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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 | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.00 | - |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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TIDMBISI
BISICHI MINING PLC
Results for the year ended 31 December 2017
Summary:
Reported EBITDA: GBP3,700,000 (2016: GBP2,400,000)
Adjusted EBITDA: GBP5,800,000 (2016: GBP1,500,000)
· Improved performance in the second half of the year from Black
Wattle, the group's South African coal mining operation.
· Investment in significant infrastructure improvements allowed Black
Wattle to mine at a sustainably higher rate of production and achieve an
increased yield from its washing plant.
· Black Wattle was able to benefit from the significantly improved
coal prices during the second half of the year.
· UK property portfolio continues to perform well with average rental
yields for the portfolio remaining stable during the year.
· In light of the strong results achieved for the year, a special
dividend of 1p (2016: Nil) per share proposed in addition to a final dividend
of 3p (2016: 3p) taking full year dividend to 5p (2016: 4p) per share.
· Dividend yield of 7.1% at year end share price.
Chairman, Sir Michael Heller, comments:
"The permanent infrastructure improvements at Black Wattle will have a positive
impact on the returns achievable from our existing coal reserves and should
open up new opportunities to mine similar coal reserves in the surrounding
area. Accordingly, we remain confident about the ability of our South African
coal mining operations to continue to contribute to our group earnings and cash
generation for the foreseeable future."
For further information, please call:
Andrew Heller or Garrett Casey, Bisichi Mining PLC 020 7415 5030
BISICHI MINING PLC
ANNUAL REPORT 2017
Building on success at Black Wattle
Earnings before interest, tax, depreciation and amortisation (EBITDA) of
GBP3.7million
(2016: GBP2.4 million)
Operating profit before depreciation, fair value adjustments and exchange
movements (Adjusted EBITDA) of
GBP5.8million
(2016: GBP1.5 million)
Dividend yield of
7.1%
at year end share price.
Strategic report
The directors present the Strategic Report of the company for the year ending
31 December 2017. The aim of the Strategic Report is to provide shareholders
with the ability to assess how the Directors have performed their duty to
promote the success of the company for the collective benefit of shareholders.
Chairman's Statement
For the year ended 31 December 2017, we are very pleased to report that your
company achieved earnings before interest, tax, depreciation and amortisation
(EBITDA) of GBP3.7million (2016: GBP2.4 million) and operating profit before
depreciation, fair value adjustments and exchange movements (Adjusted EBITDA)
of GBP5.8million (2016: GBP1.5million).
These results can be attributed mainly to an improved performance in the second
half of the year from Black Wattle, our South African coal mining operation.
The decision by your management in the first half of the year to invest in
significant infrastructure improvements to the mine's washing plant has allowed
Black Wattle to mine at a higher rate of production and achieve an increased
yield. In addition, the mine was able to benefit from significantly improved
coal prices during the second half of the year. The permanent infrastructure
improvements at Black Wattle will have a positive impact on the returns
achievable from our existing coal reserves and should open up new opportunities
to mine similar coal reserves in the surrounding area. Accordingly, we remain
confident about the ability of our South African coal mining operations to
continue to contribute to our group earnings and cash generation for the
foreseeable future.
In other mining news, we are pleased to announce the appointment of Millicent
Zvarayi to the Board of Black Wattle Colliery (Pty) Ltd. Since 2012, Ms Zvarayi
has had a major role in the management of Black Wattle's export sales via
Richards Bay Coal Terminal under the Quattro programme. As a member of its
Board, we look forward to Ms Zvarayi's direct contribution to the development
of Black Wattle's long term strategy.
A fuller explanation on the performance of our mining operations for the year
can be found within the Mining Review and Financial & Performance Review
sections of this report.
The company's UK retail property portfolio, which underpins the group and which
is managed actively by London & Associated Properties Plc, continues to perform
well, with average rental yields for the portfolio remaining stable during the
year. A fuller explanation of the portfolio's valuation results and financial
position are discussed in the Financial & Performance Review and Directors
report.
Looking forward, management is currently investigating other major investment
opportunities in both the mining sector and the domestic property sector and is
conserving the group's cash reserves accordingly. This is in line with the
company's stated strategy of balancing the high risk of our mining operations
with a dependable cash flow from our UK property investment operations.
Finally, in light of the strong results achieved for the year, your directors
recommend a special dividend of 1p (2016: Nil) per share in addition to a final
dividend of 3p (2016: 3p). Both dividends will be payable on Friday 27 July
2018 to shareholders registered at the close of business on 6 July 2018. This
takes the total dividends per share for the year to 5p (2016: 4p). Based on the
2017 year end share price, this represents a 7.1% yield.
On behalf of the Board and shareholders, I would like to thank all of our staff
for their hard work during the course of the year.
Sir Michael Heller
Chairman
20 April 2018
Principal activity, strategy & business model
The company carries on business as a mining company and its principal activity
is coal mining in South Africa. The company's strategy is to create and deliver
long term sustainable value to all our stakeholders through our business model
which can be broken down into three key areas
1 Acquisition & investment 2 Production & sustainability 3 Processing & marketing
Strategy Strategy Strategy
The group actively seeks new The group strives to mine its The group seeks to achieve
opportunities to extend the coal reserves in an economical additional value from its
life of mine of its existing and sustainable manner that mining investments through the
mining operations or develop delivers long term value to washing, transportation and
new independent mining all our stakeholders. marketing of coal into both
operations in South Africa. the domestic and export
The group aims to achieve this markets.
through new commercial
arrangements and the
acquisition of additional coal
reserves nearby to or
independent from our existing
mining operations.
In addition to the three key areas outlined above, we seek to balance the high
risk of our mining operations with a dependable cash flow from our UK property
investment operations. The company invests in retail property across the UK.
The UK property portfolio is managed by London & Associated Properties PLC
whose responsibility is to actively manage the portfolio to improve rental
income and thus enhance the value of the portfolio over time.
Mining Review
The strong performance of Black Wattle, our South African coal mining
operation, can be attributed to increased mining production from our opencast
reserves and the successful completion of coal infrastructure improvements to
our washing plant. This allowed the group to benefit from the higher prices
achievable for our coal, particularly in the second half of the year.
Production and operations
For the first half of 2017 production at Black Wattle was impacted by higher
than expected seasonal rains as well as ongoing stone contamination issues at
our opencast areas. Overall, the mine achieved mining production of 582,000
metric tonnes (2016 H1: 795,000 metric tonnes) during the first half of the
year. The stone contamination issues affected both yield and mining production
through the washing plant, thus impacting on sales volumes and earnings in the
first half of the year.
During the second half of the year, further development of our opencast areas
and the successful completion of infrastructure improvements to our washing
plant allowed the mine to increase mining production to 714,000 metric tonnes
(2016 H2: 465,000 tonnes) during the period. In addition, the completion of
infrastructure improvements assisted in reducing the stone contamination
through the washing plant and increasing our overall yield.
As a result of the higher production in the second half of the year, overall
mining production from Black Wattle increased in 2017, with total mining
production for the year of 1.30million metric tonnes (2016: 1.26million metric
tonnes). As part of Black Wattle's mining plan, the opencast areas that were
mined in 2017 will continue to be mined throughout 2018. We expect mining
production levels achieved in the second half of 2017 to be maintained in 2018.
As mentioned in the Chairman's statement, the infrastructure improvements
completed at Black Wattle in 2017 will continue to have a positive impact on
the returns achievable from our remaining reserves. In addition, the new
machinery will allow Black Wattle to mine or buy in coal from similar reserves
within the area that may be affected by stone contamination issues thus
broadening the scope of new opportunities for the group to extend the life of
mine of our mining operations in South Africa.
Main trends/markets
During 2017 management continued to sell coal into both the export and domestic
market. Black Wattle's export sales were via Richards Bay Coal Terminal and
primarily under the Quattro programme, which allows junior black-economic
empowerment coal producers direct access to the coal export market via Richards
Bay Coal Terminal. We would like to thank Vunani Limited, our black economic
empowered shareholders at Black Wattle, for managing and developing this
opportunity.
Although International coal prices fell in the first half of 2017, a surge in
the international price in the second half of the year ensured an overall
improvement in prices achievable for our coal for the year. At the beginning of
2017, the average weekly price of Free on Board (FOB) Coal from Richards Bay
Coal Terminal (API4) was $85. During the year the API4 price steadily decreased
to around $70 by May 2017 before rebounding and steadily increasing to $95 by
the end of the year. A less volatile South African Rand against the US Dollar
ensured that the movements in the Rand prices achievable for our export coal as
a result of exchange movements remained limited. Overall, the group achieved an
average Rand price of R773 per tonne of export coal sold in 2017 from the mine
compared to R632 in 2016.
In the domestic market, a continued high demand impacted positively on prices
achievable for our coal in 2017. In the last quarter of 2016, the average Rand
price achievable per tonne of coal sold was R276 increasing to R390 by the
second quarter of 2017 and over R400 by the last quarter of 2017. Overall, the
group achieved an average price of R397 per tonne of domestic coal sold in 2017
compared to R279 in 2016. Looking forward, domestic prices are expected to
remain stable as long as the shortage of coal in the domestic market continues.
Overall, the increase in group revenue, compared to the prior year, can mainly
be attributed to the higher volume of coal sold at Black Wattle as well as the
higher prices achieved for our coal.
Looking forward into 2018, both the export and domestic coal prices have
continued to remain stable at these higher levels and we continue to see strong
demand for our coal in both markets.
Sustainable development
Black Wattle continues to strive to conduct business in a safe, environmentally
and socially responsible manner. Some highlights of our Health, Safety and
Environment performance in 2017:
* Black Wattle Colliery recorded one Lost Time Injury during 2017 (2016: One).
* No cases of Occupational Diseases were recorded.
* Zero claims for the Compensation for Occupational Diseases were submitted.
We continue to adhere and make progress in terms of our Social and Labour Plan
and our various BEE initiatives. A fuller explanation of these can be found in
our Sustainable Development Report on page 8.
Prospects
Looking forward to 2018, management will focus on maintaining production at the
higher levels achieved in the second half of 2017 and increasing our life of
mine through the acquisition of additional reserves. With strong demand and
improved prices achievable for our coal, we believe the group is in a strong
position to achieve significant value from our South African mining operations
in 2018.
Andrew Heller
Managing Director
20 April 2018
Sustainable development
The group is fully committed to ensuring the sustainability of both our UK and
South African mining operations and delivering long term value to all our
stakeholders.
Health, Safety & Environment (HSE)
Black Wattle is committed to creating a safe and healthy working environment
for its employees and the health and safety of our employees is of the utmost
importance.
HSE performance in 2017:
* No cases of Occupational Diseases were recorded.
* Zero claims for the Compensation for Occupational Diseases were submitted.
* No machines operating at Black Wattle exceeded the regulatory noise level.
* Black Wattle Colliery recorded one Lost time Injury during 2017.
In addition to the required personnel appointments and assignment of direct
health and safety responsibilities on the mine, a system of Hazard
Identification and Risk Assessments has been designed, implemented and
maintained at Black Wattle.
Health and Safety training is conducted on an on going 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 on going 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.
* On going basic rigging training is being conducted for all washing plant
personnel.
* A Job Safety Analysis form is utilised to ensure effective identification
of hazards in the workplace.
* In order to capture and record investigation findings from incidents, an
incident recording sheet is utilised by line management and contractors.
* Black Wattle Colliery utilises ICAM (Incident Cause Analysis Method).
* On going training on conveyor belt operation is being conducted with all
employees involved with this discipline.
Black wattle colliery social and labour plan (slp) progress
Black Wattle Colliery is committed to true transformation and empowerment as
well as poverty eradication within the surrounding and labour providing
communities.
Black Wattle is committed to providing opportunities for the sustainable
socio-economic development of its stakeholders, such as:
* Employees and their families, through Skills Development, Education
Development, Human Resource Development, Empowerment and Progression
Programmes.
* Surrounding and labour sending communities, through Local Economic
Development, Rural and Community Development, 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).
* Black Wattle has drawn up a new SLP Plan for the next five years (2017 -
2021).
* The current Black Wattle Colliery Local Economic Development (LED)
programmes were upgraded, and new LED projects were selected in
consultation with the key stakeholders from the STLM.
* An appropriate forum was established on the mine and a process initiated
for the consultation, empowerment and participation of the employee
representatives in the Black Wattle Colliery SLP process.
* Included within the new SLP Plan is a new LED project which includes the
upgrading of Phumelele Secondary School in the Rockdale Township. The
primary focus is to build additional facilities, including classrooms to
cater for the growing population in the area.
* Black Wattle Colliery has concluded extensive work on various Agricultural
projects as well as the E-Bag Recycling projects. The E-Bag Recycling
project aims to minimize the environmental impact of post-consumer
Polyethylene Terephthalate plastic (PET) on the South African landscape.
The project was awarded the PET Entrepreneur award for 2013. To date in
2017, the E-Bag recycling project has initiated up to 70 local community
jobs in the region. Black Wattle Colliery has entered into a joint venture
project with Enviroserve Waste Management to further develop and ensure the
future sustainability of this project.
* Various upgrades were initiated at the Evergreen School nearby to Black
Wattle including the erection of new toilet facilities for the boys and
girls, which formed part of the mines portable skills development programme
for our employees.
Social, community and human rights issues
The group believes that it is in the shareholders' interests to consider social
and human rights issues when conducting business activities both in the UK and
South Africa.
Environment & Environment Management Programme
South Africa
Under the terms of the mine's Environmental Management Programme approved by
the Department of Mineral Resource ("DMR"), Black Wattle undertakes a host of
environmental protection activities to ensure that the approved Environmental
Management Plan is fully implemented. In addition to these routine activities,
Black Wattle regularly carries out environmental monitoring activities on and
around the mine, including evaluation of ground water quality, air quality,
noise and lighting levels, ground vibrations, air blast monitoring, and
assessment of visual impacts. In addition to this Black Wattle also does
quarterly monitoring of all boreholes around the mine to ensure that no
contaminated water filters through to the surrounding communities.
Black Wattle is fully compliant with the regulatory requirements of the
Department of Water Affairs and Forestry and has an approved water use licence.
Black Wattle Colliery has substantially improved its water management by
erecting and upgrading all its pollution control dams in consultation with the
Department of Water Affairs and Forestry.
A performance assessment audit was conducted to verify compliance to our
Environmental Management Programme and no significant deviations were found.
United Kingdom
The group's UK activities are principally property investment whereby we
provide premises which are rented to retail businesses. We seek to provide
those tenants with good quality premises from which they can operate in an
efficient and environmentally sound manner.
Procurement
Black Wattle is a level 7 contributor to B-BBEE and has achieved a 50% BEE
procurement recognition level. In compliance with the Mining Charter and the
Mineral and Petroleum Resource Development Act, Black Wattle has implemented a
BBBEE-focussed procurement policy which strongly encourages our suppliers to
establish and maintain BBBEE credentials. At present, BBBEE companies provide
approximately 88 percent of Black Wattle's equipment and services.
We closely monitor our monthly expenditure and welcome potential BBBEE
suppliers to compete for equipment and service contracts at Black Wattle.
Employment
As part of Black Wattle's commitment to the South African government Mining
Charter, the company seeks to:
* Expand opportunities for historically disadvantaged South Africans (HDSAs),
including women, to enter the mining and minerals industry and benefit from
the extraction and processing of the country's resources;
* Utilise the existing skills base for the empowerment of HDSAs; and
* Expand the skills base of HDSAs in order to serve the community.
In addition Black Wattle is committed to achieving the goals of the South
African Employment Equity Act and is pleased to report the following:
* Black Wattle Colliery has exceeded the 10 percent women in management and
core mining target.
* Black Wattle Colliery has achieved 12 percent women in core mining.
* 94 percent of the women at Black Wattle Colliery are HDSA females.
Black Wattle Colliery has successfully submitted their annual Employment Equity
Report to the Department of Labour.
In terms of staff training some highlights for 2017 were:
* 11 employees were trained in ABET (Adult Basic Educational Training) on
various levels;
* An additional 5 disabled women continued their training on ABET level one
and two.
* 2 HDSA Females have completed and qualified in their respective
apprenticeships at the mine.
* Black Wattle had several of the staff of Silver Solutions CC, a black owned
private contractor on the mine, trained to become competent to perform
plastic pipe welding. The mine makes extensive use of their services in
this area.
Employment terms and conditions for our employees based at our UK office and at
our South African mining operations are regulated by and are operated in
compliance with all relevant prevailing national and local legislation.
Employment terms and conditions provided to mining staff meet or exceed the
national average. The group's mining operations and coal washing plant facility
are labour intensive and unionised. During the year no labour disputes, strikes
or wage negotiations disrupted production or had a significant impact on
earnings. The group's relations to date with labour representatives and labour
related unions continue to remain strong.
In terms of directors, employees and gender representation, at the year end the
group had 6 directors (6 male, 0 female), 7 senior managers (6 male, 1 female)
and 196 employees (143 male, 53 female).
Green House Gas reporting
We have reported on all of the emission sources required under the Companies
Act 2006 (Strategic Report and Directors' Reports) Regulations.
The group has employed the Operational Control boundary definition to outline
our carbon footprint boundary. Included within that boundary are Scope 1 & 2
emissions from coal extraction and onsite mining processes for Black Wattle
Colliery. We have not measured and reported on our Scope 3 emissions sources.
Excluded from the footprint boundary are emission sources considered non
material by the group, including refrigerant use onsite.
We have used the GHG Protocol Corporate Accounting and Reporting Standard
(revised edition) and a methodology adapted from the Intergovernmental Panel on
Climate Change (2006) to calculate fugitive emissions from surface coal mining
activities. Further emission factors were used from UK Government's GHG
Conversion Factors for company Reporting 2017.
The group's carbon footprint: 2017 2016
CO2e CO2e
Tonnes Tonnes
Emissions source:
Scope 1 Combustion of fuel & operation of facilities 15,575 11,860
Scope 1 Emissions from coal mining activities 22,683 22,171
Scope 2 Electricity, heat, steam and cooling 11,210 8,530
purchased for own use
Total 49,468 42,561
Intensity:
Intensity 1 Tonnes of CO2 per pound sterling of 0.0013 0.0019
revenue
Intensity 2 Tonnes of CO2 per tonne of coal produced 0.038 0.034
Principal risks & uncertainties
PRINCIPAL RISK PERFORMANCE AND MANAGEMENT OF THE RISK
COAL PRICE RISK The group primarily focuses on managing its
The group is exposed to coal price risk as underlying production costs to mitigate coal
its future revenues will be derived based on price volatility as well as from time to time
contracts or agreements with physical entering into forward sales contracts with the
off-take partners at prices that will be goal of preserving future revenue streams. The
determined by reference to market prices of group has not entered into any such contracts
coal at delivery date. in 2017 and 2016.
The group's South African mining operational The group's export and domestic sales are
earnings are significantly dependent on determined based on the ability to deliver the
movements in both the export and domestic quality of coal required by each market and
coal price. Quattro programme quotas, together with the
The price of export sales is derived from a market factors set out opposite. Volumes of
US Dollar-denominated export coal price and export sales achieved during the year were
therefore the price achievable in South primarily dependent on the mine's ability to
African Rands can be influenced by movements produce the higher quality of coal required
in exchange rates and overall global demand for export as well as allowable quotas under
and supply. the Quattro programme and overall global
The domestic market coal prices are demand. The volume of domestic market sales
denominated in South African Rand and are achieved during the year were primarily
primarily dependant on local demand and dependant on local demand and supply as well
supply. as the mine's ability to produce the lower
overall quality of coal required.
MINING RISK This risk is managed by engaging independent
As with many mining operations, the reserve geological experts, referred to in the
that is mined has the risk of not having the industry as the "Competent Person", to
qualities and accessibility expected from determine the estimated reserves and their
geological and environmental analysis. This technical and commercial feasibility for
can have a negative impact on revenue and extraction. In addition, management engage
earnings as the quality and quantity of coal Competent Persons to assist management in the
mined and sold by our mining operations may production of detailed life of mine plans as
be lower than expected. well as in the monitoring of actual mining
results versus expected performance and
management's response to variances. The group
continued to engage an independent Competent
Person in the current year. Refer to page 6
for details of mining performance.
CURRENCY RISK Export sales within the group's South African
The group's operations are sensitive to operations are derived from a US
currency movements, especially those between Dollar-denominated export coal price. A
the South African Rand, US Dollar and weakening of the US Dollar can have a negative
British Pound. These movements can have a impact on the South African Rand prices
negative impact on the group's mining achievable for coal sold by the group's South
operations revenue as noted above, as well African mining operations. This in turn can
as operational earnings. have a negative impact on the group's mining
The group is exposed to currency risk in operations revenue as well as operational
regard to the Sterling value of earnings as the group's mining operating costs
inter-company trading balances with its are Rand denominated. In order to mitigate
South African operations. It arises as a this, the group may enter into forward sales
result of the retranslation of Rand contracts in local currencies with the goal of
denominated inter-company trade receivable preserving future revenue streams. The group
balances into Sterling that are held within has not entered into any such contracts in
the UK and which are payable by South 2017 and 2016.
