Final Results
BISICHI MINING PLC
Results for the year ended 31 December 2013
Financial summary:
* Turnover: £35,105,000 (2012: £35,962,000)
* EBITDA: £3,039,000 (2012: £4,684,000)
Summary:
* Strong performance at Black Wattle colliery in the first half was adversely
impacted by short term mining problems in the second half
* Agreement to purchase 2.3million tonnes of high quality Run of Mine coal
from an adjacent opencast reserve
* Physical demand for Black Wattle coal remains strong despite weak
international coal prices
* 266,000 metric tonnes (2012: 160,000 metric tonnes) exported via Richards
Bay under the Quattro Programme
* The UK retail portfolio continues to perform well with very low voids
* Final Dividend proposed of 3p per share payable in cash in addition to the
interim dividend of 1p per share
Chairman, Sir Michael Heller, comments:
"We expect Black Wattle to return to acceptable levels of profitability once we
return to full production from our lower cost pits in the second half of 2014
and, although we expect depressed coal prices to continue for the whole of the
year, we view the outturn for the year with cautious optimism."
For further information, please call:
Andrew Heller or Garrett Casey, Bisichi Mining PLC 020 7415 5030
Bisichi Mining PLC
Annual Report 2013
Earnings before interest, tax, depreciation and amortisation
(EBITDA) of £3.0million (£4.7million)
Agreement to purchase 2.3million tonnes of high quality Run of Mine
coal from nearby opencast reserve
UK property portfolio continues to perform well with voids at the very
low level of 2.13%
STRATEGIC REPORT
CHAIRMAN'S STATEMENT
In the year to 31 December 2013 your Company achieved earnings before interest,
tax, depreciation and amortisation (EBITDA) of £3.0 million (2012: £4.7
million).
As we stated in the Interim Report, the year started well for your Company with
a strong performance in the first six months at Black Wattle, our South African
coal mining subsidiary. However, as we reported in the Interim Management
Statement, in the final quarter of 2013 our open cast mining operations at
Black Wattle were severely impacted when one of our main production pits ran
into unrecorded old underground workings. The prompt action taken by your
management ensured that the mine recovered quickly from this incident, but the
production lost from this area had to be made up by increased production from
one of our higher cost pits. Inevitably, this has had an adverse impact on
profitability. We expect the mine to return to acceptable levels of
profitability in the second half of 2014 when we return to full production from
our lower cost pits.
Looking forward, we are pleased to report that Black Wattle has concluded an
agreement with Blue Nightingale Trading 817 (Pty) Ltd ("Blue Nightingale"), a
black owned and managed mining company, to purchase Run of Mine coal from an
opencast reserve adjacent to our existing mine. This reserve consists of
approximately 2.3 million tonnes of high quality coal with very low stripping
ratios. This is the second mining agreement we have concluded with Blue
Nightingale and we are very pleased to be involved with them in the development
of another reserve.
We are also pleased to report that 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. During 2013 the mine railed 266,000 metric tonnes (2012: 160,000
metric tonnes) through the programme.
We would like to thank Vunani Limited, our black-economic empowered
shareholders at Black Wattle for managing and developing this opportunity.
Despite the fact that coal markets have been affected by weak international
coal prices, the physical demand for our coal continues to remain strong in
both the domestic and export markets. Nevertheless we expect depressed coal
prices to continue for the whole of 2014.
Meanwhile, the Company's UK retail property portfolio, which underpins the
Group and which is actively managed by London & Associated Properties PLC,
continues to perform well. Despite the regional location of our portfolio,
voids across the portfolio were at the extraordinarily low level of 2.13%.
Given all of the above but also taking into account the strength and
diversification of our business, your directors have decided to hold the
dividend at the 2012 level and will recommend to you, our shareholders, a final
dividend of 3p (2012: 3p) payable on 1 August 2014 to shareholders registered
at the close of business on 4 July 2014 making the total for the year 4p.
On behalf of the Board, I would like to thank all of our staff for their hard
work during the course of the year.
Sir Michael Heller
Chairman
17 April 2014
STRATEGIC REPORT
Mining REVIEW
The strong earnings and momentum achieved in the first half of the year at
Black Wattle, our South African coal mining operation, were hampered in the
second half of the year when mining was affected at one of our main production
pits, where we mined into old underground workings which were never recorded on
any historical mine plan. Looking forward to 2014, we expect to see the mine to
return to acceptable levels of profitability by the second half of the year.
With new reserves to develop and strong demand for our coal we remain highly
confident on the prospects of our coal mining activities in South Africa.
Production and operations
Run of mine production from Black Wattle remained strong in 2013 with total
production for the year of 1.77million metric tonnes (2012: 1.87million metric
tonnes). Despite the setbacks in the last quarter the mine continued to source
coal from various opencast pits ensuring a steady state of production
throughout the year.
As announced in the Chairman's Statement, we are very pleased to report that
Black Wattle has concluded an agreement with Blue Nightingale, a South African
black owned and managed mining company, to purchase Run of Mine coal from an
opencast reserve close to Black Wattle's existing opencast mine. This is the
second agreement concluded between us and we are very pleased to be continuing
our successful relationship. The new reserve consists of approximately
2.3million 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.
At the end of last year we began relocating machinery to two of our profitable
production pits. Looking forward into 2014, Black Wattle will plan to increase
production from these two areas as well as begin the development of the new
reserve at Blue Nightingale.
Main trends/markets
International coal prices continued to weaken. At the beginning of 2013, the
average weekly price of Free on Board (FOB) Coal from Richards Bay Coal
Terminal (API4) was $89. By the end of the first half of the year the price had
weakened to under $75 where it remained range bound for most of the rest of the
year, a far cry from the prices achieved above $120 two years previously in
2011. A depreciation in the South African Rand against the US Dollar has helped
offset this decline but since the beginning of 2013 to date we have seen only a
marginal increase in the Rand export coal price.
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 2013:
• 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 2013.
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.
• Various upgrades were initiated at the Evergreen School nearby to Black
Wattle including upgrades to the roof, classrooms and outer areas.
Procurement
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.
Black Wattle Colliery is proud to announce that we are a level 5 BBBEE
contributor.
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 2013 were:
• 18 employees were trained in ABET (Accreditation Board for Engineering and
Technology) level one;
• An additional 4 disabled women have started training on ABET level one and
two; and
• Plans have been put in place for 2014 for a further 11 employees to be
trained on ABET level one, two or three and 1 employee will be trained on ABET
level four.
Prospects
Management continue to remain confident in the ability to achieve significant
value from our existing South African mining operations and in acquiring and
developing new coal reserves, in partnership with our BEE partners.
As a result, I look forward to the coming year with confidence.
