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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% | 90.00 | 85.00 | 95.00 | 90.00 | 90.00 | 90.00 | 2 | 08:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Investors, Nec | 95.11M | 17.61M | 1.6496 | 0.55 | 9.61M |
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TIDMBISI
BISICHI PLC
Results for the year ended 31 December 2019
Summary:
Reported EBITDA: GBP5,900,000 (2018: GBP8,600,000)
Adjusted EBITDA: GBP7,400,000 (2018: GBP9,100,000)
* Another strong performance from the group's South African mining and
processing operations.
* Consistent production of 1.27million tonnes (2018: 1.32million) from Black
Wattle Colliery.
* Group fully engaged in managing the impact of the Covid-19 pandemic on its
operations in the UK and in South Africa.
* The Group's present key priorities are the health and safety of its
employees and stakeholders and ensuring operations can continue in an
efficient manner.
* The Group's South African mining and processing operations have continued
to operate during lockdown periods as South African government-approved
essential business operations, although with a reduced and socially
distanced workforce.
* The Board has decided that it will not be proposing a final dividend for
the financial year ending 31 December 2019 at this time and will review the
dividend position when there is greater visibility of the impact of
COVID-19.
Chairman, Sir Michael Heller, comments:
"These results can be attributed mainly to another strong performance in 2019
from our South African mining and processing operations. In 2020 our key
priority is the health and safety of all our employees and stakeholders."
For further information, please call:
Andrew Heller or Garrett Casey, Bisichi PLC 020 7415 5030
BISICHI PLC
ANNUAL REPORT 2019
Strategic report
Strategic report
The Directors present the Strategic Report of the company for the year ending
31 December 2019. 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.
Earnings before interest, tax, depreciation Operating profit before depreciation,
and amortisation (EBITDA) of fair value adjustments and exchange
movements (Adjusted EBITDA) of
GBP5.9million GBP7.4million
(2018: GBP8.6 million) (2018: GBP9.1 million)
STRATEGIC REPORT
Chairman's Statement
For the year ended 31 December 2019, I am pleased to report that your company
achieved earnings before interest, tax, depreciation and amortisation (EBITDA)
of GBP5.9million (2018: GBP8.6 million) and operating profit before depreciation,
fair value adjustments and exchange movements (Adjusted EBITDA) of GBP7.4million
(2018: GBP9.1million).
These results can be attributed mainly to the strong performance from our South
African mining and processing operations. Consistent production from Black
Wattle Colliery, our South African coal mining operation, and strong demand for
our coal, particularly in the domestic market, impacted positively on the
overall results for the Group during the year. Further details on the Group's
performance during the financial year can be found within the Mining Review and
Financial & Performance Review sections of this report.
More importantly and at present, your management have been fully engaged in
managing the impact of the Covid-19 pandemic on its operations both here in the
UK and in South Africa. Our priorities are the health and safety of all our
employees and stakeholders and ensuring the continuity of our business during
this challenging time.
To date, in order to help safeguard our people from the spread of Covid-19, the
Group has implemented various health and safety measures, which are aligned
with measures announced by both the UK and South African governments. Further
details on the health and safety measures we have implemented can be found in
our Mining Review and Sustainability Report.
In terms of business continuity, the Group's South African coal mining and
processing operations have been designated as essential business operations,
which has allowed the Group's operations to continue during lockdown periods,
although with a reduced or socially distanced workforce to help safeguard the
health and safety of our employees.
In terms of our markets, we have seen the significant downturn in economic
activity related to the Covid-19 pandemic have an impact on overall demand for
coal in the international market. However demand for our particular coal in the
domestic market has to date remained more stable. Looking forward, the duration
and extent of the impact of the Covid-19 pandemic on our South African
operations, particularly in terms of our coal markets, remains uncertain and
the board will provide further updates on our operations as appropriate.
In the UK, we have seen the Covid-19 pandemic have a significant impact on
rental revenue collections from the group's UK retail property portfolio.
Although the final impact of the pandemic on the portfolio remains uncertain,
we expect much of the portfolio to recover once tenants are allowed to fully
resume operating. A fuller explanation of the Group's property performance
during the year and the Group's future prospects are discussed in the Financial
& Performance Review and Directors report.
Finally, during these times your management are doing their utmost to ensure
the Group's present key priorities are attended to, being the health and safety
of its employees and stakeholders, ensuring our operations can continue in an
efficient manner and conserving cash and maintaining balance sheet flexibility.
Therefore, until such time as the impact of Covid-19 can be fully assessed, and
in line with the wider market, the Board has decided that it will not be
proposing a final dividend for the financial year ending 31 December 2019 at
this time and will review the dividend position when there is greater
visibility of the impact of COVID-19.
On behalf of the Board and shareholders, I would like to thank all of our staff
for their hard work during this difficult period.
Sir Michael Heller
Chairman
5 June 2020
STRATEGIC REPORT
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
The group actively seeks new opportunities to extend the life
of mine of its existing mining operations or develop new independent mining
operations in South Africa. The group aims to achieve this through new
commercial arrangements and the acquisition of additional coal reserves nearby
to or independent from our existing mining operations.
In addition, we seek to balance the high risk of our mining operations with a
dependable cash flow from our UK property investment operations. The company
primarily invests in retail property across the UK as well as residential
property development. The UK Retail property portfolio is managed by London &
Associated Properties PLC whose responsibility is to actively manage the
portfolio to improve rental income and thus enhance the value of the portfolio
over time.
2 Production & sustainability
The group strives to mine its coal reserves in an economical and sustainable
manner that delivers long term value to all our stakeholders.
3 Processing & marketing
The group seeks to achieve additional value from its mining investments through
the washing, transportation and marketing of coal into both the domestic and
export markets.
STRATEGIC REPORT
Mining Review
As noted in the Chairman's statement, your management are pleased to report
another strong performance from the Group's mining operations in South Africa.
However, at present, our focus has turned to managing the impact of the
Covid-19 pandemic. In South Africa, our priorities and efforts have been
focussed on the health and safety of all our employees and stakeholders and
ensuring the efficient continuity of our business.
Covid-19 update
During this difficult period, the Group has consulted with the government
authorities and its stakeholders in South Africa to determine and agree the
appropriate measures to be taken across its South African mining and processing
operations. Such measures have been focussed on the health and safety of our
employees, assisting in the continuing provision of coal as an essential raw
material, the security and integrity of the assets, and the ability to maintain
operations at levels of activity that is aligned with government interests and
the country's broader economic interests.
The Group continues to monitor and adhere to all of the South African
government's Covid-19 related guidelines and regulations including all updates
and advice from the National Department of Health, the Department of Minerals
Resources and Energy and the Office of the President.
These measures include:
* Regular communications with employees on all guidelines, government
restrictions and best practice hygiene and health recommendations;
* Conducting various issue-based hazard identification and risk assessments;
* Temperature screening of those entering certain of our offices and sites;
* Working from home (in both the UK and South Africa), where possible or
required;
* Social distancing measures at operating sites;
* Restrictions on non-essential visits to operating sites; and
* Intensified cleaning and hygiene at offices and sites;
In particular the Group has endeavoured to follow the guidelines of the
10-point plan developed by the Department of Minerals Resources and Energy in
line with the guidelines of the Department of Health and the National Institute
of Communicable Diseases (NICD) as follows:
* Educate employees on the virus, symptoms and prevention.
* Follow guidelines from the NICD, educate health workers on how to manage
Covid-19. Consider alternate arrangements for supply of chronic medication
to reduce crowds.
* Ensure that all health workers have access to protective clothing, gloves,
masks, cleaning materials and pharmaceutical agents.
* Vaccinate employees for seasonal influenza.
* All employees are encouraged to know their status, get onto ARVs if
positive for HIV.
* Manage suspected cases or contacts of cases using guidelines from the NICD.
* Liaise with the NICD on procedure to be followed for suspected and
confirmed cases.
* Only essential travel to areas with Covid-19 should be undertaken.
* All suspected and confirmed cases in the mining industry should be reported
to the NICD.
* Monitor and stay aware of the latest information on the Covid-19 pandemic.
The health and safety of our employees and stakeholders continues to remain our
key priority. We recognise the uncertainty caused by the pandemic and to date
we have endeavoured to support our workforce and local communities where we
can.
As mentioned in the Chairman's statement, the Group's South African coal mining
and processing operations have been designated as essential business operations
as they fall within the supply chains of other essential businesses as defined
by the South African government. Since late March 2020, the Group's South
African operations, have continued, although with a reduced or socially
distanced workforce to safeguard the health and safety of our employees.
Production and operations
For the first half of 2019, the mine achieved mining production of 655,000
metric tonnes, a similar level to the total production of 670,000 metric tonnes
achieved in the first half of 2018. During the second half of the year,
production remained fairly consistent with the exception of some temporary
seasonal water issues at our opencast area which had a limited impact on
production in the last quarter of the year. Overall the mine achieved
production of 616,000 metric tonnes (2018 H2: 649,000 metric tonnes) during the
second half of the year.
Overall mining production from Black Wattle decreased slightly in 2019, with
total mining production for the year of 1.27million metric tonnes (2018:
1.32million metric tonnes). In 2019 mining continued into a new opencast area
at Black Wattle contiguous to the area that was mined in 2018. This new area
will be mined throughout 2020.
Looking forward, although the Group's overall mining production in 2020 may be
impacted by the health and safety workforce measures outlined above, the Group
will look at mitigating any continued impact through production efficiencies
and the supplementation of our own production with buy-in coal for our coal
processing operations.
Working closely with our BEE partner in South Africa, the Group continues to
seek further opportunities to extend the life of mine of its existing mining
operations or to develop new independent mining operations in South Africa. In
addition, the group continues to seek opportunities to buy in coal from similar
reserves within the area in order to achieve additional value from our coal
washing operations in South Africa separate from the group's existing mining
operations. As mentioned in last year's report, in order to maximise these
opportunities, in January 2019, Black Wattle transferred its washing plant
operations into a wholly owned subsidiary called Sisonke Coal Processing which
will operate as a stand-alone commercial entity. In addition, during the year
the group successfully completed the addition of a new high-pressure filter
press segment which will improve the management and quality of coal fines
produced from our washing plant. We look forward to the positive impact these
improvements to the washing plant and structural changes will have on the
returns achievable from our South African operations.
Main trends/markets
During 2019 management continued to sell coal into both the export and domestic
market through its newly formed coal processing entity Sisonke Coal Processing
(Pty) Ltd. 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.
Global economic factors impacted international coal demand in 2019 with the
average weekly API4 price averaging $71 compared to $98 in 2018. The lower
overall coal prices compared to the prior period, along with a year on year
stable Rand to the Dollar attributed to the group achieving an overall decrease
in the average Rand price of R679 per tonne of export coal sold from the mine
in 2019 compared to R879 in 2018.
In the domestic market, a continued high demand impacted positively on prices
achievable for our coal in 2019. Overall, the group achieved an average price
of R615 per tonne of domestic coal sold in 2019 compared to R500 in 2018.
Overall, the Group achieved an average Rand price per tonne of coal sold of
R624 compared to R545 in 2018. However, due to lower overall production and a
decrease in the average exchange rate of the Rand compared to UK Sterling,
overall Sterling Group revenue decreased during the year.
Looking forward into 2020, to date, we have seen the global coal market being
impacted by economic factors related to the Covid-19 pandemic. However, the
extent of the overall impact of Covid-19 on our direct markets and the prices
achievable for our coal continues to remain uncertain and we will continue to
provide updates to shareholders as appropriate.
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 2019:
* Black Wattle Colliery recorded one Lost Time Injury during 2019
(2018: One).
* No cases of Occupational Diseases were recorded.
* Zero claims for the Compensation for Occupational Diseases were
submitted.
In South Africa, the new government regulated Broad-Based Socio-Economic
Empowerment Charter for the Mining and Minerals Industry, 2018 (New Mining
Charter) came into force from March 2019. The New Mining Charter is a
regulatory instrument that facilitates sustainable transformation, growth and
development of the mining industry. The group is committed to fully complying
with the New Mining Charter and providing adequate resources to this area in
order to ensure opportunities are expanded for historically disadvantaged South
Africans (HDSAs) to enter the mining and minerals industry. In addition, we
continue to adhere and make progress in terms of our Social and Labour Plan and
our various BEE initiatives. A fuller explanation of these can be found in our
Sustainable Development Report on page 7.
Prospects
Looking forward into 2020, management will continue to focus on prioritising
the health and safety of our employees and we remain committed to working with
all our stakeholders in helping overcome the unprecedented challenges presented
by the Covid-19 pandemic. We would like to thank all our employees and
stakeholders for their support during this difficult time.
Andrew Heller
Managing Director
5 June 2020
STRATEGIC REPORT
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.
Social, community and human rights issues
The group believes that it is in the shareholders' interests to consider social
and human rights issues when conducting business activities both in the UK and
South Africa. Various policies and initiatives implemented by the group that
fall within these areas are discussed within this report.
Health, Safety & Environment (HSE)
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 2019:
* 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 2019.
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) and Community Projects
Black Wattle Colliery is committed to true transformation and empowerment as
well as poverty eradication within the surrounding and labour providing
communities.
Black Wattle is committed to providing opportunities for the sustainable
socio-economic development of its stakeholders, such as:
* Employees and their families, through Skills Development,
Education Development, Human Resource Development, Empowerment and Progression
Programmes.
* Surrounding and labour sending communities, through Local
Economic Development, Rural and Community Development, Enterprise Development
and Procurement Programmes.
* Empowering partners, through Broad-Based Black Economic
Empowerment (BBBEE) and Joint Ventures with Historically Disadvantaged South
African (HDSA) new mining entrants and enterprises.
* The company engages in on going consultation with its
stakeholders to develop strong company-employee relationships, strong
company-community relationships and strong company-HDSA enterprise
relationships.
The key focus areas in terms of the detailed SLP programmes were updated as
follows:
* Implementation of new action plans, projects, targets and budgets
were established through regular workshops with all stakeholders.
* A comprehensive desktop socio-economic assessment was undertaken
on baseline data of the Steve Tshwete Local Municipality (STLM) and Nkangala
District Municipality (NDM).
* Black Wattle continues to work with its current SLP Plan (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.
* 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.
Black Wattle has implemented various community initiatives including:
* A community training environmental project, where local community
members are trained to safely cut and remove non-indigenous vegetation.
* Certain community members have been identified
for training in areas regarding mining and beneficiation. These areas include
but are not limited to conveyor maintenance and operation of mining machinery.
22 community members were identified and trained on how to operate an
Articulated Dump Truck [ADT] and a further 23 were trained in environmental
waste management.
* Two new local community students were enrolled at university for
the 2019 academic year whilst 2 HDSA females completed their University studies
in the 2019 academic year.
Environment & Environment Management Programme
South Africa
Under the terms of the mine's Environmental Management Programme approved by
the Department of Mineral Resource ("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 performs
quarterly monitoring of all boreholes around the mine to ensure that no
contaminated water filters through to the surrounding communities.
Black Wattle is fully compliant with the regulatory requirements of the
Department of Water Affairs and Forestry and has an approved water use licence.
Black Wattle Colliery has substantially improved its water management by
erecting and upgrading all its pollution control dams in consultation with the
Department of Water Affairs and Forestry.
A performance assessment audit was conducted to verify compliance to our
Environmental Management Programme and no significant deviations were found.
United Kingdom
The group's UK activities are principally retail property investment as well as
residential property development whereby we provide or develop premises which
are rented to retail businesses or sold on to end users. We seek to provide
tenants and users in both these areas with good quality premises from which
they can operate or reside in an environmentally sound manner.
Procurement
Black Wattle is a level 5 contributor to BBBEE and has achieved an 80% 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 90 percent of Black Wattle's equipment and services.
Mining Charter
In South Africa, the new government regulated Broad-Based Socio-Economic
Empowerment Charter for the Mining and Minerals Industry, 2018 (New Mining
Charter) came into force from March 2019. The New Mining Charter is a
regulatory instrument that facilitates sustainable transformation, growth and
development of the mining industry. The group's mining operation is expected to
reach various levels of compliance to the New Mining Charter over a period of
five years from March 2019. The group is committed to providing adequate
resources to this area in order to ensure full compliance to the New Mining
Charter is achieved over the transitional period. As part of Black Wattle's
commitment to the New Mining Charter, the company seeks to:
* Expand opportunities for historically disadvantaged South
Africans (HDSAs), including women and youth, to enter the mining and minerals
industry and benefit from the extraction and processing of the country's
resources;
* Utilise the existing skills base for the empowerment of HDSAs;
and
* Expand the skills base of HDSAs in order to serve the community.
Employment
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 2019 were:
* 17 employees were trained in ABET (Adult Basic Educational
Training) on various levels;
* An additional 10 disabled HDSA women continued their training on
ABET levels one to four.
* 3 HDSA Females and 3 HDSA Males are progressing in their
respective apprenticeships at the mine.
We are pleased to confirm that 3 HDSA females and 1 HDSA male completed their
apprenticeships whilst the remainder 2 HDSA males have continued their learning
in 2020.
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 8 directors (7 male, 1 female), 7 senior managers (6 male, 1 female)
and 219 employees (150 male, 69 female).
Anti-slavery and human trafficking
The group is committed to the prevention of the use of forced labour and has a
zero tolerance policy for human trafficking and slavery. The group's policies
and initiatives in this area can be found within the group's Anti-slavery and
human trafficking statement found on the group's website at www.bisichi.co.uk.
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 used the main requirements of the ISO standard 14064-1 to
calculate the Scope 1 (Direct Emissions) and Scope 2 (Indirect 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.
The following sources of the carbon emissions factors was used:
* UK Government GHG Conversion Factors for Company Reporting,
2018.
* IEA data from IEA CO2 emissions from fuel combustion 2017.
* Methodology adapted from the Intergovernmental Panel on
Climate Change (2006 with 2019 edits).
The group's carbon footprint: 2019 2018
CO2e CO2e
Tonnes Tonnes
Emissions source:
Scope 1 Combustion of fuel & operation of facilities 22,626 21,348
Scope 1 Emissions from coal mining activities (see note 26,435 27,428
below)
Scope 2 Electricity, heat, steam and cooling purchased 13,153 12,177
for own use
Total 62,213 60,953
Intensity:
Intensity 1 Tonnes of CO2 per pound sterling of revenue 0.0013 0.0012
Intensity 2 Tonnes of CO2 per tonne of coal produced 0.0486 0.0462
Principal risks & uncertainties
PRINCIPAL RISK PERFORMANCE AND MANAGEMENT OF THE RISK
COVID-19 RISK
The Group is proactively assessing and Risks faced by the business are assessed by the
managing the potential risks brought about Board on an ongoing basis.
by the uncertainty of the Covid-19 Strategies for mitigating the risks have been
pandemic. Overall the Group is exposed to defined and specific measures for achieving
impacts on the health and safety of its these are already underway. These include the
employees and stakeholders and risks measures outlined in the Chairman's Statement,
related to business continuity. In the UK, Mining Review and Financial Review & Performance
the Group expects there to be an impact on sections of this report.
retail property revenue and values as The final impact of the Covid-19 pandemic
outlined under property valuation risk remains uncertain and the Group will adapt plans
below. In South Africa, the Group is accordingly as more information becomes
expected to be impacted by additional available or government advice changes.
health and safety measures related to its
workforce and coal price risk as outlined
under the same heading below.
COAL PRICE RISK
The group is exposed to coal price risk as The group primarily focuses on managing its
its future revenues will be derived based underlying production costs to mitigate coal
on contracts or agreements with physical price volatility as well as from time to time
off-take partners at prices that will be entering into forward sales contracts with the
determined by reference to market prices goal of preserving future revenue streams. The
of coal at delivery date. group has not entered into any such contracts in
The group's South African mining 2018 and 2019.
operational earnings are significantly The group's export and domestic sales are
dependent on movements in both the export determined based on the ability to deliver the
and domestic coal price. quality of coal required by each market and
The price of export sales is derived from Quattro programme quotas, together with the
a US Dollar-denominated export coal price market factors set out opposite. Volumes of
and therefore the price achievable in export sales achieved during the year were
South African Rands can be influenced by primarily dependent on the mine's ability to
movements in exchange rates and overall produce the higher quality of coal required for
global demand and supply. export as well as allowable quotas under the
The domestic market coal prices are Quattro programme and overall global demand. The
denominated in South African Rand and are volume of domestic market sales achieved during
primarily dependant on local demand and the year were primarily dependant on local
supply. demand and supply as well as the mine's ability
In the short term, the Covid-19 pandemic to produce the lower overall quality of coal
may result in additional price volatility required.
in both the export and domestic market due The group assesses on an ongoing basis the
to fluctuations in both demand and supply. impact of Covid-19 and any regulatory changes
Longer term both the demand and supply of related to climate change and governmental CO2
coal in the domestic and global market may emission commitments may have on the group's
be negatively impacted by regulatory mining operations and future investment
changes related to climate change and decisions.
governmental CO2 emission commitments.
MINING RISK
As with many mining operations, the This risk is managed by engaging independent
reserve that is mined has the risk of not geological experts, referred to in the industry
having the qualities and accessibility as the "Competent Person", to determine the
expected from geological and environmental estimated reserves and their technical and
analysis. This can have a negative impact commercial feasibility for extraction. In
on revenue and earnings as the quality and addition, management engage Competent Persons to
quantity of coal mined and sold by our assist management in the production of detailed
mining operations may be lower than life of mine plans as well as in the monitoring
expected. 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 4 for details of mining
performance.
