Final Results
BISICHI MINING PLC
Results for the year ended 31 December 2014
Financial summary:
* EBITDA: £4,609,000 (2013: £3,039,000)
* Profit before tax: £1,568,000 (2013: £102,000)
* £3.5million EBITDA in the second half of the year
Summary:
* Strong performance at Black Wattle colliery in the second half attributed to
implementation of turnaround plan by management and improved production at
Black Wattle's profitable opencast pits
* Delivery of coal from new 2.6million tonne reserve commenced and expected to
contribute to earnings in 2015
* Physical demand for Black Wattle coal remains strong despite historically low
international coal prices
* UK property portfolio continues to perform well with a new £6million loan
facility signed with Santander UK PLC
* Final Dividend proposed of 3p per share payable in cash in addition to the
interim dividend of 1p per share
* Dividend yield of 5% at year end share price
Chairman, Sir Michael Heller, comments:
"Although we expect depressed coal prices to continue, Black Wattle will
continue its focus on keeping its cost of production low. Meanwhile, our UK
retail property investment portfolio, which underpins our direct mining
business, remains virtually fully let. We have confidence, therefore, in the
prospects for Bisichi in 2015."
For further information, please call:
Andrew Heller or Garrett Casey, Bisichi Mining PLC 020 7415 5030
Bisichi Mining PLC
Annual Report 2014
Earnings before interest, tax, depreciation and amortisation
(EBITDA) of £4.6million (2013: £3.0million)
£3.5million EBITDA in the second half of the year
UK property portfolio continues to perform well with a new £6million loan
facility signed with Santander UK PLC
Dividend yield of 5% at year end share price
STRATEGIC REPORT
CHAIRMAN'S STATEMENT
I am very pleased to be able to inform shareholders that your Company achieved
earnings before interest, tax, depreciation and amortisation (EBITDA) of £4.6
million (2013: £3.0 million). Of these earnings, £3.5 million were generated in
the second half of the year.
To a significant extent, this strong performance in the second half of the year
can be attributed to the successful implementation of the turnaround plan put
in place by your management in London and at Black Wattle Colliery, our direct
coal mining asset, in South Africa.
As reported last year, at the end of 2013 the open cast mining operations at
Black Wattle were severely impacted when one of our main production pits ran
into unrecorded old underground workings. A turnaround plan was put in place.
This involved the swift movement of the machinery to two of our more profitable
production pits in order to increase production from these areas.
Although the plan initially suffered a short-term set-back caused by the
unusually heavy rainfall in the first quarter of 2014, Black Wattle steadily
increased production from its lower costing pits. This increased production
from the two existing pits ensured that the mine returned to acceptable levels
of profitability in the second half of 2014.
In regard to the new reserve at Blue Nightingale, plans were initiated to
develop the reserve by the end of 2014. We are pleased to report that delivery
of coal from the reserve has commenced and we expect the reserve to begin to
contribute to earnings in 2015.
Black Wattle continues to perform well 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.
During the second half of last year, Black Wattle became a level 4 contributor
to Broad Based Black Economic Empowerment ("BBBEE"). Our staff deserve our
thanks for their hard work in achieving this status as well as for their
continued efforts in improving our BBBEE rating and credentials.
The coal mined during the year, at a lower cost of production than 2013, helped
offset the impact of the weaker international coal prices experienced
throughout 2014. Although we expect depressed coal prices to continue, Black
Wattle will continue its focus on keeping its cost of production low and we
remain highly confident on the prospects of our coal mining activities in South
Africa.
The Company's UK retail property portfolio, which underpins the Group and which
is managed actively by London & Associated Properties PLC, continues to perform
well. We are pleased to report that in December 2014, the group signed a £6
million 5-year term loan facility with Santander UK PLC. This new loan replaces
the previous £5 million term facility and overdraft facility held with Royal
Bank of Scotland. This new loan is secured against the group's UK retail
property portfolio which was externally valued at the 2014 year end at £
11.6million (2013: £11.6million).
On the behalf of all shareholders, I would like to thank Robert Corry, who
retired at the end of 2014, for his services to the Group. Robert, a director
of Black Wattle Colliery for over 20 years, has made a significant contribution
to the development of our coal business and the banking side of Bisichi's UK
property portfolio. We wish him the very best in his retirement.
Finally, your directors have decided to hold the dividend at the 2013 level and
will recommend to you, our shareholders, a final dividend of 3p (2013: 3p)
payable on Friday 31 July 2015 to shareholders registered at the close of
business on 3 July 2015 making the total for the year 4p (2013: 4p). Based on
the 2014 year end share price, this represents a 5% yield, which is at the high
end of the mining sector.
On behalf of the Board and shareholders, I would like to thank all of our staff
for their hard work during the course of the year.
Sir Michael Heller
Chairman
27 April 2015
STRATEGIC REPORT
Mining REVIEW
The strong earnings achieved in the second half of the year at Black Wattle,
our South African coal mining operation, can be mainly attributed to improved
production at Black Wattle's profitable opencast pits.
Although we continue to operate in an environment of historically low coal
prices, we expect the changes implemented at Black Wattle to result in a
continued strong performance from our South African operations going into 2015.
Production and operations
Although overall Run of Mine production from Black Wattle weakened in 2014,
with total production for the year of 1.53million metric tonnes (2013:
1.77million metric tonnes), production improved in the second half of the year.
Average monthly Run of Mine production increased from 115,000 metric tonnes in
the first half of the year to 140,000 metric tonnes in the second half.
As announced in the Chairman's Statement, we are expecting a contribution to
earnings from the Blue Nightingale reserve in 2015. Blue Nightingale, is a
South African black owned and managed mining company and we are very pleased to
be continuing our successful relationship. As previously reported, the coal
delivered is part of an agreement to purchase Run of Mine coal from an opencast
reserve nearby to Black Wattle. Additional drilling at year end has confirmed
that the reserve consists of approximately 2.6million tonnes of coal which can
be sold either directly to local power utilities or transported to Black Wattle
where it will be washed and sold into our existing domestic and export markets.
Black Wattle will look to combine production from Black Wattle's existing
reserves with coal received from the new reserve at Blue Nightingale.
Main trends/markets
International coal prices continued to weaken. At the beginning of 2014, the
average weekly price of Free on Board (FOB) Coal from Richards Bay Coal
Terminal (API4) was $85. By the end of the year the price had weakened to under
$64. Further weakness in 2015 has seen the coal price go below $60, less than
half the price of $120 achieved three years previously in 2011. A depreciation
in the South African Rand against the US Dollar has helped to partially offset
this decline. Looking forward, we continue to see strong demand for our coal in
both the domestic and export markets and we will continue to focus on keeping
our cost of production low in order to offset the impact of lower international
coal prices.
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 2014:
• No new 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 2014.
In addition to the required personnel appointments and assignment of direct
health and safety responsibilities on the mine, a system of Hazard
Identification and Risk Assessments has been designed, implemented and
maintained at Black Wattle.
Health and Safety training is conducted on an ongoing basis. We are pleased to
report all employees to date have received training in hazard identification
and risk assessment in their work areas.
A medical surveillance system is also in place which provides management with
information used in determining measures to eliminate, control and minimise
employee health risks and hazards and all Occupational Health hazards are
monitored on an ongoing basis.
Various systems to enhance the current HSE strategy have been introduced as
follows:
• In order to improve hazard identification before the commencing of tasks,
mini risk assessment booklets have been distributed to all mine employees and
long term contractors on the mine.
• A Job Safety Analysis form has been introduced to ensure effective
identification of hazards in the workplace.
• In order to improve the current reporting practice of incidents on the mine,
initial reporting of incidents booklets were handed out to all employees and
contractors.
• In order to capture and record investigation findings from incidents, an
incident recording sheet was introduced to line management and contractors.
• Black Wattle Colliery utilises ICAM (Incident cause analysis method).
• Hazard Identification and Risk Assessment training was given to all levels of
employees, line management, Heads of Departments, contractor representatives
and contractor employees.
• Ongoing training on conveyor belt operation is being conducted with all
employees involved with this discipline.
Environment Management Programme
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.
Black Wattle is fully compliant with the regulatory requirements of the
Department of Water Affairs and Forestry and has an approved and externally
audited 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.
Black Wattle Colliery Social and Labour Plan (SLP) progress
Black Wattle Colliery is committed to true transformation and empowerment as
well as poverty eradication within the surrounding and labour providing
communities.
Black Wattle is committed to providing opportunities for the sustainable
socio-economic development of its stakeholders, such as:
• Employees and their families, through Skills Development, Education
Development, Human Resource Development, Empowerment and Progression
Programmes.
• Surrounding and labour sending communities, through Local Economic
Development, Rural and Community Development, Housing and Living Condition,
Enterprise Development and Procurement Programmes; and
• Empowerment partners, through Broad-Based Black Economic Empowerment (BBBEE)
and Joint Ventures with Historically Disadvantaged South African (HDSA) new
mining entrants and enterprises.
• The Company engages in ongoing consultation with its stakeholders to develop
strong company-employee relationships, strong company-community relationships
and strong company-HDSA enterprise relationships.
The key focus areas in terms of the detailed SLP programmes were updated as
follows:
• New implementation action plans, projects, targets and budgets were
established through regular workshops with all stakeholders.
• A comprehensive desktop socio-economic assessment was undertaken on baseline
data of the Steve Tshwete Local Municipality (STLM) and Nkangala District
Municipality (NDM).
• The 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.
• Black Wattle Colliery has concluded extensive work on various Agricultural
projects as well as the E-Bag Recycling projects. The E-Bag Recycling project
aims to minimize the environmental impact of post-consumer Polyethylene
Terephthalate plastic (PET) on the South African landscape. The project was
awarded the PET Entrepreneur award for 2013 and the project was awarded a new
bailing machine as part of the award. An additional piece of ground has been
identified to extend the project to a different area within the Mhluzi Township
nearby to Black Wattle. During 2014 the project self-funded the purchase of an
additional bailing machine, an important milestone in bringing the project to a
position of self-sustainability.
• Various upgrades were initiated at the Evergreen School nearby to Black
Wattle including upgrades to the roof, classrooms and outer areas.
Procurement
As reported in the Chairman's Statement, Black Wattle Colliery is now a level 4
BBBEE contributor.
In compliance with the Mining Charter and the Mineral and Petroleum Resource
Development Act, Black Wattle has implemented a BBBEE-focussed procurement
policy which strongly encourages our suppliers to establish and maintain BBBEE
credentials. At present, BBBEE companies provide approximately 80 percent of
Black Wattle's equipment and services. We closely monitor our monthly
expenditure and welcome potential BBBEE suppliers to compete for equipment and
service contracts at Black Wattle. Black Wattle also sells much of its coal
products to empowered companies.
Employment in South Africa
As part of Black Wattle's commitment to the South African government Mining
Charter, the Company seeks to:
• Expand opportunities for historically disadvantaged South Africans (HDSAs),
including women, to enter the mining and minerals industry and benefit from the
extraction and processing of the country's resources;
• Utilise the existing skills base for the empowerment of HDSAs; and
• Expand the skills base of HDSAs in order to serve the community.
In addition Black Wattle is committed to achieving the goals of the South
African Employment Equity Act and is pleased to report the following:
• Black Wattle Colliery has exceeded the 10 percent women in management and
core mining target.
• Black Wattle Colliery has achieved 18.5 percent women in core mining.
• 94 percent of the women at Black Wattle Colliery are HDSA females.
In terms of staff training some highlights for 2014 were:
• 13 employees were trained in ABET (Accreditation Board for Engineering and
Technology) level one;
• An additional 5 disabled women have started training on ABET level one and
two; and
• Plans have been put in place for 2015 for a further 10 employees to be
trained on ABET level one, two or three and 1 employee will be trained on ABET
level four.
• 4 HDSA Females have commenced apprenticeship at the mine.
Prospects
Plans have been put in place to ensure Black Wattle is able to provide
consistent production from its own existing reserves as well as reserves
developed in partnership with our BEE partners. Although international coal
prices remain depressed, management continue to remain confident in the ability
to achieve significant value from our existing South African mining operations.
As a result, I look forward to the coming year with confidence.
Andrew Heller
Managing Director
27 April 2015
STRATEGIC REPORT
RISK & PERFORMANCE
The directors present the Strategic Report of the Company for the year ending
31 December 2014. 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.
Business review
The Chairman's Statement and the Mining Review which form part of the Strategic
Report on the preceding pages 2 to 7 give a comprehensive and fair review of
the group's activities during the past year and prospects for the forthcoming
year.
Principal activity, strategy & business model
The Company carries on business as a mining company and its principal activity
is coal mining in South Africa. The Company's strategy is to create and deliver
long terms sustainable value to our stakeholders through our business model
which can be broken down into four key areas:
• acquiring and securing additional coal reserves in South Africa
• coal mining
• coal washing
• coal transportation and marketing
In addition to the four key areas outlined above, we seek to balance the high
risk of our mining operations with a dependable cash flow from our UK property
investment operations. The Company invests in retail property across the UK.
The UK property portfolio is managed by London & Associated Properties PLC
whose responsibility is to actively manage the portfolio to improve rental
income and thus enhance the value of the portfolio over time.
Risk & uncertainties
Coal price risk: The group's mining operational earnings are largely dependent
on movements in the coal price.
Coal washing: The group's mining operation's earnings are highly sensitive to
coal washing, therefore a stoppage or disruption to the process could
significantly impact earnings. However, there is scope to raise earnings
substantially if the yield from the washing process is improved even
marginally.
Mining risk: Attached to mining there are inherent health and safety risks. Any
such safety incidents disrupt operations, and can slow or even stop production.
The group has a comprehensive Health and Safety programme in place to mitigate
this. As with many mining operations, the reserve that is mined has the risk of
not having the qualities and accessibility expected from geological and
environmental analysis.
Currency risk: The group's South African operations are sensitive to currency
movements, especially those between the South African Rand, US Dollar and
British Pound.
New reserves and mining permissions: The acquisition of additional reserves,
permissions to mine and new mining opportunities in South Africa generally are
contingent on a number of factors outside of the group's control, e.g. approval
by the Department of Mineral Resources and the Department of Water Affairs and
Forestry.
Regulatory risk: The group's South African operations are subject to the
government Mining Charter and scorecard which primarily seeks to:
• Promote equitable access to South Africa's mineral resources for all people
in South Africa;
• Expand opportunities for historically disadvantaged South Africans (HDSAs),
including women, to enter the mining and minerals industry and benefit from the
extraction and processing of the country's resources;
• Utilise the existing skills base for the empowerment of HDSAs;
• Expand the skills base of HDSAs in order to serve the community;
• Promote employment and the social and economic welfare of mining communities
and areas supplying mining labour; and
• Promote beneficiation of South Africa's mineral commodities beyond mining and
processing, including the production of consumer goods.
The group continues to make good progress towards meeting the Charter
requirements. However any regulatory changes to these, or failure to meet
existing targets, could adversely affect the mine's ability to retain its
mining rights in South Africa.
Transport risk: At present the government owned Transnet Freight Rail (TFR) is
the sole rail freight provider for coal in South Africa. The group's South
African operations are therefore reliant on TFR for delivery of its export
quality coal directly or indirectly via the Southern African ports to its end
customers.
Power supply risk: The current utility provider for power supply in South
Africa is the government run Eskom. Eskom continues to undergo capacity
problems resulting in power cuts and lack of provision of power supply to new
projects. The group's mining operations have to date not been affected by power
cuts.