African Rand functional currency Although it is not the group's policy to
subsidiaries. obtain forward contracts to mitigate foreign
The group is exposed to currency risk in exchange risk on inter-company trading
regard to the retranslation of the group's balances or on the retranslation of the
South African functional currency net assets group's South African functional currency net
to the Sterling reporting functional assets, management regularly review the
currency of the group. A weakening of the requirement to do so in light of any increased
South African Rand against Sterling can have risk of future volatility.
a negative impact on the financial position Refer to the 'Financial Review' for details of
and net asset values reported by the group. significant currency movement impacts in the
year.
NEW RESERVES AND MINING PERMISSIONS The maintenance of compliance with permits
The life of the mine, acquisition of includes factors such as environmental
additional reserves, permissions to mine management, health and safety, labour laws and
(including ongoing and once-off permissions) Black Empowerment legislation; as failure to
and new mining opportunities in South Africa maintain appropriate controls and compliance
generally are contingent on a number of may in turn result in the withdrawal of the
factors outside of the group's control such necessary permissions to mine. The management
as approval by the Department of Mineral of these regulatory risks and performance in
Resources, the Department of Water Affairs the year is noted on page 17 under the
and Forestry and other regulatory or state headings environmental risk, health & safety
owned entities. risk and labour risk. Additionally, in order
In addition, the group's South African to mitigate this risk, the group strives to
operations are subject to the government provide adequate resources to this area
Mining Charter. including the employment of adequate personnel
Any regulatory changes to the Mining and the utilisation of third party consultants
Charter, or failure to meet existing competent in regulatory compliance related to
targets, could adversely affect the mine's mining rights and mining permissions
ability to retain its mining rights in South The group also continues to actively seek new
Africa. opportunities to expand it mining operations
in South Africa through the acquisition of
additional coal reserves and new commercial
arrangements with existing mining right
holders.
POWER SUPPLY RISK The group's mining operations have to date not
The current utility provider for power been affected by power cuts. However the group
supply in South Africa is the government run manages this risk through regular monitoring
Eskom. Eskom continues to undergo capacity of Eskom's performance and ongoing ability to
problems resulting in power cuts and lack of meet power requirements. In addition, the
provision of power supply to new projects. group continues to assess the ability to
Any power cuts or lack of provision of power utilise diesel generators as an alternative
supply to the group's mining operations may means of securing power in the event of power
disrupt mining production and impact on outages.
earnings.
PRINCIPAL RISK PERFORMANCE AND MANAGEMENT OF THE RISK
FLOODING RISK Management monitors water levels on an ongoing
The group's mining operations are basis and various projects have been
susceptible to seasonal flooding which could completed, including the construction of
disrupt mining production and impact on additional dams, to minimise the impact of
earnings. this risk as far as possible.
ENVIRONMENTAL RISK In line with all South African mining
The group's South African mining operations companies, the management of this risk is
are required to adhere to local based on compliance with the Environment
environmental regulations. Any failure to Management Plan. In order to ensure
adhere to local environmental regulations, compliance, the group strives to provide
could adversely affect the mine's ability to adequate resources to this area including the
mine under its mining right in South Africa. employment of personnel and the utilisation of
third party consultants competent in
regulatory compliance related to environmental
management.
To date, Black Wattle is fully compliant with
the regulatory requirements of the Department
of Water Affairs and Forestry and has an
approved water use licence. Further details of
the group's Environment Management Programme
are disclosed in the Sustainable development
report on page 9.
HEALTH & SAFETY RISK The group has a comprehensive Health and
Attached to mining there are inherent health Safety programme in place to mitigate this
and safety risks. Any such safety incidents risk. Management strive to create an
disrupt operations, and can slow or even environment where Health and safety of our
stop production. In addition, the group's employees is of the utmost importance. Our
South African mining operations are required Health & Safety programme provides clear
to adhere to local Health and Safety guidance on the standards our mining operation
regulations. is expected to achieve. In addition,
management receive regular updates on how our
mining operations are performing. Further
details of the group's Health and Safety
Programme are disclosed in the Sustainable
development report on page 8.
LABOUR RISK In order to mitigate this risk, the group
The group's mining operations and coal strives to ensure open and transparent
washing plant facility are labour intensive dialogue with employees across all levels. In
and unionised. Any labour disputes, strikes addition, appropriate channels of
or wage negotiations may disrupt production communication are provided to all employment
and impact earnings. unions at Black Wattle to ensure effective and
early engagement on employment matters, in
particular wage negotiations and disputes.
Refer to the 'Employment' section on page 12
for further details.
CASHFLOW RISK In order to mitigate this, we seek to balance
Commodity price risk, currency volatility the high risk of our mining operations with a
and the uncertainties inherent in mining may dependable cash flow from our UK property
result in favourable or unfavourable investment operations which are actively
cashflows. managed by London & Associated Properties PLC.
Due to the long term nature of the leases, the
effect on cash flows from property investment
activities are expected to remain stable as
long as tenants remain in operation. Refer to
page 22 for details of the property portfolio
performance.
PROPERTY VALUATION RISK The group utilises the services of London &
Fluctuations in property values, which are Associated Properties PLC whose responsibility
reflected in the Consolidated Income is to actively manage the portfolio to improve
Statement and Balance Sheet, are dependent rental income and thus enhance the value of
on an annual valuation of commercial the portfolio over time. In addition,
properties. A fall in UK commercial property management regularly monitor banking covenants
can have a marked effect on the and other loan agreement obligations as well
profitability and the net asset value of the as the performance of our property assets in
group as well as impact on covenants and relation to the overall market over time.
other loan agreement obligations. Management continue to monitor and evaluate
The economic performance of the United the impact of Brexit on the future performance
Kingdom, including the potential impact of of the Group's existing UK portfolio. In
the United Kingdom leaving the European addition, the group assesses on an ongoing
Union ("Brexit"), may impact the level of basis the impact of Brexit on the group's
rental income, yields and associated banking covenants, loan obligations and future
property valuations of the group's UK investment decisions.
property assets. Refer to page 22 for details of the property
portfolio performance.
Financial & performance review
The movement in the Group's Adjusted EBITDA from GBP1.5million in 2016 to GBP
5.8million in 2017 can mainly be attributed to the higher prices achieved for
our coal and increased mining production at Black Wattle offsetting the impact
of higher mining and washing costs. As we continue into 2018, the group's
financial position remains strong and we expect to achieve significant value
from our existing mining operations as noted in the Mining Review.
EBITDA, adjusted EBITDA and mining production are used as key performance
indicators for the group and its mining activities as the group has a strategic
focus on the long term development of its existing mining reserves and the
acquisition of additional mining reserves in order to realise shareholder
value. 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 performance indicators of the group, the
profitability of the group and the group's mining activities can be impacted by
the volatile and capital intensive nature of the mining sector. Accordingly,
EBITDA and adjusted EBITDA are primarily used as key performance indicators as
they are indicative of the value associated with the group's mining assets
expected to be realised over the long term life of the group's mining reserves.
In addition, for the group's property investment operations, the net property
valuation and net property revenue are utilised as key performance indicators
as the group's substantial property portfolio reduces the risk profile for
shareholders by providing stable cash generative UK assets and access to
capital appreciation.
Key performance indicators 2017 2016
GBP'000 GBP'000
The key performance indicators for the group are:
For the group:
Operating profit before depreciation, fair value adjustments and 5,819 1,516
exchange movements (adjusted EBITDA)
EBITDA 3,734 2,415
Profit/(loss) before tax 1,485 346
For our property investment operations:
Net property valuation (excluding joint ventures) 13,245 13,245
Net property revenue (excluding joint ventures) 1,125 1,084
For our mining activities:
Operating profit before depreciation, fair value adjustments and 4,894 755
exchange movements (adjusted EBITDA)
EBITDA 2,811 1,204
Tonnes Tonnes
'000 '000
Mining production 1,296 1,260
The key performance indicators of the Mining Property Other 2017
group can be reconciled as follows: GBP'000 GBP'000 GBP'000 GBP'000
Revenue 36,300 1,125 34 37,459
Mining and washing costs (25,664) - - (25,664)
Other operating costs excluding (5,742) (228) (6) (5,976)
depreciation
Operating profit before depreciation, 4,894 897 28 5,819
fair value adjustments and exchange
movements (adjusted EBITDA)
Exchange movements (256) - - (256)
Fair value adjustments - (13) - (13)
Gain on disposal of other investments - - 3 3
Operating profit excluding depreciation 4,638 884 31 5,553
Share of (loss)/profit and write off's in (1,827) 8 - (1,819)
joint venture
EBITDA 2,811 892 31 3,734
Net interest movement (459)
Depreciation (1,790)
Profit/(loss) before tax 1,485
The key performance indicators of the group can be Mining Property Other 2016
reconciled as follows: GBP'000 GBP'000 GBP'000 GBP'000
Revenue 21,703 1,084 28 22,815
Mining and washing costs (16,184) - - (16,184)
Other operating costs excluding depreciation (4,764) (348) (3) (5,115)
Operating profit before depreciation, fair value 1,516
adjustments and exchange movements (adjusted EBITDA) 755 736 25
Exchange movements 449 - - 449
Fair value adjustments - 445 12 457
Operating profit excluding depreciation 1,204 1,181 37 2,422
Share of (loss)/profit in joint venture - (7) - (7)
EBITDA 1,204 1,174 37 2,415
Net interest movement (284)
Depreciation (1,785)
Profit/(loss) before tax 346
Adjusted EBITDA is used as a key indicator of the 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
investments. The performance of these two operating segments are discussed in
more detail below.
The group achieved EBITDA for the year of GBP3.7 million (2016: GBP2.4million). The
movement compared to the prior year can mainly be attributed to increased
operating profits before depreciation from our mining activities of GBP4.9million
(2016: GBP1.2million) offset by the group's share of losses in joint venture
mining assets of GBP1.8million (2016: GBPnil). The share of losses in joint
ventures can be attributed to the write off of our joint venture mining
investment in Ezimbokodweni Mining (Pty) LTD of GBP1.8million which is discussed
in further detail below.
Depreciation for the year, related to our mining operations, remained stable at
GBP1.8million (2016: GBP1.8million) with the group reporting an overall profit
before tax of GBP1.5million (2016: GBP0.3million).
SOUTH AFRICAN MINING OPERATIONS
Performance
The key performance indicators of the group's South African Rand UK Sterling
South African mining operations are presented
in South African Rand and UK Sterling as 2017 2016 2017 2016
follows: R'000 R'000 GBP'000 GBP'000
Revenue 622,691 432,481 36,300 21,703
Mining and washing costs (440,241) (322,505) (25,664) (16,184)
Operating profit before other operating costs 182,450 109,976 10,636 5,519
and depreciation
Other operating costs (excluding (5,742) (4,764)
depreciation)
Operating profit before depreciation, fair 4,894 755
value adjustments and exchange movements
(adjusted EBITDA)
Exchange movements (256) 449
Share of loss in joint ventures (1,827) -
EBITDA 2,811 1,204
2017 2016
'000 '000
Mining production in tonnes 1,296 1,260
2017 2016
R R
Revenue per tonne of mining production 480 343
Mining and washing costs per tonne of mining production (340) (256)
Operating profit per tonne of mining production before other 140 87
operating costs and depreciation
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 2017 Domestic Export 2016
'000 '000 '000 '000 '000 '000
Quantity of coal sold in tonnes 1,267 155 1,422 1,219 147 1,366
Domestic Export 2017 Domestic Export 2016
R'000 R'000 R'000 R'000 R'000 R'000
Total Revenue 502,818 119,873 622,691 339,611 92,870 432,481
R R R R R R
Revenue per tonne of coal sold 397 773 438 279 632 317
The quantity of coal sold can be defined as the quantity of coal sold in metric
tonnes from the mine in any given period. Revenue per tonne of coal sold can be
defined as the net revenue price achieved per metric tonne of coal sold.
Total revenue for the group's mining operations increased for the year from
R317 per tonne of coal sold in 2016 to R438 in 2017, attributable to the
average price increases achieved in both the domestic and export market. As a
result of the overall higher mining production, the quantity of coal sold for
the year increased to 1.422million tonnes (2016: 1.366million tonnes). Overall,
the revenue for the group's South African mining operations increased in the
year to R622.7million (2016: R432.5 million).
The overall increase in cost per tonne from R256 per tonne to R340 per tonne
can mainly be attributed to the movement of mining operations to new opencast
reserves at Black Wattle which have higher inherent mining costs. As a result
of the higher mining cost per tonne and the increase in total mining
production, total mining and washing costs for the group increased from
R322.5million in 2016 to R440.2million in 2017.
Other operating costs (excluding depreciation) of GBP5.7million (2016: GBP
4.8million) include general administrative costs as well as administrative
salaries and wages related to our South African mining operations that are
incurred both in South Africa and in the UK. These costs are not significantly
impacted by movements in mining production and the increase during the year can
mainly be attributed to exchange movements on the translation of South African
Rand costs into Sterling. Overall costs were in line with management's
expectations and local inflation.
Overall, the group's South African mining operations achieved an adjusted
EBITDA of GBP4.9million (2016: GBP0.8million) attributable to the increase in
mining production for the year and higher prices achievable for our coal
offsetting the higher mining cost per tonne of our new opencast reserves.
The group's EBITDA for mining activities of GBP2.8million (2016: GBP1.2million) for
the year, in comparison to the result achieved for adjusted EBITDA were
negatively impacted by the share of loss in joint ventures of GBP1.8million
(2016: GBPnil) related to the write off of our investment in Ezimbokodweni Mining
(Pty) Ltd as well as an exchange rate loss of GBP0.3million in the current year
compared to an exchange rate gain of GBP0.4million incurred during the prior
year. These exchange movements can mainly be attributable to the retranslation
of Rand denominated inter-company trade receivable balances with our South
African mining operations that are held within the UK.
A further explanation of the mines operational performance can be found in the
Mining Review on page 6.
Other mining Investments
During the year the group wrote off its GBP1.8million investment in Ezimbokodweni
Mining (Pty) Limited ("Ezimbokodweni") made up of a GBP1.4million loan (2016: GBP
1.4million) and a GBP0.4million (2016: GBP0.4million) joint venture investment.
The carrying value of the investment was dependent upon the completion of the
acquisition of the Pegasus coal project ("the project") in South Africa.
Although a proposed sale and purchase agreement had been negotiated and a
deposit paid for the project, the conclusion of the transaction had been
delayed pending the commercial transfer of the prospecting right from the
current owners of the project to Ezimbokodweni. Although the group has always
remained committed to completing the transaction, previous negotiations to
complete the commercial acquisition of the project had been beset by various
delays outside of its control and at the beginning of 2017, the current owners
of the project notified Ezimbokodweni that they no longer wished to divest the
project. More recently, the group was notified that an agreement was reached
between the current owners of the project and the directors of Ezimbokodweni
for the deposit for the project to be returned and any further negotiations
with Ezimbokodweni to acquire the project to be terminated. Although, a legal
claim by the group has been issued against Ezimbokodweni and its
representatives, in order for the group to recover some of the investment, the
Board has considered it to be appropriate to write off the investment in full
in the 2017 year end.
Uk property investment
Performance
The group's portfolio is managed actively by London & Associated properties plc
and continues to perform well with net property revenue (excluding joint
ventures) across the portfolio increasing marginally during the year to GBP
1.125million (2016: GBP1.084million). The property portfolio was externally
valued at 31 December 2017 and the value of UK investment properties
attributable to the group at year end remained unchanged at GBP13.25 million
(2016: GBP13.25million).
Joint venture property investments
The group holds a GBP0.9million (2016: GBP0.9million) 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 remained unchanged at
GBP1.3million (2016: GBP1.3million).
Overall, the group achieved net property revenue of GBP1.21million (2016: GBP
1.17million) for the year which includes the company's share of net property
revenue from its investment in joint ventures of GBP83,000 (2016: GBP86,000).
Loans
South Africa
In July 2017, the group increased its South African structured trade finance
facility with Absa Bank Limited from R80million (South African Rand) to
R100million. The facility is renewable annually at 30 June and is secured
against inventory, debtors and cash that are held in the group's South African
operations. This facility comprises of a R80million revolving facility to cover
the fluctuating working capital requirements of the group's South African
operations, and a fully drawn R20million loan facility to cover guarantee
requirements related to the group's South African mining operations. The Board
anticipate the facility will be renewed again this year.
United Kingdom
In December 2014, the group signed a GBP6 million term loan facility with
Santander. The Loan is secured against the group's UK retail property
portfolio. The facility has a five year term, and is repayable at the end of
the term. The interest cost of the loan is 2.35% above LIBOR. No covenants were
breached during the year.
Cashflow & financial position Year Year
The following table summarises the main components of the ended ended
consolidated cashflow for the year: 31 31
December December
2017 2016
GBP'000 GBP'000
Cash flow generated from operations before working capital and 5,819 1,625
other items
Cash flow from operating activities 7,270 2,614
Cash flow from investing activities (1,936) (1,691)
Cash flow from financing activities (429) (521)
Net (decrease) / increase in cash and cash equivalents 4,905 402
Cash and cash equivalents at 1 January (890) (626)
Exchange adjustment 50 (666)
Cash and cash equivalents at 31 December 4,065 (890)
Cash and cash equivalents at 31 December comprise:
Cash and cash equivalents as presented in the 5,327 2,444
balance sheet
Bank overdrafts (secured) (1,262) (3,334)
4,065 (890)
Cash flow generated from operating activities increased compared to the prior
year to GBP7.3million (2016: GBP2.6 million) mainly due to the improved operating
performance of our South African mining operations, as outlined above. Overall
the group achieved an increase in operating profit during the year of GBP
3.8million (2016: GBP0.6million). In addition to operating profit, the increase
in cashflow generation from operating activities can also be attributed to a
cashflow increase from trade receivables of GBP0.9million (2016: GBP0.2million), as
a result of an decrease in the trade receivables balances of our South African
domestic coal customers, and a cashflow increase from inventories of GBP
0.9million (2016: decrease of GBP0.26million), as a result of improved coal sales
from our South African mining operations in the last quarter of 2017.
Investing cashflows primarily reflect the net effect of capital expenditure
during the year of GBP1.8million (2016: GBP2.9million) which can mainly be
attributable to the new infrastructure improvements to the washing plant
facility at Black Wattle, as outlined in the Mining Review. As at year end the
group's mining reserves, plant and equipment had a net asset value of GBP
8.6million (2016: GBP8.5million) with capital expenditure being offset by
depreciation of GBP1.8million (2016: GBP1.8milion) for the year.
Cash outflows from financing activities included dividends paid to shareholders
of GBP0.4million (2016: 0.4 million).
Overall, the group managed to achieve an overall increase in cash and cash
equivalents of GBP4.9million (2016: GBP0.4million) for the year. After taking into
account an exchange gain of GBP0.05million (2016: loss of GBP0.7million) on the
translation of the group's year end net balance of cash and cash equivalents
that were held in South African Rands, the group's net balance of cash and cash
equivalents (including bank overdrafts) at year end was GBP4.1 million (2016:
balance owing of: GBP0.9million).
The group has considerable financial resources available at short notice
including cash and cash equivalents (excluding bank overdrafts) of GBP5.3million
(2016: GBP2.4million), investments available for sale of GBP1.1million (2016: GBP
0.8million) and its GBP2m loan to Dragon Retail Properties Limited which accrues
annual interest at 6.875 per cent. The above financial resources totalling GBP
8.4million (2016: GBP5.2million).
The net assets of the group reported as at year end were GBP17.7million (2016: GBP
17.0million). Total assets remained stable at GBP36.6million (2016: GBP36.9million)
mainly due to a decrease in inventory and trade receivables balances at year
end, as outlined above, and the write off of the groups' joint venture
investment in Ezimbokodweni Mining (Pty) Ltd of GBP1.8million offsetting the
increase in the groups' cash and cash equivalents balance from GBP2.4million to GBP
5.3million during the year. Liabilities decreased from GBP19.9million to GBP
18.8million during the year primarily due to a decrease in current borrowings
from GBP3.4million in 2016 to GBP1.3million in 2017. This decrease can mainly be
attributed to a decrease in borrowings drawn from the groups' South African
structured trade facility utilised by the groups' mining operations. The
overall exchange gain recorded through the translation reserve on translation
of the group's South African net assets at year end decreased to GBP0.1million
(2016: GBP1.0million) as a result of the reduced movement of the South African
Rand against UK sterling year to year.
Further details on the group's cashflow and financial position are stated in
the Consolidated Cashflow Statement on page 59 and the Consolidated Balance
Sheet on page 56.
FUTURE PROSPECTS
As we continue into 2018, the group's financial position remains strong and we
expect to achieve significant additional value from our existing mining
operations. The group continues to seek to expand its operations in South
Africa through the acquisition of additional coal reserves, in particular in
areas surrounding Black Wattle where additional value can be achieved through
the use of our existing infrastructure. In addition, management is currently
investigating other major investment opportunities in the domestic property
sector in line with the groups' 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.
