,000 metric tonnes in 2021.
At Black Wattle, the Group's South African coal mining operation, our
transition into new mining areas impacted adversely our coal production,
particularly during the first half of the year. As previously reported, the
transition into the new mining areas was completed in July last year and in the
second half of the year Black Wattle achieved improved production of
0.52million metric tonnes compared to 0.30million metric tonnes in the first
half of the year. The mine achieved production of 0.82million metric tonnes in
2022 compared to 1.05million metric tonnes in 2021. The increases in our
reserves, plant and equipment that are evident on the balance sheet are mainly
attributable to the costs of completing the development of the new mining areas
which will be mined throughout 2023.
Despite the lower coal production from Black Wattle, at Sisonke Coal Processing
we were able maintain the levels of coal processed. During the year the Group
sold 1.29million metric tonnes compared to 1.45million metric tonnes of coal in
2021. For the year, the Group reported £95.1million in revenue (2021: £
50.5million) with the higher prices achievable for our coal offsetting the
lower quantity of coal sold.
Looking forward into 2023, we have already seen coal prices in the export
market come back down to similar levels last seen at the beginning of 2022.
With the outlook for global energy demand less certain, your management will be
focussing on improving production levels at Black Wattle and keeping operating
costs low. We continue to mitigate the uncertainties in transporting coal for
export on the South African rail network by maintaining diversified sales
through the domestic market.
We are pleased to include in our annual report this year our new climate change
report on page 11. The Group recognises that climate change represents one of
the most significant challenges facing the world today and supports the goals
of the Paris Agreement and the UN Framework Convention on Climate Change. The
Group recognises the need, and is committed to, diversifying its future
business activities into areas outside of coal. The Group is continually
looking at alternative independent mining and renewable energy related
opportunities, as well as new opportunities to add to our existing UK property
and listed equity investment portfolios. In the interim, we continue to work
closely with Vunani Mining, our BEE partner in Black Wattle and Sisonke Coal
processing, in being responsible stewards of our legacy coal operations taking
into account the climate-related risks outlined in our climate report and the
impact these risks may have on all our stakeholders.
In the UK, we have seen rental revenue from our retail property portfolio
remain stable in 2022. The Group billed revenue from our directly owned
property portfolio of £1.11million (2021: £1.12million) during the year. The
Group continues to hold its joint venture development investment in West
Ealing, with London & Associated Properties PLC and Metroprop Real Estate Ltd.
A final decision on whether to sell the land or build out the flats has yet to
be taken.
As previously announced, we are pleased to welcome John Heller to the Board of
Bisichi PLC as a non-executive director. The appointment took effect on the 29
March 2023. John is the Chairman and Managing Director of London & Associated
Properties PLC which holds a 41.6% stake in Bisichi and a Director of Intu
Debenture PLC. John's valuable experience in property investment and
management, makes him an excellent addition to the Board. John's knowledge and
experience will enhance the Group's strategy of growing the company's existing
and future spread of business interests and investments, and will help to
offset the loss of our late Chairman, Sir Michael Heller.
Finally, in light of the strong results achieved for the year and the
performance of our South African operations, the Directors propose a total
year-end dividend per share of 12p (2021: 6p) made up a final dividend of 4p
(2021: 4p) and a special dividend of 8p (2021: 2p). The final and special
dividends proposed will be payable on Friday 28 July 2023 to shareholders
registered at the close of business on 7 July 2023. This takes the total
dividends per share for the year to 22p (2021: 6p).
On behalf of the Board, our late Chairman, and shareholders, I would like to
thank all of our staff for their hard work and dedication during the course of
the year
Andrew Heller
Executive Chairman & Managing Director
26 April 2023
STRATEGIC REPORT
Principal activity, strategy & business model
The company carries on business as a mining company and its principal activity
is coal mining and coal processing in South Africa. The company's strategy is
to create and deliver long term sustainable value to all our stakeholders
through our business model which can be broken down into three key areas:
1 Acquisition & investment
The Group continues to oversee responsibly its existing mining and processing
operations in South Africa as well as actively to seek and evaluate new
alternative mining related opportunities. The Group aims to achieve this
through new commercial arrangements.
In addition, we seek to balance the high risk of our mining operations with a
dependable cash flow from our UK property investment operations and listed
equity investment portfolios. The company primarily invests in retail property
across the UK as well as residential property development. The UK Retail
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.
2 Production & sustainability
The Group strives to mine its remaining South African coal reserves in an
economical and sustainable manner that delivers value to all our stakeholders.
3 Processing & marketing
The Group seeks to achieve value from its South African coal processing
infrastructure through the washing, transportation and marketing of coal into
both the domestic and export markets.
STRATEGIC REPORT
Mining Review
Despite mining and logistical challenges, 2022 was an unprecedented year in
terms of performance for our South African coal mining and processing
operations. Higher coal prices contributing strongly to the profitability of
the Group. With more uncertainty in the coal market going into 2023, management
will be focussing on improving production levels and keeping operating costs
low.
Production and operations
The transition to new mining areas at Black Wattle, our South African mining
operation, impacted production in 2022, particularly in the first half of the
year. For the year, the mine achieved production of 0.82million metric tonnes
compared to 1.05million metric tonnes in 2021. Looking forward, both our mining
contractors have fully transitioned into the new mining area where mining
conditions are expected to improve steadily over the course of 2023. In
addition, management will be focussing on keeping operating costs low in light
of global inflationary pressures that started to impact our operations during
the course of 2022.
We continue to work closely with Vunani Mining, our BEE partner in Black Wattle
and Sisonke Coal processing, in being responsible stewards of our legacy coal
operations, which have a life of mine of seven years, taking into account the
climate related risks outlined in our climate report on page 11 and the impact
these risks may have on all our stakeholders.
Main trends/markets
The disconnect in global energy markets in 2022 had a significant impact on
demand and prices achievable for our coal over the year. In the international
market the average weekly price of Free On Board (FOB) Coal from Richard Bay
Coal Terminal (API4 price) averaged $273 in 2022 compared to $125 in 2021.
The higher prices, along with a stronger US Dollar compared to the South
African Rand, resulted in the Group achieving an average Rand price of R3,770
per tonne of export coal sold from the mine in 2022 compared to R1,129 in
2021. The Group's export sales are via Richards Bay Coal Terminal, primarily
under the Quattro programme which allows junior black-economic empowerment coal
producers direct access to the coal export market via the terminal. During the
second half of the year exports were limited by constraints in transporting
coal for export on the South African rail network, exports volumes from our
South African operations decreased during the year to 262,000 metric tonnes
compared to 320,000 metric tonnes in 2021.
In light of the export constraints, the Group continued to supply the majority
of its coal to the South African domestic market in 2022. The strong demand in
the international market contributed to higher domestic prices achievable for
our coal, particularly in the second half of the year. For the year, the Group
achieved an average domestic price of R774 per tonne coal sold compared to R470
in 2021. Domestic sales volumes from our South African operations decreased
slightly during the year to 1.03million metric tonnes (2021: 1.13million metric
tonnes) mainly due to a build of coal stocks at year end.
In 2022, the Group achieved an average Rand price per tonne of coal sold of
R1,384 compared to R616 in 2021. The higher coal prices contributed to the
increase in Group revenue during the year offsetting lower sales volumes.
Looking forward into 2023, in the first quarter we have seen API4 prices
average $145 and uncertainties remain, particularly with regard to the outlook
for the international coal price as well as the impact of continued constraints
in transporting coal for export on the South African rail network. In light of
this, management will be focussing in 2023 on improving production levels,
maintaining a diversified sales market, and keeping operating costs low.
Sustainable development
The Group's South African operations continue to strive to conduct business in
a safe, environmentally and socially responsible manner. Some highlights of our
Health, Safety and Environment performance in 2022:
. The Group's South African operations recorded 2 Lost time Injuries during
2022 (2021: Two).
. No cases of Occupational Diseases were recorded.
. Zero claims for the Compensation for Occupational Diseases were submitted.
In South Africa, the new government regulated Broad-Based Socio-Economic
Empowerment Charter for the Mining and Minerals Industry, 2020 (New Mining
Charter) came into force from March 2020. The New Mining Charter is a
regulatory instrument that facilitates sustainable transformation, growth and
development of the mining industry. The Group is committed to fully complying
with the New Mining Charter and providing adequate resources to this area in
order to ensure opportunities are expanded for historically disadvantaged South
Africans (HDSAs) to enter the mining and minerals industry. In addition, 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 7.
During the year the Group continued with its various employee and community
related bursary and training initiatives. One of the key highlights for the
year was the successful completion by Takalani Sandani, Mine Manager of Black
Colliery, in his bursary studies. On behalf of the Group, the Board
congratulates Takalani in obtaining his Masters of Business Administration from
the Gordon Institute of Business Science, an affiliate of the University of
Pretoria.
Takalani Sandani at his Graduation
Prospects
Management would like to thank all our South African employees and stakeholders
for their significant contribution to the Group's performance in 2022. Going
forward, your management are optimistic that 2023 will be another successful
year for our South African operations.
STRATEGIC REPORT
Sustainable development
The Group is fully committed to ensuring the sustainability of both our UK and
South African operations and delivering long term value to all our
stakeholders.
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. Various policies and initiatives implemented by the Group that
fall within these areas are discussed within this report.
Health, Safety & Environment (HSE)
The Group 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 2022:
. 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.
. The Group's South African operations recorded 2 Lost time Injuries during
2022.
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 and at Sisonke Coal Processing.
Health and Safety training is conducted on an ongoing basis. We are pleased to
report all relevant 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.
. 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).
. On-going training on first aid is being conducted with all employees involved
with this discipline.
The Group continues to monitor and adhere to all of the South African
government's Covid-19 related guidelines and regulations including all updates
and advice from the National Department of Health, the Department of Minerals
Resources and Energy and the Office of the President.
Black Wattle Colliery Social and Labour Plan (SLP) and Community Projects
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, Enterprise Development and
Procurement Programmes.
. Empowering 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 on going 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).
. The STLM is still in the process of finalising its 2022-2027 Local Economic
Development (LED) Plan. Once finalised, Black Wattle Colliery will select
projects from the 2022-2027 STLM LED plan for the inclusion in its 2022-2027
SLP. The Black Wattle Colliery SLP will thereafter be submitted to the
department of Mineral Resources and Energy for approval.
. The building of the new school hall at the Phumelele Secondary School in the
Rockdale Township was completed.
. Various upgrades were initiated at the Evergreen School nearby to Black
Wattle.
Black Wattle has implemented various community initiatives including:
. A community training environmental project, where local community members are
trained to safely cut and remove non-indigenous vegetation, the making, bagging
and sales of charcoal.
. Certain community members have been identified for training in areas
regarding mining and beneficiation. These areas include but are not limited to
conveyor maintenance, operation of mining machinery and training in
environmental waste management.
. An interlocking block manufacturing operation will be started during 2023,
making interlocking blocks for building homes
. One HDSA Male completed his University studies in the 2022 academic year.
. Two HDSA females completed their University studies in the 2022 academic
year.
. Two local community HDSA members were enrolled for the new academic year.
Environment & Environment Management Programme
South Africa
Under the terms of the mine's Environmental Management Programme approved by
the Department of Mineral Resource and Energy ("DMRE"), 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 performs 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 retail property investment as well as
residential property development whereby we provide or develop premises which
are rented to retail businesses or sold on to end users. We seek to provide
tenants and users in both these areas with good quality premises from which
they can operate or reside in an environmentally sound manner.
Procurement
In compliance with the Mining Charter and the Mineral and Petroleum Resource
Development Act, the Group's South African operations has implemented a
BBBEE-focussed procurement policy which strongly encourages our suppliers to
establish and maintain BBBEE credentials. At present, BBBEE companies provide
approximately 90 percent of Black Wattle's equipment and services.
Mining Charter
In South Africa, the new government regulated Broad-Based Socio-Economic
Empowerment Charter for the Mining and Minerals Industry, 2020 (New Mining
Charter) came into force from March 2020. The New Mining Charter is a
regulatory instrument that facilitates sustainable transformation, growth and
development of the mining industry. The Group's mining operation is expected to
reach various levels of compliance to the New Mining Charter over a period of
five years from March 2020. The Group is committed to providing adequate
resources to this area in order to ensure full compliance to the New Mining
Charter is achieved over the transitional period. As part of Black Wattle's
commitment to the New Mining Charter, the company seeks to:
. Expand opportunities for historically disadvantaged South Africans (HDSAs),
including women and youth, 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.
Employment & Diversity
In the UK, the Board of Bisichi PLC at 31 December 2022 comprised of:
Number Percentage Number of Number in Percentage
of of the senior executive of
board board positions on management Executive
members the board management
Men 7 100% 3 4 100%
Women 0 0% 0 0 0%
Not specified/prefer 0 0% 0 0 0%
not to say
Number Percentage Number of Number in Percentage
of of the board senior executive of
board positions on management Executive
members the board management
White British or other 6 86% 3 4 100%
White (including
minority white groups)
Mixed/Multiple Ethnic 0 0% 0 0 0%
Groups
Asian/Asian British 1 14% 0 0 0%
Black/African/Caribbean/ 0 0% 0 0 0%
Black British
Other ethnic group, 0 0% 0 0 0%
including Arab
The above data has been collected through self-reporting by the Board members.
Questions asked include gender identity or sex and ethnic background.
At 31 December 2022 the Company did not meet the target of at least 40% of the
individuals on its board of directors are women and at least one of the senior
positions on the Board are held by a women. The Group is committed to improving
upon its gender and diversity targets at all employment levels within the Group
through a required build-up of sufficient talent pools, training up of
employees and targeted recruitment policies. The Group's South African
operations are 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 over 15 percent women in core mining.
. 94 percent of the women at Black Wattle Colliery are HDSA females.
In terms of directors, employees and gender representation, at the year end the
Group had 9 directors (8 male and 2 from a minority ethnic or HDSA Background,
1 female from a minority ethnic or HDSA Background), 6 senior managers (5 male
and 2 from a minority ethnic or HDSA Background, 1 female from a minority
ethnic or HDSA Background) and 228 employees (158 male and 134 from a minority
ethnic or HDSA Background, 70 female and 66 from a minority ethnic or HDSA
Background).
Black Wattle Colliery has successfully submitted their annual Employment Equity
Report to the Department of Labour. In terms of staff training some highlights
for 2022 were:
. 1 employee was trained in ABET (Adult Basic Educational Training) on various
levels;
. An additional 8 disabled HDSA women continued their training on ABET levels
one to four.
. Four HDSA persons were enrolled for apprenticeships in 2022; these are
categorised as follows:
. One HDSA female employee was enrolled for her apprenticeship.
. Two HDSA females and one HDSA male from the local community were enrolled for
their apprenticeships.
. Further to the above, we confirm that one HDSA Male completed his bursary
studies in 2022, while two HDSA females continued their bursary studies in
2022.
. Two HDSA females were allocated new Bursaries for 2022.
Highlights for 2022 for Sisonke Coal Processing:
· One employee was trained in ABET (Adult Basic Educational Training) on
various levels
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.
Anti-slavery and human trafficking
The Group is committed to the prevention of the use of forced labour and has a
zero tolerance policy for human trafficking and slavery. The Group's policies
and initiatives in this area can be found within the Group's Anti-slavery and
human trafficking statement found on the Group's website at www.bisichi.co.uk.
Climate Change reporting
The Group recognises that climate change represents one of the most significant
challenges facing the world today and supports the goals of the Paris Agreement
and the UN Framework Convention on Climate Change.
Our aim is to:
- minimize our contribution to greenhouse gas emissions;
- to consider and plan for the physical and transitional risks of climate
change on our operations; and
- to work with stakeholders, including local government and communities, to
mitigate the impact of climate-related challenges.
Task Force on Climate-related Financial Disclosures
Bisichi is committed to managing the impact of its operations on the planet and
the impact of climate change on its operations, particularly to ensure
continued operational and financial resilience in a changing world and
marketplace. Bisichi understands the importance of these matters to its
investors, partners, and regulatory authorities and, as required by the Listing
Rules, has adopted the Task Force on Climate-related Disclosure's framework for
communicating climate related financial risks.
The Group's primary operations are coal mining and processing in South Africa.
Hydrocarbons are a key source of energy and heat for the foreseeable future and
the Company's operations have contributed to meeting market demand for coal,
particularly in South Africa. However, the Group's operations form part of a
wider energy and natural resources market which is in the process of
transitioning, in conjunction with the published government, national and
supra-national policies, to net-zero.
In the current year, the Group has aligned its climate disclosures in this
Strategic Report to the four Task force on Climate-related Financial
Disclosures ("TCFD") recommendations and the 11 recommended disclosures as
outlined below. This is the first year the Group has published a report in line
with the TCFD Recommendations and the Group has endeavoured to make disclosures
consistent with the TCFD recommended disclosures taking into consideration the
short to medium term life of its South African coal operation and the size and
complexity of the Group as a whole. The Group continues to develop and enhance
its infrastructure, strategies, structures, resources and tools to manage the
risks and opportunities presented by climate change and to ensure its ongoing
climate change reporting disclosure is fully consistent in all areas with the
TCFD recommended disclosures.
TCFD Pillar TCFD Recommended Bisichi PLC
Disclosure
Governance Board's The Board has ultimate responsibility for the
oversight of monitoring and development of the Group's
climate risk and approach to climate risk and opportunities.
opportunities.
In light of the size of the Group, ESG
matters are considered as part of the Group's
regular board meetings and at other
appropriate points during the year.
The Board has developed and implemented a
Climate Change Policy and monitor the content,
effectiveness and implementation of this
Policy on a regular basis.
The Group's Climate Change Policy can be found
on the Group's website at www.bisichi.co.uk.
Short, medium and long term strategic
decisions, including those on capital
allocation and portfolio management, are
considered by Group management who make
recommendations to the Board. Climate related
issues and policy are included as significant
factors for consideration in the decision
making process, both in the management
recommendation and in the Board's
consideration of the relevant issue.
On-going climate related issues are integrated
into the Group's business risk management
process and reporting thereof to the Board and
Audit Committee.
The Group has regard to best practice in its
area of operations, its health and safety and
environmental obligations and seeks to ensure
high standards of business conduct in its
operations. It will review compliance with the
TCFD Recommendations on an ongoing basis, and
report on its performance on a yearly basis.
Management's Responsibility for the application of this
role in Policy rests with, but is not limited to, all
assessing and employees and contractors engaged in relevant
managing activities under the Group's operational
climate-related control. The Group's managers are responsible
risks and for promoting and ensuring compliance with
opportunities. this Policy and any related individual
site-level policies and practices.
At our South African operations, management
have commenced engagement with key
stakeholders in order to ensure awareness of
our climate change policy as well as the
potential impact of climate change on our
environment and operations. We continue our
collaboration with our contractors on GHG
Emission Reporting, and we are actively
looking for opportunities to partner with our
stakeholders to drive the uptake of carbon
neutral solutions.
For material strategic or financial decisions,
the Group may consider procuring expert advice
from third party consultants on the impact in
the short, medium and long term of the
decision, and ensure that such information is
fully considered as part of the evaluation of
the relevant matter.
Strategy Climate-related The Group considers the current life of mine
risks of its South African operations to fall within
and a short to medium term horizon. Within this
opportunities horizon, climate change transition risks may
the Group has impact our South African coal mining and
identified over processing operations. Risks include:
the short, - coal price and demand volatility;
medium, and long - availability and cost of financing and third
run. party services such as insurance;
- delays or restrictions to regulatory
approvals;
- early retirement of our coal processing and
mining operations; and
- Carbon pricing and taxes, that may create
additional costs through the value chain.
The Group have assessed physical climate risk
profiles produced by the World Bank,
particularly in relation to our South African
operations. The Group considers the physical
risks of variations in climate over the
current life of mine of our South African
operations to be mainly limited to an
increased risk of seasonal flooding that may
impact the operating efficiency, costs and
revenues of our mining and processing
operations.
In a longer term horizon, and in a scenario
where the useful life of our South African
operations is extended, the above short to
medium term transitional risks are expected to
continue to apply. In addition, in a scenario,
such as the International Energy Association's
("IEA") Pathway to Net Zero by 2050 ("NZE
2050"), where climate policies are effectively
implemented that support a transformation to
net zero emissions by 2050 and limiting the
rise of global temperatures to 1.5°C by the
end of the century, policies will lead to
significant coal demand decline over the
longer term. This in turn will impact the
carrying value and long term viability of our
South African coal operations as well as the
stakeholders and communities reliant on our
operations. Extreme weather events, over the
long term in South Africa, such as floods, and
droughts, as well as changes in rainfall
patterns, temperature, and storm frequency
will also affect the operating efficiency,
costs and revenues of our mining and
processing operations, supply chains and
impact the communities living close to our
operations.
Clean coal research and technology initiatives
such as carbon capture may result in
opportunities to increase the useful life of
our South African coal mining and processing
operations. In addition, the clean energy
transition provides opportunities for the
Group to diversify its business activities and
equity investment portfolio into renewable and
extractive industries that will benefit from
and are critical to the transition to a clean
energy system
The main sources of scope 1 & 2 Green House
Gas (GHG) emissions for the Group have been
associated with our South African coal mining
and processing operations, namely due to fuel
combustion and electricity usage. Improvements
in the cost competitiveness of lower emission
sources of energy provide opportunities to
lower overall operating costs at our
operations as well as reduce overall GHG
Emissions.
In the UK we have identified the following
material physical and transitional risks
related to our UK Retail portfolio:
- Long term physical risk through changes in
climate, flood risk and extreme weather; and
- Short-term transition risk from emerging
regulation related to energy performance
("EPC") and enhanced disclosures.
Impact of Management have incorporated and regularly
climate-related review the following strategies and procedures
risks and in relation to it South African coal
opportunities on operations:
businesses, . Review of the impact of climate change and
strategy, and the global transition to clean energy,
financial particularly in relation to the current life
planning. of mine of the Group's coal operations;
. Regular research and analysis of the coal
market demand outlook;
. Regular research and analysis on the outlook
of the South African coal mining industry and
climate change regulation including mining
regulation, energy procurement and licensing,
and carbon taxing;
. Regular communication with financial service
providers and suppliers on any future changes
to availability and cost of services;
. Regular research and analysis on the
progress of clean coal technology and related
regulatory initiatives; and
. Regular dialogue and seeking collaboration
with governments and local communities and
other stakeholders on climate change-related
challenges.