Flooding risk: The group's mining operations are susceptible to seasonal
flooding which could disrupt production. Management monitors water levels on an
ongoing basis and various projects have been completed, including the
construction of additional dams, to mitigate this risk.
Environmental risk: The group's South African mining operations are required to
adhere to local environmental regulations. Details of the groups Environment
Management Programme are disclosed in the Mining Review on page 6.
Health & Safety risk: The group's South African mining operations are required
to adhere to local Health and Safety regulations. Details of the group's Health
and Safety Programme are disclosed in the Mining Review on page 5.
Labour risk: The group's mining operations and coal washing plant facility are
labour intensive and unionised. Any labour disputes, strikes or wage
negotiations may disrupt production and impact earnings.
Cashflow risk: We seek to balance the high risk of our mining operations with a
dependable cash flow from our UK property investment operations. Fluctuations
in property values, which are reflected in the Consolidated Income Statement
and Balance Sheet, are dependent on an annual valuation of commercial
properties. A fall in UK commercial property can have a marked effect on the
profitability and the net asset value of the group. However, due to the long
term nature of the leases, the effect on cash flows from property investment
activities will remain stable as long as tenants remain in operation.
Key Performance Indicators
The Key Performance Indicators for the Group are:
2014 2013
£'000 £'000
For South African mining activities:
Earnings before interest, tax, depreciation, and amortisation 3,139 2,268
(EBITDA)
For our UK property investment operations:
Net property valuation 11,575 11,559
For the Group:
Profit before tax 1,568 102
Earnings before interest, tax, depreciation, and amortisation 4,609 3,039
(EBITDA)
Financial position
In December 2014, the group signed a £6 million term loan facility with
Santander. This new loan replaces the previous £5 million term facility and
overdraft held with Royal Bank of Scotland. The Loan is secured against the
group's UK retail property portfolio. The new debt package has a five year term
and is repayable at the end of the term. The interest cost of the loan is 2.35%
above LIBOR.
The property portfolio was externally valued at 31 December 2014 and the value
of UK investment properties attributable to the group at year end was £
11.6million (2013: £11.6million).
In South Africa, an increase in the structured trade finance facility from
R60million (South African Rand) to R80million was signed by Black Wattle
Colliery (Pty) Limited ("Black Wattle") in October 2013 with Absa Bank Limited,
a South African subsidiary of Barclays Bank PLC. The facility is renewed
annually at 30 June and is secured against inventory, debtors and cash that are
held in the group's South African operations. This facility comprises of a
R60million revolving loan to cover the working capital requirements of the
group's South African operations, and a R20million loan facility to cover
guarantee requirements related to the group's South African mining operations.
The group's cash and cash equivalents (excluding bank overdrafts) at year end
were £2.8million (2013: £1.7million). The net assets of the group at the year
end were £17.7million (2013: £17.0million). During 2012 the Company lent £
2million to Dragon Retail Properties Limited, our joint venture company at
6.875 per cent annual interest. This money is repayable on demand and not
included in the groups cash and cash equivalents.
The group has considerable financial resources available at short notice
including cash, held for trading investments and its £2m loan to Dragon Retail
Properties Limited.
Further details on the group's financial position are stated in the
Consolidated Balance Sheet on page 42.
Cashflow
The Company at year end had a net amount of cash and cash equivalents
(including bank overdrafts) of £0.7 million (2013: net balance owing of £1.3
million). Details on the group's cashflow position are stated in the
Consolidated Cashflow Statement on page 45. Cash and cash equivalents as per
the Cashflow Statement comprise Cash and cash equivalents as presented in the
balance sheet and bank overdrafts (secured).
Environment
The group's UK activities are principally property investment whereby we
provide premises which are rented to retail businesses. We seek to provide
those tenants with good quality premises from which they can operate in an
efficient and environmentally sound manner.
Further information relating to the Company's position on the Environment and
Environmental Management issues related to our South African operations can be
found in The Mining Review which forms part of the Strategic Report on the
preceding pages 5 to 7.
Employment
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.
Further information relating to the Company's position on Employment issues can
be found in The Mining Review which forms part of the Strategic Report on the
preceding pages 5 to 7.
Green House Gas reporting
We have reported on all of the emission sources required under the Companies
Act 2006 (Strategic Report and Directors' Reports) Regulations.
The group has employed the Operational Control boundary definition to outline
our carbon footprint boundary. Included within that boundary are Scope 1 & 2
emissions from coal extraction and onsite mining processes for Black Wattle
Colliery. We have not measured and reported on our Scope 3 emissions sources.
Excluded from the footprint boundary are emission sources considered non
material by the group, including refrigerant use onsite.
We have used the GHG Protocol Corporate Accounting and Reporting Standard
(revised edition) and a methodology adapted from the Intergovernmental Panel on
Climate Change (2006) to calculate fugitive emissions from surface coal mining
activities. Further emission factors were used from UK Government's GHG
Conversion Factors for Company Reporting 2015.
The Group's carbon footprint:
2014 2013
CO2e CO2e
Tonnes Tonnes
Emissions source:
Scope 1 Combustion of fuel & operation of facilities 14,867 24,862
Scope 1 Emissions from coal mining activities 26,872 31,014
Scope 2 Electricity, heat, steam and cooling purchased for own 8,300 9,947
use
Total 50,039 65,823
Intensity:
Intensity 1 Tonnes of CO2 per pound sterling of revenue 0.00189 0.00188
Intensity 2 Tonnes of CO2 per tonne of coal produced 0.0327 0.0372
Social, community and human rights issues
The Company 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. Further information relating to the Company's position on
social and community issues can be found in the Mining Review which form part
of the Strategic Report on the preceding pages 5 to 7.
Directors, employees and gender representation
At the year end the group had 6 directors (6 male, 0 female), 7 senior managers
(6 male, 1 female) and 217 employees (165 male, 52 female).
Future prospects
The group seeks to expand its operations in South Africa through the
acquisition of additional coal reserves. Further information on the outlook of
the Company can be found in both the Chairman's Statement on page 2 and the
Mining Review on page 5 which form part of the Strategic Report.
Signed on behalf of the Board of Directors
Garrett Casey
Finance Director
27 April 2015
Management team
1 Sir Michael Heller
Chairman
Bisichi Mining PLC
2 Andrew Heller
Managing Director
Bisichi Mining PLC,
Managing Director
Black Wattle Colliery
3 Christopher Joll
Senior Independent Director,
Chairman Audit
and Remuneration
Committees
4 Garrett Casey
Finance Director
Bisichi Mining PLC,
Director
Black Wattle Colliery
5 Robert Grobler
Director of Mining
Bisichi Mining PLC,
Director
Black Wattle Colliery
6 Ethan Dube
Director
Black Wattle Colliery
7 Nico Serfontein
Mine Manager
Black Wattle Colliery
Directors & advisors
* Sir Michael Heller
MA, FCA (Chairman)
Andrew R Heller
MA, ACA
(Managing Director)
Garrett Casey
CA (SA)
(Finance Director)
Robert Grobler
Pr Cert Eng
(Director of mining)
O+ Christopher A Joll
MA (Non-executive)
Christopher Joll was appointed a Director on 1 February 2001. He has held a
number of non-executive directorships of quoted and un-quoted companies and is
currently senior partner of MJ2 Events LLP an event management business.
O John A Sibbald
BL (Non-executive)
John Sibbald has been a Director since 1988. After qualifying as a Chartered
Accountant he spent over 20 years in stockbroking, specialising in mining and
international investment.
Secretary & Registered office
Garrett Casey CA (SA)
24 Bruton Place
London W1J 6NE
Black Wattle Colliery
Directors
Andrew Heller (Managing Director)
Ethan Dube
Robert Grobler
Garrett Casey
Property portfolio asset manager
James Charlton BSc MRICS
Company Registration
Company registration No. 112155 (Incorporated in England and Wales)
Website
www.bisichi.co.uk
E-mail
admin@bisichi.co.uk
* Member of the nomination committee
+ Senior independent director
O Member of the audit, nomination and remuneration committees.
Auditor
BDO LLP
Principal bankers
United Kingdom
Santander UK PLC
Barclays Bank PLC
National Westminster Bank PLC
Investec PLC
South Africa
ABSA Bank (SA)
First National Bank (SA)
Standard Bank (SA)
Corporate solicitors
United Kingdom
Olswang LLP, London
Memery Crystal, London
Fladgate LLP, London
South Africa
Tugendhaft Wapnick Banchetti and Partners, Johannesburg
Hogan Lovells, Johannesburg
Brandmullers Attorneys, Middelburg
Stockbrokers
Shore Capital & Corporate Ltd
Registrars and transfer office
Capita Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent, BR3 4TU
Telephone: 0871 664 0300
(calls cost 10 pence per minute plus network extras)
Or +44 (0)203 728 5000 for overseas callers
www.capitaassetservices.com
E-mail: ssd@capitaregistrars.com
GOVERNANCE
FIVE YEAR SUMMARY
2014 2013 2012 2011 2010
£'000 £'000 £'000 £'000 £'000
Consolidated income statement
Revenue 26,500 35,105 35,962 29,909 32,824
Operating profit/ (loss) 1,364 123 2,568 (1,328) (1,705)
Profit/ (loss) before tax 1,568 102 2,190 (1,450) (1,813)
Trading profit before tax 1,157 17 2,808 (1,210) (2,209)
Revaluation profit before tax 411 85 (618) (240) 396
Profit before interest, taxation and 4,609 3,039 4,684 1,150 770
depreciation
Consolidated balance sheet
Investment properties 11,575 11,559 11,612 12,068 12,110
Fixed asset investments 4,090 4,370 4,309 2,727 3,757
15,665 15,929 15,921 14,795 15,867
Current asset investments 796 822 787 2,515 605
16,461 16,751 16,708 17,310 16,472
Other assets less liabilities less 854 (123) 607 (537) 1,482
non-controlling interests
Total equity attributable to equity 17,315 16,628 17,315 16,773 17,954
shareholders
Net assets per ordinary share 162.2p 156.3p 164.0p 158.9p 171.8p
Dividend per share 4.00p 4.00p 4.00p 4.00p 4.00p
GOVERNANCE
FINANCIAL CALENDAR
10 June 2015 Annual General Meeting
31 July 2015 Payment of final dividend for 2014 (if approved)
Late August 2015 Announcement of half-year results to 30 June 2015
Late April 2016 Announcement of results for year ending 31 December 2015
GOVERNANCE
DIRECTOR'S REPORT
The directors submit their report together with the audited financial
statements for the year ended 31 December 2014.
Activities and review of business
The group continues its mining activities. Income for the year was derived from
sales of coal from its South African operations. The group also has a property
investment portfolio for which it receives rental income.
The results for the year and state of affairs of the group and the company at
31 December 2014 are shown on pages 40 to 80 and in the Strategic Report on
pages 2 to 15. Future developments and prospects are also covered in the
Strategic Report. Over 99 per cent. of staff are employed in the South African
coal mining industry - employment matters and health and safety are dealt with
in the Strategic Report.
The management report referred to in the Director's responsibilities statement
encompasses this Directors' Report and Strategic Report on pages 2 to 15.
Corporate responsibility
Environment
The environmental issues of the group's South African coal mining operations
are covered in the Strategic Report on pages 2 to 15.
The group's UK activities are principally property investment whereby premises
are provided for rent to retail businesses.
The group seeks to provide those tenants with good quality premises from which
they can operate in an efficient and environmentally friendly manner. Wherever
possible, improvements, repairs and replacements are made in an environmentally
efficient manner and waste re-cycling arrangements are in place at all the
company's locations.
Greenhouse Gas Emissions
Details of the group's greenhouse gas emissions for the year ended 31 December
2014 can be found on page 15 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 2014 of 1p was paid on 6 February 2014 (Interim 2013:
1p). The directors recommend the payment of a final dividend for 2014 of 3p per
ordinary share (2013: 3p) making a total dividend for 2014 of 4p (2013: 4p).
Subject to shareholder approval, the total dividend per ordinary share for 2014
will be 4p per ordinary share.
The final dividend will be payable on Friday 31 July 2015 to shareholders
registered at the close of business on 3 July 2015.
Investment properties
The investment property portfolio is stated at its open market value of £
11,575,000, at 31 December 2014 (2013: £11,559,000) as valued by professional
external valuers. The open market value of the company's share of investment
properties included within its investments in joint ventures is £4,021,000
(2013: £3,599,000).
Financial instruments
Note 21 to the financial statements sets out the risks in respect of financial
instruments. The Board reviews and agrees overall treasury policies, delegating
appropriate authority to the managing director. Financial instruments are used
to manage the financial risks facing the group - speculative transactions are
not permitted. Treasury operations are reported at each Board meeting and are
subject to weekly internal reporting.
Directors
The directors of the company for the whole year were Sir Michael Heller, A R
Heller, G J Casey, C A Joll, R J Grobler (a South African citizen), and J A
Sibbald.
The directors retiring by rotation are Mr R J Grobler and Mr A R Heller who
offers themselves for re-election.
Robert Grobler was appointed as General Mine Manager by Black Wattle Colliery
(Proprietary) Ltd on 1 May 2000. He was appointed to the Board of Bisichi
Mining PLC as Director of Mining on 22 August 2008. He has over 40 years'
experience in the South African coal mining industry. He is a professional
engineer and member of the South African Coal Managers Association.
Andrew Heller has been an executive director since 1998. He is a Chartered
Accountant and has been employed by the group since 1994 under a contract of
employment determinable at three months' notice.
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 30 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 27 April 2015:
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 1,671,610 shares representing 15.7 per cent. of
Limited - the issued share capital.
James Hyslop - 341,126 shares representing 3.20 per cent. of the
issued share capital.
Disclosure of information to auditor
The directors in office at 31 December 2014 have confirmed that they are aware
that there is no relevant audit information of which the auditor is unaware.
Each of the directors has confirmed that they have taken all reasonable steps
they ought to have taken as directors to make themselves aware of any relevant
audit information and to establish that it has been communicated to the
auditor.
Corporate governance
The company has adopted the Corporate Governance Code for Small and Mid-Size
Quoted Companies (the QCA Code) published by the Quoted Companies Alliance. The
QCA Code provides governance guidance to small and mid-size quoted companies.
The paragraphs below set out how the company has applied this guidance during
the year. The company has complied with the QCA Code throughout 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 19. 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 37. 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 28 to 34.
• The audit committee comprises the two non-executive directors and is chaired
by Christopher Joll. Its prime tasks are to review the scope of external audit,
to receive regular reports from the company's auditor and to review the
half-yearly and annual accounts before they are presented to the Board,
focusing in particular on accounting policies and areas of management judgment
and estimation. The committee is responsible for monitoring the controls which
are in force to ensure the integrity of the information reported to the
shareholders. The committee acts as a forum for discussion of internal control
issues and contributes to the Board's review of the effectiveness of the
group's internal control and risk management systems and processes. The
committee also considers annually the need for an internal audit function. It
advises the Board on the appointment of external auditors and on their
remuneration for both audit and non-audit work, and discusses the nature and
scope of the audit with the external auditors. The committee, which meets
formally at least twice a year, provides a forum for reporting by the group's
external auditors. Meetings are also attended, by invitation, by the company
chairman, managing director and finance director.