CURRENCY RISK
The group's operations are sensitive to Export sales within the group's South African
currency movements, especially those operations are derived from a US
between the South African Rand, US Dollar Dollar-denominated export coal price. A
and British Pound. These movements can weakening of the US Dollar can have a negative
have a negative impact on the group's impact on the South African Rand prices
mining operations revenue as noted above, achievable for coal sold by the group's South
as well as operational earnings. African mining operations. This in turn can have
The group is exposed to currency risk in a negative impact on the group's mining
regard to the Sterling value of operations revenue as well as operational
inter-company trading balances with its earnings as the group's mining operating costs
South African operations. It arises as a are Rand denominated. In order to mitigate this,
result of the retranslation of Rand the group may enter into forward sales contracts
denominated inter-company trade receivable in local currencies with the goal of preserving
balances into Sterling that are held future revenue streams. The group has not
within the UK and which are payable by entered into any such contracts in 2019 and
South African Rand functional currency 2018.
subsidiaries. Although it is not the group's policy to obtain
The group is exposed to currency risk in forward contracts to mitigate foreign exchange
regard to the retranslation of the group's risk on inter-company trading balances or on the
South African functional currency net retranslation of the group's South African
assets to the Sterling reporting functional currency net assets, management
functional currency of the group. A regularly review the requirement to do so in
weakening of the South African Rand light of any increased risk of future
against Sterling can have a negative volatility.
impact on the financial position and net Refer to the 'Financial Review' for details of
asset values reported by the group. significant currency movement impacts in the
year.
NEW RESERVES AND MINING PERMISSIONS
The life of the mine, acquisition of The work performed in the acquisition and
additional reserves, permissions to mine renewal of mining permits as well as the
(including ongoing and once-off maintenance of compliance with permits includes
permissions) and new mining opportunities factors such as environmental management, health
in South Africa generally are contingent and safety, labour laws and Black Empowerment
on a number of factors outside of the legislation (such as the New Mining Charter); as
group's control such as approval by the failure to maintain appropriate controls and
Department of Mineral Resources, the compliance may in turn result in the withdrawal
Department of Water Affairs and Forestry of the necessary permissions to mine. The
and other regulatory or state owned management of these regulatory risks and
entities. performance in the year is noted in the Mining
In addition, the group's South African Review on page 4 as well as in the Sustainable
operations are subject to the government Development report on page 7 and in this section
Mining Charter with the New Mining Charter under the headings environmental risk, health &
coming into force from March 2019. Failure safety risk and labour risk. Additionally, in
to meet existing targets or further order to mitigate this risk, the group strives
regulatory changes to the Mining Charter, to provide adequate resources to this area
could adversely affect the mine's ability including the employment of adequate personnel
to retain its mining rights in South and the utilisation of third party consultants
Africa. competent in regulatory compliance related to
mining rights and mining permissions.
The group also continues to actively seek new
opportunities to expand it mining operations in
South Africa through the acquisition of
additional coal reserves and new commercial
arrangements with existing mining right holders.
POWER SUPPLY RISK
The current utility provider for power The group's mining operations have to date not
supply in South Africa is the government been affected by power cuts. However the group
run Eskom. Eskom continues to undergo manages this risk through regular monitoring of
capacity problems resulting in power cuts Eskom's performance and ongoing ability to meet
and lack of provision of power supply to power requirements. In addition, the group
new projects. Any power cuts or lack of continues to assess the ability to utilise
provision of power supply to the group's diesel generators as an alternative means of
mining operations may disrupt mining securing power in the event of power outages.
production and impact on earnings.
FLOODING RISK
The group's mining operations are Management monitors water levels on an ongoing
susceptible to seasonal flooding which basis and various projects have been completed,
could disrupt mining production and impact including the construction of additional dams,
on earnings. to minimise the impact of this risk as far as
possible.
ENVIRONMENTAL RISK
The group's South African mining In line with all South African mining companies,
operations are required to adhere to local the management of this risk is based on
environmental regulations. Any failure to compliance with the Environment Management Plan.
adhere to local environmental regulations, In order to ensure compliance, the group strives
could adversely affect the mine's ability to provide adequate resources to this area
to mine under its mining right in South including the employment of personnel and the
Africa. 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 7.
HEALTH & SAFETY RISK
Attached to mining there are inherent The group has a comprehensive Health and Safety
health and safety risks. Any such safety programme in place to mitigate this risk.
incidents disrupt operations, and can slow Management strive to create an environment where
or even stop production. In addition, the Health and safety of our employees is of the
group's South African mining operations utmost importance. Our Health & Safety programme
are required to adhere to local Health and provides clear guidance on the standards our
Safety regulations as well as enhanced mining operation is expected to achieve. In
health and Safety measures related to addition, management receive regular updates on
Covid-19. 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 7.
LABOUR RISK
The group's mining operations and coal In order to mitigate this risk, the group strives
washing plant facility are labour to ensure open and transparent dialogue with
intensive and unionised. Any labour employees across all levels. In addition,
disputes, strikes or wage negotiations may appropriate channels of communication are
disrupt production and impact earnings. provided to all employment unions at Black Wattle
to ensure effective and early engagement on
employment matters, in particular wage
negotiations and disputes.
Refer to the 'Employment' section on page 9 for
further details.
CASHFLOW RISK
Commodity price risk, currency volatility In order to mitigate this, we seek to balance the
and the uncertainties inherent in mining high risk of our mining operations with a
may result in favourable or unfavourable dependable cash flow from our UK property
cashflows. investment operations which are actively managed
by London & Associated Properties PLC. Due to the
long term nature of the leases, the effect on
cash flows from property investment activities
are expected to remain stable as long as tenants
remain in operation. Refer to page 20 for details
of the property portfolio performance.
PROPERTY VALUATION RISK
Fluctuations in property values, which are The group utilises the services of London &
reflected in the Consolidated Income Associated Properties PLC whose responsibility is
Statement and Balance Sheet, are dependent to actively manage the portfolio to improve
on an annual valuation of the group's rental income and thus enhance the value of the
commercial and residential development portfolio over time. In addition, management
properties. A fall in UK commercial and regularly monitor banking covenants and other
residential property can have a marked loan agreement obligations as well as the
effect on the profitability and the net performance of our property assets in relation to
asset value of the group as well as impact the overall market over time.
on covenants and other loan agreement Management continue to monitor and evaluate the
obligations. impact of Brexit, the Covid-19 pandemic and the
The economic performance of the United current economic performance of the UK retail
Kingdom, including the potential impact of market on the future performance of the Group's
the United Kingdom leaving the European existing UK portfolio. In addition, the group
Union ("Brexit"), the impact of Covid-19 assesses on an ongoing basis the impact of Brexit
pandemic, as well as the current economic and the current economic performance of the UK
performance and trends of the UK retail retail market on the group's banking covenants,
market, may impact the level of rental loan obligations and future investment
income, yields and associated property decisions.
valuations of the group's UK property Refer to page 20 for details of the property
assets including its investments in Joint portfolio performance.
Ventures.
Financial & performance review
The movement in the Group's Adjusted EBITDA from GBP9.1million in 2018 to GBP
7.4million in 2019 can mainly be attributed to the lower coal production and
sales from the Group's South African operations and a weakening in the South
African Rand to UK Sterling. This offset the higher prices achieved for our
coal and stable operating costs achieved in 2019.
EBITDA, adjusted EBITDA and mining production are used as key performance
indicators for the group and its mining activities as the group has a strategic
focus on the long term development of its existing mining reserves and the
acquisition of additional mining reserves in order to realise shareholder
value. Mining production can be defined as the coal quantity in metric tonnes
extracted from our reserves during the period and held by the mine before any
processing through the washing plant. Whilst profit/(loss) before tax is
considered as one of the key overall performance indicators of the group, the
profitability of the group and the group's mining activities can be impacted by
the volatile and capital intensive nature of the mining sector. Accordingly,
EBITDA and adjusted EBITDA are primarily used as key performance indicators as
they are indicative of the value associated with the group's mining assets
expected to be realised over the long term life of the group's mining reserves.
In addition, for the group's property investment operations, the net property
valuation and net property revenue are utilised as key performance indicators
as the group's substantial property portfolio reduces the risk profile for
shareholders by providing stable cash generative UK assets and access to
capital appreciation. Certain key performance indicators below are not
Generally Accepted Accounting Practice measures and are not intended as a
substitute for those measures, and may or may not be the same as those used by
other companies.
Key performance indicators 2019 2018
The key performance indicators for the group are: GBP'000 GBP'000
For the group:
Operating profit before depreciation, fair value adjustments and 7,457 9,088
exchange movements (adjusted EBITDA)
EBITDA 5,868 8,587
Profit/(loss) before tax 3,027 5,959
For our property investment operations:
Net property valuation 11,565 13,045
Net property revenue 1,290 1,232
For our mining activities:
Operating profit before depreciation, fair value adjustments and 6,517 8,206
exchange movements (adjusted EBITDA)
EBITDA 6,394 8,143
Tonnes Tonnes
'000 '000
Mining production 1,271 1,320
The key performance indicators of the group Mining Property Other 2019
can be reconciled as follows: GBP'000 GBP'000 GBP'000 GBP'000
Revenue 46,704 1,290 112 48,106
Transport and loading cost (3,421) - - (3,421)
Mining and washing costs (30,047) - - (30,047)
Other operating costs excluding depreciation (6,719) (458) (4) (7,181)
Operating profit before depreciation, fair value 6,517 832 108 7,457
adjustments and exchange movements (adjusted EBITDA)
Exchange movements (123) - - (123)
Fair value adjustments - (1,480) - (1,480)
Losses on investments held at fair value through - - (6) (6)
profit and loss (FVPL)
Operating profit excluding depreciation 6,394 (648) 102 5,848
Share of (loss)/profit and write off's in joint - 20 - 20
venture
EBITDA 6,394 (628) 102 5,868
Net interest movement (651)
Depreciation (2,190)
Profit/(loss) before tax 3,027
The key performance indicators of the group Property Other 2018
can be reconciled as follows: Mining GBP'000 GBP'000 GBP'000
GBP'000
Revenue 48,666 1,232 47 49,945
Transport and loading cost (3,103) - - (3,103)
Mining and washing costs (31,340) - - (31,340)
Other operating costs excluding depreciation (6,017) (394) (3) (6,414)
Operating profit before depreciation, fair value 8,206 838 44 9,088
adjustments and exchange movements (adjusted EBITDA)
Exchange movements (63) - - (63)
Fair value adjustments - (215) - (215)
Losses on investments held at fair value through - - (171) (171)
profit and loss (FVPL)
Operating profit excluding depreciation 8,143 623 (127) 8,639
Share of (loss)/profit and write off's in joint - (52) - (52)
venture
EBITDA 8,143 571 (127) 8,587
Net interest movement (515)
Depreciation (2,113)
Profit/(loss) before tax 5,959
Adjusted EBITDA is used as a key indicator of the operating trading performance
of the group and its operating segments representing operating profit before
the impact of depreciation, fair value adjustments, gains/(losses) on disposal
of other investments and foreign exchange movements. The group's operating
segments include its South African mining operations and UK property. The
performance of these two operating segments are discussed in more detail below.
The group achieved EBITDA for the year of GBP5.9million (2018: GBP8.6million). The
movement compared to the prior year can mainly be attributed to a decrease in
operating profits before depreciation from our mining activities to GBP6.5
million (2018: GBP8.2million).
Negative fair value adjustments, related to our UK property increased to GBP
1.5million (2018: GBP0.2million) with the group reporting an overall profit
before tax of GBP3.0million (2018: GBP6.0million). Taxation for the year decreased
to GBP1.4million (2018: GBP1.9million). This resulted in the Group achieving an
overall profit for the year after tax of GBP1.6million (2018: GBP4.0million), of
which GBP1.0million (2018: GBP3.3million) was attributable to equity holders of the
company.
South African mining operations
Performance South African Rand UK Sterling
The key performance indicators of the group's
South African mining operations are presented in 2019 2018 2019 2018
South African Rand and UK Sterling as follows: R'000 R'000 GBP'000 GBP'000
Revenue 860,876 852,650 46,704 48,666
Transport and loading costs (63,058) (54,366) (3,421) (3,103)
Mining and washing costs (553,844) (549,090) (30,047) (31,340)
Operating profit before other operating costs and 243,974 249,194 13,236 14,223
depreciation
Other operating costs (excluding depreciation) (6,719) (6,017)
Operating profit before depreciation, fair value 6,517 8,206
adjustments and exchange movements (adjusted
EBITDA)
Exchange movements (123) (63)
EBITDA 6,394 8,143
2019 2018
'000 '000
Mining production in tonnes 1,271 1,320
2018 2018
R R
Net Revenue per tonne of mining production 628 605
Mining and washing costs per tonne of mining production (436) (416)
Operating profit per tonne of mining production before other operating 192 189
costs and depreciation
Net Revenue per tonne of mining production can be defined as the revenue price
achieved per metric tonne of mining production less transportation and loading
costs.
A breakdown of the quantity of coal sold and revenue of the group's South
African mining operations are presented in metric tonnes and South African Rand
as follows:
Domestic Export 2019 Domestic Export 2018
'000 '000 '000 '000 '000 '000
Quantity of coal sold in tonnes 1,094 184 1,278 1,292 174 1,466
Domestic Export 2019 Domestic Export 2018
R'000 R'000 R'000 R'000 R'000 R'000
Total Net Revenue 672,854 124,964 797,815 645,386 152,898 798,284
R R R R R R
Net Revenue per tonne of coal sold 615 679 624 500 879 545
The quantity of coal sold can be defined as the quantity of coal sold in metric
tonnes by the Group in any given period. Net Revenue per tonne of coal sold can
be defined as the revenue price achieved per metric tonne of coal sold less
transportation and loading costs.
Total net revenue per tonne of coal sold for the group's mining and processing
operations increased for the year from R545 per tonne of coal sold in 2018 to
R624 in 2019, attributable to the average price increases achieved in the
domestic market offsetting price decreases in the export market. As a result of
the overall lower mining production and an increase in coal inventories, the
quantity of coal sold for the year decreased to 1.278million tonnes (2018:
1.466million tonnes). The decrease in mining production can be attributable to
temporary seasonal water issues in the last quarter of 2019. Overall, the
increase in revenue per tonne of coal sold offset the lower production and
increase in coal inventories resulting in stable revenue from the group's South
African mining operations during the year compared to the prior year at
R797.8million (2018: R798.3million).
The decrease in total mining production offset the marginal overall increase in
mining and washing cost per tonne from R416 per tonne to R433 per tonne
resulting in similar total mining and washing costs for the group of
R553.8million (2018: R549.1million).
Other operating costs (excluding depreciation) of GBP6.7million (2018: GBP
6.0million) 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 salaries and wages related to our mining operations
offset by exchange movements on the translation of South African Rand costs
into Sterling. Overall costs in South Africa were in line with management's
expectations and local inflation.
Overall, the group's South African mining operations achieved an adjusted
EBITDA of GBP6.5 million (2018: GBP8.2million) attributable to lower overall
production and a decrease in the average exchange rate of the Rand compared to
UK Sterling.
The movement in the group's EBITDA for mining activities of GBP6.4million (2018:
GBP8.1million) for the year, in comparison to the result achieved for adjusted
EBITDA was as a result of a small exchange rate loss of GBP0.1million.
A further explanation of the mines operational performance can be found in the
Mining Review on page 4.
Other mining Investments
As reported in the Mining review, in January 2019, Black Wattle Colliery (Pty)
Limited transferred its washing plant operations into its own wholly owned
subsidiary called Sisonke Coal Processing (Pty) Limited which will operate as a
stand-alone commercial entity. As the transaction is internal there was no
material impact on the financial reporting of the group. Further details on the
impact of the transaction on the group's finance facilities can be found in the
section on loans below.
There were no movements in other mining investments outside of the above
restructuring in 2019.
UK property investment
Performance
The group's portfolio is managed actively by London & Associated Properties plc
and continued to perform well in 2019. Net property revenue (excluding joint
ventures and service charge income) across the portfolio increased marginally
during the year to GBP1.109million (2018: GBP1.095million). The property portfolio
was externally valued at 31 December 2019 and the value of UK investment
properties attributable to the group at year end decreased to GBP11.565 million
(2018: GBP13.045million) mainly due to valuation yields applied in a more
challenging retail market compared to the prior year.
Joint venture property investments
The group holds a GBP0.8million (2018: GBP0.8million) 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 marginally decreased
during the year to GBP1.22million (2018: GBP1.23million).
During the year the group continued to hold a GBP0.5million (2018: GBP0.5million)
50% joint venture investment in West Ealing Projects Limited, a UK unlisted
property development company. West Ealing Projects Limited's only asset is a
property development in West Ealing, London. The carrying value of the group's
share of the trading property inventory included within this development is
valued at GBP3.3million (2018: GBP3.1million). The joint venture has planning
consent for 20 flats at first and second floor levels which will be eligible
for the UK Government Help to Buy Scheme. More recently, the joint venture has
submitted a planning application for an expanded residential redevelopment of
55 flats on the site and we look forward to updating shareholders in due
course.
Overall, the group achieved net property revenue of GBP1.4million (2018: GBP
1.2million) for the year which includes the company's share of net property
revenue from its investment in joint ventures of GBP75,000 (2018: GBP95,000).
Cashflow & financial position
The following table summarises the main components of the Year Year
consolidated cashflow for the year: ended ended
31 31
December December
2019 2018
GBP'000 GBP'000
Cash flow generated from operations before working capital and other 7,457 9,112
items
Cash flow from operating activities 4,148 5,409
Cash flow from investing activities (3,662) (3,373)
Cash flow from financing activities (3,322) 442
Net (decrease) / increase in cash and cash equivalents (2,836) 1,594
Cash and cash equivalents at 1 January 5,686 4,065
Exchange adjustment 28 27
Cash and cash equivalents at 31 December 2,878 5,686
Cash and cash equivalents at 31 December comprise:
Cash and cash equivalents as presented in the balance 7,720 9,221
sheet
Bank overdrafts (secured) (4,842) (3,535)
2,878 5,686
Cash flow generated from operating activities decreased compared to the prior
year to GBP4.1million (2018: GBP5.4million). The decrease in operating profit
during the year of GBP3.6million (2018: GBP6.5million) was offset by a decrease in
income tax paid of GBP1.2million (2018: GBP2.28million) both as a result of the
lower profitability in UK sterling of our South African mining operations as
well as the unrealised loss on investment properties of GBP1.48million (2018: GBP
0.22million). In addition, cashflow generation from operating activities was
also impacted by a cashflow decrease from trade receivables of GBP0.8million
(2018: GBP0.9million), as a result of an increase in the trade receivables
balances of our South African domestic coal customers, and a cashflow decrease
from inventories of GBP0.9million (2018: GBP0.8million), mainly as a result of
reduced domestic and export coal sales from our South African mining operations
in the last quarter of 2019 due to lower local consumption and seasonal weather
related issues at Richards Bay Coal Terminal.
Investing cashflows primarily reflect the net effect of capital expenditure
during the year of GBP3.2million (2018: GBP2.9million) which can mainly be
attributable to mine development costs at Black Wattle of GBP1.7million and
infrastructure improvements to the washing plant at Sisonke Coal Processing of
GBP1.0million. As at year end the group's mining reserves, plant and equipment
had a carrying value of GBP9.5million (2018: GBP8.5million) with capital
expenditure being offset by depreciation of GBP2.2million (2018: GBP2.1milion) and
exchange translation movements of GBP0.1million (2018: GBP0.8million) for the year.
Other investing cashflows also include the acquisition of listed investments of
GBP0.5million compared to the prior year joint venture investment in West Ealing
Projects Limited of GBP0.5million.
Cash outflows from financing activities includes a net decrease in borrowings
of GBP2.1million (2018:GBP0.7million) attributable to repayment of the Santander
loan and drawdown of the Hodge Bank loan as outlined under the loan section
below. In addition, dividends paid to shareholders increased during the year to
GBP0.64million (2018: 0.53 million) and dividends paid to minority interests
decreased to GBP0.5million (2018: GBP0.6million).
Overall, the group's cash and cash equivalents deceased during the year by GBP
2.86million (2018: increase of GBP1.59millon). After taking into account an
exchange gain of GBP0.03million (2018: GBP0.03million) 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 GBP2.8million (2018: GBP5.7million).
The group has considerable financial resources available at short notice
including cash and cash equivalents (excluding bank overdrafts) of GBP7.7million
(2018: GBP9.2million) and listed investments of GBP1.4million (2018: GBP0.9million)
as at year end. The above financial resources totalling GBP9.1million (2018: GBP
10.1million).
The net assets of the group reported as at year end were GBP20.6million (2018: GBP
20.1million). Total assets remained stable at GBP41.7million (2018: GBP
41.6million).
Liabilities decreased from GBP21.5million to GBP21.2million during the year
primarily due to a decrease in UK Borrowings from GBP5.8million to GBP3.8million
offsetting an increase in trade payables from GBP7.3million to GBP7.6million and an
increase in South African borrowings from GBP4.3million in 2018 to GBP5.5million in
2019. This increase can mainly be attributed to an increase in borrowings drawn
from the groups' South African structured trade facility utilised by the
groups' mining operations. The overall exchange loss recorded through the
translation reserve on translation of the group's South African net assets at
year end decreased to GBP0.05million (2018: GBP0.4million) as a result of the
lesser weakening 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 61 and the Consolidated Balance
Sheet on page 58.
Loans
South Africa
The group has a South African structured trade finance facility with Absa Bank
Limited for R100million (South African Rand) which covers the fluctuating
working capital requirements of the group's South African operations. As part
of the process and sale of the washing plant facilities from Black Wattle
Colliery (Pty) Limited to its wholly owned subsidiary Sisonke Coal Processing
(Pty) Limited ("Sisonke Coal Processing"), the R100million bank overdraft
facility held by Black Wattle Colliery (Pty) Limited with Absa Bank Limited in
2018 was replaced in January 2019 by a new structured trade finance facility
for R100million held by Sisonke Coal Processing ("new trade facility"). The new
trade facility is renewable annually at 25 January and is secured against
inventory, debtors and cash that are held in the group's South African
operations.