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 6 which form part
of the Strategic Report.
Signed on behalf of the Board of Directors
Garrett Casey
Finance Director
20 April 2018
Governance
Management team
1 Sir Michael Heller
Chairman
Bisichi Mining PLC
2 Andrew Heller
Managing Director
Bisichi Mining PLC
Managing Director
Black Wattle Colliery
3 Christopher Joll
Senior Independent Director
Chairman Audit and Remuneration Committees
4 Garrett Casey
Finance Director
Bisichi Mining PLC
Director Black Wattle Colliery
5 Robert Grobler
Director of Mining
Bisichi Mining PLC
Director Black Wattle Colliery
6 Ethan Dube
Director
Black Wattle Colliery
7 Millicent Zvarayi
Director
Black Wattle Colliery
8 Nico Serfontein
Mine Manager
Black Wattle Colliery
Directors and advisors
* Sir Michael Heller
MA, FCA (Chairman)
Andrew R Heller
MA, ACA
(Managing Director)
Garrett Casey
CA (SA)
(Finance Director)
Robert Grobler
Pr Cert Eng
(Director of mining)
O+ Christopher A Joll
MA (Non-executive)
Christopher Joll was appointed a Director on 1 February 2001. He has held a
number of non-executive directorships of quoted and un-quoted companies and is
currently senior partner of MJ2 Events LLP an event management business.
O * John A Sibbald
BL (Non-executive)
John Sibbald has been a Director since 1988. After qualifying as a Chartered
Accountant he spent over 20 years in stockbroking, specialising in mining and
international investment.
* Member of the nomination committee
+ Senior independent director
O Member of the audit, nomination and remuneration committees.
Secretary and registered office
Garrett Casey CA (SA)
24 Bruton Place
London W1J 6NE
Black Wattle Colliery Directors
Andrew Heller
(Managing Director)
Ethan Dube
Robert Grobler
Millicent Zvarayi
Garrett Casey
Property portfolio asset manager
James Charlton BSc MRICS
Company Registration
Company registration No. 112155 (Incorporated in England and Wales)
Website
www.bisichi.co.uk
E-mail
admin@bisichi.co.uk
Auditor
BDO LLP
Principal bankers
United Kingdom
Santander UK PLC
National Westminster Bank PLC
Investec PLC
South Africa
ABSA Bank (SA)
First National Bank (SA)
Standard Bank (SA)
Corporate solicitors
United Kingdom
Fladgate LLP, London
Memery Crystal, London
Olswang LLP, London
South Africa
Brandmullers Attorneys, Middelburg
Herbert Smith Freehills, Johannesburg
Hogan Lovells, Johannesburg
Tugendhaft Wapnick Banchetti and Partners, Johannesburg
Stockbrokers
Shore Capital & Corporate Ltd
Registrars and transfer office
Link Asset Services
65 Gresham Street
London
EC2V 7NQ
Telephone 0871 664 0300
(Calls cost 12p per minute + network extras) or
+44 (0) 371 664 0300 for overseas callers
www.linkassetservices.com
Email: shareholderenquiries@linkgroup.co.uk
Five year summary
2017 2016 2014 2013 2012
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Consolidated income statement items
Revenue 37,459 22,815 25,655 26,500 35,105
Operating profit/(loss) 3,763 637 150 1,364 123
Profit/(loss) before tax 1,485 346 (147) 1,568 102
Trading profit/(loss) before tax 3,317 (74) (188) 1,157 17
Revaluation and impairment profit/(loss) (1,832) 420 41 411 85
before tax
EBITDA 3,734 2,415 1,365 4,609 3,039
Operating profit before depreciation, fair 5,819 1,516 1,717 4,276 3,834
value adjustments and exchange movements
(adjusted EBITDA)
Consolidated balance sheet items
Investment properties 13,245 13,245 12,800 11,575 11,559
Fixed asset investments 925 2,703 2,112 4,090 4,370
14,170 15,948 14,912 15,665 15,929
Available for sale investments 1,050 781 594 796 822
15,220 16,729 15,506 16,461 16,751
Other assets less liabilities less 1,922 (72) (196) 854 (123)
non-controlling interests
Total equity attributable to equity 17,142 16,657 15,310 17,315 16,628
shareholders
Net assets per ordinary share 160.6p 156.0p 143.4p 162.2p 156.3p
(attributable)
Dividend per share 5.00p 4.00p 4.00p 4.00p 4.00p
Financial calendar
6 June 2018 Annual General Meeting
27 July 2018 Payment of final and special dividend for 2017 (if approved)
Late August 2018 Announcement of half-year results to 30 June 2018
Late April 2019 Announcement of results for year ending 31 December 2018
Directors' report
The directors submit their report together with the audited financial
statements for the year ended 31 December 2017.
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.
The results for the year and state of affairs of the group and the company at
31 December 2017 are shown on pages 54 to 94 and in the Strategic Report on
pages 2 to 23. 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 31 to the financial statements. Over 99 per cent. of staff are
employed in the South African coal mining industry - employment matters and
health and safety are dealt with in the Strategic Report.
The management report referred to in the Director's responsibilities statement
encompasses this Directors' Report and Strategic Report on pages 2 to 23.
Corporate responsibility
Environment
The environmental considerations of the group's South African coal mining
operations are covered in the Strategic Report on pages 2 to 23.
The group's UK activities are principally property investment whereby premises
are provided for rent to retail businesses. The group seeks to provide those
tenants with good quality premises from which they can operate in an efficient
and environmentally friendly manner. Wherever possible, improvements, repairs
and replacements are made in an environmentally efficient manner and waste
re-cycling arrangements are in place at all the company's locations.
Greenhouse Gas Emissions
Details of the group's greenhouse gas emissions for the year ended 31 December
2017 can be found on page 12 of the Strategic Report.
Employment
The group's policy is to attract staff and motivate employees by offering
competitive terms of employment. The group provides equal opportunities to all
employees and prospective employees including those who are disabled. The
Strategic Report gives details of the group's activities and policies
concerning the employment, training, health and safety and community support
and social development concerning the group's employees in South Africa.
Dividend policy
An interim dividend for 2017 of 1p was paid on 9 February 2018 (Interim 2016:
1p). The directors recommend the payment of a final dividend for 2017 of 3p per
ordinary share (2016: 3p) as well as a special dividend of 1p (2016: Nil)
making a total dividend for 2017 of 5p (2016: 4p).
Subject to shareholder approval, the total dividend per ordinary share for 2017
will be 5p per ordinary share.
The final dividend and the special dividend will be payable on Friday 27 July
2018 to shareholders registered at the close of business on 6 July 2018.
Investment properties
The investment property portfolio is stated at its open market value of GBP
13,245,000 at 31 December 2017 (2016: GBP13,245,000) as valued by professional
external valuers. The open market value of the company's share of investment
properties included within its investments in joint ventures is GBP1,315,000
(2016: GBP1,315,000).
Financial instruments
Note 21 to the financial statements sets out the risks in respect of financial
instruments. The Board reviews and agrees overall treasury policies, delegating
appropriate authority to the managing director. Financial instruments are used
to manage the financial risks facing the group. Treasury operations are
reported at each Board meeting and are subject to weekly internal reporting.
Directors
The directors of the company for the whole year were Sir Michael Heller, A R
Heller, G J Casey, C A Joll, R J Grobler (a South African citizen), and J A
Sibbald.
The directors retiring by rotation are Mr A R Heller and Mr R J Grobler who
offers themselves for re-election.
Mr A R Heller has been an executive director of the company since 1998. He is a
Chartered Accountant and has been employed by the group since 1994 under a
contract of employment determinable at three months' notice. The board
recommends the re-election of AR Heller.
Mr R J Grobler was appointed as General Mine Manager by Black Wattle Colliery
(Proprietary) Ltd on 1 May 2000. He was appointed to the Board of Bisichi
Mining PLC as Director of Mining on 22 August 2008. He has over 40 years'
experience in the South African coal mining industry. The board recommends the
re-election of RJ Grobler.
No director had any material interest in any contract or arrangement with the
company during the year other than as shown in this report.
Directors' shareholdings
The interests of the directors in the shares of the company, including family
and trustee holdings where appropriate, are shown on
page 38 of the Annual Remuneration Report.
Substantial interests
The following have advised that they have an interest in 3 per cent. or more of
the issued share capital of the company as at 16 April 2018:
London & Associated Properties PLC - 4,432,618 shares representing 41.52 per
cent. of the issued capital. (Sir Michael Heller is a director and shareholder
of London & Associated Properties PLC).
Sir Michael Heller - 330,117 shares representing 3.09 per cent. of the issued
capital.
A R Heller - 785,012 shares representing 7.35 per cent. of the issued
capital.
Cavendish Asset 1,892,654 shares representing 17.73 per cent. of the issued
Management share capital.
Limited -
James Hyslop - 351,126 shares representing 3.29 per cent. of the issued share
capital.
Disclosure of information to auditor
The directors in office at the date of approval of the financial statements
have confirmed that as far as they are aware that there is no relevant audit
information of which the auditor is unaware. Each of the directors has
confirmed that they have taken all reasonable steps they ought to have taken as
directors to make themselves aware of any relevant audit information and to
establish that it has been communicated to the auditor.
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 2017 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 the guidelines set out in the Quoted
Companies Alliance (QCA) published Corporate Governance Code and complies with
these so far as is appropriate having regard to the size and nature of the
company. The paragraphs below set out how the company has applied this guidance
during the year.
Principles of corporate governance
The group's Board appreciates the value of good corporate governance not only
in the areas of accountability and risk management, but also as a positive
contribution to business prosperity. The Board endeavours to apply corporate
governance principles in a sensible and pragmatic fashion having regard to the
circumstances of the group's business. The key objective is to enhance and
protect shareholder value.
Board structure
During the year the Board comprised the executive chairman, the managing
director, two other executive directors and two non-executive directors. Their
details appear on page 27. The Board is responsible to shareholders for the
proper management of the group. The Directors' responsibilities statement in
respect of the accounts is set out on page 46. The non-executive directors have
a particular responsibility to ensure that the strategies proposed by the
executive directors are fully considered. To enable the Board to discharge its
duties, all directors have full and timely access to all relevant information
and there is a procedure for all directors, in furtherance of their duties, to
take independent professional advice, if necessary, at the expense of the
group. The Board has a formal schedule of matters reserved to it and meets
bi-monthly.
The Board is responsible for overall group strategy, approval of major capital
expenditure projects and consideration of significant financing matters.
The following Board committees, which have written terms of reference, deal
with specific aspects of the group's affairs:
* The nomination committee is chaired by Christopher Joll and comprises the
non-executive directors and the executive chairman. The committee is
responsible for proposing candidates for appointment to the Board, having
regard to the balance and structure of the Board. In appropriate cases
recruitment consultants are used to assist the process. Each director is
subject to re-election at least every three years.
* The remuneration committee is responsible for making recommendations to the
Board on the company's framework of executive remuneration and its cost.
The committee determines the contractual terms, remuneration and other
benefits for each of the executive directors, including performance related
bonus schemes, pension rights and compensation payments. The Board itself
determines the remuneration of the non-executive directors. The committee
comprises the non-executive directors. It is chaired by Christopher Joll.
The company's executive chairman is normally invited to attend meetings.
The report on directors' remuneration is set out on pages 35 to 42.
* The audit committee comprises the two non-executive directors and is
chaired by Christopher Joll. Its prime tasks are to review the scope of
external audit, to receive regular reports from the company's auditor and
to review the half-yearly and annual accounts before they are presented to
the Board, focusing in particular on accounting policies and areas of
management judgment and estimation. The committee is responsible for
monitoring the controls which are in force to ensure the integrity of the
information reported to the shareholders. The committee acts as a forum for
discussion of internal control issues and contributes to the Board's review
of the effectiveness of the group's internal control and risk management
systems and processes. The committee also considers annually the need for
an internal audit function. It advises the Board on the appointment of
external auditors and on their remuneration for both audit and non-audit
work, and discusses the nature and scope of the audit with the external
auditors. The committee, which meets formally at least twice a year,
provides a forum for reporting by the group's external auditors.
Meetings are also attended, by invitation, by the company chairman, managing
director and finance director.
The audit committee also undertakes a formal assessment of the auditors'
independence each year which includes:
* a review of non-audit services provided to the group and related fees;
* discussion with the auditors of a written report detailing 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 43.
An analysis of the fees payable to the external audit firm in respect of both
audit and non-audit services during the year is set out in Note 4 to the
financial statements.
Performance evaluation - board, board committees and directors
The performance of the board as a whole and of its committees and the
non-executive directors is assessed by the chairman and the managing director
and is discussed with the senior independent director. Their recommendations
are discussed at the nomination committee prior to proposals for re-election
being recommended to the Board. The performance of executive directors is
discussed and assessed by the remuneration committee. The senior independent
director meets regularly with the chairman and both the executive and
non-executive directors individually outside of formal meetings. The directors
will take outside advice in reviewing performance but have not found this
necessary to date.
Independent directors
The senior independent non-executive director is Christopher Joll. The other
independent non-executive director is John Sibbald.
Christopher Joll has been a non-executive director for over fifteen years and
John Sibbald has been a non-executive director for over twenty five years. The
Board encourages Christopher Joll and John Sibbald to act independently. The
board considers that their length of service and connection with the company's
public relations advisers, does not, and has not, resulted in their inability
or failure to act independently. In the opinion of the Board, Christopher Joll
and John Sibbald continue to fulfil their role as independent non-executive
directors.
The independent directors regularly meet prior to Board meetings to discuss
corporate governance issues.
Board and board committee meetings
The number of meetings during 2017 and attendance at regular Board meetings and
Board committees was as follows:
Meetings Meetings
held Attended
Sir Michael Heller Board 5 5
Nomination committee 1 1
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 1 1
J A Sibbald Board 5 5
Audit committee 2 2
Nomination committee 1 1
Remuneration committee 1 1
Internal control
The directors are responsible for the group's system of internal control and
review of its effectiveness annually. The Board has designed the group's system
of internal control in order to provide the directors with reasonable assurance
that its assets are safeguarded, that transactions are authorised and properly
recorded and that material errors and irregularities are either prevented or
would be detected within a timely period. However, no system of internal
control can eliminate the risk of failure to achieve business objectives or
provide absolute assurance against material misstatement or loss.
The key elements of the control system in operation are:
* the Board meets regularly with a formal schedule of matters reserved to it
for decision and has put in place an organisational structure with clearly
defined lines of responsibility and with appropriate delegation of
authority;
* there are established procedures for planning, approval and monitoring of
capital expenditure and information systems for monitoring the group's
financial performance against approved budgets and forecasts;
* UK property and financial operations are closely monitored by members of
the Board and senior managers to enable them to assess risk and address the
adequacy of measures in place for its monitoring and control. The South
African operations are closely supervised by the UK based executives
through daily, weekly and monthly reports from the directors and senior
officers in South Africa. This is supplemented by monthly visits by the UK
based finance director to the South African operations which include
checking the integrity of information supplied to the UK. The directors are
guided by the internal control guidance for directors issued by the
Institute of Chartered Accountants in England and Wales.
During the period, the audit committee has reviewed the effectiveness of
internal control as described above. The Board receives periodic reports from
its committees.
There are no significant issues disclosed in the Annual Report for the year
ended 31 December 2017 (and up to the date of approval of the report)
concerning material internal control issues. The directors confirm that the
Board has reviewed the effectiveness of the system of internal control as
described during the period.
Communication with shareholders
Communication with shareholders is a matter of priority. Extensive information
about the group and its activities is given in the Annual Report, which is made
available to shareholders. Further information is available on the company's
website, www.bisichi.co.uk. There is a regular dialogue with institutional
investors. Enquiries from individuals on matters relating to their
shareholdings and the business of the group are dealt with informatively and
promptly.
Takeover directive
The company has one class of share capital, ordinary shares. Each ordinary
share carries one vote. All the ordinary shares rank pari passu. There are no
securities issued in the company which carry special rights with regard to
control of the company. The identity of all substantial direct or indirect
holders of securities in the company and the size and nature of their holdings
is shown under the "Substantial interests" section of this report above.
A relationship agreement dated 15 September 2005 (the "Relationship Agreement")
was entered into between the company and London & Associated Properties PLC
("LAP") in regard to the arrangements between them whilst LAP is a controlling
shareholder of the company. The Relationship Agreement includes a provision
under which LAP has agreed to exercise the voting rights attached to the
ordinary shares in the company owned by LAP to ensure the independence of the
Board of directors of the company.
Other than the restrictions contained in the Relationship Agreement, there are
no restrictions on voting rights or on the transfer of ordinary shares in the
company. The rules governing the appointment and replacement of directors,
alteration of the articles of association of the company and the powers of the
company's directors accord with usual English company law provisions. Each
director is re-elected at least every three years. The company is not party to
any significant agreements that take effect, alter or terminate upon a change
of control of the company following a takeover bid. The company is not aware of
any agreements between holders of its ordinary shares that may result in
restrictions on the transfer of its ordinary shares or on voting rights.
There are no agreements between the company and its directors or employees
providing for compensation for loss of office or employment that occurs because
of a takeover bid.
The Bribery Act 2010
The Bribery Act 2010 came into force on 1 July 2011, and the Board took the
opportunity to implement a new Anti-Bribery Policy. The company is committed to
acting ethically, fairly and with integrity in all its endeavours and
compliance of the code is closely monitored.
Annual General Meeting
The annual general meeting of the company ("Annual General Meeting") will be
held at 24 Bruton Place, London W1J 6NE on Wednesday, 6 June 2018 at 11.00 a.m.
Resolutions 1 to 9 will be proposed as ordinary resolutions. More than 50 per
cent. of shareholders' votes cast must be in favour for those resolutions to be passed. Resolutions 10 to 12 will be proposed as special resolutions. At least 75 per cent. of shareholders' votes cast must be in favour for those resolutions to be passed. The directors consider that all of the resolutions to be put to the meeting are in the best interests of the company and its shareholders as a whole. The Board recommends that shareholders vote in favour of all resolutions. Please note that the following paragraphs are only summaries of certain resolutions to be proposed at the Annual General Meeting and not the full text of the resolutions. You should therefore read this section in conjunction with the full text of the resolutions contained in the notice of Annual General Meeting. Directors' authority to allot shares (Resolution 9) 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 9.1.1 of resolution 9 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 GBP355,894. This represents approximately 1/3 (one third) of the ordinary share capital of the company in issue (excluding treasury shares) at 16 April 2018 (being the last practicable date prior to the publication of this Directors' Report). Paragraph 9.1.2 of resolution 9 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 GBP355,894, 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 16 April 2018 (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 9 is GBP711,788. Resolution 9 complies with guidance issued by the Investment Association (IA). The authority granted by resolution 9 will expire on 31 August 2019 or, if earlier, the conclusion of the next annual general meeting of the company. The directors have no present intention to make use of this authority. However, if they do exercise the authority, the directors intend to follow emerging best practice as regards its use as recommended by the IA. Disapplication of pre-emption rights (Resolution 10) A special resolution will be proposed at the Annual General Meeting in respect of the disapplication of pre-emption rights. Shares allotted for cash must normally first be offered to shareholders in proportion to their existing shareholdings. The directors will, at the forthcoming Annual General Meeting seek power to allot equity securities (as defined by section 560 of the Companies Act 2006) or sell treasury shares for cash as if the pre-emption rights contained in Section 561 of the Companies Act 2006 did not apply: (a) in relation to pre-emptive offers and offers to holders of other equity securities if required by the rights of those securities or as the directors otherwise consider necessary, up to a maximum nominal amount of GBP355,894 which represents approximately 1/3 (one third) of the ordinary share capital of the company in issue (excluding treasury shares) and, in relation to rights issues only, up to a maximum additional amount of GBP355,894 which represents approximately 1/3 (one third) of the ordinary share capital of the company in issue (excluding treasury shares), in each case as at 16 April 2018 (being the last practicable date prior to the publication of this Directors' Report); and (b) in any other case, up to a maximum nominal amount of GBP53,384 which represents approximately 5 per cent. of the ordinary share capital of the company in issue (excluding treasury shares) as at 16 April 2018 (being the last practicable date prior to the publication of this Directors' Report). In compliance with the guidelines issued by the Pre-emption group, the directors will ensure that, other than in relation to a rights issue, no more than 7.5 per cent. of the issued ordinary shares (excluding treasury shares) will be allotted for cash on a non-pre-emptive basis over a rolling three year period unless shareholders have been notified and consulted in advance. The power in resolution 10 will expire when the authority given by resolution 9 is revoked or expires. The directors have no present intention to make use of this authority. NOTICE OF GENERAL MEETINGS (RESOLUTION 11) Resolution 11 will be proposed to allow the company to call general meetings (other than an Annual General Meeting) on 14 clear days' notice. A resolution in the same terms was passed at the Annual General Meeting in 2017. The notice period required by the Companies Act 2006 for general meetings of the company is 21 days unless shareholders approve a shorter notice period, which cannot however be less than 14 clear days. Annual General Meetings must always be held on at least 21 clear days' notice. It is intended that the flexibility offered by this resolution will only be used for time-sensitive, non-routine business and where merited in the interests of shareholders as a whole. The approval will be effective until the company's next Annual General Meeting, when it is intended that a similar resolution will be proposed. In order to be able to call a general meeting on less than 21 clear days' notice, the company must make a means of electronic voting available to all shareholders for that meeting. Purchase of own Ordinary Shares (Resolution 12) The effect of resolution 12 would be to renew the directors' current authority to make limited market purchases of the company's ordinary shares of 10 pence each. The power is limited to a maximum aggregate number of 1,067,683 ordinary shares (representing approximately 10 per cent. of the company's issued share capital as at 16 April 2018 (being the last practicable date prior to publication of this Directors' Report)). The minimum price (exclusive of expenses) which the company would be authorised to pay for each ordinary share would be 10 pence (the nominal value of each ordinary share). The maximum price (again exclusive of expenses) which the company would be authorised to pay for an ordinary share is an amount equal to 105 per cent. of the average market price for an ordinary share for the five business days preceding any such purchase. The authority conferred by resolution 12 will expire at the conclusion of the company's next annual general meeting or 15 months from the passing of the resolution, whichever is the earlier. Any purchases of ordinary shares would be made by means of market purchase through the London Stock Exchange. If granted, the authority would only be exercised if, in the opinion of the directors, to do so would result in an increase in earnings per share or net asset value per share and would be in the best interests of shareholders generally. In exercising the authority to purchase ordinary shares, the directors may treat the shares that have been bought back as either cancelled or held as treasury shares (shares held by the company itself). No dividends may be paid on shares which are held as treasury shares and no voting rights are attached to them. As at 16 April 2018 (being the last practicable date prior to the publication of this Directors' Report) the total number of new ordinary shares over which options have been granted was 380,000 shares representing 3.56 per cent. of the company's issued share capital (excluding treasury shares) as at that date. Such number of options to subscribe for new ordinary shares would represent approximately 3.95 per cent. of the reduced issued share capital of the company (excluding treasury shares) assuming full use of the authority to make market purchases sought under resolution 12. Donations No political or charitable donations were made during the year (2016: 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 6 to 7 and its financial position is set out on page 22 of the Strategic Report. In addition Note 21 to the financial statements includes the group's treasury policy, interest rate risk, liquidity risk, foreign exchange risks and credit risk. The group has prepared cash flow forecasts which demonstrate that the group has sufficient resources to meet its liabilities as they fall due for at least the next 12 months. In July 2017, the group increased its South African structured trade finance facility with Absa Bank Limited from R80million (South African Rand) to R100million. The facility is renewable annually at 30 June and is secured against inventory, debtors and cash that are held in the group's South African operations. This facility comprises of a R80million revolving facility to cover the fluctuating working capital requirements of the group's South African operations, and a fully drawn R20million loan facility to cover guarantee requirements related to the group's South African mining operations. The 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 the improved coal market conditions experienced by Black Wattle Colliery, its direct mining asset in 2017 and the first quarter of 2018 will be similar for at least the next 12 months. The directors therefore have a reasonable expectation that the mine will continue to achieve positive
levels of cash generation for the group for at least the next 12 months. As a
consequence, the directors believe that the group is well placed to manage its
South African business risks successfully.