Andrew Heller
Managing Director
17 April 2014
STRATEGIC REPORT
RISK & PERFORMANCE
The directors present the Strategic Report of the Company for the year ending
31 December 2013. 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:
2013 2012
£'000 £'000
For South African mining activities:
Earnings before interest, tax, depreciation, and amortisation 2,268 4,520
(EBITDA)
For our UK property investment operations:
Net property valuation 11,559 11,612
For the Group:
Profit before tax 102 2,190
Earnings before interest, tax, depreciation, and amortisation 3,039 4,684
(EBITDA)
Financial position
In the UK discussions are continuing with the Royal Bank of Scotland ("RBS") on
the renewal of the current UK banking facilities, being a £5million term
facility and a £1million overdraft. The bank has previously agreed to an
extension, from its original expiry date of 31 December 2012, to 30th June
2013. Whilst discussions are on-going, no further extension has been formalised
as the terms for a new facility are being negotiated. The directors consider
that with the asset security available, the level of facilities required should
be readily available and consider that a new loan will be agreed, either with
RBS or an alternative provider, in the near future.
The property portfolio was externally valued at 31 December 2013 and the value
of UK investment properties attributable to the group at year end was £
11.6million (2012: £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.
Subsequent to year end Black Wattle breached one of the covenants of the
facility related to the accounting net asset value of the company. Management
have been in discussions with the bank to rectify the breach and have no reason
to believe the breach will not be rectified or affect the ongoing use of the
facility or that the facility will not be renewed at the appropriate times.
The group's cash and cash equivalents (excluding bank overdrafts) at year end
were £1.7million (2012: £1.8million). The net assets of the group at the year
end were £17.0million (2012: £17.8million). 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 46.
Cashflow
The Company at year end had a net amount owing of cash and cash equivalents
(including bank overdrafts) of £1.3 million (2012: net positive balance of £
0.7million). Details on the group's cashflow position are stated in the
Consolidated Cashflow Statement on page 49. 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 2014.
The Group's carbon footprint:
2013
CO2e
Tonnes
Emissions source:
Scope 1 Combustion of fuel & operation of facilities 24,862
Scope 2 Emissions from coal mining activities 31,014
Scope 3 Electricity, heat, steam and cooling purchased for own use 9,947
Total 65,823
Intensity:
Intensity 1 Tonnes of CO2 per pound sterling of revenue 0.00188
Intensity 2 Tonnes of CO2 per tonne of coal produced 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 227 employees
(174 male, 50 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
17 April 2014
Management team
1 Sir Michael Heller
Chairman
Bisichi Mining PLC
2 Andrew Heller
Managing Director
Bisichi Mining PLC,
Managing Director
Black Wattle Colliery
3 Robert Corry
Chairman
Black Wattle Colliery
4 Christopher Joll
Senior Independent Director,
Chairman Audit
and Remuneration
Committees
5 Garrett Casey
Finance Director
Bisichi Mining PLC,
Director
Black Wattle Colliery
6 Robert Grobler
Director of Mining
Bisichi Mining PLC,
Director
Black Wattle Colliery
7 Ethan Dube
Director
Black Wattle Colliery
8 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
Heather A Curtis ACIS
24 Bruton Place
London W1J 6NE
Black Wattle Colliery
Directors
Robert Corry (Chairman)
Andrew Heller (Managing Director)
Ethan Dube
Robert Grobler
Garrett Casey
Director of Property
Mike J Dignan FRICS
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
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 10p per minute + network extras) or
+44 208 639 3399 for overseas callers
www.capitaregistrars.com
Email: shareholderenquiries@capita.co.uk
governance
five year summary
2013 2012 2011 2010 2009
£'000 £'000 £'000 £'000 £'000
Consolidated income statement
Revenue 35,105 35,962 29,909 32,824 29,016
Operating profit/ (loss) 123 2,568 (1,328) (1,705) 4,892
Profit/ (loss) before tax 102 2,190 (1,450) (1,813) 5,003
Trading Income 17 2,808 (1,210) (2,209) 4,698
Revaluation Income 85 (618) (240) 396 305
Profit before interest, taxation and 3,039 4,684 1,150 770 7,534
depreciation
Consolidated balance sheet
Investment properties 11,559 11,612 12,068 12,110 11,865
Fixed asset investments 4,370 4,309 2,727 3,757 3,755
15,929 15,921 14,795 15,867 15,620
Current asset investments 822 787 2,515 605 510
16,751 16,708 17,310 16,472 16,130
Other assets less liabilities less (123) 607 (537) 1,482 3,170
non-controlling interests
Total equity attributable to equity 16,628 17,315 16,773 17,954 19,300
shareholders
Net assets per ordinary share 156.3p 164.0p 158.9p 171.8p 184.7p
Dividend per share 4.00p 4.00p 4.00p 4.00p 4.00p
governance
financial calendar
11 June Annual General Meeting 18 November Second interim management
2014 2014 statement
1 August Payment of final dividend Late April Announcement of results for
2014 for 2013 (if approved) 2015 year ending 31 December 2014
Late Announcement of half-year
August results to 30 June 2014
2014
governance
directors' report
The directors submit their report together with the audited financial
statements for the year ended 31 December 2013.
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 2013 are shown on pages 44 to 84 and in the Strategic Report on
pages 2 to 14. 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 14.
Corporate responsibility
Environment
The environmental issues of the group's South African coal mining operations
are covered in the Strategic Report on pages 5 to 14.
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
2013 can be found on page 14 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 2013 of 1p was paid on 1 February 2014 (Interim 2012:
1p). The directors recommend the payment of a final dividend for 2013 of 4p per
ordinary share (2012: 3p) making a total dividend for 2013 of 4p (2012: 4p).
Subject to shareholder approval, the total dividend per ordinary share for 2013
will be 4p per ordinary share.
The final dividend will be payable on Friday 1 August 2014 to shareholders
registered at the close of business on 4 July 2014.
Investment properties
The investment property portfolio is stated at its open market value of £
11,559,000, at 31 December 2013 (2012: £11,612,000) 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 £3,599,000
(2012: £3,336,000).
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 director retiring by rotation is Mr G J Casey who offers himself for
re-election.
Mr G J Casey has been an executive director of the company since 2010. He is a
chartered accountant and has a contract of employment determinable at three
months notice. The board recommends the re-election of G J Casey.
No director had any material interest in any contract or arrangement with the
company during the year other than as shown in this report.
Directors' shareholdings
The interests of the directors in the shares of the company, including family
and trustee holdings where appropriate, are shown on page 32 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 15 April 2014:
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 1,569,110 shares representing 14.7 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 2013 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 42. 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 30 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 40.
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 2013 and attendance at regular Board meetings and
Board committees was as follows:
Meetings held Meetings Attended
Sir Michael Heller Board 5 5
Nomination committee 1 1
A R Heller Board 5 5
Audit committee 2 2
G J Casey Board 5 4
Audit committee 2 2
R J Grobler Board 5 2
C A Joll Board 5 5
Audit committee 2 2
Nomination committee 1 1
Remuneration committee 1 1
J A Sibbald Board 5 5
Audit committee 2 2
Nomination committee 1 1
Remuneration committee 1 1
Internal control
The directors are responsible for the group's system of internal control and
review of its effectiveness annually. The Board has designed the group's system
of internal control in order to provide the directors with reasonable assurance
that its assets are safeguarded, that transactions are authorised and properly
recorded and that material errors and irregularities are either prevented or
would be detected within a timely period. However, no system of internal
control can eliminate the risk of failure to achieve business objectives or
provide absolute assurance against material misstatement or loss.