The audit committee also undertakes a formal assessment of the auditors'
independence each year which includes:
• a review of non-audit services provided to the group and related fees;
• discussion with the auditors of a written report detailing all relationships
with the company and any other parties that could affect independence or the
perception of independence;
• a review of the auditors' own procedures for ensuring the independence of the
audit firm and partners and staff involved in the audit, including the regular
rotation of the audit partner; and
• obtaining written confirmation from the auditors that, in their professional
judgement, they are independent.
The audit committee report is set out on page 35.
An analysis of the fees payable to the external audit firm in respect of both
audit and non-audit services during the year is set out in Note 4 to the
financial statements.
Performance evaluation - board, board committees and directors
The performance of the board as a whole and of its committees and the
non-executive directors is assessed by the chairman and the managing director
and is discussed with the senior independent director. Their recommendations
are discussed at the nomination committee prior to proposals for re-election
being recommended to the Board. The performance of executive directors is
discussed and assessed by the remuneration committee. The senior independent
director meets regularly with the chairman and both the executive and
non-executive directors individually outside of formal meetings. The directors
will take outside advice in reviewing performance but have not found this
necessary to date.
Independent directors
The senior independent non-executive director is Christopher Joll. The other
independent non-executive director is John Sibbald.
Christopher Joll has been a non-executive director for over ten years and John
Sibbald has been a non-executive director for over twenty years. The Board
encourages Christopher Joll and John Sibbald to act independently. The board
considers that their length of service and connection with the company's public
relations advisers, does not, and has not, resulted in their inability or
failure to act independently. In the opinion of the Board, Christopher Joll and
John Sibbald continue to fulfil their role as independent non-executive
directors.
The independent directors regularly meet prior to Board meetings to discuss
corporate governance issues.
Board and board committee meetings
The number of meetings during 2014 and attendance at regular Board meetings and
Board committees was as follows:
Meetings held Meetings Attended
Sir Michael Heller Board 6 6
Nomination committee 1 1
A R Heller Board 6 6
Audit committee 2 2
G J Casey Board 6 5
Audit committee 2 2
R J Grobler Board 6 2
C A Joll Board 6 6
Audit committee 2 2
Nomination committee 1 1
Remuneration committee 1 1
J A Sibbald Board 6 6
Audit committee 2 2
Nomination committee 1 1
Remuneration committee 1 1
Internal control
The directors are responsible for the group's system of internal control and
review of its effectiveness annually. The Board has designed the group's system
of internal control in order to provide the directors with reasonable assurance
that its assets are safeguarded, that transactions are authorised and properly
recorded and that material errors and irregularities are either prevented or
would be detected within a timely period. However, no system of internal
control can eliminate the risk of failure to achieve business objectives or
provide absolute assurance against material misstatement or loss.
The key elements of the control system in operation are:
• the Board meets regularly with a formal schedule of matters reserved to it
for decision and has put in place an organisational structure with clearly
defined lines of responsibility and with appropriate delegation of authority;
• there are established procedures for planning, approval and monitoring of
capital expenditure and information systems for monitoring the group's
financial performance against approved budgets and forecasts;
• UK property and financial operations are closely monitored by members of the
Board and senior managers to enable them to assess risk and address the
adequacy of measures in place for its monitoring and control. The South African
operations are closely supervised by the UK based executives through daily,
weekly and monthly reports from the directors and senior officers in South
Africa. This is supplemented by monthly visits by the UK based finance director
to the South African operations which include checking the integrity of
information supplied to the UK. The directors are guided by the internal
control guidance for directors issued by the Institute of Chartered Accountants
in England and Wales.
During the period, the audit committee has reviewed the effectiveness of
internal control as described above. The Board receives periodic reports from
its committees.
There are no significant issues disclosed in the Annual Report for the year
ended 31 December 2014 (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. All directors and staff
continue to complete an e-learning training course on a bi-annual basis. 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 Wednesday, 10 June 2015 at 11.00 a.m.
Resolutions 1 to 8 will be proposed as ordinary resolutions. More than 50 per
cent. of shareholders' votes cast must be in favour for those resolutions to be
passed. Resolutions 9 to 11 will be proposed as special resolutions. At least
75 per cent. of shareholders' votes cast must be in favour for those
resolutions to be passed.
The directors consider that all of the resolutions to be put to the meeting are
in the best interests of the company and its shareholders as a whole. The Board
recommends that shareholders vote in favour of all resolutions.
Please note that the following paragraphs are only summaries of certain
resolutions to be proposed at the Annual General Meeting and not the full text
of the resolutions. You should therefore read this section in conjunction with
the full text of the resolutions contained in the notice of Annual General
Meeting.
Directors' authority to allot shares (Resolution 8)
In certain circumstances it is important for the company to be able to allot
shares up to a maximum amount without needing to seek shareholder approval
every time an allotment is required. Paragraph 8.1.1 of Resolution 8 would give
the directors the authority to allot shares in the company and grant rights to
subscribe for, or convert any security into, shares in the company up to an
aggregate nominal value of £355,894. This represents approximately 1/3 (one
third) of the ordinary share capital of the company in issue (excluding
treasury shares) at 27 April 2015 (being the last practicable date prior to the
publication of this Directors' Report). Paragraph 8.1.2 of Resolution 8 would
give the directors the authority to allot shares in the company and grant
rights to subscribe for, or convert any security into, shares in the company up
to a further aggregate nominal value of £355,894, in connection with a
pre-emptive rights issue. This amount represents approximately 1/3 (one third)
of the ordinary share capital of the company in issue (excluding treasury
shares) at 27 April 2015 (being the last practicable date prior to the
publication of this Directors' Report).
Therefore, the maximum nominal value of shares or rights to subscribe for, or
convert any security into, shares which may be allotted or granted under
resolution 8 is £711,788.
Resolution 8 complies with guidance issued by the Investment Management
Association (IMA).
The authority granted by resolution 8 will expire on 31 August 2016 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 IMA.
Disapplication of pre-emption rights (Resolution 9)
A special resolution will be proposed at the Annual General Meeting in respect
of the disapplication of pre-emption rights.
Shares allotted for cash must normally first be offered to shareholders in
proportion to their existing shareholdings. The directors will, at the
forthcoming Annual General Meeting seek power to allot equity securities (as
defined by section 560 of the Companies Act 2006) or sell treasury shares for
cash as if the pre-emption rights contained in Section 561 of the Companies Act
2006 did not apply:
(a) in relation to pre-emptive offers and offers to holders of other equity
securities if required by the rights of those securities or as the directors
otherwise consider necessary, up to a maximum nominal amount of £355,894 which
represents approximately 1/3 (one third) of the ordinary share capital of the
company in issue (excluding treasury shares) and, in relation to rights issues
only, up to a maximum additional amount of £355,894 which represents
approximately 1/3 (one third) of the ordinary share capital of the company in
issue (excluding treasury shares), in each case as at 27 April 2015 (being the
last practicable date prior to the publication of this Directors' Report); and
(b) in any other case, up to a maximum nominal amount of £53,384 which
represents approximately 5 per cent. of the ordinary share capital of the
company in issue (excluding treasury shares) as at 27 April 2015 (being the
last practicable date prior to the publication of this Directors' Report).
In compliance with the guidelines issued by the Pre-emption Group, the
directors will ensure that, other than in relation to a rights issue, no more
than 7.5 per cent. of the issued ordinary shares (excluding treasury shares)
will be allotted for cash on a non pre-emptive basis over a rolling three year
period unless shareholders have been notified and consulted in advance.
The power in resolution 9 will expire when the authority given by resolution 8
is revoked or expires.
The directors have no present intention to make use of this authority.
Notice of General Meetings (Resolution 10)
Resolution 10 will be proposed to allow the company to call general meetings
(other than an Annual General Meeting) on 14 clear days' notice. A resolution
in the same terms was passed at the Annual General Meeting in 2014. The notice
period required by the Companies Act 2006 for general meetings of the company
is 21 days unless shareholders approve a shorter notice period, which cannot
however be less than 14 clear days. Annual General Meetings must always be held
on at least 21 clear days' notice. It is intended that the flexibility offered
by this resolution will only be used for time-sensitive, non-routine business
and where merited in the interests of shareholders as a whole. The approval
will be effective until the Company's next Annual General Meeting, when it is
intended that a similar resolution will be proposed. In order to be able to
call a general meeting on less than 21 clear days' notice, the company must
make a means of electronic voting available to all shareholders for that
meeting.
Purchase of own Ordinary Shares (Resolution 11)
The effect of resolution 11 would be to renew the directors' current authority
to make limited market purchases of the company's ordinary shares of 10 pence
each. The power is limited to a maximum aggregate number of 1,067,683 ordinary
shares (representing approximately 10 per cent. of the company's issued share
capital as at 27 April 2015 (being the last practicable date prior to
publication of this Directors' Report)). The minimum price (exclusive of
expenses) which the company would be authorised to pay for each ordinary share
would be 10 pence (the nominal value of each ordinary share). The maximum price
(again exclusive of expenses) which the company would be authorised to pay for
an ordinary share is an amount equal to 105 per cent. of the average market
price for an ordinary share for the five business days preceding any such
purchase.
The authority conferred by resolution 11 will expire at the conclusion of the
company's next annual general meeting or 15 months from the passing of the
resolution, whichever is the earlier. Any purchases of ordinary shares would be
made by means of market purchase through the London Stock Exchange. If granted,
the authority would only be exercised if, in the opinion of the directors, to
do so would result in an increase in earnings per share or net asset value per
share and would be in the best interests of shareholders generally. In
exercising the authority to purchase ordinary shares, the directors may treat
the shares that have been bought back as either cancelled or held as treasury
shares (shares held by the company itself). No dividends may be paid on shares
which are held as treasury shares and no voting rights are attached to them.
As at 27 April 2015 (being the last practicable date prior to the publication
of this Directors' Report) the total number of options to subscribe for new
ordinary shares in the company was 598,000 shares representing 5.60 per cent.
of the company's issued share capital (excluding treasury shares) as at that
date. Such number of options to subscribe for new ordinary shares would
represent approximately 6.22 per cent. of the reduced issued share capital of
the company (excluding treasury shares) assuming full use of the authority to
make market purchases sought under resolution 11.
Donations
No political or charitable donations were made during the year (2013:Nil).
Going concern
The group's business activities, together with the factors likely to affect its
future development are set out in the Chairman's Statement on the preceding
page 2, the Mining Review on pages 5 to 7 and its financial position is set out
on page 13 of the Strategic Report. In addition Note 21 to the financial
statements includes the group's treasury policy, interest rate risk, liquidity
risk and hedging profile.
The group has considerable financial resources available at short notice
including cash, held for trading investments and its £2m loan to Dragon Retail
Properties Limited which is repayable on demand. In addition its investment
property assets benefit from long term leases with the majority of its tenants.
Black Wattle Colliery, its direct mining asset, experienced an improvement in
profitability in the second half of 2014. The directors expect that that the
market conditions experienced in the second half of 2014 will be similar going
into 2015.
The directors therefore have a reasonable expectation that the mine will
continue to achieve acceptable levels of profitability in 2015. As a
consequence, the directors believe that the group is well placed to manage its
business risks successfully.
In October 2013, an increase in the structured trade finance facility from
R60million (South African Rand) to R80million was signed by Black Wattle
Colliery (Pty) Limited ("Black Wattle") with Absa Bank Limited, a South African
subsidiary of Barclays Bank PLC. The facility is renewed annually at 30 June
and is secured against inventory, debtors and cash that are held in the group's
South African operations. This facility comprises of a R60million revolving
loan to cover the working capital requirements of the group's South African
operations, and a R20million loan facility to cover guarantee requirements
related to the group's South African mining operations. During the year Black
Wattle breached one of the covenants of the facility related to the accounting
net asset value of the company. Due to the improved performance of the company
the breach was subsequently rectified and the breach did not affect the ongoing
use of the facility, or the ability to renew the facility again at the
appropriate times.
In December 2014, the group signed a £6 million term loan facility with
Santander. This new loan replaces the previous £5 million term facility and
overdraft held with Royal Bank of Scotland. The Loan is secured against the
Company's UK retail property portfolio. The new debt package has a five year
term and is repayable at the end of the term. The interest cost of the loan is
2.35% above LIBOR.
As a result of the completion of the above agreed banking facilities as well as
the acceptable levels of profitability and cash generation the mine is expected
to continue to achieve in 2015, the Directors believe that the company has
adequate resources to continue in operational existence for the foreseeable
future and that the company 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
27 April 2015
GOVERNANCE
Statement of the Chairman of the Remuneration Committee
The remuneration committee presents its report for the year ended 31 December
2014.
The Annual Remuneration Report details remuneration awarded to directors and
non-executive directors during the year. The shareholders will be asked to
approve the Annual Remuneration Report as an ordinary resolution (as in
previous years) at the AGM in June 2015.
A copy of the remuneration policy, which details the remuneration policy for
directors, can be found at www.bisichi.co.uk. The remuneration policy was
subject to a binding vote which was approved by shareholders at the AGM in June
2014. The approval will apply for a 3 year period commencing 11 June 2014. The
approved policy took effect from 11 June 2014.
The remuneration committee reviewed the existing policy and deemed no changes
necessary to the current arrangements.
Both of the above reports have been prepared in accordance with The Large and
Medium-sized Companies and Groups (Accounts and Reports) (Amendment)
Regulations 2013.
The Company's auditors, BDO LLP are required by law to audit certain
disclosures and where disclosures have been audited they are indicated as such.
Christopher Joll
Chairman - remuneration committee
24 Bruton Place
London W1J 6NE
27 April 2015
GOVERNANCE
Annual Remuneration Report
The following information has been audited:
Single total figure of remuneration for the year ended 31 December 2014
Salaries Bonuses Benefits Pension Total Notional Total
and Fees before value 2014
Share of
options vesting
Share
options
Executive Directors
Sir Michael 75 - - - 75 - 75
Heller
A R Heller 450 300 54 32 836 26 862
G J Casey 124 100 14 16 254 - 254
R Grobler 149 102 15 8 274 - 274
Non-Executive Directors
C A Joll* 25 - - - 25 - 25
J A Sibbald* 2 - 3 - 5 - 5
Total 825 502 86 56 1,469 26 1,495
*Members of the remuneration committee for the year ended 31 December 2014
Single total figure of remuneration for the year ended 31 December 2013
Salaries Bonuses Benefits Pension Total Notional Total
and Fees before value 2013
Share of
options vesting
Share
options
Executive Directors
Sir Michael Heller 75 - - - 75 - 75
A R Heller 450 103 31 30 614 - 614
G J Casey 119 75 10 16 220 - 220
R Grobler 142 50 22 7 221 - 221
Non-Executive Directors
C A Joll* 25 - - - 25 - 25
J A Sibbald* 2 - 3 - 5 - 5
27 - 3 - 30 - 30
Total 813 228 66 53 1,160 - 1,160
*Members of the remuneration committee for the year ended 31 December 2013
Summary of directors' terms
Date of Unexpired Notice
contract term period
Executive directors
Sir Michael Heller November Continuous 6 months
1972
A R Heller January Continuous 3 months
1994
G J Casey June 2010 Continuous 3 months
R J Grobler April Continuous 3 months
2008
Non-executive directors
C A Joll February Continuous 3 months
2001
J A Sibbald October Continuous 3 months
1988
Pension schemes and incentives
Three (2013: three) directors have benefits under money purchase pension
schemes. Contributions in 2014 were £56,000 (2013: £53,000), see table above.