United Kingdom
In December 2019, the group repaid its GBP5.84million loan facility with
Santander Bank PLC and signed a new GBP3.96million term loan facility with Julian
Hodge Bank Limited. The new debt package has a five year term and is repayable
at the end of the term in December 2024. The interest cost of the loan is 4.00%
above LIBOR. The loan is secured by way of a first charge over the investment
properties in the UK which are included in the financial statements at a value
of GBP11.6million. No banking covenants were breached by the group during the
year.
Statement regarding Section 172 of the UK Companies Act
Section 172 of the UK Companies Act requires the Board to report on how the
directors have had regard to the matters outlined below in performing their
duties. During the year, the Directors consider that they have acted in a way,
and have made decision that would, most likely promote the success of the Group
for the benefit of its members as a whole as outlined in the matters below:
* The likely consequences of any decision in the long term: see Principal
activity, strategy & business model on page 3 and Principal Risks and
Uncertainties on page 11;
* The interests of the Group's employees; ethics and compliance; fostering of
the Company's business relationships with suppliers, customers and others;
and the impact of the Group's operations on the community and environment:
see Sustainability report on page 7;
* The need to act fairly between members of the Company: see the Corporate
Governance section on page 26.
Future prospects and impact of the Covid-19 pandemic
As we continue into 2020, your management have been fully engaged in managing
the impact of the Covid-19 pandemic on its operations both here in the UK and
in South Africa. Our priorities are the health and safety of all our employees
and stakeholders and the continuity of our business during this challenging
time.
In terms of business continuity, the Group's South African coal mining and
processing operations have been designated as essential business operations. At
present, the final impact of the pandemic on the Group's future prospects and
financial performance remains uncertain. However, to date, the group's
financial position has remained strong and at present, the group has adequate
financial resources to ensure the Group remains viable for the foreseeable
future and that liabilities are met. A full going concern and viability
assessment can be found in the Directors report on page 30.
Outside of the impact of the Covid-19 pandemic, the group continues to seek to
expand its operations in South Africa through the acquisition of additional
coal reserves. In the UK, management is looking forward to progressing its
development in West Ealing and is currently investigating other major
investment opportunities in the domestic property sector. This is 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 4 which form part
of the Strategic Report.
Signed on behalf of the Board of Directors
Garrett Casey
Finance Director
5 June 2020
Governance
Governance
Management team
Bisichi PLC
* 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
currently runs his own event management business. He is also a published
author, lecturer and a writer and director of documentary films.
O * John A Sibbald
BL (Non-executive)
John Sibbald has been a Director since 1988. After qualifying as a Chartered
Accountant he spent over 20 years in stockbroking, specialising in mining and
international investment.
* Member of the nomination committee
+ Senior independent director
O Member of the audit, nomination and remuneration committees.
Other directors and advisors
Secretary and registered office
Garrett Casey CA (SA)
24 Bruton Place
London W1J 6NE
Black Wattle Colliery and Sisonke Coal Processing Directors
Andrew Heller
(Managing Director)
Ethan Dube
Robert Grobler
Garrett Casey
Millicent Zvarayi
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, London
Principal bankers
United Kingdom
Julian Hodge Bank Limited
Santander UK 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
Eversheds Sutherland, Johannesburg
Herbert Smith Freehills, Johannesburg
Hogan Lovells, Johannesburg
Tugendhaft Wapnick Banchetti and Partners, Johannesburg
Stockbrokers
Shore Capital Stockbrokers Limited
Registrars and transfer office
Link Asset Services
Shareholder Services
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
UK telephone: 0871 664 0300
International telephone: +44 371 664 0300
(Calls cost 12p per minute plus your phone company's access charge. Calls
outside the United Kingdom will be charged at the applicable international
rate). Lines are open between 9.00am to 5.30pm, Monday to Friday, excluding
public holidays in England and Wales.
Website: www.linkassetservices.com
Email: enquiries@linkgroup.co.uk
Five year summary
2019 2018 2017 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Consolidated income statement items
Revenue 48,106 49,945 40,350 24,923 27,603
Operating profit/(loss) 3,658 6,526 3,763 637 150
Profit/(loss) before tax 3,027 5,959 1,485 346 (147)
Trading profit/(loss) before tax 4,493 6,397 3,317 (74) (188)
Revaluation and impairment (loss)/profit before (1,466) (438) (1,832) 420 41
tax
EBITDA 5,868 8,587 3,734 2,415 1,365
Operating profit before depreciation, fair 7,457 9,088 5,819 1,516 1,717
value adjustments and exchange movements
(adjusted EBITDA)
Consolidated balance sheet items
Investment properties 11,565 13,045 13,245 13,245 12,800
Fixed asset investments 1,629 1,357 925 2,703 2,112
13,194 14,402 14,170 15,948 14,912
Investments held at fair value 1,119 887 1,050 781 594
14,313 15,289 15,220 16,729 15,506
Other assets less liabilities less 5,619 4,280 1,922 (72) (196)
non-controlling interests
Total equity attributable to equity 19,932 19,569 17,142 16,657 15,310
shareholders
Net assets per ordinary share (attributable) 186.7p 183.3p 160.6p 156.0p 143.4p
Dividend per share 1.00p 6.00p 5.00p 4.00p 4.00p
Financial calendar
9 July 2020 Annual General Meeting
Late August 2020 Announcement of half-year results to 30 June 2020
Late April 2021 Announcement of results for year ending 31 December 2020
Governance
Directors' report
The directors submit their report together with the audited financial
statements for the year ended 31 December 2019.
Review of business, future developments and post balance sheet events
The group continues its mining activities. Income for the year was derived from
sales of coal from its South African operations. The group also has a property
investment portfolio for which it receives rental income and a joint venture
investment in a UK residential property development.
The results for the year and state of affairs of the group and the company at
31 December 2019 are shown on pages 56 to 97 and in the Strategic Report on
pages 2 to 22. Future developments and prospects are also covered in the
Strategic Report and further details of any post balance sheet events can be
found in note 32 to the financial statements. Over 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 22.
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 22.
The group's UK activities are principally property investment whereby premises
are provided for rent to retail businesses and a joint venture investment in a
UK residential property development.
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
2019 can be found on page 10 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 2019 of 1p was paid on 7 February 2020 (Interim 2018:
1p). The directors are not proposing the payment of a final dividend (2018: 3p)
or a special dividend (2018: 2p) for 2019.
The total dividend per ordinary share for 2019 will therefore be 1p (2018: 6p)
per ordinary share.
Investment properties and other properties
The investment property portfolio is stated at its open market value of GBP
11,565,000 at 31 December 2019 (2018: GBP13,045,000) as valued by professional
external valuers. The open market value of the company's share of investment
properties and development property inventory held at cost included within its
investments in joint ventures is GBP4,553,000 (2018: GBP4,334,000).
Financial instruments
Note 22 to the financial statements sets out the risks in respect of financial
instruments. The Board reviews and agrees overall treasury policies, delegating
appropriate authority to the managing director.. Treasury operations are
reported at each Board meeting and are subject to weekly internal reporting.
Directors
The directors of the company for the whole year were Sir Michael Heller, A R
Heller, G J Casey, C A Joll, R J Grobler (a South African citizen), and J A
Sibbald.
The director retiring by rotation is Mr GJ Casey who offers himself for
re-election.
Mr GJ Casey has been an executive director of the company since 2010. He is
chartered accountant and has a contract of employment determinable at three
months' notice. The board recommends the re-election of GJ Casey.
No director had any material interest in any contract or arrangement with the
company during the year other than as shown in this report.
Directors' shareholdings
The interests of the directors in the shares of the company, including family
and trustee holdings where appropriate, are shown on page 34 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 5 June 2020:
London & Associated Properties PLC - 4,432,618 shares representing 41.52 per
cent. of the issued capital. (Sir Michael Heller is a director and shareholder
of London & Associated Properties PLC).
Sir Michael Heller - 330,117 shares representing 3.09 per cent. of the issued
capital.
A R Heller - 785,012 shares representing 7.35 per cent. of the issued
capital.
Cavendish Asset Management 1,976,154 shares representing 18.51 per cent. of the issued
Limited - share capital.
James Hyslop - 345,000 shares representing 3.23 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 2019 and as at the date of this Directors'
report. No amount has been paid under any of these indemnities during the year.
The group has purchased directors' and officers' insurance during the year. In
broad terms, the insurance cover indemnifies individual directors and officers
against certain personal legal liability and legal defence costs for claims
arising out of actions taken in connection with group business.
Corporate Governance
The Board acknowledges the importance of good corporate governance. The
paragraphs below set out how the company has applied this guidance during the
year.
Principles of corporate governance
The group's Board appreciates the value of good corporate governance not only
in the areas of accountability and risk management, but also as a positive
contribution to business prosperity. The Board endeavours to apply corporate
governance principles in a sensible and pragmatic fashion having regard to the
circumstances of the group's business. The key objective is to enhance and
protect shareholder value.
Board structure
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 23. The Board is responsible to shareholders for the
proper management of the group. The Directors' responsibilities statement in
respect of the accounts is set out on page 49. The non-executive directors have
a particular responsibility to ensure that the strategies proposed by the
executive directors are fully considered. To enable the Board to discharge its
duties, all directors have full and timely access to all relevant information
and there is a procedure for all directors, in furtherance of their duties, to
take independent professional advice, if necessary, at the expense of the
group. The Board has a formal schedule of matters reserved to it and meets
bi-monthly.
The Board is responsible for overall group strategy, approval of major capital
expenditure projects and consideration of significant financing matters.
The following Board committees, which have written terms of reference, deal
with specific aspects of the group's affairs:
* The nomination committee is chaired by Christopher Joll and
comprises the non-executive directors and the executive chairman. The committee
is responsible for proposing candidates for appointment to the Board, having
regard to the balance and structure of the Board. In appropriate cases
recruitment consultants are used to assist the process. Each director is
subject to re-election at least every three years.
* The remuneration committee is responsible for making
recommendations to the Board on the company's framework of executive
remuneration and its cost. The committee determines the contractual terms,
remuneration and other benefits for each of the executive directors, including
performance related bonus schemes, pension rights and compensation payments.
The Board itself determines the remuneration of the non-executive directors.
The committee comprises the non-executive directors. It is chaired by
Christopher Joll. The company's executive chairman is normally invited to
attend meetings. The report on directors' remuneration is set out on pages 37
to 44.
* 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 46.
An analysis of the fees payable to the external audit firm in respect of both
audit and non-audit services during the year is set out in Note 5 to the
financial statements.
Performance evaluation - board, board committees and directors
The performance of the board as a whole and of its committees and the
non-executive directors is assessed by the chairman 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 nineteen years and
John Sibbald has been a non-executive director for over thirty years. The Board
encourages Christopher Joll and John Sibbald to act independently. The board
considers that their length of service does not, and has not, resulted in their
inability or failure to act independently. In the opinion of the Board,
Christopher Joll and John Sibbald continue to fulfil their role as independent
non-executive directors.
The independent directors regularly meet prior to Board meetings to discuss
corporate governance issues.
Board and board committee meetings
The number of meetings during 2019 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
Audit committee 2 2
A R Heller Board 5 5
Audit committee 2 2
G J Casey Board 5 5
Audit committee 2 2
R J Grobler Board 5 1
C A Joll Board 5 5
Audit committee 2 2
Nomination committee 1 1
Remuneration committee 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 were no significant issues identified during the year ended 31 December
2019 (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 Thursday, 9 July 2020 at 11.00 a.m.
Resolutions 1 to 7 will be proposed as ordinary resolutions. More than 50 per
cent. of shareholders' votes cast must be in favour for those resolutions to be
passed.
The directors consider that all of the resolutions to be put to the meeting are
in the best interests of the company and its shareholders as a whole. The Board
recommends that shareholders vote in favour of all resolutions.
Please note that the following paragraph is a summary of resolution 7 to be
proposed at the Annual General Meeting and not the full text of the resolution.
You should therefore read this section in conjunction with the full text of the
resolutions contained in the notice of Annual General Meeting.
Directors' authority to allot shares (Resolution 7)
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 7.1.1 of resolution 7 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 5 June 2020 (being the last practicable date prior to the
publication of this Directors' Report). Paragraph 7.1.2 of resolution 7 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 5 June 2020 (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 7 is GBP711,788. Resolution 7 complies with guidance issued by the
Investment Association (IA).
The authority granted by resolution 7 will expire on 31 August 2021 or, if
earlier, the conclusion of the next annual general meeting of the company. The
directors have no present intention to make use of this authority. However, if
they do exercise the authority, the directors intend to follow emerging best
practice as regards its use as recommended by the IA.
Donations
No political donations were made during the year (2018: GBPnil).
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 23 of the Strategic Report. In addition Note 22 to the financial
statements includes the group's treasury policy, interest rate risk, liquidity
risk, foreign exchange risks and credit risk.
In South Africa, the Covid-19 pandemic continues to have an impact on the
Group's South African mining operations. In terms of business continuity, the
Group's entities have remained in operation as the entities have been
classified as essential businesses. Although the final impact of Covid-19 is
uncertain, the directors have assessed the expected range of impact of the
pandemic on its cashflow forecasts and have a reasonable expectation that the
mine will retain adequate levels of cash to remain in operation for the
foreseeable future.
In addition, a structured trade finance facility with Absa Bank Limited for
R100million is held by Sisonke Coal Processing (Pty) Limited, a 100% subsidiary
of Black Wattle Colliery (Pty) Limited. This facility comprises of a
R100million revolving facility to cover the working capital requirements of the
group's South African operations. The facility is renewable annually at 25
January 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. As a consequence,
the directors believe that the group is well placed to manage its South African
business risks successfully.
In the UK, both rental and investment income have been negatively impacted by
the pandemic. Although the final impact of the pandemic is uncertain, the
directors have assessed the range of expected impact of the pandemic on its UK
and Group cashflow forecasts. The forecasts demonstrate that the group has
sufficient resources to meet its liabilities as they fall due for at least the
next 12 months, from the approval of the financial statements, including those
related to the Group's UK Loan facility outlined below.
During the year, a GBP6 million term loan facility was repaid in December 2019
that was held with Santander Bank PLC. At the same time in December 2019 the
Group entered into a new 5 year term facility of GBP3.9m with Julian Hodge Bank
Limited at an initial LTV of 40%. The loan is secured against the company's UK
retail property portfolio. The amount repayable on the loan at year end was GBP
3.9million. The debt package has a five year term and is repayable at the end
of the term. The interest cost of the loan is 4.0 % above LIBOR. Although the
final impact of the Covid-19 pandemic on the new facility's banking covenants
is uncertain, the directors have a reasonable expectation that the group has
adequate financial resources at short notice, including cash and listed equity
investments, to ensure the existing facility's covenants are met on an ongoing
basis.
As a result of the banking facilities held as well as the acceptable levels of
cash expected to be held by the group over the next 12 months, the Directors
believe that the group has adequate resources to continue in operational
existence for the foreseeable future and that the group is well placed to
manage its business risks. Thus they continue to adopt the going concern basis
of accounting in preparing the annual financial statements.
By order of the board
G.J Casey
Secretary
24 Bruton Place
London W1J 6NE
5 June 2020
Governance
Statement of the Chairman of the remuneration committee
The remuneration committee presents its report for the year ended 31 December
2019, which this year is presented in two parts in accordance with the
regulations.
The first part is the Annual Remuneration Report which details remuneration
awarded to directors and non-executive directors during the year. The
shareholders will be asked to approve the Annual Remuneration Report as an
ordinary resolution (as in previous years) at the AGM in July 2020.
The current remuneration policy, which details the remuneration policy for
directors, can be found at www.bisichi.co.uk. The current remuneration policy
was subject to a binding vote which was approved by shareholders at the AGM in
June 2017. The approval will continue to apply for a 3 year period up to the
AGM on 9 July 2020. The remuneration committee considered the overall
performance of the group as well as of each director in the year ended 31
December 2019 and remuneration including bonuses were awarded in line with the
performance conditions of the remuneration policy.
The second part, is the new remuneration policy report which can be found on
page 40. The new remuneration policy is largely in line with the previous
policy and is subject to a binding vote which will be proposed to shareholders
at the AGM on 9 July 2020. Once approved, the approval of the new policy will
apply for a 3 year period effective from the conclusion of the AGM on 9 July
2020.
Both the above reports have been prepared in accordance with The Large &
Medium-sized Companies and Groups (Accounts and Reports) (Amendment)
Regulations 2013.
The company's auditors, 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
5 June 2020
Governance
Annual remuneration report
The following information has been audited:
Single total figure of remuneration for the year ended 31 December 2019:
Salaries Bonuses Benefits Pension Total Share Total
and Fees GBP'000 GBP'000 GBP'000 before options 2019
GBP'000 Share GBP'000 GBP'000
options
GBP'000
Executive Directors
Sir Michael Heller 83 200 0 - 283 - 283
A R Heller 495 500 40 - 1,035 - 1,035
G J Casey 149 200 17 20 386 - 386
R Grobler 208 195 12 16 431 - 431
Non-Executive Directors
C A Joll* 38 - - - 38 - 38
J A Sibbald* 3 - 3 - 6 - 6
Total 976 1,095 72 36 2,179 - 2,179
*Members of the remuneration committee for the year ended 31 December 2019
Single total figure of remuneration for the year ended 31 December 2018:
Salaries Bonuses Benefits Pension Total Share Total
and Fees GBP'000 GBP'000 GBP'000 before options 2018
GBP'000 Share GBP'000 GBP'000
options
GBP'000
Executive Directors
Sir Michael Heller 82 200 2 - 284 - 284
A R Heller 495 500 71 5 1,071 2 1,073
G J Casey 143 200 28 20 391 2 393
R Grobler 201 137 27 14 379 - 379
Non-Executive Directors
C A Joll* 33 - - - 33 - 33
J A Sibbald* 2 - 3 - 5 - 5
Total 956 1,037 131 39 2,163 4 2,167
*Members of the remuneration committee for the year ended 31 December 2018
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 1994 Continuous 3
months
G J Casey June 2010 Continuous 3
months
R J Grobler April 2008 Continuous 3
months
Non-executive directors
C A Joll February Continuous 3
2001 months
J A Sibbald October 1988 Continuous 3
months
Pension schemes and incentives
Two (2018: Three) directors have benefits under money purchase pension schemes.
Contributions in 2019 were GBP36,640 (2018: GBP39,000), see table above.
Scheme interests awarded during the year
During the year no share options were granted under share option schemes.
Share option schemes
The company currently has only one Unapproved Share Option Scheme which is not
subject to HM revenue and Customs (HMRC) approval. The 2012 scheme was approved
by the remuneration committee of the company on 28 September 2012.
Number of share
options
Option 1 Options 31 Exercisable Exercisable
price* January granted/( December from to
2019 Surrendered) 2019
in
2019
The 2012 Scheme
A R Heller 87.01p 150,000 - 150,000 18/09/2015 17/09/2025
A R Heller 73.50p 150,000 - 150,000 06/02/2018 06/02/2028
G J Casey 87.01p 150,000 - 150,000 18/09/2015 17/09/2025
G J Casey 73.50p 230,000 - 230,000 06/02/2018 06/02/2028
*Middle market price at date of grant
No consideration is payable for the grant of options under the 2012 Unapproved
Share Option Scheme. There are no performance or service conditions attached to
the 2012 Unapproved Share Option scheme.
Payments to past directors
No payments were made to past directors in the year ended 31 December 2019
(2018: GBPnil).
Payments for loss of office
No payments for loss of office were made in the year ended 31 December 2019
(2018: GBPnil).
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
31.12.2019 1.1.2019 31.12.2019 1.1.2019
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 PLC ordinary shares at 31 December 2019 was
109p (2018: 92.5p). During the year the share price ranged between 85p and
129p.
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 2010 to
31 December 2019.
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
% *
%
2019 A R Heller 1,035 34% N/A
2018 A R Heller 1,073 34% N/A
2017 A R Heller 898 25% N/A
2016 A R Heller 850 22% N/A
2015 A R Heller 912 22% N/A
2014 A R Heller 862 22% N/A
2013 A R Heller 614 N/A N/A
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
Bisichi PLC does not have a Chief Executive so the table includes the
equivalent information for the Managing Director.
*There were no formal criteria or conditions to apply in determining the amount
of bonus payable or the number of shares to be issued prior to 2014.
Percentage change in remuneration of director undertaking role of Managing
Director
Managing Director UK based employees
GBP'000 GBP'000
2019 2018 % 2019 2018 %
change change
Base salary 495 495 0% 231 225 3%
Benefits 40 71 -44 % 17 30 -43%
Bonuses 500 500 0% 400 400 0%
Bisichi PLC does not have a Chief Executive so the table includes the
equivalent information for the Managing Director. The comparator group chosen
is all UK based employees as the remuneration committee believe this provides
the most accurate comparison of underlying increases based on similar annual
bonus performances utilised by the group.
Relative importance of spend on pay
The total expenditure of the group on remuneration to all employees (see Notes
29 and 9 to the financial statements) is shown below:
2019 2018
GBP'000 GBP'000
Employee remuneration 7,783 7,335
Distribution to shareholders 107 641
Statement of implementation of new remuneration policy
The new remuneration policy will be approved at the AGM on 9 July 2020. The
policy will take effect from the conclusion of the AGM and will apply for 3
years unless changes are deemed necessary by the remuneration committee. The
company may not make a remuneration payment or payment for loss of office to a
person who is, is to be, or has been a director of the company unless that
payment is consistent with the approved remuneration policy, or has otherwise
been approved by a resolution of members.