The key elements of the control system in operation are:
• The Board meets regularly with a formal schedule of matters reserved to it
for decision and has put in place an organisational structure with clearly
defined lines of responsibility and with appropriate delegation of authority;
• There are established procedures for planning, approval and monitoring of
capital expenditure and information systems for monitoring the group's
financial performance against approved budgets and forecasts;
• UK property and financial operations are closely monitored by members of the
Board and senior managers to enable them to assess risk and address the
adequacy of measures in place for its monitoring and control. The South African
operations are closely supervised by the UK based executives through daily,
weekly and monthly reports from the directors and senior officers in South
Africa. This is supplemented by monthly visits by the UK based finance director
to the South African operations which include checking the integrity of
information supplied to the UK. The directors are guided by the internal
control guidance for directors issued by the Institute of Chartered Accountants
in England and Wales.
During the period, the audit committee has reviewed the effectiveness of
internal control as described above. The Board receives periodic reports from
its committees.
There are no significant issues disclosed in the Annual Report for the year
ended 31 December 2013 (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, 11 June 2014 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 15 April 2014 (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 15 April 2014 (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 Association of British
Insurers (ABI).
The authority granted by resolution 8 will expire on 31 August 2015 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 ABI.
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 15 April 2014 (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 £106,768 which
represents approximately 10 per cent. of the ordinary share capital of the
company in issue (excluding treasury shares) as at 15 April 2014 (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 2013. 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 15 April 2014 (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 15 April 2014 (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 678,000 shares representing 6.35 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 7.06 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 (2012: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 a reduction in
profitability in the second half of 2013 due to operational issues related to
their mining activates. The directors expect that these operational issues will
be fully overcome by the second half of 2014 and that the market conditions
experienced
in 2013 will be similar going into 2014.
The directors therefore have a reasonable expectation that the mine will return
to acceptable levels of profitability in the second half of 2014. 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. Subsequent to year end
Black Wattle breached one of the covenants of the facility related to the
accounting net asset value of the company. Management have been in discussions
with the bank to rectify the breach and have no reason to believe the breach
will not be rectified or affect the ongoing use of the facility, or that the
facility will not be renewed again at the appropriate times.
The group is working with the Royal Bank
of Scotland ("RBS") on the renewal of the current UK banking facilities, being
a £5million term facility and a £1million overdraft. The bank has previously
agreed to an extension, from its original expiry date of 31 December 2012, to
30th June 2013. Whilst discussions are on-going, no further extension has been
formalised as the terms for a new facility are being negotiated. The directors
consider that with the asset security available, the level of facilities
required should be readily available and consider that a new loan will be
agreed, either with RBS or an alternative provider, in the near future. As a
result, the Directors believe that the company will have 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
Heather Curtis
Secretary
24 Bruton Place
London W1J 6NE
17 April 2014
governance
Statement of the Chairman of the remuneration committee
The remuneration committee presents its report for the year ended 31 December
2013, which this year is presented in two parts in accordance with the new
regulations.
The first part, is the Annual Remuneration Report which details remuneration
awarded to directors and non-executive directors during the year. The
shareholders will be asked to approve the Annual Remuneration Report as an
ordinary resolution (as in previous years) at the AGM in June 2014.
The second part, is the Remuneration Policy Report which details the
remuneration policy for directors. This policy is subject to a binding vote by
shareholders at the AGM in 2014, and if approved will apply for a 3 year period
commencing 11 June 2014. The policy is very much in line with the previous
policy although the level of disclosure has increased in accordance with the
new regulations. 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
17 April 2014
governance
Annual Remuneration Report
The following information has been audited:
Single total figure of remuneration for the year ended 31 December 2013
Salaries Bonuses Benefits Pension Total Notional Total
before value
and Fees 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
786 228 63 53 1,130 - 1,130
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
Single total figure of remuneration for the year ended 31 December 2012
Salaries Bonuses Benefits Pension Total Notional Total
before value
and Fees 2012
Share of
options vesting
Share
options
Executive Directors
Sir Michael Heller 75 - - - 75 - 75
A R Heller 350 150 14 30 544 177 721
G J Casey 109 75 9 15 208 - 208
R Grobler 162 - 26 8 196 - 196
696 225 49 53 1,023 177 1,200
Non-Executive Directors
C A Joll* 25 - - - 25 - 25
J A Sibbald* 2 - 3 - 5 - 5
27 - 3 - 30 - 30
Total 723 225 52 53 1,053 177 1,230
*Members of the remuneration committee for the year ended 31 December 2012
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 (2012: three) directors have benefits under money purchase pension
schemes. Contributions in 2013 were £53,000 (2012: £53,000), see table above.
Scheme interests awarded during the year
No scheme options were awarded during the year ended 31 December 2013.
Share option schemes
The Company currently has four "Unapproved" Share Option Schemes which are not
subject to HM Revenue and Customs (HMRC) approval. The "Second Scheme" was
approved by shareholders on 23 June 2005, options having been provisionally
granted under it on 23 September 2004. 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 in replacement of a scheme which
was adopted on 15 June 1999 (the "First Scheme"). Existing options over
ordinary shares granted under the First Scheme lapsed on 29 September 2012.
Replacement options could not be granted under the First Scheme as the period
for new grants under the scheme had expired. Accordingly, the remuneration
committee approved the adoption by the Company of the 2012 Scheme with similar
rules to the First Scheme. All available options under each of the Schemes have
been granted.
Number of
share options
Option 1 Options 31 Exercisable Exercisable
January
price* granted December from to
2013 in
2013
2013
Second Scheme
A R Heller 149p 80,000 - 80,000 23/9/2007 22/9/2014
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 - 233,000 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 Second Scheme and the 2010 scheme,
agreed by members on 23 June 2005 and 31 August 2010 respectively, 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 2013.
Payments for loss of office
No payments for loss of office were made in the year ended 31 December 2013.
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
31.12.2013 1.1.2013 31.12.2013 1.1.2013
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 - - - -
The following information is unaudited:
The following graph illustrates the Company's performance compared with a broad
equity market index over a five 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
2013 was 109.75p (2012-110p). During the year the share price ranged between
95p and 126.5p.
Remuneration of the Managing Director over the last five years
The table below demonstrates the remuneration of the holder of the office of
Managing Director for the last five years for the period from 1 January 2009 to
31 December 2013.
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
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 A R Heller 817 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.
Percentage change in remuneration of director undertaking role of Managing
Director
Managing Director UK based employees
£'000 £'000
2013 2012 % change 2013 2012 % change
Base salary 450 350 28.6% 194 184 5.4%
Benefits 31 14 121.4% 10 9 11.1%
Bonuses 103 150 (31.3%) 75 75 0%
Bisichi Mining plc does not have a Chief Executive so the table includes the
equivalent information for the Managing Director.
The comparator group chosen is all UK based employees as the remuneration
committee believe this provides the most accurate comparison of underlying
increases based on similar annual bonus performances utilised by the group.