In the UK, a GBP6 million term loan facility repayable in 2019 is held with
Santander Bank PLC. The loan is secured against the company's UK retail
property portfolio. The debt package has a five year term and is repayable at
the end of the term. The interest cost of the loan is 2.35% above LIBOR.
If required, the group has sufficient financial resources available at short
notice including cash, available-for-sale investments and its GBP2m loan to
Dragon Retail Properties Limited which is repayable on demand. In addition its
investment property assets benefit from long term leases with the majority of
its tenants.
As a result of the banking facilities held as well as the acceptable levels of
profitability and cash generation the group's South African operations are
expected to achieve for at least the next 12 months, the Directors believe that
the group has adequate resources to continue in operational existence for the
foreseeable future and that the group is well placed to manage its business
risks. Thus they continue to adopt the going concern basis of accounting in
preparing the annual financial statements.
By order of the board
G.J Casey
Secretary
24 Bruton Place
London W1J 6NE
20 April 2018
Statement of the Chairman of the remuneration committee
The remuneration committee presents its report for the year ended 31 December
2017.
The remuneration committee presents its report for the year ended 31 December
2017.
The Annual Remuneration Report 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 2018.
A copy of the remuneration policy, which details the remuneration policy for
directors, can be found at www.bisichi.co.uk. The current remuneration policy
was subject to a binding vote which was approved by shareholders at the AGM in
June 2017. The approved policy took effect from 7 June 2017 and will apply for
a three year period.
The remuneration committee reviewed the existing policy and deemed no changes
necessary to the current arrangements.
Both of the above reports have been prepared in accordance with The Large and
Medium-sized Companies and Groups (Accounts and Reports) (Amendment)
Regulations 2013.
The company's auditors, BDO LLP are required by law to audit certain
disclosures and where disclosures have been audited they are indicated as such.
Christopher Joll
Chairman - remuneration committee
24 Bruton Place
London W1J 6NE
20 April 2018
Annual remuneration report
The following information has been audited:
Single total figure of remuneration for the year ended 31 December 2017:
Salaries Bonuses Benefits Pension Total Share Total
and Fees GBP'000 GBP'000 GBP'000 before options 2017
GBP'000 Share GBP'000 GBP'000
options
GBP'000
Executive Directors
Sir Michael Heller 75 - - - 75 - 75
A R Heller 450 350 66 32 898 - 898
G J Casey 133 125 14 18 290 - 290
R Grobler 188 122 16 11 337 - 337
Non-Executive Directors
C A Joll* 30 - - - 30 - 30
J A Sibbald* 2 - 3 - 5 - 5
Total 878 597 99 61 1,635 - 1,635
*Members of the remuneration committee for the year ended 31 December 2017
Single total figure of remuneration for the year ended 31 December 2016:
Salaries Bonuses Benefits Pension Total Share Total
and Fees GBP'000 GBP'000 GBP'000 before options 2016
GBP'000 Share GBP'000 GBP'000
options
GBP'000
Executive Directors
Sir Michael Heller 75 - - - 75 - 75
A R Heller 450 300 68 32 850 - 850
G J Casey 133 100 14 18 265 - 265
R Grobler 154 60 14 8 236 - 236
Non-Executive Directors
C A Joll* 30 - - - 30 - 30
J A Sibbald* 2 - 3 - 5 - 5
Total 844 460 99 58 1,461 - 1,461
*Members of the remuneration committee for the year ended 31 December 2016
Summary of directors' terms Date of Unexpired Notice
contract term period
Executive directors
Sir Michael Heller November Continuous 6
1972 months
A R Heller January Continuous 3
1994 months
G J Casey June 2010 Continuous 3
months
R J Grobler April Continuous 3
2008 months
Non-executive directors
C A Joll February Continuous 3
2001 months
J A Sibbald October Continuous 3
1988 months
Pension schemes and incentives
Three (2016: Three) directors have benefits under money purchase pension
schemes. Contributions in 2017 were GBP61,000 (2016: GBP58,000), see table above.
Scheme interests awarded during the year
No scheme interests were awarded in the year ended 31 December 2017. Subsequent
to year end 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: 150,000 options granted on 6 February 2018 at an exercise
price of GBP0.7350 per share
* Garrett Casey: 230,000 options granted on 6 February 2018 at an exercise
price of GBP0.7350 per share
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. 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 one "Unapproved" Share Option Schemes which is not
subject to HM Revenue and Customs (HMRC) approval. The "2010 Scheme" was
approved by shareholders on 7 June 2011. The "2012 Scheme" was approved by the
remuneration committee of the company on 28 September 2012.
Number of share
options
Option 1 Options 31 Exercisable Exercisable
price* January lapsed December from to
2017 in 2017
2017
The 2010 Scheme
G J Casey 202.05p 80,000 - 80,000 31/08/2013 30/08/2020
The 2012 Scheme
A R Heller 87.01p 150,000 - 150,000 18/09/2015 17/09/2025
G J Casey 87.01p 150,000 - 150,000 18/09/2015 17/09/2025
*Middle market price at date of grant
No consideration is payable for the grant of options under the 2012 Unapproved
Share Option Scheme. There are no performance conditions attached to the 2012
Unapproved Share Option scheme.
On the 5 February 2018 the company entered into an agreement with Garrett Casey
to surrender the 80,000 Options which were granted on 31 August 2010 under the
2010 Scheme. The aggregate consideration paid by the Company to effect the
cancellation was GBP1.
Payments to past directors
No payments were made to past directors in the year ended 31 December 2017.
Payments for loss of office
No payments for loss of office were made in the year ended 31 December 2017.
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
31.12.2017 1.1.2017 31.12.2017 1.1.2017
Sir Michael Heller 148,783 148,783 181,334 181,334
A R Heller 785,012 785,012 - -
C A Joll - - - -
J A Sibbald - - - -
R J Grobler - - - -
G J Casey 40,000 40,000 - -
The following section is unaudited.
The following graph illustrates the company's performance compared with a broad
equity market index over a ten year period. Performance is measured by total
shareholder return. The directors have chosen the FTSE All Share Mining index
as a suitable index for this comparison as it gives an indication of
performance against a spread of quoted companies in the same sector.
The middle market price of Bisichi Mining PLC ordinary shares at 31 December
2017 was 70.5p (2016-74p). During the year the share price ranged between
68.25p and 82.50p.
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 2008 to
31 December 2017.
Year Managing Managing Annual Long-term
Director Director bonus incentive
Single total payout vesting
figure of against rates
remuneration maximum against
GBP'000 opportunity maximum
* opportunity
% *
%
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
2012 A R Heller 721 N/A N/A
2011 A R Heller 626 N/A N/A
2010 A R Heller 568 N/A N/A
2009 A R Heller 817 N/A N/A
2008 A R Heller 961 N/A N/A
Bisichi Mining PLC does not have a Chief Executive so the table includes the
equivalent information for the Managing Director.
*There were no formal criteria or conditions to apply in determining the amount
of bonus payable or the number of shares to be issued prior to 2014.
Percentage change in remuneration of director undertaking role of Managing
Director
Managing Director UK based employees
GBP'000 GBP'000
2017 2016 % 2017 2016 % change
change
Base salary 450 450 0% 208 208 0%
Benefits 66 68 (3.03%) 14 14 0%
Bonuses 350 300 16.67% 125 100 25%
Bisichi Mining PLC does not have a Chief Executive so the table includes the
equivalent information for the Managing Director.
The comparator group chosen is all UK based employees as the remuneration
committee believe this provides the most accurate comparison of underlying
increases based on similar annual bonus performances utilised by the group.
Relative importance of spend on pay
The total expenditure of the group on remuneration to all employees (see Notes
28 and 8 to the financial statements) is shown below:
2017 2016
GBP'000 GBP'000
Employee remuneration 6,396 5,321
Distribution to shareholders 534 427
Statement of implementation of new remuneration policy
The remuneration policy was approved at the AGM in June 2017. The policy took
effect from 7 June 2017 and will apply for 3 years unless changes are deemed
necessary by the Remuneration committee. The company may not make a
remuneration payment or payment for loss of office to a person who is, is to
be, or has been a director of the company unless that payment is consistent
with the approved remuneration policy, or has otherwise been approved by a
resolution of members.
Consideration by the directors of matters relating to directors' remuneration
The remuneration committee considered the executive directors remuneration and
the board considered the non-executive directors remuneration in the year ended
31 December 2017. No increases were awarded and no external advice was taken in
reaching this decision.
SHAREHOLDER VOTING
At the Annual General Meeting on 7 June 2017, there was an advisory vote on the
resolution to approve the remuneration report, other than the part containing
the remuneration policy. In addition, on 7 June 2017 there was a binding vote
on the resolution to approve the current remuneration policy the results of
which are detailed below:
% of % of No of
votes votes votes
for against withheld
Resolution to approve the Remuneration Report (7 June 2017) 74.75% 25.18% -
Resolution to approve the Remuneration Policy (7 June 2017) 74.77% 25.16% -
Service contracts
All executive directors have full-time contracts of employment with the
company. Non-executive directors have contracts of service. No director has a
contract of employment or contract of service with the company, its joint
venture or associated companies with a fixed term which exceeds twelve months.
Directors notice periods (see page 37 of the annual remuneration report) are
set in line with market practice and of a length considered sufficient to
ensure an effective handover of duties should a director leave the company.
All directors' contracts as amended from time to time, have run from the date
of appointment. Service contracts are kept at the registered office.
Remuneration policy table
The remuneration policy table below is an extract of the group's current
remuneration policy on directors' remuneration, which was approved by a binding
vote at the 2017 AGM. The approved policy took effect from 7 June 2017. 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 No individual
salary Skills remuneration annually director will be
Responsibility committee on Paid monthly awarded a base salary
Accountability appointment. in cash in excess of GBP700,000
Experience Set at a level per annum.
Value considered No specific
appropriate to performance
attract, conditions are
retain attached to base
motivate and salaries.
reward the
right
individuals.
Pension To provide Company The Company contribution
competitive contribution contribution offered at up to 10%
retirement offered at up payable by the of base salary as
benefits to 10% of base company is part of overall
salary as part included in remuneration package.
of overall the No specific
remuneration director's performance
package contract of conditions are
employment. attached to pension
Paid into contributions
money purchase
schemes
Benefits To provide a Contractual The committee The costs associated
competitive benefits can retains the with benefits offered
benefits include but discretion are closely
package are not to approve controlled and
limited to: changes in reviewed on an annual
Car or car contractual basis.
allowance benefits in No director will
Group health exceptional receive benefits of a
cover circumstances value in excess of
Death in or where 30% of his base
service cover factors salary.
Permanent outside the No specific
health control of the performance
insurance Group lead to conditions are
increased attached to
costs (e.g. contractual benefits.
medical The value of benefits
inflation) for each director for
the year ended 31
December 2017 is
shown in the table on
page 36.
Annual To reward and In assessing The The current maximum
Bonus incentivise the remuneration bonus opportunity
performance of committee will not exceed 200%
the executive determines the of base salary in any
team, and in level of bonus one year, but the
particular to on an annual remuneration
determine basis applying committee reserves
whether such the power to award up
bonuses are performance to 300% in an
merited the conditions and exceptional year.
remuneration performance Performance
committee measures as conditions will be
takes into it considers assessed on an annual
account the appropriate basis. The
overall performance measures
performance of applied may be
the business. financial,
Bonuses are non-financial,
generally corporate, divisional
offered in or individual and in
cash such proportion as
the remuneration
committee considers
appropriate
Share To provide Granted under Offered at Entitlement to share
Options executive existing appropriate options is not
directors with schemes (see times by the subject to any
a long-term page 37) remuneration specific performance
interest in committee conditions.
the company Share options will be
offered by the
remuneration
committee as
appropriate.
The aggregate number
of shares over which
options may be
granted under all of
the company's option
schemes (including
any options and
awards granted under
the company's
employee share plans)
in any period of ten
years, will not
exceed, at the time
of grant, 10% of the
ordinary share
capital of the
company from time to
time. In determining
the limits no account
shall be taken of any
shares where the
right to acquire the
shares has been
released, lapsed or
has otherwise become
incapable of
exercise.
The company currently
has two Share Option
Schemes (see page
37). The performance
conditions for the
2010 scheme requires
growth in net assets
over a three year
period to exceed the
growth in the retail
price index by a
scale of percentages.
For the 2012 scheme
the remuneration
committee has the
ability to impose
performance criteria
in respect of any new
share options
granted, however
there is no
requirement to do so.
There are no
performance
conditions attached
to the options
already issued under
the 2012 scheme.
Non-executive directors
Base To recognise: Considered by Reviewed No individual
salary Skills the board on annually director will be
Experience appointment. awarded a base salary
Value Set at a level in excess of GBP40,000
considered per annum.
appropriate to No specific
attract, performance
retain and conditions are
motivate the attached to base
individual. salaries.
Experience and
time required
for the role
are considered
on
appointment.
Pension No pension
offered
Benefits No benefits The committee The costs associated
offered except retains the with the benefit
to one discretion to offered is closely
non-executive approve controlled and
director who changes in reviewed on an annual
is eligible contractual basis.
for health benefits in No director will
cover (see exceptional receive benefits of a
annual circumstances value in excess of
remuneration or where 30% of his base
report factors salary.
page 36) outside the No specific
control of the performance
Group lead to conditions are
increased attached to
costs (e.g. contractual benefits.
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.
For details of remuneration of other company employees can be found in Note 28
to the financial statements.
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 4 to the financial
statements.
FINANCIAL REPORTING
As part of its role, the Audit Committee assessed the audit findings that were
considered most significant to the financial statements, including those areas
requiring significant judgment and/or estimation. When assessing the identified
financial reporting matters, the committee assessed quantitative materiality
primarily by reference to the carrying value of the group's total assets, given
that the group operates a principally asset based business. The Board also gave
consideration to the value of revenues generated by the group, given the
importance of production, and its Adjusted EBITDA, given that it is a key
trading KPI, when determining quantitative materiality. The qualitative aspects
of any financial reporting matters identified during the audit process were
also considered when assessing their materiality. Based on the considerations
set out above we have considered quantitative errors individually or in
aggregate in excess of approximately GBP300,000 to GBP350,000 to be material.
External Auditors
BDO LLP held office throughout the year. In the United Kingdom the company is
provided with extensive administration and accounting services by London &
Associated Properties PLC which has its own audit committee and employs a
separate firm of external auditors, RSM UK Audit LLP (Formerly Baker Tilly UK
Audit LLP). In South Africa Grant Thornton (Jhb) Inc. acts as the external
auditor to the South African companies, and the work of that firm was reviewed
by BDO LLP for the purpose of the group audit.
Christopher Joll
Chairman - audit committee
24 Bruton Place
London W1J 6NE
20 April 2018
Valuers' certificates
To the directors of Bisichi Mining PLC
In accordance with your instructions we have carried out a valuation of the
freehold property interests held as at 31 December 2017 by the company as
detailed in our Valuation Report dated 20 February 2018.
Having regard to the foregoing, we are of the opinion that the open market
value as at 31 December 2017 of the interests owned by the company was GBP
13,245,000 being made up as follows:
GBP'000
Freehold 10,550
Leasehold 2,695
13,245
Leeds Carter
20 February 2018 Towler
Regulated by
Royal
Institute of
Chartered
Surveyors
Directors' responsibilities statement
The directors are responsible for preparing the annual report and the financial
statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each
financial year. Under that law the directors are required to prepare the group
financial statements in accordance with International Financial Reporting
Standards as adopted by the European Union and have elected to prepare the
company financial statements in accordance with United Kingdom Generally
Accepted Accounting Practice (United Kingdom Accounting Standards and
applicable law). Under company law the directors must not approve the financial
statements unless they are satisfied that they give a true and fair view of the
state of affairs of the group and company and of the profit or loss for the
group for that period.
In preparing these financial statements, the directors are required to:
* select suitable accounting policies and then apply them consistently;
* make judgements and accounting estimates that are reasonable and prudent;
* state with regard to the group financial statements whether they have been
prepared in accordance with IFRSs as adopted by the European Union subject to
any material departures disclosed and explained in the financial statements;
* state with regard to the parent company financial statements, whether
applicable UK accounting standards have been followed, subject to any material
departures disclosed and explained in the financial statements;
* prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the company and the group will continue in
business; and
* prepare a director's report, a strategic report and director's remuneration
report which comply with the requirements of the Companies Act 2006.
The directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the company's transactions and disclose with
reasonable accuracy at any time the financial position of the company and
enable them to ensure that the financial statements comply with the Companies
Act 2006 and, as regards the group financial statements, Article 4 of the IAS
Regulation. They are also responsible for safeguarding the assets of the
company and hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities. The Directors are responsible for ensuring
that the annual report and accounts, taken as a whole, are fair, balanced, and
understandable and provides the information necessary for shareholders to
assess the group's performance, business model and strategy.
Website publication
The directors are responsible for ensuring the annual report and the financial
statements are made available on a website. Financial statements are published
on the company's website in accordance with legislation in the United Kingdom
governing the preparation and dissemination of financial statements, which may
vary from legislation in other jurisdictions. The maintenance and integrity of
the company's website is the responsibility of the directors. The directors'
responsibility also extends to the ongoing integrity of the financial
statements contained therein.
Directors' responsibilities pursuant to DTR4
The directors confirm to the best of their knowledge:
* the group financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRSs) as adopted by the European
Union and Article 4 of the IAS Regulation and give a true and fair view of the
assets, liabilities, financial position and profit and loss of the group.
* the annual report includes a fair review of the development and performance
of the business and the financial position of the group and the parent company,
together with a description or the principal risks and uncertainties that they
face.