Consideration by the directors of matters relating to directors' remuneration
The remuneration committee considered the executive directors remuneration and
the board considered the non-executive directors remuneration in the year ended
31 December 2019.
Shareholder voting
At the Annual General Meeting on 11 June 2019, 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 votes No of
votes against votes
for withheld
Resolution to approve the Remuneration Report (11 June 70% 30% 2,304
2019)
Resolution to approve the Remuneration Policy (7 June 74.77% 25.16% -
2017)
The remuneration committee and directors have considered the percentage of
votes against the resolutions to approve the remuneration report and policy.
Reasons given by shareholders, as known by the directors, have been the level
of remuneration awarded and the general remuneration policy itself. The
remuneration committee consider the remuneration policy and performance
conditions within remain appropriate and therefore no further action has been
taken.
Service contracts
All executive directors have full-time contracts of employment with the
company. Non-executive directors have contracts of service. No director has a
contract of employment or contract of service with the company, its joint
venture or associated companies with a fixed term which exceeds twelve months.
Directors notice periods (see page 33 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 annually No individual director will
salary Skills remuneration Paid monthly in cash be awarded a base salary in
Responsibility committee on excess of GBP700,000 per
Accountability appointment. annum.
Experience Set at a level No specific performance
Value considered conditions are attached to
appropriate to base salaries.
attract, retain
motivate and
reward the right
individuals.
Pension To provide Company The contribution Company contribution offered
competitive contribution payable by the company at up to 10% of base salary
retirement offered at up to is included in the as part of overall
benefits 10% of base director's contract of remuneration package.
salary as part of employment. No specific performance
overall Paid into money conditions are attached to
remuneration purchase schemes pension contributions
package.
Benefits To provide a Contractual The committee retains The costs associated with
competitive benefits can the discretion to benefits offered are closely
benefits include but are approve changes in controlled and reviewed on
package not limited to: contractual benefits in an annual basis.
Car or car exceptional No director will receive
allowance circumstances or where benefits of a value in
Group health factors outside the excess of 30% of his base
cover control of the Group salary.
Death in service lead to increased costs No specific performance
cover (e.g. medical conditions are attached to
Permanent health inflation) contractual benefits.
insurance The value of benefits for
each director for the year
ended 31 December 2019 is
shown in the table on page
32.
Annual To reward and In assessing the The remuneration The current maximum bonus
Bonus incentivise performance of committee determines opportunity will not exceed
the executive the level of bonus on 200% of base salary in any
team, and in an annual basis one year, but the
particular to applying such remuneration committee
determine whether performance conditions reserves the power to award
bonuses are and performance up to 300% in an exceptional
merited the measures as year.
remuneration it considers Performance conditions will
committee takes appropriate be assessed on an annual
into account the basis. The performance
overall measures applied may be
performance of financial, non-financial,
the business. corporate, divisional or
Bonuses are individual and in such
generally offered proportion as the
in cash remuneration committee
considers appropriate
Share To provide Granted under Offered at appropriate Entitlement to share options
Options executive existing schemes times by the is not subject to any
directors with (see page 33) remuneration committee specific performance
a long-term conditions.
interest in Share options will be
the company 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
one Share Option Scheme (see
page 33).
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 the Reviewed annually No individual director will
salary Skills board on be awarded a base salary in
Experience appointment. excess of GBP40,000 per annum.
Value Set at a level No specific performance
considered conditions are attached to
appropriate to base salaries.
attract, retain and
motivate the
individual.
Experience and time
required for the
role are considered
on appointment.
Pension No pension offered
Benefits No benefits offered The committee The costs associated with
except retains the the benefit offered is
to one non-executive discretion to closely controlled and
director who is approve changes in reviewed on an annual basis.
eligible for health contractual benefits No director will receive
cover (see annual in exceptional benefits of a value in
remuneration report circumstances or excess of 30% of his base
page 32) where factors salary.
outside the control No specific performance
of the Group lead to conditions are attached to
increased costs contractual benefits.
(e.g. medical
inflation)
Share Non-executive
Options directors do not
participate in the
share option schemes
Remuneration Policy
The remuneration policy below is the group's new remuneration policy on
directors' remuneration, which will be proposed for a binding vote at the 2020
AGM. If approved it is intended that the policy take effect from the conclusion
of the AGM on 9 July 2020, and will apply to remuneration determined on or
after that date. The previously determined remuneration (determined under the
company's remuneration policy approved at the 2017 AGM) will continue to apply
until that time.
The remuneration of the Company's executive directors is determined by the
remuneration committee. In the decision making process for the determination,
review and implementation of the company's remuneration policy, the
remuneration committee has taken the following into account:
* The need to attract, retain and motivate individuals of a calibre who will
ensure successful leadership and management of the company
* The group's general aim of seeking to reward all employees fairly according
to the nature of their role and their performance
* Remuneration packages offered by similar companies within the same sector
* The need to align the interests of shareholders as a whole with the long-term
growth of the group
* The need to align the determination, review and implementation of the
company's remuneration policy with the long term strategy and success of the
business.
* The need to be flexible and adjust with operational changes throughout the
term of this policy
* The need to ensure a link between remuneration and the long terms success of
the group; and
* The need to consider factors beyond the control of management in determining
final outcomes.
The remuneration of non-executive directors is determined by the board, and
takes into account additional remuneration for services outside the scope of
the ordinary duties of non-executive directors.
In determining the remuneration for each executive director, the remuneration
committee has, and in the determination of the fees payable to non-executive
directors, the Board has, had regard to potential conflicts of interest in the
decision making process, and has sought to mitigate these as far as is possible
given the company's size, nature and stage of operations.
The remuneration policy contains no significant revisions compared with the
previous policy.
Future Policy Table
Element Purpose Policy Operation Opportunity and performance
conditions
Executive directors
Base To recognise: Considered by Reviewed annually No individual director will
salary Skills remuneration Paid monthly in cash be awarded a base salary in
Responsibility committee on excess of GBP700,000 per
Accountability appointment. annum.
Experience Set at a level No specific performance
Value considered conditions are attached to
appropriate to base salaries.
attract, retain
motivate and
reward the right
individuals.
Pension To provide Company The contribution Company contribution offered
competitive contribution payable by the company at up to 10% of base salary
retirement offered at up to is included in the as part of overall
benefits 10% of base director's contract of remuneration package.
salary as part of employment. No specific performance
overall Paid into money conditions are attached to
remuneration purchase schemes pension contributions.
package.
Benefits To provide a Contractual The committee retains The costs associated with
competitive benefits can absolute discretion to benefits offered are closely
benefits include but are approve changes in controlled and reviewed on
package not limited to: contractual benefits in an annual basis.
Car or car exceptional No director will receive
allowance circumstances or where benefits of a value in
Group health factors outside the excess of 30% of his base
cover control of the Group salary.
Death in service lead to increased costs No specific performance
cover (e.g. medical conditions are attached to
Permanent health inflation) contractual benefits.
insurance The value of benefits for
each director for the year
ended 31 December 2019 is
shown in the table on page
32.
Annual To reward and In assessing the The remuneration The current maximum bonus
Bonus incentivise performance of committee determines opportunity will not exceed
the executive the level of bonus on 200% of base salary in any
team, and in an annual basis one year, but the
particular to applying such remuneration committee
determine whether performance conditions reserves the power to award
bonuses are and performance up to 300% in an exceptional
merited the measures as year.
remuneration it considers There is no formal framework
committee takes appropriate by which the company
into account the assesses performance and
overall performance conditions and
performance of measures will be assessed on
the business. an annual basis by the
Bonuses are remuneration committee. In
generally offered determining the level of the
in cash bonus, the remuneration
committee will take into
account internal and
external factors and
circumstances that occur
during the year under
review. The performance
measures applied may be
financial, non-financial,
corporate, divisional or
individual and in such
proportion as the
remuneration committee
considers appropriate to the
prevailing circumstances.
The company does not
consider, given the
company's size, nature and
stage of operations that a
formal framework is
required.
Share To provide Granted under Offered at appropriate Entitlement to share options
Options executive existing schemes times by the is not subject to any
directors with (see page 33) remuneration committee specific performance
a long-term conditions.
interest in Share options will be
the company offered by the remuneration
committee as appropriate
taking into account the
factors considered above in
the decision making process
in determining remuneration
policy.
The aggregate number of
shares over which options
may be granted under all of
the company's option schemes
(including any options and
awards granted under the
company's employee share
plans) in any period of ten
years, will not exceed, at
the time of grant, 10% of
the ordinary share capital
of the company from time to
time. In determining the
limits no account shall be
taken of any shares where
the right to acquire the
shares has been released,
lapsed or has otherwise
become incapable of
exercise.
The company currently has
one Share Option Scheme (see
page 33).
For the 2012 scheme the
remuneration committee has
the ability to impose
performance criteria in
respect of any new share
options granted, however
there is no requirement to
do so. There are no
performance conditions
attached to the options
already issued under the
2012 scheme, the options
vest on issue and there are
no minimum hold periods for
the resulting shares issued
on exercise of the option.
Non-executive directors
Base To recognise: Considered by the Reviewed annually No individual director will
salary Skills board on be awarded a base salary in
Experience appointment. excess of GBP60,000 per annum.
Value Set at a level No specific performance
considered conditions are attached to
appropriate to base salaries.
attract, retain and
motivate the
individual.
Experience and time
required for the
role are considered
on appointment.
Pension No pension offered
Benefits No benefits offered The committee The costs associated with
except retains the the benefit offered is
to one non-executive discretion to closely controlled and
director who is approve changes in reviewed on an annual basis.
eligible for health contractual benefits No director will receive
cover (see annual in exceptional benefits of a value in
remuneration report circumstances or excess of 30% of his base
page 32) where factors salary.
outside the control No specific performance
of the Group lead to conditions are attached to
increased costs contractual benefits.
(e.g. medical
inflation)
Share Non-executive
Options directors do not
participate in the
share option schemes
Notes to the future policy table
In order to ensure that shareholders have sufficient clarity over director
remuneration levels, the company has, where possible, specified a maximum that
may be paid to a director in respect of each component of remuneration. The
remuneration committee consider the performance measures outlined in the table
above to be appropriate measures of performance and that the KPI's chosen align
the interests of the directors and shareholders.
Details of remuneration of other company employees can be found in Note 29 to
the financial statements. Any differences in the types of remuneration
available for directors and other employees reflect common practice and market
norms. The bonus targets for general employees of the Group are more focused on
annual targets that further the company's interests. The maximum bonus
opportunity for employees and directors alike is based on the seniority and
responsibility of the role undertaken.
Remuneration scenarios
An indication of the possible level of remuneration that would be received by
each Executive Director in the year commencing 1 January 2020 in accordance
with the directors' remuneration policy is shown below. All performance targets
relate to one financial year, and therefore there are no targets which would be
impacted by share price appreciation.
Sir Michael Heller
AR Heller
GJ Casey
R Grobler
Assumptions
Minimum
Consists of base salary, benefits and pension. Base salary, benefits and
pension for 2020 are assumed at the levels included in the single total figure
remuneration table for the year ended 31 December 2019 on page 32.
On target
Based on the average percentage bonus awarded to the individual in the three
years ending on 31 December 2019. As outlined in the policy table above, the
remuneration committee has discretion to award bonuses of up to 200% of base
salary in any one year (up to 300% in an exceptional year). Base salary,
benefits and pension for 2020 are assumed at the levels included in the single
total figure remuneration table for the year ended 31 December 2019 on page 32.
Maximum
Based on maximum remuneration receivable of 300% of base salary awarded as
bonus in an exceptional year. Base salary, benefits and pension for 2020 are
assumed at the levels included in the single total figure remuneration table
for the year ended 31 December 2019 on page 32.
Approach to recruitment remuneration
All appointments to the board are made on merit. The components of a new
director's remuneration package (who is recruited within the life of the
approved remuneration policy) would comprise base salary, pension, benefits,
annual bonus and opportunity to be granted share options as outlined above and
the company's approach to such appointments are detailed with in the future
policy table above. The company will pay such levels of remuneration to new
directors that would enable the company to attract appropriately skilled and
experienced individuals that is not in the opinion of the remuneration
committee excessive. The company has no pre-determined policy for buyouts of
previous awards, and each case will be determined on merit, having regard to
all relevant circumstances at the time.
Service contracts
All executive directors have full-time contracts of employment with the
company. Non-executive directors have contracts of service. No director has a
contract of employment or contract of service with the company, its joint
venture or associated companies with a fixed term which exceeds twelve months.
Directors' notice periods (see page 33 of the annual remuneration report) are
set in line with market practice and of a length considered sufficient to
ensure an effective handover of duties should a director leave the company. All
directors' contracts as amended from time to time, have run from the date of
appointment. Service contracts are kept at the registered office.
Policy on payment for loss of office
There are no contractual provisions agreed prior to 27 June 2012 that could
impact on a termination payment. Termination payments will be calculated in
accordance with the existing contract of employment or service contract. It is
the policy of the remuneration committee to issue employment contracts to
executive directors with normal commercial terms and without extended terms of
notice which could give rise to extraordinary termination payments. The board
retains the discretion to make additional (ex-gratia) payments on termination
should it be appropriate in all the circumstances.
Consideration of employment conditions elsewhere in the Group
In setting this policy for directors' remuneration the remuneration committee
has been mindful of the company's objective to reward all employees fairly
according to their role, performance and market forces. In setting the policy
for Directors' remuneration the remuneration committee has considered the pay
and employment conditions of the other employees within the group. No formal
consultation has been undertaken with employees in drawing up the policy. The
remuneration committee has not used formal comparison measures.
Consideration of shareholder views
No shareholder views have been taken into account when formulating this policy.
In accordance with the new regulations, an ordinary resolution for approval of
this policy will be put to shareholders at the AGM in June 2020.
Audit committee report
The committee's terms of reference have been approved by the board and follow
published guidelines, which are available from the company secretary. The audit
committee comprises the two non-executive directors, Christopher Joll
(chairman), an experienced financial PR executive and John Sibbald, a retired
chartered accountant.
The Audit Committee's prime tasks are to:
* review the scope of external audit, to receive regular reports
from the auditor and to review the half-yearly and annual accounts before they
are presented to the board, focusing in particular on accounting policies and
areas of management judgment and estimation;
* monitor the controls which are in force to ensure the integrity
of the information reported to the shareholders;
* assess key risks and to act as a forum for discussion of risk
issues and contribute to the board's review of the effectiveness of the group's
risk management control and processes;
* act as a forum for discussion of internal control issues and
contribute to the board's review of the effectiveness of the group's internal
control and risk management systems and processes;
* consider each year the need for an internal audit function;
* advise the board on the appointment of external auditors and
rotation of the audit partner every five years, and on their remuneration for
both audit and non-audit work, and discuss the nature and scope of their audit
work;
* participate in the selection of a new external audit partner and
agree the appointment when required;
* undertake a formal assessment of the auditors' independence each
year which includes:
a review of non-audit services provided to the
group and related fees;
discussion with the auditors of a written report
detailing all relationships with the company and any other parties that could
affect independence or the perception of independence;
a review of the auditors' own procedures for
ensuring the independence of the audit firm and partners and staff involved in
the audit, including the regular rotation of the audit partner; and
obtaining written confirmation from the auditors
that, in their professional judgement, they are independent.
Meetings
The committee meets prior to the annual audit with the external auditors to
discuss the audit plan and again prior to the publication of the annual
results. These meetings are attended by the external audit partner, managing
director, director of finance and company secretary. Prior to bi-monthly board
meetings the members of the committee meet on an informal basis to discuss any
relevant matters which may have arisen. Additional formal meetings are held as
necessary.
During the past year the committee:
* met with the external auditors, and discussed their reports to
the Audit Committee;
* approved the publication of annual and half-year financial
results;
* considered and approved the annual review of internal controls;
* decided that due to the size and nature of operation there was
not a current need for an internal audit function;
* agreed the independence of the auditors and approved their fees
for both audit related and non-audit services as set out in note 5 to the
financial statements.
Financial reporting
As part of its role, the Audit Committee assessed the audit findings that were
considered most significant to the financial statements, including those areas
requiring significant judgment and/or estimation. When assessing the identified
financial reporting matters, the committee assessed quantitative materiality
primarily by reference to profit before tax. The Board also gave consideration
to:
* the carrying value of the group's total assets, given that the group
operates a principally asset based business;
* the value of revenues generated by the group, given the importance of
production;
* Adjusted EBITDA, given that it is a key trading KPI, when determining
quantitative materiality; and
* Going concern, given the impact of Covid-19 pandemic subsequent to year end
on the Group's operations.
The qualitative aspects of any financial reporting matters identified during
the audit process were also considered when assessing their materiality. Based
on the considerations set out above we have considered quantitative errors
individually or in aggregate in excess of approximately 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. BDO South Africa 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
5 June 2020
Valuers' certificates
To the directors of Bisichi PLC
In accordance with your instructions we have carried out a valuation of the
freehold property interests held as at 31 December 2019 by the company as
detailed in our Valuation Report dated 2 March 2020.
Having regard to the foregoing, we are of the opinion that the open market
value as at 31 December 2019 of the interests owned by the company was GBP
11,565,000 being made up as follows:
GBP'000
Freehold 9,020
Leasehold 2,545
11,565
Leeds Carter Towler
2 March 2020 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 of the principal risks and
uncertainties that they face.
Independent auditor's report to the members of Bisichi Plc
Opinion
We have audited the financial statements of Bisichi Plc (the 'Parent Company')
and its subsidiaries (the 'Group') for the year ended 31 December 31 2019 which
comprise the consolidated income statement, the consolidated statement of other
comprehensive income, the consolidated balance sheet, the consolidated
statement of changes in shareholders' equity, the consolidated cash flow
statement, the company balance sheet, the 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 the preparation of the Group financial statements is applicable
law and International Financial Reporting Standards (IFRSs) as adopted by the
European Union. The financial reporting framework that has been applied in the
preparation of the Parent Company financial statements is applicable law and
United Kingdom Accounting Standards, including Financial Reporting Standard 101
Reduced Disclosure Framework (United Kingdom Generally Accepted Accounting
Practice).
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 2019 and of
the Group's profit for the year then ended;
* the Group financial statements have been properly prepared in accordance
with IFRSs as adopted by the European Union;
* the Parent Company financial statements have been properly prepared in
accordance with United Kingdom Generally Accepted Accounting Practice; and
* the financial statements have been prepared in accordance with the
requirements of the Companies Act 2006; and, as regards the Group financial
statements, Article 4 of the IAS Regulation.
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 the Parent 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 judgement, were
of most significance in our audit of the financial statements of the current
period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) that we identified, including those which had the
greatest effect on: the overall audit strategy, the allocation of resources in
the audit; and directing the efforts of the engagement team. These matters were
addressed in the context of our audit of the financial statements as a whole,
and in forming our opinion thereon, and we do not provide a separate opinion on
these matters.
KEY AUDIT MATTER HOW THE MATTER WAS ADDRESSED IN OUR
AUDIT
Property Valuation
The Group holds investment property at We assessed the competency, independence
fair value (see note 11 and Key and objectivity of the Group's
judgements and estimates) together with independent external valuer which
further investment property held at included making inquiries regarding
fair value in the Group's Dragon Retail interests and relationships that may
Joint Venture (note 14). The assessment have created a threat to the valuer's
of fair value for the property objectivity.
portfolio is significant judgement
taken in the Annual Report and We reviewed the scope of the valuations
estimates by the Directors, including and confirmed that it was in accordance
assessment of independent third party with the Statements of Asset Valuation
valuations obtained for the portfolio and Guidance Notes published by The
have a significant impact on the Royal Institution of Chartered
results of the Group. Surveyors.
Each valuation requires consideration We reviewed the independent external
of the individual nature of the valuation reports and confirmed their
property, its location, its cash flows consistency with the valuations
and comparable market transactions. The presented in the financial statements.
valuation of these properties requires
assessment of the market yield as well
as consideration of the current rental We met with the independent external
agreements. valuers, who valued all of the Group's
investment properties, to understand the
Any significant input inaccuracies or assumptions and methodologies used in
unreasonable bases used in these valuing these properties, the market
judgements (such as in respect of evidence supporting the valuation
estimated rental value and net initial assumptions and the valuation movements
yield applied) could result in a in the period.
material misstatement.
We used our knowledge and experience to
There is also an inherent risk that evaluate and challenge the valuation
management may influence valuation assumptions, methodologies and the
judgements. inputs used. This included establishing
our own range of expectations for the
Given these factors, this was valuation of investment property based
considered to be an area of focus for on externally available metrics.
our audit.
We agreed a sample of key observable
valuation inputs supplied to and used by
the external valuer and Directors to
information audited by us, where
applicable, or supporting market
documentation.
We reviewed the disclosures contained
within the financial statements,
specifically including COVID-19 and the
impact on the property portfolio. In
particular we reviewed the risk
disclosures including the principal
risks and uncertainties, as well as the
post balance sheet events note.
Key Observations
We found that the key judgments and estimates included in the valuation
calculation to be supportable, and the disclosures to be in line with the
accounting standards.
Going Concern
COVID-19 is having an unprecedented We inspected the confirmation from the
impact on the Global economy the South African Government confirming that
predicted impact of which remains Black Wattle Colliery is able to
unclear. Management have carried out an continue production and sale of coal in
initial risk assessment and carried out both the domestic markets and export
various sensitivities on the cash flow markets.
forecast to consider the impact of
COVID-19 on the Going Concern We performed a detailed review of
assumption. management's going concern and
supporting cash flow forecast,
See page 30 for the Group's disclosure challenging the key operating
on Going Concern including a summary of assumptions based on 2019 and 2020
trade facilities available and how the actual results and external data and
Director's have assessed it appropriate market commentary, where possible.
to continue to adopt the Going Concern
basis. We tested the integrity of the forecast
model checking the accuracy and
Any significant changes in operations completeness of the model, including
or unreasonable cash flow assumptions challenging the appropriateness of
used could result in the Group not estimates and assumptions with reference
being able to meet its liabilities as to empirical data and external evidence
they fall due. with specific focus on the following
assumptions: starting cash balance,
Given the current impact COVID-19 is property prices, rent recoverability,
having across the capital markets we yields achieved, pricing, production
consider it to be a risk to the Going levels and exchange rates and assessed
Concern assumption and an area of focus their consistency with approved budgets
for our audit. and the mine development plan, as
applicable.