The Board has identified the need to mitigate
GHG emission heavy sources of electricity
usage at our coal washing plant. Management
are currently in the process of evaluating
opportunities to reduce these emissions taking
into particular consideration the financial
viability and long term sustainability of the
projects.
The below areas have been identified where GHG
emissions can be further reduced through:
. Minimising land clearance for new project
facilities;
. Adoption of mitigation strategies for
preserving integrity of environment;
. Minimising tree felling;
. The use of modern, energy and fuel efficient
equipment;
. The inclusion of the impact of GHG emissions
as an evaluation criteria in the selection of
mining contractors, suppliers and equipment.
Particular consideration will be given to the
choice of vehicles used for the mine fleet,
employee transportation and the haulage fleet.
Where possible energy and fuel efficiency will
be a factor in the selection of vehicles as
this will not only reduce GHG emissions but
also reduce operating costs. In addition to
the efficiency of the fleet itself,
opportunities will be sought for improving the
use of the vehicles.
. Scheduling of excavation and haulage
activities to optimise activities and avoid
double handling, where this is operationally
practical; and
. The upgrading of energy-intensive machinery
over time will be used to improve efficiency
and reduce CO2 emissions compared to machinery
that has been removed.
Further energy efficiency opportunities will
also be investigated.
Potential water scarcity has increased
management focus on opportunities to increase
the usage efficiency of our existing water
supply and water recycling systems. The
introduction of a closed loop filter press
system for coal fines in 2019 and additional
other work concluded or planned on our water
recycling systems at our coal processing
facility will result in a lowering of our
overall cost of water and the environmental
footprint of our operations. Increased risks
of flooding have been incorporated at planning
stage in new opencast mining areas that have
been opened.
Transition and physical risks related to
climate change are regularly discussed at
Board level, particularly those related to the
long term viability of the Group's South
African coal operations and the future
allocation of capital. The Board regularly
considers the need for coal as an energy
source both globally and in South Africa over
the life of mine of our operations and in its
long term planning. The Board is committed to
responsible stewardship of our legacy South
African coal assets taking into account the
impact climate change related risks may have
on all our local stakeholders. We recognise
the need to collaborate with government,
employees and communities, to ensure a just
transition for our stakeholders through the
transition to a low carbon economy.
The Board regularly evaluates and continues to
seek opportunities to diversify its business
activities and equity investment portfolio,
particularly into renewable and extractive
industries that predominantly mine commodities
identified by the IEA as critical in the
transition to a clean energy system. Any
significant developments will be reported to
shareholders in due course.
The Board continue to monitor and regularly
review adherence by the Group to changes to UK
EPC. The Group have incorporated the ongoing
impact of EPC regulatory standards into its
decision making process.
Resilience of Management have incorporated climate scenarios
strategy, taking into our strategic operational planning and
into review process. We have assessed the
consideration resilience of our coal operations compared to
different the IEA's NZE2050 Scenario, which sets out
climate-related what additional measures would be required
scenarios, over the next ten years to put the world as a
including a 2°C whole on track for net zero emissions by
or lower mid-century. The Scenario indicates a
scenario. significant coal demand decline over the
longer term impacting the potential commercial
longevity of the Group's South African
operations. In addition we have assessed
physical climate risk profiles for our South
African operations obtained via the World Bank
Group's Climate Change Knowledge Portal. The
outcomes of scenario testing and physical
climate profiling have been incorporated into
the long term strategic planning and decision
making processes of the Group.
Over the short to medium term, considering the
potential impact of transitional climate risks
on the Group's South African operations, the
Group's climate strategy and policy is
regularly scrutinised by senior management and
the Board in regard to any changes in coal
demand outlook and climate regulatory policy
that may impact our operations over the
current life of mine. A recent example being
the Just Energy Transition Investment Plan
("JET IP") announced by the South African
Government for 2023-2027.
The Board encourages senior and local
management to assess principal and emerging
climate-related risks on a regular basis.
Risks identified are to be reported to and
discussed at Board level and incorporated into
the strategy and planning of the Group.
Risk Management Processes for The Group's risk management processes are
identifying and developed, implemented and reviewed by the
assessing Board, who retain ultimate responsibility for
climate related them.
risks.
In addition to the Group's management of its
principal risks and uncertainties, climate
change impacts are mainly considered from two
environmental perspectives, the impact of our
South African coal mining and processing
operations on the climate and the effect of
global climate change on our operations and
stakeholders.
Heavy sources of GHG emissions have been
identified from our annual Greenhouse Gas
emissions recording and reporting.
The Board and Senior management remain in
regular communication with local regulatory
bodies, climate research providers, coal
market analysts, suppliers, and services
providers to ensure climate related risks and
changes in regulatory policy are identified
and assessed on a regular basis. Senior and
local management in South Africa are
encouraged by the Board to identify local
climate related risks and changes in
regulatory policy that may impact our South
African coal operations.
Management continually engage with governments
and local communities and other stakeholders
on climate change-related challenges impacting
the local area and the South African coal
industry at large.
Processes for The Board and Senior management co-ordinate
managing the Group's analysis and planning of the
climate-related effects of climate change on our business. The
risks. Board regularly discusses the impact of any
risks identified through the organisation,
particularly in relation to material matters
that may impact the viability of the Group's
coal operations. The Board regularly reviews
and analyses coal market and outlook research,
particularly in relation to targets set out in
local climate policy such as JET IP and global
climate scenarios such as NZE 2050.
The mitigation of GHG emissions and
identification of climate related risks has
been integrated into our corporate policy,
project and procurement evaluation criteria at
our South African operations to ensure it is
consistently applied and managed.
The Group continuously monitors and reports
key performance indications relating to
environmental matters, including the location
of CO2 emissions, their levels and intensity.
On an ongoing basis, the Group assesses the
impact of carbon pricing, climate regulation
and taxation on going concern assumptions, the
Group's current and future strategy and
operations.
Processes for New or evolving climate change risks
identifying, identified by both senior and local management
assessing, and are to be reported to and discussed at Board
managing level and incorporated into the strategy,
climate-related planning and climate policy of the Group.
risks are
integrated into Where possible, plans to mitigate the effect
the overall of climate change on our operations and our
risk management. local communities will be integrated into the
mines regulatory environmental management and
social and labour plans.
Metrics and Metrics used by A financial segmentation of the Group's South
Targets the Group to African coal mining and processing assets that
assess climate are impacted by the climate related risks and
related risks opportunities outlined above can be found on
and page 82.
opportunities in
line with its The Group recognises that its ability to
strategy and reduce overall carbon emissions is constrained
risk management at present by the main segment of it business
process. activities, being coal mining and processing
in South Africa. The Group has, however,
sought to appropriately target its emission
reduction strategy to the elements of its
operations where a meaningful reduction in
greenhouse gas emissions can be effected, and
this will be reflected in the targets set by
the Group in due course.
The Group measures and report our CO2
emissions across the Group including a
breakdown of UK and South African coal
operations. See below for disclosure of
emissions during the year.
Scope 1, Scope 2 The Group is committed to measuring and
and, if reporting our scope 1 and 2 greenhouse gas
appropriate, emissions, see below for disclosure of
Scope 3 emissions during the year.
greenhouse gas
(GHG) emissions, Scope 3 emissions are not currently measured
and the related given the size and life of mine of the Group's
risks. South African coal operations and the
uncertainty and impracticality in accurately
measuring such emissions throughout the value
chain. The Group will continue to assess the
above approach as part of its continued review
of compliance with the TCFD Recommendations
and taking into account any material changes
in future business activities.
Targets used by Over 99% of the Group's GHG Emissions relate
the Group to to our South African coal operations which has
manage a current life of mine of 7 years.
climate-related
risks and In the short term, the Group's continues to
opportunities evaluate areas where GHG emissions can be
and performance further reduced, particularly scope 2
against targets. emissions related to the heavy sources of
electricity usage at our coal washing plant.
Once the Group has identified the scope of
further potential reductions, their time,
capital cost and practicability of
implementation, short term targets for the
Group will be reassessed.
Over the long term, as part of the Group's
business strategy, the Board continues to
evaluate opportunities to diversify its
business activities. In turn, targets related
to GHG emissions will be re-evaluated in line
with any future changes in the Group's planned
operating activities.
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 data detailed in these tables represent emissions and energy use for which
Bisichi Mining plc is responsible. To calculate our emissions, we have used the
main requirements of the Greenhouse Gas Protocol Corporate Standard and a
methodology adapted from the Intergovernmental Panel on Climate Change (2019),
along with the UK Government GHG Conversion Factors for Company Reporting 2022.
Any estimates included in our totals are derived from actual data which have
been extrapolated to cover the full reporting periods. Our reporting includes
our energy use and emissions associated with our UK office, which are minimal
(2.5 tonnes of CO2e).
The Group's carbon footprint: 2022 2021
CO2e CO2e
Tonnes Tonnes
Emissions source:
Emissions from the combustion of fuel or the operation of any 39,564 41,960
facility including fugitive emissions from refrigerants use
Emissions resulting from the purchase of electricity, heat, steam 12,267 12,040
or cooling by the company for its own use (location based)
Total gross emissions 51,831 54,000
Of which:
UK 3 2
South Africa 51,828 53,998
Intensity:
Tonnes of CO2 per £ sterling of revenue 0.0005 0.0011
Tonnes of CO2 per tonne of coal produced 0.0629 0.0516
kWh kWh
Energy consumption used to calculate above emissions 87,292,816 83,079,614
Of which UK 12,341 10,186
Principal risks & uncertainties
PRINCIPAL RISK PERFORMANCE AND MANAGEMENT OF THE RISK
COAL PRICE AND VOLUME RISK
The Group is exposed to coal price risk The Group primarily focuses on managing its
as its future revenues will be derived underlying production and processing costs to
based on contracts or agreements with mitigate coal price volatility as well as from
physical off-take partners at prices time to time entering into forward sales
that will be determined by reference to contracts with the goal of preserving future
market prices of coal at delivery date. revenue streams. The Group has not entered into
The Group's South African mining and any such contracts in 2021 and 2022.
coal processing operational earnings are The Group's export and domestic sales are
significantly dependent on movements in determined based on the ability to deliver the
both the export and domestic coal price. quality of coal required by each market
The price of export sales is derived together with the market factors set out
from a US Dollar-denominated export coal opposite. Volumes of export sales achieved
price and therefore the price achievable during the year were primarily dependent on the
in South African Rands can be influenced Group's ability to produce the higher quality
by movements in exchange rates and of coal required for export, obtaining adequate
overall global demand and supply. The rail capacity and utilising allowable export
volume of export sales achievable can be quotas under the Quattro programme. The volume
influenced by rail capacity and export of domestic market sales achieved during the
quota constraints at Richards Bay Coal year were primarily dependant on local demand
Terminal under the Quattro programme. and supply as well as the Group's ability to
The domestic market coal prices are produce the overall quality of coal required.
denominated in South African Rand and The Group continues to assess on an ongoing
are primarily dependant on local demand basis its dependence on the above factors and
and supply. evaluate alternative means to ensure coal sales
In the short term, disconnections in and prices achieved are optimised.
global energy markets and global The Group assesses on an ongoing basis the
economic volatility may result in impact of volatility in global energy markets,
additional price volatility in both the economic volatility and climate change related
export and domestic market due to risks may have on the Group's mining operations
fluctuations in both demand and supply. and future investment decisions as outlined in
Longer term both the demand and supply the Group's climate change reporting on page
of coal in the domestic and global 11.
market may be negatively impacted by
climate related risks such as regulatory
changes related to climate change and
governmental CO2 emission commitments.
MINING RISK
As with many mining operations, the This risk is managed by engaging independent
reserve that is mined has the risk of geological experts, referred to in the industry
not having the qualities and as the "Competent Person", to determine the
accessibility expected from geological estimated reserves and their technical and
and environmental analysis. This can commercial feasibility for extraction. In
have a negative impact on revenue and addition, management engage Competent Persons
earnings as the quality and quantity of to assist management in the production of
coal mined and sold by our mining detailed life of mine plans as well as in the
operations may be lower than expected. 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.
CURRENCY RISK
The Group's operations are sensitive to Export sales within the Group's South African
currency movements, especially those operations are derived from a US
between the South African Rand, US Dollar-denominated export coal price. A weakening
Dollar and British Pound. These of the US Dollar can have a negative impact on
movements can have a negative impact on the South African Rand prices achievable for coal
the Group's mining operations revenue sold by the Group's South African mining
as noted above, as well as operational operations. This in turn can have a negative
earnings. impact on the Group's mining operations revenue
The Group is exposed to currency risk as well as operational earnings as the Group's
in regard to the Sterling value of mining operating costs are Rand denominated. In
inter-company trading balances with its order to mitigate this, the Group may enter into
South African operations. It arises as forward sales contracts in local currencies with
a result of the retranslation of Rand the goal of preserving future revenue streams.
denominated inter-company trade The Group has not entered into any such contracts
receivable balances into Sterling that in 2022 and 2021.
are held within the UK and which are Although it is not the Group's policy to obtain
payable by South African Rand forward contracts to mitigate foreign exchange
functional currency subsidiaries. risk on inter-company trading balances or on the
The Group is exposed to currency risk retranslation of the Group's South African
in regard to the retranslation of the functional currency net assets, management
Group's South African functional regularly review the requirement to do so in
currency net assets to the Sterling light of any increased risk of future volatility.
reporting functional currency of the Refer to the 'Financial Review' for details of
Group. A weakening of the South African significant currency movement impacts in the
Rand against Sterling can have a year.
negative impact on the financial
position and net asset values reported
by the Group.
NEW RESERVES AND MINING PERMISSIONS
The life of the mine, acquisition of The work performed in the acquisition and renewal
additional reserves, permissions to of mining permits as well as the maintenance of
mine (including ongoing and once-off compliance with permits includes factors such as
permissions) and new mining environmental management, health and safety,
opportunities in South Africa generally labour laws and Black Empowerment legislation
are contingent on a number of factors (such as the New Mining Charter); as failure to
outside of the Group's control such as maintain appropriate controls and compliance may
approval by the Department of Mineral in turn result in the withdrawal of the necessary
Resources and Energy, the Department of permissions to mine. The management of these
Water Affairs and Forestry and other regulatory risks and performance in the year is
regulatory or state owned entities. noted in the Mining Review on page 5 as well as
In addition, the Group's South African in the Sustainable Development report on page 7
operations are subject to the and in this section under the headings
government Mining Charter with the New environmental risk, health & safety risk and
Mining Charter which came into force labour risk. Additionally, in order to mitigate
from March 2020. Failure to meet this risk, the Group strives to provide adequate
existing targets or further regulatory resources to this area including the employment
changes to the Mining Charter, could of adequate personnel and the utilisation of
adversely affect the mine's ability to third party consultants competent in regulatory
retain its mining rights in South compliance related to mining rights and mining
Africa. permissions.
POWER SUPPLY RISK
The current utility provider for power The Group's mining operations have to date not
supply in South Africa is the been affected by power cuts. However the Group
government run Eskom. Eskom continues manages this risk through regular monitoring of
to undergo capacity problems resulting Eskom's performance and ongoing ability to meet
in power cuts and lack of provision of power requirements. In addition, the Group
power supply to new projects. Any power continues to assess the ability to utilise diesel
cuts or lack of provision of power generators as an alternative means of securing
supply to the Group's mining operations power in the event of power outages.
may disrupt mining production and
impact on earnings.
FLOODING RISK
The Group's mining operations are Management monitors water levels on an ongoing
susceptible to seasonal flooding which basis and various projects have been completed,
could disrupt mining production and including the construction of additional dams, to
impact on earnings. minimise the impact of this risk as far as
possible.
ENVIRONMENTAL RISK
The Group's South African mining In line with all South African mining
operations are required to adhere to companies, the management of this risk is based
local environmental regulations. Any on compliance with the Environment Management
failure to adhere to local Plan. In order to ensure compliance, the Group
environmental regulations, could strives to provide adequate resources to this
adversely affect the mine's ability to area including the employment of personnel and
mine under its mining right in South the utilisation of third party consultants
Africa. 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 7.
HEALTH & SAFETY RISK
Attached to mining there are inherent The Group has a comprehensive Health and Safety
health and safety risks. Any such programme in place to mitigate this risk.
safety incidents disrupt operations, Management strive to create an environment
and can slow or even stop production. where Health and safety of our employees is of
In addition, the Group's South African the utmost importance. Our Health & Safety
mining operations are required to programme provides clear guidance on the
adhere to local Health and Safety standards our mining operation is expected to
regulations as well as enhanced health achieve. In addition, management receive
and Safety measures related to regular updates on how our mining operations
Covid-19. are performing. Further details of the Group's
Health and Safety Programme are disclosed in
the Sustainable Development report on page 7.
CLIMATE CHANGE RISK
Climate change is a material issue that Transition and physical risks related to
can affect our South African coal climate change are regularly discussed and
business through: acted upon at Board and management levels,
- changes in carbon pricing, taxes, and particularly those related to the viability of
coal mining regulation; the Group's South African coal operations and
- extreme climatic events; the future allocation of capital. Further
- access to capital and services and details of the Group's performance and
allocation thereof; and management of climate change related risk is
- reduced demand and prices for coal. set out in the Group's climate change report on
page 11.
LABOUR RISK
The Group's mining operations and coal In order to mitigate this risk, the Group
washing plant facility are labour strives to ensure open and transparent dialogue
intensive and unionised. Any labour with employees across all levels. In addition,
disputes, strikes or wage negotiations appropriate channels of communication are
may disrupt production and impact provided to all employment unions at Black
earnings. Wattle to ensure effective and early engagement
on employment matters, in particular wage
negotiations and disputes.
Refer to the 'Employment' section on page 9 for
further details.
CASHFLOW RISK
Commodity price risk, currency In order to mitigate this, we seek to balance
volatility and the uncertainties the high risk of our mining operations with a
inherent in mining may result in dependable cash flow from our UK property
favourable or unfavourable cashflows. investment operations which are actively
managed by London & Associated Properties PLC
and our equity investment portfolio. 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 Financial
and Performance review on page 24 for details
of the property and investment portfolio
performance.
PROPERTY VALUATION RISK
Fluctuations in property values, which The Group utilises the services of London &
are reflected in the Consolidated Associated Properties PLC whose responsibility
Income Statement and Balance Sheet, are is to actively manage the portfolio to improve
dependent on an annual valuation of the rental income and thus enhance the value of the
Group's commercial and residential portfolio over time. In addition, management
development properties. A fall in UK regularly monitor banking covenants and other
commercial and residential property can loan agreement obligations as well as the
have a marked effect on the performance of our property assets in relation
profitability and the net asset value to the overall market over time.
of the Group as well as impact on Management continues to monitor and evaluate
covenants and other loan agreement the impact of Brexit , counter inflationary
obligations. regulatory measures and the current economic
The economic performance of the United performance of the UK retail market on the
Kingdom, including the potential final future performance of the Group's existing UK
impact of the United Kingdom leaving portfolio. In addition, the Group assesses on
the European Union ("Brexit"), counter an ongoing basis the performance of the UK
inflationary regulatory measures, as retail market on the Group's banking covenants,
well as the current economic loan obligations and future investment
performance and trends of the UK retail decisions.
market, may impact the level of rental Refer to page 28 for details of the property
income, yields and associated property portfolio performance.
valuations of the Group's UK property
assets including its investments in
Joint Ventures.
Financial & performance review
The movement in the Group's Adjusted EBITDA from £5.0million in 2021 to £
39.4million in 2022 can mainly be attributed to higher prices achievable for
our coal from the Group's South African operations. This offset the higher
operating costs and lower coal sale volumes in 2022.
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. Mining production can be defined as the coal quantity in metric tonnes
extracted from our reserves during the period and held by the mine before any
processing through the washing plant. Whilst profit/(loss) before tax is
considered as one of the key overall 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. Certain key performance indicators below are not
Generally Accepted Accounting Practice measures and are not intended as a
substitute for those measures, and may or may not be the same as those used by
other companies.
Key performance indicators 2022 2021
The key performance indicators for the Group are: £'000 £'000
For the Group:
Operating profit before depreciation, fair value adjustments and 39,363 5,028
exchange movements (adjusted EBITDA)
EBITDA 39,980 5,849
Profit before tax 38,014 2,501
For our property investment operations:
Net property valuation 10,465 10,525
Net property revenue 1,108 1,119
For our mining activities:
Operating profit before depreciation, fair value adjustments and 38,126 4,266
exchange movements (adjusted EBITDA)
EBITDA 37,856 4,145
Tonnes Tonnes
'000 '000
Mining production 824 1,046
Quantity of coal sold 1,287 1,447
The key performance indicators of the Group Mining Property Other 2022
can be reconciled as follows: £'000 £'000 £'000 £'000
Revenue 93,413 1,108 590 95,111
Transport and loading cost (5,201) - - (5,201)
Mining and washing costs (38,008) - - (38,008)
Other operating costs excluding depreciation (12,078) (456) (5) (12,539)
Operating profit before depreciation, fair value 38,126 652 585 39,363
adjustments and exchange movements (adjusted EBITDA)
Exchange movements (270) - - (270)
Fair value adjustments - (60) - (60)
Gains on investments held at fair value through - - 1,036 1,036
profit and loss (FVPL)
Operating profit excluding depreciation 37,856 592 1,621 40,069
Share of loss in joint venture - (89) - (89)
EBITDA 37,856 503 1,621 39,980
Net interest movement (663) (210) - (873)
Depreciation (1,093) - - (1,093)
Profit before tax 38,014
The key performance indicators of the Group Property Other 2021
can be reconciled as follows: Mining £'000 £'000 £'000
£'000
Revenue 49,226 1,119 175 50,520
Transport and loading cost (5,569) - - (5,569)
Mining and washing costs (32,438) - - (32,438)
Other operating costs excluding depreciation (6,953) (527) (5) (7,485)
Operating profit before depreciation, fair value 4,266 592 170 5,028
adjustments and exchange movements (adjusted EBITDA)
Exchange movements (121) - - (121)
Fair value adjustments - 255 - 255
Gains on investments held at fair value through - - 812 812
profit and loss (FVPL)
Operating profit excluding depreciation 4,145 847 982 5,974
Share of loss in joint venture - (125) - (125)
EBITDA 4,145 722 982 5,849
Net interest movement (777)
Depreciation (2,571)
Profit before tax 2,501
Adjusted EBITDA is used as a key indicator of the operating trading performance
of the Group and its operating segments representing operating profit before
the impact of depreciation, fair value adjustments, gains/(losses) on disposal
of other investments and foreign exchange movements. The Group's operating
segments include its South African mining operations and UK property. The
performance of these two operating segments are discussed in more detail below.