Scheme interests awarded during the year
No scheme options were awarded during the year ended 31 December 2014.
Share option schemes
The Company currently has three "Unapproved" Share Option Schemes which are not
subject to HM Revenue and Customs (HMRC) approval. The "2006 Scheme" was
approved by shareholders on 29 June 2006, and the "2010 Scheme" was approved by
shareholders on 7 June 2011. The "2012 Scheme" was approved by the remuneration
committee of the Company on 28 September 2012. Existing options over ordinary
shares granted under the First Scheme lapsed on 29 September 2012. All
available options under each of the Schemes have been granted.
Number of share options
Option 1 Options 31 Exercisable Exercisable
price* January Granted/ December from to
2014 (Exercised) 2014
in 2014
The 2006 Scheme
A R Heller 237.5p 275,000 - 275,000 4/10/2009 3/10/2016
Employee 237.5p 50,000 - 50,000 4/10/2009 3/10/2016
The 2010 Scheme
G J Casey 202.5p 80,000 - 80,000 31/08/2013 30/08/2020
The 2012 Scheme
A R Heller 34p 233,000 (40,000) 193,000 01/10/2012 30/09/2022
*Middle market price at date of grant
No consideration is payable for the grant of options under the Unapproved Share
Option Schemes.
Performance conditions:
The exercise of options under the Unapproved Share Option Schemes, for certain
option issues, is subject to the satisfaction of objective performance
conditions specified by the remuneration committee, which will conform to
institutional shareholder guidelines and best practice provisions in force from
time to time. The performance conditions for the 2010 scheme, agreed by members
on 31 August 2010, requires growth in net assets over a three year period to
exceed the growth in the retail price index by a scale of percentages. There
are no performance conditions attached to the other schemes.
Payments to past directors
No payments were made to past directors in the year ended 31 December 2014.
Payments for loss of office
No payments for loss of office were made in the year ended 31 December 2014.
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
31.12.2014 1.1.2014 31.12.2014 1.1.2014
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 - - -
The following information is unaudited:
The following graph illustrates the Company's performance compared with a broad
equity market index over a ten year period. Performance is measured by total
shareholder return. The directors have chosen the FTSE All Share Mining index
as a suitable index for this comparison as it gives an indication of
performance against a spread of quoted companies in the same sector.
The middle market price of Bisichi Mining PLC ordinary shares at 31 December
2014 was 80p (2013-109.75p). During the year the share price ranged between 78p
and 125p.
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 2005 to
31 December 2014.
Year Managing Managing Director Annual bonus payout Long-term incentive
Director Single total figure against maximum vesting rates against
of opportunity* maximum opportunity*
remuneration % %
£'000
2014 A R Heller 836 22% N/A
2013 A R Heller 614 N/A N/A
2012 A R Heller 544 N/A N/A
2011 A R Heller 626 N/A N/A
2010 A R Heller 568 N/A N/A
2009 AR Heller 817 N/A N/A
2008 AR Heller 716 N/A N/A
2007 AR Heller 961 N/A N/A
2006 AR Heller 462 N/A N/A
2005 AR Heller 413 N/A N/A
Bisichi Mining PLC does not have a Chief Executive so the table includes the
equivalent information for the Managing Director.
*There were no formal criteria or conditions to apply in determining the amount
of bonus payable or the number of shares to be issued prior to 2014.
Percentage change in remuneration of director undertaking role of Managing
Director
Managing Director UK based employees
£'000 £'000
2014 2013 % change 2014 2013 % change
Base salary 450 450 0% 199 194 2.6%
Benefits 54 31 74.2% 14 10 40.0%
Bonuses 300 103 191.3% 100 75 33.3%
Bisichi Mining PLC does not have a Chief Executive so the table includes the
equivalent information for the Managing Director.
The comparator group chosen is all UK based employees as the remuneration
committee believe this provides the most accurate comparison of underlying
increases based on similar annual bonus performances utilised by the group.
Relative importance of spend on pay
The total expenditure of the Group on remuneration to all employees (see Notes
28 and 32 to the financial statements) is shown below:
2014 2013
£'000 £'000
Employee remuneration 5,057 5,850
Distribution to shareholders 427 425
Statement of implementation of remuneration policy
The remuneration policy was approved at the AGM in June 2014. The policy took
effect from 11 June 2014 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 2014. No increases were awarded and no external advice was taken in
reaching this decision.
Shareholder voting
At the Annual General Meeting on 11 June 2014, there was an advisory vote on
the resolution to approve the remuneration report, other than the part
containing the remuneration policy. In addition, there was a binding vote on
the resolution to approve the remuneration policy the results of which are
detailed below:
% of votes % of votes No of votes
for against withheld
Resolution to approve the Remuneration Report 98.73% 1.06% 4,693
Resolution to approve the Remuneration Policy 98.75% 1.04% 5,405
Service contracts
All executive directors have full-time contracts of employment with the
Company. Non-executive directors have contracts of service. No director has a
contract of employment or contract of service with the Company, its joint
venture or associated companies with a fixed term which exceeds twelve months.
Directors notice periods (see page 29 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 remuneration
policy on directors' remuneration, which was approved by a binding vote at the
2014 AGM. The approved policy took effect from 11 June 2014. A copy of the full
policy can be found at www.bisichi.co.uk.
Element Purpose Policy Operation Opportunity and
performance
conditions
Executive directors
Base To recognise: Considered by Reviewed annually There is no
salary Skills remuneration prescribed maximum
Responsibility committee on Paid monthly in salary
Accountability appointment cash or maximum rate of
Experience increase
Value Set at a level
considered No specific
appropriate to performance
attract, retain conditions are
motivate and attached to base
reward the right salaries
individuals.
Pension To provide Company The contribution Company contribution
competitive contribution payable by the offered at up to 10%
retirement offered at up to Company is of base salary as
benefits 10% of base salary included in the part of overall
as part of overall director's remuneration package
remuneration contract of
package employment No specific
performance
Paid into money conditions are
purchase schemes attached to pension
contributions
Benefits To provide a Contractual The committee The costs associated
competitive benefits can retains the with benefits
benefits include but are discretion to offered are closely
package not limited to: approve changes controlled and
Car or car in contractual reviewed on an
allowance benefits in annual basis
Group health cover exceptional
Death in service circumstances or No specific
cover where factors performance
Permanent health outside the conditions are
insurance control of the attached to
Group lead to contractual benefits
increased costs
(e.g. medical The value of
inflation) benefits for each
director for the
year ended 31
December 2014 is
shown in the table
on page 28
Annual To reward and In assessing the The remuneration The current maximum
Bonus incentivise performance of the committee bonus opportunity
executive team, determines the will not exceed 200%
and in particular level of bonus on of base salary in
to determine an annual basis any one year, but
whether bonuses applying such the remuneration
are merited the performance committee reserves
remuneration conditions and the power to award
committee takes performance up to 300% in an
into account the measures as it exceptional year
overall considers
performance of the appropriate Performance
business. conditions will be
assessed on an
Bonuses are annual basis. The
generally offered performance measures
in cash applied may be
financial,
non-financial,
corporate,
divisional or
individual and in
such proportion as
the remuneration
committee considers
appropriate
Share To provide Granted under Offered at Entitlement to share
Options executive existing schemes appropriate times options is not
directors with (see page 29) by the subject to any
a long-term remuneration performance
interest in committee conditions
the company Share options will
be offered by the
remuneration
committee as
appropriate
There are no maximum
levels for share
options offered.
Non-executive directors
Base To recognise: Considered by the Reviewed annually There is no
salary Skills board on prescribed maximum
Experience appointment salary or maximum
Value rate of increase. No
Set at a level specific performance
considered conditions are
appropriate to attached to base
attract, retain salaries
and motivate the
individual
Experience and
time required for
the role are
considered on
appointment
Pension No pension offered
Benefits No benefits The costs associated
offered except to with the benefit
one non-executive offered is closely
director who is controlled and
eligible for reviewed on an
health cover (see annual basis
annual
remuneration No specific
report page 28) performance
conditions are
attached to
contractual benefits
Share Non-executive
Options directors do not
participate in the
share option
schemes
The remuneration committee consider the performance measures outlined in the
table above to be appropriate measures of performance and that the KPI's chosen
align the interests of the directors and shareholders.
GOVERNANCE
Audit Committee Report
The committee's terms of reference have been approved by the board and follow
published guidelines, which are available from the company secretary. The audit
committee comprises the two non-executive directors, Christopher Joll
(chairman), an experienced financial PR executive and John Sibbald, a retired
chartered accountant.
The Audit Committee's prime tasks are to:
Review the scope of external audit, to receive regular reports from the auditor
and to review the half-yearly and annual accounts before they are presented to
the board, focusing in particular on accounting policies and areas of
management judgment and estimation;
Monitor the controls which are in force to ensure the integrity of the
information reported to the shareholders;
Assess key risks and to act as a forum for discussion of risk issues and
contribute to the board's review of the effectiveness of the group's risk
management control and processes;
Act as a forum for discussion of internal control issues and contribute to the
board's review of the effectiveness of the group's internal control and risk
management systems and processes;
Consider each year the need for an internal audit function;
Advise the board on the appointment of external auditors and rotation of the
audit partner every five years, and on their remuneration for both audit and
non-audit work, and discuss the nature and scope of their audit work;
Participate in the selection of a new external audit partner and agree the
appointment when required;
Undertake a formal assessment of the auditors' independence each year which
includes:
• a review of non-audit services provided to the group and related fees;
• discussion with the auditors of a written report detailing all relationships
with the company and any other parties that could affect independence or the
perception of independence;
• a review of the auditors' own procedures for ensuring the independence of the
audit firm and partners and staff involved in the audit, including the regular
rotation of the audit partner; and
• obtaining written confirmation from the auditors that, in their professional
judgement, they are independent.
Meetings
The committee meets prior to the annual audit with the external auditors to
discuss the audit plan and again prior to the publication of the annual
results. These meetings are attended by the external audit partner, managing
director, director of finance and company secretary. Prior to bi-monthly board
meetings the members of the committee meet on an informal basis to discuss any
relevant matters which may have arisen. Additional formal meetings are held as
necessary.
During the past year the committee:
• met with the external auditors, and discussed their report to the Audit
Committee;
• approved the publication of annual and half-year financial results;
• considered and approved the annual review of internal controls;
• decided that due to the size and nature of operation there was not a current
need for an internal audit function;
• agreed the independence of the auditors and approved their fees for both
audit and not-audit services as set out in note 4 to the financial statements.
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, Baker Tilly UK Audit LLP. In South Africa
Grant Thornton (Jhb) Inc. acts as the external auditor to the South African
companies, and the work of that firm was reviewed by BDO LLP for the purpose of
the group audit.
Christopher Joll
Chairman - audit committee
24 Bruton Place
London W1J 6NE
27 April 2015
GOVERNANCE
VALUERS' CERTIFICATES
To the directors of Bisichi Mining PLC
In accordance with your instructions we have carried out a valuation of the
freehold property interests held as at 31 December 2014 by the company as
detailed in our Valuation Report dated 25 February 2015.
Having regard to the foregoing, we are of the opinion that the open market
value as at 31 December 2014 of the interests owned by the Company was £
11,575,000 being made up as follows:
£000
Freehold 8,925
Leasehold 2,650
11,575
Leeds Carter Towler
25 February 2015
Regulated by Royal Institute
of Chartered Surveyors
GOVERNANCE
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;
* prepare a strategic report, director's 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.
Website publication
The directors are responsible for ensuring the annual report and the financial
statements are made available on a website. Financial statements are published
on the company's website in accordance with legislation in the United Kingdom
governing the preparation and dissemination of financial statements, which may
vary from legislation in other jurisdictions. The maintenance and integrity of
the company's website is the responsibility of the directors. The directors'
responsibility also extends to the ongoing integrity of the financial
statements contained therein.
Directors' responsibilities pursuant to DTR4
The directors confirm to the best of their knowledge:
* The group financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRSs) as adopted by the
European Union and Article 4 of the IAS Regulation and give a true and fair
view of the assets, liabilities, financial position and profit and loss of
the group.
* The annual report includes a fair review of the development and performance
of the business and the financial position of the group and the parent
company, together with a description or the principal risks and
uncertainties that they face.
GOVERNANCE
Independent auditor's report
To the members of Bisichi Mining PLC
We have audited the financial statements of Bisichi Mining PLC for the year
ended 31 December 2014 which comprise the consolidated income statement, the
consolidated statement of comprehensive income, the consolidated balance sheet,
the consolidated statement of changes in shareholders' equity, the consolidated
cash flow statement, the parent company balance sheet and the related notes.
The financial reporting framework that has been applied in the preparation of
the group financial statements is applicable law and International Financial
Reporting Standards (IFRSs) as adopted by the European Union. The financial
reporting framework that has been applied in preparation of the parent company
financial statements is applicable law and United Kingdom Accounting Standards
(United Kingdom Generally Accepted Accounting Practice).
This report is made solely to the company's members, as a body, in accordance
with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the company's members those matters we are
required to state to them in an auditor's report and for no other purpose. To
the fullest extent permitted by law, we do not accept or assume responsibility
to anyone other than the company and the company's members as a body, for our
audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the statement of directors' responsibilities, the
directors are responsible for the preparation of the financial statements and
for being satisfied that they give a true and fair view. Our responsibility is
to audit and express an opinion on the financial statements in accordance with
applicable law and International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Financial Reporting Council's (FRC's)
Ethical Standards for Auditors
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on
the FRC's website at www.frc.org.uk/auditscopeukprivate.
Opinion on financial statements
In our opinion:
* the financial statements give a true and fair view of the state of the
group's and the parent company's affairs as at 31 December 2014 and of the
group's profit for the year then ended;
* the group financial statements have been properly prepared in accordance
with IFRSs as adopted by the European Union;
* the parent company financial statements have been properly prepared in
accordance with United Kingdom Generally Accepted Accounting Practice; and
* the financial statements have been prepared in accordance with the
requirements of the Companies Act 2006; and, as regards the group financial
statements, Article 4 of the IAS Regulation.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion:
* the part of the directors' remuneration report to be audited has been
properly prepared in accordance with the Companies Act 2006; and
* the information given in the strategic report and directors' report for the
financial year for which the financial statements are prepared is
consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following:
Under the Companies Act 2006 we are required to report to you if, in our
opinion:
* adequate accounting records have not been kept by the parent company, or
returns adequate for our audit have not been received from branches not
visited by us; or
* the parent company financial statements and the part of the directors'
remuneration report to be audited are not in agreement with the accounting
records and returns; or
* certain disclosures of directors' remuneration specified by law are not
made; or
* we have not received all the information and explanations we require for
our audit.
Andrew Huddleston (senior statutory auditor)
For and on behalf of BDO LLP, statutory auditor
London,
United Kingdom
27 April 2015
BDO LLP is a limited liability partnership registered in England and Wales
(with registered number OC305127).