We discussed the potential impact of
COVID-19 with management including their
assessment of risks and uncertainties
associated with areas such as the
Group's workforce, supply chain,
production disruption, sales, price
volatility and the ability to renew
existing facilities under such
scenarios. We formed our own assessment
of risks and uncertainties based on our
understanding of the business and mining
sector and compared this to Management's
model.
We evaluated management's sensitivity
analysis and performed our own
sensitivity analysis in respect of the
key assumptions underpinning the
forecasts including specific scenarios
associated with COVID-19.
Our sensitivity test applied the
following:
A 100% reduction in dividends and
Management Fees from the South African
mining operations and a 5% reduction in
pricing
A 30% reduction in property values
A 50% reduction in the recoverability of
rent
A 100% reduction in investment income
We assessed the reasonableness of any
mitigating actions identified by
Management by checking these were
contractually possible, this included
reviewing the group's banking facility
contracts to vouch remedial action
should covenants be breached.
We confirmed the terms of all facilities
in place and the consistency of the
forecasts with the facilities. We
assessed the risk of any covenant
breaches under the base case and
sensitivity scenarios.
We reviewed post year-end operational
and financial data comparing it to the
current level of operations which the
Group maintains.
We reviewed the adequacy and
completeness of the disclosure included
within the financial statements in
respect of going concern.
Key Observations
Our observations in respect of this matter are set out in the Conclusions
relating to going concern section above.
.
Our application of materiality
We apply the concept of materiality both in planning and performing our audit,
and in evaluating the effect of misstatements. We consider materiality to be
the magnitude by which misstatements, including omissions, could influence the
economic decisions of reasonable users that are taken on the basis of the
financial statements. Importantly, misstatements below these levels will not
necessarily be evaluated as immaterial as we also take into account of the
nature of identified misstatements, and the particular circumstances of their
occurrence, when evaluating their effect on the financial statements as a
whole. The Materiality level we have calculated for the Group is GBP300,000
(2018: GBP300,000) which equates to 5.4% of adjusted profit before tax (2018: 5%
of profit before tax). We consider this to be the most appropriate performance
measure as the underlying profit of the Group is a key measure for
stakeholders. In FY2019 we adjusted profit before tax to exclude the property
revaluation and Director's bonuses.
Materiality FY2019 FY2018
Materiality for the Group GBP300,000 GBP300,000
Financial Statements
Performance Materiality for GBP225,000 (75% of Group GBP225,000 (75% of Group
the Group Financial Materiality) Materiality)
Statements
Performance Materiality GBP27,000 to GBP146,000 GBP26,000 to GBP188,000
levels used for the audits
of the significant
components of the audit
Materiality for the Parent GBP135,000 (capped at 45% of GBP220,000 (capped at 75% of
Company Group Materiality) Group Materiality)
Performance materiality for GBP101,000 (75% of GBP165,000 (75% of
the Parent Company Materiality for the Parent Materiality for the Parent
Company) Company)
Audit scope coverage 100% of total assets, 100% 100% of total assets, 100%
of revenue and 100% of of revenue and 100% of
profit before tax profit before tax
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.
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 (2018: GBP15,000). We also agreed to report differences below these
thresholds that, in our view, warranted reporting on qualitative grounds.
An overview of the scope of our audit
The Group's operations principally comprise property interests in the United
Kingdom and an operating mine located in South Africa. We assessed there to be
7 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 BDO member firm performed a full scope audit of the mine in South Africa,
under our direction and supervision as Group auditors.
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 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.
* Two of the significant components were joint ventures and we carried out a
full scope audit of these entities.
Capability of the audit to detect irregularities including fraud
We gained an understanding of the legal and regulatory framework applicable to
the group and the industry in which it operates, and considered the risk of
acts by the group which were contrary to applicable laws and regulations,
including fraud. These included but were not limited to compliance with
Companies Act 2006 and IFRS.
We designed audit procedures to respond to the risk, recognising that the risk
of not detecting a material misstatement due to fraud is higher than the risk
of not detecting one resulting from error, as fraud may involve deliberate
concealment.
We focused on laws and regulations that could give rise to a material
misstatement in the financial statements. Our tests included, but were not
limited to:
* agreement of the financial statement disclosures to underlying supporting
documentation;
* enquiries of management;
* review of minutes of board meetings throughout the period; and
* Obtaining an understanding of the control environment in monitoring
compliance with laws and regulations
There are inherent limitations in the audit procedures described above and the
further removed noncompliance with laws and regulations is from the events and
transactions reflected in the financial statements, the less likely we would
become aware of it. We also addressed the risk of management override of
internal controls, including testing journals and evaluating whether there was
evidence of bias by the directors that represented a risk of material
misstatement due to fraud.
Other information
The directors are responsible for the other information. The other information
comprises the information included in the Annual Report, other than the
financial statements and our auditor's report thereon. 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 Parent Company
and its environment obtained in the course of the audit, we have not identified
material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to
which the
Companies Act 2006 requires us to report to you if, in our opinion:
* adequate accounting records have not been kept by the Parent Company, or
returns adequate for our audit have not been received from branches not
visited by us; or
* the Parent Company financial statements and the part of the directors'
remuneration report to be audited are not in agreement with the accounting
records and returns; or
* certain disclosures of directors' remuneration specified by law are not
made; or
* we have not received all the information and explanations we require for
our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement set out on
page 49 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
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
We were reappointed by the members on 11 June 2019 during the AGM to audit the
financial statements for the year ending 31 December 2019. The period of total
uninterrupted engagement, including previous renewals and reappointments of the
firm, is 32 years, covering the years ending 1987 to 2019.
Under the FRC's Ethical Standard we are required to rotate off as the Company's
Auditors following the year ended 31 December 2020. During the uninterrupted
engagement period, the engagement partner has rotated in accordance with the
applicable requirements.
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.
Use of our report
This report is made solely to the Parent 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 Parent 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 Parent Company and the Parent
Company's members as a body, for our audit work, for this report, or for the
opinions we have formed.
Laura Pingree
(Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London, United Kingdom
5 June 2020
BDO LLP is a limited liability partnership registered in England and Wales
(with registered number OC305127).
Bisichi PLC
Financial statements
56 Consolidated income statement
57 Consolidated statement of other comprehensive income
58 Consolidated balance sheet
60 Consolidated statement of changes in shareholders' equity
61 Consolidated cash flow statement
62 Group accounting policies
69 Notes to the financial statements
91 Company balance sheet
92 Company statement of changes in equity
93 Company accounting policies
Consolidated income statement
for the year ended 31 December 2019
Notes 2019 2019 2019 2018 2018 2018
Trading Revaluations Total Trading Revaluations Total
GBP'000 and GBP'000 GBP'000 and GBP'000
impairment impairment
GBP'000 GBP'000
Group revenue 2 48,106 - 48,106 49,945 - 49,945
Operating costs 3 (40,649) - (40,649) (40,857) - (40,857)
Operating profit before depreciation, 7,457 - 7,457 9,088 - 9,088
fair value adjustments and exchange
movements
Depreciation 3 (2,190) - (2,190) (2,113) - (2,113)
Operating profit before fair value 1 5,267 - 5,267 6,975 - 6,975
adjustments and exchange movements
Exchange losses (123) - (123) (63) - (63)
Decrease in value of investment 4 - (1,480) (1,480) - (215) (215)
properties
Loss on investments held at fair value - (6) (6) - (171) (171)
Operating profit/(loss) 1 5,144 (1,486) 3,658 6,912 (386) 6,526
Share of (loss)/profit in joint 14 - 20 20 - (52) (52)
ventures
Profit/(loss) before interest and 5,144 (1,466) 3,678 6,912 (438) 6,474
taxation
Interest receivable 28 - 28 126 - 126
Interest payable 7 (679) - (679) (641) - (641)
Profit/(loss) before tax 5 4,493 (1,466) 3,027 6,397 (438) 5,959
Taxation 8 (1,592) 160 (1,432) (1,971) 55 (1,916)
Profit/(loss) for the year 2,901 (1,306) 1,595 4,426 (383) 4,043
Attributable to:
Equity holders of the company 2,352 (1,306) 1,046 3,697 (383) 3,314
Non-controlling interest 27 549 - 549 729 - 729
Profit/(loss) for the year 2,901 (1,306) 1,595 4,426 (383) 4,043
Profit per share - basic 10 9.80p 31.05p
Profit per share - diluted 10 9.63p 30.85p
Trading gains and losses reflect all the trading activity on mining and
property operations and realised gains. Revaluation gains and losses reflects
the revaluation of investment properties and other assets within the group and
any proportion of unrealised gains and losses within Joint Ventures. The total
column represents the consolidated income statement presented in accordance
with IAS 1.
Financial statements
Consolidated statement of other comprehensive income
for the year ended 31 December 2019
2019 2018
GBP'000 GBP'000
Profit for the year 1,595 4,043
Other comprehensive income/(expense):
Items that may be subsequently recycled to the income statement:
Exchange differences on translation of foreign operations (49) (430)
Other comprehensive income for the year net of tax (49) (430)
Total comprehensive income for the year net of tax 1,546 3,613
Attributable to:
Equity shareholders 1,004 2,937
Non-controlling interest 542 676
1,546 3,613
Financial statements
Consolidated balance sheet
at 31 December 2019
Notes 2019 2018
GBP'000 GBP'000
Assets
Non-current assets
Investment properties 11 11,748 13,230
Mining reserves, plant and equipment 12 9,508 8,531
Investments in joint ventures accounted for using equity 13 1,342 1,322
method
Other investments at fair value through profit and loss 13 287 35
("FVPL")
Total non-current assets 22,885 23,118
Current assets
Inventories 16 2,432 1,511
Trade and other receivables 17 7,559 6,837
Corporation tax recoverable 19 19
Investments in listed securities held at FVPL 18 1,119 887
Cash and cash equivalents 7,720 9,221
Total current assets 18,849 18,475
Total assets 41,734 41,593
Liabilities
Current liabilities
Borrowings 20 (5,103) (9,580)
Trade and other payables 19 (7,619) (7,257)
Current tax liabilities (457) (92)
Total current liabilities (13,179) (16,929)
Non-current liabilities
Borrowings 20 (4,141) (547)
Provision for rehabilitation 21 (1,554) (1,571)
Lease liabilities 31 (232) (185)
Deferred tax liabilities 23 (2,071) (2,226)
Total non-current liabilities (7,998) (4,529)
Total liabilities (21,177) (21,458)
Net assets 20,557 20,135
Equity
Share capital 24 1,068 1,068
Share premium account 258 258
Translation reserve (2,090) (2,048)
Other reserves 25 707 707
Retained earnings 19,989 19,584
Total equity attributable to equity shareholders 19,932 19,569
Non-controlling interest 27 625 566
Total equity 20,557 20,135
These financial statements were approved and authorised for issue by the board
of directors on 5 June 2020 and signed on its behalf by:
A R Heller G J Casey Company Registration
No. 112155
Director Director
Financial statements
Consolidated statement of changes in shareholders' equity
for the year ended 31 December 2019
Share Share Translation Other Retained Total Non- Total
capital Premium reserves reserves earnings GBP'000 controlling equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 interest GBP'000
GBP'000
Balance at 1 1,068 258 (1,671) 683 16,804 17,142 532 17,674
January 2018
Profit for - - - - 3,314 3,314 729 4,043
the year
Other - - (377) - - (377) (53) (430)
comprehensive
income
Total - - (377) - 3,314 2,937 676 3,613
comprehensive
income for
the year
Dividend - - - - (534) (534) (642) (1,176)
(note 9)
Share options - - - 24 - 24 - 24
charge
Balance at 1 1,068 258 (2,048) 707 19,584 19,569 566 20,135
January 2019
Profit for - - - - 1,046 1,046 549 1,595
the year
Other - - (42) - - (42) (7) (49)
comprehensive
expense
Total - - (42) - 1,046 1,004 542 1,546
comprehensive
income for
the year
Dividend - - - - (641) (641) (483) (1,124)
(note 9)
Balance at 31 1,068 258 (2,090) 707 19,989 19,932 625 20,557
December 2019
Consolidated cash flow statement
for the year ended 31 December 2019
Year Year
ended ended
31 31
December December
2019 2018
GBP'000 GBP'000
Cash flows from operating activities
Operating profit 3,658 6,526
Adjustments for:
Depreciation 2,190 2,113
Share based payments - 24
Unrealised loss/(gain) on investment properties 1,480 215
Loss on investments held at FVPL 6 171
Exchange adjustments 123 63
Cash flow before working capital 7,457 9,112
Change in inventories (945) (797)
Change in trade and other receivables (790) (894)
Change in trade and other payables 276 742
Cash generated from operations 5,998 8,163
Interest received 28 126
Interest paid (679) (598)
Income tax paid (1,199) (2,282)
Cash flow from operating activities 4,148 5,409
Cash flows from investing activities
Acquisition of reserves, property, plant and equipment (3,172) (2,881)
Investment in joint venture - (500)
Disposal of other investments - 8
Acquisition of other investments (490) -
Cash flow from investing activities (3,662) (3,373)
Cash flows from financing activities
Borrowings drawn 3,818 753
Borrowings and lease liabilities repaid (6,016) (19)
Equity dividends paid (641) (534)
Minority dividends paid (483) (642)
Cash flow from financing activities (3,322) (442)
Net increase in cash and cash equivalents (2,836) 1,594
Cash and cash equivalents at 1 January 5,686 4,065
Exchange adjustment 28 27
Cash and cash equivalents at 31 December 2,878 5,686
Cash and cash equivalents at 31 December comprise:
Cash and cash equivalents as presented in the balance 7,720 9,221
sheet
Bank overdrafts (secured) (4,842) (3,535)
2,878 5,686
Financial statements
Group accounting policies
for the year ended 31 December 2019
Basis of accounting
The results for the year ended 31 December 2019 have been prepared in
accordance with International Financial Reporting Standards (IFRS) as adopted
by the European Union and with those parts of the Companies Act 2006 applicable
to companies reporting under IFRS. In applying the group's accounting policies
and assessing areas of judgment and estimation materiality is applied as
detailed on page 47 of the Audit Committee Report. The principal accounting
policies are described below:
The group financial statements are presented in 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 15 for subsidiaries and Note 14 for joint
arrangements and associates.
The exchange rates used in the accounts were as follows:
GBP1 Sterling: GBP1 Sterling:
Rand Dollar
2019 2018 2019 2018
Year-end rate 18.5759 18.3723 1.3254 1.2690
Annual average 18.4326 17.5205 1.2781 1.3096
Going concern
The group has prepared cash flow forecasts which demonstrate that the group has
sufficient resources to meet its liabilities as they fall due for at least the
next 12 months from date of signing.
In South Africa, the Covid-19 pandemic continues to have an impact on the
Group's South African mining operations. In terms of business continuity, the
Group's entities has remained in operation as the entities have been classified
as essential businesses. Although the final impact of Covid-19 is uncertain,
the directors have assessed the expected range of impact of the pandemic on its
cashflow forecasts and have a reasonable expectation that the mine will retain
adequate levels of cash to remain in operation for the foreseeable future.
In addition, a structured trade finance facility with Absa Bank Limited for
R100million is held by Sisonke Coal Processing (Pty) Limited, a 100% subsidiary
of Black Wattle Colliery (Pty) Limited. This facility comprises of a
R100million revolving facility to cover the working capital requirements of the
group's South African operations. The facility is renewable annually at 25
January 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. As a consequence,
the directors believe that the group is well placed to manage its South African
business risks successfully.
In the UK, both rental and investment income have been negatively impacted by
the pandemic. Although the final impact of the pandemic is uncertain, the
directors have assessed the range of expected impact of the pandemic on its UK
and Group cashflow forecasts. The forecasts demonstrate that the group has
sufficient resources to meet its liabilities as they fall due for at least the
next 12 months from date of signing including those related to the Group's UK
Loan facility outlined below.
During the year, a GBP6 million term loan facility was repaid in December 2019
that was held with Santander Bank PLC. At the same time in December 2019 the
Group entered into a new 5 year term facility of GBP3.9m with Julian Hodge Bank
Limited at an initial LTV of 40%. The loan is secured against the company's UK
retail property portfolio. The amount repayable on the loan at year end was GBP
3.9million. The debt package has a five year term and is repayable at the end
of the term. The interest cost of the loan is 4.0% above LIBOR. Although the
final impact of the Covid-19 pandemic on the new facility's banking covenants
is uncertain, the directors have a reasonable expectation that the group has
adequate financial resources at short notice, including cash and listed equity
investments, to ensure the existing facility's covenants are met on an ongoing
basis.
As a result of the banking facilities held as well as the acceptable levels of
cash expected to be held by the group over the next 12 months, the Directors
believe that the group has adequate resources to continue in operational
existence for the foreseeable future and that the group is well placed to
manage its business risks. Thus they continue to adopt the going concern basis
of accounting in preparing the annual financial statements.
International Financial Reporting Standards (IFRS)
The Group has adopted all of the new and revised Standards and Interpretations
issued by the International Accounting Standards Board ("IASB") that are
relevant to its operations and effective for accounting periods beginning 1
January 2019.
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 Group has applied IFRS 16 using the modified retrospective approach
resulting in a nil impact on opening equity and retained earnings. The Group's
lessor accounting remains unchanged.
A right of use asset of GBP57,000 related to an operating lease was recognised on
transition at 1 January 2019 at a value equal to the lease liability using a
discount rate at the date of the initial application. This has been applied
using the exemption not to represent the prior reporting period. The related
lease liability of GBP57,000 is recognised as the present value of the lease
payments.
Interest is accrued on the lease liability based on the discount rate and is
accounted for in finance costs and subsequent payments are deducted from the
lease liability. Subsequently the right of use asset is depreciated over the
life of the contract on a straight line basis. In the cashflow statement the
principal and interest portion of the lease payments are classified within
financing activities and as interest paid respectively. On transition to IFRS
16 the weighted average incremental borrowing rate applied to lease liabilities
recognised under IFRS 16 was 10%.
The aggregate lease liability recognised in the statement of financial position
at 1 January 2019 and the Group's operating lease commitment at 31 December
2018 can be reconciled as follows:
GBP'000
Operating lease commitment at 31 December 2018 76
Effect of discounting those lease commitments at an annual rate of 10% (19)
The aggregate lease liability recognised in the statement of financial 57
position at 1 January 2019
IFRIC 23 - Uncertainty over income tax treatment.
The interpretation addresses the accounting for income taxes when tax
treatments involve uncertainty that affects the application of IAS 12 Income
Taxes. The Group has re-assessed its tax exposure and the key estimates taken
in determining the positions recorded for adopting IFRIC 23. The adoption of
the interpretation had no material impact on the Group.
The Group has not adopted any Standards or Interpretations in advance of the
required implementation dates.
We are committed to improving disclosure and transparency and will continue to
work with our different stakeholders to ensure they understand the detail of
these accounting changes. We continue to remain committed to a robust financial
policy.
Key judgements and estimates
Areas where key estimates and judgements are considered to have a significant
effect on the amounts recognised in the financial statements include:
Life of mine and reserves
The directors consider their judgements and estimates surrounding the life of
the mine and its reserves to have significant effect on the amounts recognised
in the financial statements and to be an area where the financial statements
are subject to significant estimation uncertainty. The life of mine remaining
is currently estimated at 4 years. This life of mine is based on the group's
existing coal reserves including reserves acquired but subject to regulatory
approval. The group actively seeks new opportunities to extend the life of mine
of its existing mining operations or develop new independent mining operations
in South Africa. The life of mine excludes future coal purchases and coal
reserve acquisitions. The group's estimates of proven and probable reserves are
prepared utilising the South African code for the reporting of exploration
results, mineral resources and mineral reserves (the SAMREC code) and are
subject to assessment by an independent Competent Person experienced in the
field of coal geology and specifically opencast and pillar coal extraction.
Estimates of coal reserves impact assessments of the carrying value of
property, plant and equipment, depreciation calculations and rehabilitation and
decommissioning provisions. There are numerous uncertainties inherent in
estimating coal reserves and changes to these assumptions may result in
restatement of reserves. These assumptions include geotechnical factors as well
as economic factors such as commodity prices, production costs and yield.
Depreciation, amortisation of mineral rights, mining development costs and
plant & equipment
The annual depreciation/amortisation charge is dependent on estimates,
including coal reserves and the related life of mine, expected development
expenditure for probable reserves, the allocation of certain assets to relevant
ore reserves and estimates of residual values of the processing plant. The
charge can fluctuate when there are significant changes in any of the factors
or assumptions used, such as estimating mineral reserves which in turn affects
the life of mine or the expected life of reserves. Estimates of proven and
probable reserves are prepared by an independent Competent Person. Assessments
of depreciation/amortisation rates against the estimated reserve base are
performed regularly. Details of the depreciation/amortisation charge can be
found in note 12.
Provision for mining rehabilitation including restoration and de-commissioning
costs
A provision for future rehabilitation including restoration and decommissioning
costs requires estimates and assumptions to be made around the relevant
regulatory framework, the timing, extent and costs of the rehabilitation
activities and of the risk free rates used to determine the present value of
the future cash outflows. The provisions, including the estimates and
assumptions contained therein, are reviewed regularly by management. The group
annually engages an independent expert to assess the cost of restoration and
final decommissioning as part of management's assessment of the provision.
Details of the provision for mining rehabilitation can be found in note 21.