Relative importance of spend on pay
The total expenditure of the Group on remuneration to all employees (see Notes
28 and 32 to the financial statements) is shown below:
2013 2012
£'000 £'000
Employee remuneration 5,850 6,000
Distribution to shareholders 425 422
Statement of implementation of remuneration policy in the following year
If the policy is approved at the AGM in June 2014 it is intended that the
remuneration policy take effect from 11 June 2014. The vote on the remuneration
policy is binding in nature. The Company may not then 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 2013. No increases were awarded and no external advice was taken in
reaching this decision.
Shareholder voting
At the Annual General Meeting on 5 June 2013, there was an advisory vote on the
resolution to approve the Remuneration Report the result of which is detailed
below:
% of votes % of votes No of votes
for against withheld
Resolution to approve the Remuneration Report 99.10% 0.68% 1,384,750
governance
Remuneration Policy
Introduction
The remuneration policy below is the Group's policy on directors' remuneration,
which will be proposed for a binding vote at the 2014 AGM. If approved it is
intended that the policy take effect from 11 June 2014.
In setting the policy, the Remuneration Committee has taken the following into
account:
• The need to attract, retain and motivate individuals of a calibre who will
ensure successful leadership and management of the Company
• The Group's general aim of seeking to reward all employees fairly according
to the nature of their role and their performance
• Remuneration packages offered by similar companies within the same sector
• The need to align the interests of shareholders as a whole with the long-term
growth of the Group
• The need to be flexible and adjust with operational changes throughout the
term of this policy
The remuneration of non-executive directors is determined by the board, and
takes into account additional remuneration for services outside the scope of
the ordinary duties of non-executive directors.
Future policy table
Element Purpose Policy Operation Opportunity and
performance
conditions
Executive directors
Base To recognise: Considered by Reviewed annually There is no
salary remuneration prescribed maximum
Skills committee on Paid monthly in salary
appointment cash or maximum rate of
Responsibility increase
Set at a level
Accountability considered No specific
appropriate to performance
Experience attract, retain conditions are
motivate and attached to base
Value 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
in contractual reviewed on an
Car or car benefits in annual basis
allowance exceptional
circumstances or No specific
Group health cover where factors performance
conditions are
Death in service outside the attached to
cover control of the contractual benefits
Group lead to
Permanent health increased costs The value of
insurance (e.g. medical benefits for each
inflation) director for the
year ended 31
December 2013 is
shown in the table
on page 30
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 31) 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 board on prescribed maximum
Skills appointment salary or maximum
rate of increase. No
Experience Set at a level specific performance
considered conditions are
Value 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 committee The costs associated
offered except to retains the with the benefit
one non-executive discretion to offered is closely
director who is approve changes controlled and
eligible for in contractual reviewed on an
health cover (see benefits in annual basis
annual exceptional
remuneration circumstances or No specific
report page 30) where factors performance
outside the conditions are
attached to
control of the contractual benefits
Group lead to
increased costs
(e.g. medical
inflation)
Share Non-executive
Options directors do not
participate in the
share option
schemes
Notes to the future policy table
The remuneration committee consider the performance measures outlined in the
table above to be appropriate measures of performance and that the KPI's chosen
align the interests of the directors and shareholders.
For details of remuneration of other Company employees please see page 39.
Remuneration scenarios
An indication of the possible level of remuneration that would be received by
each Executive Director in the year commencing 11 June 2014 in accordance with
the directors' remuneration policy is shown below.
Sir Michael Heller
G J Casey
A R Heller
R J Grobler
Assumptions
Minimum
Consists of base salary, benefits and pension.
Base salary, benefits and pension for 2014 are assumed at the levels included
in the single total figure remuneration table for the year ended 31 December
2013 on page 30.
On target
Based on the average percentage bonus awarded to the individual in the three
years ending on 31 December 2013. As outlined in the policy table above, the
remuneration committee has discretion to award bonuses of up to 200% of base
salary in any one year (up to 300% in an exceptional year).
Base salary, benefits and pension for 2014 are assumed at the levels included
in the single total figure remuneration table for the year ended 31 December
2013 on page 30.
Maximum
Based on maximum remuneration receivable of 300% of base salary awarded as
bonus in an exceptional year.
Base salary, benefits and pension for 2014 are assumed at the levels included
in the single total figure remuneration table for the year ended 31 December
2013 on page 30.
Approach to recruitment remuneration
All appointments to the board are made on merit. The components of a new
directors remuneration package (who is recruited within the life of the
approved remuneration policy) would comprise base salary, pension, benefits,
annual bonus and opportunity to be granted share options as outlined above and
approach to such appointments are detailed with in the future policy table
above. The Company will pay such levels of remuneration to new directors that
would enable the Company to attract appropriately skilled and experienced
individuals that is not in the opinion of the remuneration committee excessive.
Service contracts
All executive directors have full-time contracts of employment with the
Company. Non-executive directors have contracts of service. No director has a
contract of employment or contract of service with the Company, its joint
venture or associated companies with a fixed term which exceeds twelve months.
Directors notice periods (see page 31 of the annual remuneration report) are
set in line with market practice and of a length considered sufficient to
ensure an effective handover of duties should a director leave the company.
All directors' contracts as amended from time to time, have run from the date
of appointment. Service contracts are kept at the registered office.
Policy on payment for loss of office
There are no contractual provisions agreed prior to 27 June 2012 that could
impact on a termination payment. Termination payments will be calculated in
accordance with the existing contract of employment or service contract. It is
the policy of the remuneration committee to issue employment contracts to
executive directors with normal commercial terms and without extended terms of
notice which could give rise to extraordinary termination payments.
Consideration of employment conditions elsewhere in the Group
In setting this policy for directors' remuneration the remuneration committee
has been mindful of the Company's objective to reward all employees fairly
according to their role, performance and market forces. In setting the policy
for Directors' remuneration the remuneration committee has considered the pay
and employment conditions of the other employees within the Group. No formal
consultation has been undertaken with employees in drawing up the policy. The
remuneration committee has not used formal comparison measures.
Consideration of shareholder views
No shareholder views have been taken into account when formulating this policy.
In accordance with the new regulations, an ordinary resolution for approval of
this policy will be put to shareholders at the AGM in June 2014.
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
17 April 2014
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 2013 by the company as
detailed in our Valuation Report dated 14 February 2014.