Independent auditor's report
To the members of Bisichi Mining PLC
Opinion
We have audited the financial statements of Bisichi Mining Plc (the 'parent
company') and its subsidiaries (the 'group') for the year ended 31 December
2017 which comprise the consolidated income statement, the consolidated
statement of other comprehensive income, the consolidated balance sheet, the
consolidated statement of changes in shareholders' equity, the consolidated
cash ?ow statement, the parent company balance sheet, the parent company
statement of changes in equity and notes to the financial statements, including
a summary of significant accounting policies. The financial reporting framework
that has been applied in their preparation is applicable law and International
Financial Reporting Standards (IFRSs) as adopted by the European Union and, as
regards the parent company financial statements, as applied in accordance with
the provisions of the Companies Act 2006.
In our opinion the financial statements:
* give a true and fair view of the state of the group's and of the parent
company's affairs as at 31 December 2017 and of the group's profit for the
year then ended;
* the group financial statements have been properly prepared in accordance
with IFRSs as adopted by the European Union;
* the parent company financial statements have been properly prepared in
accordance with IFRSs as adopted by the European Union and as applied in
accordance with the provisions of the Companies Act 2006; and
* the financial statements have been prepared in accordance with the
requirements of the Companies Act 2006; and, as regards the group financial
statements, Article 4 of the IAS Regulation.
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 and
company in accordance with the ethical requirements that are relevant to our
audit of the financial statements in the UK, including the FRC's Ethical
Standard as applied to listed public interest 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
We have nothing to report in respect of the following matters in relation to
which the ISAs (UK) require us to report to you where:
* the directors' use of the going concern basis of accounting in the
preparation of the financial statements is not appropriate; or
* the directors have not disclosed in the financial statements any identified
material uncertainties that may cast significant doubt about the group's or
the parent company's ability to continue to adopt the going concern basis
of accounting for a period of at least twelve months from the date when the
financial statements are authorised for issue.
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. These matters included 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.
The following key audit matters were identified for the period under review:
1. The risk that estimates and judgments in the life of mine model may be
inappropriate and mining assets require impairment.
2. The risk that investment property valuations are inappropriate.
3. The risk that judgments, estimates and disclosure associated with the
carrying value of Ezimbokedwini and impairment charges are inappropriate
Key Audit Matter How the matter was addressed in our audit
The risk that estimates and judgments in the We have evaluated management's discounted
life of mine model may be inappropriate and cash flow impairment assessment,
mining assets require impairment. including the underlying Life of Mine
plan. In doing so, we critically
The mining assets amounted to GBP8.6m as at 31 assessed key inputs to the model
December 2017 (2016: GBP8.5m) and relate to including forecast coal prices, exchange
the South African mining operations. These rates, production, costs and the discount
assets represent a significant part of the rate. This included assessment compared
Group's balance sheet (See note 11). to empirical data and trends, pricing
information and market data.
Management performed an impairment
assessment based on the Board approved Life In respect of the coal reserves included
of Mine plan at 31 December 2017 as detailed in the model, we reviewed the independent
in the Key Judgements and Estimates note. Competent Person's Report and held
discussions with the Competent Person. In
The assessment by management of inputs to relying on the Competent Person we
the Life of Mine plan requires significant assessed their independence and
judgment and estimate, including competence.
determination of forecast coal prices,
production, coal reserves and costs We performed sensitivity analysis on the
impairment model in respect of factors
These factors caused this area to be a such as pricing, costs, yields, exchange
significant focus for our audit. rates and the discount rate.
We evaluated the disclosures in the Key
Judgements and Estimates note based on
our audit procedures.
Our findings
Our work on the impairment test supported management's conclusion that no
impairment exists to be appropriate. We found the key assumptions to be
balanced and appropriately considered by management and the disclosures in the
Key Judgements and Estimates note to be sufficient.
Key Audit Matter How the matter was addressed in our audit
The risk that investment property valuations We obtained an understanding of
are inappropriate. management's approach to the valuation of
investment properties.
The Group holds investment property at fair
value of GBP13.2m together with further We reviewed the independent external
investment property held at fair value of GBP valuation reports and confirmed their
2.6m (100% basis) in the Group's Dragon consistency with the valuations presented
Retail Joint Venture (notes 10 and 13). The in the financial statements. We met with
assessment of fair value for the property the group's independent external valuers,
portfolio requires significant judgement and who valued all of the group's investment
estimates by the Directors, including properties, to understand the assumptions
assessment of independent third party and methodologies used in valuing these
valuations obtained for the portfolio. properties, the market evidence
supporting the valuation assumptions and
Each valuation requires consideration of the the valuation movements in the period.
individual nature of the property, its
location, its cash flows and comparable We assessed the competency, independence
market transactions. The valuation of these and objectivity of the independent
properties requires assessment of the market external valuer which included making
yield as well as consideration of the inquiries regarding interests and
current rental agreements. relationships that may have created a
threat to the valuer's objectivity.
Any significant input inaccuracies or
unreasonable bases used in these judgements We used our knowledge and experience to
(such as in respect of estimated rental evaluate and challenge the valuation
value and net initial yield applied) could assumptions, methodologies and the inputs
result in a material misstatement. used. This included establishing our own
There is also an inherent risk that range of expectations for the valuation
management may influence valuation of investment property based on
judgments. externally available metrics.
Given these factors, this area was We agreed a sample of key observable
considered to be a significant focus for our valuation inputs supplied to and used by
audit given the subjective nature of certain the external valuer and Directors to
assumptions inherent in each valuation. information audited by us, where
applicable, or supporting market
documentation.
Our findings
We found the valuations determined by the group for its investment properties
in note 10 and investment properties included within the Dragon retain Joint
Venture in note 13 to be consistent with the independent external valuation
reports.
Key Audit Matter How the matter was addressed in our audit
The risk that judgments, estimates and We will have made specific inquiries of
disclosure associated with the carrying management and the Board to gain an
value of Ezimbokedweni and impairment understanding of the fact pattern and events
charges are inappropriate. during the year regarding Ezimbokedweni.
As at 31 December 2016 the group's net We have reviewed minutes of Board meetings,
investment in Ezimbokedweni Mining (Pty) legal documents and correspondence relating
Limited ("Ezimbokedweni"), an equity to the joint venture, the Business Rescue and
accounted joint venture was GBP1.8m. The assessments of the resulting financial
carrying value was dependent upon the position and interests of the joint venture.
ultimate completion of a sale and purchase
agreement to acquire the Pegasus coal We have assessed the Board's conclusion that
project in South Africa, under which a the net investment is impaired based on the
deposit had been paid by Ezimbokedweni. facts and circumstances, including assessment
of the probability of value being recovered
During the year the joint venture was placed from the joint venture.
into Business Rescue under the South African
Companies Act by the group's joint venture We have assessed the tax treatment of the
partner. The original deposit has been transaction applied by management in
returned to Ezimbokodweni and as a result, conjunction with our valuation specialists
the Board consider there to be no reasonable and those of the component auditor in South
prospect of the Pegasus coal project Africa.
transaction completing.
We have assessed the accounting entries in
Further to these developments, the Board respect of the impairment as well as the
performed an impairment review of the disclosures in note 13 and the Key Estimates
carrying value of the net investment in and Judgments note.
Ezimbokedwini and recorded an impairment of
the net investment of GBP1.8m, with any
further movements since 31 December 2016
reflecting foreign exchange differences.
The assessment of the carrying value,
subsequent impairment and associated
disclosure represented a significant focus
for our audit.
Additionally, the tax treatment of this
transaction was considered to be an area of
risk of material misstatement. This was also
considered to be an area requiring
specialist knowledge and expertise.
Our findings
We consider the judgements made by management relating to the impairment
recorded by the group to be appropriate based on the developments during the
year. We consider the disclosures at note 13 and the Key Estimates and
Judgments note to be acceptable.
Our application of materiality
The materiality level we applied was calculated based on 1% of total assets
reflecting both the significant asset base of the group and the transitionary
phase of mining.
Whilst materiality for the Financial Statements as a whole was GBP300,000 (FY
2016: GBP350,000), each significant component of the Group was audited to a lower
materiality as detailed in the table below.
Performance materiality is the application of materiality at the individual
account or balance level set at an amount to reduce to an appropriately low
level the probability that the aggregate of uncorrected and undetected
misstatements exceeds materiality for the financial statements as a whole.
Performance materiality was set at GBP225,000 (2016: GBP260,000) which represents
75% (2016 75%) of the above materiality levels.
Materiality FY2017 FY2016
Materiality for the GBP300,000 GBP350,000
Financial Statements as a
whole
Materiality levels used GBP23,000 to GBP170,000 GBP15,000 to GBP210,000
for the audits of the
significant components of
the audit
Audit scope coverage 100% of total assets, 100% of revenue and 100% of
profit before tax
We agreed with the Audit Committee that we would report to them all individual
audit differences identified during the course of our audit in excess of GBP
15,000. We also agreed to report differences below that threshold that, in our
view, warranted reporting on qualitative grounds.
An overview of the scope of our audit
Whilst Bisichi Mining Plc is a company listed on the Standard Segment of the
London Stock Exchange, the Group's operations principally comprise investment
property in the United Kingdom and an operating mine located in South Africa.
We assessed there to be significant components within the group, comprising the
mine in South Africa, corporate accounting function and property companies.
We performed a full scope audit of each of the UK property companies, corporate
accounting function and consolidation.
A non-BDO member firm performed a full scope audit of the mine in South Africa,
under our direction and supervision as group auditors under ISA 600.
As part of our audit strategy, as group auditors:
* Detailed group reporting instructions were sent to the component auditor,
which included the significant areas to be covered by the audit (including
areas that were considered to be key audit matters as detailed above), and
set out the information required to be reported to the group audit team.
* We performed a review of the component audit files and held meetings with
the component audit team during the planning and completion phases of their
audit.
* The group audit team was actively involved in the direction of the audits
performed by the component auditors for group reporting purposes, along
with the consideration of findings and determination of conclusions drawn.
We performed our own additional procedures in respect of the significant
risk areas that represented Key Audit Matters in addition to the procedures
performed by the component auditor.
* The remaining non-significant companies within the group were principally
subject to analytical review procedures.
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. 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. In connection with our audit of the financial
statements, 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 audit or otherwise
appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to
determine whether there is a material misstatement in the financial statements
or a material misstatement of the other information. If, based on the work we
have performed, we conclude that there is a material misstatement of the other
information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, the part of the directors' remuneration report to be audited
has been properly prepared in accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
* the information given in the strategic report and 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 the knowledge and understanding of the group and the parent
company and its environment obtained in the course of the audit, we have not
identified material misstatements in the strategic report or the directors'
report.
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, 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 46, 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 the 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 the 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
This report is made solely to the company's members, as a body, in accordance
with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the company's members those matters we are
required to state to them in an auditor's report and for no other purpose. To
the fullest extent permitted by law, we do not accept or assume responsibility
to anyone other than the company and the company's members as a body, for our
audit work, for this report, or for the opinions we have formed.
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.
A further description of our responsibilities for the audit of the financial
statements is located on the Financial Reporting Council's website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our
auditor's report.
Other matters which we are required to address
Following the recommendation of the audit committee, we were appointed to audit
the financial statements for the year ending 31 December 2017 and subsequent
financial periods. The period of total uninterrupted engagement is 30 years,
covering the years ending 1987 to 2017.
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.
Our audit opinion is consistent with the additional report to the audit
committee.
Ryan Ferguson
(Senior Statutory Auditor)
For and on behalf of BDO LLP
Statutory Auditor
London, United Kingdom
20 April 2018
BDO LLP is a limited liability partnership registered in England and Wales
(with registered number OC305127).
Financial statements
Consolidated income statement
for the year ended 31 December 2017
Notes 2017 2017 2017 2016 2016 2016
Trading Revaluations Total Trading Revaluations Total
GBP'000 and GBP'000 GBP'000 and GBP'000
impairment impairment
GBP'000 GBP'000
Group revenue 1 37,459 - 37,459 22,815 - 22,815
Operating costs 2 (31,640) - (31,640) (21,299) - (21,299)
Operating 5,819 - 5,819 1,516 - 1,516
profit before
depreciation,
fair value
adjustments and
exchange
movements
Depreciation 2 (1,790) - (1,790) (1,785) - (1,785)
Operating 1 4,029 - 4,029 (269) - (269)
profit/(loss)
before fair
value
adjustments and
exchange
movements
Exchange (256) - (256) 449 - 449
(losses)/gains
Decrease/ 3 - (13) (13) - 445 445
increase in
value of
investment
properties
Gain on 3 - 3 - - -
disposal of
other
investments
Increase in - - - - 12 12
value of other
investments
Operating 1 3,776 (13) 3,763 180 457 637
profit/(loss)
Share of profit 12 - 8 8 30 (37) (7)
/(loss) in
joint ventures
Write-off of 12 - (1,827) (1,827) - - -
investment in
joint venture
Profit/(loss) 3,776 (1,832) 1,944 210 420 630
before interest
and taxation
Interest 205 - 205 270 - 270
receivable
Interest 6 (664) - (664) (554) - (554)
payable
Profit/(loss) 4 3,317 (1,832) 1,485 (74) 420 346
before tax
Taxation 7 (588) 24 (564) 150 (89) 61
Profit/(loss) 2,729 (1,808) 921 76 331 407
for the year
Attributable
to:
Equity holders 2,557 (1,808) 749 148 331 479
of the company
Non-controlling 26 172 - 172 (72) - (72)
interest
Profit/(loss) 2,729 (1,808) 921 76 331 407
for the year
Profit per 9 7.02p 4.48p
share - basic
Profit per 9 7.02p 4.48p
share - diluted
Trading gains and losses reflect all the trading activity on mining and
property operations and realised gains from Joint ventures. 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.
Consolidated statement of other comprehensive income
for the year ended 31 December 2017
2017 2016
GBP'000 GBP'000
Profit for the year 921 407
Other comprehensive income/(expense):
Items that may be subsequently recycled to the income statement:
Exchange differences on translation of foreign operations 91 1,106
Gain on available for sale investments 103 193
Taxation (20) (13)
Other comprehensive income for the year net of tax 174 1,286
Total comprehensive income for the year net of tax 1,095 1,693
Attributable to:
Equity shareholders 912 1,665
Non-controlling interest 183 28
1,095 1,693
Consolidated balance sheet
at 31 December 2017
Notes 2017 2016
GBP'000 GBP'000
Assets
Non-current assets
Value of investment properties 10 13,245 13,245
Fair value of head lease 30 152 181
Investment properties 13,397 13,426
Mining reserves, plant and equipment 11 8,613 8,520
Investments in joint ventures accounted for using equity 12 874 1,321
method
Loan to joint venture 12 - 1,350
Other investments 12 51 32
Total non-current assets 22,935 24,649
Current assets
Inventories 15 828 1,721
Trade and other receivables 16 6,417 7,246
Corporation tax recoverable - 32
Available for sale investments 17 1,050 781
Cash and cash equivalents 5,327 2,444
Total current assets 13,622 12,224
Total assets 36,557 36,873
Notes 2017 2016
GBP'000 GBP'000
Liabilities
Current liabilities
Borrowings 19 (1,288) (3,358)
Trade and other payables 18 (7,381) (6,950)
Current tax liabilities (356) (18)
Total current liabilities (9,025) (10,326)
Non-current liabilities
Borrowings 19 (5,872) (5,876)
Provision for rehabilitation 20 (1,349) (1,236)
Finance lease liabilities 30 (152) (181)
Deferred tax liabilities 22 (2,485) (2,248)
Total non-current liabilities (9,858) (9,541)
Total liabilities (18,883) (19,867)
Net assets 17,674 17,006
Equity
Share capital 23 1,068 1,068
Share premium account 258 258
Translation reserve (1,671) (1,751)
Available for sale reserve 143 60
Other reserves 24 683 683
Retained earnings 16,661 16,339
Total equity attributable to equity shareholders 17,142 16,657
Non-controlling interest 26 532 349
Total equity 17,674 17,006
These financial statements were approved and authorised for issue by the board
of directors on 20 April 2018 and signed on its behalf by:
A R Heller G J Casey Company
Registration No. 112155
Director Director
Consolidated statement of changes in shareholders' equity
for the year ended 31 December 2017
Share Share Translation Available- Other Retained Total Non- Total
capital Premium reserves for-sale reserves earnings GBP'000 controlling equity
GBP'000 GBP'000 GBP'000 reserves GBP'000 GBP'000 interest GBP'000
GBP'000 GBP'000
Balance at 1 1,068 258 (2,757) (120) 574 16,287 15,310 321 15,631
January 2016
Revaluation - - - - - 331 331 - 331
and
impairments
Trading - - - - - 148 148 (72) 76
Profit/(loss) - - - - - 479 479 (72) 407
for the year
Other - - 1,006 180 - - 1,186 100 1,286
comprehensive
expense
Total - - 1,006 180 - 479 1,665 28 1,693
comprehensive
expense for
the year
Dividend - - - - - (427) (427) - (427)
(note 8)
Share options - - - - 109 - 109 - 109
charge
Balance at 1 1,068 258 (1,751) 60 683 16,339 16,657 349 17,006
January 2017
Revaluation - - - - - (1,808) (1,808) - (1,808)
and
impairments
Trading - - - - - 2,557 2,557 172 2,729
Profit/(loss) - - - - - 749 749 172 921
for the year
Other - - 80 83 - - 163 11 174
comprehensive
income
Total - - 80 83 - 749 912 183 1,095
comprehensive
income for
the year
Dividend - - - - - (427) (427) - (427)
(note 8)
Balance at 31 1,068 258 (1,671) 143 683 16,661 17,142 532 17,674
December 2017
Consolidated cash flow statement
for the year ended 31 December 2017
Year Year ended
ended 31 December
31 2016
December GBP'000
2017
GBP'000
Cash flows from operating activities
Operating profit 3,763 637
Adjustments for:
Depreciation 1,790 1,785
Share based payments - 109
Unrealised loss/(gain) on investment properties 13 (445)
Realised gain on disposal of other investments (3) -
Unrealised gain on other investments - (12)
Exchange adjustments 256 (449)
Cash flow before working capital 5,819 1,625
Change in inventories 896 (258)
Change in trade and other receivables 919 224
Change in trade and other payables 69 1,396
Cash generated from operations 7,703 2,987
Interest received 124 121
Interest paid (546) (448)
Income tax paid (11) (46)
Cash flow from operating activities 7,270 2,614
Cash flows from investing activities
Acquisition of reserves, property, plant and equipment (1,754) (2,859)
Share of income from joint ventures - 30
Disposal of other investments 14 -
Acquisition of available for sale investments (196) -
Disposal of non-current asset held for sale - 1,138
Cash flow from investing activities (1,936) (1,691)
Cash flows from financing activities
Borrowings drawn 23 37
Borrowings repaid (25) (131)
Equity dividends paid (427) (427)
Cash flow from financing activities (429) (521)
Net increase in cash and cash equivalents 4,905 402
Cash and cash equivalents at 1 January (890) (626)
Exchange adjustment 50 (666)
Cash and cash equivalents at 31 December 4,065 (890)
Cash and cash equivalents at 31 December comprise:
Cash and cash equivalents as presented in the 5,327 2,444
balance sheet
Bank overdrafts (secured) (1,262) (3,334)
4,065 (890)
Group accounting policies
for the year ended 31 December 2017
Basis of accounting
The results for the year ended 31 December 2017 have been prepared in
accordance with International Financial Reporting Standards (IFRS) as adopted
by the European Union and with those parts of the Companies Act 2006 applicable
to companies reporting under IFRS. In applying the group's accounting policies
and assessing areas of judgment and estimation materiality is applied as
detailed on page 44 of the Audit Committee Report. The principal accounting
policies are described below:
The group financial statements are presented in GBP sterling and all values are
rounded to the nearest thousand pounds (GBP000) 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 14 for subsidiaries and Note 13 for joint
arrangements and associates.
The exchange rates used in the accounts were as follows:
GBP1 Sterling: GBP1 Sterling:
Rand Dollar
2017 2016 2017 2016
Year-end rate 16.6686 16.9472 1.35028 1.23321
Annual average 17.1540 19.9269 1.29174 1.35477
Going concern
The group has prepared cash flow forecasts which demonstrate that the group has
sufficient resources to meet its liabilities as they fall due for at least the
next 12 months.
In South Africa, a structured trade finance facility for R100million is held by
Black Wattle Colliery (Pty) Limited ("Black Wattle") with Absa Bank Limited, a
South African subsidiary of Barclays Bank PLC. The facility is renewable
annually at 30 June and is secured against inventory, debtors and cash that are
held in the group's South African operations. The Directors do not foresee any
reason why the facility will not continue to be renewed at the next renewal
date, in line with prior periods and based on their banking relationships. This
facility comprises of a R80million revolving facility to cover the working
capital requirements of the group's South African operations, and a R20million
loan facility to cover guarantee requirements related to the group's South
African mining operations.
The directors expect that that the coal market conditions experienced by Black
Wattle Colliery, its direct mining asset, in the second half of 2017 and the
first quarter of 2018 will be similar going into the remainder of 2018. The
directors therefore have a reasonable expectation that the mine will achieve
positive levels of cash generation for the group in 2018. As a consequence, the
directors believe that the group is well placed to manage its South African
business risks successfully.