The Group achieved an EBITDA for the year of £40.0million (2021: £5.8million).
The movement compared to the prior year can mainly be attributed to the EBITDA
from our mining activities of £37.9million (2021: £4.1million). In addition,
the Group's fair value loss, related to our UK property was £0.1million (2021:
gain £0.3million) and gains related to investments held at fair value through
profit and loss were £1.0million (2021: £0.8million).
The Group reported a profit before tax of £38.0million (2021: £2.5million) for
the year resulting in an increase in taxation for the year to £11.9million
(2021: £0.8 million). This resulted in the Group achieving an overall profit
for the year after tax of £26.1million (2021: £1.7million), of which £
17.6million (2021: £1.5million) was attributable to equity holders of the
company.
South African mining operations
Performance South African Rand UK Sterling
The key performance indicators of the Group's
South African mining operations are presented in 2022 2021 2022 2021
South African Rand and UK Sterling as follows: R'000 R'000 £'000 £'000
Revenue 1,886,276 1,004,444 93,413 49,226
Transport and loading costs (105,023) (113,641) (5,201) (5,569)
Mining and washing costs (767,490) (661,929) (38,008) (32,438)
Operating profit before other operating costs and 1,013,763 228,874 50,204 11,219
depreciation
Other operating costs (excluding depreciation) (12,078) (6,953)
Operating profit before depreciation, fair value 38,126 4,266
adjustments and exchange movements (adjusted
EBITDA)
Exchange movements (270) (121)
EBITDA 37,856 4,145
2022 2021
'000 '000
Mining production in tonnes 824 1,046
2022 2021
R R
Net Revenue per tonne of mining production 2,162 852
Mining and washing costs per tonne of mining production (931) (633)
Operating profit per tonne of mining production before other 1,231 219
operating costs and depreciation
Net Revenue per tonne of mining production can be defined as the revenue price
achieved per metric tonne of mining production less transportation and loading
costs.
A breakdown of the quantity of coal sold and revenue of the Group's South
African mining operations are presented in metric tonnes and South African Rand
as follows:
Domestic Export 2022 Domestic Export 2021
'000 '000 '000 '000 '000 '000
Quantity of coal sold in tonnes 1,025 262 1,287 1,127 320 1,447
Domestic Export 2022 Domestic Export 2021
R'000 R'000 R'000 R'000 R'000 R'000
Revenue 795,132 1,091,144 1,886,276 530,905 473,539 1004,444
R R R R R R
Net Revenue per tonne of coal sold 774 3,770 1,384 470 1,129 616
Mining and washing costs per tonne of coal (596) (457)
sold
Operating profit per tonne of coal sold 788 158
before other operating costs and
depreciation
The quantity of coal sold can be defined as the quantity of coal sold in metric
tonnes by the Group in any given period. Net Revenue per tonne of coal sold can
be defined as the revenue price achieved less transportation and loading costs
per metric tonne of coal sold.
Total net revenue per tonne of coal sold for the Group's mining and processing
operations increased for the year from R616 per tonne of coal sold in 2021 to
R1,384 in 2022, attributable to the average price increases achieved in both
the export and domestic market. A decrease in mining production from Black
Wattle and an increase in coal inventories at the end of the year offset an
increase in buy-in coal processed during the year resulting in the quantity of
coal sold for the year decreasing to 1.287million tonnes (2021: 1.447million
tonnes). Overall, revenue from the Group's South African mining operations
increased during the year to R1.886billion compared to revenue of R1.005billion
in 2021 with the increase in revenue per tonne of coal sold offsetting the
lower coal sales volumes, particularly in the export market.
Mining and washing costs per tonne of coal sold during the year increased from
R457 per tonne in 2021 to R596 per tonne in 2022 mainly due to increases in
buy-in coal costs and mining costs per tonne from Black Wattle. This resulted
in an increase in total mining and washing costs for the Group to R767.4million
(2021: R661.9million).
Other operating costs (excluding depreciation) of £12.08million (2021: £
6.95million) include general administrative costs and 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 coal processing. The increase during the
year can mainly be attributed to higher salaries and wages costs attributable
to the improved financial performance of the Group in the same period. Overall
costs in South Africa were in line with management's expectations and local
inflation.
In summary, the movement in the Group's Adjusted EBITDA from £5.0million in
2021 to £39.4million in 2022 can mainly be attributed to higher prices
achievable from the Group's South African coal processing operations. This
offset the higher mining, washing and operating costs and lower coal sales
volumes incurred in 2022. A further explanation of the mines operational
performance can be found in the Mining Review on page 5.
Non-controlling interest Black Wattle
As previously reported, the Group's subsidiary Black Wattle Colliery (Pty) Ltd
signed an agreement to acquire additional coal reserves during the year. The
new reserves of 6.1million metric tonnes, extends the life of mine of Black
Wattle to seven years and remains subject to regulatory approval. The
acquisition was negotiated in conjunction with a re-negotiation of 2.1million
metric tonnes of separate coal reserves previously acquired from the same
seller, as previously announced in our 2018 annual report.
Vunani Mining (Pty) Ltd our black economic empowered shareholders at Black
Wattle, were integral in the success in acquiring both of these reserves. As a
result, it was agreed that Vunani Mining will share equally in any
distributable economic benefit from the coal reserves as part of their
non-controlling interest in Black Wattle. This has been achieved through a new
shares issue in Black Wattle that was completed on 12 April 2022. The total
issued share capital in Black Wattle Colliery (Pty) Ltd was increased further
from 1000 shares to 1002 shares at par of R1 through the following share issue:
- a subscription of 1 "B" Share at par by Bisichi Mining (Exploration
Limited), a 100% subsidiary of the Group;
- a subscription of 1 "B" Share at par by Vunani Mining (Pty) Ltd
The "B" shares rank pari passu with the ordinary shares save that they have
sole rights to the distributable profits attributable to the above mining
reserves held by Black Wattle Colliery (Pty) Ltd. A non-controlling interest is
therefore recognised for all profits distributable to the "B" shares held by
Vunani Mining (Pty) Ltd from the date of issue of the shares (12 April 2022).
Details of Vunani's non-controlling interest held at year end can be found in
the Non-controlling interest note on page 102.
UK property investment
Performance
The Group's portfolio is managed actively by London & Associated Properties
plc. Rental performance was marginally below levels achieved in 2022. Net
property revenue (excluding joint ventures and service charge income) across
the portfolio decreased during the year to £1.108million (2021: £1.119million).
The property portfolio was externally valued at 31 December 2022 and the value
of UK investment properties attributable to the Group at year end decreased
marginally to £10.465million (2021: £10.525million).
Joint venture property investments
The Group holds a £0.6million (2021: £0.6million) joint venture investment in
Dragon Retail Properties Limited, a UK property investment company. The open
market value of the company's share of investment properties included within
its joint venture investment in Dragon Retail Properties decreased marginally
during the year to £1.019million (2021: £1.040million).
The Group continues to hold a £0.4million (2021: £0.5million) 50% joint venture
investment in West Ealing Projects Limited, a UK unlisted property development
company. West Ealing Projects Limited's only asset is a property development in
West Ealing, London. The carrying value of the Group's share of the trading
property inventory included within this development is valued at £4.1million
(2021: £3.7million). The joint venture has obtained planning consent for a
residential development of 56 flats. During 2022 the joint venture explored the
possibility of a consented land sale but did not receive sufficiently
attractive offers during a period of extreme building costs inflation to
persuade the venture to sell. A final decision on whether to sell the land or
build out the flats has yet to be taken and we look forward to updating
shareholders further in due course.
The Group continues to hold a one third joint venture investment in Development
Physics Limited, a UK unlisted property development company. The remaining two
thirds is held equally by London & Associated Properties PLC and Metroprop Real
Estate Ltd. The company was set up with the purpose of delivering a residential
development of 44 flats and 4 town houses in Purley, London. Development
Physics acquired a series of options on the site and registered for planning
permission for its development. The planning application submitted in 2022 was
rejected in January 2023 despite being recommended for approval by the planning
officer. The joint venture has appealed this decision and we will update
shareholders on progress in due course. At year end, the negative carrying
value of the investment held by the Group was £14,000 (2021: £3,000).
Overall, the Group achieved net property revenue of £1.2million (2021: £
1.2million) for the year which includes the company's share of net property
revenue from its investment in joint ventures of £108,000 (2021: £88,000).
Other Investments
During the year the Group's non-current investments held at fair value through
profit and loss increased from £3.6million in 2021 to £12.6million due to net
additions during the year of £8.2million (2021: £1.2million) and gains from
investments of £0.7million (2021: £0.7million). The investments comprise of £
6.8million (2021: £1.56million) of investments listed on stock exchanges in the
United Kingdom and £5.8million (2021: £2.07million) of investments listed on
overseas stock exchanges. The Group's listed investments are primarily in
entities involved in extractive and energy related (including renewable energy)
business activities.
Cashflow & financial position
The following table summarises the main components of the Year Year
consolidated cashflow for the year: ended ended
31 31
December December
2022 2021
£'000 £'000
Cash flow generated from operations before working capital and other 39,768 5,028
items
Cash flow from operating activities 30,698 4,432
Cash flow from investing activities (16,584) (2,706)
Cash flow from financing activities (7,206) (271)
Net (decrease) / increase in cash and cash equivalents 6,908 1,455
Cash and cash equivalents at 1 January 482 (1,078)
Exchange adjustment (25) 105
Cash and cash equivalents at 31 December 7,365 482
Cash and cash equivalents at 31 December comprise:
Cash and cash equivalents as presented in the balance sheet 10,590 3,018
Bank overdrafts (secured) (3,225) (2,536)
7,365 482
Cash flow generated from operating activities increased compared to the prior
year to £30.7million (2021: £4.4million). This can mainly be attributed to the
increase in operating profit during the year of £39.0million (2021: £
3.4million) net of taxes paid of £7.9million (2021: refund of £0.2million) and
an increase in inventories of £4.0million (2021: decrease £2.1million). The
operating profit can mainly be attributed to the improved coal revenue per
tonne achieved during the year.
Investing cashflows primarily reflect the net acquisitions of listed equity
investments of £8.1million (2021: £0.9million) and capital expenditure during
the year of £8.5million (2021: £1.8million) which can mainly be attributable to
mine development costs at Black Wattle. As at year end the Group's mining
reserves, plant and equipment had a carrying value of £16.4million (2021: £9.0
million) with capital expenditure being offset by depreciation of £1.1million
(2021: £2.5milion) and exchange translation movements of £0.6million (2021: £
0.4million) for the year.
Cash outflows from financing activities includes a net increase in borrowings
of £0.5million (2021: decrease £0.3million). In addition, dividends were paid
during the year to equity shareholders of £0.6million (2021: £Nil) and to
minority shareholders of £7.0million (2021: £Nil).
Overall, the Group's cash and cash equivalents increased during the year by £
6.9million (2021: £1.5million). The Group's net balance of cash and cash
equivalents (including bank overdrafts) at year end was £7.4million (2021: £
0.5million).
The Group has considerable financial resources available at short notice
including cash and cash equivalents (excluding bank overdrafts) of £10.6million
(2021: £3.0 million) and listed investments of £13.5million (2021: £4.3million)
as at year end. The above financial resources totalling £24.1million (2021: £
7.3million).
The net assets of the Group reported as at year end were £35.6million (2021: £
17.8million) and total assets at £63.8million (2021: £38.1million).
Liabilities increased from £20.3million to £28.2million during the year
primarily due to an increase in trade and other payables from £10.7million to £
13.3million as well as an increase in tax payable from £0.7million to £
4.3million.
Further details on the Group's cashflow and financial position are stated in
the Consolidated Cashflow Statement on page73 and the Consolidated Balance
Sheet on page 70 and 71.
Loans
South Africa
The Group has a structured trade finance facility with Absa Bank Limited for
R85million held by Sisonke Coal Processing (Pty) Limited, a 100% subsidiary of
Black Wattle Colliery (Pty) Limited. This facility comprises of an R85million
revolving facility to cover the working capital requirements of the Group's
South African operations. The facility is renewable annually and is secured
against inventory, debtors and cash that are held in the Group's South African
operations.
United Kingdom
The Group holds a 5 year term facility of £3.9m with Julian Hodge Bank Limited
at an initial LTV of 40%. The loan is secured against the company's UK retail
property portfolio. The amount repayable on the loan at year end was £
3.8million. The debt package has a five year term and is repayable at the end
of the term in December 2024. The overall interest cost of the loan is 4.00%
above the Bank of England base rate. The loan is 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 £10.5million. No banking covenants were
breached by the Group during the year.
Statement regarding Section 172 of the UK Companies Act
Section 172 of the UK Companies Act requires the Board to report on how the
directors have had regard to the matters outlined below in performing their
duties. The Board consider the Group's customers, employees, local communities,
suppliers and shareholders as key stakeholders of the Group. During the year,
the Directors consider that they have acted in a way, and have made decision
that would, most likely promote the success of the Group for the benefit of its
members as a whole as outlined in the matters below:
- The likely consequences of any decision in the long term: see Principal
activity, strategy & business model on page 4 and Principal Risks and
Uncertainties on page 19;
- The interests of the Group's employees; ethics and compliance; fostering of
the Company's business relationships with suppliers, customers and others; and
the impact of the Group's operations on the community and environment: see
Sustainability report on page 7;
- The need to act fairly between members of the Company: see the Corporate
Governance section on page 34.
Future prospects
In the first quarter of the 2023, we have seen the API4 price average $145 and
uncertainties remain, particularly in regard to the sustainability of the
higher international coal price and the impact of continued constraints in
transporting coal for export on the South African rail network. In light of
this, management will be focussing on improving production levels, maintaining
a diversified sales market and keeping operating costs low.
The Group continues to seek and evaluate opportunities to transition into
alternative mining related opportunities through new commercial arrangements.
In the UK, management is looking forward to progressing its property
development opportunities in West Ealing and Development Physics as well as
seeking other opportunities to expand upon on its property and equity
investment portfolios. This is in line with the Group's overall strategy of
balancing the high risk of our mining operations with a dependable cash flow
and capital appreciation from our UK property investment operations and equity
investments.
To date, the Group's financial position has remained strong and at present, the
Group has adequate financial resources to ensure the Group remains viable for
the foreseeable future and that liabilities are met. A full going concern and
viability assessment can be found in the Directors report on page 38.
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 2023
Governance
Governance
Management team
Bisichi PLC
* Andrew R Heller
MA, ACA
(Chairman & 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
currently runs his own event management business. He is also a published
author, lecturer and a writer and director of documentary films.
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.
John Wong
ACA, CFA (Non-executive)
John Wong was appointed a Director on 15 October 2020. After training as a
Chartered accountant he has worked in the fund management industry for almost
20 years and has extensive experience in investment management, in particular
within the mining sector.
John A Heller (Appointed 29 March 2023)
(Non-executive)
John Heller was appointed a Director on 29 March 2023. John Heller is the
Chairman and Chief Executive of London & Associated Properties PLC which holds
a 41.6% stake in Bisichi. John Heller has extensive knowledge and experience in
property investment and management.
* Member of the nomination committee
+ Senior independent director
O Member of the audit, nomination and remuneration committees.
Other directors and advisors
Secretary and registered office
Garrett Casey CA (SA)
12 Little Portland Street
London W1W8BJ
Black Wattle Colliery and Sisonke Coal Processing Directors
Andrew Heller
(Managing Director)
Ethan Dube
Robert Grobler
Garrett Casey
Millicent Zvarayi
Company Registration
Company registration No. 112155 (Incorporated in England and Wales)
Website
www.bisichi.co.uk
E-mail
admin@bisichi.co.uk
Auditor
Kreston Reeves LLP, London
Principal bankers
United Kingdom
Julian Hodge Bank Limited
Santander UK PLC
Investec PLC
South Africa
ABSA Bank (SA)
First National Bank (SA)
Corporate solicitors
United Kingdom
Ashfords LLP, London
Fladgate LLP, London
Olswang LLP, London
Wake Smith Solicitors Limited, Sheffield
South Africa
Beech Veltman Inc, Johannesburg
Brandmullers Attorneys, Middelburg
Cliffe Decker Hofmeyer, Johannesburg
Herbert Smith Freehills, Johannesburg
Natalie Napier Inc, Johannesburg
Tugendhaft Wapnick Banchetti and Partners, Johannesburg
Stockbrokers
Shore Capital Stockbrokers Limited
Registrars and transfer office
Link Group
10th Floor, Central Square
29 Wellington Street
Leeds
LS1 4DL
UK telephone: 0371 664 0300
International telephone: +44 (0) 371 664 0300
Calls are charged at the standard geographic rate and will vary by provider.
Calls outside the United Kingdom will be charged at the applicable
international rate. The helpline is open between 8.00 a.m. - 5.30 p.m., Monday
to Friday excluding public holidays in England and Wales.
Website: https://www.linkgroup.eu
Email: shareholderenquiries@linkgroup.co.uk
Company registration number: 341829 (England and Wales)
Five year summary
2022 2021 2020 2019 2018
£'000 £'000 £'000 £'000 £'000
Consolidated income statement items
Revenue 95,111 50,520 29,805 48,106 49,945
Operating profit /(loss) 38,976 3,403 (4,493) 3,658 6,526
Profit/(Loss) before tax 38,014 2,501 (5,196) 3,027 5,959
Trading profit /(loss) before tax 37,127 1,559 (3,881) 4,493 6,397
Revaluation and impairment profit /(loss) 887 942 (1,315) (1,466) (438)
before tax
EBITDA 39,980 5,849 (2,387) 5,868 8,587
Operating profit before depreciation, fair 39,363 5,028 (1,111) 7,457 9,088
value adjustments and exchange movements
(adjusted EBITDA)
Consolidated balance sheet items
Investment properties 10,465 10,525 10,270 11,565 13,045
Other non-current investments 13,631 4,761 3,001 1,629 1,357
24,096 15,286 13,271 13,194 14,402
Current Investments held at fair value 886 685 833 1,119 887
24,982 15,971 14,104 14,313 15,289
Other assets less liabilities less 8,820 1,541 1,969 5,619 4,280
non-controlling interests
Total equity attributable to equity 33,802 17,512 16,073 19,932 19,569
shareholders
Net assets per ordinary share (attributable) 316.6p 164.0p 150,5p 186.7p 183.3p
Dividend per share 22.00p 6.00p 0p 1.00p 6.00p
Financial calendar
06 June 2023 Annual General Meeting
Late August 2023 Announcement of half-year results to 30 June 2023
Late April 2024 Announcement of results for year ending 31 December 2023
Governance
Directors' report
The directors submit their report together with the audited financial
statements for the year ended 31 December 2022.
Review of business, future developments and post balance sheet events
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 and joint venture
investments in two UK residential property developments.
The results for the year and state of affairs of the Group and the company at
31 December 2022 are shown on pages 68 to 113 and in the Strategic Report on
pages 2 to 30. Future developments and prospects are also covered in the
Strategic Report and further details of any post balance sheet events can be
found in note 32 to the financial statements. Over 98 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 30.
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 30.
The Group's UK activities are principally property investment whereby premises
are provided for rent to retail businesses and a joint venture investment in a
UK residential property development in West Ealing.
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.
Climate Change Reporting and Greenhouse Gas Emissions
The Group's climate change report and details on its greenhouse gas emissions
for the year ended 31 December 2022 can be found on page 11 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
As outlined in the Strategic report on page 3 the directors are proposing the
payment of a final dividend of 4p (2021: 4p) and a special dividend of 8p
(2021: 2p) per share for 2022. An interim dividend for 2022 of 10p (Interim
2021: 0p) has been paid on 3 February 2023.
The total dividend per ordinary share for 2022 will therefore be 22p (2021: 6p)
per ordinary share.
Investment properties and other properties
The investment property portfolio is stated at its open market value of £
10,465,000 at 31 December 2022 (2021: £10,525,000) as valued by professional
external valuers. The open market value of the company's share of investment
properties and development property inventory held at cost included within its
investments in joint ventures is £4,812,000 (2021: £4,787,000).
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. Treasury operations are
reported at each Board meeting and are subject to weekly internal reporting.
Directors
The directors of the company for the year were Sir Michael Heller (ceased to be
a director on 30 January 2023) , A R Heller, G J Casey, C A Joll, R J Grobler
(a South African citizen), J A Sibbald and J Wong.
Mr J Heller was appointed as a non-executive director by the Board on 29 March
2023 and offers himself for re-election. Mr J Heller is the Chairman and
Managing Director of London & Associated Properties PLC which holds a 41.6%
stake in Bisichi with extensive & valuable experience in property investment
and management. The board recommends the re-election of Mr J Heller.
The director retiring by rotation is Mr GJ Casey who offers himself for
re-election.
Mr GJ Casey has been an executive director of the company since 2010. He is
chartered accountant and has a contract of employment determinable at three
months' notice. The board recommends the re-election of Mr 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 42 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 31 December 2022:
London & Associated Properties PLC - 4,432,618 shares representing 41.52 per
cent. of the issued capital. (Sir Michael Heller (Estate) is a shareholder of
London & Associated Properties PLC).
Sir Michael Heller (Estate) - 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.
Stonehage Fleming Investment 1,916,154 shares representing 17.95 per cent. of the
Management Ltd - 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.
Indemnities and insurance
The Articles of Association and Constitution of the company provide for them to
indemnify, to the extent permitted by law, directors and officers (excluding
the Auditor) of the companies, including officers of subsidiaries, and
associated companies against liabilities arising from the conduct of the
Group's business. The indemnities are qualifying third-party indemnity
provisions for the purposes of the UK Companies Act 2006 and each of these
qualifying third-party indemnities was in force during the course of the
financial year ended 31 December 2022 and as at the date of this Directors'
report. No amount has been paid under any of these indemnities during the year.
The Group has purchased directors' and officers' insurance during the year. In
broad terms, the insurance cover indemnifies individual directors and officers
against certain personal legal liability and legal defence costs for claims
arising out of actions taken in connection with Group business.