Consolidated income statement
for the year ended 31 December 2014
Notes 2014 2014 2014 2013 2013 2013
Trading Revaluations Total Trading Revaluations Total
£'000 £'000 £'000 £'000 £'000 £'000
Group revenue 1 26,500 - 26,500 35,105 - 35,105
Operating costs 2 (22,224) - (22,224) (31,271) - (31,271)
Operating profit before 4,276 - 4,276 3,834 - 3,834
depreciation, fair
value adjustments and
exchange movements
Depreciation 2 (2,682) - (2,682) (2,817) - (2,817)
Operating profit before 1 1,594 - 1,594 1,017 - 1,017
fair value adjustments
and exchange movements
Exchange losses (143) - (143) (880) - (880)
Decrease in value of 3 - (6) (6) - (53) (53)
investment properties
Increase/(Decrease) in - 1 1 - (1) (1)
value of other
investments
(Reversal of gains)\ - (82) (82) - 40 40
Gains on held for
trading investments
Operating profit/(loss) 1 1,451 (87) 1,364 137 (14) 123
Share of profit in 13 65 498 563 - 99 99
joint ventures
Profit before interest 1,516 411 1,927 137 85 222
and taxation
Interest receivable 234 - 234 235 - 326
Interest payable 6 (593) - (593) (446) - (446)
Profit before tax 4 1,157 411 1,568 17 85 102
Taxation 7 (348) (17) (365) 98 164 262
Profit for the year 809 394 1,203 115 249 364
Attributable to:
Equity holders of the 709 394 1,103 106 249 355
company
Non-controlling 26 100 - 100 9 - 9
interest
Profit for the year 809 394 1,203 115 249 364
Profit per share - 9 6.64p 3.69p 10.33p 1.00p 2.35p 3.35p
basic
Profit per share - 9 6.57p 3.65p 10.23p 0.99p 2.31p 3.30p
diluted
Trading income reflects all the trading activity on mining and property
operations. Revaluation Income reflects the revaluation of investment
properties and other assets within the group and any proportion of these
amounts within Joint Ventures. The total column represents the consolidated
income statement presented in accordance with IAS 1.
Consolidated statement of comprehensive income
for the year ended 31 December 2014
2014 2013
£'000 £'000
Profit for the year 1,203 364
Other comprehensive income:
Items that may be subsequently recycled to the income statement:
Exchange differences on translation of foreign operations (121) (858)
Transfer of gain on available for sale investments 56 -
Taxation (15) -
Other comprehensive income for the year net of tax (80) (858)
Total comprehensive income for the year net of tax 1,123 (494)
Attributable to:
Equity shareholders 1,036 (409)
Non-controlling interest 87 (85)
1,123 (494)
Consolidated balance sheet
at 31 December 2014
Notes 2014 2013
£'000 £'000
Assets
Non-current assets
Value of investment properties 10 11,575 11,559
Fair value of head lease 30 195 196
Investment properties 11,770 11,755
Mining reserves, plant and equipment 11 6,064 7,096
Investments in joint ventures accounted for using equity 12 2,898 3,235
method
Loan to joint venture 12 1,040 984
Other investments 12 152 151
Total non-current assets 21,924 23,221
Current assets
Inventories 15 1,760 1,756
Trade and other receivables 16 6,860 8,659
Corporation tax recoverable 35 36
Available for sale investments 17 796 822
Cash and cash equivalents 2,838 1,707
Total current assets 12,289 12,980
Total assets 34,213 36,201
Notes 2014 2013
£'000 £'000
Liabilities
Current liabilities
Borrowings 19 (2,139) (8,042)
Trade and other payables 18 (4,986) (8,080)
Current tax liabilities (23) (2)
Total current liabilities (7,148) (16,124)
Non-current liabilities
Borrowings 19 (6,013) (118)
Provision for rehabilitation 20 (930) (874)
Finance lease liabilities 30 (195) (196)
Deferred tax liabilities 22 (2,208) (1,902)
Total non-current liabilities (9,346) (3,090)
Total liabilities (16,494) (19,214)
Net assets 17,719 16,987
Equity
Share capital 23 1,068 1,064
Share premium account 258 249
Translation reserve (1,677) (1,569)
Available for sale reserve 41 -
Other reserves 24 652 587
Retained earnings 16,973 16,297
Total equity attributable to equity shareholders 17,315 16,628
Non-controlling interest 26 404 359
Total equity 17,719 16,987
These financial statements were approved and authorised for issue by the board
of directors on 27 April 2015 and signed on its behalf by:
A R Heller G J Casey Company Registration No. 112155
Director Director
Consolidated statement of changes in shareholders' equity
for the year ended 31 December 2014
Share Share Translation Other Retained Total Non- Total
capital Premium reserves Available-for-sale reserves earnings £'000 controlling equity
£'000 £'000 £'000 reserves £'000 £'000 interest £'000
£'000 £'000
Balance at 1 1,056 169 (805) - 528 16,367 17,315 444 17,759
January 2013
Revaluation of - - - - - (53) (53) - (53)
investment
properties
Other income - - - - - 408 408 9 417
statement movements
Profit for the year - - - - - 355 355 9 364
Other comprehensive - - (764) - - - (764) (94) (858)
income
Total comprehensive - - (764) - - 355 (409) (85) (494)
income for the year
Dividend (note 8) - - - - - (425) (425) - (425)
Share issues 8 80 - - - - 88 - 88
Equity share - - - - 59 - 59 - 59
options
Balance at 1 1,064 249 (1,569) - 587 16,297 16,628 359 16,987
January 2014
Revaluation of - - - - - (6) (6) - (6)
investment
properties
Other income - - - - - 1,109 1,109 100 1,209
statement movements
Profit for the year - - - - - 1,103 1,103 100 1,203
Other comprehensive - - (108) 41 - - (67) (13) (80)
income
Total comprehensive - - (108) 41 - 1,103 1,036 87 1,123
income for the year
Dividend (note 8) - - - - - (427) (427) (42) (469)
Share issues 4 9 - - - - 13 - 13
Equity share - - - - 65 - 65 - 65
options
Balance at 31 1,068 258 (1,677) 41 652 16,973 17,315 404 17,719
December 2014
Consolidated cash flow statement
for the year ended 31 December 2014
Year Year
ended ended
31 31
December December
2014 2013
£'000 £'000
Cash flows from operating activities
Operating profit 1,364 123
Adjustments for:
Depreciation 2,682 2,817
Share based payment expense 65 120
Loss/(Gain) on investment held for trading 82 (40)
Unrealised loss on investment properties 6 53
Unrealised (gain)/loss on other investments (1) 1
Share of profit of joint venture - -
Cash flow before working capital 4,198 3,074
Change in inventories (4) 120
Change in trade and other receivables 2,438 (2,320)
Change in trade and other payables (2,940) 433
Change in provisions - 15
Cash generated from operations 3,692 1,322
Interest received 234 326
Interest paid (506) (357)
Income tax received (14) 11
Cash flow from operating activities 3,406 1,302
Cash flows from investing activities
Acquisition of reserves, plant and equipment (1,903) (3,060)
Disposal/(acquisitions) of investments - (102)
Cash flow from investing activities (1,903) (3,162)
Year Year
ended ended
31 31
December December
2014 2013
£'000 £'000
Cash flows from financing activities
Borrowings drawn 5,902 39
Borrowings repaid (5,000) (96)
Equity dividends paid (427) (425)
Net proceeds from issue of ordinary shares 13 27
Cash flow from financing activities 488 (455)
Net Increase/(decrease) in cash and cash equivalents 1,991 (2,315)
Cash and cash equivalents at 1 January (1,322) 718
Exchange adjustment 50 275
Cash and cash equivalents at 31 December 719 (1,322)
Cash and cash equivalents at 31 December comprise:
Cash and cash equivalents as presented in the balance sheet 2,838 1,707
Bank overdrafts (secured) (2,119) (3,029)
719 (1,322)
Group Accounting Policies
for the year ended 31 December 2014
Basis of accounting
The results for the year ended 31 December 2014 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. The principal accounting policies are
described below:
The group financial statements are presented in £ sterling and all values are
rounded to the nearest thousand pounds (£000) except when otherwise stated.
Going concern
The group has considerable financial resources available at short notice
including cash, held for trading investments and its £2m loan to Dragon Retail
Properties Limited which is repayable on demand. In addition its investment
property assets benefit from long term leases with the majority of its tenants.
Black Wattle Colliery, its direct mining asset, experienced an improvement in
profitability and cashflow in the second half of 2014. The directors expect
that that the market conditions experienced in the second half of 2014 will be
similar going into 2015.
The directors therefore have a reasonable expectation that the mine will
continue to achieve acceptable levels of profitability in 2015. As a
consequence, the directors believe that the group is well placed to manage its
business risks successfully.
In October 2013, an increase in the structured trade finance facility from
R60million (South African Rand) to R80million was signed by Black Wattle
Colliery (Pty) Limited ("Black Wattle") with Absa Bank Limited, a South African
subsidiary of Barclays Bank PLC. The facility is renewed annually at 30 June
and is secured against inventory, debtors and cash that are held in the group's
South African operations. This facility comprises of a R60million revolving
loan to cover the working capital requirements of the group's South African
operations, and a R20million loan facility to cover guarantee requirements
related to the group's South African mining operations. During the year Black
Wattle breached one of the covenants of the facility related to the accounting
net asset value of the company. Due to the improved performance of the company
the breach was subsequently rectified and the breach did not affect the ongoing
use of the facility, or the ability to renew the facility again at the
appropriate times.
In December 2014, the group signed a £6 million term loan facility with
Santander. This new loan replaces the previous £5 million term facility and
overdraft held with Royal Bank of Scotland. The Loan is secured against the
Company's UK retail property portfolio. The new debt package has a five year
term and is repayable at the end of the term. The interest cost of the loan is
2.35% above LIBOR. At year-end an amount of £472,500 was held in a blocked
account by Santander UK PLC that relates to the new £6million loan facility.
The funds have been blocked in order to satisfy the bank that certain
conditions relating to the facility will be fulfilled. Subsequent to year end
these conditions have been fulfilled and Santander UK PLC have confirmed that
these funds will be released in the near future.
As a result of the completion of the above agreed banking facilities, the
Directors believe that the company has adequate resources to continue in
operational existence for the foreseeable future and that the company 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 financial statements are prepared in accordance with International
Financial Reporting Standards and Interpretations in force at the reporting
date. These are prepared under the historic cost basis as modified by the
revaluation of investment properties and held for trading investments.
During 2014 the following accounting standards and guidance were adopted by the
group:
* Amendments to IAS 32 - Financial instruments: presentation - offsetting
financial assets and financial liabilities
* Amendments to IAS 39 - Novation of Derivatives and Continuation of Hedge
* IFRS 10 - 12 and IAS 27 - Investment entities and Joint Arrangements
* IFRIC 21 - Levies
The accounting treatment detailed in the above standards have not resulted in a
change of the Group's accounting policy and had no material impact on the
group's financial position, group structure or performance.
All other standards and interpretations that were mandatory for the accounting
period and were required to be adopted by the group either had no material
impact on the group's financial statements or were not relevant to the
operations of the group.
The group has not adopted any standards or interpretations in advance of the
required implementation dates. The following new or revised standards that are
applicable to the group were issued but not yet effective:
* IFRS 9 - Financial instruments
* IFRS 15 - Revenue from Contracts with Customers
* Amendments to IAS 16 and IAS 38 - Clarification of Acceptable Methods of
Depreciation and Amortisation
It is not expected that adoption of any standards or interpretations which have
been issued by the International Accounting Standards Board but have not been
adopted will have a material impact on the financial statements.
Key judgements and estimates
The directors consider their judgements and estimates surrounding the life of
the mine and its reserves to have the most significant effect on the amounts
recognised in the financial statements and to be the area where the financial
statements are at most risk of a material adjustment due to estimation
uncertainty. Areas where key estimates and judgements are considered to have a
significant effect on the amounts recognised in the financial statements
include:
Depreciation, amortisation of mineral rights, mining development costs and
plant & equipment
The annual depreciation/amortisation charge to operations, can fluctuate from
initial estimates. This could generally result when there are significant
changes in any of the factors or assumptions used in estimating mineral
reserves and resources which in turn affects the life of mine or the expected
life of reserves. Estimates of proven and probable reserves and resources are
prepared by suitable qualified experts. Assessments of depreciation/
amortisation rates against the estimated reserve and resource base are
performed regularly.
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 adjusted discount 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.
Impairment
Property, plant and equipment are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying value may not be fully
recoverable. Future cash flow estimates are discounted using asset specific
discount rates and are based on expectations about future operations, primarily
comprising estimates about production and sales volumes, commodity prices,
reserves and resources, operating, rehabilitation and restoration costs and
capital expenditures. Changes in such estimates could impact recoverable values
of these assets. Estimates are reviewed regularly by management.
Fair value measurements of investment properties
An assessment of the fair value of assets and liabilities, in particular
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 at the relevant transaction date or reporting
period end. To the extent possible, the assumptions and inputs used take into
account externally verifiable inputs. However, such information is by nature
subject to uncertainty. The directors note that the fair value measurement of
the investment properties, can be considered to be less judgemental where
external valuers have been used and as a result of the nature of the underlying
assets.
Basis of consolidation
The group accounts incorporate the accounts of Bisichi Mining PLC and all of
its subsidiary undertakings, together with the group's share of the results of
its joint ventures. Non-controlling interests in subsidiaries are presented
separately from the equity attributable to equity owners of the parent company.
When changes in ownership in a subsidiary do not result in a loss of control,
the non-controlling shareholders' interests are initially measured at the
non-controlling interests' proportionate share of the subsidiaries net assets.
Subsequent to this, 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. Total comprehensive income is
attributed to non-controlling interests even if this results in the
non-controlling interests having a deficit balance.
The definition of control according to IFRS 10 was applied during the year.
"Control" assumes the simultaneous fulfillment 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 analyzed for their relevant activities and variable returns, and
the link between the variable returns and the extent to which their relevant
activities could be influenced in order to ensure the definition is correctly
applied.
Revenue
Revenue comprises sales of coal and property rental income. Revenue is
recognised when delivery of the product or service has been made and when the
customer has a legally binding obligation to settle under the terms of the
contract and has assumed all significant risks and rewards of ownership.
Revenue is only recognised on individual sales of coal when all of the
significant risks and rewards of ownership have been transferred to a third
party. In most instances revenue is recognised when the product is delivered to
the location specified by the customer, which is typically when loaded into
transport, where the customer pays the transportation costs.
Rental income which excludes services charges recoverable from tenants, is
recognised in the group income statement on a straight-line basis over the term
of the lease. This includes the effect of lease incentives.
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. Properties held for use in the business are not
recognised as investment properties and are held at depreciated historical
cost.
The fair value of the head leases is the net present value of the current head
rent payable on leasehold properties until the expiry of the lease.
Mining reserves, plant and equipment
The cost of property, plant and equipment comprises its purchase price and any
costs directly attributable to bringing the asset to the location and condition
necessary for it to be capable of operating in accordance with agreed
specifications. Freehold land is not depreciated. Other property, plant and
equipment is stated at historical cost less accumulated depreciation.
Provisions
Provisions are recognised when the group has a present obligation as a result
of a past event which it is probable will result in an outflow of economic
benefits that can be reliably estimated.
A provision for rehabilitation of the mine is carried at present value and is
provided for over the life of mine. The provision includes the restoration of
the underground, opencast, surface operations and de-commissioning of plant and
equipment and is estimated to be utilised at the end of the life of mine of the
group. 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.
Mine reserves and development cost
The purpose of mine development is to establish secure working conditions and
infrastructure to allow the safe and efficient extraction of recoverable
reserves. Depreciation on mine development is not charged until production
commences or the assets are put to use. On commencement of full production,
depreciation is charged over the life of the associated mine reserves on a unit
of production basis.