Impairment
Property, plant and equipment representing the group's mining assets in South
Africa are reviewed for impairment when there are indicators of impairment. The
impairment test is performed using the approved Life of Mine plan and those
future cash flow estimates are discounted using asset specific discount rates
and are based on expectations about future operations. The impairment test
requires estimates about production and sales volumes, commodity prices, proven
and probable reserves (as assessed by the Competent Person), operating costs
and capital expenditures necessary to extract reserves in the approved Life of
Mine plan. Changes in such estimates could impact recoverable values of these
assets. Details of the carrying value of property, plant and equipment can be
found in note 12.
The impairment test indicated significant headroom as at 31 December 2019 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 11% reduction in average forecast coal prices or a 12%
reduction in yield would give rise to a breakeven scenario. However, the
directors consider the forecasted yield levels and pricing to be appropriate
and supportable best estimates.
Fair value measurements of investment properties
An assessment of the fair value of investment properties, is required to be
performed. In such instances, fair value measurements are estimated based on
the amounts for which the assets and liabilities could be exchanged between
market participants. To the extent possible, the assumptions and inputs used
take into account externally verifiable inputs. However, such information is by
nature subject to uncertainty. The fair value of investment property is set out
in note 11, whilst the carrying value of investments in joint ventures which
themselves include investment property held at fair value by the joint venture
is set out at note 13.
Measurement of development property
The development property included within the group's joint venture investment
in West Ealing Projects limited is considered by Management to fall outside the
scope of investment property. A property intended for sale in the ordinary
course of business or in the process of construction or development for such
sale, for example, property acquired exclusively with a view to subsequent
disposal in the near future or for development and resale is expected to be
recorded under the accounting standard of IAS 2 Inventories. The directors have
discussed the commercial approach with the directors of the underlying joint
venture and the current plan is to obtain further planning permission for the
development and then sell or to complete the development and sell. The
Directors therefore consider the key judgement of accounting treatment of the
property development under IAS 2 Inventories to be correct.
IAS 2 Inventories require the capitalised costs to be held at the lower of cost
or Net realisable value. At 31 December 2019, the costs capitalised within the
development based on a director's appraisal for the property estimated the net
realisable value at a surplus over the cost for the development. The directors
have reviewed the underlying inputs and key assumptions made in the appraisal
and consider them adequate. However, such information is by nature subject to
uncertainty. The cost of the development property is set out in note 12.
Basis of consolidation
The group accounts incorporate the accounts of Bisichi PLC and all of its
subsidiary undertakings, together with the group's share of the results of its
joint ventures. Non-controlling interests in subsidiaries are presented
separately from the equity attributable to equity owners of the parent company.
On acquisition of a non-wholly owned subsidiary, the non-controlling
shareholders' interests are initially measured at the non-controlling
interests' proportionate share of the fair value of the subsidiaries net
assets. Thereafter, the carrying amount of non-controlling interests is the
amount of those interests at initial recognition plus the non-controlling
interests' share of subsequent changes in equity. For subsequent changes in
ownership in a subsidiary that do not result in a loss of control, the
consideration paid or received is recognised entirely in equity. The definition of control assumes the simultaneous fulfilment of the following three criteria: * The parent company holds decision-making power over the relevant activities of the investee, * The parent company has rights to variable returns from the investee, and * The parent company can use its decision-making power to affect the variable returns. Investees are analysed for their relevant activities and variable returns, and the link between the variable returns and the extent to which their relevant activities could be influenced in order to ensure the definition is correctly applied. Revenue Revenue comprises sales of coal and property rental income. Coal revenue is recognised when the customer has a legally binding obligation to settle under the terms of the contract when the performance obligations have been satisfied, which is once control of the goods has transferred to the buyer at the delivery point. Coal Revenue is measured based on consideration specified in the contract with a customer on a per metric tonne basis. Export revenue is generally recognised when the product is delivered to the export terminal location specified in the customer contract, at which point control of the goods have been transferred to the customer. Domestic coal revenues are generally recognised on collection by the customer from the mine or from the mine's rail siding when loaded into transport, where the customer pays the transportation costs. Fulfilment costs to satisfy the performance obligations of coal revenues such as transport and loading costs borne by the group from the mine to the delivery point are recoded in operating costs. Rental income 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. Service charges recoverable from tenants are recognised over time as the service is rendered. Expenditure Expenditure is recognised in respect of goods and services received. Where coal is purchased from third parties at point of extraction the expenditure is only recognised when the coal is extracted and all of the significant risks and rewards of ownership have been transferred. Investment properties Investment properties comprise freehold and long leasehold land and buildings. Investment properties are carried at fair value in accordance with IAS 40 'Investment Properties'. Properties are recognised as investment properties when held for long-term rental yields, and after consideration has been given to a number of factors including length of lease, quality of tenant and covenant, value of lease, management intention for future use of property, planning consents and percentage of property leased. Investment properties are revalued annually by professional external surveyors and included in the balance sheet at their fair value. Gains or losses arising from changes in the fair values of assets are recognised in the consolidated income statement in the period to which they relate. In accordance with IAS 40, investment properties are not depreciated. The fair value of the head leases is the net present value of the current head rent payable on leasehold properties until the expiry of the lease. Mining reserves, plant and equipment and development cost The cost of property, plant and equipment comprises its purchase price and any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in accordance with agreed specifications. Freehold land included within mining reserves is not depreciated. Other property, plant and equipment is stated at historical cost less accumulated depreciation. The cost recognised includes the recognition of any decommissioning assets related to property, plant and equipment. The purpose of mine development is to establish secure working conditions and infrastructure to allow the safe and efficient extraction of recoverable reserves. Depreciation on mine development costs is not charged until production commences or the assets are put to use. On commencement of full commercial production, depreciation is charged over the life of the associated mine reserves extractable using the asset on a unit of production basis. The unit of production calculation is based on tonnes mined as a ratio to proven and probable reserves and also includes future forecast capital expenditure. The cost recognised includes the recognition of any decommissioning assets related to mine development. Post production stripping In surface mining operations, the group may find it necessary to remove waste materials to gain access to coal reserves prior to and after production commences. Prior to production commencing, stripping costs are capitalised until the point where the overburden has been removed and access to the coal seam commences. Subsequent to production, waste stripping continues as part of extraction process as a mining production activity. There are two benefits accruing to the group from stripping activity during the production phase: extraction of coal that can be used to produce inventory and improved access to further quantities of material that will be mined in future periods. Economic coal extracted is accounted for as inventory. The production stripping costs relating to improved access to further quantities in future periods are capitalised as a stripping activity asset, if and only if, all of the following are met: * it is probable that the future economic benefit associated with the stripping activity will flow to the group; * the group can identify the component of the ore body for which access has been improved; and * the costs relating to the stripping activity associated with that component or components can be measured reliably. In determining the relevant component of the coal reserve for which access is improved, the group componentises its mine into geographically distinct sections or phases to which the stripping activities being undertaken within that component are allocated. Such phases are determined based on assessment of factors such as geology and mine planning. The group depreciates deferred costs capitalised as stripping assets on a unit of production method, with reference the tons mined and reserve of the relevant ore body component or phase. The cost is recognised within Mine development costs within the balance sheet. Other assets and depreciation The cost, less estimated residual value, of other property, plant and equipment is written off on a straight-line basis over the asset's expected useful life. This includes the washing plant and other key surface infrastructure. Residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. Changes to the estimated residual values or useful lives are accounted for prospectively. Heavy surface mining and other plant and equipment is depreciated at varying rates depending upon its expected usage. The depreciation rates generally applied are: Mining 5 - 10 per cent per annum, but shorter of its useful life or the life of equipment the mine Motor 25 - 33 per cent per annum vehicles Office 10 - 33 per cent per annum equipment Provisions and contingent liabilities Provisions are recognised when the group has a present obligation as a result of a past event which it is probable will result in an outflow of economic benefits that can be reliably estimated. A provision for rehabilitation of the mine is initially recorded at present value and the discounting effect is unwound over time as a finance cost. Changes to the provision as a result of changes in estimates are recorded as an increase / decrease in the provision and associated decommissioning asset. The decommissioning asset is depreciated in line with the group's depreciation policy over the life of mine. The provision includes the restoration of the underground, opencast, surface operations and de-commissioning of plant and equipment. The timing and final cost of the rehabilitation is uncertain and will depend on the duration of the mine life and the quantities of coal extracted from the reserves. Management exercises judgment in measuring the Group's exposures to contingent liabilities through assessing the likelihood that a potential claim or liability will arise and where possible in quantifying the possible range of financial outcomes. Where there is a dispute and where a reliable estimate of the potential liability cannot be made, or where the Group, based on legal advice, considers that it is improbable that there will be an outflow of economic resources, no provision is recognised. Employee benefits Share based remuneration The company operates a share option scheme. The fair value of the share option scheme is determined at the date of grant. This fair value is then expensed on a straight-line basis over the vesting period, based on an estimate of the number of shares that will eventually vest. The fair value of options granted is calculated using a binomial or Black-Scholes-Merton model. Payments made to employees on the cancellation or settlement of options granted are accounted for as the repurchase of an equity interest, i.e. as a deduction from equity. Details of the share options in issue are disclosed in the Directors' Remuneration Report on page 32 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
Financial assets and financial liabilities are recognised in the Group's
consolidated statement of financial position when the group becomes a party to
the contractual provisions of the instrument.
Financial assets
Financial assets are classified as either financial assets at amortised cost,
at fair value through other comprehensive income ("FVTOCI") or at fair value
through profit or loss ("FVPL") depending upon the business model for managing
the financial assets and the nature of the contractual cash flow
characteristics of the financial asset.
A loss allowance for expected credit losses is determined for all financial
assets, other than those at FVPL, at the end of each reporting period. The
Group applies a simplified approach to measure the credit loss allowance for
trade receivables using the lifetime expected credit loss provision. The
lifetime expected credit loss is evaluated for each trade receivable taking
into account payment history, payments made subsequent to year end and prior to
reporting, past default experience and the impact of any other relevant and
current observable data. The group applies a general approach on all other
receivables classified as financial assets. The general approach recognises
lifetime expected credit losses when there has been a significant increase in
credit risk since initial recognition.
The Group derecognises a financial asset when the contractual rights to the
cash flows from the asset expire, or when it transfers the financial asset and
substantially all the risks and rewards of ownership of the asset to another
party. The Group derecognises financial liabilities when the Group's
obligations are discharged, cancelled or have expired.
Bank loans and overdrafts
Bank loans and overdrafts are included as financial liabilities on the group
balance sheet at the amounts drawn on the particular facilities net of the
unamortised cost of financing. Interest payable on those facilities is expensed
as finance cost in the period to which it relates.
Lease liabilities
For any new contracts entered into the Group considers whether a contract is,
or contains a lease. A lease is defined as 'a contract, or part of a contract,
that conveys the right to use an asset (the underlying asset) for a period of
time in exchange for consideration'. To apply this definition the Group
assesses whether the contract contains an identified asset and has the right to
obtain substantially all of the economic benefits from use of the identified
asset throughout the period of use.
At lease commencement date, the Group recognises a right-of-use asset and a
lease liability on the balance sheet.
Right-of-use assets, excluding property head leases, have been included in
property, plant and equipment and are measured at cost, which is made up of the
initial measurement of the lease liability and any initial direct costs
incurred by the Group. The Group depreciates the right-of-use assets on a
straight-line basis from the lease commencement date to the earlier of the end
of the useful life of the right-of-use asset or the end of the lease term.
At the commencement date, the Group measures the lease liability at the present
value of the lease payments unpaid at that date, discounted using the interest
rate implicit in the lease if that rate is readily available or the Group's
incremental borrowing rate. Short term lease liabilities have been included in
trade and other payables.
Lease payments included in the measurement of the lease liability are made up
of fixed payments and variable payments based on a consumer inflation index.
Subsequent to initial measurement, the liability will be reduced for payments
made and increased for interest. It is re-measured to reflect any reassessment
or modification. When the lease liability is re-measured, the corresponding
adjustment is reflected in the right-of-use asset, or profit and loss if the
right-of-use asset is already reduced to zero.
Lease liabilities that arise for investment properties held under a leasehold
interest and accounted for as investment property are initially calculated as
the present value of the minimum lease payments, reducing in subsequent
reporting periods by the apportionment of payments to the lessor.
The Group has elected to account for short-term leases and leases of low-value
assets using the practical expedients. Instead of recognising a right-of-use
asset and lease liability, the payments in relation to these are recognised as
an expense in profit or loss on a straight-line basis over the lease term.
Investments
Current financial asset investments and other investments classified as
non-current ("The investments") comprise of shares in listed companies. The
investments are measured at fair value. Any changes in fair value are
recognised in the profit or loss account and accumulated in retained earnings.
Trade receivables
Trade receivables are accounted for at amortised cost. Trade receivables do not
carry any interest and are stated at their nominal value as reduced by
appropriate expected credit loss allowances for estimated recoverable amounts
as the interest that would be recognised from discounting future cash payments
over the short payment period is not considered to be material.
Trade payables
Trade payables cost are not interest bearing and are stated at their nominal
value, as the interest that would be recognised from discounting future cash
payments over the short payment period is not considered to be material.
Other financial assets and liabilities
The 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 22. These facilities
are considered to form an integral part of the treasury management of the group
and can fluctuate from positive to negative balances during the period.
Segmental reporting
For management reporting purposes, the group is organised into business
segments distinguishable by economic activity. The group's material business
segments are mining activities and investment properties. These business
segments are subject to risks and returns that are different from those of
other business segments and are the primary basis on which the group reports
its segment information. This is consistent with the way the group is managed
and with the format of the group's internal financial reporting. Significant
revenue from transactions with any individual customer, which makes up 10
percent or more of the total revenue of the group, is separately disclosed
within each segment. All coal exports are sales to coal traders at Richard
Bay's terminal in South Africa with the risks and rewards passing to the coal
trader at the terminal. Whilst the coal traders will ultimately sell the coal
on the international markets the Company has no visibility over the ultimate
destination of the coal. Accordingly, the export sales are recorded as South
African revenue.
Financial statements
Notes to the financial statements
for the year ended 31 December 2019
1. SEGMENTAL REPORTING
2019
Business analysis Mining Property Other Total
GBP'000 GBP'000 GBP'000 GBP'000
Significant revenue customer A 32,424 - - 32,424
Significant revenue customer B 10,985 - - 10,985
Other revenue 3,295 1,290 112 4,697
Segment revenue 46,704 1,290 112 48,106
Operating (loss)/profit before fair value 4,327 832 108 5,267
adjustments & exchange movements
Revaluation of investments & exchange movements (123) (1,480) (6) (1,609)
Operating profit and segment result 4,204 (648) 102 3,658
Segment assets 18,577 12,927 1,138 32,642
Unallocated assets
- Non-current assets 30
- Cash & cash equivalents 7,720
Total assets excluding investment in joint 40,392
ventures and assets held for sale
Segment liabilities (9,385) (2,382) (166) (11,933)
Borrowings (5,485) (3,759) - (9,244)
Total liabilities (14,870) (6,141) (166) (21,177)
Net assets 19,215
Non segmental assets
- Investment in joint ventures 1,342
Net assets as per balance sheet 20,557
Geographic analysis United South Total
Kingdom Africa GBP'000
GBP'000 GBP'000
Revenue 1,402 46,704 48,106
Operating profit/(loss) and segment result (616) 4,274 3,658
Non-current assets excluding investments 11,778 9,477 21,255
Total net assets 15,505 5,052 20,557
Capital expenditure 34 3,234 3,268
2018
Business analysis Mining Property Other Total
GBP'000 GBP'000 GBP'000 GBP'000
Significant revenue customer A 34,112 - - 34,112
Significant revenue customer B 11,557 - - 11,557
Other revenue 2,997 1,232 47 4,276
Segment revenue 48,666 1,232 47 49,945
Operating (loss)/profit before fair value 6,093 838 44 6,975
adjustments & exchange movements
Revaluation of investments & exchange movements (63) (215) (171) (449)
Operating profit and segment result 6,030 623 (127) 6,526
Segment assets 15,809 14,333 906 31,048
Unallocated assets
- Non-current assets 2
- Cash & cash equivalents 9,221
Total assets excluding investment in joint 40,271
ventures and assets held for sale
Segment liabilities (8,729) (2,392) (210) (11,331)
Borrowings (4,287) (5,840) - (10,127)
Total liabilities (13,016) (8,232) (210) (21,458)
Net assets 18,813
Non segmental assets
- Investment in joint ventures 1,322
Net assets as per balance sheet 20,135
Geographic analysis United South Total
Kingdom Africa GBP'000
GBP'000 GBP'000
Revenue 1,279 48,666 49,945
Operating profit/(loss) and segment result 441 6,085 6,526
Non-current assets excluding investments 13,231 8,530 21,761
Total net assets 15,567 4,568 20,135
Capital expenditure 17 2,864 2,881
2. REVENUE
2019 2018
GBP'000 GBP'000
Revenue from contracts with customers:
Coal Sales 46,704 48,666
Service charges recoverable from tenants 181 137
Other:
Rental income 1,109 1,095
Other revenue 112 47
Revenue 48,106 49,945
Segmental mining revenue is derived principally from coal sales and is
recognised once the control of the goods has transferred from the group to the
buyer. Segmental property revenue is derived from rental income and service
charges recoverable from tenants. This is consistent with the revenue
information disclosed for each reportable segment (see note 1). Rental income
is recognised on a straight-line basis over the term of the lease. Service
charges recoverable from tenants are recognised over time as the service is
rendered. Revenue is measured based on the consideration specified in the
contract with the customer or tenant.
3. OPERATING COSTS
2019 2018
GBP'000 GBP'000
Mining 33,468 34,443
Property 399 338
Cost of sales 33,867 34,781
Administration 8,972 8,189
Operating costs 42,839 42,970
The direct property costs are:
Direct property expense 358 308
Bad debts 41 30
399 338
Operating costs above include depreciation of GBP2,190,000 (2017: GBP2,113,000).
4. (LOSS)/GAIN ON REVALUATION OF INVESTMENT PROPERTIES
The reconciliation of the investment (deficit)/surplus to the gain on
revaluation of investment properties in the income statement is set out below:
2019 2018
GBP'000 GBP'000
Investment (deficit)/surplus (1,478) (248)
Gain/(Loss) on valuation movement in respect of head lease payments (2) 33
Loss on revaluation of investment properties (1,480) (215)
5. PROFIT BEFORE TAXATION
Profit before taxation is arrived at after charging:
2019 2018
GBP'000 GBP'000
Staff costs (see note 29) 7,783 7,335
Depreciation 2,190 2,113
Exchange loss 123 63
Fees payable to the company's auditor for the audit of the company's 61 56
annual accounts
Fees payable to the company's auditor and its associates (2018:
affiliate) for other services:
The audit of the company's subsidiaries pursuant to 28 22
legislation
Audit related services 1 1
Non-audit related services 7 6
The directors consider the auditors were best placed to provide the above
non-audit and audit related services which refer to regulatory matters. The
audit committee reviews the nature and extent of non-audit services to ensure
that independence is maintained.
6. DIRECTORS' EMOLUMENTS
Directors' emoluments are shown in the Directors' remuneration report on page
32 which is within the audited part of that report.
7. INTEREST PAYABLE
2019 2018
GBP'000 GBP'000
On bank overdrafts and bank loans 655 539
Unwinding of discount - 43
Lease liabilities 15 -
Other interest payable 9 59
Interest payable 679 641
8. TAXATION
2019 2018
GBP'000 GBP'000
(a) Based on the results for the year:
Current tax - UK - -
Current tax - Overseas 1,570 2,026
Corporation tax - adjustment in respect of prior year - UK (2) (19)
Current tax 1,568 2,007
Deferred tax (136) (91)
Total tax in income statement charge 1,432 1,916
(b) Factors affecting tax charge for the year:
The corporation tax assessed for the year is different from that at the
standard rate of corporation tax in the United Kingdom of 19.00% (2018: 19%).
The differences are explained below:
Profit on ordinary activities before taxation 3,027 5,959
Tax on profit on ordinary activities at 19.00% (2018: 19.00%) 575 1,132
Effects of:
Expenses not deductible for tax purposes - 56
Adjustment to tax rate 463 623
Other differences 396 124
Adjustment in respect of prior years (2) (19)
Total tax in income statement (credit) / charge 1,432 1,916
(c) Analysis of United Kingdom and overseas tax:
United Kingdom tax included in above:
Corporation tax - -
Adjustment in respect of prior - (19)
years
Current tax - (19)
Deferred tax (176) (175)
(176) (194)
Overseas tax included in
above:
Current tax 1,570 2,026
Adjustment in respect of prior (2) -
years
Current tax 1,568 2,026
Deferred tax 40 84
1,608 2,110
Overseas tax is derived from the group's South African mining operation. Refer
to note 1 for a report on the groups' mining and South African segmental
reporting. The adjustment to tax rate arises due to the corporation tax rate
assessed in South Africa for the year being different from that in the UK. The
South African rate assessed is 28% (2018: 28%).
9. SHAREHOLDER DIVIDS
2019 2019 2018 2018
Per GBP'000 Per GBP'000
share share
Dividends paid during the year relating to the prior 6.00p 641 5.00p 534
period
Dividends relating to the current period:
Interim dividend for 2019 paid on 14 February 2020 1.00p 107 1.00p 107
Proposed final dividend for 2019 - - 3.00p 320
Proposed special dividend for 2019 - - 2.00p 214
1.00p 107 6.00p 641
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
2019, will be accounted for as an appropriation of retained earnings in the
year ending 31 December 2020.
10. PROFIT AND DILUTED PROFIT PER SHARE
Both the basic and diluted profit per share calculations are based on a profit
after tax of GBP1,046,000 (2018: GBP3,314,000). The basic profit per share has been
calculated on a weighted average of 10,676,839 (2018: 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
(2018: 10,676,839) plus the dilutive potential ordinary shares arising from
share options of 183,920 (2018: 67,350) totalling 10,860,759 (2018:
10,744,189).