Having regard to the foregoing, we are of the opinion that the open market
value as at 31 December 2013 of the interests owned by the Company was £
11,559,000 being made up as follows:
£000
Freehold 9,035
Leasehold 2,524
11,559
Leeds Woolhouse Real Estate
14 February 2014
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 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 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, where
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 2013 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 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 2013 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
17 April 2014
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 2013
Notes 2013 2013 2013 2012 2012 2012
Trading Revaluations Total Trading Revaluations Total
£'000 £'000 £'000 £'000 £'000 £'000
Group revenue 1 35,105 - 35,105 35,962 - 35,962
Operating costs 2 (31,271) - (31,271) (30,367) - (30,367)
Operating profit before 3,834 - 3,834 5,595 - 5,595
depreciation, fair
value adjustments and
exchange movements
Depreciation 2 (2,817) - (2,817) (2,253) - (2,253)
Operating profit/(loss) 1 1,017 - 1,017 3,342 - 3,342
before fair value
adjustments and
exchange movements
Exchange losses (880) - (880) (357) - (357)
Decrease in value of 3 - (53) (53) - (456) (456)
investment properties
Decrease in value of - (1) (1)
other investments
Gains on held for - 40 40 - 39 39
trading investments
Operating profit/(loss) 1 137 (14) 123 2,985 (417) 2,568
Share of profit/(loss) 13 - 99 99 64 (201) (137)
in joint ventures
Profit/(Loss) before 137 85 222 3,049 (618) 2,431
interest and taxation
Interest receivable 326 - 326 281 - 281
Interest payable 6 (446) - (446) (522) - (522)
Profit/(Loss) before 4 17 85 102 2,808 (618) 2,190
tax
Taxation 7 98 164 262 (842) 192 (650)
Profit/(Loss) for the 115 249 364 1,966 (426) 1,540
year
Attributable to:
Equity holders of the 106 249 355 1,721 (426) 1,295
company
Non-controlling 26 9 - 9 245 - 245
interest
Profit/(Loss) for the 115 249 364 1,966 (426) 1,540
year
Profit/(Loss) per share 9 1.00p 2.35p 3.35p 16.30p (4.03)p 12.27p
- basic
Profit/(Loss) per share 9 0.99p 2.31p 3.30p 16.05p (3.97)p 12.08p
- 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 2013
2013 2012
£'000 £'000
Profit for the year 364 1,540
Other comprehensive income:
Items that may be subsequently recycled to the income statement:
Exchange differences on translation of foreign operations (858) (391)
Taxation - -
Other comprehensive income for the year net of tax (858) (391)
Total comprehensive income for the year net of tax (494) 1,149
Attributable to:
Equity shareholders (409) 936
Non-controlling interest (85) 213
(494) 1,149
consolidated balance sheet
at 31 December 2013
Notes 2013 2012
£'000 £'000
Assets
Non-current assets
Value of investment properties 10 11,559 11,612
Fair value of head lease 30 196 202
Investment properties 11,755 11,814
Mining reserves, plant and equipment 11 7,096 8,638
Investments in joint ventures accounted for using equity 12 3,235 3,061
method
Loan to joint venture 12 984 1,117
Other investments 12 151 131
Total non-current assets 23,221 24,761
Current assets
Inventories 15 1,756 1,876
Trade and other receivables 16 8,659 7,604
Corporation tax recoverable 36 49
Held for trading investments 17 822 787
Cash and cash equivalents 1,707 1,802
Total current assets 12,980 12,118
Total assets 36,201 36,879
Notes 2013 2012
£'000 £'000
Liabilities
Current liabilities
Borrowings 19 (8,042) (6,186)
Trade and other payables 18 (8,080) (9,218)
Current tax liabilities (2) (2)
Total current liabilities (16,124) (15,406)
Non-current liabilities
Borrowings 19 (118) (86)
Provision for rehabilitation 20 (874) (989)
Finance lease liabilities 30 (196) (202)
Deferred tax liabilities 22 (1,902) (2,437)
Total non-current liabilities (3,090) (3,714)
Total liabilities (19,214) (19,120)
Net assets 16,987 17,759
Equity
Share capital 23 1,064 1,056
Share premium account 249 169
Translation reserve (1,569) (805)
Other reserves 24 587 528
Retained earnings 16,297 16,367
Total equity attributable to equity shareholders 16,628 17,315
Non-controlling interest 26 359 444
Total equity 16,987 17,759
These financial statements were approved and authorised for issue by the board
of directors on 17 April 2014 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 2013
Share Share Translation Other Retained Total Non- Total
capital Premium reserves reserves earnings £'000 controlling equity
£'000 £'000 £'000 £'000 £'000 interest £'000
£'000
Balance at 1 January 1,056 169 (446) 500 15,494 16,773 231 17,004
2012
Revaluation of - - - - (456) (456) - (456)
investment properties
Other income - - - - 1,751 1,751 245 1,996
statement movements
Loss for the year - - - - 1,295 1,295 245 1,540
Exchange adjustment - - (359) - - (359) (32) (391)
Total comprehensive - - (359) - 1,295 936 213 1,149
income for the year
Dividend - - - - (422) (422) - (422)
Equity share options - - - 28 - 28 - 28
Balance at 1 January 1,056 169 (805) 528 16,367 17,315 444 17,759
2013
Revaluation of - - - - (53) (53) - (53)
investment properties
Other income - - - - 408 408 9 417
statement movements
Profit for the year - - - - 355 355 9 364
Exchange adjustment - - (764) - - (764) (94) (858)
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 options - - - 59 - 59 - 59
Balance at 31 1,064 249 (1,569) 587 16,297 16,628 359 16,987
December 2013
consolidated cash flow statement
for the year ended 31 December 2013
Year Year
ended ended
31 31
December December
2013 2012
£'000 £'000
Cash flows from operating activities
Operating profit/(loss) 123 2,568
Adjustments for:
Depreciation 2,817 2,253
Share based payment expense 120 28
(Gain) on investment held for trading (40) (39)
Unrealised loss on investment properties 53 456
Unrealised loss on other investments 1 -
Share of profit of joint venture - 64
Cash flow before working capital 3,074 5,330
Change in inventories 120 (670)
Change in trade and other receivables (2,320) (2,057)
Change in trade and other payables 433 1,149
Change in provisions 15 6
Acquisitions of held for trading investments - (18)
Cash generated from operations 1,322 3,740
Interest received 326 281
Interest paid (357) (411)
Income tax received 11 83
Cash flow from operating activities 1,302 3,693
Cash flows from investing activities
Acquisition of reserves, plant and equipment (3,060) (3,681)
Proceeds from sale of investment properties, reserves,
plant and equipment - -
Disposal/(acquisitions) of investments (102) 16
Cash flow from investing activities (3,162) (3,665)
Year Year
ended ended
31 31
December December
2013 2012
£'000 £'000
Cash flows from financing activities
Borrowings drawn 39 86
Borrowings repaid (96) (214)
Equity dividends paid (425) (422)
Net proceeds from issue of ordinary shares 27 -
Cash flow from financing activities (455) (550)
Net decrease in cash and cash equivalents (2,315) (522)
Cash and cash equivalents at 1 January 718 1,114
Exchange adjustment 275 126
Cash and cash equivalents at 31 December (1,322) 718
Cash and cash equivalents at 31 December comprise:
Cash and cash equivalents as presented in the balance sheet 1,707 1,802
Bank overdrafts (secured) (3,029) (1,084)
(1,322) 718
group accounting policies
for the year ended 31 December 2013
Basis of accounting
The results for the year ended 31 December 2013 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 a reduction in
profitability in the second half of 2013 due to operational issues related to
their mining activates. The directors expect that these operational issues will
be fully overcome by the second half of 2014 and that the market conditions
experienced
in 2013 will be similar going into 2014. The directors therefore have a
reasonable expectation that the mine will return to acceptable levels of
profitability in the second half of 2014. 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. Subsequent to year end
Black Wattle breached one of the covenants of the facility related to the
accounting net asset value of the company. Management have been in discussions
with the bank to rectify the breach and have no reason to believe the breach
will not be rectified or affect the ongoing use of the facility, or that the
facility will not be renewed again at the appropriate times.