Corporate Governance
The Board acknowledges the importance of good corporate governance. 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
The Board currently comprises the joint executive chairman and managing
director, two other executive directors and four non-executive directors. Their
details appear on page 31. 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 57. 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 comprises of two non-executive directors C A Joll
(Chairman) and JA Sibbald as well as 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 of two
non-executive directors C A Joll (Chairman) and JA Sibbald. The company's
executive chairman is normally invited to attend meetings. The report on
directors' remuneration is set out on pages 39 to 53.
. The audit committee comprises of two non-executive directors C A Joll
(Chairman) and JA Sibbald. 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 executive 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 consideration of
any matters 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 54.
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 5 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/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
two independent non-executive directors are John Sibbald and John Wong.
Christopher Joll has been a non-executive director for over twenty years, John
Sibbald has been a non-executive director for over thirty years and John Wong
was appointed to the Board on 15 October 2020. The Board encourages the
non-executive directors to act independently. The board considers that their
length of service 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 2022 and attendance at regular Board meetings and
Board committees was as follows:
Meetings Meetings
held Attended
Sir Michael Heller Board 5 4
Nomination committee 1 1
Audit committee 2 2
A R Heller Board 5 5
Audit committee 2 2
G J Casey Board 5 5
Audit committee 2 2
R J Grobler Board 5 1
C A Joll Board 5 5
Audit committee 2 2
Nomination committee 1 1
Remuneration committee 2 2
J A Sibbald Board 5 2
Audit committee 2 0
Nomination committee 1 1
Remuneration committee 2 1
J Wong Board 5 5
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 regular 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 were no significant issues identified during the year ended 31 December
2022 (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 Meeting Room 2, 12 Charles II Street, St James, London SW1Y 4QU on
Tuesday, 6 June 2023 at 11.00 a.m. Resolutions 1 to 10 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.
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 paragraph is a summary of resolution 10 to be
proposed at the Annual General Meeting and not the full text of the resolution.
You should therefore read this section in conjunction with the full text of the
resolutions contained in the notice of Annual General Meeting.
Directors' authority to allot shares (Resolution 10)
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 10.1.1 of resolution 10 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 2023 (being the last practicable date prior to the
publication of this Directors' Report). Paragraph 10.1.2 of resolution 10 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 2023 (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 10 is £711,788. Resolution 10 complies with guidance issued by the
Investment Association (IA).
The authority granted by resolution 10 will expire on 31 August 2024 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.
Donations
No political donations were made during the year (2021: £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 24 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.
In South Africa, a structured trade finance facility with Absa Bank Limited for
R85million is held by Sisonke Coal Processing (Pty) Limited, a 100% subsidiary
of Black Wattle Colliery (Pty) Limited. This facility comprises of a R85million
revolving facility to cover the working capital requirements of the Group's
South African operations. The facility is renewable annually 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.
The directors expect that coal market conditions for the Group' will remain at
a stable and profitable level through 2023. The directors therefore have a
reasonable expectation that the mine will achieve positive levels of cash
generation for the Group in 2023. As a consequence, the directors believe that
the Group is well placed to manage its South African business risks
successfully.
In the UK, forecasts demonstrate that the Group has sufficient resources to
meet its liabilities as they fall due for at least the next 12 months, from the
approval of the financial statements, including those related to the Group's UK
Loan facility outlined below.
The Group holds a 5 year term facility of £3.9m with Julian Hodge Bank Limited
at an initial LTV of 40%. The loan is secured against the company's UK retail
property portfolio. The amount repayable on the loan at year end was £
3.9million. The debt package has a five year term and is repayable at the end
of the term in December 2024. The overall interest cost of the loan is 4.00%
above the Bank of England base rate. All covenants on the loan were met during
the year and the directors have a reasonable expectation that the Group has
adequate financial resources at short notice, including cash and listed equity
investments, to ensure the existing facility's covenants are met on an ongoing
basis.
Dragon Retail Properties Limited ("Dragon"), the Group's 50% owned joint
venture, holds a Santander bank loan of £1.143million secured against its
investment property, see note 14. The bank loan is secured by way of a first
charge on specific freehold property at a value of £2.03 million. The interest
cost of the loan is 2.75 per cent above the bank's base rate. A refinancing of
this loan is currently underway. The loan originally expired in September 2020,
but has been extended to October 2023. Santander have indicated that they are
willing to provide a new term loan and we expect to complete this in the near
future.
In 2022 a disconnect in global energy markets resulted in higher global energy
prices. Although the volatility in global energy markets in 2023 is uncertain,
the Directors at present do not foresee events having a significant negative
impact on the Group's UK and South African operations ability to remain in
operation for the foreseeable future.
As a result of the banking facilities held as well as the acceptable levels of
cash expected to be held by the Group over 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.
Detailed budget and cash flow forecasts for the Group's operations demonstrated
that the Group has sufficient resources to meet its liabilities as they fall
due for at least the next 12 months and the Directors believe the Group would
be able to manage its business risks and have adequate cash resources to
continue in operational existence for the foreseeable future. As a result of
the banking facilities held as well as the acceptable levels of cash expected
to be held by the Group over 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
12 Little Portland Street
London W1W8BJ
26 April 2023
Governance
Statement of the Chairman of the remuneration committee
The remuneration committee presents its report for the year ended 31 December
2022. The report is presented in two parts in accordance with the remuneration
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 2023. During the
year, in light of the performance of the Group, the board determined to award
bonuses and share options to certain executive directors of the Group. In
addition, on 1st September 2022 the Company bought out 680,000 options over
ordinary shares outstanding which were exercisable. As an alternative to the
exercise of the options, the Company cancelled the share options for a
consideration avoiding the need for the Company to allot shares, for shares to
be sold in the market to meet the tax liabilities arising from the exercise and
therefore the potential impact to the Company's share price and on
shareholders.
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
July 2020. A further resolution amending the policy was approved by
shareholders at a general meeting of the Company held on 16 June 2022. The
resolution authorises the directors of the Company to enter into agreements to
cancel and surrender options over Ordinary Shares. The approvals will continue
to apply for a 3 year period up to the AGM on 6 June 2023. The remuneration
committee considered the overall performance of the group as well as of each
director in the year ended 31 December 2022 and remuneration including bonuses
were awarded in line with the performance conditions of the remuneration
policy.
The second part, is the new remuneration policy report which can be found on
page 48. The new remuneration policy is largely in line with the previous
policy and is subject to a binding vote which will be proposed to shareholders
at the AGM on 6 June 2023. Once approved, the approval of the new policy will
apply for a 3 year period effective from the conclusion of the AGM on 6 June
2023.
Both of the above reports have been prepared in accordance with The Large &
Medium-sized Companies and Groups (Accounts and Reports) (Amendment)
Regulations 2013.
The company's auditors, Kreston Reeves 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
12 Little Portland Street
London W1W8BJ
26 April 2023
Governance
Annual remuneration report
The following information has been audited:
Single total figure of remuneration for the year ended 31 December 2022:
Salaries Benefits Bonuses Pension Notional Total
and Fees £'000 £'000 Long Term £'000 Value of 2022 Total Total
£'000 Incentive Vesting £'000 Fixed Variable
Awards Share Remuneration Remuneration
£'000 Options £'000 £'000
Executive Directors
Sir Michael Heller 200 - 580 - - - 780 200 580
A R Heller 495 42 1,100 - - 273 1,910 537 1,373
G J Casey 194 17 575 - 19 273 1,078 230 848
R Grobler 218 17 356 - 19 - 610 254 356
Non-Executive
Directors
C A Joll* 52 - - - - - 52 52 -
J A Sibbald* 3 3 - - - - 6 6 -
J Wong 55 - - - - - 55 55 -
Total 1,217 79 2,611 - 38 546 4,491 1,334 3,157
*Members of the remuneration committee for the year ended 31 December 2022
The notional value of vesting share options are based on the value of the share
options at grant. The awards are not subject to performance in line with the
scheme terms.
Single total figure of remuneration for the year ended 31 December 2021:
Salaries Benefits Bonuses Long Term Pension Total Total Total
and Fees £'000 £'000 Incentive £'000 2021 Fixed Variable
£'000 Awards £ £'000 Remuneration Remuneration
'000 £'000 £'000
Executive Directors
Sir Michael Heller 83 - - - - 83 83 -
A R Heller 495 34 400 - - 929 529 400
G J Casey 185 17 200 - 19 421 221 200
R Grobler 205 11 176 - 17 409 233 176
Non-Executive Directors
C A Joll* 40 - - - - 40 40 -
J A Sibbald* 3 3 - - - 6 6 -
J Wong 50 - - - - 50 50 -
Total 1,061 65 776 - 36 1,938 1,162 776
*Members of the remuneration committee for the year ended 31 December 2021
Summary of directors' terms Date of Unexpired Notice
contract term period
Executive directors
A R Heller January Continuous 3
1994 months
G J Casey June 2010 Continuous 3
months
R J Grobler April 2008 Continuous 3
months
Non-executive directors
C A Joll February Continuous 3
2001 months
J A Sibbald October Continuous 3
1988 months
J Wong October Continuous 3
2020 months
J Heller March 2023 Continuous 3
months
Pension schemes and incentives
Two (2021: Two) directors have benefits under money purchase pension schemes.
Contributions in 2022 were £37,869 (2021: £35,177), see table above. There are
no additional benefits payable to any director in the event of early
retirement.
Scheme interests awarded during the year
During the year the company granted options over ordinary shares in the Company
of 10 pence (the "Options") to the following directors of the Company, under
the Company's Unapproved Executive Share Option Scheme 2012 ("the Scheme"), as
set out below:
. Andrew Heller: 380,000 options granted on 1 September 2022 at an exercise
price of £3.52 per share
. Garrett Casey: 380,000 options granted on 1 September 2022 at an exercise
price of £3.52 per share
The exercise price of 352 pence per share was based on the midmarket closing
price of the Company's shares on 31 August 2022, the date prior to the grant.
The above Options are subject to the terms and conditions set out in the rules
of the Scheme, and subject to the memorandum and articles of association of the
Company. Further details of the Scheme are outlined below under Share option
schemes. The above options were valued at £547,200 at date of grant using the
Black-Scholes-Merton model. These Options are exercisable at any time during
the next 10 years from the dates of grant stated above. No consideration has
been paid for the granting of these Options.
Share option schemes
The company currently has only one Unapproved Share Option Scheme which is not
subject to HM revenue and Customs (HMRC) approval. The 2012 scheme was approved
by the remuneration committee of the company on 28 September 2012.
Number of share options
Option 1 Options 31 Exercisable Exercisable
price* January granted/ December from to
2022 (Surrendered) 2022
in
2022
The 2012 Scheme
A R Heller 87.01p 150,000 (150,000) - 18/09/2015 17/09/2025
A R Heller 73.50p 150,000 (150,000) - 06/02/2018 06/02/2028
G J Casey 87.01p 150,000 (150,000) - 18/09/2015 17/09/2025
G J Casey 73.50p 230,000 (230,000) - 06/02/2018 06/02/2028
A R Heller 352.00p - 380,000 380,000 01/09/2022 31/08/2032
G J Casey 352.00p - 380,000 380,000 01/09/2022 31/08/2032
*Middle market price at date of grant
No consideration is payable for the grant of options under the 2012 Unapproved
Share Option Scheme. There are no performance or service conditions attached to
the 2012 Unapproved Share Option scheme. No part of the award was attributable
to share price appreciation and no discretion has been exercised as a result of
share price appreciation or depreciation. During the year, there were no
changes to the exercise price or exercise period for the options. On 1st
September 2022, the Company entered into an agreement with Andrew Heller and
Garrett Casey to cancel the options granted in 2015 and 2018 under the Scheme.
The Company paid each director a cash payment in consideration for cancelling
the options. The cash payment was calculated by reference to the closing
midmarket share price on 31 August 2022 less the relevant exercise price. The
aggregate consideration paid by the Company to effect the cancellations was £
1,853,270.
Payments to past directors
No payments were made to past directors in the year ended 31 December 2022
(2021: £nil).
Payments for loss of office
No payments for loss of office were made in the year ended 31 December 2022
(2021: £nil).
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
31.12.2022 1.1.2022 31.12.2022 1.1.2022
Sir Michael Heller 148,783 148,783 181,334 181,334
A R Heller 785,012 785,012 - -
R J Grobler - - - -
G J Casey 40,000 40,000 - -
C A Joll - - - -
J A Sibbald - - - -
J Wong - - - -
There are no requirements or guidelines for any director to own shares in the
Company.
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 PLC ordinary shares at 31 December 2022 was
305p (2021: 60p). During the year the share price ranged between 81p and 375p.
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 2013 to
31 December 2022.
Year Managing Managing Annual Long-term
Director Director bonus incentive
Single total payout vesting
figure of against rates
remuneration maximum against
£'000 opportunity maximum
* opportunity
% *
%
2022 A R Heller 1,637 74% N/A
2021 A R Heller 929 27% N/A
2020 A R Heller 551 0% N/A
2019 A R Heller 1,035 34% N/A
2018 A R Heller 1,073 34% N/A
2017 A R Heller 898 25% N/A
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
Bisichi 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 and Company performance
Director Base Benefits Bonuses Base Benefits Bonuses Base Benefits Bonuses
Salary 2022 2022 Salary 2021 2021 Salary 2020 2020
2022 2021 2020
Executive:
Sir 141% 0% N/A 0% 0% 0% 0% 0% (100%)
Michael
Heller 1
A R Heller 0% 24% 175% 0% (39%) N/A 0% 40% (100%)
2
G J Casey 5% 0% 188% 20% (10% N/A 3% 18% (100%)
2
R Grobler 6% 55% 102% 6% 3% N/A (7%) (17%) (100%)
2
Non-Executive:
C A Joll 30% 0% 0% 0% 0% 0% 5% 0% 0%
J A 0% 0% 0% 0% 0% 0% 0% 0% 0%
Sibbald
J Wong 3 10% 0% 0% 0% 0% 0% N/A N/A N/A
J Heller 4 N/A N/A N/A N/A N/A N/A N/A N/A N/A
Employee remuneration on a full-time equivalent basis:
Employees 47% 0% 478% 8% (26%) N/A 1% 33% (100%)
of the
Company 5
1 Bonus changes for 2022 for Sir Michael Heller are disclosed as not
applicable as no bonus was awarded to the director in 2021.
2 Bonus changes for 2021 for AR Heller, G J Casey, R Grobler and Employees of
the Company are disclosed as not applicable as no bonuses were awarded to the
various directors and employees in 2020.
3 Mr J Wong was appointed as a non-executive Director on 15 October 2020 so the
annual change is not applicable for 2020 and was apportioned for 2021.
4 Mr J Heller was appointed as a non-executive Director on 29 March 2023 so the
annual change is not applicable.
5 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 9 to the financial statements) is shown below:
2022 2021
£'000 £'000
Employee remuneration 11,991 7,491
Distribution to shareholders (see note below) 2,348 641
The distribution to shareholders in the current year is subject to shareholder
approval at next the Annual General Meeting.
Statement of implementation of remuneration policy
The remuneration policy was approved at the AGM on 9 July 2020. The policy took
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. During the year a resolution amending the policy was
approved by shareholders at a general meeting of the Company held on 16 June
2022. The resolution authorises the directors of the Company to enter into
agreements to cancel and surrender options over Ordinary Shares. During the
year, there were no deviations from the procedure for the implementation of the
remuneration policy as set out in the policy.
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 2022. The Company did not engage any consultants to provide advice
or services to materially assist the remuneration committee's considerations.
Shareholder voting
At the Annual General Meeting on 16 June 2022, there was an advisory vote on
the resolution to approve the remuneration report, other than the part
containing the remuneration policy. In addition, on 9 July 2020 there was a
binding vote on the resolution to approve the current remuneration policy. In
addition, a further resolution amending the policy was approved by shareholders
at a general meeting of the Company held on 16 June 2022. The resolution
authorises the directors of the Company to enter into agreements to cancel and
surrender options over Ordinary Shares. The results of the votes above are
detailed below:
% of % of No of
votes votes votes
for against withheld
Resolution to approve the Remuneration Report (16 June 2022) 73.85% 26.15% 7,174
Resolution to approve the Remuneration Policy (9 July 2020) 69.87% 30.13% -
Resolution to authorises the directors of the Company to enter 100% 0% -
into agreements to cancel and surrender options over Ordinary
Shares. (16 June 2022)
The remuneration committee and directors have considered the percentage of
votes against the resolutions to approve the remuneration report and policy.
Reasons given by shareholders, as known by the directors, have been the level
of remuneration awarded and the general remuneration policy itself. The
remuneration committee consider the remuneration policy and performance
conditions within remain appropriate and therefore no further action has been
taken.
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 41 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 2020 AGM. The approved policy took effect from 9 July 2020. 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 To recognise: Considered by Reviewed annually No individual director will be awarded a base salary in excess of £700,000
salary Skills remuneration Paid monthly in cash per annum.
Responsibility committee on No specific performance conditions are attached to base salaries.
Accountability appointment.
Experience Set at a level
Value considered
appropriate to
attract, retain
motivate and
reward the right
individuals.
Pension To provide Company The contribution Company contribution offered at up to 10% of base salary as part of overall
competitive contribution payable by the company remuneration package.
retirement offered at up to is included in the No specific performance conditions are attached to pension contributions.
benefits 10% of base salary director's contract of
as part of overall employment.
remuneration Paid into money
package. purchase schemes
Benefits To provide a Contractual The committee retains The costs associated with benefits offered are closely controlled and
competitive benefits can absolute discretion to reviewed on an annual basis.
benefits include but are approve changes in No director will receive benefits of a value in excess of 30% of his base
package not limited to: contractual benefits in salary.
Car or car exceptional No specific performance conditions are attached to contractual benefits.
allowance circumstances or where The value of benefits for each director for the year ended 31 December 2022
Group health cover factors outside the is shown in the table on page 40.
Death in service control of the Group
cover lead to increased costs
Permanent health (e.g. medical
insurance inflation)
Annual To reward and In assessing the The remuneration The current maximum bonus opportunity will not exceed 200% of base salary
Bonus incentivise performance of the committee determines in any one year, but the remuneration committee reserves the power to award
executive team, the level of bonus on up to 300% in an exceptional year.
and in particular an annual basis There is no formal framework by which the company assesses performance and
to determine applying such performance conditions and measures will be assessed on an annual basis by
whether bonuses performance conditions the remuneration committee. In determining the level of the bonus, the
are merited the and performance remuneration committee will take into account internal and external factors
remuneration measures as and circumstances that occur during the year under review. The performance
committee takes it considers measures applied may be financial, non-financial, corporate, divisional or
into account the appropriate individual and in such proportion as the remuneration committee considers
overall appropriate to the prevailing circumstances. The company does not consider,
performance of the given the company's size, nature and stage of operations that a formal
business. framework is required.
Bonuses are
generally offered
in cash
Share To provide Granted under Offered at appropriate Entitlement to share options is not subject to any specific performance
Options executive existing schemes times by the conditions.
directors with (see page 41) remuneration committee Share options will be offered by the remuneration committee as appropriate
a long-term taking into account the factors considered above in the decision making
interest in process in determining remuneration policy.
the company 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 one Share Option Scheme (see page
41).
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, the options
vest on issue and there are no minimum hold periods for the resulting
shares issued on exercise of the option.
Non-executive directors
Base To recognise: Considered by the Reviewed annually No individual director will be awarded a base salary in excess of £60,000
salary Skills board on appointment. per annum.
Experience Set at a level No specific performance conditions are attached to base salaries.
Value considered
appropriate to
attract, retain and
motivate the
individual.
Experience and time
required for the role
are considered on
appointment.
Pension No pension offered
Benefits No benefits offered The committee The costs associated with the benefit offered is closely controlled and
except retains the reviewed on an annual basis.
to one non-executive discretion to No director will receive benefits of a value in excess of 30% of his base
director who is approve changes in salary.
eligible for health contractual benefits No specific performance conditions are attached to contractual benefits.
cover (see annual in exceptional
remuneration report circumstances or
page 40) where factors
outside the control
of the Group lead to
increased costs
(e.g. medical
inflation)
Share Non-executive
Options directors do not
participate in the
share option schemes
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. 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.
In addition to above, during the year a resolution amending the policy was
approved by shareholders at a general meeting of the Company held on 16 June
2022. The resolution authorises the directors of the Company to enter into
agreements to cancel and surrender options over Ordinary Shares.
Details of remuneration of other company employees can be found in Note 29 to
the financial statements.
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 2023
AGM. If approved it is intended that the policy take effect from the conclusion
of the AGM on 6 June 2023, and will apply to remuneration determined on or
after that date. The previously determined remuneration (determined under the
company's remuneration policy approved at the 2020 AGM) will continue to apply
until that time. In the absence of approval of the new remuneration policy at
the 2023 AGM the previous policy shall continue to apply.
The remuneration of the Company's executive directors is determined by the
remuneration committee. In the decision making process for the determination,
review and implementation of the company's remuneration 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
. The need to align the determination, review and implementation of the
company's remuneration policy with the long term strategy and success of the
business.
. The need to be flexible and adjust with operational changes throughout the
term of this policy
. The need to ensure a link between remuneration and the long term success of
the group; and
. The need to consider factors beyond the control of management in determining
final outcomes.
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.
In determining the remuneration for each executive director, the remuneration
committee has, and in the determination of the fees payable to non-executive
directors, the Board has, had regard to potential conflicts of interest in the
decision making process, and has sought to mitigate these as far as is possible
given the company's size, nature and stage of operations.
The remuneration policy contains no significant revisions compared with the
previous policy other than rates which have been amended after taking into
consideration inflation and the increase in size of the Group.
Future Policy Table
The below new remuneration policy table is subject to approval by shareholders
at the 2023 AGM:
Element Purpose Policy Operation Opportunity and performance conditions
Executive directors
Base To recognise: Considered by Reviewed annually No individual director will be awarded a base salary in excess of £
salary Skills remuneration Paid monthly in cash 1,200,000 per annum.
Responsibility committee on No specific performance conditions are attached to base salaries.
Accountability appointment.
Experience Set at a level
Value considered
appropriate to
attract, retain
motivate and
reward the right
individuals.
Pension To provide Company The contribution Company contribution offered at up to 10% of base salary as part of overall
competitive contribution payable by the company remuneration package.
retirement offered at up to is included in the No specific performance conditions are attached to pension contributions.
benefits 10% of base salary director's contract of
as part of overall employment.
remuneration Paid into money
package. purchase schemes
Benefits To provide a Contractual The committee retains The costs associated with benefits offered are closely controlled and
competitive benefits can absolute discretion to reviewed on an annual basis.
benefits include but are approve changes in No director will receive benefits of a value in excess of 30% of his base
package not limited to: contractual benefits in salary.