Surface mine development
Expenditure incurred prior to the commencement of working surface mine sites,
net of any residual value and taking into account the likelihood of the site
being mined, is capitalised within property, plant and equipment and charged to
the income statement over the life of the recoverable reserves of the scheme.
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.
Residual values and useful lives are reviewed, and adjusted if appropriate, at
each balance sheet date. Changes to the estimated residual values or useful
lives are accounted for prospectively. Heavy surface mining and other plant and
equipment is depreciated at varying rates depending upon its expected usage.
The depreciation rates generally applied are:
Mining equipment The shorter of its useful life or the life of the mine
Mining reserves Over the expected life of the reserves using the units of
production basis
Motor vehicles 25-33 per cent per annum
Office equipment 10-33 per cent per annum
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. Details of the
share options in issue are disclosed in the Directors' Remuneration Report on
page 29 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 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. Where foreign
operations are disposed of, the cumulative exchange differences of that foreign
operation are recognised in the consolidated income statement when the gain or
loss on disposal is recognised.
Transactions in foreign currencies are translated at the exchange rate ruling
on transaction date.
Financial instruments
The group classifies financial instruments, or their component parts, on
initial recognition as a financial asset, a financial liability or an equity
instrument in accordance with the substance of the contractual arrangement.
Bank loans and overdrafts
Bank loans and overdrafts are included as financial liabilities on the group
balance sheet at the amounts drawn on the particular facilities net of the
unamortised cost of financing. Interest payable on those facilities is expensed
as finance cost in the period to which it relates.
Finance lease liabilities
Finance lease liabilities arise for those investment properties held under a
leasehold interest and accounted for as investment property. The liability is
initially calculated as the present value of the minimum lease payments,
reducing in subsequent reporting periods by the apportionment of payments to
the lessor.
Interest rate derivatives
The group uses derivative financial instruments to manage the interest rate
risk associated with the financing of the group's business. No trading in such
financial instruments is undertaken. At each reporting date, these interest
rate derivatives are recognised at fair value, being the estimated amount that
the group would receive or pay to terminate the agreement at the balance sheet
date, taking into account current interest rates and the current credit rating
of the counterparties. The gain or loss at each fair value re-measurement is
recognised immediately in the income statement.
Available for sale investments
Financial assets/liabilities available for sale or held for short-term gain are
measured at fair value and movements in fair value are charged/credited to the
statement of comprehensive income in the period.
Trade receivables
Trade receivables do not carry any interest and are stated at their nominal
value as reduced by appropriate allowances for estimated recoverable amounts as
the interest that would be recognised from discounting future cash payments
over the short payment period is not considered to be material.
Trade payables
Trade payables are not interest bearing and are stated at their nominal value,
as the interest that would be recognised from discounting future cash payments
over the short payment period is not considered to be material.
Other financial assets and liabilities
The groups other financial assets and liabilities not disclosed above are
accounted for at amortised cost.
Joint ventures
Investments in joint ventures, being those entities over whose activities the
group has joint control, as established by contractual agreement, are included
at cost together with the group's share of post-acquisition reserves, on an
equity basis. 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
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. Net realisable value is based on estimated selling price less all
further costs to completion and all relevant marketing, selling and
distribution costs.
Other investments
Other investments that do not have a quoted market price in an active market
and whose fair value cannot be reliably measured are recognised at cost less
any provision for impairment.
Impairment
Whenever events or changes in circumstance indicate that the carrying amount of
an asset may not be recoverable an asset is reviewed for impairment. A review
involves determining whether the carrying amounts are in excess of their
recoverable amounts. An asset's recoverable amount is determined as the higher
of its fair value less costs of disposal and its value in use. Such reviews are
undertaken on an asset-by-asset basis, except where assets do not generate cash
flows independent of other assets, in which case the review is undertaken on a
company or group level.
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.
Segmental reporting
For management reporting purposes, the group is organised into business
segments distinguishable by economic activity. The group's only business
segments are mining activities and investment properties. These business
segments are subject to risks and returns that are different from those of
other business segments and are the primary basis on which the group reports
its segment information. This is consistent with the way the group is managed
and with the format of the group's internal financial reporting. Significant
revenue from transactions with any individual customer, which makes up 10
percent or more of the total revenue of the group, is separately disclosed
within each segment.
notes to the financial statements
for the year ended 31 December 2014
1. Segmental reporting
2014
Business analysis Mining Property Other Total
£'000 £'000 £'000 £'000
Significant revenue 12,607 - - 12,607
customer A
Significant revenue 6,455 - - 6,445
customer B
Significant revenue 1,793 - - 1,793
customer C
Other revenue 4,681 931 33 5,645
Segment revenue 25,536 931 33 26,500
Operating profit 864 699 31 1,594
before fair value
adjustments &
exchange movements
Revaluation of (143) (6) (81) (230)
investments &
exchange movements
Operating profit/ 721 693 (50) 1,364
(loss) and segment
result
Segment assets 12,058 12,546 2,797 27,401
Unallocated assets
- Non-current 36
assets
- Cash & cash 2,838
equivalents
Total assets 30,275
excluding
investment in joint
ventures
Segment liabilities (6,698) (1,301) (14) (8,013)
Borrowings (60) (5,973) - (6,033)
(6,758) (7,274) (14) (14,046)
Unallocated (2,448)
liabilities
Total liabilities (16,494)
Net assets 13,781
Investment in joint 3,938
ventures non
segmental
Net assets as per 17,719
balance sheet
Geographic analysis United South Other Unallocated Total
Kingdom Africa £'000 £'000 £'000
£'000 £'000
Revenue 964 25,536 - - 26,500
Operating profit/(loss) and segment 643 721 - - 1,364
result
Non-current assets excluding investments 11,780 6,030 - 24 17,834
Total net assets 6,051 5,296 17 6,355 17,719
Capital expenditure 26 1,877 - - 1,903
2013
Business analysis Mining Property Other Total
£'000 £'000 £'000 £'000
Significant revenue customer A 12,981 - - 12,981
Significant revenue customer B 7,448 - - 7,448
Significant revenue customer C 6,829 - - 6,829
Other revenue 6,859 953 35 7,847
Segment revenue 34,117 953 35 35,105
Operating profit before fair value adjustments & 335 649 33 1,017
exchange movements
Revaluation of investments & exchange movements (880) (53) 39 (894)
Operating profit/(loss) and segment result (545) 596 72 123
Segment assets 15,849 11,557 2,823 30,229
Unallocated assets
- Non-current assets 46
- Cash & cash equivalents 1,707
Total assets excluding investment in joint ventures 31,982
Segment liabilities (8,816) (1,010) (22) (9,848)
Borrowings (33) (5,098) - (5,131)
(8,849) (6,108) (22) (14,979)
Unallocated liabilities (4,235)
Total liabilities (19,214)
Net assets 12,768
Investment in joint ventures non segmental 4,219
Net assets as per balance sheet 16,987
Geographic analysis United South Other Unallocated Total
Kingdom Africa £'000 £'000 £'000
£'000 £'000
Revenue 988 34,117 - - 35,105
Operating profit and segment result 668 (545) - - 123
Non-current assets excluding investments 11,765 7,050 - 36 18,851
Total net assets 5,969 7,248 43 3,726 16,986
Capital expenditure 48 3,012 - - 3,060
2. Operating costs
2014 2013
£'000 £'000
Mining 18,244 26,158
Property 97 192
Cost of sales 18,341 26,350
Administration 6,565 7,738
Operating costs 24,906 34,088
The direct property costs are:
Ground rent 8 5
Direct property expense 55 116
Bad debts 34 71
97 192
Operating costs above include depreciation of £2,682,000 (2013: £2,817,000).
3. Loss on revaluation and sale of investment properties
The reconciliation of the investment deficit to the loss on revaluation of
investment properties in the income statement is set out below:
2014 2013
£'000 £'000
Investment deficit (5) (47)
Loss on valuation movement in respect of head lease payments (1) (6)
Loss on revaluation of investment properties (6) (53)
4. Profit before taxation
Profit before taxation is arrived at after charging:
2014 2013
£'000 £'000
Staff costs (see note 28) 5,057 5,850
Depreciation 2,682 2,817
Exchange loss 143 880
Fees payable to the company's auditor for the audit of the 48 35
company's annual accounts
Fees payable to the company's auditor and its associates for
other services:
The audit of the company's subsidiaries pursuant to legislation 3 3
Other services 1 1
The directors consider the auditors were best placed to provide the above
non-audit services.
The audit committee reviews the nature and extent of non-audit services to
ensure that independence is maintained.
5. Directors' emoluments
Directors' emoluments are shown in the Directors' remuneration report on pages
28 and 29 under the heading Directors' remuneration which is within the audited
part of that report.
6. Interest payable
2014 2013
£'000 £'000
On bank overdrafts and bank loans 487 323
Unwinding of discount 87 89
Other interest payable 19 34
Interest payable 593 446
7. Taxation
2014 2013
£'000 £'000
(a) Based on the results for the year:
Corporation tax 16 -
Corporation tax - adjustment in respect of prior year - UK 20
Current tax 36 -
Deferred tax - current year 305 (213)
Deferred tax - adjustment in respect of prior year 24 (49)
Total tax in income statement 365 (262)
(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 23% (2013: 24%)
The differences are explained below:
Profit on ordinary activities before taxation 1,568 102
Tax on profit on ordinary activities at 21.5% (2013: 23.5%) 337 24
Effects of:
Expenses not deductible for tax purposes 45 6
Adjustment to tax rate (2) (101)
Other differences (59) (142)
Adjustment in respect of prior years 44 (49)
Total tax 365 (262)
(c) Analysis of United Kingdom and overseas tax
United Kingdom tax included in above:
2014 2013
£'000 £'000
Corporation tax - -
Adjustment in respect of prior years 20 -
Current tax 20 -
Deferred tax 38 (271)
58 (271)
Overseas tax included in above:
Corporation tax 16 -
Adjustment in respect of prior years - -
Current tax 16 -
Deferred tax 291 9
307 9
8. Dividends paid
2014 2014 2013 2013
Per £'000 Per £'000
share share
Dividends paid during the year relating to the 4.00p 427 4.00p 425
prior period
Dividends to be paid:
Interim dividend for 2014 paid on 6 February 2015 1.00p 107 1.00p 106
Proposed final dividend for 2014 3.00p 320 3.00p 319
4.00p 427 4.00p 425
The dividends to be paid are not accounted for until they have been approved at
the Annual General Meeting. The amount will be accounted for as an
appropriation of retained earnings in the year ending 31 December 2015.
9. Profit and diluted profit per share
Both the basic and diluted profit per share calculations are based on a profit
of £1,103,000 (2013: £355,000). The basic profit per share has been calculated
on a weighted average of 10,673,506 (2013: 10,596,839) 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 10,673,506 (2013: 10,596,839)
plus the dilutive potential ordinary shares arising from share options of
110,975 (2013: 160,982) totalling 10,784,481 (2013: 10,757,821).
10. Investment properties
Freehold Long Total
£'000 Leasehold £'000
£'000
Valuation at 1 January 2014 9,035 2,524 11,559
Additions 22 - 22
Revaluation (132) 126 (6)
Valuation at 31 December 2014 8,925 2,650 11,575
Valuation at 1 January 2013 8,889 2,723 11,612
Revaluation 146 (199) (53)
Valuation at 31 December 2013 9,035 2,524 11,559
Historical cost
At 31 December 2014 4,823 728 5,551
At 31 December 2013 4,801 728 5,529
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:
2014
£'000
Carter Towler 11,575
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 as those held by the group.
Valuations are performed annually and are performed consistently across all
investment properties in the group's portfolio. At each reporting date
appropriately qualified employees of the group verify all significant inputs
and review the computational outputs. Valuers submit their report to the Board
on the outcome of each valuation round.
Valuations take into account tenure, lease terms and structural condition. The
inputs underlying the valuations include market rent or business profitability,
likely incentives offered to tenants, forecast growth rates, yields, EBITDA,
discount rates, construction costs including any specific site costs (for
example section 106), professional fees, developer's profit including
contingencies, planning and construction timelines, lease regear costs,
planning risk and sales prices based on known market transactions for similar
properties to those being valued.
Valuations are based on what is determined to be the highest and best use. When
considering the highest and best use a valuer will consider, on a property by
property basis, its actual and potential uses which are physically, legally and
financially viable. Where the highest and best use differs from the existing
use, the valuer will consider the cost and likelihood of achieving and
implanting this change in arriving at its valuation.
There are often restrictions on Freehold and Leasehold property which could
have a material impact on the realisation of these assets. The most significant
of these occur when planning permission or lease extension and renegotiation of
use are required or when a credit facility is in place. These restrictions are
factored in the property's valuation by the external valuer.
IFRS 13 sets out a valuation hierarchy for assets and liabilities measured at
fair value as follows:
Level 1: valuation based on inputs on quoted market prices in active markets
Level 2: valuation based on inputs other than quoted prices included within
level 1 that maximise the use of observable data directly or from market prices
or indirectly derived from market prices.
Level 3: where one or more inputs to valuations are not based on observable
market data
The inter-relationship between key unobservable inputs and the groups'
properties is detailed in the table below:
Class of property Level 3 Carrying Valuation Key Range
/ technique unobservable (weighted
fair inputs average)
value 2014
2014
£'000
Freehold - external 8,925 Income Estimated £7
valuation capitalisation rental value
(£7)
Per sq ft p.a
7%
Equivalent
Yield (7%)
Long leasehold - external 2,650 Income Estimated £7- £26
valuation capitalisation rental value
(£19)
Per sq ft p.a
7.7% -
Equivalent 11.4%
yield
(9%)
At 31 December 2013 11,575
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 Equivalent
rental value yield
10% increase or 25 basis point
decrease contraction
£'000 or expansion
£'000
Freehold - external valuation 892 / (892) 276/ (260)
Long Leasehold - external valuation 265 / (265) 99 / (92)
11. Mining reserves, plant and equipment
Mining Mining Motor Office Total
reserves equipment vehicles equipment £'000
£'000 £'000 £'000 £'000
Cost at 1 January 2014 1,310 16,328 165 112 17,915
Exchange adjustment (44) (550) (4) (2) (600)
Additions - 1,838 38 5 1,881
Disposals - (77) (30) - (107)
Cost at 31 December 2014 1,266 17,539 169 115 19,089
Accumulated depreciation at 1 January 1,184 9,470 77 88 10,819
2014
Exchange adjustment (38) (329) (1) (1) (369)
Charge for the year 3 2,641 31 7 2,682
Disposals - (77) (30) - (107)
Accumulated depreciation at 31 1,149 11,705 77 94 13,025
December 2014
Net book value at 31 December 2014 117 5,834 92 21 6,064
Cost at 1 January 2013 1,651 16,835 159 112 18,757
Exchange adjustment (341) (3,479) (21) (12) (3,853)
Additions - 2,972 76 12 3,060
Disposals - - (49) - (49)
Cost at 31 December 2013 1,310 16,328 165 112 17,915
Accumulated depreciation at 1 January 1,438 8,462 129 90 10,119
2013
Exchange adjustment (296) (1,749) (15) (8) (2,068)
Charge for the year 42 2,757 12 6 2,817
Disposals in year - - (49) - (49)
Accumulated depreciation at 31 1,184 9,470 77 88 10,819
December 2013
Net book value at 31 December 2013 126 6,858 88 24 7,096
12. Investments held as non-current assets
2014 2014 2013 2013
Joint Other Joint Other
ventures £'000 ventures £'000
assets assets
£'000 £'000
At 1 January 3,235 156 3,061 131
Additions - - 75 26
Dividends received (900) - - -
Exchange adjustment - - - (1)
Share of gain in joint ventures 563 - 99 -
Net assets at 31 December 2,898 156 3,235 156
Loan to joint venture:
At 1 January 984 - 1,117 -
Exchange adjustments (36) - (242) -
Additions 92 - 109 -
At 31 December 1,040 - 984 -
At 31 December 3,938 156 4,219 156
Provision for diminution in value:
At 1 January - (5) - -
Transfer - - - (4)
Write back\(down) of investment - 1 - (1)
At 31 December - (4) - (5)
Net book value at 31 December 3,938 152 4,219 151
2014 2013
£'000 £'000
Net book value of unquoted investments 126 126
Net book and market value of investments listed on overseas stock 26 25
exchanges
152 151
13. Joint ventures
The company owns 50% of the issued share capital of Dragon Retail Properties
Limited, an unlisted property investment company. The remaining 50% is held by
London & Associated Properties PLC. Dragon Retail Properties Limited is
incorporated in England and Wales. It has issued share capital of 500,000
(2013: 500,000) ordinary shares of £1 each.