In the UK, a GBP6 million term loan facility repayable in December 2019 is held
with Santander Bank PLC. The loan is secured against the company's UK retail
property portfolio. The amount repayable on the loan at year end was GBP
5.9million (2016: GBP5.9million). The debt package has a five year term and is
repayable at the end of the term. The interest cost of the loan is 2.35% above
LIBOR.
If required, the group has sufficient financial resources available at short
notice including cash, available-for-sale investments and its GBP2m loan to
Dragon Retail Properties Limited which is repayable on demand. In addition its
investment property assets benefit from long term leases with the majority of
its tenants.
As a result of the banking facilities held as well as the acceptable levels of
profitability and cash generation the group's South African operations is
expected to achieve for 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 2017. An amendment to IAS 7 "Statement of Cash Flows: Disclosure
Initiative", which is mandatory for 2017, requires entities to provide
disclosures about changes in liabilities arising from financing activities,
including changes from financing cash flows and non-cash changes (such as
foreign exchange gains or losses). This amendment has been endorsed by the EU.
The adoption of this amendment and other new and revised Standards and
Interpretations had no material effect on the profit or loss or financial
position of the Group.
The Group has not adopted any Standards or Interpretations in advance of the
required implementation dates.
IFRS 15 'Revenue from Contracts with Customers' was issued by the IASB in May
2014. It is effective for accounting periods beginning on or after 1 January
2018. The new standard will replace existing accounting standards, and provides
enhanced detail on the principle of recognising revenue to reflect the transfer
of goods and services to customers at a value which the company expects to be
entitled to receive. The standard also updates revenue disclosure requirements.
The standard was endorsed by the EU on 22 September 2017. The Directors are
continuing to assess the impact of IFRS 15 on the results of the Group. Whilst
management do not envisage a material impact, the impact of adopting this
standard cannot be reliably estimated until the transition review is complete.
IFRS 9 was published in July 2014 and will be effective for the group from 1
January 2018. The standard was endorsed by the EU on 22 November 2017. It is
applicable to financial assets and financial liabilities, and covers the
classification, measurement, impairment and de-recognition of financial assets
and financial liabilities together with a new hedge accounting model. IFRS 9
also introduces the expected credit loss model for impairment of financial
assets. Application of the IFRS 9 impairment model is expected to have minimal
impact given the Group's credit risk management policies. The Directors are
continuing to assess the impact on the results of the Group and will complete
the assessment during H1 2018.
IFRS 16 'Leases' - IFRS 16 'Leases' was issued by the IASB in January 2017 and
is effective for accounting periods beginning on or after 1 January 2019. The
new standard will replace IAS 17 'Leases' and will eliminate the classification
of leases as either operating leases or finance leases and, instead, introduce
a single lessee accounting model. The standard, which has been endorsed by the
EU, provides a single lessee accounting model, specifying how leases are
recognised, measured, presented and disclosed. The Directors are currently
evaluating the financial and operational impact of this standard including the
application to service contracts at the mine containing leases. The review of
the impact of IFRS 16 will require an assessment of all leases and the impact
of adopting this standard cannot be reliably estimated until this work is
substantially complete.
The Directors do not anticipate that the adoption of the other standards and
interpretations not listed above will have a material impact on the accounts.
Certain of these standards and interpretations will, when adopted, require
addition to or amendment of disclosures in the accounts.
We are committed to improving disclosure and transparency and will continue to
work with our different stakeholders to ensure they understand the detail of
these accounting changes. We continue to remain committed to a robust financial
policy
Key judgements and estimates
Areas where key estimates and judgements are considered to have a significant
effect on the amounts recognised in the financial statements include:
Life of mine and reserves
The directors consider their judgements and estimates surrounding the life of
the mine and its reserves to have significant effect on the amounts recognised
in the financial statements and to be an area where the financial statements
are at most risk of a significant estimation uncertainty. The life of mine
remaining is currently estimated at 4 years. This life of mine is based on the
groups existing coal reserves and excludes future coal purchases and coal
reserve acquisitions. The group's estimates of proven and probable reserves are
prepared and 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
and yield.
Depreciation, amortisation of mineral rights, mining development costs and
plant & equipment
The annual depreciation/amortisation charge is dependent on estimates,
including coal reserves and the related life of mine, expected development
expenditure for probable reserves, the allocation of certain assets to relevant
ore reserves and estimates of residual values of the processing plant. The
charge can fluctuate when there are significant changes in any of the factors
or assumptions used, such as estimating mineral reserves which in turn affects
the life of mine or the expected life of reserves. Estimates of proven and
probable reserves are prepared by an independent Competent Person. Assessments
of depreciation/amortisation rates against the estimated reserve base are
performed regularly. Details of the depreciation/amortisation charge can be
found in note 11.
Provision for mining rehabilitation including restoration and de-commissioning
costs
A provision for future rehabilitation including restoration and decommissioning
costs requires estimates and assumptions to be made around the relevant
regulatory framework, the timing, extent and costs of the rehabilitation
activities and of the risk free rates used to determine the present value of
the future cash outflows. The provisions, including the estimates and
assumptions contained therein, are reviewed regularly by management. The group
engages an independent expert to assess the cost of restoration and
decommissioning annually as part of management's assessment of the provision.
Details of the provision for mining rehabilitation can be found in note 20.
Impairment
Property, plant and equipment representing the group's mining assets in South
Africa are reviewed for impairment at each reporting date. The impairment test
is performed using the approved Life of Mine plan and those future cash flow
estimates are discounted using asset specific discount rates and are based on
expectations about future operations. The impairment test requires estimates
about production and sales volumes, commodity prices, proven and probable
reserves (as assessed by the Competent Person), operating costs and capital
expenditures necessary to extract reserves in the approved Life of Mine plan.
Changes in such estimates could impact recoverable values of these assets.
Details of the carrying value of property, plant and equipment can be found in
note 11.
The impairment test indicated significant headroom as at 31 December 2017 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. A 9% reduction in average forecast coal prices or a 9%
reduction in yield would give rise to a breakeven scenario. However, the
directors consider the forecasted yield levels and pricing to be achievable.
Fair value measurements of investment properties
An assessment of the fair value of investment properties, is required to be
performed. In such instances, fair value measurements are estimated based on
the amounts for which the assets and liabilities could be exchanged between
market participants. To the extent possible, the assumptions and inputs used
take into account externally verifiable inputs. However, such information is by
nature subject to uncertainty. The directors note that the fair value
measurement of the investment properties, can be considered to be less
judgemental where external valuers have been used and as a result of the nature
of the underlying assets. The fair value of investment property is set out in
note 10, whilst the carrying value of investments in joint ventures which
themselves include investment property held at fair value by the joint venture
is set out at note 12.
Write off of Ezimbokodweni joint venture
During the year the group wrote off its GBP1.8million (2016: GBP1.8million)
investment in Ezimbokodweni Mining (Pty) Limited ("Ezimbokodweni") made up of a
GBP1.4million loan (2016: GBP1.4million) and a GBP0.4million (2016: GBP0.4million)
joint venture investment.
The carrying value of the investment was dependent upon the completion of the
acquisition of the Pegasus coal project ("the project") in South Africa.
Although a proposed sale and purchase agreement had been negotiated and a
deposit paid for the project, the conclusion of the transaction had been
delayed pending the commercial transfer of the prospecting right from the
current owners of the project to Ezimbokodweni. Although the group has always
remained committed to completing the transaction, previous negotiations to
complete the commercial acquisition of the project had been beset by various
delays outside of its control and at the beginning of 2017, the current owners
of the project notified Ezimbokodweni that they no longer wished to divest the
project. More recently, the group was notified that an agreement was reached
between the current owners of the project and the directors of Ezimbokodweni
for the deposit for the project to be returned and any further negotiations
with Ezimbokodweni to acquire the project to be terminated.
Although, a legal claim by the group has been issued against Ezimbokodweni and
its representatives, in order for the group to recover some of the investment,
the board has exercised significant judgement in considering it to be
appropriate to write off the investment in full in the 2017 year end.
BASIS of consolidation
The group accounts incorporate the accounts of Bisichi Mining PLC and all of
its subsidiary undertakings, together with the group's share of the results of
its joint ventures. Non-controlling interests in subsidiaries are presented
separately from the equity attributable to equity owners of the parent company.
On acquisition of a non-wholly owned subsidiary, the non-controlling
shareholders' interests are initially measured at the non-controlling
interests' proportionate share of the fair value of the subsidiaries net
assets. Thereafter, the carrying amount of non-controlling interests is the
amount of those interests at initial recognition plus the non-controlling
interests' share of subsequent changes in equity. For subsequent changes in
ownership in a subsidiary that do not result in a loss of control, the
consideration paid or received is recognised entirely in equity.
The definition of control assumes the simultaneous fulfilment of the following
three criteria:
* The parent company holds decision-making power over the relevant activities
of the investee,
* The parent company has rights to variable returns from the investee, and
* The parent company can use its decision-making power to affect the variable
returns.
Investees are analysed for their relevant activities and variable returns, and
the link between the variable returns and the extent to which their relevant
activities could be influenced in order to ensure the definition is correctly
applied.
Revenue
Revenue comprises sales of coal and property rental income. Revenue is
recognised when the customer has a legally binding obligation to settle under
the terms of the contract and has assumed all significant risks and rewards of
ownership.
Revenue is only recognised on individual sales of coal when all of the
significant risks and rewards of ownership have been transferred to a third
party. Export revenue is generally recognised when the product is delivered to
the export terminal location specified by the customer, at which point the
customer assumes risks and rewards under the contract. Domestic coal revenues
are generally recognised on collection by the customer from the mine when
loaded into transport, where the customer pays the transportation costs.
Rental income which excludes services charges recoverable from tenants, is
recognised in the group income statement on a straight-line basis over the term
of the lease. This includes the effect of lease incentives.
Expenditure
Expenditure is recognised in respect of goods and services received. Where coal
is purchased from third parties at point of extraction the expenditure is only
recognised when the coal is extracted and all of the significant risks and
rewards of ownership have been transferred.
Investment properties
Investment properties comprise freehold and long leasehold land and buildings.
Investment properties are carried at fair value in accordance with IAS 40
'Investment Properties'. Properties are recognised as investment properties
when held for long-term rental yields, and after consideration has been given
to a number of factors including length of lease, quality of tenant and
covenant, value of lease, management intention for future use of property,
planning consents and percentage of property leased. Investment properties are
revalued annually by professional external surveyors and included in the
balance sheet at their fair value. Gains or losses arising from changes in the
fair values of assets are recognised in the consolidated income statement in
the period to which they relate. In accordance with IAS 40, investment
properties are not depreciated. The fair value of the head leases is the net
present value of the current head rent payable on leasehold properties until
the expiry of the lease.
Mining reserves, plant and equipment
The cost of property, plant and equipment comprises its purchase price and any
costs directly attributable to bringing the asset to the location and condition
necessary for it to be capable of operating in accordance with agreed
specifications. Freehold land is not depreciated. Other property, plant and
equipment is stated at historical cost less accumulated depreciation. The cost
recognised includes the recognition of any decommissioning assets related to
property, plant and equipment.
Mine reserves and development cost
The purpose of mine development is to establish secure working conditions and
infrastructure to allow the safe and efficient extraction of recoverable
reserves. Depreciation on mine development is not charged until production
commences or the assets are put to use. On commencement of full commercial
production, depreciation is charged over the life of the associated mine
reserves extractable using the asset on a unit of production basis. The unit of
production calculation is based on tonnes mined as a ratio to proven and
probable reserves and also includes future forecast capital expenditure. The
cost recognised includes the recognition of any decommissioning assets related
to mine development.
Post production stripping
In surface mining operations, the group may find it necessary to remove waste
materials to gain access to coal reserves prior to and after production
commences. Prior to production commencing, stripping costs are capitalised
until the point where the overburden has been removed and access to the coal
seam commences. Subsequent to production, waste stripping continues as part of
extraction process as a 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, but shorter of its useful life or the life
equipment of the mine
Motor vehicles 25 - 33 per cent per annum
Office 10 - 33 per cent per annum
equipment
Provisions
Provisions are recognised when the group has a present obligation as a result
of a past event which it is probable will result in an outflow of economic
benefits that can be reliably estimated.
A provision for rehabilitation of the mine is initially recorded at present
value and the discounting effect is unwound over time as a finance cost.
Changes to the provision as a result of changes in estimates are recorded as an
increase / decrease in the provision and associated decommissioning asset. The
decommissioning asset is depreciated in line with the group's depreciation
policy over the life of mine. The provision includes the restoration of the
underground, opencast, surface operations and de-commissioning of plant and
equipment. The timing and final cost of the rehabilitation is uncertain and
will depend on the duration of the mine life and the quantities of coal
extracted from the reserves.
Employee benefits
Share based remuneration
The company operates a share option scheme. The fair value of the share option
scheme is determined at the date of grant. This fair value is then expensed on
a straight-line basis over the vesting period, based on an estimate of the
number of shares that will eventually vest. The fair value of options granted
is calculated using a binomial or Black-Scholes-Merton model. Payments made to
employees on the cancellation or settlement of options granted are accounted
for as the repurchase of an equity interest, ie as a deduction from equity.
Details of the share options in issue are disclosed in the Directors'
Remuneration Report on page 37 under the heading Share option schemes which is
within the audited part of that report.
Pensions
The group operates a defined contribution pension scheme. The contributions
payable to the scheme are expensed in the period to which they relate.
Foreign currencies
Monetary assets and liabilities are translated at year end exchange rates and
the resulting exchange rate differences are included in the consolidated income
statement within the results of operating activities if arising from trading
activities, including inter-company trading balances and within finance cost/
income if arising from financing.
For consolidation purposes, income and expense items are included in the
consolidated income statement at average rates, and assets and liabilities are
translated at year end exchange rates. Translation differences arising on
consolidation are recognised in other comprehensive income. Foreign exchange
differences on intercompany loans are recorded in other comprehensive income
when the loans are not considered as trading balances and are not expected to
be repaid in the foreseeable future. Where foreign operations are disposed of,
the cumulative exchange differences of that foreign operation are recognised in
the consolidated income statement when the gain or loss on disposal is
recognised.
Transactions in foreign currencies are translated at the exchange rate ruling
on transaction date.
Financial instruments
The group classifies financial instruments, or their component parts, on
initial recognition as a financial asset, a financial liability or an equity
instrument in accordance with the substance of the contractual arrangement.
Bank loans and overdrafts
Bank loans and overdrafts are included as financial liabilities on the group
balance sheet at the amounts drawn on the particular facilities net of the
unamortised cost of financing. Interest payable on those facilities is expensed
as finance cost in the period to which it relates.
Finance lease liabilities
Finance lease liabilities arise for those investment properties held under a
leasehold interest and accounted for as investment property. The liability is
initially calculated as the present value of the minimum lease payments,
reducing in subsequent reporting periods by the apportionment of payments to
the lessor.
Available for sale investments
Financial assets available for sale are measured at fair value. Any changes in
fair value above cost are recognised in other comprehensive income and
accumulated in the available-for-sale reserve. For any changes in fair value
below cost a provision for impairment is recognised in the profit or loss
account.
Other investments classified as non-current available for sale investments
comprise of shares in listed companies and are carried at fair value.
Trade receivables
Trade receivables do not carry any interest and are stated at their nominal
value as reduced by appropriate allowances for estimated recoverable amounts as
the interest that would be recognised from discounting future cash payments
over the short payment period is not considered to be material.
Trade payables
Trade payables are not interest bearing and are stated at their nominal value,
as the interest that would be recognised from discounting future cash payments
over the short payment period is not considered to be material.
Other financial assets and liabilities
The groups other financial assets and liabilities not disclosed above are
accounted for at amortised cost.
Joint ventures
Investments in joint ventures, being those entities over whose activities the
group has joint control, as established by contractual agreement, are included
at cost together with the group's share of post-acquisition reserves, on an
equity basis. Dividends received are credited against the investment. Joint
control is the contractually agreed sharing of control over an arrangement,
which exists only when decisions about relevant strategic and/or key operating
decisions require unanimous consent of the parties sharing control. Control
over the arrangement is assessed by the group in accordance with the definition
of control under IFRS 10. Loans to joint ventures are classified as non-current
assets when they are not expected to be received in the normal working capital
cycle. Trading receivables and payables to joint ventures are classified as
current assets and liabilities.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost
includes materials, direct labour and overheads relevant to the stage of
production. Cost is determined using the weighted average method. Net
realisable value is based on estimated selling price less all further costs to
completion and all relevant marketing, selling and distribution costs.
Impairment
Whenever events or changes in circumstance indicate that the carrying amount of
an asset may not be recoverable an asset is reviewed for impairment. 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 21. 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.
Assets held for sale
Non-current assets, or disposal groups comprising assets and liabilities, are
classified as held-for-sale if it is highly probable that they will be
recovered primarily through sale rather through continuing use. Such assets, or
disposal groups, are generally measured at the lower of their carrying amount
and fair value less costs of sell. Any impairment loss on a disposal group is
allocated first to goodwill, and then to the remaining assets and liabilities
on a pro rata basis, except that no loss is allocated to inventories, financial
assets, deferred tax assets, employee benefit assets, investment property which
continue to be measured in accordance with the group's other accounting
policies.
Impairment losses on initial classification as held-for-sale and subsequent
gains and losses on remeasurement are recognised in profit or loss. Once
classified as held-for-sale, intangible assets and property, plant and
equipment are no longer amortised or depreciated, and any equity-accounted
investment is no longer equity accounted.
Segmental reporting
For management reporting purposes, the group is organised into business
segments distinguishable by economic activity. The group's only business
segments are mining activities and investment properties. These business
segments are subject to risks and returns that are different from those of
other business segments and are the primary basis on which the group reports
its segment information. This is consistent with the way the group is managed
and with the format of the group's internal financial reporting. Significant
revenue from transactions with any individual customer, which makes up 10
percent or more of the total revenue of the group, is separately disclosed
within each segment. All coal exports are sales to coal traders at Richard
Bay's terminal in South Africa with the risks and rewards passing to the coal
trader at the terminal. Whilst the coal traders will ultimately sell the coal
on the international markets the Company has no visibility over the ultimate
destination of the coal. Accordingly, the export sales are recorded as South
African revenue.
Notes to the financial statements
for the year ended 31 December 2017
1. SEGMENTAL REPORTING
2017
Business analysis Mining Property Other Total
GBP'000 GBP'000 GBP'000 GBP'000
Significant revenue customer A 27,528 - - 27,528
Significant revenue customer B 7,226 - - 7,226
Significant revenue customer C 412 - - 412
Other revenue 1,134 1,125 34 2,293
Segment revenue 36,300 1,125 34 37,459
Operating (loss)/profit before fair value 3,104 897 28 4,029
adjustments & exchange movements
Revaluation of investments & exchange movements (256) (13) 3 (266)
Operating profit and segment result 2,848 884 31 3,763
Segment assets 13,500 13,803 3,050 30,353
Unallocated assets
- Non-current assets 3
- Cash & cash equivalents 5,327
Total assets excluding investment in joint 35,683
ventures and assets held for sale
Segment liabilities (9,238) (2,270) (214) (11,722)
Borrowings (1,329) (5,832) - (7,161)
Total liabilities (10,567) (8,102) (214) (18,883)
Net assets 16,800
Non segmental assets
- Investment in joint ventures 874
Net assets as per balance sheet 17,674
Geographic analysis United South Total
Kingdom Africa GBP'000
GBP'000 GBP'000
Revenue 1,159 36,300 37,459
Operating profit/(loss) and segment result 854 2,909 3,763
Non-current assets excluding investments 13,400 8,610 22,010
Total net assets 13,416 4,258 17,674
Capital expenditure 13 1,741 1,754
2016
Business analysis Mining Property Other Total
GBP'000 GBP'000 GBP'000 GBP'000
Significant revenue customer A 14,543 - - 14,543
Significant revenue customer B 4,581 - - 4,581
Significant revenue customer C 445 - - 445
Other revenue 2,134 1,084 28 3,246
Segment revenue 21,703 1,084 28 22,815
Operating (loss)/profit before fair value (1,030) 736 25 (269)
adjustments & exchange movements
Revaluation of investments & exchange movements 449 445 12 906
Operating (loss)/profit and segment result (581) 1,181 37 637
Segment assets 15,082 13,889 2,781 31,752
Unallocated assets
- Non-current assets 6
- Cash & cash equivalents 2,444
Total assets excluding investment in joint 34,202
ventures and assets held for sale
Segment liabilities (8,098) (2,320) (215) (10,633)
Borrowings (3,424) (5,810) - (9,234)
Total liabilities (11,522) (8,130) (215) (19,867)
Net assets 14,335
Non segmental assets
- Investment in joint ventures 1,321
- Loan to joint venture 1,350
Net assets as per balance sheet 17,006
Geographic analysis United South Total
Kingdom Africa GBP'000
GBP'000 GBP'000
Revenue 1,112 21,703 22,815
Operating profit/(loss) and segment result 1,231 (595) 636
Non-current assets excluding investments 13,432 8,517 21,949
Total net assets 12,291 4,715 17,006
Capital expenditure 1 2,858 2,859
2. OPERATING COSTS
2017 2016
GBP'000 GBP'000
Mining 25,664 16,184
Property 151 211
Cost of sales 25,815 16,395
Administration 7,615 6,689
Operating costs 33,430 23,084
The direct property costs are:
Ground rent 8 10
Direct property expense 130 177
Bad debts 13 24
151 211
Operating costs above include depreciation of GBP1,790,000 (2016: GBP1,785,000).