The group is working with the Royal Bank of Scotland ("RBS") on the renewal of
the current UK banking facilities, being a £5million term facility and a £
1million overdraft. The bank has previously agreed to an extension, from its
original expiry date of 31 December 2012, to 30th June 2013. Whilst discussions
are on-going, no further extension has been formalised as the terms for a new
facility are being negotiated. The directors consider that with the asset
security available, the level of facilities required should be readily
available and consider that a new loan will be agreed, either with RBS or an
alternative provider, in the near future.
As a result, the Directors believe that the company will have 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 2013 the following accounting standards and guidance were adopted by the
group:
• IAS 1 Presentation of Financial Statements: Presentation of items of Other
Comprehensive Income
• IFRS 13 Fair Value Measurement
• IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine.
The accounting treatment detailed in the above standards have not resulted in a
change of the Group's accounting policy and had no impact on the group's
financial position or performance.
IFRS 13 Fair Value Measurement:
IFRS 13 establishes a single source of guidance for fair value measurements and
their disclosures when fair value is required or permitted. IFRS 13 defines
fair value as the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction in the principal (most
advantageous) market at the measurement date under current market conditions.
Fair value under IFRS 13 is an `exit price' regardless of whether that price is
directly observable or estimated using another valuation technique. The
application of IFRS 13 has not materially impacted the fair value measurements
of the group. Additional disclosures where required, are provided in the
individual notes relating to the assets and liabilities whose fair values were
determined.
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
• Amendment to IAS 32
• IFRS 10 Consolidated financial statements
• IFRS 11 Joint Arrangements
• IFRS 12 Disclosure of Interests in Other Entities
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.
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
straight-line 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 31 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.
Held for trading investments
Financial assets/liabilities held for trading or short-term gain are measured
at fair value and movements in fair value are charged/credited to the income
statement 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.
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. 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.
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 2013
1. Segmental reporting
2.
2013
Business analysis Mining Property Other Total
£'000 £'000 £'000 £'000
Significant revenue 12,981 - - 12,981
customer A
Significant revenue 7,448 - - 7,448
customer B
Significant revenue 6,829 - - 6,829
customer C
Other revenue 6,859 953 35 7,847
Segment revenue 34,117 953 35 35,105
Operating profit 335 649 33 1,017
before fair value
adjustments &
exchange movements
Revaluation of (880) (53) 39 (894)
investments &
exchange movements
Operating profit/ (545) 596 72 123
(loss) and segment
result
Segment assets 15,849 11,557 2,823 30,229
Unallocated assets
- Non-current 46
assets
- Cash & cash 1,707
equivalents
Total assets 31,982
excluding
investment in joint
ventures
Segment liabilities (8,816) (1,010) (22) (9,848)
Borrowings (33) (5,098) - (5,131)
(8,849) (6,108) (22) (14,979)
Unallocated (4,235)
liabilities
Total liabilities (19,214)
Net assets 12,768
Investment in joint 4,219
ventures non
segmental
Net assets as per 16,987
balance sheet
Geographic analysis United South Other Unallocated Total
Kingdom Africa £'000 £'000 £'000
£'000 £'000
Revenue 988 34,117 - - 35,105
Operating profit/(loss) and segment 668 (545) - - 123
result
Non-current assets excluding investments 11,765 7,050 - 36 18,851
Total net assets 5,969 7,248 43 3,726 16,987
Capital expenditure 48 3,012 - - 3,060
2012
Business analysis Mining Property Other Total
£'000 £'000 £'000 £'000
Significant revenue customer A 10,510 - - 10,510
Significant revenue customer B 6,120 - - 6,120
Significant revenue customer C 3,110 - - 3,110
Other Revenue 15,212 957 53 16,222
Segment revenue 34,952 957 53 35,962
Operating profit/(loss) before fair value 2,630 666 46 3,342
adjustments & exchange movements
Revaluation of investments & exchange movements (357) (456) 39 (774)
Operating profit/(loss) and segment result 2,273 210 85 2,568
Segment assets 15,789 12,322 2,786 30,897
Unallocated assets
- Non-current assets 2
- Cash & cash equivalents 1,802
Total assets excluding investment in joint 32,701
ventures
Segment liabilities (9,416) (2,159) (1,271) (12,846)
Borrowings (102) (5,086) - (5,188)
(9,518) (7,245) (66) (16,829)
Unallocated liabilities (1,086)
Total liabilities (19,120)
Net assets 13,581
Investment in joint ventures non segmental 4,178
Net assets as per balance sheet 17,759
Geographic analysis United South Other Unallocated Total
Kingdom Africa £'000 £'000 £'000
£'000 £'000
Revenue 1,010 34,952 - - 35,962
Operating profit and segment result 295 2,273 - - 2,568
Non-current assets excluding investments 11,814 8,638 - - 20,452
Total net assets 5,857 6,170 43 5,689 17,759
Capital expenditure 1 3,680 - - 3,681
2. Operating costs
2013 2012
£'000 £'000
Mining 26,158 25,390
Property 192 135
Cost of sales 26,350 25,525
Administration 7,738 7,095
Operating costs 34,088 32,620
The direct property costs are:
Ground rent 5 9
Direct property expense 116 86
Bad debts 71 40
192 135
Operating costs above include depreciation of £2,817,000 (2012: £2,253,000).
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:
2013 2012
£'000 £'000
Investment deficit (47) (476)
Loss on valuation movement in respect of head lease payments (6) 20
Loss on revaluation of investment properties (53) (456)
4. Profit/(Loss) before taxation
Profit/(Loss) before taxation is arrived at after charging:
2013 2012
£'000 £'000
Staff costs (see note 28) 5,850 6,000
Depreciation 2,817 2,253
Exchange loss 880 357
Fees payable to the company's auditor for the audit of the 35 33
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 - 31
Corporate finance - 17
Other services 1 5
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
30 and 31 under the heading Directors' remuneration which is within the audited
part of that report.
6. Interest payable
2013 2012
£'000 £'000
On bank overdrafts and bank loans 323 352
Unwinding of discount 89 111
Other interest payable 34 59
Interest payable 446 522
7. Taxation
2013 2012
£'000 £'000
(a) Based on the results for the year:
Corporation tax - 7
Current tax - 7
Deferred tax - current year (213) 643
Deferred tax - adjustment in respect of prior year (49) -
Total tax in income statement (262) 650
(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 23.5% (2012: 24.5%)
The differences are explained below:
Profit on ordinary activities before taxation 102 2,190
Tax on profit on ordinary activities at 23.5% (2012: 24.5%) 24 537
Effects of:
Expenses not deductible for tax purposes 6 25
Adjustment to tax rate (101) -
Other differences (142) 88
Adjustment in respect of prior years (49) -
Total tax (262) 650
financial statements notes to the financial statements continued
(c) Analysis of United Kingdom and overseas tax
United Kingdom tax included in above:
2013 2012
£'000 £'000
Corporation tax - 2
Adjustment in respect of prior years - -
Current tax - 2
Deferred tax (271) (101)
(271) (99)
Overseas tax included in above:
Corporation tax - 5
Adjustment in respect of prior years - -
Current tax - 5
Deferred tax 9 744
9 749
8. Dividends paid
2013 2013 2012 2012
Per £'000 Per £'000
share share
Dividends paid during the year relating to the 4.00p 425 4.00p 422
prior period
Dividends to be paid:
Interim dividend for 2013 paid on 31 January 2014 1.00p 106 1.00p 105
Proposed final dividend for 2013 3.00p 319 3.00p 317
4.00p 425 4.00p 422
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 2014.