The company owns 12.5% of the units of Langney Shopping Centre Unit Trust, an
unlisted property unit trust incorporated
in Jersey. 12.5% of the units in the trust are held by London & Associated
Properties PLC and 75% are held by Columbus UK GP limited,
a partner acting on behalf of Columbus UK Real Estate Fund.
The company owns 49% of the issued share capital of Ezimbokodweni Mining (Pty)
Limited, an unlisted coal production company. The company is incorporated in
South Africa. It has issued share capital of 100 (2013: 100) ordinary shares of
ZAR1 each.
Langney Dragon Ezimbokodweni 2014 2013
12.5% 50% 49% £'000 £'000
£'000 £'000 £'000
Turnover 136 100 - 236 269
Profit and loss
(Loss)/Profit before tax 563 1 - (564) 116
Taxation - (1) - (1) (17)
(Loss)/Profit after taxation 563 - - (563) 99
Balance sheet
Non-current assets 2,461 1,562 1,037 5,060 4,588
Current assets 385 1,347 3 1,735 2,054
Current liabilities (172) (1,117) (1,040) (2,329) (1,753)
Non-current liabilities (1,299) (952) - (2,251) (2,337)
Share of net assets at 31 December 1,375 840 - 2,215 2,552
14. Subsidiary companies
The company owns the following ordinary share capital of the principal
subsidiaries which are included within the consolidated financial statements:
Activity Percentage Country of
of incorporation
share
capital
Mineral Products Limited Share 100% England and
dealing Wales
Bisichi (Properties) Limited Property 100% England and
Wales
Black Wattle Colliery (Pty) Limited Coal 62.5% South Africa
mining
Bisichi Coal Mining (Pty) Limited Coal 100% South Africa
mining
Bisichi Mining (Exploration) Limited Holding 100% England and
company Wales
Ninghi Marketing Limited Dormant 90.1% England and
Wales
Details on the non-controlling interest in subsidiaries are shown under note 26.
15. Inventories
2014 2013
£'000 £'000
Coal
Washed 606 481
Run of mine 1,070 754
Work in progress 45 487
Other 39 34
1,760 1,756
16. Trade and other receivables
2014 2013
£'000 £'000
Amounts falling due within one year:
Trade receivables 4,046 5,658
Amount owed by joint venture 2,168 2,232
Other receivables 419 511
Prepayments and accrued income 227 258
6,860 8,659
17. Available for sale investments
2014 2013
£'000 £'000
Market value of listed Investments:
Listed in Great Britain 758 778
Listed outside Great Britain 38 44
796 822
Original cost of listed investments 740 737
Unrealised surplus of market value over cost 56 85
During the year the held for trading investments were redefined as available
for sale.
18. Trade and other payables
2014 2013
£'000 £'000
Trade payables 1,682 4,214
Amounts owed to joint ventures 305 1,205
Other payables 1,320 704
Accruals and deferred income 1,679 1,957
4,986 8,080
19. Financial liabilities - borrowings
Current Non-current
2014 2013 2014 2013
£'000 £'000 £'000 £'000
Bank overdraft (secured) 2,119 3,029 - -
Bank loan (secured) 20 5,013 6,013 118
2,139 8,042 6,013 118
Bank overdraft and loan instalments by reference to
the balance sheet date:
Within one year 2,139 8,042
From one to two years 21 14
From two to five years 5,992 104
8,152 8,160
Bank overdraft and loan analysis by origin:
United Kingdom 5,973 5,366
Southern Africa 2,179 2,794
8,152 8,160
The United Kingdom bank loans and overdraft are secured by way of a first
charge over the investment properties in the UK which are included in the
financial statements at a value of £11,575,000. At year-end an amount of £
472,500 was held in a blocked account by Santander UK PLC that relates to the
new £6million loan facility. The funds have been blocked in order to satisfy
the bank that certain conditions relating to the facility will be fulfilled.
Subsequent to year end these conditions have been fulfilled and Santander UK
PLC have confirmed that these funds will be released in the near future.
The South African bank loans are secured by way of a first charge over specific
pieces of mining equipment, inventory and the debtors of the relevant company
which holds the loan which are included in the financial statements at a value
of £6,264,000.
Consistent with others in the mining and property industry, the group monitors
its capital by its gearing levels. This is calculated as the net debt (loans
less cash and cash equivalents) as a percentage of the equity. At year end the
gearing of the group was 30.7% (2013: 38.8%) which was calculated as follows:
2014 2013
£'000 £'000
Total debt 8,152 8,160
Less cash and cash equivalents (2,838) (1,707)
Net debt 5,314 6,453
Total equity 17,315 16,628
Gearing 30.7% 38.8%
20. Provision for rehabilitation
2014 2013
£'000 £'000
As at 1 January 874 989
Exchange adjustment (31) (204)
Unwinding of discount 87 89
As at 31 December 930 874
21. Financial instruments
Total financial assets and liabilities
The group's financial assets and liabilities are as follows, representing both
the fair value and the carrying value:
Loans and Financial Assets 2014 2013
receivables Liabilities at fair £'000 £'000
£'000 measured at value
amortised through
cost profit
£'000 and
loss
£'000
Cash and cash equivalents 2,838 - - 2,838 1,707
Investments held for trading - - 796 796 822
Other investments - - 152 152 151
Trade and other receivables 7,673 - - 7,673 9,385
Bank borrowings - (8,152) - (8,152) (8,160)
Finance leases - (195) - (195) (196)
Other liabilities - (4,836) - (4,836) (7,901)
10,511 (13,183) 948 (1,724) (4,192)
Investments held for trading 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. Other investments are held at cost. The directors are of the
opinion that the difference in value between cost and fair value of other
investments is not significant or material. The comparative figures for 2013
fall under the same category of financial instrument as 2014.
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 2014, with other variables unchanged, a 1% increase or
decrease in interest rates, on investments and borrowings whose interest rates
are not fixed, would respectively decrease or increase the loss for the year by
£79,000 (2013: £18,000). The effect on equity of this change would be an
equivalent decrease or increase for the year of £79,000 (2013: £18,000).
Liquidity risk
The group's policy is to minimise refinancing risk. Efficient treasury
management and strict credit control minimise the costs and risks associated
with this policy which ensures that funds are available to meet commitments as
they fall due. As at year end the group held borrowing facilities in the UK in
Bisichi Mining PLC and in South Africa in Black Wattle Colliery (Pty) Ltd.
The following table sets out the maturity profile of the financial liabilities
as at 31 December:
2014 2013
£'000 £'000
Within one year 7,400 15,956
From one to two years 223 38
From two to five years 6,539 129
Beyond five years 134 134
14,296 16,257
The following table sets out the maturity profile of the financial liabilities
as at 31 December maturing within one year:
2014 2013
£'000 £'000
Within one month 1,587 10,207
From one to three months 2,438 1,998
From four to twelve months 3,375 3,751
7,400 15,956
In South Africa, an increase in the structured trade finance facility from
R60million (South African Rand) to R80million was signed by Black Wattle
Colliery (Pty) Limited in October 2013 with Absa Bank Limited, a South African
subsidiary of Barclays Bank PLC. The facility is renewed annually at 30 June
and is secured against inventory, debtors and cash that are held by Black
Wattle Colliery (Pty) Limited. This facility comprises of a R60million
revolving loan to cover the working capital requirements of the group's South
African operations, and a R20million loan facility to cover guarantee
requirements related to the group's South African mining operations. During the
year Black Wattle breached one of the covenants of the facility related to the
accounting net asset value of the company. Due to the improved performance of
the company the breach was subsequently rectified and the breach did not affect
the ongoing use of the facility, or the ability to renew the facility again at
the appropriate times.
In December 2014, the group signed a £6 million term loan facility with
Santander. This new loan replaces the previous £5 million term facility and
overdraft held with Royal Bank of Scotland. The Loan is secured against the
group's UK retail property portfolio. The new debt package has a five year term
and is repayable at the end of the term. The interest cost of the loan is 2.35%
above LIBOR.
As a result of the completion 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 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 £
10,511,000 (2013: £11,092,000). The group's credit risk is primarily
attributable to its trade receivables. The group had amounts due from its
significant revenue customers at the year end that represented 87% of the trade
receivables balance. These amounts have been subsequently settled.
Trade debtor's credit ratings are reviewed regularly. The group only deposits
surplus cash with well-established financial institutions of high quality
credit standing. As at year end the amount of trade receivables held past due
date was £130,000 (2013: £137,000). To date, the amount of trade receivables
held past due date that has not subsequently been settled is £85,000 (2013: £
118,000). Management have no reason to believe that this amount will not be
settled.
Financial assets maturity
On 31 December 2014, cash at bank and in hand amounted to £2,838,000 (2013: £
1,707,000) 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. At year-end an amount of £472,500
was held in a blocked account by Santander UK PLC that relates to the new £
6million loan facility. The funds have been blocked in order to satisfy the
bank that certain conditions relating to the facility will be fulfilled.
Subsequent to year end these conditions have been fulfilled and Santander UK
PLC have confirmed that these funds will be released in the near future.
Commodity price risk
Commodity price risk is the risk that the group's future earnings will be
adversely impacted by changes in the market of commodities. The group is
exposed to commodity price risk as its future revenues will be derived based on
a contract with a physical off-take partner at prices that will be determined
by reference to market prices of coal at the delivery date.
From time to time the group may manage its exposure to commodity price risk by
entering into forward sales contracts with the goal of preserving future
revenue streams.
Foreign exchange risk
All trading is undertaken in the local currencies. Funding is also in local
currencies other than inter-company investments and loans and it is not the
group's policy to obtain forward contracts to mitigate foreign exchange risk on
these amounts. During 2014 and 2013 the group did not hedge its exposure of
foreign investments held in foreign currencies.
The table below shows the currency profiles of cash and cash equivalents:
2014 2013
£'000 £'000
Sterling 1,697 139
South African Rand 1,138 1,426
US Dollar 3 142
2,838 1,707
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:
2014: Sterling South
£'000 African
Rands
£'000
Sterling (2,515) -
South African Rand 153 618
US Dollar 20 -
(2,342) 618
2013: Sterling South
£'000 African
Rands
£'000
Sterling (4,082) -
South African Rand 768 (1,065)
US Dollar 187 -
(3,127) (1,065)
The directors consider there to be no significant risk from exchange rate
movements of foreign currencies against the functional currencies of the
reporting companies within the group. As such no sensitivity analysis is
prepared.
22. Deferred taxation
2014 2013
£'000 £'000
Balance at 1 January 1,902 2,437
Recognised in income 344 (262)
Exchange adjustment (38) (273)
2,208 1,902
The deferred tax balance comprises the following:
Revaluation of properties 730 713
Capital allowances 1,418 1,183
Short-term differences 60 6
2,208 1,902
23. Share capital
2014 2013
£'000 £'000
Authorised: 13,000,000 ordinary shares of 10p each 1,300 1,300
Allotted and fully paid:
2014 2013 2014 2013
Number of Number of £'000 £'000
ordinary ordinary
shares shares
At 1 January 10,636,839 10,556,839 1,064 1,056
Shares issued during the year in regard to 40,000 80,000 4 8
employee share options exercised (note 25)
Outstanding at 31 December 10,676,839 10,636,839 1,068 1,064
24. Other reserves
2014 2013
£'000 £'000
Equity share options 566 501
Net premium on share capital in joint venture 86 86
652 587
25. Share based payments
Details of the share option scheme are shown in the Directors' remuneration
report on pages 29 and 30 under the heading Share option schemes which is
within the audited part of this report. Further details of the share option
schemes are set out below.
The Bisichi Mining PLC Unapproved Option Schemes:
Year of Subscription Period within Number of Number of Number of
grant price per which options share share share
share exercisable for which options for which
options issued/ options
outstanding at exercised/ outstanding at
31 December (cancelled) 31 December
2013 during year 2014
2004 149.0p Sep 2007 - Sep 80,000 (80,000) -
2014
2006 237.5p Oct 2009 - Oct 325,000 - 325,000
2016
2010 202.5p Aug 2013 - Aug 80,000 - 80,000
2020
2012 34.0p Oct 2012 - Sep 233,000 (40,000) 193,000
2022
The exercise of options under the Unapproved Share Option Schemes, for certain
option issues, is subject to the satisfaction of objective performance
conditions specified by the remuneration committee, which will conform to
institutional shareholder guidelines and best practice provisions in force from
time to time. The performance conditions for the 2010 scheme, agreed by members
on 31 August 2010 respectively, requires growth in net assets over a three year
period to exceed the growth of the retail prices index by a scale of
percentages. There are no performance conditions attached to the other schemes.
2014 2014 2013 2013
Number Weighted Number Weighted
average average
exercise exercise
price price
Outstanding at 1 January 718,000 157.7p 718,000 157.7p
Cancelled during the year (80,000) (149.0p) - -
Exercised during the year (40,000) (34.0p) - -
Outstanding at 31 December 598,000 167.1p 718,000 157.7p
Exercisable at 31 December 598,000 167.1p 718,000 157.7p
26. Non-controlling interest
2014 2013
£'000 £'000
As at 1 January 359 444
Share of profit for the year 100 9
Dividends received (42) -
Exchange adjustment (13) (94)
As at 31 December 404 359
The non-controlling interest comprises of a 37.5% shareholding in Black Wattle
Colliry (Pty) Ltd. A coal mining company incorporated in South Africa.
Summarised financial information reflecting 100% of the underlying subsidiary's
relevant figures, is set out below.
2014
£'000
Revenue 25,536
Expenses (24,866)
Profit for the year 670
Other comprehensive Income -
Total comprehensive income for the year 670
Balance sheet
Non-current assets 6,030
Current assets 8,054
Current liabilities (9,125)
Non-current liabilities (2,260)
Net assets at 31 December 2,699
The non-controlling interest relates to the disposal of a 37.5% shareholding in
Black Wattle Colliery (Pty) Ltd in 2010. The total issued share capital in
Black Wattle Colliery (Pty) Ltd was increased from 136 shares to 1,000 shares
at par of R1 (South African Rand) through the following shares issue:
- a subscription for 489 ordinary shares at par by Bisichi Mining (Exploration)
Limited increasing the number of shares held from 136 ordinary shares to a
total of 675 ordinary shares;
- a subscription for 110 ordinary shares at par by Vunani Mining (Pty) Ltd;
- a subscription for 265 "A" shares at par by Vunani Mining (Pty) Ltd
Bisichi Mining (Exploration) Limited is a wholly owned subsidiary of Bisichi
Mining PLC incorporated in England and Wales.