3. (LOSS)/GAIN ON REVALUATION OF INVESTMENT PROPERTIES
The reconciliation of the investment surplus to the gain on revaluation of
investment properties in the income statement is set out below:
2017 2016
GBP'000 GBP'000
Investment surplus 16 458
Loss on valuation movement in respect of head lease payments (29) (13)
(Loss)/gain on revaluation of investment properties (13) 445
4. PROFIT/(LOSS) BEFORE TAXATION
(Loss)/profit before taxation is arrived at after charging:
2017 2016
GBP'000 GBP'000
Staff costs (see note 28) 6,396 5,321
Depreciation 1,790 1,785
Exchange loss/(gain) 256 (449)
Fees payable to the company's auditor for the audit of the company's 41 40
annual accounts
Fees payable to the company's auditor and its associates for other
services:
The audit of the company's subsidiaries pursuant to 10 10
legislation
Audit related services 1 32
Non-audit related services 1 -
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.
5. DIRECTORS' EMOLUMENTS
Directors' emoluments are shown in the Directors' remuneration report on page
36 which is within the audited part of that report.
6. INTEREST PAYABLE
2017 2016
GBP'000 GBP'000
On bank overdrafts and bank loans 443 395
Unwinding of discount 92 78
Other interest payable 129 81
Interest payable 664 554
7. TAXATION
2017 2016
GBP'000 GBP'000
(a) Based on the results for the year:
Current tax - UK 231 10
Current tax - Overseas 136 60
Corporation tax - adjustment in respect of prior year - UK (5) -
Current tax 362 70
Deferred tax 202 (131)
Total tax in income statement charge / (credit) 564 (61)
The 2016 deferred tax recognised in income of GBP131,000 includes a credit of GBP
168,000 arising on the correction of an error in the calculation of deferred
tax in 2015 related to the accounting of a deferred tax liability incorrectly
recognised in respect of management fees. The company adjusted the effect of
this error in its 2016 financial statements by reducing the tax charge for the
year by GBP168,000 and reducing the associated deferred tax liability as it was
not considered to be material to the current or prior year financial
statements.
(b) Factors affecting tax charge for the year:
The corporation tax assessed for the year is different from that at the
standard rate of corporation tax in the United Kingdom of 19.25% (2016: 20%).
The differences are explained below:
Profit/(Loss) on ordinary activities before taxation 1,485 346
Tax on profit on ordinary activities at 19.25% (2016: 20%) 286 69
Effects of:
Expenses not deductible for tax purposes 107 20
Capital gains on disposal - 153
Adjustment to tax rate 201 (117)
Other differences (27) (32)
Adjustment in respect of prior years (3) (154)
Total tax in income statement (credit) / charge 564 (61)
(c) Analysis of United Kingdom and overseas tax:
United Kingdom tax included in above:
2017 2016
GBP'000 GBP'000
Corporation tax 231 10
Adjustment in respect of prior years (5) -
Current tax 226 10
Deferred tax (197) 8
29 18
Overseas tax included in above:
Current tax 136 60
Deferred tax 399 (139)
535 (79)
8. DIVIDS PAID
2017 2017 2016 2016
Per GBP'000 Per GBP'000
share share
Dividends paid during the year relating to the 4.00p 427 4.00p 427
prior period
Dividends relating to the current period:
Interim dividend for 2017 paid on 9 February 2018 1.00p 107 1.00p 107
Proposed final dividend for 2017 3.00p 320 3.00p 320
Proposed special dividend for 2017 1.00p 107 - -
5.00p 534 4.00p 427
The dividends relating to the current period are not accounted for until they
have been approved at the Annual General Meeting. The amount, in respect of
2017, will be accounted for as an appropriation of retained earnings in the
year ending 31 December 2018.
9. PROFIT AND DILUTED PROFIT PER SHARE
Both the basic and diluted profit per share calculations are based on a profit
of GBP749,000 (2016: GBP479,000). The basic profit per share has been calculated on
a weighted average of 10,676,839 (2016: 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 (2016: 10,676,839)
plus the dilutive potential ordinary shares arising from share options of nil
(2016: nil) totalling 10,676,839 (2016: 10,676,839).
Share options exercisable as at 31 December 2017 do not have a dilutive effect
as the average market price of ordinary shares during the period does not
exceed the exercise price of the options.
10. INVESTMENT PROPERTIES
Freehold Long Total
GBP'000 Leasehold GBP'000
GBP'000
Valuation at 1 January 2017 10,550 2,695 13,245
Additions 13 - 13
Revaluation (13) - (13)
Valuation at 31 December 2017 10,550 2,695 13,245
Valuation at 1 January 2016 10,150 2,650 12,800
Revaluation 400 45 445
Valuation at 31 December 2016 10,550 2,695 13,245
Historical cost
At 31 December 2017 5,836 728 6,564
At 31 December 2016 5,823 728 6,551
Long leasehold properties are those for which the unexpired term at the balance
sheet date is not less than 50 years. All investment properties are held for
use in operating leases and all properties generated rental income during the
period.
Freehold and Long Leasehold properties were externally professionally valued at
31 December on an open market basis by:
2017 2016
GBP'000 GBP'000
Carter Towler 13,245 13,245
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 Valuation Key Carrying Carrying Range Range
property Level technique unobservable / / (weighted (weighted
3 inputs fair fair average) average)
value value 2017 2016
2017 2016
GBP'000 GBP'000
Freehold - Income Estimated 10,550 10,550 GBP7 - GBP25 GBP7 - GBP27
external capitalisation rental (GBP18) (GBP20)
valuation value per sq
ft p.a
Equivalent 7.1% - 7.8% -
Yield 11.0% 11.0%
(8.7%) (8.9%)
Long leasehold Income Estimated 2,695 2,695 GBP8 - GBP8 GBP8 - GBP8
- external capitalisation rental (GBP8) (GBP8)
valuation value per sq
ft p.a
Equivalent 7.7% - 7.6% -
yield 7.7% 7.6%
(7.7%) (7.6%)
At 31 December 13,245 13,245
2017
There are interrelationships between all these inputs as they are determined by
market conditions. The existence of an increase in more than one input would be
to magnify the input on the valuation. The impact on the valuation will be
mitigated by the interrelationship of two inputs in opposite directions, for
example, an increase in rent may be offset by an increase in yield.
The table below illustrates the impact of changes in key unobservable inputs on
the carrying / fair value of the group's properties:
Estimated rental value Equivalent yield
10% increase or decrease 25 basis point contraction or
expansion
2017 2016 2017 2016
GBP'000 GBP'000 GBP'000 GBP'000
Freehold - external 1,055 / 1,055 / 331 / (311) 316 / (298)
valuation (1,055) (1,055)
Long Leasehold - external 270 / (270) 270 / (270) 90 / (85) 92 / (86)
valuation
11. MINING RESERVES, PLANT AND EQUIPMENT
Mining Mining Motor Office Total
reserves equipment vehicles equipment GBP'000
GBP'000 and GBP'000 GBP'000
development
costs
GBP'000
Cost at 1 January 2017 1,345 23,724 235 146 25,450
Exchange adjustment 22 447 3 2 474
Additions - 1,731 - 10 1,741
Disposals - - (38) - (38)
Cost at 31 December 2017 1,367 25,902 200 158 27,627
Accumulated depreciation at 1 1,287 15,370 154 119 16,930
January 2017
Exchange adjustment 21 308 2 1 332
Charge for the year 1 1,763 17 9 1,790
Disposals - - (38) - (38)
Accumulated depreciation at 31 1,309 17,441 135 129 19,014
December 2017
Net book value at 31 December 2017 58 8,461 65 29 8,613
Cost at 1 January 2016 995 15,453 150 120 16,718
Exchange adjustment 350 5,858 47 19 6,274
Additions - 2,814 38 7 2,859
Disposals - (401) - - (401)
Cost at 31 December 2016 1,345 23,724 235 146 25,450
Accumulated depreciation at 1 949 10,201 99 95 11,344
January 2016
Exchange adjustment 336 3,824 28 14 4,202
Charge for the year 2 1,746 27 10 1,785
Disposals - (401) - - (401)
Accumulated depreciation at 31 1,287 15,370 154 119 16,930
December 2016
Net book value at 31 December 2016 58 8,354 81 27 8,520
12. INVESTMENTS HELD AS NON-CURRENT ASSETS
2017 2017 2016 2016
Net Other Net Other
investment GBP'000 investment GBP'000
in joint in joint
ventures ventures
assets assets
GBP'000 GBP'000
At 1 January 1,321 36 1,198 29
Share of gain in investment - 19 - 6
Exchange adjustment (8) - 130 1
Share of (loss)/gain in joint ventures 8 - (7) -
Write-off of investment (447) - - -
Net assets at 31 December 874 55 1,321 36
Loan to joint venture (Ezimbokodweni):
At 1 January 1,350 - 900 -
Exchange adjustments (16) - 336 -
Additions - interest 46 - 114 -
Write-off of loan (1,380) - - -
At 31 December - - 1,350 -
At 31 December 874 55 2,671 36
Provision for diminution in value:
At 1 January - (4) - (15)
Exchange adjustment - - - (1)
Write back/(down) of investment - - - 12
At 31 December - (4) - (4)
Net book value at 31 December 874 51 2,671 32
2017 2016
GBP'000 GBP'000
Net book value of unquoted investments - -
Net book and market value of investments listed on overseas stock 51 32
exchanges
51 32
13. JOINT VENTURES
Dragon Retail Properties Limited
The company owns 50% of the issued share capital of Dragon Retail Properties
Limited, an unlisted property investment company. At year end, the carrying
value of the investment held by the group was GBP874,000 (2016: GBP866,000). The
remaining 50% is held by London & Associated Properties PLC. Dragon Retail
Properties Limited is incorporated in England and Wales and its registered
address is 24 Bruton Place, London, W1J 6NE. It has issued share capital of
500,000 (2016: 500,000) ordinary shares of GBP1 each. No dividends were received
during the period.
Ezimbokodweni Mining (Pty) Ltd
The company owned 49% of the issued share capital of Ezimbokodweni Mining (Pty)
Limited ("Ezimbokodweni"), an unlisted coal exploration and development company
incorporated in South Africa. During the year the group wrote off its net
investment in Ezimbokodweni at a carrying value of GBP1,827,000. The write-off
included a loan at an amount of a GBP1,380,000 as well as an equity investment of
GBP447,000. At year end, the carrying value of the net investment, as disclosed
in joint venture assets in note 12, is a loan to Ezimbokodweni of GBPnil (2016: GBP
1,350,000) and an equity investment of GBPnil (2016: GBP455,000). Refer to page 62
for details regarding the write-off of the asset.
Dragon Ezimbokodweni 2017 2016
50% 49% GBP'000 GBP'000
GBP'000 GBP'000
Turnover 83 - 83 86
Profit and loss
Profit/(loss) before depreciation, interest 26 - 26 12
and taxation
Depreciation and amortisation (6) - (6) (13)
Loss before interest and taxation 20 - 20 (1)
Interest Income 68 - 68 69
Interest expense (83) - (83) (85)
Loss before taxation 5 - 5 (17)
Taxation 3 - 3 10
Loss after taxation 8 - 8 (7)
Balance sheet
Non-current assets 1,317 - 1,317 2,672
Cash and cash equivalents 46 - 46 61
Other current assets 1,218 - 1,218 1,165
Current borrowings - - - -
Other current liabilities (1,062) - (1,062) (2,388)
Net current assets 202 - 202 (1,162)
Non-current borrowings (609) - (609) (603)
Other non-current liabilities (36) - (36) (41)
Share of net assets at 31 December 874 - 874 866
Reconciliation of net assets to carrying
value of joint venture assets:
Share of net assets at 31 December 874 - 874 866
Pre-acquisition costs capitalised - - - 455
Carrying value of joint venture assets at 31 874 - 874 1,321
December
14. 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
Mineral Products Share 100% 24 Bruton Place, London, W1J6NE England and
Limited dealing Wales
Bisichi Property 100% 24 Bruton Place, London, W1J6NE England and
(Properties) Wales
Limited
Bisichi Property 100% 24 Bruton Place, London, W1J6NE England and
Northampton Wales
Limited
Bisichi Trustee Property 100% 24 Bruton Place, London, W1J6NE England and
Limited Wales
Urban First Property 100% 24 Bruton Place, London, W1J6NE England and
(Northampton) Wales
Limited
Bisichi Mining Holding 100% 24 Bruton Place, London, W1J6NE England and
(Exploration) company Wales
Limited
Ninghi Marketing Dormant 90.1% 24 Bruton Place, London, W1J6NE England and
Limited Wales
Bisichi Mining Dormant 100% 24 Bruton Place, London, W1J6NE England and
Managements Wales
Services Limited
Black Wattle Coal 62.5% Samora Machel Street, Bethal South Africa
Colliery (Pty) mining Road, Middelburg, Mpumalanga,
Limited 1050
Bisichi Coal Coal 100% Samora Machel Street, Bethal South Africa
Mining (Pty) mining Road, Middelburg, Mpumalanga,
Limited 1050
Black Wattle Coal 62.5% Samora Machel Street, Bethal South Africa
Klipfontein (Pty) mining Road,
Limited Middelburg, Mpumalanga, 1050
Amandla Ehtu Dormant 70% Samora Machel Street, Bethal South Africa
Mineral Resource Road,
Development (Pty) Middelburg, Mpumalanga, 1050
Limited
Details on the non-controlling interest in subsidiaries are shown under note
26.
15. INVENTORIES
2017 2016
GBP'000 GBP'000
Coal
Washed 301 1,139
Mining Production 286 83
Work in progress 227 458
Other 14 41
828 1,721
16. TRADE AND OTHER RECEIVABLES
2017 2016
GBP'000 GBP'000
Amounts falling due within one year:
Trade receivables 3,908 4,076
Amount owed by joint venture 2,000 2,000
Other receivables 415 754
Prepayments and accrued income 94 416
6,417 7,246
17. AVAILABLE FOR SALE INVESTMENTS
2017 2016
GBP'000 GBP'000
Market value of listed Investments:
Listed in Great Britain 1,003 721
Listed outside Great Britain 47 60
1,050 781
Original cost of listed investments 922 737
Unrealised surplus / defecit of market value versus cost 128 44
The Directors have reviewed the individual investments for impairment and do
not consider the investments which are below cost to be impaired.
18. TRADE AND OTHER PAYABLES
2017 2016
GBP'000 GBP'000
Trade payables 3,771 3,610
Amounts owed to joint ventures 192 192
Other payables 1,402 1,422
Accruals 1,787 1,493
Deferred Income 229 233
7,381 6,950
19. FINANCIAL LIABILITIES - BORROWINGS
Current Non-current
2017 2016 2017 2016
GBP'000 GBP'000 GBP'000 GBP'000
Bank overdraft (secured) 1,262 3,334 - -
Bank loan (secured) 26 24 5,872 5,876
1,288 3,358 5,872 5,876
2017 2016
GBP'000 GBP'000
Bank overdraft and loan instalments by reference to the balance sheet
date:
Within one year 1,288 3,358
From one to two years 17 26
From two to five years 5,855 5,850
7,160 9,234
Bank overdraft and loan analysis by origin:
United Kingdom 5,832 5,810
Southern Africa 1,328 3,424
7,160 9,234
The United Kingdom bank loans and overdraft are secured by way of a first
charge over the investment properties in the UK which are included in the
financial statements at a value of GBP13,245,000. The South African bank loans
are secured by way of a first charge over specific pieces of mining equipment,
inventory and the debtors of the relevant company which holds the loan which
are included in the financial statements at a value of GBP6,123,500. 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:
2017 2016
GBP'000 GBP'000
Total bank loans and overdraft 7,160 9,234
Less cash and cash equivalents (excluding overdraft) (5,327) (2,444)
Net debt 1,833 6,790
Total equity attributable to shareholders of the parent 17,209 16,657
Gearing 10.7% 40.8%
Analysis of the changes in liabilities arising from financing activities:
Bank Finance 2017 2016
borrowings leases GBP'000 GBP'000
(including GBP'000
overdraft)
GBP'000
Balance at 1 January 9,234 181 9,415 8,401
Exchange adjustments (4) - (4) 854
Cash movements excluding exchange (2,070) - (2,070) 173
adjustments
Valuation movements - (29) (29) (13)
Balance at 31 December 7,160 152 7,312 9,415
20. PROVISION FOR REHABILITATION
2017 2016
GBP'000 GBP'000
As at 1 January 1,236 847
Exchange adjustment 21 311
Unwinding of discount 92 78
As at 31 December 1,349 1,236
21. FINANCIAL INSTRUMENTS
Total financial assets and liabilities
The group's financial assets and liabilities are as follows, representing both
the fair value and the carrying value:
Loans and Financial Available 2017 2016
receivables Liabilities for sale GBP'000 GBP'000
GBP'000 measured at investments
amortised GBP'000
cost
GBP'000
Cash and cash equivalents 5,327 - - 5,327 2,444
Current available for sale - - 1,050 1,050 781
investments
Non-current available for sale - - 51 51 32
investments
Trade and other receivables 6,323 - - 6,323 6,830
Bank borrowings and overdraft - (7,160) - (7,160) (9,234)
Finance leases - (152) - (152) (181)
Other liabilities - (7,152) - (7,152) (6,735)
11,650 (14,464) 1,101 (1,713) (6,063)
Available for sale investments are held at fair value and fall under level 1 of
the fair value hierarchy into which fair value measurements are recognised in
accordance with the levels set out in IFRS 7. The comparative figures for 2016
fall under the same category of financial instrument as 2017.
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 19 approximates its carrying value and was determined under
level 2 of the fair value hierarchy and is estimated by discounting the future
contractual cash flows at the current market interest rates for UK borrowings
and for the South African overdraft facility. The fair value of the finance
lease liabilities in note 30 approximates its carrying value and was determined
under level 2 of the fair value hierarchy and is estimated by discounting the
future contractual cash flows at the current market interest rates.
Treasury policy
Although no derivative transactions were entered into during the current and
prior year, the group may use derivative transactions such as interest rate
swaps and forward exchange contracts as necessary in order to help manage the
financial risks arising from the group's activities. The main risks arising
from the group's financing structure are interest rate risk, liquidity risk,
market risk, credit risk, currency risk and commodity price risk. There have
been no changes during the year of the main risks arising from the group's
finance structure. The policies for managing each of these risks and the
principal effects of these policies on the results are summarised below.
Interest rate risk
Interest rate risk is the risk that the value of a financial instrument or
cashflows associated with the instrument will fluctuate due to changes in
market interest rates. Interest rate risk arises from interest bearing
financial assets and liabilities that the group uses. Treasury activities take
place under procedures and policies approved and monitored by the Board to
minimise the financial risk faced by the group. Interest bearing assets
comprise cash and cash equivalents which are considered to be short-term liquid
assets and loans to joint ventures. Interest bearing borrowings comprise bank
loans, bank overdrafts and variable rate finance lease obligations. The rates
of interest vary based on LIBOR in the UK and PRIME in South Africa.
As at 31 December 2017, 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 GBP
82,000 (2016: GBP56,000). The effect on equity of this change would be an
equivalent decrease or increase for the year of GBP82,000 (2016: GBP56,000).
Liquidity risk
The group's policy is to minimise refinancing risk. Efficient treasury
management and strict credit control minimise the costs and risks associated
with this policy which ensures that funds are available to meet commitments as
they fall due. As at year end the group held borrowing facilities in the UK in
Bisichi Mining PLC and in South Africa in Black Wattle Colliery (Pty) Ltd.
The following table sets out the maturity profile of contractual undiscounted
cashlfows of financial liabilities as at 31 December:
2017 2016
GBP'000 GBP'000
Within one year 9,110 10,658
From one to two years 198 239
From two to five years 6,054 6,277
Beyond five years 105 125
15,467 17,299
The following table sets out the maturity profile of contractual undiscounted
cashlfows of financial liabilities as at 31 December maturing within one year:
2017 2016
GBP'000 GBP'000
Within one month 3,824 2,119
From one to three months 2,278 2,926
From four to twelve months 3,008 5,613
9,110 10,658
In South Africa, an increased structured trade finance facility for R100million
was signed by Black Wattle Colliery (Pty) Limited in July 2017 with Absa Bank
Limited. The facility is renewable annually at 30 June and is secured against
inventory, debtors and cash that are held by Black Wattle Colliery (Pty)
Limited. The trade facility, which is repayable on demand, is included in cash
and cash equivalents within the cashflow statement.