Car or car exceptional No specific performance conditions are attached to contractual benefits.
allowance circumstances or where The value of benefits for each director for the year ended 31 December 2022
Group health cover factors outside the is shown in the table on page 40.
Death in service control of the Group
cover lead to increased costs
Permanent health (e.g. medical
insurance inflation)
Annual To reward and In assessing the The remuneration The current maximum bonus opportunity will not exceed 200% of base salary
Bonus incentivise performance of the committee determines in any one year, but the remuneration committee reserves the power to award
executive team, the level of bonus on up to 300% in an exceptional year.
and in particular an annual basis There is no formal framework by which the company assesses performance and
to determine applying such performance conditions and measures will be assessed on an annual basis by
whether bonuses performance conditions the remuneration committee. In determining the level of the bonus, the
are merited the and performance remuneration committee will take into account internal and external factors
remuneration measures as and circumstances that occur during the year under review. The performance
committee takes it considers measures applied may be financial, non-financial, corporate, divisional or
into account the appropriate individual and in such proportion as the remuneration committee considers
overall appropriate to the prevailing circumstances. The company does not consider,
performance of the given the company's size, nature and stage of operations that a formal
business. framework is required.
Bonuses are
generally offered
in cash
Share To provide Granted under Offered at appropriate Entitlement to share options is not subject to any specific performance
Options executive existing schemes times by the conditions.
directors with (see page 41) and remuneration committee Share options will be offered by the remuneration committee as appropriate
a long-term new schemes taking into account the factors considered above in the decision making
interest in process in determining remuneration policy.
the company 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, surrendered, lapsed or has otherwise become incapable of
exercise.
The company currently has one Share Option Scheme (see page
41).
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, the options
vest on issue and there are no minimum hold periods for the resulting
shares issued on exercise of the option.
The Board is authorised under this policy to enter into agreements with
holders of options over ordinary shares in the capital of the Company to
cancel or surrender the Options in consideration of the payment by the
Company to the holder of the Option of cash up to a maximum of the
difference between the exercise price of the Option and the closing market
price on the business day immediately prior to the day on which the Company
enters into that agreement with the relevant holder of the Options.
Non-executive directors
Base To recognise: Considered by the Reviewed annually No individual director will be awarded a base salary in excess of £125,000
salary Skills board on appointment. per annum.
Experience Set at a level No specific performance conditions are attached to base salaries.
Value considered
appropriate to
attract, retain and
motivate the
individual.
Experience and time
required for the role
are considered on
appointment.
Pension No pension offered
Benefits No benefits offered The committee The costs associated with the benefit offered is closely controlled and
except retains the reviewed on an annual basis.
to one non-executive discretion to No director will receive benefits of a value in excess of 30% of his base
director who is approve changes in salary or £10,000 whichever is the higher.
eligible for health contractual benefits No specific performance conditions are attached to contractual benefits.
cover (see annual in exceptional
remuneration report circumstances or
page 40) where factors
outside the control
of the Group lead to
increased costs
(e.g. medical
inflation)
Share Non-executive
Options 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. 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. Details of remuneration of other company employees can be found in Note 29 to the financial statements. Any differences in the types of remuneration available for directors and other employees reflect common practice and market norms. The bonus targets for general employees of the Group are more focused on annual targets that further the company's interests. The maximum bonus opportunity for employees and directors alike is based on the seniority and responsibility of the role undertaken. Remuneration scenarios An indication of the possible level of remuneration that would be received by each current Executive Director in the year commencing 1 January 2023 in accordance with the directors' remuneration policy is shown below. All performance targets relate to one financial year, and therefore there are no targets which would be impacted by share price appreciation. A Heller: G.Casey: R Grobler: Assumptions Minimum Consists of base salary, benefits and pension. Base salary, benefits and pension for 2023 are assumed at the levels included in the single total figure remuneration table for the year ended 31 December 2022 on page 40. On target Based on the average percentage bonus awarded to the individual in the three years ending on 31 December 2022. 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 2023 are assumed at the levels included in the single total figure remuneration table for the year ended 31 December 2022 on page 40. Maximum Based on maximum remuneration receivable of 300% of base salary awarded as bonus in an exceptional year. Base salary, benefits and pension for 2023 are assumed at the levels included in the single total figure remuneration table for the year ended 31 December 2022 on page 40. 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. The company has no pre-determined policy for buyouts of previous awards, and each case will be determined on merit, having regard to all relevant circumstances at the time. 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 41 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. The board retains the discretion to make additional (ex-gratia) payments on termination should it be appropriate in all the circumstances. 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 2023. 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 reports 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 related and non-audit services as set out in note 5 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 profit before tax. The Board also gave consideration to: . the carrying value of the Group's total assets, given that the Group operates a principally asset based business; . the value of revenues generated by the Group, given the importance of coal production and processing; . Adjusted EBITDA, given that it is a key trading KPI, when determining quantitative materiality; and . Going concern, given the potential impact of macro-economic activity on the Group's operations. 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 £700,000 to £800,000 to be material. External Auditors Kreston Reeves LLP have expressed their willingness to continue in office and a resolution to reappoint them will be proposed at the forthcoming Annual General Meeting. 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 team of external auditors from Kreston Reeves LLP. BDO South Africa Inc. acts as the external auditor to the South African companies, and the work of that firm was reviewed
by Kreston Reeves LLP for the purpose of the Group audit.
Christopher Joll
Chairman - audit committee
12 Little Portland Street
London W1W8BJ
26 April 2023
Valuers' certificates
To the directors of Bisichi PLC
In accordance with your instructions we have carried out a valuation of the
freehold property interests held as at 31 December 2022 by the company as
detailed in our Valuation Report dated 20 February 2023.
Having regard to the foregoing, we are of the opinion that the open market
value as at 31 December 2022 of the interests owned by the company was £
10,465,000 being made up as follows:
£'000
Freehold 8,270
Leasehold 2,195
10,465
Leeds Carter
20 February 2023 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 UK-adopted international accounting
standards in conformity with the requirements of the Companies Act 2006. The
directors 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 UK-adopted international accounting standards in
conformity with the requirements of the Companies Act 2006 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, international
accounting standards. 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
UK-adopted international accounting standards in conformity with the
requirements of the Companies Act 2006 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 of the principal risks and uncertainties that they
face.
Independent Auditor report to the shareholders of Bisichi Plc for the year
ended 31 December 2022
Opinion
We have audited the financial statements of Bisichi PLC (the 'parent company')
and its subsidiaries (the 'Group') for the year ended 31 December 2022 which
comprise the consolidated income statement, consolidated statement of other
comprehensive income, consolidated and company balance sheets, consolidated and
company statements of changes in equity, consolidated cash flow statement and
notes to the financial statements, including a summary of significant Group
accounting policies. The financial reporting framework that has been applied in
their preparation of the group financial statements is applicable law and UK
adopted international accounting standards. The financial reporting framework
that has been applied in the preparation of the parent company financial
statements is applicable law and United Kingdom Accounting Standards, including
FRS 101 Reduced Disclosure Framework (United Kingdom Generally Accepted
Accounting Practice).
In our opinion, the financial statements:
· the group financial statements have been properly prepared in accordance with
UK adopted international accounting standards;
· 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.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards
are further described in the Auditor's responsibilities for the audit of the
financial statements section of our report. We are independent of the Group in
accordance with the ethical requirements that are relevant to our audit of the
financial statements in the UK, including the FRC's Ethical Standard as applied
to listed entities, and we have fulfilled our other ethical responsibilities in
accordance with these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors' use
of the going concern basis of accounting in the preparation of the financial
statements is appropriate.
Our evaluation of the directors assessment of the Group and Parent companies
ability to continue to adopt the going concern basis of accounting including
the following:
· Gained an understanding of the systems and controls around managements' going
concern assessment, including for the preparation and review process for
forecasts and budgets.
· Evidence obtained that management have undertaken a formal going concern
assessment, including sensitivity analysis on cash flow forecasts, clear
consideration of external factors including the COVID pandemic and the war in
Ukraine and the potential liquidity impact of these on cash balances including
available facilities.
· Analysed the financial strength of the business at the year end date and
considered key trends in balance sheet strength and business performance over
the last three years.
· Confirmations gained that operation of the business, including mine
production and sale at Black Wattle Colliery have not been disrupted in the
period by any external or internal factors.
· Testing the mechanical integrity of forecast model by checking the accuracy
and completeness of the model, including challenging the appropriateness of
estimates and assumptions with reference to empirical data and external
evidence.
· Based on our above assessment we performed our own sensitivity analysis in
respect of the key assumptions underpinning the forecasts.
· We performed stress-testing analysis on the core cash generating units of the
business to confirm cash inflow levels needed to maintain minimal liquidity
required to meet liabilities as they fall due.
· We considered post year end performance of the business, comparing this to
budget as well as considering the development of key liquidity ratios in the
business.
· The group's banking facility documentation was reviewed to ensure that any
covenants in place have not been breached.
· We reviewed the adequacy and completeness of the disclosure included within
the financial statements in respect of going concern.
Based on the work we have performed, we have not identified any material
uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the entity's ability to continue as
a going concern for a period of at least twelve months from when the financial
statements are authorised for issue.
In relation to the Group and Parent Company's reporting on how they have
applied the UK Corporate Governance Code, we have nothing material to add or
draw attention to in relation to the directors' statement in the financial
statements about whether the directors considered it appropriate to adopt the
going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to
going concern are described in the relevant sections of this report. However,
because not all future events or conditions can be predicted, this statement is
not a guarantee as to the Group's and Parent Company's ability to continue as a
going concern.
Corporate Governance Statement
The Listing Rules require us to review the directors' statement in relation to
going concern, longer-term viability and that part of the Corporate Governance
Statement relating to the Group's and Parent Company's compliance with the
provisions of the UK Corporate Governance Code specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each
of the following elements of the Corporate Governance Statement is materially
consistent with the financial statements or our knowledge obtained during the
audit:
· Directors' statement with regards to the appropriateness of adopting the
going concern basis of accounting and any material uncertainties identified set
out on page 38;
· Directors' explanation as to its assessment of the company's prospects, the
period this assessment covers and why the period is appropriate set out on page
38;
· Board's confirmation that it has carried out a robust assessment of
the emerging and principal risks set out on pages 19 to 23;
· The section of the Annual Report that describes the review of effectiveness
of risk management and internal control systems set out on page 36 and
· The section describing the work of the Risk and Audit Committee set out on
page 35.
An overview of the scope of our audit
As part of designing our audit, we determined materiality and assessed the
risks of material misstatement in the financial statements. In particular, we
looked at where the directors made subjective judgements, for example in
respect of significant accounting estimates that involved making assumptions
and considering future events that are inherently uncertain. As in all of our
audits we also addressed the risk of management override of internal controls,
including evaluating whether there was evidence of bias by the directors that
represented a risk of material misstatement due to fraud.
Our application of materiality
Group financial Parent company
statements financial statements
Materiality £711,200 (2021: £ £710,000 (2021: £
359,600) 359,500)
Basis for determining 2% of net assets Capped below group
materiality materiality
Rationale for benchmark The group's principal The parent company
applied activity of that of an materiality has been
exploration and mining capped at below group
operation and investment materiality. This was
property holdings. To to address the
this end the business is aggregation risk in
highly asset focused. the group audit.
Therefore a benchmark
for materiality of the
NA's of the group is
considered to be
appropriate.
Performance materiality £533,400 (2021: £ £532,500 (2021: £
269,700) 269,600)
Basis for determining 75% of materiality Capped below group
performance materiality materiality
Rationale for performance On the basis of our risk The parent company
materiality applied assessments, together performance
with our assessment of materiality has been
the Group's overall capped at below group
control environment, our performance
judgement was that materiality. This was
performance materiality to address the
was 75% of our planning aggregation risk in
materiality. In the group audit.
assessing the
appropriate level, we
consider the nature, the
number and impact of the
audit differences
identified in the
previous year's audit.
Triviality threshold £35,560 (2021: £17,980) £35,500 (2021: £
17,980)
Basis for determining 5% of materiality Capped below group
triviality threshold materiality
We reported all audit differences found in excess of our triviality threshold
to the directors and the management board.
For each Group company within the scope of our Group audit, we allocated a
materiality that is less than our overall Group materiality. The range of
materiality allocated across each Group company was between £234,500 and £
23,300. The scope of our audit was influenced by our application of materiality
as we set certain quantitative thresholds for performance materiality and use
these thresholds as a consideration tool to help to determine the scope of our
audit and the nature, timing and extent of our audit procedures on the
individual financial statement line items and disclosures and in evaluating the
effect of misstatements, both individually and in aggregate on the financial
statements as a whole.
We determined component materiality for the parent company to be capped at
below group materiality. This was also the case for group subsidiaries
registered outside of the UK. For the lower risk UK-registered trading
subsidiaries, 4% of those subsidiary's net assets were used. Performance
materiality was set in the range of 70-80% of each individual materiality.
Coverage overview
Group revenue Group profit/ Group net assets
(loss) before tax
Totals at 31 £95,110,894 £38,013,787 £35,560,822
December 2022:
Full statutory £95,111,894 £37,924,360 £35,285,511
audit (Kreston (100%) (99.8%) (99.2%)
Reeves and BDO)
Limited £Nil £89,427 (0.2%) £275,311 (0.8%)
procedures
We tailored the scope of our audit to ensure that we performed sufficient work
to be able to give an opinion on the financial statements as a whole, taking
into account the structure of the Group and the parent company, the accounting
processes and controls, and the industry in which they operate.
Our scoping considerations for the Group audit were based both on financial
information and risk. As noted above limited assurance audit work - which is to
say the audit of balances and transactions material at a group level - was only
applied in respect of a small element of the group. The below table summarises
for the parent company, and its subsidiaries, in terms of the level of
assurance gained:
Group component Level of assurance
Bisichi PLC Full statutory audit (Kreston Reeves)
Mineral Products Limited Full statutory audit (Kreston Reeves)
Bisichi (Properties) Limited Full statutory audit (Kreston Reeves)
Bisichi Northampton Limited Full statutory audit (Kreston Reeves)
Bisichi Mining (Exploration) Limited Full statutory audit (Kreston Reeves)
Black Wattle Colliery (Pty) Limited Full statutory audit (BDO)
Sisonke Coal Processing (Pty) Limited Full statutory audit (BDO)
Black Wattle Klipfontein (Pty) Full statutory audit (BDO)
Limited
Bisichi Coal Mining (Pty) Limited Full statutory audit (BDO)
All other group undertakings Limited assurance (Kreston Reeves)
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of
most significance in our audit of the financial statements of the current
period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) that we identified, including those which had the
greatest effect on: the overall audit strategy, the allocation of resources in
the audit; and directing the efforts of the engagement team. These matters were
addressed in the context of our audit of the financial statements as a whole,
and in forming our opinion thereon, and we do not provide a separate opinion on
these matters. This is not a complete list of all risks identified by our
audit.
Revenue recognition: £95,110,894 (2021: £50,520,000)
Significance and nature of How our audit addressed the key risk
key risk Sales of coal and coal processing services in
Revenue is a key performance the period were tested from the trigger point
indicator for users in of the sale to the point of recognition in
assessing the group's the financial statements, corroborating this
financial statements. Revenue to contract sales or service terms and the
generated has a significant recognition stages detailed in IFRS 15.
impact on cash inflows and Rental income revenue was recalculated based
profit before tax for the on the terms included in signed lease
group. As such revenue is a agreements. Again, the recognition stages
key determinant in detailed the relevant standards were
profitability and the group's carefully considered to ensure revenue
ability to generate cash. recognised was in line with these. This
Revenue comprises two key substantive testing covered 100% of total
revenue streams: the sale of property rental revenues.
coal and property rental Revenue streams were further analytically
income. reviewed via comparison to our expectations.
Coal revenue is recognised Expectations were based on a combination of
when the customer has a prior financial data/budgets and our own
legally binding obligation to assessments based on our knowledge gained of
settle under the terms of the the business.
contract. Cut-off of revenue was reviewed by analysing
Rental income is recognised sales recorded during the period just before
in the Group income statement and after the financial year end and
on a straight-line basis over determining if the recognition applied was
the term of the lease. appropriate.
Walkthrough testing was performed to ensure
that key systems and controls in place around
the revenue cycle operated as designed.
The accuracy of revenue disclosures in the
accounts were confirmed to be consistent with
the revenue cycle observed and audited. The
completeness of these disclosures was
confirmed by reference to the full disclosure
requirements as detailed in IFRS 15.
Key observations communicated to the Risk and Audit Committee
We have no concerns over the material accuracy of revenue recognised in the
financial statements.
Valuation/impairment of investment properties: £10,635,000 (2021: £
10,700,000)
Significance and nature of How our audit addressed the key risk
key risk Appropriate classification of investment
Investment properties properties under IAS 40 was considered,
comprise freehold and long especially in relation to long leasehold land
leasehold land and buildings. and buildings.
Investment properties are External valuation reports were obtained and
carried at fair value in vouched to stated fair values. The competence
accordance with IAS 40. and independence of the valuation experts was
Investment properties are carefully considered to ensure that the
revalued annually by reports they produce can be relied upon.
professional external The key assumptions made within these reports
surveyors and included in the were reviewed and considered for
balance sheet at their fair reasonableness, including rental yield
value. Gains or losses analysis. We have further performed our own
arising from changes in the separate impairment considerations to
fair values of assets are consider if events/factors in place at year
recognised in the end present material impairment indicators.
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.
Key observations communicated to the Risk and Audit Committee
We have no concerns over the material accuracy of investment property
values recognised in the financial statements.
Valuation/impairment of mining reserves and development: £16,177,000 (2021:
£8,896,000)
Significance and nature of How our audit addressed the key risk
key risk The accounting requirements of IFRS 6 and IAS
The purpose of mine 16 were considered to ensure capitalisation
development is to establish of costs to mine development under IAS 16 was
secure working conditions and appropriate.
infrastructure to allow the In considering impairment indicators, as
safe and efficient extraction governed by IAS 36, the life of mine
of recoverable reserves. assessment was obtained. All significant
Depreciation on mine input variables were considered and
development costs is not stress-tested to assess headroom between
charged until production modelling and the value of mine development.
commences or the assets are Consideration was given to the competence and
put to use. On commencement independence of the technical expert involved
of full commercial with the production of historic technical
production, depreciation is reports on which the life of mine assessment
charged over the life of the is partially built.
associated mine reserves Depreciation of mine development was
extractable using the asset recalculated based on the unit of production
on a unit of production basis to ensure accurately recorded. This
basis. basis was also considered for reasonableness
The unit of production by reference to the accounting policies of
calculation is based on industry peers.
tonnes mined as a ratio to The accuracy and appropriateness of mine
proven and probable reserves development disclosures in the accounts were
and also includes future confirmed to be consistent with the mine
forecast capital development accounting cycle observed and
expenditure. The cost audited.
recognised includes the
recognition of any
decommissioning assets
related to mine development.
Key observations communicated to the Risk and Audit Committee
We have no concerns over the material accuracy of mining reserves and
development values recognised in the financial statements.
Other information
The other information comprises the information included in the annual report
other than the financial statements and our auditor's report thereon. The
directors are responsible for the other information contained within the annual
report. Our opinion on the financial statements does not cover the other
information and, except to the extent otherwise explicitly stated in our
report, we do not express any form of assurance conclusion thereon. Our
responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the course of the audit, or otherwise
appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to
determine whether this gives rise to a material misstatement in the financial
statements themselves. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we are
required to report that fact.
We have nothing to report in this regard.
Our opinion on the Remuneration Report
Kreston Reeves has audited the Annual remuneration report set out on pages 40
to 53 of the Annual Report for the year ended 31 December 2022. The directors
of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with the Companies Act 2006. Kreston Reeves'
responsibility is to express an opinion on the Remuneration Report, based on
our audit conducted in accordance with International Accounting Standards. In
Kreston Reeves' opinion, the Remuneration Report of the Group for the year,
complies with the requirements of the Companies Act 2006.
Our consideration of climate change related risks
The financial impacts on the Group of climate change and the transition to a
low carbon economy ("climate change") were considered in our audit where they
have the potential to directly or indirectly impact key judgements and
estimates within the financial statements.
The Group continues to develop its assessment of the potential impacts of
climate change. Climate risks have the potential to materially impact the key
judgements and estimates within the financial report. Our audit considered
those risks that could be material to the key judgement and estimates in the
assessment of the carrying value of non-current assets and closure and
rehabilitation provisions.
The key judgements and estimates included in the financial statements
incorporate actions and strategies, to the extent they have been approved and
can be reliably estimated in accordance with the Group's accounting policies.
Accordingly, our key audit matters address how we have assessed the Group's
climate related assumptions to the extent they impact each key audit matter.
Our audit procedures were performed with the involvement of our climate change
and valuation specialists.