Vunani Mining (Pty) Ltd is a South African Black Economic Empowerment company
and minority shareholder in Black Wattle Colliery (Pty) Ltd.
The "A" shares rank pari passu with the ordinary shares save that they will
have no dividend rights until such time as the dividends paid by Black Wattle
Colliery (Pty) Ltd on the ordinary shares subsequent to 30 October 2008 will
equate to R832,075,000.
A non-controlling interest of 15% in Black Wattle Colliery (Pty) Ltd is
recognised for all profits distributable to the 110 ordinary shares held by
Vunani Mining (Pty) Ltd from the date of issue of the shares (18 October 2010).
An additional non-controlling interest will be recognised for all profits
distributable to the 265 "A" shares held by Vunani Mining (Pty) Ltd after such
time as the profits available for distribution, in Black Wattle Colliery (Pty)
Ltd, before any payment of dividends after 30 October 2008, exceeds
R832,075,000.
27. Related party transactions
At 31 December During the year
Amounts Amounts Costs Cash
owed owed recharged paid
to by (to)/by (to)/by
related related related related
party party party party
£'000 £'000 £'000 £'000
Related party:
London & Associated Properties PLC (note (a)) 3 - 138 (135)
Langney Shopping Centre Unit Trust (note (b)) - (168) - 64
Dragon Retail Properties Limited (note (c)) 305 (2,000) (174) (726)
Ezimbokodweni Mining (Pty) Limited (note (d)) - (1,040) (92) -
As at 31 December 2014 308 (3,208) (128) (797)
London & Associated Properties PLC (note (a)) - - 138 (144)
Langney Shopping Centre Unit Trust (note (b)) - (232) -- (217)
Dragon Retail Properties Limited (note (c)) 1,205 (2,000) (180) 180
Ezimbokodweni Mining (Pty) Limited (note (d)) - (984) (109) -
As at 31 December 2013 1,205 (3,216) (151) (181)
London & Associated Properties PLC is a substantial shareholder. Langney
Shopping Centre Unit Trust and Dragon Retail Properties Limited are joint
ventures and are treated as non-current asset investments. Ezimbokodweni Mining
(Pty) Limited is a joint venture and is treated as a non-current asset
investment.
(a) London & Associated Properties PLC - Property management, office premises,
general management, accounting and administration services are provided for
Bisichi Mining PLC and its UK subsidiaries.
(b) Langney Shopping Centre Unit Trust - Langney Shopping Centre Unit Trust is
an unlisted property unit trust incorporated in Jersey.
(c) Dragon Retail Properties Limited - ("Dragon") is owned equally by the
company and London & Associated Properties PLC. During 2012 the company lent £
2million to Dragon at 6.875 per cent annual interest.
(d) Ezimbokodweni Mining (Pty) Limited - Ezimbokodweni Mining is a prospective
coal production company based in South Africa.
Details of key management personnel compensation and interest in share options
are shown in the Directors' Remuneration Report on pages 28 and 29 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 £114,000 (2013: 111,000). In 2012 a loan was made to one of the
directors, Mr A R Heller, for £116,000. The loan amount outstanding at year end
was £101,000 (2013: £116,000) and a repayment of £15,000 (2013: nil) was made
during the year.
28. Employees
2014 2013
£'000 £'000
The average weekly numbers of employees of the group during the
year were as follows:
Production 213 220
Administration 18 20
231 240
£'000 £'000
Staff costs during the year were as follows:
Salaries 4,676 5,395
Social security costs 117 115
Pension costs 209 220
Share based payments 55 120
5,057 5,850
29. Capital commitments
2014 2013
£'000 £'000
Commitments for capital expenditure approved but not contracted 389 402
for at the year end
Share of commitment of capital expenditure in joint venture 1,402 1,451
30. Head lease commitments and future property lease rentals
Present value of head Leases on properties
Minimum lease Present value of
payments minimum lease payments
2014 2013 2014 2013
£'000 £'000 £'000 £'000
Within one year 12 12 12 12
Second to fifth year 49 49 45 45
After five years 1,569 1,589 138 139
1,630 1,650 195 196
Discounting adjustment (1,435) (1,454) - -
Present value 195 196 195 196
Finance lease liabilities are in respect of leased investment property. Many of
the leases provide for contingent rents in addition to the rents above which
are a proportion of rental income. Finance lease liabilities are effectively
secured as the rights to the leased asset revert to the lessor in event of
default.
The group leases out its investment properties under operating leases. The
future aggregate minimum rentals receivable under non-cancellable operating
leases are as follows:
2014 2013
£'000 £'000
Within one year 746 859
Second to fifth year 2,399 3,195
After five years 9,868 9,879
13,013 13,933
31. Contingent liabilities
Bank guarantees have been issued by the bankers of Black Wattle Colliery (Pty)
Limited on behalf of the company to third parties. The guarantees are secured
against the assets of the company and have been issued in respect of the
following:
2014 2013
£'000 £'000
Rail siding 158 62
Rehabilitation of mining land 1,114 1,153
Water & electricity 52 54
Company balance sheet
at 31 December 2014
Notes 2014 2013
£'000 £'000
Fixed assets
Tangible assets 33 34 11,605
Investment in joint ventures 34 1,810 1,810
Other investments 34 7,712 1,714
Debtors - amounts due in more than one year 35 1,127 1,313
10,683 16,442
Current assets
Debtors - amounts due within one year 35 2,981 3,082
Bank balances 988 799
3,969 3,881
Creditors - amounts falling due within one year 36 (1,218) (7,425)
Net current liabilities 2,751 (3,554)
Total assets less current liabilities 13,434 12,898
Creditors - amounts falling due in more than one year - 36 (64) (90)
medium term bank loan
Provision for liabilities and charges 37 - -
Net assets 13,370 12,808
Capital and reserves
Called up share capital 23 1,068 1,064
Share premium account 38 259 249
Revaluation reserve 38 - 5,632
Other reserves 38 566 503
Retained earnings 38 11,477 5,360
Shareholders' funds 13,370 12,808
The company financial statements were approved and authorised for issue by the
board of directors on 27 April 2015 and signed on its behalf by:
A R Heller G J Casey Company Registration No. 112155
Director Director
Company Accounting Policies
for the year ended 31 December 2014
The following are the main accounting policies of the company:
Accounting convention
The financial statements have been prepared under the historical cost
convention, as modified by the revaluation of investment properties, and in
accordance with applicable UK Generally Accepted Accounting Practice.
Dividends received
Dividends are credited to the profit and loss account when received.
Depreciation
Provision for depreciation on tangible fixed assets is made in equal annual
instalments to write each item off over its useful life. The rates generally
used are:
Motor vehicles 25 - 33 per cent
Office equipment 10 - 33 per cent
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.
Investment properties
The investment property portfolio is included in the financial statements at
open market valuation. An external professional valuation is carried out
annually by professional external surveyors. Surpluses and deficits arising on
valuations are taken direct to the revaluation reserve. No depreciation or
amortisation is provided in respect of freehold and leasehold investment
properties. The directors consider that this accounting policy, which is not in
accordance with the Companies Act 2006, results in the accounts giving a true
and fair view. Depreciation or amortisation is only one of many factors
reflected in the valuation and the amount which might otherwise have been shown
cannot be separately identified or quantified.
On the 23rd of December 2014, the investment property portfolio was transferred
within the group to Bisichi (Properties) Limited, a 100% owned and controlled
subsidiary of the company.
Investments
Investments of the company are stated in the balance sheet as fixed assets at
cost less provisions for impairment.
Financial instruments
Bank loans and overdrafts
Bank loans and overdrafts are included in creditors on the company balance
sheet net of the unamortised cost of financing.
Interest payable on those facilities is expensed as a finance cost in the
period to which it relates.
Debtors
Amounts due from subsidiary undertakings are held at present value where the
interest that would be recognised from discounting future cash payments is
considered to be material. Other debtors do not carry interest and are stated
at their nominal value as reduced by appropriate allowances for estimated
recoverable amounts.
Creditors
Creditors are not interest bearing and are stated at their nominal value.
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.
Deferred taxation
As required by FRS 19 "Deferred Tax", full provision is made for deferred tax
arising from all timing differences between the recognition of gains and losses
in the financial statements and recognition in the tax computation, except for
those timing differences in respect of which the standard specifies that
deferred tax should not be recognised. Deferred tax assets and liabilities are
calculated at the tax rates expected to be effective at the time the timing
differences are expected to reverse.
Leased assets and obligations
All leases are "Operating Leases" and the annual rentals are charged to the
profit and loss account on a straight line basis over the lease term. Rent free
periods or other incentives received for entering into a lease are accounted
for over the period of the lease so as to spread the benefit received over the
lease term.
Pensions
The company makes contributions to a money purchase scheme and the costs are
charged to the profit and loss account in the period to which they relate.
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 model or Black-Scholes-Merton model. Details of
the share options in issue are disclosed in the Directors' Remuneration Report
on pages 29 and 30 under the heading Share option schemes which is within the
audited part of this report.
32. Dividends
The aggregate amount of dividends comprises:
2014 2013
£'000 £'000
Final dividends in respect of prior year but not recognised as 427 425
liabilities in that year:
The aggregate amount of dividends to be paid and not recognised as liabilities
as at year end is £427,000 (2013: £425,000).
33. Tangible fixed assets
Investment
properties
Freehold Long Motor Office Total
£'000 leasehold vehicles equipment £'000
£'000 £'000 £'000
Cost or valuation at 1 January 2014 9,035 2,524 37 63 11,659
Additions 22 - - 3 25
Disposals (9,057) (2,524) - - (11,581)
Revaluation - - - - -
Cost or valuation at 31 December 2014 - - 37 66 103
At valuation - - - - -
At cost - - 37 66 103
- - 37 66 103
Accumulated depreciation at 1 January - - 1 53 54
2014
Charge for the year - - 13 2 15
Disposals - - - - -
Accumulated depreciation at 31 - - 14 55 69
December 2014
Net book value at 31 December 2014 - - 23 11 34
Net book value at 31 December 2013 9,035 2,524 36 10 11,605
Details of historical cost of investment properties are shown in note 10. On
the 23rd of December 2014, the investment property portfolio was transferred
within the group to Bisichi (Properties) Limited, a 100% owned and controlled
subsidiary of the company.
34. Investments
Joint Shares Loans Other Total
ventures £'000 £'000 investments £'000
shares £'000
£'000
Cost at 1 January 2014 1,810 361 1,328 26 1,715
Invested during year - 5,995 3 - 5,998
Cost at 31 December 2014 1,810 6,356 1,331 26 7,713
-
Provision for impairment
As at 1 January - - - (1) (1)
Transfer - - - - -
As at 31 December 2014 - - - (1) (1)
Net book value at 31 December 2014 1,810 6,356 1,331 25 7,712
Net book value at 31 December 2013 1,810 361 1,328 25 1,714
Other investments comprise £25,000 (2013: £25,000) shares.
Included in the investments in shares during the year is an investment in
Bisichi (Properties) Limited, a 100% owned and controlled subsidiary of Bisichi
Mining PLC. The investment relates to the transfer of the company's directly
owned UK property portfolio from the company to Bisichi (Properties) Limited on
the 23rd of December 2014.
Investments in subsidiaries are detailed in note 14. In the opinion of the
directors the aggregate value of the investment in subsidiaries is not less
than the amount shown in these financial statements.
35. Debtors
2014 2013
£'000 £'000
Amounts due within one year:
Amounts due from subsidiary undertakings 360 295
Trade receivables 109 163
Other debtors 118 135
Joint venture 2,168 2,232
Prepayments and accrued income 226 257
2,981 3,082
Amounts due in more than one year:
Amounts due from subsidiary undertakings 1,123 1,295
Deferred taxation 4 18
1,127 1,313
36. Creditors
2014 2013
£'000 £'000
Amounts falling due within one year:
Bank overdraft (secured) - 269
Bank loan (secured) 7 5,007
Joint venture 305 1,205
Current taxation 23 2
Other taxation and social security 89 95
Other creditors 444 323
Accruals and deferred income 350 524
1,218 7,425
Amounts falling due in more than one year:
Bank loan (secured) 64 90
2014 2013
£'000 £'000
Bank and other loan instalments by reference to the balance sheet
date:
Within one year 7 5,007
From one to two years 7 7
From two to five years 57 83
71 5,097
37. Provisions for liabilities
2014 2013
£'000 £'000
Deferred taxation
Balance at 1 January - 40
Provision - -
Transfer - (40)
- -
No provision has been made for the approximate taxation liability at 21.5%
(2013: 23.5%) of £nil (2013: £713,000) which would have arisen if the
investment properties were sold at the stated valuation.
38. Share capital & reserves
Share Share Revaluation Other Retained Shareholders
capital premium reserve reserve earnings funds
£'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 January 2014 1,064 249 5,632 503 5,360 12,808
Dividend paid - - - - (427) (427)
Disposal of investment - - (5,632) - 5,632 -
property
Share options 4 10 - 63 - 77
Retained loss for the year - - - - 912 6,544
Balance at 31 December 2014 1,068 259 - 566 11,477 13,370
A profit and loss account for Bisichi Mining PLC has not been presented as
permitted by Section 408(2) of the Companies Act 2006. The profit for the
financial year, before dividends, was £912,000 (2013: £110,000)
Details of share capital are set out in note 23 and details of the share
options are shown in the Directors' Remuneration Report on page 29 under the
heading Share option schemes which is within the audited part of this report
and note 25.
39. Related party transactions
At 31 During the year
December
Amounts Costs Cash
owed recharged paid
by / (to)/
related accrued by
party (to) / by related
£'000 related party
party £'000
£'000
Related party:
Black Wattle Colliery (Pty) Ltd (note (a)) (2,316) (1,009) 1,207
Ninghi Marketing Limited (note (b)) (102) - -
As at 31 December 2014 (2,418) (1,009) 1,207
Black Wattle Colliery (Pty) Ltd (note (a)) (2,514) (1,264) 1,177
Ninghi Marketing Limited (note (b)) (102) - -
As at 31 December 2013 (2,616) (1,264) (1,177)
(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.
In addition to the above, the company has issued a company guarantee of
R17,000,000 (2013: R17,000,000) (South African Rand) to the bankers of Black
Wattle Colliery (Pty) Ltd in order to cover bank guarantees issued to third
parties in respect of the rehabilitation of mining land.
A provision of £102,000 has been raised against the amount owing by Ninghi
Marketing Limited as the company is dormant.
In 2012 a loan was made to one of the directors, Mr A R Heller, for £116,000.
Interest is repayable on the loan at a rate of 6.14%. There is no fixed
repayment date. The loan amount outstanding at year end was £101,000 (2013: £
116,000) and a repayment of £15,000 (2013: nil) was made during the year.
Under Financial Reporting Standard 8 Related Party Disclosures, the company has
taken advantage of the exemption from disclosing transactions with other wholly
owned group companies.
Details of other related party transactions are given in note 27 of the Group
financial statements.
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