9. Profit/(Loss) and diluted profit/(loss) per share
Both the basic and diluted profit/(loss) per share calculations are based on a
profit of £355,000 (2012: £1,295,000). The basic profit/(loss) per share has
been calculated on a weighted average of 10,596,839(2012: 10,556,839) ordinary
shares being in issue during the period. The diluted profit/(loss) per share
has been calculated on the weighted average number of shares in issue of
10,596,839 (2012: 10,556,839) plus the dilutive potential ordinary shares
arising from share options of 160,982 (2012: 165,722) totalling 10,757,821
(2011: 10,722,561).
10. Investment properties
Freehold Long Total
£'000 Leasehold £'000
£'000
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
Valuation at 1 January 2012 9,118 2,950 12,068
Revaluation (229) (227) (456)
Valuation at 31 December 2012 8,889 2,723 11,612
Historical cost
At 31 December 2013 4,801 728 5,529
At 31 December 2012 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:
2013
£'000
Woodhouse Real Estate 11,559
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
inputs (weighted
fair
value average)
2013 2013
£'000
Freehold - external 9,035 Income Estimated £6
valuation capitalisation rental value
(£6)
Per sq ft p.a
7.1%
Equivalent
Yield (7.1%)
Long leasehold - external 2,524 Income Estimated £7- £25
valuation capitalisation rental value
(£12)
Per sq ft p.a
7.9% -
Equivalent 10.5%
yield
(10.3%)
At 31 December 2013 11,559
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 180 / (180) 88 / (91)
Long Leasehold - external valuation 597 / (594) 298 / (302)
11. Mining reserves, plant and equipment
Mining Mining Motor Office Total
reserves equipment vehicles equipment £'000
£'000 £'000 £'000 £'000
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 2012 1,438 8,462 129 90 10,119
Exchange adjustment (296) (1,749) (15) (8) (2,068)
Charge for the year 42 2,757 12 6 2,817
Disposals - - (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
Cost at 1 January 2012 1,815 14,467 170 115 16,567
Exchange adjustment (164) (1,310) (11) (6) (1,491)
Additions - 3,678 - 3 3,681
Disposals - - - - -
Cost at 31 December 2012 1,651 16,835 159 112 18,757
Accumulated depreciation at 1 January 1,523 6,905 127 86 8,641
2012
Exchange adjustment (138) (626) (7) (4) (775)
Charge for the year 53 2,183 9 8 2,253
Disposals in year - - - - -
Accumulated depreciation at 31 1,438 8,462 129 90 10,119
December 2012
Net book value at 31 December 2012 213 8,373 30 22 8,638
12. Investments held as non-current assets
2013 2013 2012 2012
Joint Other Joint Other
ventures £'000 ventures £'000
assets assets
£'000 £'000
At 1 January 3,061 131 2,579 431
Transfers - - 619 (298)
Additions 75 26 - -
Exchange adjustment - (1) - (2)
Share of gain/(loss) in joint ventures 99 - (137) -
Net assets at 31 December 3,235 156 3,061 131
Loan to joint venture:
At 1 January 1,117 - - -
Exchange adjustments (242) - (100) -
Additions 109 - 114 -
Transfers - - 1,103 -
At 31 December 984 - 1,117 -
At 31 December 4,219 156 4,178 131
Provision for diminution in value:
At 1 January - - - (283)
Transfer - (4) - 283
Write down of investment - (1) - -
At 31 December - (5) - -
Net book value at 31 December 4,219 151 4,178 131
2013 2012
£'000 £'000
Net book value of unquoted investments 126 124
Net book and market value of investments listed on overseas stock 25 7
exchanges
151 131
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
(2012: 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 (2012: 100) ordinary shares of
ZAR1 each.
Langney Dragon Ezimbokodweni 2013 2012
12.5% 50% 49% £'000 £'000
£'000 £'000 £'000
Turnover 165 104 - 269 192
Profit and loss
(Loss)/Profit before tax (45) 161 - 116 (135)
Taxation - (17) - (17) (2)
(Loss)/Profit after taxation (45) 144 - 99 (137)
Balance sheet
Non-current assets 2,043 1,564 981 4,588 4,450
Current assets 242 1,809 3 2,054 1,904
Current liabilities (88) (681) (984) (1,753) (2,691)
Non-current liabilities (1,385) (952) - (2,337) (1,284)
Share of net assets at 31 December 812 1,740 - 2,552 2,379
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
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
2013 2012
£'000 £'000
Coal
Washed 481 1,165
Run of mine 754 365
Work in progress 487 290
Other 34 56
1,756 1,876
16. Trade and other receivables
2013 2012
£'000 £'000
Amounts falling due within one year:
Trade receivables 5,658 5,270
Amount owed by joint venture 2,232 2,000
Other receivables 511 134
Prepayments and accrued income 258 200
8,659 7,604
17. Held for trading investments
2013 2012
£'000 £'000
Market value of Listed Investments:
Listed in Great Britain 778 731
Listed outside Great Britain 44 56
822 787
Original cost of Listed Investments 737 749
Unrealised surplus of market value over cost 85 38
18. Trade and other payables
2013 2012
£'000 £'000
Trade payables
Amounts owed to joint ventures 4,214 4,824
Other payables 1,205 1,205
Accruals and deferred income 704 545
1,957 2,644
8,080 9,218
19. Financial liabilities - borrowings
Current Non-current
2013 2012 2013 2012
£'000 £'000 £'000 £'000
Bank overdraft (secured) 3,029 1,084 - -
Bank loan (secured) 5,013 5,102 118 86
8,042 6,186 118 86
Bank overdraft and loan instalments by reference to
the balance sheet date:
Within one year 8,042 6,186
From one to two years 14 -
From two to five years 104 86
8,160 6,272
Bank overdraft and loan analysis by origin:
United Kingdom 5,366 5,145
Southern Africa 2,794 1,127
8,160 6,272
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 £11,559,000. The South African bank loans
are secured by way of a first charge over specific pieces of mining equipment,
inventory and the debtors of the relevant company which holds the loan which
are included in the financial statements at a value of £8,075,000.
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 38.8% (2011: 25.8%) which was calculated as follows:
2013 2012
£'000 £'000
Total debt 8,160 6,272
Less cash and cash equivalents (1,707) (1,802)
Net debt 6,453 4,470
Total equity 16,628 17,315
Gearing 38.8% 25.8%
20. Provision for rehabilitation
2013 2012
£'000 £'000
As at 1 January 989 965
Exchange adjustment (204) (87)
Unwinding of discount 89 111
As at 31 December 874 989
21. Financial instruments
Treasury policy
Although no derivative transactions were entered into during the 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 2013, 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
£18,000 (2012: £19,000). The effect on equity of this change would be an
equivalent decrease or increase for the year of £18,000 (2011: £19,000).