Opinions on other matters prescribed by 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 the directors' report for
the financial year for which the financial statements are prepared is
consistent with the financial statements; and
· the strategic report and the 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 our knowledge and understanding of the Group and 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. We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us 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 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 Responsibilities of directors As explained more fully in the directors' responsibilities statement (set out on page 57), the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the Group's and parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or parent company or to cease operations, or have no realistic alternative but to do so. Auditor's responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. Capability of the audit in detecting irregularities, including fraud Based on our understanding of the group and industry, and through discussion with the directors and other management (as required by auditing standards), we identified that the principal risks of non-compliance with laws and regulations related to health and safety, anti-bribery and employment law. We considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as the Companies Act 2006. We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance throughout the audit. We evaluated management's incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to: posting inappropriate journal entries to increase revenue or reduce expenditure, management bias in accounting estimates and judgemental areas of the financial statements such as the valuation of investment properties. Audit procedures performed by the group engagement team and component auditors included: · We obtained an understanding of the legal and regulatory frameworks that are applicable to the Group and determined that the most significant are those that relate to the reporting framework and the relevant tax compliance regulations in the jurisdictions in which Bisichi PLC operates. In addition, we concluded that there are certain significant laws and regulations that may have an effect on the determination of the amounts and disclosures in the financial statements, mainly relating to health and safety, employee matters, bribery and corruption practices, environmental and certain aspects of company legislation recognising the regulated nature of the Group's mining activities and its legal form. · Detailed discussions were held with management to identify any known or suspected instances of non- compliance with laws and regulations. · Identifying and assessing the design effectiveness of controls that management has in place to prevent and detect fraud. · Challenging assumptions and judgements made by management in its significant accounting estimates, including assessing the capabilities of the property valuers and discussing with the valuers how their valuations were calculated and the data and assumptions they have used to calculate these. · Performing analytical procedures to identify any unusual or unexpected relationships, including related party transactions, that may indicate risks of material misstatement due to fraud. · Confirmation of related parties with management, and review of transactions throughout the period to identify any previously undisclosed transactions with related parties outside the normal course of business. · Reading minutes of meetings of those charged with governance, reviewing internal audit reports and reviewing correspondence with relevant tax and regulatory authorities. · Performing integrity testing to verify the legitimacy of banking records obtained from management. · Review of significant and unusual transactions and evaluation of the underlying financial rationale supporting the transactions. · Identifying and testing journal entries, in particular any manual entries made at the year end for financial statement preparation. · We ensured our global audit team (including Kreston Reeves and BDO) has deep industry experience through working for many years on relevant audits, including experience of mining and investment property management. Our audit planning included considering external market factors, for example geopolitical risk, the potential impact of climate change, commodity price risk and major trends in the industry. Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. As part of an audit in accordance with ISAs (UK), we exercise professional judgment and maintain professional scepticism throughout the audit. We also: · Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. · Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control. · Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. · Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's or the parent company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group or the parent company to cease to continue as a going concern. · Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. · Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Other matters which we are required to address We were reappointed by the audit committee in the year to audit the financial statements. Our total uninterrupted period of engagement is 2 years, covering the years ended 31 December 2021 and 31 December 2022.
The non-audit services prohibited by the FRC's Ethical Standard were not
provided to the group or the parent company and we remain independent of the
group and the parent company in conducting our audit.
During the period under review, agreed upon procedures were completed in
respect of a number of the group's service charge accounts.
Our audit opinion is consistent with the additional report to the audit
committee.
Use of our Report
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 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.
Anne Dwyer BSc(Hons) FCA (Senior Statutory Auditor)
For and on behalf of
Kreston Reeves LLP
Chartered Accountants
Statutory Auditor
London
Date: 27 April 2023
Bisichi PLC
Financial statements
68 Consolidated income statement
69 Consolidated statement of other comprehensive income
70 Consolidated balance sheet
72 Consolidated statement of changes in shareholders' equity
73 Consolidated cash flow statement
74 Group accounting policies
82 Notes to the financial statements
108 Company balance sheet
109 Company statement of changes in equity
110 Company accounting policies
Consolidated income statement
for the year ended 31 December 2022
Notes 2022 2022 2022 2021 2021 2021
Trading Revaluations Total Trading Revaluations Total
£'000 and £'000 £'000 and £'000
impairment impairment
£'000 £'000
Group revenue 2 95,111 - 95,111 50,520 - 50,520
Operating costs 3 (55,748) - (55,748) (45,492) - (45,492)
Operating profit before depreciation, 39,363 - 39,363 5,028 - 5,028
fair value adjustments and exchange
movements
Depreciation 3 (1,093) - (1,093) (2,571) - (2,571)
Operating profit before fair value 1 38,270 - 38,270 2,457 - 2,457
adjustments and exchange movements
Exchange losses (270) - (270) (121) - (121)
(Decrease)/ Increase in value of 4 - (60) (60) - 255 255
investment properties
Gain on investments held at fair - 1,036 1,036 - 812 812
value
Operating profit 1 38,000 976 38,976 2,336 1,067 3,403
Share of loss in joint ventures 13 - (89) (89) - (125) (125)
Profit before interest and taxation 38,000 887 38,887 2,336 942 3,278
Interest receivable 174 - 174 22 - 22
Interest payable 7 (1,047) - (1,047) (799) - (799)
Profit before tax 5 37,127 887 38,014 1,559 942 2,501
Taxation 8 (11,878) (30) (11,908) (453) (342) (795)
Profit for the year 25,249 857 26,106 1,106 600 1,706
Attributable to:
Equity holders of the company 16,755 857 17,612 891 600 1,491
Non-controlling interest 27 8,494 - 8,494 215 - 215
Profit for the year 25,249 857 26,106 1,106 600 1,706
Profit per share - basic 10 164.96p 13.96p
Profit per share - diluted 10 164.96p 13.94p
Trading gains and losses reflect all the trading activity on mining and
property operations and realised gains. Revaluation gains and losses reflects
the revaluation of investment properties and other assets within the Group and
any proportion of unrealised gains and losses within Joint Ventures. The total
column represents the consolidated income statement presented in accordance
with IAS 1.
Financial statements
Consolidated statement of other comprehensive income
for the year ended 31 December 2022
2022 2021
£'000 £'000
Profit for the year 26,106 1,706
Other comprehensive income/(expense):
Items that may be subsequently recycled to the income statement:
Exchange differences on translation of foreign operations (43) (60)
Other comprehensive income for the year net of tax (43) (60)
Total comprehensive income for the year net of tax 26,063 1,646
Attributable to:
Equity shareholders 17,593 1,439
Non-controlling interest 8,470 207
26,063 1,646
Financial statements
Consolidated balance sheet
at 31 December 2022
Notes 2022 2021
£'000 £'000
Assets
Non-current assets
Investment properties 11 10,635 10,700
Mining reserves, plant and equipment 12 16,377 9,065
Investments in joint ventures accounted for using equity 13 1,041 1,130
method
Other investments at fair value through profit and loss 13 12,590 3,631
("FVPL")
Total non-current assets 40,643 24,526
Current assets
Inventories 16 5,199 1,253
Trade and other receivables 17 6,437 8,626
Investments in listed securities held at FVPL 18 886 685
Cash and cash equivalents 10,590 3,018
Total current assets 23,112 13,582
Total assets 63,755 38,108
Liabilities
Current liabilities
Borrowings 20 (3,795) (2,666)
Trade and other payables 19 (13,282) (10,743)
Current tax liabilities (4,256) (726)
Total current liabilities (21,333) (14,135)
Non-current liabilities
Borrowings 20 (3,930) (3,853)
Provision for rehabilitation 21 (1,715) (1,390)
Lease liabilities 31 (344) (389)
Deferred tax liabilities 23 (872) (506)
Total non-current liabilities (6,861) (6,138)
Total liabilities (28,194) (20,273)
Net assets 35,561 17,835
Equity
Share capital 24 1,068 1,068
Share premium account 258 258
Translation reserve (2,559) (2,540)
Other reserves 25 1,112 707
Retained earnings 33,923 18,019
Total equity attributable to equity shareholders 33,802 17,512
Non-controlling interest 27 1,759 323
Total equity 35,561 17,835
These financial statements were approved and authorised for issue by the board
of directors on 26 April 2023 and signed on its behalf by:
A R Heller G J Casey Company Registration No. 112155
Director Director
Financial statements
Consolidated statement of changes in shareholders' equity
for the year ended 31 December 2022
Share Share Translation Other Retained Total Non- Total
capital Premium reserves reserves earnings £'000 controlling equity
£'000 £'000 £'000 £'000 £'000 interest £'000
£'000
Balance at 1 1,068 258 (2,488) 707 16,528 16,073 116 16,189
January 2021
Profit for the year - - - - 1,491 1,491 215 1,706
Other comprehensive - - (52) - - (52) (8) (60)
expense
Total comprehensive - - (52) - 1,491 1,439 207 1,646
expense for the
year
Dividend (note 9) - - - - - - - -
Balance at 1 1,068 258 (2,540) 707 18,019 17,512 323 17,835
January 2022
Profit for the year - - - - 17,612 17,612 8,494 26,106
Other comprehensive - - (19) - - (19) (24) (43)
income
Total comprehensive - - (19) - 17,612 17,593 8,470 26,063
income for the year
Dividend (note 9) - - - - (1,708) (1,708) (7,034) (8,742)
Share options - - - (142) - (142) - (142)
cancelled
Share options - - - 547 - 547 - 547
issued
Balance at 31 1,068 258 (2,559) 1,112 33,923 33,802 1,759 35,561
December 2022
Consolidated cash flow statement
for the year ended 31 December 2022
Year Year
ended ended
31 31
December December
2022 2021
£'000 £'000
Cash flows from operating activities
Operating profit 38,976 3,403
Adjustments for:
Depreciation 1,093 2,571
Unrealised loss/(gain) on investment properties 60 (255)
Share based payment expense 405 -
Gain on investments held at FVPL (1,036) (812)
Exchange adjustments 270 121
Cash flow before working capital 39,768 5,028
Change in inventories (4,009) 2,105
Change in trade and other receivables 2,307 (1,900)
Change in trade and other payables 1,114 192
Cash generated from operations 39,180 5,425
Interest received 175 22
Interest paid (728) (799)
Income tax paid (7,929) (216)
Cash flow from operating activities 30,698 4,432
Cash flows from investing activities
Acquisition of reserves, property, motor vehicles, plant and (8,480) (1,781)
equipment
Disposal of reserves, property, motor vehicles, plant and equipment 20 -
Disposal of other investments 2,083 705
Acquisition of other investments (10,207) (1,630)
Cash flow from investing activities (16,584) (2,706)
Cash flows from financing activities
Borrowings drawn 524 46
Borrowings and lease liabilities repaid (55) (317)
Equity dividends paid (641) -
Minority dividends paid (7,034) -
Cash flow from financing activities (7,206) (271)
Net increase in cash and cash equivalents 6,908 1,455
Cash and cash equivalents at 1 January 482 (1,078)
Exchange adjustment (25) 105
Cash and cash equivalents at 31 December 7,365 482
Cash and cash equivalents at 31 December comprise:
Cash and cash equivalents as presented in the balance sheet 10,590 3,018
Bank overdrafts (secured) (3,225) (2,536)
7,365 482
Financial statements
Group accounting policies
for the year ended 31 December 2022
Basis of accounting
The results for the year ended 31 December 2022 have been prepared in
accordance with UK-adopted international accounting standards in conformity
with the requirements of the Companies Act 2006. In applying the Group's
accounting policies and assessing areas of judgment and estimation materiality
is applied as detailed on page 55 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 14 for joint
arrangements and associates.
The exchange rates used in the accounts were as follows:
£1 Sterling: £1 Sterling:
Rand Dollar
2022 2021 2022 2021
Year-end rate 20.5785 20.7672 1.2102 1.3706
Annual average 20.1929 20.4060 1.2967 1.3685
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 from date of signing.
In South Africa, a structured trade finance facility with Absa Bank Limited for
R85million is held by Sisonke Coal Processing (Pty) Limited, a 100% subsidiary
of Black Wattle Colliery (Pty) Limited. This facility comprises of a R85million
revolving facility to cover the working capital requirements of the Group's
South African operations. The facility is renewable annually 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.
The directors expect that coal market conditions for the Group' will remain at
a stable and profitable level through 2023. The directors therefore have a
reasonable expectation that the mine will achieve positive levels of cash
generation for the Group in 2023. As a consequence, the directors believe that
the Group is well placed to manage its South African business risks
successfully.
In the UK, forecasts demonstrate that the Group has sufficient resources to
meet its liabilities as they fall due for at least the next 12 months, from the
approval of the financial statements, including those related to the Group's UK
Loan facility outlined below.
The Group holds a 5 year term facility of £3.9m with Julian Hodge Bank Limited
at an initial LTV of 40%. The loan is secured against the company's UK retail
property portfolio. The amount repayable on the loan at year end was £
3.9million. The debt package has a five year term and is repayable at the end
of the term in December 2024. The overall interest cost of the loan is 4.00%
above the Bank of England base rate. All covenants on the loan were met during
the year and the directors have a reasonable expectation that the Group has
adequate financial resources at short notice, including cash and listed equity
investments, to ensure the existing facility's covenants are met on an ongoing
basis.
Dragon Retail Properties Limited ("Dragon"), the Group's 50% owned joint
venture, holds a Santander bank loan of £1.143million secured against its
investment property, see note 14. The bank loan is secured by way of a first
charge on specific freehold property at a value of £2.03 million. The interest
cost of the loan is 2.75 per cent above the bank's base rate. A refinancing of
this loan is currently underway. The loan originally expired in September 2020,
but has been extended to October 2023. Santander have indicated that they are
willing to provide a new term loan and we expect to complete this in the near
future.
In 2022 a disconnect in global energy markets resulted in higher global energy
prices. Although the volatility in global energy markets in 2023 is uncertain,
the Directors at present do not foresee events having a significant negative
impact on the Group's UK and South African operations ability to remain in
operation for the foreseeable future.
As a result of the banking facilities held as well as the acceptable levels of
cash expected to be held by the Group over 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.
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 2022.
A number of new standards, amendments to standards and interpretations have
been issued but are not yet effective for the Group. The Group has not adopted
any Standards or Interpretations in advance of the required implementation
dates. The application of these new standards, amendments and interpretations
are not expected to have a significant impact on the Group's income statement
or balance sheet.
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 significant effect on the amounts recognised
in the financial statements and to be an area where the financial statements
are subject to significant estimation uncertainty. The life of mine remaining
is currently estimated at 7 years. This life of mine is based on the Group's
existing coal reserves including reserves acquired but subject to regulatory
approval. The Group actively seeks and evaluates new opportunities to extend
the life of its existing mining and processing operations in South Africa. The
life of mine excludes future coal purchases and coal reserve acquisitions. The
Group's estimates of proven and probable reserves are prepared utilising the
South African code for the reporting of exploration results, mineral resources
and mineral reserves (the SAMREC code) and are subject to assessment by an
independent Competent Person experienced in the field of coal geology and
specifically opencast and pillar coal extraction. Estimates of coal reserves
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 geotechnical factors as well as economic factors such as
commodity prices, production costs, coal demand outlook 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 12.
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
annually engages an independent expert to assess the cost of restoration and
final decommissioning 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 when there are indicators of impairment. 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 12.
The impairment test indicated significant headroom as at 31 December 2022 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 yields
associated with mining areas based on assessments by the Competent Person and
empirical data. An 28% reduction in average forecast coal prices or a 31%
reduction in yield would give rise to a breakeven scenario. However, the
directors consider the forecasted yield levels and pricing to be appropriate
and supportable best estimates.
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 fair value of investment property is set out
in note 11, 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 13.
Measurement of development property
The development property included within the Group's joint venture investment
in West Ealing Projects limited is considered by Management to fall outside the
scope of investment property. A property intended for sale in the ordinary
course of business or in the process of construction or development for such
sale, for example, property acquired exclusively with a view to subsequent
disposal in the near future or for development and resale is expected to be
recorded under the accounting standard of IAS 2 Inventories. The directors have
discussed the commercial approach with the directors of the underlying joint
venture and the current plan is to sell or to complete the development and
sell. The Directors therefore consider the key judgement of accounting
treatment of the property development under IAS 2 Inventories to be correct.
IAS 2 Inventories require the capitalised costs to be held at the lower of cost
or net realisable value. At 31 December 2022, the costs capitalised within the
development based on a director's appraisal for the property estimated the net
realisable value at a surplus over the cost for the development. The directors
have reviewed the underlying inputs and key assumptions made in the appraisal
and consider them adequate. However, such information is by nature subject to
uncertainty. The cost of the development property is set out in note 14.
Basis of consolidation
The Group accounts incorporate the accounts of Bisichi 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
The Group's revenue from contracts with customers, as defined under IFRS 15,
includes coal revenue and service charge income.
Coal revenue is derived principally from export revenue and domestic revenue.
Both export revenue and domestic revenue is recognised when the customer has a legally binding obligation to settle under the terms of the contract when the performance obligations have been satisfied, which is once control of the goods has transferred to the buyer at the delivery point. For export revenue this is generally recognised when the product is delivered to the export terminal location specified in the customer contract, at which point control of the goods have been transferred to the customer. For domestic coal revenues this is generally recognised on collection by the customer from the mine or from the mine's rail siding when loaded into transport, where the customer pays the transportation costs. Fulfilment costs to satisfy the performance obligations of coal revenues such as transport and loading costs borne by the Group from the mine to the delivery point are recoded in operating costs. Coal revenue is measured based on consideration specified in the contract with a customer on a per metric tonne basis. Both export and domestic contracts are typically on a specified coal volume basis and less than a year in duration. Export contracts are typically linked to the price of Free on Board (FOB) Coal from Richards Bay Coal Terminal (API4 price). Domestic contracts are typically linked to a contractual price agreed. Service charges recoverable from tenants are recognised over time as the service is rendered. Lease property rental income, as defined under IFRS 16, 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 and development cost 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 included within mining reserves 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. 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 costs 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 mining production 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 5 - 10 per cent per annum of the earlier of its useful life or the life equipment of the mine Motor 25 - 33 per cent per annum vehicles Office 10 - 33 per cent per annum equipment Provisions and contingent liabilities 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. Management exercises judgment in measuring the Group's exposures to contingent liabilities through assessing the likelihood that a potential claim or liability will arise and where possible in quantifying the possible range of financial outcomes. Where there is a dispute and where a reliable estimate of the potential liability cannot be made, or where the Group, based on legal advice, considers that it is improbable that there will be an outflow of economic resources, no provision is recognised. 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, i.e. as a deduction from equity. Details of the share options in issue are disclosed in the Directors' Remuneration Report on page 41 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 the transaction date.
Financial instruments
Financial assets and financial liabilities are recognised in the Group's
consolidated statement of financial position when the Group becomes a party to
the contractual provisions of the instrument.
Financial assets
Financial assets are classified as either financial assets at amortised cost,
at fair value through other comprehensive income ("FVTOCI") or at fair value
through profit or loss ("FVPL") depending upon the business model for managing
the financial assets and the nature of the contractual cash flow
characteristics of the financial asset.
A loss allowance for expected credit losses is determined for all financial
assets, other than those at FVPL, at the end of each reporting period. The
Group applies a simplified approach to measure the credit loss allowance for
trade receivables using the lifetime expected credit loss provision. The
lifetime expected credit loss is evaluated for each trade receivable taking
into account payment history, payments made subsequent to year end and prior to
reporting, past default experience and the impact of any other relevant and
current observable data. The Group applies a general approach on all other
receivables classified as financial assets. The general approach recognises
lifetime expected credit losses when there has been a significant increase in
credit risk since initial recognition.
The Group derecognises a financial asset when the contractual rights to the
cash flows from the asset expire, or when it transfers the financial asset and
substantially all the risks and rewards of ownership of the asset to another
party. The Group derecognises financial liabilities when the Group's
obligations are discharged, cancelled or have expired.
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.
Lease liabilities
For any new contracts entered into the Group considers whether a contract is,
or contains a lease. A lease is defined as 'a contract, or part of a contract,
that conveys the right to use an asset (the underlying asset) for a period of
time in exchange for consideration'. To apply this definition the Group
assesses whether the contract contains an identified asset and has the right to
obtain substantially all of the economic benefits from use of the identified
asset throughout the period of use.
At lease commencement date, the Group recognises a right-of-use asset and a
lease liability on the balance sheet.
Right-of-use assets, excluding property head leases, have been included in
property, plant and equipment and are measured at cost, which is made up of the
initial measurement of the lease liability and any initial direct costs
incurred by the Group. The Group depreciates the right-of-use assets on a
straight-line basis from the lease commencement date to the earlier of the end
of the useful life of the right-of-use asset or the end of the lease term.
At the commencement date, the Group measures the lease liability at the present
value of the lease payments unpaid at that date, discounted using the interest
rate implicit in the lease if that rate is readily available or the Group's
incremental borrowing rate. Liabilities relating to short term leases are
included within trade and other payables.
Lease payments included in the measurement of the lease liability are made up
of fixed payments and variable payments based on an index or rate, initially
measured using the index or rate at the commencement date. Subsequent to
initial measurement, the liability will be reduced for payments made and
increased for interest. It is re-measured to reflect any reassessment or
modification. When the lease liability is re-measured, the corresponding
adjustment is reflected in the right-of-use asset, or profit and loss if the
right-of-use asset is already reduced to zero.
Lease liabilities that arise for investment properties held under a leasehold
interest and accounted for as investment property are initially calculated as
the present value of the minimum lease payments, reducing in subsequent
reporting periods by the apportionment of payments to the lessor.
The Group has elected to account for short-term leases and leases of low-value
assets using the practical expedients available in IFRS 16. Instead of
recognising a right-of-use asset and lease liability, the payments in relation
to these are recognised as an expense in profit or loss on a straight-line
basis over the lease term.
Investments
Current financial asset investments and other investments classified as
non-current ("The investments") comprise of shares in listed companies. The
investments are measured at fair value. Any changes in fair value are
recognised in the profit or loss account and accumulated in retained earnings.
Trade receivables
Trade receivables are accounted for at amortised cost. Trade receivables do not
carry any interest and are stated at their nominal value as reduced by
appropriate expected credit loss 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 cost 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 Group's 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. 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 of
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. This
includes mining reserves, plant and equipment and net investments in joint
ventures. 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
that are repayable on demand as per IAS 7. This includes the structured trade
finance facility held in South Africa as detailed in note 22. These facilities
are considered to form an integral part of the treasury management of the Group
and can fluctuate from positive to negative balances during the period.
Segmental reporting
For management reporting purposes, the Group is organised into business
segments distinguishable by economic activity. The Group's material 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.