11. INVESTMENT PROPERTIES
Freehold Long Head Total
GBP'000 Leasehold Lease GBP'000
GBP'000 GBP'000
Valuation at 1 January 2019 10,350 2,695 185 13,230
Revaluation (1,330) (150) (2) (1,482)
Valuation at 31 December 2019 9,020 2,545 182 11,748
Valuation at 1 January 2018 10,550 2,695 152 13,397
Addition 15 - - 15
Revaluation (215) - 33 (182)
Valuation at 31 December 2018 10,350 2,695 185 13,230
Historical cost
At 31 December 2019 5,851 728 - 6,579
At 31 December 2018 5,851 728 - 6,579
Long leasehold properties are those for which the unexpired term at the balance
sheet date is not less than 50 years. All investment properties are held for
use in operating leases and all properties generated rental income during the
period.
Freehold and Long Leasehold properties were externally professionally valued at
31 December on an open market basis by:
2019 2018
GBP'000 GBP'000
Carter Towler 11,565 13,045
The valuations were carried out in accordance with the Statements of Asset
Valuation and Guidance Notes published by The Royal Institution of Chartered
Surveyors.
Each year external valuers are appointed by the Executive Directors on behalf
of the Board. The valuers are selected based upon their knowledge, independence
and reputation for valuing assets such as those held by the group.
Valuations are performed annually and are performed consistently across all
investment properties in the group's portfolio. At each reporting date
appropriately qualified employees of the group verify all significant inputs
and review the computational outputs. Valuers submit their report to the Board
on the outcome of each valuation round.
Valuations take into account tenure, lease terms and structural condition. The
inputs underlying the valuations include market rent or business profitability,
likely incentives offered to tenants, forecast growth rates, yields, EBITDA,
discount rates, construction costs including any specific site costs (for
example section 106), professional fees, developer's profit including
contingencies, planning and construction timelines, lease regear costs,
planning risk and sales prices based on known market transactions for similar
properties to those being valued.
Valuations are based on what is determined to be the highest and best use. When
considering the highest and best use a valuer will consider, on a property by
property basis, its actual and potential uses which are physically, legally and
financially viable. Where the highest and best use differs from the existing
use, the valuer will consider the cost and likelihood of achieving and
implanting this change in arriving at its valuation.
There are often restrictions on Freehold and Leasehold property which could
have a material impact on the realisation of these assets. The most significant
of these occur when planning permission or lease extension and renegotiation of
use are required or when a credit facility is in place. These restrictions are
factored in the property's valuation by the external valuer.
IFRS 13 sets out a valuation hierarchy for assets and liabilities measured at
fair value as follows:
Level 1: valuation based on inputs on quoted market prices in active markets
Level 2: valuation based on inputs other than quoted prices
included within level 1 that maximise the use of observable data directly or
from market prices or indirectly derived from market prices.
Level 3: where one or more significant inputs to valuations are
not based on observable market data
The inter-relationship between key unobservable inputs and the groups'
properties is detailed in the table below:
Class of property Valuation Key Carrying Carrying Range Range
Level 3 technique unobservable / / (weighted (weighted
inputs fair fair average) average)
value value 2019 2018
2019 2018
GBP'000 GBP'000
Freehold - external Income Estimated 9,020 10,350 GBP7 - GBP26 GBP7 - GBP28
valuation capitalisation rental (GBP19) (GBP20)
value per sq
ft p.a
Equivalent 8.4% - 8.4% -
Yield 13.8% 11.8%
(10.7%) (9.3%)
Long leasehold - Income Estimated 2,545 2,695 GBP8 - GBP8 GBP8 - GBP8
external valuation capitalisation rental (GBP8) (GBP8)
value per sq
ft p.a
Equivalent 8.2% - 7.9% -
yield 8.2% 7.9%
(8.2%) (7.9%)
At 31 December 2019 11,565 13,045
There are interrelationships between all these inputs as they are determined by
market conditions. The existence of an increase in more than one input would be
to magnify the input on the valuation. The impact on the valuation will be
mitigated by the interrelationship of two inputs in opposite directions, for
example, an increase in rent may be offset by an increase in yield.
The table below illustrates the impact of changes in key unobservable inputs on
the carrying / fair value of the group's properties:
Estimated rental Equivalent yield
value 10% increase 25 basis point contraction or
or decrease expansion
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
Freehold - external valuation 902 / 1,035 / 235 / (223) 331 / (311)
(902) (1,035)
Long Leasehold - external 255 / 270 / (270) 80 / (76) 90 / (85)
valuation (255)
12. 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 2019 1,240 26,148 253 163 27,804
Exchange adjustment (14) (293) (1) (2) (310)
Additions - 3,131 123 14 3,268
Disposals - (2,312) (14) - (2,326)
Cost at 31 December 2019 1,226 26,674 361 175 28,436
Accumulated depreciation at 1 January 1,213 17,777 151 132 19,273
2019
Exchange adjustment (14) (193) (1) (1) (209)
Charge for the year 13 2,133 35 9 2,190
Disposals - (2,312) (14) - (2,326)
Accumulated depreciation at 31 December 1,212 17,405 171 140 18,928
2019
Net book value at 31 December 2019 14 9,269 190 35 9,508
Cost at 1 January 2018 1,367 25,902 200 158 27,627
Exchange adjustment (127) (2,531) (22) (9) (2,689)
Additions - 2,777 75 14 2,866
Disposals - - - - -
Cost at 31 December 2018 1,240 26,148 253 163 27,804
Accumulated depreciation at 1 January 1,309 17,441 135 129 19,014
2018
Exchange adjustment (122) (1,712) (14) (6) (1,854)
Charge for the year 26 2,048 30 9 2,113
Disposals - - - - -
Accumulated depreciation at 31 December 1,213 17,777 151 132 19,273
2018
Net book value at 31 December 2018 27 8,371 102 31 8,531
Included in the above line items are right-of-use assets over the following:
Mining Motor Total
equipment vehicles GBP'000
GBP'000 GBP'000
Net book value at 1 January 2019 - - -
IFRS 16 Reclassification 57 - 57
Additions 5 33 38
Exchange adjustment (1) - (1)
Depreciation (9) (4) (13)
Net book value at 31 December 2019 52 29 81
13. INVESTMENTS HELD AS NON-CURRENT ASSETS
2019 2019 2018 2018
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 1,322 35 874 51
Share of (loss)/gain in investment - (3) - (15)
Additions - 255 500 -
Exchange adjustment - - - (1)
Share of (loss)/gain in joint ventures 20 - (52) -
Net assets at 31 December 1,342 287 1,322 35
2019 2018
GBP'000 GBP'000
Net book value of unquoted investments - -
Net book and market value of investments listed on overseas stock 287 35
exchanges
287 35
14. 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 GBP806,000 (2018: GBP815,000). 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 (2017: 500,000) ordinary shares of GBP1 each. No dividends were received
during the period.
West Ealing Projects Limited
The company owns 50% of the issued share capital of West Ealing Projects
Limited, an unlisted property development company. At year end, the carrying
value of the investment held by the group was GBP536,000 (2018: GBP507,000). The
remaining 50% is held by London & Associated Properties PLC. West Ealing
Projects Limited is incorporated in England and Wales and its registered
address is 24 Bruton Place, London, W1J 6NE. It has issued share capital of
1,000,000 (2018: GBP1,000,000) ordinary shares of GBP1 each. No dividends were
received during the period.
Dragon West 2019 Dragon West 2018
50% Ealing GBP'000 50% Ealing GBP'000
GBP'000 50% GBP'000 50%
GBP'000 GBP'000
Turnover - 75 75 83 12 95
Profit and loss:
(Loss)/Profit before depreciation, 17 37 54 (53) 8 (45)
interest and taxation
Depreciation and amortisation (7) - (7) (6) - (6)
(Loss)/Profit before interest and 10 37 47 (59) 8 (51)
taxation
Interest Income - - - 51 - 51
Interest expense (17) - (17) (68) - (68)
(Loss)/Profit before taxation (7) 37 30 (76) 8 (68)
Taxation (2) (8) (10) 17 (1) 16
(Loss)/Profit after taxation (9) 29 20 (59) 7 (52)
Balance sheet
Non-current assets 1,229 - 1,229 1,235 - 1,235
Cash and cash equivalents 52 11 63 45 22 67
Property inventory - 3,333 3,333 - 3,099 3,099
Other current assets 172 29 201 207 39 246
Other current liabilities (40) (1,034) (1,074) (73) (951) (1,024)
Net current assets 184 2,339 2,523 179 2,209 2,388
Non-current borrowings (588) (1,803) (2,391) (582) (1,702) (2,284)
Other non-current liabilities (19) - (19) (17) - (17)
Share of net assets at 31 December 806 536 1,342 815 507 1,322
15. SUBSIDIARY COMPANIES
The company owns the following ordinary share capital of the subsidiaries which
are included within the consolidated financial statements:
Activity Percentage Registered address Country of
of incorporation
share
capital
Directly held:
Mineral Products Share 100% 24 Bruton Place, London, England and
Limited dealing W1J6NE Wales
Bisichi (Properties) Property 100% 24 Bruton Place, London, England and
Limited W1J6NE Wales
Bisichi Northampton Property 100% 24 Bruton Place, London, England and
Limited W1J6NE Wales
Bisichi Trustee Limited Property 100% 24 Bruton Place, London, England and
W1J6NE Wales
Urban First Property 100% 24 Bruton Place, London, England and
(Northampton) Limited W1J6NE Wales
Bisichi Mining Holding 100% 24 Bruton Place, London, England and
(Exploration) Limited company W1J6NE Wales
Ninghi Marketing Dormant 90.1% 24 Bruton Place, London, England and
Limited W1J6NE Wales
Bisichi Mining Dormant 100% 24 Bruton Place, London, England and
Managements W1J6NE Wales
Services Limited
Bisichi Coal Mining Coal 100% Samora Machel Street, South Africa
(Pty) Limited mining Bethal Road, Middelburg,
Mpumalanga, 1050
Indirectly held:
Black Wattle Colliery Coal 62.5% Samora Machel Street, South Africa
(Pty) Limited mining Bethal Road, Middelburg,
Mpumalanga, 1050
Sisonke Coal Processing Coal 62.5% Samora Machel Street, South Africa
(Pty) Limited processing Bethal Road, Middelburg,
Mpumalanga, 1050
Black Wattle Coal 62.5% Samora Machel Street, South Africa
Klipfontein (Pty) mining Bethal Road,
Limited Middelburg, Mpumalanga,
1050
Amandla Ehtu Mineral Dormant 70% Samora Machel Street, South Africa
Resource Development Bethal Road,
(Pty) Limited Middelburg, Mpumalanga,
1050
Details on the non-controlling interest in subsidiaries are shown under note
27.
16. INVENTORIES
2019 2018
GBP'000 GBP'000
Coal
Washed 2,037 777
Mining Production 135 316
Work in progress 215 378
Other 45 40
2,432 1,511
17. TRADE AND OTHER RECEIVABLES
2019 2018
GBP'000 GBP'000
Financial assets falling due within one year:
Trade receivables 5,922 5,311
Amount owed by joint venture 840 752
Other receivables 714 337
Non-financial instruments falling due within one year:
Prepayments and accrued income 83 437
7,559 6,837
Financial assets falling due within one year are held at amortised cost. The
fair value of trade and other receivables approximates their carrying amounts.
The Group applies a simplified approach to measure the credit loss allowance
for trade receivables using the lifetime expected credit loss provision. The
lifetime expected credit loss is evaluated for each trade receivable taking
into account payment history, payments made subsequent to year end and prior to
reporting, past default experience and the impact of any other relevant and
current observable data. The group applies a general approach on all other
receivables classified as financial assets. At year end, the group allowance
for doubtful debts provided against trade receivables was GBP23,000 (2018: GBP
12,000).
18. INVESTMENTS IN LISTED SECURITIES HELD AT FVPL
2019 2018
GBP'000 GBP'000
Market value of listed Investments:
Listed in Great Britain 863 847
Listed outside Great Britain 256 40
1,119 887
Original cost of listed investments 1,150 916
Unrealised surplus / deficit of market value versus cost (31) (29)
19. TRADE AND OTHER PAYABLES
2019 2018
GBP'000 GBP'000
Trade payables 3,902 3,949
Amounts owed to joint ventures 148 192
Lease liabilities (Note 31) 30 -
Other payables 1,926 1,791
Accruals 1,400 1,089
Deferred Income 213 236
7,619 7,257
20. FINANCIAL LIABILITIES - BORROWINGS
Current Non-current
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
Bank overdraft (secured) 4,842 3,535 - -
Bank loan (secured) 261 6,045 4,141 547
5,103 9,580 4,141 547
2019 2018
GBP'000 GBP'000
Bank overdraft and loan instalments by reference to the balance sheet
date:
Within one year 5,103 9,580
From one to two years 270 223
From two to five years 3,871 324
9,244 10,127
Bank overdraft and loan analysis by origin:
United Kingdom 3,759 5,840
Southern Africa 5,485 4,287
9,244 10,127
In South Africa, as part of a restructuring and sale of the washing plant
facilities from Black Wattle Colliery (Pty) Limited ("Black Wattle") to its
wholly owned subsidiary Sisonke Coal Processing (Pty) Limited ("Sisonke Coal
Processing"), the R100million bank overdraft facility held by Black Wattle with
Absa Bank Limited was replaced in January 2019 by a new structured trade
finance facility for R100million held by Sisonke Coal Processing ("new trade
facility"). 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 GBP10,533,000.
In December 2019, the group repaid its GBP5.84million loan facility with
Santander Bank PLC and signed a new GBP3.96million term loan facility with Julian
Hodge Bank Limited. The new debt package has a five year term and is repayable
at the end of the term in December 2024. The interest cost of the loan is 4.00%
above LIBOR. The loan is secured by way of a first charge over the investment
properties in the UK which are included in the financial statements at a value
of GBP11,565,000. No banking covenants were breached by the group during the
year.
Consistent with others in the mining and property industry, the group monitors
its capital by its gearing levels. This is calculated as the total bank loans
and overdraft less remaining cash and cash equivalents as a percentage of
equity. At year end the gearing of the group was calculated as follows:
2019 2018
GBP'000 GBP'000
Total bank loans and overdraft 9,244 10,127
Less cash and cash equivalents (excluding overdraft) (7,720) (9,221)
Net debt 1,524 906
Total equity attributable to shareholders of the parent 19,932 19,569
Gearing 7.6% 4.6%
Analysis of the changes in liabilities arising from financing activities:
Bank Bank Lease 2019 Bank Bank Lease 2018
borrowings overdrafts liabilities GBP'000 borrowings Overdrafts Liabilities GBP'000
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 January 6,592 3,535 185 10,312 5,898 1,262 152 7,312
Exchange adjustments (8) (49) - (57) (40) (233) - (273)
Cash movements (2,182) 1,356 (16) (842) 734 2,506 - 3,240
excluding exchange
adjustments
Valuation movements - - 93 93 - - 33 33
Balance at 31 December 4,402 4,842 262 9,506 6,592 3,535 185 10,312
21. PROVISION FOR REHABILITATION
2019 2018
GBP'000 GBP'000
As at 1 January 1,571 1,349
Exchange adjustment (17) (150)
Increase in provision - 329
Unwinding of discount - 43
As at 31 December 1,554 1,571
22. FINANCIAL INSTRUMENTS
Total financial assets and liabilities
The group's financial assets and liabilities are as follows, representing both
the fair value and the carrying value:
Financial Financial Investments 2019 Financial Financial Investments 2018
Assets Liabilities held at GBP'000 Assets Liabilities held at GBP'000
measured measured at FVPL GBP'000 measured measured at FVPL GBP'000
at amortised at amortised
amortised cost amortised cost
cost GBP'000 cost GBP'000
GBP'000 GBP'000
Cash and cash equivalents 7,720 - - 7,720 9,221 - - 9,221
Non-current other investments - - 287 287 - - 35 35
held at FVPL
Investments in listed - - 1,119 1,119 - - 887 887
securities held at FVPL
Trade and other receivables 7,476 - - 7,476 6,400 - - 6,400
Bank borrowings and overdraft - (9,244) - (9,244) - (10,127) - (10,127)
Lease Liabilities - (262) - (262) - (185) - (185)
Other liabilities - (7,833) - (7,833) - (7,113) - (7,113)
15,196 (17,339) 1,406 (737) 15,621 (17,425) 922 (882)
Investments in listed securities held at fair value through profit and loss
fall under level 1 of the fair value hierarchy into which fair value
measurements are recognised in accordance with the levels set out in IFRS 7.
The comparative figures for 2018 fall under the same category of financial
instrument as 2019.
The carrying amount of short term (less than 12 months) trade receivable and
other liabilities approximate their fair values. The fair value of non-current
borrowings in note 20 approximates its carrying value and was determined under
level 2 of the fair value hierarchy and is estimated by discounting the future
contractual cash flows at the current market interest rates for UK borrowings
and for the South African overdraft facility. The fair value of the lease
liabilities in note 31 approximates its carrying value and was determined under
level 2 of the fair value hierarchy and is estimated by discounting the future
contractual cash flows at the current market interest rates.
Treasury policy
Although no derivative transactions were entered into during the current and
prior year, the group may use derivative transactions such as interest rate
swaps and forward exchange contracts as necessary in order to help manage the
financial risks arising from the group's activities. The main risks arising
from the group's financing structure are interest rate risk, liquidity risk,
market risk, credit risk, currency risk and commodity price risk. There have
been no changes during the year of the main risks arising from the group's
finance structure. The policies for managing each of these risks and the
principal effects of these policies on the results are summarised below.
Interest rate risk
Interest rate risk is the risk that the value of a financial instrument or
cashflows associated with the instrument will fluctuate due to changes in
market interest rates. Interest rate risk arises from interest bearing
financial assets and liabilities that the group uses. Treasury activities take
place under procedures and policies approved and monitored by the Board to
minimise the financial risk faced by the group. Interest bearing assets
comprise cash and cash equivalents which are considered to be short-term liquid
assets and loans to joint ventures. Interest bearing borrowings comprise bank
loans, bank overdrafts and variable rate finance lease obligations. The rates
of interest vary based on LIBOR in the UK and PRIME in South Africa.
As at 31 December 2019, 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
107,000 (2018: GBP101,000). The effect on equity of this change would be an
equivalent decrease or increase for the year of GBP107,000 (2018: GBP101,000).
Liquidity risk
The group's policy is to minimise refinancing risk. Efficient treasury
management and strict credit control minimise the costs and risks associated
with this policy which ensures that funds are available to meet commitments as
they fall due. As at year end the group held borrowing facilities in the UK in
Bisichi PLC and in South Africa in Black Wattle Colliery (Pty) Ltd.
The following table sets out the maturity profile of contractual undiscounted
cash flows of financial liabilities as at 31 December:
2019 2018
GBP'000 GBP'000
Within one year 13,183 17,329
From one to two years 458 290
From two to five years 4,304 392
Beyond five years 135 127
18,080 18,138
The following table sets out the maturity profile of contractual undiscounted
cash flows of financial liabilities as at 31 December maturing within one year:
2019 2018
GBP'000 GBP'000
Within one month 10,164 3,627
From one to three months 2,120 3,117
From four to twelve months 899 10,585
13,183 17,329
In South Africa, as part of the restructuring and sale of the washing plant
facilities from Black Wattle Colliery (Pty) Limited ("Black Wattle") to its
wholly owned subsidiary Sisonke Coal Processing (Pty) Limited ("Sisonke Coal
Processing"), the R100million facility held by Black Wattle with Absa Bank
Limited was replaced in January 2019 by a new structured trade finance facility
for R100million held by Sisonke Coal Processing ("new trade facility").
The new trade facility comprises of a R100million revolving facility to cover
the working capital requirements of the group's South African operations. The
interest cost of the loan is at the South African prime lending rate. The
facility is renewable annually each January, is repayable on demand and is
secured against inventory, debtors and cash that are held by Sisonke Coal
Processing (Pty) Limited. The facility is included in cash and cash equivalents
within the cashflow statement.
In December 2019, the group repaid its GBP5.84million loan facility with
Santander Bank PLC and signed a new GBP3.96million term loan facility with Julian
Hodge Bank Limited. The loan is secured against the group's UK retail property
portfolio. The debt package has a five year term and is repayable at the end of
the term in December 2024. The interest cost of the loan is 4.00% 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 GBP15,173,000 (2018: GBP15,621,000).
To mitigate risk on its cash and cash equivalents, the group only deposits
surplus cash with well-established financial institutions of high quality
credit standing.
The group's credit risk is primarily attributable to its trade receivables.
Trade debtor's credit ratings are reviewed regularly. The Group's review
includes measures such as the use of external ratings and establishing purchase
limits for each customer. The group had amounts due from its significant
revenue customers at the year end that represented 73% (2018: 92%) of the trade
receivables balance. These amounts have been subsequently settled. The Group
approach to measure the credit loss allowance for trade receivables is outlined
in note 17. At year end, the group allowance for doubtful debts provided
against trade receivables was GBP21,000 (2019: GBP12,000). As at year end the
amount of trade receivables held past due date less credit loss allowances was
GBP23,000 (2019: GBP17,000). To date, the amount of trade receivables held past due
date less credit loss allowances that has not subsequently been settled is GBP
14,000 (2018: GBP14,000). Management have no reason to believe that this amount
will not be settled.
The Group exposure to credit risk on its loans to joint ventures and other
receivables is mitigated through ongoing review of the underlying performance
and resources of the counterparty including evaluation of different scenarios
of probability of default and expected loss applicable to each of the
underlying balances.
Financial assets maturity
On 31 December 2019, cash at bank and in hand amounted to GBP7,697,000 (2018: GBP
9,221,000) 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 2019 and 2018 the group did not hedge its
exposure of foreign investments held in foreign currencies.