This trade facility comprises of a R80million revolving facility to cover the
working capital requirements of the group's South African operations, and a
R20million loan facility to cover guarantee requirements related to the group's
South African mining operations. The interest cost of the loan is at the South
African prime lending rate.
In December 2014, the group signed a GBP6 million term loan facility with
Santander. The loan is secured against the group's UK retail property
portfolio. The debt package has a five year term and is repayable at the end of
the term. The interest cost of the loan is 2.35% above LIBOR.
As a result of the above agreed banking facilities, the Directors believe that
the group is well placed to manage its liquidity risk.
Credit risk
The group is mainly exposed to credit risk on its cash and cash equivalents,
trade and other receivables and amounts owed by joint ventures as per the
balance sheet. The maximum exposure to credit risk is represented by the
carrying amount of each financial asset in the balance sheet which at year end
amounted to GBP11,650,000 (2016: GBP9,274,000). The group's credit risk is
primarily attributable to its trade receivables. The group had amounts due from
its significant revenue customers at the year end that represented 93% (2016:
85%) of the trade receivables balance. These amounts have been subsequently
settled.
Trade debtor's credit ratings are reviewed regularly. The group only deposits
surplus cash with well-established financial institutions of high quality
credit standing. As at year end the amount of trade receivables held past due
date was GBP24,000 (2016: GBP157,000). To date, the amount of trade receivables
held past due date that has not subsequently been settled is GBP18,000 (2016: GBP
134,000). Management have no reason to believe that this amount will not be
settled.
Financial assets maturity
On 31 December 2017, cash at bank and in hand amounted to GBP5,327,000 (2016: GBP
2,444,000) 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 2017 and 2016 the group did not hedge its
exposure of foreign investments held in foreign currencies.
The directors consider there to be no significant risk from exchange rate
movements of foreign currencies against the functional currencies of the
reporting companies within the group, excluding inter-company balances. The
principle currency risk to which the group is exposed in regard to
inter-company balances is the exchange rate between Pounds sterling and South
African Rand. It arises as a result of the retranslation of Rand denominated
inter-company trade receivable balances held within the UK which are payable by
South African Rand functional currency subsidiaries.
Based on the group's net financial assets and liabilities as at 31 December
2017, 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 GBP34,000 (2016: GBP435,000). 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 GBP56,000 (2016: GBP725,000).
The 25% sensitivity has been determined based on the average historic
volatility of the exchange rate for 2016 and 2017.
The table below shows the currency profiles of cash and cash equivalents:
2017 2016
GBP'000 GBP'000
Sterling 3,402 1,717
South African Rand 1,923 725
US Dollar 2 2
5,327 2,444
Cash and cash equivalents earn interest at rates based on LIBOR in Sterling and
Prime in Rand.
The tables below shows the currency profiles of net monetary assets and
liabilities by functional currency of the group:
2017: Sterling South
GBP'000 African
Rands
GBP'000
Sterling (832) -
South African Rand 54 (1,304)
US Dollar 13 -
(765) (1,304)
2016: Sterling South
GBP'000 African
Rands
GBP'000
Sterling (2,522) -
South African Rand 36 (2,262)
US Dollar 35 -
(2,451) (2,262)
22. DEFERRED TAXATION
2017 2016
GBP'000 GBP'000
As at 1 January 2,248 2,002
Recognised in income 202 (131)
Recognised in comprehensive income - 13
Exchange adjustment 35 364
As at 31 December 2,485 2,248
The deferred tax balance comprises the following:
Revaluation of properties 691 715
Capital allowances 2,389 2,361
Short term timing difference (513) (184)
Unredeemed capital deductions (80) (642)
Losses and other deductions (2) (2)
2,485 2,248
Refer to note 7 for details of adjustments in respect of the prior year
deferred tax in the current year.
23. SHARE CAPITAL
2017 2016
GBP'000 GBP'000
Authorised: 13,000,000 ordinary shares of 10p each 1,300 1,300
Allotted and fully paid:
2017 2016 2017 2016
Number of Number of GBP'000 GBP'000
ordinary ordinary
shares shares
At 1 January and outstanding at 31 December 10,676,839 10,676,839 1,068 1,068
24. OTHER RESERVES
2017 2016
GBP'000 GBP'000
Equity share options 597 597
Net investment premium on share capital in joint venture 86 86
683 683
25. SHARE BASED PAYMENTS
Details of the share option scheme are shown in the Directors' remuneration
report on page 37 under the heading Share option schemes which is within the
audited part of this report. Further details of the share option schemes are
set out below.
The Bisichi Mining PLC Unapproved Option Schemes:
Year of grant Subscription Period within Number of Number Number of
price per which options share of share
share exercisable for which share for which
options options options
outstanding lapsed outstanding
at during at
31 December year 31 December
2016 2017
2010 202.5p Aug 2013 - Aug 80,000 - 80,000
2020
2016 87.0p Sep 2015 - Sep 300,000 - 300,000
2025
On the 5 February 2018 the company entered into an agreement with G.Casey to
surrender the 80,000 options which were granted in 2010. The aggregate
consideration paid by the group to effect the cancellation was GBP1. There are no
performance or service conditions attached to 2015 options which are
outstanding at 31 December 2017 which vested in 2015.
On 6 February 2018 the company granted additional options to the following
directors of the company:
* A.Heller 150,000 options at an exercise price of 73.50p per share.
* G.Casey 230,000 options at an exercise price of 73.50p per share.
The above 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 options.
2017 2017 2016 2016
Number Weighted Number Weighted
average average
exercise exercise
price price
Outstanding at 1 January 380,000 111.3p 705,000 133.1p
Lapsed during the year - - (325,000) 237.5p
Outstanding at 31 December 380,000 111.3p 380,000 111.3p
Exercisable at 31 December 380,000 111.3p 380,000 111.3p
26. NON-CONTROLLING INTEREST
2017 2016
GBP'000 GBP'000
As at 1 January 349 321
Share of profit/(loss) for the year 172 (72)
Exchange adjustment 11 100
As at 31 December 532 349
The non-controlling interest comprises of a 37.5% shareholding in Black Wattle
Colliery (Pty) Ltd. A coal mining company incorporated in South Africa.
Summarised financial information reflecting 100% of the underlying subsidiary's
relevant figures, is set out below.
2017 2016
GBP'000 GBP'000
Revenue 36,300 21,703
Expenses (35,150) (22,185)
Profit/(loss) for the year 1,150 (482)
Other comprehensive Income - -
Total comprehensive income for the year 1,150 (482)
Balance sheet
Non-current assets 8,613 8,516
Current assets 6,747 8,600
Current liabilities (8,652) (12,151)
Non-current liabilities (3,155) (2,635)
Net assets at 31 December 3,553 2,330
The non-controlling interest relates to 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
Bisichi Mining (Exploration) Limited is a wholly owned subsidiary of Bisichi
Mining PLC incorporated in England and Wales.
Vunani Mining (Pty) Ltd is a South African Black Economic Empowerment company
and minority shareholder in Black Wattle Colliery (Pty) Ltd.
The "A" shares rank pari passu with the ordinary shares save that they will
have no dividend rights until such time as the dividends paid by Black Wattle
Colliery (Pty) Ltd on the ordinary shares subsequent to 30 October 2008 will
equate to R832,075,000.
A non-controlling interest of 15% in Black Wattle Colliery (Pty) Ltd is
recognised for all profits distributable to the 110 ordinary shares held by
Vunani Mining (Pty) Ltd from the date of issue of the shares (18 October 2010).
An additional non-controlling interest will be recognised for all profits
distributable to the 265 "A" shares held by Vunani Mining (Pty) Ltd after such
time as the profits available for distribution, in Black Wattle Colliery (Pty)
Ltd, before any payment of dividends after 30 October 2008, exceeds
R832,075,000.
27. 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
GBP'000 GBP'000 GBP'000 GBP'000
Related party:
London & Associated Properties PLC (note (a)) 33 - 138 (140)
Langney Shopping Centre Unit Trust (note (b)) - - - -
Dragon Retail Properties Limited (note (c)) 147 (2,000) (180) 204
Ezimbokodweni Mining (Pty) Limited (note (d)) - - (46) -
As at 31 December 2017 180 (2,000) (88) 64
London & Associated Properties PLC (note (a)) 35 - 138 (162)
Langney Shopping Centre Unit Trust (note (b)) - - - 64
Dragon Retail Properties Limited (note (c)) 123 (2,000) (174) 150
Ezimbokodweni Mining (Pty) Limited (note (d)) - (1,350) (114) -
As at 31 December 2016 158 (3,350) (150) 52
(a) London & Associated Properties PLC - London & Associated Properties PLC is
a substantial shareholder and parent company of Bisichi Mining PLC. Property
management, office premises, general management, accounting and administration
services are provided for Bisichi Mining PLC and its UK subsidiaries.
(b) Langney Shopping Centre Unit Trust - Langney Shopping Centre Unit Trust is
an unlisted property unit trust incorporated in Jersey. On the 11 March 2016,
the company disposed of its investment in Langney Shopping Centre Unit Trust.
(c) Dragon Retail Properties Limited - ("Dragon") is owned equally by the
company and London & Associated Properties PLC. Dragon is accounted as a joint
venture and is treated as a non-current asset investment. During 2012 the
company lent GBP2million to Dragon at 6.875 per cent annual interest which has
been classified as a trading balance and which is unsecured and payable on
demand.
(d) Ezimbokodweni Mining (Pty) Limited - Ezimbokodweni Mining is a prospective
coal production company based in South Africa. Ezimbokodweni Mining (Pty)
Limited is a joint venture and a loan to the joint venture is treated as part
of the net investment in the joint venture. Further details on the net
investment in Ezimbokodweni can be found in note 13.
Details of key management personnel compensation and interest in share options
are shown in the Directors' Remuneration Report on pages 36 and 37 under the
headings Directors' remuneration, Pension schemes and incentives and Share
option schemes which is within the audited part of this report. Refer also to
note 25 for details of IFRS 2 charges. The total employers' national insurance
paid in relation to the remuneration of key management was GBP156,000 (2016:
143,000). In 2012 a loan was made to one of the directors, Mr A R Heller, for GBP
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 GBP56,000 (2016: GBP71,000) and a repayment of GBP15,000
(2016: GBP15,000) was made during the year.
The non-controlling interest to Vunani Limited is shown in note 26. In
addition, the group holds an investment in Vunani Limited classified as
non-current available for sale investments with a fair value of GBP51,000 (2016:
GBP32,000).
28. EMPLOYEES
2017 2016
GBP'000 GBP'000
The average weekly numbers of employees of the group during the year
were as follows:
Production 192 185
Administration 15 15
207 200
Staff costs during the year were as follows:
Salaries 5,993 4,864
Social security costs 161 148
Pension costs 242 200
Share based payments - 109
6,396 5,321
29. CAPITAL COMMITMENTS
2017 2016
GBP GBP'000
'000
Commitments for capital expenditure approved and contracted for at the - 762
year end
Share of commitment of capital expenditure in joint venture - 1,489
30. HEAD LEASE COMMITMENTS AND FUTURE PROPERTY LEASE RENTALS
Present value of head leases on properties
Minimum lease Present value of
payments minimum lease
payments
2017 2016 2017 2016
GBP'000 GBP'000 GBP'000 GBP'000
Within one year 10 11 10 11
Second to fifth year 38 45 30 36
After five years 1,199 1,436 112 134
1,247 1,492 152 181
Discounting adjustment (1,095) (1,311) - -
Present value 152 181 152 181
The Company has one finance lease contract for an investment property. The
remaining term for the leased investment property is 131 years. The annual rent
payable is the higher of GBP7,500 or 6.25% of the revenue derived from the leased
assets.
The group has entered into operating leases on its investment property
portfolio consisting mainly of commercial properties. These leases have terms
of between 1 and 68 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:
2017 2016
GBP'000 GBP'000
Within one year 914 981
Second to fifth year 2,460 2,533
After five years 9,327 9,262
12,701 12,776
31. CONTINGENT LIABILITIES AND POST BLANCE SHEET EVENTS
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:
2017 2016
GBP'000 GBP'000
Rail siding 64 63
Rehabilitation of mining land 1,387 1,364
Water & electricity 58 57
Company balance sheet
at 31 December 2017
Notes 2017 2016
GBP'000 GBP'000
Fixed assets
Tangible assets 34 48 51
Investment in joint ventures 35 165 847
Other investments 35 7,395 7,599
7,609 8,497
Current assets
Debtors - amounts due within one year 36 3,471 3,253
Debtors - amounts due in more than one year 36 - 843
Bank balances 2,129 1,118
5,599 5,214
Creditors - amounts falling due within one year 37 (1,406) (1,328)
Net current assets 4,193 3,886
Total assets less current liabilities 11,802 12,383
Provision for liabilities and charges 38 (18) (18)
Net assets 11,784 12,365
Capital and reserves
Called up share capital 23 1,068 1,068
Share premium account 258 258
Available for sale reserve 25 6
Other reserves 598 598
Retained earnings 32 9,835 10,435
Shareholders' funds 11,784 12,365
The loss for the financial year, before dividends, was GBP173,000 (2016: loss of
GBP224,000)
The company financial statements were approved and authorised for issue by the
board of directors on 20 April 2018 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 2017
Share Share Available Other Retained Shareholders
capital premium for sale reserve earnings funds
GBP'000 GBP'000 reserve GBP'000 GBP'000 GBP'000
GBP'000
Balance at 1 January 2016 1,068 258 - 489 11,086 12,901
Dividend paid - - - - (427) (427)
Share option charge - - - 109 - 109
Profit and total - - 6 - (224) (218)
comprehensive income for
the year
Balance at 1 January 2017 1,068 258 6 598 10,435 12,365
Dividend paid - - - - (427) (427)
Profit and total - - 19 - (173) (154)
comprehensive income for
the year
Balance at 31 December 1,068 258 25 598 9,835 11,784
2017
Company accounting policies
for the year ended 31 December 2017
The following are the main accounting policies of the company:
Basis of preperation
The financial statements have been prepared in accordance with Financial
Reporting Standard 100 Application of Financial Reporting Requirements and
Financial Reporting Standard 101 Reduced Disclosure Framework. The principal
accounting policies adopted in the preparation of the financial statements are
set out below.
The financial statements have been prepared on a historical cost basis, except
for the revaluation of investment property and certain financial instruments.
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 and 13.
Therefore these financial statements do not include:
* certain comparative information as otherwise required by EU endorsed IFRS;
* certain disclosures regarding the company's capital;
* a statement of cash flows;
* the effect of future accounting standards not yet adopted;
* the disclosure of the remuneration of key management personnel; and
* disclosure of related party transactions with the company's wholly owned
subsidiaries.
In addition, and in accordance with FRS 101, further disclosure exemptions have
been adopted because equivalent disclosures are included in the company's
Consolidated Financial Statements.
Dividends received
Dividends are credited to the profit and loss account when received.
Depreciation
Provision for depreciation on tangible fixed assets is made in equal annual
instalments to write each item off over its useful life. The rates generally
used are:
Motor vehicles 25 - 33 per cent
Office equipment 10 - 33 per cent
Joint ventures
Investments in joint ventures, being those entities over whose activities the
group has joint control as established by contractual agreement, are included
at cost, less impairment.
Other Investments
Investments of the company in subsidiaries are stated in the balance sheet as
fixed assets at cost less provisions for impairment.
Other investments comprising of shares in listed companies are classified as
non-current available for sale investments and are carried at fair value. Any
changes in fair value above cost are recognised in other comprehensive income
and accumulated in the available-for-sale reserve. For any changes in fair
value below cost a provision for impairment is recognised in the profit or loss
account.
Foreign currencies
Monetary assets and liabilities expressed in foreign currencies have been
translated at the rates of exchange ruling at the balance sheet date. All
exchange differences are taken to the profit and loss account.
Financial instruments
Details on the group's accounting policy for financial instruments can be found
on page 64.
Deferred taxation
Details on the group's accounting policy for deferred taxation can be found on
page 65.
Leased assets and obligations
All leases are "Operating Leases" and the annual rentals are charged to the
profit and loss account on a straight line basis over the lease term. Rent free
periods or other incentives received for entering into a lease are accounted
for over the period of the lease so as to spread the benefit received over the
lease term.
Pensions
Details on the group's accounting policy for pensions can be found on page 64.
Share based remuneration
Details on the group's accounting policy for share based remuneration can be
found on page 64. Details of the share options in issue are disclosed in the
directors' remuneration report on page 37 under the heading share option
schemes which is within the audited part of this report.
32. PROFIT & LOSS ACCOUNT
A separate profit and loss account for Bisichi Mining PLC has not been
presented as permitted by Section 408(2) of the Companies Act 2006. The loss
for the financial year, before dividends, was GBP173,000 (2016: loss of GBP224,000)
Details of share capital are set out in note 23 of the group financial
statements and details of the share options are shown in the Directors'
Remuneration Report on page 37 under the heading Share option schemes which is
within the audited part of this report and note 25 of the group financial
statements.
33. DIVIDS
Details on dividends can be found in note 8 in the group financial statements.
34. TANGIBLE FIXED ASSETS
Leasehold Motor Office Total
Property vehicles equipment GBP'000
GBP'000 GBP'000 GBP'000
Cost at 1 January 2017 45 37 67 149
Revaluation - (37) - (37)
Cost at 31 December 2017 45 - 67 112
Accumulated depreciation at 1 January 2017 - 37 61 98
Charge for the year - - 3 3
Accumulated depreciation at 31 December 2017 - 37 64 101
Net book value at 31 December 2017 45 - 3 48
Net book value at 31 December 2016 45 - 6 51
Leasehold property consists of a single unit with a long leasehold tenant. The
term remaining on the lease is 42 years.
35. INVESTMENTS
Joint Shares in Loans Other Total
ventures subsidiaries GBP'000 investments GBP'000
shares GBP'000 GBP'000
GBP'000
Net book value at 1 January 2017 847 6,356 1,211 32 7,599
Repaid during year - - (223) - (223)
Write-off of investment (682) - - - -
Unrealised surplus of market - - - 19 19
value versus cost
Net book value at 31 December 165 6,356 988 51 7,395
2017
During the year, the company wrote off its investment in Ezimbokodweni Mining
(Pty) Ltd. Further information relating to the write down of Ezimbokodweni
Mining (Pty) Ltd can be found in Note 13.
Investments in subsidiaries are detailed in note 14. 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 GBP52,000 (2016: GBP32,000) shares.
36. DEBTORS
2017 2016
GBP'000 GBP'000
Amounts due within one year:
Amounts due from subsidiary undertakings 1,289 1,006
Trade receivables 16 7
Other debtors 78 89
Joint venture 2,000 2,070
Prepayments and accrued income 88 81
3,471 3,253
Amounts due in more than one year:
Amounts due from subsidiary undertakings - 834
37. CREDITORS
2017 2016
GBP'000 GBP'000
Amounts falling due within one year:
Amounts due to subsidiary undertakings 279 359
Joint venture 192 192
Current taxation 123 -
Other taxation and social security 38 26
Other creditors 659 592
Accruals and deferred income 115 159
1,406 1,328
38. PROVISIONS FOR LIABILITIES
2017 2016
GBP'000 GBP'000
Deferred taxation:
Balance at 1 January 18 182
Provision - (164)
Transfer - -
18 18
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
GBP'000 related party
party GBP'000
GBP'000
Related party:
Black Wattle Colliery (Pty) Ltd (note (a)) (165) (999) 2,768
Ninghi Marketing Limited (note (b)) (102) - -
As at 31 December 2017 (267) (999) 2,768
Black Wattle Colliery (Pty) Ltd (note (a)) (1,934) (1,421) 644
Ninghi Marketing Limited (note (b)) (102) - -
As at 31 December 2016 (2,036) (1,421) 644
(a) Black Wattle Colliery (Pty) Ltd - Black Wattle Colliery (Pty) Ltd
is a coal mining company based in South Africa.
(b) Ninghi Marketing Limited - Ninghi Marketing Limited is a dormant
coal marketing company incorporated in England & Wales.
Black Wattle Colliery (PTY) Ltd and NInghi Marketing Limited are subsidiaries
of the company.
In addition to the above, the company has issued a company guarantee of
R17,000,000 (2016: R17,000,000) (South African Rand) to the bankers of Black
Wattle Colliery (Pty) Ltd in order to cover bank guarantees issued to third
parties in respect of the rehabilitation of mining land.
A provision of GBP102,000 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 GBP116,000.
Further details on the loan can be found in Note 27 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 27 of the group financial statements.
40. EMPLOYEES
2017 2016
GBP'000 GBP'000
The average weekly numbers of employees of the company during the
year were as follows:
Directors & administration 5 5
Staff costs during the year were as follows:
Salaries 1,227 1,125
Social security costs 161 148
Pension costs 62 65
Share based payments - 109
1,450 1,447
END
(END) Dow Jones Newswires
April 23, 2018 03:10 ET (07:10 GMT)
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