Financial statements
Notes to the financial statements
for the year ended 31 December 2022
1. SEGMENTAL REPORTING
2022
Business analysis Mining Property Other Total
£'000 £'000 £'000 £'000
Significant revenue customer A 57,381 - - 57,381
Significant revenue customer B 29,934 - - 29,934
Significant revenue customer C 2,167 - - 2,167
Other revenue 3,931 1,108 590 5,629
Segment revenue 93,413 1,108 590 95,111
Operating profit before fair value adjustments 37,033 652 585 38,270
& exchange movements
Revaluation of investments & exchange movements (270) (60) 1,036 706
Operating profit and segment result 36,763 592 1,621 38,976
Segment assets 25,911 12,682 13,478 52,071
Unallocated assets
- Non-current assets 53
- Cash & cash equivalents 10,590
Total assets excluding investment in joint 62,714
ventures and assets held for sale
Segment liabilities (17,928) (2,536) (5) (20,469)
Borrowings (3,845) (3,880) - (7,725)
Total liabilities (21,773) (6,416) (5) (28,194)
Net assets 34,520
Non segmental assets
- Investment in joint ventures 1,041
Net assets as per balance sheet 35,561
Geographic analysis United South Total
Kingdom Africa £'000
£'000 £'000
Revenue 1,698 93,413 95,111
Operating (loss)/profit and segment result (3,696) 42,672 38,976
Depreciation (41) (1,052) (1,093)
Non-current assets excluding investments 10,688 16,324 27,012
Total net assets 28,285 7,276 35,561
Capital expenditure 46 8,434 8,480
2021
Business analysis Mining Property Other Total
£'000 £'000 £'000 £'000
Significant revenue customer A 23,206 - - 23,206
Significant revenue customer B 12,656 - - 12,656
Significant revenue customer C 6,169 - - 6,169
Other revenue 7,195 1,119 175 8,489
Segment revenue 49,226 1,119 175 50,520
Operating profit before fair value adjustments 1,695 592 170 2,457
& exchange movements
Revaluation of investments & exchange movements (121) 255 812 946
Operating profit and segment result 1,574 847 982 3,403
Segment assets 17,350 12,242 4,319 33,911
Unallocated assets
- Non-current assets 48
- Cash & cash equivalents 3,018
Total assets excluding investment in joint 36,977
ventures and assets held for sale
Segment liabilities (12,227) (1,522) (5) (13,754)
Borrowings (2,680) (3,839) - (6,519)
Total liabilities (14,907) (5,361) (5) (20,273)
Net assets 16,704
Non segmental assets
- Investment in joint ventures 1,131
Net assets as per balance sheet 17,835
Geographic analysis United South Total
Kingdom Africa £'000
£'000 £'000
Revenue 1,294 49,222 50,516
Operating profit and segment result 687 2,716 3,403
Depreciation (32) (2,539) (2,571)
Non-current assets excluding investments 10,748 9,018 19,766
Total net assets 14,400 3,435 17,835
Capital expenditure 35 1,781 1,816
2. REVENUE
2022 2021
£'000 £'000
Revenue from contracts with customers:
Coal sales and processing 93,413 49,226
Service charges recoverable from tenants 98 130
Other:
Rental income 1,010 989
Other revenue 590 175
Revenue 95,111 50,520
Segmental mining revenue is derived principally from coal sales and is
recognised once the control of the goods has transferred from the Group to the
buyer. Segmental property revenue is derived from rental income and service
charges recoverable from tenants. This is consistent with the revenue
information disclosed for each reportable segment (see note 1). Rental income
is recognised on a straight-line basis over the term of the lease. Service
charges recoverable from tenants are recognised over time as the service is
rendered. Revenue is measured based on the consideration specified in the
contract with the customer or tenant.
3. OPERATING COSTS
2022 2021
£'000 £'000
Mining 43,209 38,008
Property 269 400
Cost of sales 43,478 38,408
Administration 13,363 9,655
Operating costs 56,841 48,063
The direct property costs are:
Direct property expense 250 351
Bad debts 19 49
269 400
Operating costs above include depreciation of £1,093,000 (2021: £2,571,000).
4. (LOSS)/GAIN ON REVALUATION OF INVESTMENT PROPERTIES
The reconciliation of the investment (deficit)/surplus to the gain on
revaluation of investment properties in the income statement is set out below:
2022 2021
£'000 £'000
Investment (deficit)/surplus (60) 255
Loss on valuation movement in respect of head lease payments (5) (26)
(Loss)/Gain on revaluation of investment properties (65) 229
5. PROFIT BEFORE TAXATION
Profit before taxation is arrived at after charging:
2022 2021
£'000 £'000
Staff costs (see note 29) 11,991 7,491
Depreciation 1,093 2,571
Exchange loss (270) (121)
Fees payable to the company's auditor for the audit of the company's 50 51
annual accounts
Fees payable to the company's auditor and its associates for other
services:
The audit of the company's subsidiaries pursuant to legislation 43 37
Audit related services - -
Non-audit related services - -
(Increase)/Decrease in value of Inventory (4,009) 2,105
The directors consider the auditors were best placed to provide the above
non-audit and 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.
6. DIRECTORS' EMOLUMENTS
Directors' emoluments are shown in the Directors' remuneration report on page
40 which is within the audited part of that report.
7. INTEREST PAYABLE
2022 2021
£'000 £'000
On bank overdrafts and bank loans 507 554
Unwinding of discount 319 -
Lease liabilities 25 29
Other interest payable 196 216
Interest payable 1,047 799
8. TAXATION
2022 2021
£'000 £'000
(a) Based on the results for the year:
Current tax - UK - -
Current tax - Overseas 11,520 750
Corporation tax - adjustment in respect of prior year - UK - -
Current tax 11,520 750
Deferred tax 388 45
Total tax in income statement charge 11,908 795
(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 19.00% (2021: 19%).
The differences are explained below:
Profit/ Loss on ordinary activities before taxation 38,014 2,501
Tax on profit/ loss on ordinary activities at 19.00% (2021: 19.00%) 7,223 475
Effects of:
Expenses not deductible for tax purposes 280 49
Capital gains(losses) on disposal 14 20
Differences in tax rates to UK Tax rate 4,491 260
Other differences (100) (9)
Adjustment in respect of prior years - -
Total tax in income statement (credit) / charge 11,908 795
(c) Analysis of United Kingdom and overseas tax:
United Kingdom tax included in above:
Current tax - -
Deferred tax (937) 152
(937) 152
Overseas tax included in
above:
Current tax 11,520 750
Adjustment in respect of - -
prior years
Current tax 11,520 750
Deferred tax 1,325 (107)
12,845 643
Overseas tax is derived from the Group's South African mining operation. Refer
to note 1 for a report on the Groups' mining and South African segmental
reporting. The adjustment to tax rate arises due to the deferred tax rate used
in the UK for the year of 25% (2021: 25%) and the corporation tax rate assessed
in South Africa for the year of 28% (2021: 28%) being different from the
corporation tax rate in the UK.
9. SHAREHOLDER DIVIDS
2022 2022 2021 2021
Per £'000 Per £'000
share share
Dividends paid during the year relating to the prior period 6p 641 - -
Dividends relating to the current period:
Interim dividend 10p 1,067 - -
Proposed final dividend 4p 427 4p 427
Proposed special dividend 8p 854 2p 214
22p 2,348 6p 641
The interim dividend for 2022 was approved by the Board on 30th August 2022,
paid on 3rd February 2023 and accounted for as payable as at 31 December 2022.
The total dividends to shareholders accounted during the year of £1,708,000
(2021: £Nil) comprise of dividends paid during the year relating to the prior
period of £641,000 (2021: £Nil) and the interim dividend of £1,067,000 (£Nil).
The final and special dividends for 2022 are not accounted for until they have
been approved at the Annual General Meeting.
10. PROFIT AND DILUTED PROFIT PER SHARE
Both the basic and diluted profit per share calculations are based on a profit
after tax attributable to equity holders of the company of £17,612,000 (2021: £
1,491,000). The basic profit/(loss) per share has been calculated on a weighted
average of 10,676,839 (2021: 10,676,839) ordinary shares being in issue during
the period. The diluted profit per share has been calculated on the weighted
average number of shares in issue of 10,676,839 (2021: 10,676,839) plus the
dilutive potential ordinary shares arising from share options of nil (2021:
21,923) totalling 10,676,839 (2021: 10,698,762).
11. INVESTMENT PROPERTIES
Freehold Long Head Total
£'000 Leasehold Lease £'000
£'000 £'000
Valuation at 1 January 2022 8,230 2,295 175 10,700
Revaluation 40 (100) (5) (65)
Valuation at 31 December 2022 8,270 2,195 170 10,635
Valuation at 1 January 2021 7,875 2,395 201 10,471
Revaluation 355 (100) (26) 229
Valuation at 31 December 2021 8,230 2,295 175 10,700
Historical cost
At 31 December 2022 5,851 728 - 6,579
At 31 December 2021 5,851 728 - 6,579
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:
2022 2021
£'000 £'000
Carter Towler 10,465 10,525
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 significant 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 Valuation Key Carrying Carrying Range Range
Level 3 technique unobservable / / (weighted (weighted
inputs fair fair average) average)
value value 2022 2021
2022 2021
£'000 £'000
Freehold - external Income Estimated 8,270 8,230 £4 - £29 £6 - £29
valuation capitalisation rental (£21) (£21)
value per sq
ft p.a
Equivalent 8.9% - 8.9% -
Yield 15.8% 14.7%
(11.4%) (11.2%)
Long leasehold - Income Estimated 2,195 2,295 £8 - £8 £9 - £9
external valuation capitalisation rental (£8) (£9)
value per sq
ft p.a
Equivalent 9.8% - 9.8% -
yield 9.8% 9.8%
(9.8%) (9.8%)
At 31 December 2022 10,465 10,525
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 Equivalent yield
value 10% increase 25 basis point contraction or
or decrease expansion
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Freehold - external valuation 827 / 823 / 205 / (195) 203 / (193)
(827) (823)
Long Leasehold - external 220 / 230 / 57 / (55) 60 / (57)
valuation (220) (230)
12. MINING RESERVES, PLANT AND EQUIPMENT
Mining Mining Motor Office Total
reserves equipment vehicles equipment £'000
£'000 and £'000 £'000
development
costs
£'000
Cost at 1 January 2022 1,097 29,063 396 179 30,735
Exchange adjustment (13) 134 3 1 125
Additions 1,248 7,117 55 60 8,480
Disposals - (23) (69) (72) (164)
Cost at 31 December 2022 2,332 36,291 385 168 39,176
Accumulated depreciation at 1 January 1,089 20,167 264 150 21,670
2022
Exchange adjustment 10 166 3 1 180
Charge for the year - 1,037 38 18 1,093
Disposals - (23) (49) (72) (144)
Accumulated depreciation at 31 December 1,099 21,347 256 97 22,799
2022
Net book value at 31 December 2022 1,233 14,944 129 71 16,377
Cost at 1 January 2021 1,138 28,371 372 174 30,055
Exchange adjustment (41) (1,059) (11) (4) (1,115)
Additions - 1,772 35 9 1,816
Disposals - (21) - - (21)
Cost at 31 December 2021 1,097 29,063 396 179 30,735
Accumulated depreciation at 1 January 1,123 18,399 215 144 19,881
2021
Exchange adjustment (41) (710) (7) (3) (761)
Charge for the year 7 2,499 56 9 2,571
Disposals - (21) - - (21)
Accumulated depreciation at 31 December 1,089 20,167 264 150 21,670
2021
Net book value at 31 December 2021 8 8,896 132 29 9,065
Included in the above line items are right-of-use assets over the following:
Mining Motor Total
Equipment vehicles £'000
and £'000
development
costs
£'000
Net book value at 1 January 2022 219 48 267
Additions - - -
Exchange adjustment 5 - 5
Depreciation (38) (27) (65)
Net book value at 31 December 2022 186 21 207
Net book value at 1 January 2021 263 45 308
Additions - 35 35
Exchange adjustment (6) - (6)
Depreciation (38) (32) (70)
Net book value at 31 December 2021 219 48 267
13. INVESTMENTS HELD AS NON-CURRENT ASSETS
2022 2022 2021 2021
Net Other Net Other
investment £'000 investment £'000
in joint in joint
ventures ventures
assets assets
£'000 £'000
At 1 January 1,130 3,631 1,255 1,746
Gain in investment - 718 - 701
Additions - 9,758 - 1,630
Disposals - (1,517) - (446)
Share of (loss)/gain in joint ventures (89) - (125) -
Net assets at 31 December 1,041 12,590 1,130 3,631
Other investments comprise of the following:
2022 2021
£'000 £'000
Net book value of unquoted investments - -
Net book and market value of readily realisable investments listed on 6,782 1,564
stock exchanges in the United Kingdom
Net book and market value of readily realisable investments listed on 5,808 2,067
overseas stock exchanges
12,590 3,631
14. JOINT VENTURES
Development Physics Limited
The company owns a third of the issued share capital of Development Physics
Limited, an unlisted property development company. At year end, the negative
carrying value of the investment held by the Group was £14,000 (2021: £3,000).
The remaining two thirds is held equally by London & Associated Properties PLC
and Metroprop Real Estate Ltd. Development Physics Limited is incorporated in
England and Wales and its registered address is 12 Little Portland Street,
London, W1W8BJ. It has issued share capital of 99 (2021: 99) ordinary shares of
£1 each. No dividends were received during the period.
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 £606,000 (2021: £637,000). 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 12 Little Portland Street, London, W1W8BJ. It has issued share
capital of 500,000 (2021: 500,000) ordinary shares of £1 each. No dividends
were received during the period. It holds a Santander bank loan of £
1.143million secured against its investment property. The bank loan of £
1.143million is secured by way of a first charge on specific freehold property
at a value of £2.038 million. The interest cost of the loan is 2.75 per cent
above the bank's base rate. A refinancing of this loan is currently underway.
The loan originally expired in September 2020, but has been extended to October
2023. Santander have indicated that they are willing to provide a new term loan
and we expect to complete this in the near future.
West Ealing Projects Limited
The company owns 50% of the issued share capital of West Ealing Projects
Limited, an unlisted property development company. At year end, the carrying
value of the investment held by the Group was £449,000 (2021: £496,000). The
remaining 50% is held by London & Associated Properties PLC. West Ealing
Projects Limited is incorporated in England and Wales and its registered
address is 12 Little Portland Street, London, W1W8BJ. It has issued share
capital of 1,000,000 (2021: 1,000,000) ordinary shares of £1 each. No dividends
were received during the period.
Development Dragon West 2022 Development Dragon West 2021
Physics £'000 Ealing £'000 Physics £'000 Ealing £'000
£'000 £'000 £'000 £'000
Turnover - 168 53 221 - 168 58 226
Profit and loss:
(Loss)/Profit before (33) (5) (71) (109) (10) (32) (215) (257)
depreciation,
interest and taxation
Depreciation and - (3) - (3) - (3) - (3)
amortisation
(Loss)/Profit before (33) (8) (71) (112) (10) (35) (215) (260)
interest and taxation
Interest Income - - - - - - - -
Interest expense - (51) (1) (52) - (31) (1) (32)
(Loss)/Profit before (33) (59) (72) (164) (10) (66) (216) (292)
taxation
Taxation - (2) (34) (36) - - 38 38
(Loss)/Profit after (33) (61) (106) (200) (10) (66) (178) (254)
taxation
Balance sheet
Non-current assets - 2,038 - 2,038 - 2,091 - 2,091
Cash and cash 2 107 9 118 - 27 5 32
equivalents
Property inventory 348 - 8,112 8,460 232 - 7,494 7,726
Other current assets 2 269 47 318 27 374 70 471
Current borrowings - (1,143) (4,399) (5,542)
Other current (395) (59) (2,862) (3,316) (269) (53) (6,549) (6,871)
liabilities
Net current assets (43) (826) 907 38 (10) 348 1,020 1,358
Non-current - - (9) (9) - (1,165) (28) (1,193)
borrowings
Other non-current - - - - - - - -
liabilities
Net assets at 31 (43) 1,212 898 2,067 (10) 1,274 992 2,256
December
Share of net assets (14) 606 449 1,041 (3) 637 496 1,130
at 31 December
15. SUBSIDIARY COMPANIES
The company owns the following ordinary share capital of the subsidiaries which
are included within the consolidated financial statements:
Activity Percentage Registered address Country of
of incorporation
share
capital
Directly held:
Mineral Products Share 100% 12 Little Portland Street, England and
Limited dealing London, W1W8BJ Wales
Bisichi (Properties) Property 100% 12 Little Portland Street, England and
Limited London, W1W8BJ Wales
Bisichi Northampton Property 100% 12 Little Portland Street, England and
Limited London, W1W8BJ Wales
Bisichi Trustee Limited Property 100% 12 Little Portland Street, England and
London, W1W8BJ Wales
Urban First Property 100% 12 Little Portland Street, England and
(Northampton) Limited London, W1W8BJ Wales
Bisichi Mining Holding 100% 12 Little Portland Street, England and
(Exploration) Limited company London, W1W8BJ Wales
Ninghi Marketing Dormant 90.1% 12 Little Portland Street, England and
Limited London, W1W8BJ Wales
Bisichi Mining Dormant 100% 12 Little Portland Street, England and
Management London, W1W8BJ Wales
Services Limited
Bisichi Coal Mining Coal 100% Samora Machel Street, South Africa
(Pty) Limited mining Bethal Road, Middelburg,
Mpumalanga, 1050
Indirectly held:
Black Wattle Colliery Coal 62.5% Samora Machel Street, South Africa
(Pty) Limited mining Bethal Road, Middelburg,
Mpumalanga, 1050
Sisonke Coal Processing Coal 62.5% Samora Machel Street, South Africa
(Pty) Limited processing Bethal Road, Middelburg,
Mpumalanga, 1050
Black Wattle Coal 62.5% Samora Machel Street, South Africa
Klipfontein (Pty) mining Bethal Road,
Limited Middelburg, Mpumalanga,
1050
Amandla Ehtu Mineral Dormant 70% Samora Machel Street, South Africa
Resource Development Bethal Road,
(Pty) Limited Middelburg, Mpumalanga,
1050
Details on the non-controlling interest in subsidiaries are shown under note
27.
16. INVENTORIES
2022 2021
£'000 £'000
Coal
Washed 4,758 1,185
Mining Production 162 59
Work in progress 221 -
Other 58 9
5,199 1,253
The amount of inventories recognised as an expense during the period was £
35,969,000 (2021: £32,912,000).
17. TRADE AND OTHER RECEIVABLES
2022 2021
£'000 £'000
Financial assets falling due within one year:
Trade receivables 4,067 6,328
Amount owed by joint venture 1,379 1,067
Other receivables 860 984
Non-financial instruments falling due within one year:
Prepayments and accrued income 131 247
6,437 8,626
Financial assets falling due within one year are held at amortised cost. The
fair value of trade and other receivables approximates their carrying amounts.
The Group applies a simplified approach to measure the credit loss allowance
for trade receivables using the lifetime expected credit loss provision. The
lifetime expected credit loss is evaluated for each trade receivable taking
into account payment history, payments made subsequent to year end and prior to
reporting, past default experience and the impact of any other relevant and
current observable data. The Group applies a general approach on all other
receivables classified as financial assets. At year end, the Group allowance
for doubtful debts provided against trade receivables was £89,000 (2021: £
140,000).
18. INVESTMENTS IN LISTED SECURITIES HELD AT FVPL
2022 2021
Other Other
£'000 £'000
At 1 January 685 833
Gain in investments 318 110
Additions 449 -
Disposals (566) (258)
Market value at 31 December 886 685
2022 2021
£'000 £'000
Market value of listed Investments:
Listed in Great Britain 686 478
Listed outside Great Britain 200 207
886 685
Original cost of listed investments 846 846
Unrealised surplus / deficit of market value versus cost 40 (161)
19. TRADE AND OTHER PAYABLES
2022 2021
£'000 £'000
Trade payables 8,519 7,171
Amounts owed to joint ventures 120 156
Lease liabilities (Note 31) 54 65
Other payables 2,000 2,281
Accruals 2.366 844
Deferred Income 223 226
13,282 10,743
20. FINANCIAL LIABILITIES - BORROWINGS
Current Non-current
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Bank overdraft (secured) 3,225 2,536 - -
Bank loan (secured) 570 130 3,930 3,853
3,795 2,666 3,930 3,853
2022 2021
£'000 £'000
Bank overdraft and loan instalments by reference to the balance sheet
date:
Within one year 3,795 2,666
From one to two years 3,906 11
From two to five years 24 3,842
7,725 6,519
Bank overdraft and loan analysis by origin:
United Kingdom 3,880 3,839
Southern Africa 3,845 2,680
7,725 6,519
In South Africa, an R85million trade facility is held with Absa Bank Limited by
Sisonke Coal Processing (Pty) Limited ("Sisonke Coal Processing") in order to
cover the working capital requirements of the Group's South African operations.
The interest cost of the loan is at the South African prime lending rate plus
3.8% The facility is renewable annually, is repayable on demand and is 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 £11,482,554 (2021: £8,843,219). All
banking covenants were either adhered to or waived by Absa Bank Limited during
the year.
In the UK, the Group holds a £3.96million term loan facility with Julian Hodge
Bank Limited. 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 in December 2024. The overall interest cost of the loan is 4.00% above
the Bank of England base rate. The loan is 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 £10,465,000 (2021: £10,525,000). No banking covenants
were breached by the Group during the year.
Consistent with others in the mining and property industry, the Group monitors
its capital by its gearing levels. This is calculated as the total bank loans
and overdraft less remaining cash and cash equivalents as a percentage of
equity. At year end the gearing of the Group was calculated as follows:
2022 2021
£'000 £'000
Total bank loans and overdraft 7,725 6,519
Less cash and cash equivalents (excluding overdraft) (10,590) (3,018)
Net debt (2,865) 3,501
Total equity attributable to shareholders of the parent 33,802 17,512
Gearing (8.5%) 20.0%
Analysis of the changes in liabilities arising from financing activities:
Bank Bank Lease 2022 Bank Bank Lease 2021
borrowings overdrafts liabilities £'000 borrowings overdrafts liabilities £'000
£'000 £'000 £'000 £'000 £'000
£'000
Balance at 1 January 3,983 2,536 454 6,973 4,207 4,846 508 9,561
Exchange adjustments (9) 11 5 7 (10) (138) (6) (154)
Cash movements 525 678 (56) 1,147 (214) (2,172) (57) (2,443)
excluding exchange
adjustments
Additions - - (5) (5) - - 9 9
Balance at 31 4,499 3,225 398 8,122 3,983 2,536 454 6,973
December
21. PROVISION FOR REHABILITATION
2022 2021
£'000 £'000
As at 1 January 1,390 1,442
Exchange adjustment 6 (52)
Increase in provision - -
Unwinding of discount 319 -
As at 31 December 1,715 1,390
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:
Financial Financial Investments 2022 Financial Financial Investments 2021
Assets Liabilities held at £'000 Assets Liabilities held at £'000
measured measured at FVPL £'000 measured measured at FVPL £'000
at amortised at amortised
amortised cost amortised cost
cost £'000 cost £'000
£'000 £'000
Cash and cash equivalents 10,590 - - 10,590 3,018 - - 3,018
Non-current other investments - - 12,590 12,590 - - 3,631 3,631
held at FVPL
Investments in listed - - 886 886 - - 685 685
securities held at FVPL
Trade and other receivables 6,306 - - 6,306 8,379 - - 8,379
Bank borrowings and overdraft - (7,725) - (7,725) - (6,519) - (6,519)
Lease Liabilities - (398) - (398) - (454) - (454)
Other liabilities - (17,261) - (17,261) - (11,178) - (11,178)
16,896 (25,384) 13,476 4,988 11,397 (18,151) 4,316 (2,438)
Investments in listed securities held at fair value through profit and loss
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 2021 fall under the same category of financial
instrument as 2022.