The principal currency risk to which the group is exposed in regard to
inter-company balances is the exchange rate between Pounds sterling and South
African Rand. It arises as a result of the retranslation of Rand denominated
inter-company trade receivable balances held within the UK which are payable by
South African Rand functional currency subsidiaries.
Based on the group's net financial assets and liabilities as at 31 December
2018, 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 GBP176,000 (2018: GBP130,000). 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 GBP294,000 (2018: GBP216,000).
The 25% sensitivity has been determined based on the average historic
volatility of the exchange rate for 2018 and 2019.
The table below shows the currency profiles of cash and cash equivalents:
2019 2018
GBP'000 GBP'000
Sterling 4,741 6,897
South African Rand 1,672 2,322
US Dollar 1,307 2
7,720 9,221
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:
2019: Sterling South
GBP'000 African
Rands
GBP'000
Sterling 1,151 -
South African Rand 40 (3,510)
US Dollar 1,582 -
2,773 (3,510)
2018: Sterling South
GBP'000 African
Rands
GBP'000
Sterling 1,042 -
South African Rand 37 (1,974)
US Dollar 13 -
1,092 (1,974)
23. DEFERRED TAXATION
2019 2018
GBP'000 GBP'000
As at 1 January 2,226 2,485
Recognised in income (136) (91)
Exchange adjustment (19) (168)
As at 31 December 2,071 2,226
The deferred tax balance comprises the following:
Revaluation of properties 476 636
Capital allowances 2,419 2,369
Short term timing difference (707) (662)
Unredeemed capital deductions - -
Losses and other deductions (117) (117)
2,071 2,226
Refer to note 8 for details of deferred tax recognised in income in the current
year. Tax rates of 17% (2018: 17%) in the UK and 28% (2018: 28%) in South
Africa were utilised to calculate year end deferred tax balances.
24. SHARE CAPITAL
2019 2018
GBP'000 GBP'000
Authorised: 13,000,000 ordinary shares of 10p each 1,300 1,300
Allotted and fully paid:
2019 2018 2019 2018
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
25. OTHER RESERVES
2019 2018
GBP'000 GBP'000
Equity share options 621 621
Net investment premium on share capital in joint venture 86 86
707 707
26. SHARE BASED PAYMENTS
Details of the share option scheme are shown in the Directors' remuneration
report on page 32 under the heading Share option schemes which is within the
audited part of this report. Further details of the share option schemes are
set out below.
The Bisichi PLC Unapproved Option Schemes:
Year of grant Subscription Period within Number of Number of Number of
price per which options share share share for
share exercisable for which options which
options lapsed/ options
outstanding surrendered outstanding
at /awarded at
31 December during year 31 December
2018 2019
2015 87.0p Sep 2015 - Sep 300,000 - 300,000
2025
2018 73.50p Feb 2018 - Feb 380,000 - 380,000
2028
There are no performance or service conditions attached to 2015 and 2018
options which are outstanding at 31 December 2019.
2019 2019 2018 2018
Number Weighted Number Weighted
average average
exercise exercise
price price
Outstanding at 1 January 680,000 79.46p 380,000 111.3p
Lapsed/Surrendered during the year - - (80,000) 205.5p
Issued during the year - - 380,000 73.5p
Outstanding at 31 December 680,000 79.46p 680,000 79.46p
Exercisable at 31 December 680,000 79.46p 680,000 79.46p
27. NON-CONTROLLING INTEREST
2019 2018
GBP'000 GBP'000
As at 1 January 566 532
Share of profit/(loss) for the year 549 729
Dividends paid (483) (641)
Exchange adjustment (7) (54)
As at 31 December 625 566
The non-controlling interest comprises of a 37.5% interest in Black Wattle
Colliery (Pty) Ltd and its wholly owned subsidiary Sisonke Coal Processing
(Pty) Ltd. Black Wattle Colliery (Pty) Ltd is a coal mining company and Sisonke
Coal Processing (Pty) Ltd is a coal processing company both incorporated in
South Africa. Summarised financial information reflecting 100% of the
underlying consolidated relevant figures of Black Wattle Colliery (Pty) Ltd's
and its wholly owned subsidiary Sisonke Coal Processing (Pty) Ltd is set out
below.
2019 2018
GBP'000 GBP'000
Revenue 46,706 48,666
Expenses (43,040) (43,801)
Profit/(loss) for the year 3,666 4,865
Other comprehensive Income - -
Total comprehensive income for the year 3,666 4,865
Balance sheet
Non-current assets 9,480 8,532
Current assets 10,462 9,587
Current liabilities (12,087) (10,540)
Non-current liabilities (3,682) (3,800)
Net assets at 31 December 4,173 3,779
The non-controlling interest originates from the disposal of a 37.5%
shareholding in Black Wattle Colliery (Pty) Ltd in 2010 when the total issued
share capital in Black Wattle Colliery (Pty) Ltd was increased from 136 shares
to 1,000 shares at par of R1 (South African Rand) through the following shares
issue:
- a subscription for 489 ordinary shares at par by Bisichi Mining
(Exploration) Limited increasing the number of shares held from 136 ordinary
shares to a total of 625 ordinary shares;
- a subscription for 110 ordinary shares at par by Vunani Mining
(Pty) Ltd;
- a subscription for 265 "A" shares at par by Vunani Mining (Pty)
Ltd
Bisichi Mining (Exploration) Limited is a wholly owned subsidiary of Bisichi
PLC incorporated in England and Wales.
Vunani Mining (Pty) Ltd is a South African Black Economic Empowerment company
and minority shareholder in Black Wattle Colliery (Pty) Ltd.
The "A" shares rank pari passu with the ordinary shares save that they will
have no dividend rights until such time as the dividends paid by Black Wattle
Colliery (Pty) Ltd on the ordinary shares subsequent to 30 October 2008 will
equate to R832,075,000.
A non-controlling interest of 15% in Black Wattle Colliery (Pty) Ltd is
recognised for all profits distributable to the 110 ordinary shares held by
Vunani Mining (Pty) Ltd from the date of issue of the shares (18 October 2010).
An additional non-controlling interest will be recognised for all profits
distributable to the 265 "A" shares held by Vunani Mining (Pty) Ltd after such
time as the profits available for distribution, in Black Wattle Colliery (Pty)
Ltd, before any payment of dividends after 30 October 2008, exceeds
R832,075,000.
28. RELATED PARTY TRANSACTIONS
At 31 December During the year
Amounts Amounts Costs Cash
owed owed recharged paid
to by (to)/by (to)/by
related related related related
party party party party
GBP'000 GBP'000 GBP'000 GBP'000
Related party:
London & Associated Properties PLC (note (a)) 33 - 200 (170)
West Ealing Projects Limited (note (b)) - (840) - (88)
Dragon Retail Properties Limited (note (c)) 149 - - (44)
As at 31 December 2019 182 (840) 200 (302)
London & Associated Properties PLC (note (a)) 3 - 153 (183)
West Ealing Projects Limited (note (b)) - (752) - (752)
Dragon Retail Properties Limited (note (c)) 193 - - 2,046
As at 31 December 2018 196 (752) 153 1,111
(a) London & Associated Properties PLC - London & Associated
Properties PLC ("LAP") is a substantial shareholder and parent company of
Bisichi PLC. Property management, office premises, general management,
accounting and administration services are provided for Bisichi PLC and its UK
subsidiaries. Bisichi PLC continues to operate as a fully independent company
and currently LAP owns only 41.52% of the issued ordinary share capital.
However, LAP is deemed under IFRS 10 to have effective control of Bisichi PLC
for accounting purposes.
(b) West Ealing Projects Limited - West Ealing Projects Limited ("West
Ealing") is an unlisted property company incorporated in England and Wales.
West Ealing is owned equally by the company and London & Associated Properties
PLC and is accounted as a joint venture and treated as a non-current asset
investment.
(c) Dragon Retail Properties Limited - ("Dragon") is owned equally by
the company and London & Associated Properties PLC. Dragon is accounted as a
joint venture and is treated as a non-current asset investment.
Key management personnel comprise of the directors of the company who have the
authority and responsibility for planning, directing, and controlling the
activities of the company. Details of key management personnel compensation and
interest in share options are shown in the Directors' Remuneration Report on
pages 32 and 33 under the headings Directors' remuneration, Pension schemes and
incentives and Share option schemes which is within the audited part of this
report. The total employers' national insurance paid in relation to the
remuneration of key management was GBP223,000 (2018: GBP225,000). In 2012 a loan
was made to one of the directors, Mr A R Heller, for GBP116,000. 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 GBP41,000 (2018: GBP41,000) and no repayment (2018: GBP15,000) was made during
the year.
The non-controlling interest to Vunani Limited is shown in note 27. In
addition, the group holds an investment in Vunani Limited classified as
non-current available for sale investments with a fair value of GBP38,000 (2018:
GBP35,000).
29. EMPLOYEES
2019 2018
GBP'000 GBP'000
Staff costs during the year were as follows:
Salaries 7,251 6,809
Social security costs 223 231
Pension costs 309 271
Share based payments - 24
7,783 7,335
2019 2018
The average weekly numbers of employees of the group during the year
were as follows:
Production 204 231
Administration 15 15
219 246
30. CAPITAL COMMITMENTS
2019 2018
GBP GBP'000
'000
Commitments for capital expenditure approved and contracted for at the - 751
year end
31. LEASE LIABILITIES AND FUTURE PROPERTY LEASE RENTALS
The lease liabilities are secured by the related underlying assets. The
undiscounted maturity analysis of lease payments at 31 December 2019 is as
follows:
Mining Motor Head 2019 2018
Equipment Vehicles Lease GBP'000 GBP'000
GBP'000 GBP'000 Property
GBP'000
Within one year 13 11 11 35 12
Second to fifth year 53 18 46 117 46
After five years - - 1,419 1,419 1,443
66 29 1,476 1,571 1,501
Discounting adjustment (14) (2) (1,293) (1,309) (1,316)
Present value 52 27 183 262 185
The present value of minimum lease payments at 31 December 2019 is as follows:
Mining Motor Head 2019 2018
Equipment Vehicles Lease GBP'000 GBP'000
GBP'000 GBP'000 Property
GBP'000
Within one year (Note 19) 9 10 11 30 12
Second to fifth year 43 17 36 96 37
After five years - - 136 136 136
Present value 52 27 183 262 185
With the exception of short-term leases and leases of low-value underlying
assets, each lease is reflected on the balance sheet as a right-of-use asset
and a lease liability. The Group classifies its right-of-use assets in a
consistent manner to its property, plant and equipment. Lease liabilities due
within one year are classified within trade and other payables in the balance
sheet.
The group has one lease for mining equipment in South Africa and one lease for
motor vehicles in the United Kingdom. Both leases have terms of less than 5
years are either non-cancellable or may only be cancelled by incurring a
substantive termination fee. Lease payments for mining equipment are subject to
changes in consumer price inflation in South Africa.
The group has one lease contract for an investment property. The remaining term
for the leased investment property is 130 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 rental leases on its investment property portfolio
consisting mainly of commercial properties. These leases have terms of between
1 and 109 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:
2019 2018
GBP'000 GBP'000
Within one year 856 919
Second to fifth year 2,249 2,456
After five years 9,673 9,765
12,778 13,140
32. CONTINGENT LIABILITIES AND POST BALANCE SHEET EVENTS
Bank Guarantees
Bank guarantees have been issued by the bankers of Black Wattle Colliery (Pty)
Limited on behalf of the company to third parties. The guarantees are secured
against the assets of the company and have been issued in respect of the
following:
2019 2018
GBP'000 GBP'000
Rail siding 54 54
Rehabilitation of mining land 1,553 1,259
Water & electricity 52 52
Covid-19 Pandemic
The Group's operations both in the United Kingdom and in South Africa have been
impacted by the by the Covid-19 pandemic. Overall the Group is expected to be
impacted in South Africa by additional health and safety measures related to
its workforce and stakeholders and risks related to business continuity and
coal price. In the UK, the Group expects there to be an impact on retail
property revenue and values.
As at 5 June 2020, the Group's South African mining operations have remained in
operation as the entities have been classified as essential businesses. In
terms of our markets, we have seen the significant downturn in economic
activity related to the Covid-19 pandemic have an impact on overall demand for
coal in the international market. However demand for our particular coal in the
domestic market has to date remained more stable. Looking forward, the duration
and extent of the impact of the Covid-19 pandemic on our South African
operations, particularly in terms of our coal markets, remains uncertain.
In the UK, we have seen the Covid-19 pandemic have a significant impact on
rental revenue collections from the group's UK retail property portfolio.
Although the final impact of the pandemic on the portfolio remains uncertain,
we expect much of the portfolio to recover once tenants are allowed to fully
resume operating.
Although the final impact of Covid-19 is uncertain and an estimate of the
overall financial effect cannot be made, 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.
Contingent tax liability
The interpretation of laws and regulations in South Africa where the Group
operates can be complex and can lead to challenges from or disputes with
regulatory authorities. Such situations often take significant time to resolve.
Where there is a dispute and where a reliable estimate of the potential
liability cannot be made, or where the Group, based on legal advice, considers
that it is improbable that there will be an outflow of economic resources, no
provision is recognised.
Black Wattle Colliery (Pty) Ltd is currently involved in a tax dispute in South
Africa related to VAT. The dispute arose subsequent to the year end and is
related to events which occurred during and prior to the years ended 31
December 2019. As at 5 June 2020, the Group has been advised that it has a
strong legal case, that it has complied fully with the legislation and,
therefore, no economic outflow is expected to occur. Because of the nature and
complexity of the dispute, the possible financial effect of a negative decision
cannot be measured reliably. Accordingly, no provision has been booked at the
year end. At this stage, the Group believes that the dispute will be resolved
in its favour.
Company balance sheet
at 31 December 2019
Notes 2019 2018
GBP'000 GBP'000
Fixed assets
Tangible assets 35 74 47
Investment in joint ventures 36 665 665
Other investments 36 6,643 6,391
7,382 7,103
Current assets
Debtors - amounts due within one year 37 4,237 3,028
Debtors - amounts due in more than one year 37 113 -
Bank balances 4,900 5,132
9,250 8,160
Creditors - amounts falling due within one year 38 (1,473) (1,575)
Net current assets 7,777 6,585
Total assets less current liabilities 15,159 13,688
Provision for liabilities and charges 38 (17) -
Net assets 15,142 13,688
Capital and reserves
Called up share capital 24 1,068 1,068
Share premium account 258 258
Available for sale reserve - -
Other reserves 622 622
Retained earnings 33 13,194 11,740
Shareholders' funds 15,142 13,688
The profit for the financial year, before dividends, was GBP2,095,000 (2018:
profit of GBP2,414,000)
The company financial statements were approved and authorised for issue by the
board of directors on 5 June 2020 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 2019
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 2019 1,068 258 25 598 9,835 11,784
IFRS 9 Reclassification - - (25) - 25 -
Share option charge - - - 24 - 24
Dividend paid - - - - (534) (534)
Profit and total comprehensive - - - - 2,414 2,414
income for the year
Balance at 1 January 2019 1,068 258 - 622 11,740 13,688
Dividend paid - - - - (641) (641)
Profit and total comprehensive - - - - 2,095 2,095
income for the year
Balance at 31 December 2019 1,068 258 - 622 13,194 15,142
Company accounting policies
for the year ended 31 December 2019
The following are the main accounting policies of the company:
Basis of preparation
The financial statements have been prepared in accordance with Financial
Reporting Standard 100 Application of Financial Reporting Requirements and
Financial Reporting Standard 101 Reduced Disclosure Framework. The principal
accounting policies adopted in the preparation of the financial statements are
set out below.
The financial statements have been prepared on a historical cost basis, except
for the revaluation of leasehold property and certain financial instruments.
The Group has adopted the new accounting standard IFRS 16 'Leases' which became
effective this year. Adoption of the new Standard had no impact on the
company's opening balances from the prior period. Details on the group's
implementation of the new accounting policy can be found on page 63.
Going concern
Details on the Group's adoption of the going concern basis of accounting in
preparing the annual financial statements can be found on page 62.
Disclosure exemptions adopted
In preparing these financial statements the company has taken advantage of all
disclosure exemptions conferred by FRS 101 as well as disclosure exemptions
conferred by IFRS 2, 7, 13 and 16.
Therefore these financial statements do not include:
* certain comparative information as otherwise required by 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:
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 at
fair value through profit and loss.
Foreign currencies
Monetary assets and liabilities expressed in foreign currencies have been
translated at the rates of exchange ruling at the balance sheet date. All
exchange differences are taken to the profit and loss account.
Financial instruments
Details on the group's accounting policy for financial instruments can be found
on page 67.
Deferred taxation
Details on the group's accounting policy for deferred taxation can be found on
page 69.
Leased assets and liabilities
Details on the group's accounting policy for leased assets and liabilities can
be found on page 68.
Pensions
Details on the group's accounting policy for pensions can be found on page 67.
Share based remuneration
Details on the group's accounting policy for share based remuneration can be
found on page 67. Details of the share options in issue are disclosed in the
directors' remuneration report on page 33 under the heading share option
schemes which is within the audited part of this report.
33. PROFIT & LOSS ACCOUNT
A separate profit and loss account for Bisichi PLC has not been presented as
permitted by Section 408(2) of the Companies Act 2006. The profit for the
financial year, before dividends paid, was GBP2,095,000 (2018: GBP2,414,000)
Details of share capital are set out in note 24 of the group financial
statements and details of the share options are shown in the Directors'
Remuneration Report on page 33 under the heading Share option schemes which is
within the audited part of this report and note 26 of the group financial
statements.
34. DIVIDS
Details on dividends can be found in note 9 in the group financial statements.
35. TANGIBLE FIXED ASSETS
Leasehold Motor Office Total
Property Vehicles equipment GBP'000
GBP'000 GBP'000 GBP'000
Cost at 1 January 2019 45 - 69 114
Additions - 33 1 34
Cost at 31 December 2019 45 33 70 148
Accumulated depreciation at 1 January 2019 - - 67 67
Charge for the year - 5 2 7
Accumulated depreciation at 31 December 2019 - 5 69 74
Net book value at 31 December 2019 45 28 1 74
Net book value at 31 December 2018 45 - 2 47
Leasehold property consists of a single unit with a long leasehold tenant. The
term remaining on the lease is 40 years. Motor Vehicles comprise wholly of a
Right of Use leased asset.
36. 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 2019 665 6,356 - 35 6,391
Invested during the year - - - 255 255
Exchange loss - - - - -
Repayment - - - - -
Transfer - - - - -
Unrealised deficit over cost - - - (3) (3)
Net book value at 31 December 2019 665 6,356 - 287 6,643
Investments in subsidiaries are detailed in note 15. In the opinion of the
directors the aggregate value of the investment in subsidiaries is not less
than the amount shown in these financial statements.
Other investments comprise of GBP287,000 (2018: GBP35,000) shares in listed
companies.
37. DEBTORS
2019 2018
GBP'000 GBP'000
Amounts due within one year:
Amounts due from subsidiary undertakings 3,285 2,140
Trade receivables - 6
Other debtors 79 58
Joint venture 840 752
Prepayments and accrued income 33 72
4,237 3,028
Amounts due in more than one year:
Deferred taxation 113 -
113 -
Amounts due within one year are held at amortised cost. The Group applies a
simplified approach to measure the loss allowance for trade receivables using
the lifetime expected loss provision. The group applies a general approach on
all other receivables. The general approach recognises lifetime expected credit
losses when there has been a significant increase in credit risk since initial
recognition. The company has reviewed and assessed the underlying performance
and resources of its counterparties including its subsidiary undertakings and
joint ventures.
38. CREDITORS
2019 2018
GBP'000 GBP'000
Amounts falling due within one year:
Amounts due to subsidiary undertakings - 138
Joint venture 148 192
Current taxation - -
Other taxation and social security 21 6
Other creditors 1,221 1,162
Lease Liabilities 10 -
Accruals and deferred income 73 77
1,473 1,575
Amounts falling due in more than one year:
Lease Liabilities 17 -
Lease liabilities comprise of a lease on a Motor vehicle with a remaining lease
of 2-3 years. With the exception of short-term leases and leases of low-value
underlying assets, each lease is reflected on the balance sheet as a
right-of-use asset and a lease liability.
39. PROVISIONS FOR LIABILITIES
2019 2018
GBP GBP'000
'000
Deferred taxation:
Balance at 1 January - 18
Provision - -
Transfer - (18)
- -
40. 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)) (373) (1,053) 813
Ninghi Marketing Limited (note (b)) (102) - -
As at 31 December 2019 (475) (1,053) 813
Black Wattle Colliery (Pty) Ltd (note (a)) (134) (1,093) 1,125
Ninghi Marketing Limited (note (b)) (102) - -
As at 31 December 2018 (236) (1,093) 1,125
(a) Black Wattle Colliery (Pty) Ltd - Black Wattle Colliery (Pty) Ltd
is a coal mining company based in South Africa.
(b) Ninghi Marketing Limited - Ninghi Marketing Limited is a dormant
coal marketing company incorporated in England & Wales.
Black Wattle Colliery (Pty) Ltd and NInghi Marketing Limited are subsidiaries
of the company.
In addition to the above, the company has issued a company guarantee of
R20,061,917 (2018: R20,061,917) (South African Rand) to the bankers of Black
Wattle Colliery (Pty) Ltd in order to cover bank guarantees issued to third
parties in respect of the rehabilitation of mining land.
A provision of 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 28 of the group financial
statements.
Under FRS 101, the company has taken advantage of the exemption from disclosing
transactions with other wholly owned group companies. Details of other related
party transactions are given in note 28 of the group financial statements.
41. EMPLOYEES
2019 2018
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 1,687 1,752
Social security costs 223 231
Pension costs 37 38
Share based payments - 24
1,947 2,045
END
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June 08, 2020 02:30 ET (06:30 GMT)
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