The carrying amount of short term (less than 12 months) trade receivable and
other liabilities approximate their 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 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 Bank of
England in the UK and PRIME in South Africa.
As at 31 December 2022, 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 £
35,000 (2021: £80,000). The effect on equity of this change would be an
equivalent decrease or increase for the year of £35,000 (2021: £80,000).
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 PLC and in South Africa in Black Wattle Colliery (Pty) Ltd.
The following table sets out the maturity profile of contractual undiscounted
cash flows of financial liabilities as at 31 December:
2022 2021
£'000 £'000
Within one year 21,511 14,122
From one to two years 4,259 238
From two to five years 479 4,391
Beyond five years 126 129
26,375 18,880
The following table sets out the maturity profile of contractual undiscounted
cash flows of financial liabilities as at 31 December maturing within one year:
2022 2021
£'000 £'000
Within one month 15,635 11,509
From one to three months 4,150 1,699
From four to twelve months 1,726 914
21,511 14,122
In South Africa, an R85million trade facility is held with Absa Bank Limited by
Sisonke Coal Processing (Pty) Limited ("Sisonke Coal Processing") in order to
cover the working capital requirements of the Group's South African operations.
The interest cost of the loan is at the South African prime lending rate plus
3.8% The facility is renewable annually, is repayable on demand and is secured
against inventory, debtors and cash that are held by Sisonke Coal Processing
(Pty) Limited. The facility is included in cash and cash equivalents within the
cashflow statement.
In the UK, the Group holds a £3.96million term loan facility with Julian Hodge
Bank Limited. 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 in December 2024. The overall interest cost of the loan is 4.00% above
the Bank of England base rate.
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 £16,896,000 (2021: £11,397,000).
To mitigate risk on its cash and cash equivalents, the Group only deposits
surplus cash with well-established financial institutions of high quality
credit standing.
The Group's credit risk is primarily attributable to its trade receivables.
Trade debtor's credit ratings are reviewed regularly. The Group's review
includes measures such as the use of external ratings and establishing purchase
limits for each customer. The Group had amounts due from its significant
revenue customers at the year end that represented 84% (2021: 53%) of the trade
receivables balance. These amounts have been subsequently settled. The Group
approach to measure the credit loss allowance for trade receivables is outlined
in note 17. At year end, the Group allowance for doubtful debts provided
against trade receivables was £89,000 (2021: £140,000). As at year end the
amount of trade receivables held past due date less credit loss allowances was
£159,000 (2021: £201,000). To date, the amount of trade receivables held past
due date less credit loss allowances that has not subsequently been settled is
£122,000 (2021: £106,000). Management have no reason to believe that this
amount will not be settled.
The Group exposure to credit risk on its loans to joint ventures and other
receivables is mitigated through ongoing review of the underlying performance
and resources of the counterparty including evaluation of different scenarios
of probability of default and expected loss applicable to each of the
underlying balances.
Financial assets maturity
On 31 December 2022, cash at bank and in hand amounted to £10,712,000 (2021: £
3,018,000) 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 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 2022 and 2021 the Group did not hedge its
exposure of foreign investments held in foreign currencies.
The principal 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
2022, 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 £121,000 (2021: £218,000). 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 £201,000 (2021: £364,000). The 25% sensitivity has
been determined based on the average historic volatility of the exchange rate.
The table below shows the currency profiles of cash and cash equivalents:
2022 2021
£'000 £'000
Sterling 7,779 1,397
South African Rand 2,238 1,017
US Dollar 573 604
10,590 3,018
Cash and cash equivalents earn interest at rates based on Bank of England rates
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:
2022: Sterling South
£'000 African
Rands
£'000
Sterling 14,715 -
South African Rand 45 (11,743)
US Dollar 1,971 -
16,731 (11,743)
2021: Sterling South
£'000 African
Rands
£'000
Sterling 1,123 -
South African Rand 65 (5,088)
US Dollar 1,462 -
2,650 (5,088)
23. DEFERRED TAXATION
2022 2021
£'000 £'000
As at 1 January 506 474
Recognised in income 388 45
Exchange adjustment (22) (13)
As at 31 December 872 506
The deferred tax balance comprises the following:
Revaluations 671 641
Capital allowances 3,855 2,253
Short term timing difference (813) (832)
Unredeemed capital deductions (1,439) (1,057)
Losses and other deductions (1,402) (499)
872 506
Refer to note 8 for details of deferred tax recognised in income in the current
year. Tax rates of 25% (2021: 25%) in the UK and 27% (2021: 28%) in South
Africa were utilised to calculate year end deferred tax balances.
24. SHARE CAPITAL
2022 2021
£'000 £'000
Authorised: 13,000,000 ordinary shares of 10p each 1,300 1,300
Allotted and fully paid:
2022 2021 2022 2021
Number of Number of £'000 £'000
ordinary ordinary
shares shares
At 1 January and outstanding at 31 December 10,676,839 10,676,839 1,068 1,068
25. OTHER RESERVES
2022 2021
£'000 £'000
Equity share options 1,026 621
Net investment premium on share capital in joint venture 86 86
1,112 707
26. SHARE BASED PAYMENTS
Details of the share option scheme are shown in the Directors' remuneration
report on page 41 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 PLC Unapproved Option Schemes:
Year of grant Subscription Period within Number of Number of Number of
price per which options share share share for
share exercisable for which options which
options lapsed/ options
outstanding surrendered outstanding
at /awarded at
31 December during year 31 December
2021 2022
2015 87.0p Sep 2015 - Sep 300,000 (300,000) -
2025
2018 73.50p Feb 2018 - Feb 380,000 (380,000) -
2028
2022 352.0p Sep 2022 - Sep - 760,000 760,000
2032
On 1 September 2022, the company entered into an agreement with A Heller and G.
Casey to cancel the 300,000 options which were granted in 2015 and 380,000
options which were granted in 2018. The aggregate consideration paid by the
group to effect the cancellation was £1,853,270. On 1 September 2022 the
company granted additional options to the following directors of the company:
- A. Heller 380,000 options at an exercise price of 352.0p per share.
- G. Casey 380,000 options at an exercise price of 352.0p per share.
The options vest on date of grant and are exercisable within a period of 10
years from date of grant. There are no performance or service conditions
attached to the 2022 options which are outstanding at 31 December 2022. The
above options were valued at £547,200 at date of grant using the
Black-Scholes-Merton model with the following assumptions:
Expected volatility 54.18% (Based on historic volatility)
Expected life 4 years
Risk free rate 1.58%
Expected dividends 6.90%
2022 2022 2021 2021
Number Weighted Number Weighted
average average
exercise exercise
price price
Outstanding at 1 January 680,000 79.46p 680,000 79.46p
Lapsed/Surrendered/cancelled during the year (680,000) 79.46p - -
Issued during the year 760,000 352.00p - -
Outstanding at 31 December 760,000 352.00p 680,000 79.46p
Exercisable at 31 December 760,000 352.00p 680,000 79.46p
27. NON-CONTROLLING INTEREST
2022 2021
£'000 £'000
As at 1 January 323 116
Issue of shares in subsidiary 1 -
Share of profit/(loss) for the year 8,494 215
Dividends paid (7,034) -
Exchange adjustment (25) (8)
As at 31 December 1,759 323
The non-controlling interest comprises of a 37.5% interest in Black Wattle
Colliery (Pty) Ltd and its wholly owned subsidiary Sisonke Coal Processing
(Pty) Ltd. Black Wattle Colliery (Pty) Ltd is a coal mining company and Sisonke
Coal Processing (Pty) Ltd is a coal processing company both incorporated in
South Africa. Summarised financial information reflecting 100% of the
underlying consolidated relevant figures of Black Wattle Colliery (Pty) Ltd's
and its wholly owned subsidiary Sisonke Coal Processing (Pty) Ltd is set out
below.
2022 2021
£'000 £'000
Revenue 93,356 49,225
Expenses (63,289) (47,787)
Profit/(loss) for the year 30,067 1,438
Other comprehensive Income - -
Total comprehensive income for the year 30,067 1,438
Balance sheet
Non-current assets 16,325 9,019
Current assets 11,752 9,329
Current liabilities (18,873) (14,287)
Non-current liabilities (3,522) (1,904)
Net assets at 31 December 5,682 2,157
The non-controlling interest originates from the disposal of a 37.5%
shareholding in Black Wattle Colliery (Pty) Ltd in 2010 when 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
On 12 April 2022 the total issued share capital in Black Wattle Colliery (Pty)
Ltd was increased further from 1000 shares to 1002 shares at par of R1 through
the following share issue:
- a subscription of 1 "B" Share at par by Bisichi Mining (Exploration
Limited);
- a subscription of 1 "B" Share at par by Vunani Mining (Pty) Ltd
Bisichi Mining (Exploration) Limited is a wholly owned subsidiary of Bisichi
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.
The "B" shares rank pari passu with the ordinary shares save that they have
sole rights to the distributable profits attributable to certain mining
reserves held by Black Wattle Colliery (Pty) Ltd. A non-controlling interest is
recognised for all profits distributable to the "B" shares held by Vunani
Mining (Pty) Ltd from the date of issue of the shares (12 April 2022).
28. RELATED PARTY TRANSACTIONS
At 31 December During the year
Amounts Amounts Costs Cash
owed owed recharged paid
to by (to)/by (to)/by
related related related related
party party party party
£'000 £'000 £'000 £'000
Related party:
London & Associated Properties PLC (note (a)) - - 200 (241)
West Ealing Projects Limited (note (b)) - (1,237) - (239)
Dragon Retail Properties Limited (note (c)) 120 - (36) -
Development Physics Limited (note (d)) - (142) - (75)
As at 31 December 2022 120 (1,379) 164 (555)
London & Associated Properties PLC (note (a)) 41 - 200 (192)
West Ealing Projects Limited (note (b)) - (998) - (158)
Dragon Retail Properties Limited (note (c)) 156 - (36) 44
Development Physics Limited (note (d)) - (67) - (67)
As at 31 December 2021 197 (1,065) 164 (373)
(a) London & Associated Properties PLC - London & Associated Properties PLC
("LAP") is a substantial shareholder and parent company of Bisichi PLC.
Property management, office premises, general management, accounting and
administration services are provided for Bisichi PLC and its UK subsidiaries.
Bisichi PLC continues to operate as a fully independent company and currently
LAP owns only 41.52% of the issued ordinary share capital. However, LAP is
deemed under IFRS 10 to have effective control of Bisichi PLC for accounting
purposes.
(b) West Ealing Projects Limited - West Ealing Projects Limited ("West Ealing")
is an unlisted property company incorporated in England and Wales. West Ealing
is owned equally by the company and London & Associated Properties PLC and is
accounted as a joint venture and treated as a non-current asset investment.
(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.
(d) Development Physics Limited - Development Physics Limited ("DP") is an
unlisted property company incorporated in England and Wales. DP is owned
equally by the company, London & Associated Properties PLC and Metroprop Real
Estate Ltd and is accounted as a joint venture and treated as a non-current
asset investment.
Key management personnel comprise of the directors of the company who have the
authority and responsibility for planning, directing, and controlling the
activities of the company. Details of key management personnel compensation and
interest in share options are shown in the Directors' Remuneration Report on
pages 40 and 41 under the headings Directors' remuneration, Pension schemes and
incentives and Share option schemes which is within the audited part of this
report. The total employers' national insurance paid in relation to the
remuneration of key management was £580,000 (2021: £189,000). 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 £41,000 (2021: £41,000) and no repayment (2021: £nil) was made during the
year.
The non-controlling interest to Vunani Mining (Pty) Ltd is shown in note 27. In
addition, the Group holds an investment in Vunani Limited with a fair value of
£44,000 (2021: £45,000) and an investment in Vunani Capital Partners (Pty) Ltd
of £189,000 (2021: £38,000). Both are related parties to Vunani Mining (Pty)
Ltd and are classified as non-current available for sale investments.
29. EMPLOYEES
2022 2021
£'000 £'000
Staff costs during the year were as follows:
Salaries 8,891 6,995
Social security costs 580 189
Pension costs 300 307
Share based payments 2,220 -
11,991 7,491
2022 2021
The average weekly numbers of employees of the Group during the year were
as follows:
Production 213 214
Administration 15 15
228 229
30. CAPITAL COMMITMENTS
2022 2021
£ £'000
'000
Commitments for capital expenditure approved and contracted for at the year - -
end
31. LEASE LIABILITIES AND FUTURE PROPERTY LEASE RENTALS
The lease liabilities are secured by the related underlying assets. The
undiscounted maturity analysis of lease payments at 31 December 2022 is as
follows:
Mining Motor Head 2022 2021
Equipment & Vehicles Lease £'000 £'000
Development £'000 Property
costs £'000
£'000
Within one year 45 12 14 71 83
Second to fifth year 158 9 43 210 226
After five years 53 - 1,288 1,341 1,427
256 21 1,345 1,622 1,736
Discounting adjustment (47) (1) (1,174) (1,222) (1,282)
Present value 209 20 171 400 454
The present value of minimum lease payments at 31 December 2022 is as follows:
Mining Motor Head 2022 2021
Equipment & Vehicles Lease £'000 £'000
Development £'000 Property
costs £'000
£'000
Within one year (Note 19) 32 11 11 54 65
Second to fifth year 127 9 34 170 260
After five years 50 - 126 176 129
Present value 209 20 171 400 454
With the exception of short-term leases and leases of low-value underlying
assets, each lease is reflected on the balance sheet as a right-of-use asset
and a lease liability. The Group classifies its right-of-use assets in a
consistent manner to its property, plant and equipment. Lease liabilities due
within one year are classified within trade and other payables in the balance
sheet.
The Group has one lease for mining equipment in South Africa and one lease for
motor vehicles in the United Kingdom. Both leases have terms of less than 5
years are either non-cancellable or may only be cancelled by incurring a
substantive termination fee. Lease payments for mining equipment are subject to
changes in consumer price inflation in South Africa.
The Group has one lease contract for an investment property. The remaining term
for the leased investment property is 126 years (2021: 127 years). The annual
rent payable is the higher of £7,500 or 6.25% of the revenue derived from the
leased assets.
The Group has entered into rental leases on its investment property portfolio
consisting mainly of commercial properties. These leases have terms of between
1 and 106 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:
2022 2021
£'000 £'000
Within one year 973 948
Second year 875 830
Third year 801 776
Fourth year 716 710
Fifth year 645 634
After five years 9,530 9,956
13,540 13,854
32. CONTINGENT LIABILITIES AND POST BALANCE SHEET EVENTS
Bank Guarantees
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:
2022 2021
£'000 £'000
Rail siding 49 48
Rehabilitation of mining land 1,715 1,700
Water & electricity 47 46
Contingent tax liability
The interpretation of laws and regulations in South Africa where the Group
operates can be complex and can lead to challenges from or disputes with
regulatory authorities. Such situations often take significant time to resolve.
Where there is a dispute and where a reliable estimate of the potential
liability cannot be made, or where the Group, based on legal advice, considers
that it is improbable that there will be an outflow of economic resources, no
provision is recognised.
Black Wattle Colliery (Pty) Ltd is currently involved in a tax dispute in South
Africa related to VAT. The dispute arose during the year ended 31 December 2020
and is related to events which occurred prior to the years ended 31 December
2020. As at 26 April 2023, the Group has been advised that it has a strong
legal case, that it has complied fully with the legislation and, therefore, no
economic outflow is expected to occur. Because of the nature and complexity of
the dispute, the possible financial effect of a negative decision cannot be
measured reliably. Accordingly, no provision has been booked at the year end.
At this stage, the Group believes that the dispute will be resolved in its
favour.
Company balance sheet
at 31 December 2022
Notes 2022 2021
£'000 £'000
Fixed assets
Tangible assets 35 98 93
Investment in joint ventures 36 665 665
Other investments 36 18,946 9,987
19,709 10,745
Current assets
Debtors - amounts due within one year 37 2,754 3,636
Debtors - amounts due in more than one year 37 1,159 220
Bank balances 7,928 788
11,841 4,644
Creditors - amounts falling due within one year 38 (2,514) (454)
Net current assets 9,327 4,190
Total assets less current liabilities 29,036 14,935
Creditors - amounts falling in more than one year 38 (9) (20)
Net assets 29,027 14,915
Capital and reserves
Called up share capital 24 1,068 1,068
Share premium account 258 258
Other reserves 1,027 622
Retained earnings 33 26,674 12,967
Shareholders' funds 29,027 14,915
The profit for the financial year, before dividends payable, was £15,415,000
(2021: loss of £203,000)
The company financial statements were approved and authorised for issue by the
board of directors on 26 April 2023 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 2022
Share Share Other Retained Shareholders
capital premium reserve earnings funds
£'000 £'000 £'000 £'000 £'000
Balance at 1 January 2021 1,068 258 622 13,170 15,118
Dividends paid - - - - -
Profit and total comprehensive income for the - - - (203) (203)
year
Balance at 1 January 2022 1,068 258 622 12,967 14,915
Dividends paid - - - (1,708) (1,708)
Share options cancelled - - (142) - (142)
Share options issued - - 547 - 547
Profit and total comprehensive income for the - - - 15,415 15,415
year
Balance at 31 December 2022 1,068 258 1,027 26,674 29,027
Company accounting policies
for the year ended 31 December 2022
The following are the main accounting policies of the company:
Basis of preparation
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 leasehold property and certain financial instruments.
Going concern
Details on the Group's adoption of the going concern basis of accounting in
preparing the annual financial statements can be found on page 74.
Disclosure exemptions adopted
In preparing these financial statements the company has taken advantage of all
disclosure exemptions conferred by FRS 101 as well as disclosure exemptions
conferred by IFRS 2, 7, 13 and 16.
Therefore these financial statements do not include:
. certain comparative information as otherwise required by 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:
Office equipment 10 - 33 percent
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 at
fair value through profit and loss.
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 79.
Deferred taxation
Details on the Group's accounting policy for deferred taxation can be found on
page 81.
Leased assets and liabilities
Details on the Group's accounting policy for leased assets and liabilities can
be found on page 80.
Pensions
Details on the Group's accounting policy for pensions can be found on page 79.
Share based remuneration
Details on the Group's accounting policy for share based remuneration can be
found on page 79. Details of the share options in issue are disclosed in the
directors' remuneration report on page 41 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 PLC has not been presented as
permitted by Section 408(2) of the Companies Act 2006. The profit for the
financial year, before dividends paid, was £15,415,000 (2021: loss: £203,000)
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 41 under the heading Share option schemes which is
within the audited part of this report and note 26 of the Group financial
statements.
34. DIVIDS
Details on dividends can be found in note 9 in the Group financial statements.
35. TANGIBLE FIXED ASSETS
Leasehold Motor Office Total
Property Vehicles equipment £'000
£'000 £'000 £'000
Cost at 1 January 2022 45 104 70 219
Additions - - 46 46
Disposals - - (72) (72)
Cost at 31 December 2022 45 104 44 193
Accumulated depreciation at 1 January 2022 - 56 70 126
Charge for the year - 27 14 41
Disposals - - (72) (72)
Accumulated depreciation at 31 December 2022 - 83 12 95
Net book value at 31 December 2022 45 21 32 98
Net book value at 31 December 2021 45 48 - 93
Leasehold property consists of a single unit with a long leasehold tenant. The
term remaining on the lease is 37 years. Motor Vehicles comprise wholly of
Right of Use leased assets.
36. INVESTMENTS
Joint Shares in Other Total
ventures subsidiaries investments £'000
shares £'000 £'000
£'000
Net book value at 1 January 2022 665 6,356 3,631 9,987
Invested during the year - - 9,758 9,758
Repayment - - (1,517) (1,517)
Gain in investments - - 718 718
Net book value at 31 December 2022 665 6,356 12,590 18,946
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 of £12,590,000 (2021: £3,631,000) shares in listed
companies.
37. DEBTORS
2022 2021
£'000 £'000
Amounts due within one year:
Amounts due from subsidiary undertakings 1,079 2,421
Other debtors 237 94
Joint venture 1,379 1,065
Prepayments and accrued income 59 56
2,754 3,636
Amounts due in more than one year:
Deferred taxation 1,159 220
1,159 220
Amounts due within one year are held at amortised cost. The Group applies a
simplified approach to measure the loss allowance for trade receivables using
the lifetime expected loss provision. The Group applies a general approach on
all other receivables. The general approach recognises lifetime expected credit
losses when there has been a significant increase in credit risk since initial
recognition. The company has reviewed and assessed the underlying performance
and resources of its counterparties including its subsidiary undertakings and
joint ventures.
38. CREDITORS
2022 2021
£'000 £'000
Amounts falling due within one year:
Amounts due to subsidiary undertakings 15 -
Joint venture 120 156
Other taxation and social security 64 64
Other creditors 71 164
Lease Liabilities 11 26
Accruals and deferred income 2,233 44
2,514 454
Amounts falling due in more than one year:
Lease Liabilities 9 20
Lease liabilities comprise of leases on Motor vehicles with remaining leases of
1-3 years. With the exception of short-term leases and leases of low-value
underlying assets, each lease is reflected on the balance sheet as a
right-of-use asset and a lease liability.
39. RELATED PARTY TRANSACTIONS
At 31 During the year
December
At 31 December Amounts Costs Cash
owed recharged paid
by / (to)/
related accrued by
party (to)/ by related
£'000 related party
party £'000
£'000
Related party:
Black Wattle Colliery (Pty) Ltd (note (a)) (145) (972) 1,464
Ninghi Marketing Limited (note (b)) (102) - -
As at 31 December 2022 (247) (972) 1,464
Black Wattle Colliery (Pty) Ltd (note (a)) (637) (923) 1,617
Ninghi Marketing Limited (note (b)) (102) - -
As at 31 December 2021 (739) (923) 1,617
(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
R20,061,917 (2021: R20,061,917) (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.
40. EMPLOYEES
2022 2021
£'000 £'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 3,264 1,426
Social security costs 580 189
Pension costs 21 31
Share based payments 2,220 -
6,085 1,646
END
(END) Dow Jones Newswires
April 28, 2023 02:00 ET (06:00 GMT)
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