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:
2013 2012
£'000 £'000
Within one year 15,956 15,239
From one to two years 38 13
From two to five years 129 123
Beyond five years 134 139
16,257 15,514
The following table sets out the maturity profile of the financial liabilities
as at 31 December maturing within one year:
2013
£'000
Within one month 10,207
From one to three months 1,998
From four to twelve months 3,751
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. Subsequent
to year end Black Wattle breached one of the covenants of the facility related
to the accounting net asset value of the company. Management have been in
discussions with the bank to rectify the breach and have no reason to believe
the breach will not be rectified or affect the ongoing use of the facility, or
that the facility will not be renewed again at the appropriate times.
In the UK the group is working with Royal Bank of Scotland on the renewal of
the current banking facilities being a £5million term facility and a £1million
overdraft. The bank has previously agreed to an extension, from its original
expiry date of 31 December 2012, to 30 June 2013. Whilst discussions are
on-going, no further extension has been formalised as the terms for a new
facility are being negotiated. The directors consider that with the asset
security available, the level of facilities required should be readily
available and consider that a new loan will be agreed, either with RBS or an
alternative provider, in the near future. This facility is secured against the
group's UK retail property portfolio. At 31 December 2013 the group was within
its bank borrowing facilities and had not breached any of its covenants.
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 £
11,092,000 (2012: £10,323,000). 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 81% 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 £137,000 (2012: £147,000). To date, the amount of trade receivables
held past due date that has not subsequently been settled is £118,000 (2012: £
nil). Management have no reason to believe that this amount will not be
settled.
Financial assets maturity
On 31 December 2013, cash at bank and in hand amounted to £1,707,000 (2012: £
1,802,000) 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.
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 2013 2012
at fair
receivables Liabilities £'000 £'000
value
£'000 measured at through
amortised profit
cost and
loss
£'000
£'000
Cash and cash equivalents 1,707 - - 1,707 1,802
Investments held for trading - - 822 822 787
Other investments - - 151 151 131
Trade and other receivables 9,385 - - 9,385 8,521
Bank borrowings - (8,160) - (8,160) (6,272)
Finance leases - (196) - (196) (202)
Other liabilities - (7,901) - (7,901) (9,040)
11,092 (16,257) 973 (4,192) (4,273)
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 2012
fall under the same category of financial instrument as 2013.
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 2013 and 2012 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:
2013 2012
£'000 £'000
Sterling 139 131
South African Rand 1,426 1,527
US Dollar 142 144
1,707 1,802
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:
2013: Sterling South
African
£'000
Rands
£'000
Sterling (4,082) -
South African Rand 768 (1,065)
US Dollar 187 -
(3,127) (1,065)
2012: Sterling South
African
£'000
Rands
£'000
Sterling (4,187) -
South African Rand 1,054 (1,296)
US Dollar 157 -
(2,976) (1,296)
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
2013 2012
£'000 £'000
Balance at 1 January 2,437 1,881
Recognised in income (262) 643
Exchange adjustment (273) (87)
1,902 2,437
The deferred tax balance comprises the following:
Revaluation of properties 713 895
Capital allowances 1,183 1,312
Short-term differences 6 230
1,902 2,437
23. Share capital
2013 2012
£'000 £'000
Authorised: 13,000,000 ordinary shares of 10p each 1,300 1,300
Allotted and fully paid:
2013 2012 2013 2012
Number of Number of £'000 £'000
ordinary ordinary
shares shares
At 1 January 10,556,839 10,556,839 1,056 1,056
Shares issued during the year 80,000 - 8,000 -
Outstanding at 31 December 10,636,839 10,556,839 1,064 1,056
24. Other reserves
2013 2012
£'000 £'000
Equity share options 501 442
Net premium on share capital in joint venture 86 86
587 528
25. Share based payments
Details of the share option scheme are shown in the Directors' remuneration
report on pages 30 and 31 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 share share
price per which options share
share for which options for which
exercisable options options
issued/
outstanding at exercised/ outstanding at
31 December (cancelled) 31 December
2012 2013
during year
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 - 233,000
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 2004 and 2010 scheme, agreed
by members on 23 June 2005 and 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.
The 2012 options were valued at £212,000 at date of grant using the
Black-Scholes-Merton model with the following assumptions:
Expected volatility 38.83%
Expected life 4.00 Years
Risk free rate 0.50%
Expected dividends 3.48%
Expected volatility was determined by reference to the historical volatility of
the share price over a period commensurate with the option's expected life. The
expected life used in the model is based on the risk-averse balance likely to
be required by the option holders.
2013 2013 2012 2012
Number Weighted Number Weighted
average average
exercise exercise
price price
Outstanding at 1 January 718,000 157.7p 798,000 145.2p
Granted during year - - 233,000 34.0p
Cancelled during the year - - (233,000) 34.0p
Exercised during the year - - (80,000) 34.0p
Outstanding at 31 December 718,000 157.7p 718,000 157.6p
Exercisable at 31 December 718,000 157.7p 638,000 152.0p
26. Non-controlling interest
2013 2012
£'000 £'000
As at 1 January 444 231
Share of profit for the year 9 245
Exchange adjustment (94) (32)
As at 31 December 359 444
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
paid
owed owed recharged
(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)) - - 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) (319)
London & Associated Properties PLC (note (a)) 6 - 172 (533)
Langney Shopping Centre Unit Trust (note (b)) - (15) - 64
Dragon Retail Properties Limited (note (c)) 1,205 (2,000) (145) (1,855)
Ezimbokodweni Mining (pty) Limited (note (d)) - (1,117) (14) -
As at 31 December 2012 1,211 (3,132) 13 (2,324)
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 30 and 31 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 £111,000 (2012: 108,000). In 2012 a loan was made to one of the
directors, Mr A R Heller, for £116,000.
28. Employees
2013 2012
£'000 £'000
The average weekly numbers of employees of the group during the
year were as follows:
Production 220 218
Administration 20 19
240 237
£'000 £'000
Staff costs during the year were as follows:
Salaries 5,395 5,607
Social security costs 115 129
Pension costs 220 236
Share based payments 120 28
5,850 6,000
29. Capital commitments
2013 2012
£'000 £'000
Commitments for capital expenditure approved but not contracted 402 507
for at the year end
Share of commitment of capital expenditure in joint venture 1,451 1,829
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
2013 2012 2013 2012
£'000 £'000 £'000 £'000
Within one year 12 13 12 13
Second to fifth year 49 50 45 47
After five years 1,589 1,527 139 142
1,650 1,590 196 202
Discounting adjustment (1,454) (1,388) - -
Present value 196 202 196 202
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:
2013 2012
£'000 £'000
Within one year 859 847
Second to fifth year 3,195 2,718
After five years 9,879 10,332
13,933 13,897
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:
2013 2012
£'000 £'000
Rail siding 62 78
Rehabilitation of mining land 1,153 1,454
Water & electricity 54 68
Company balance sheet
at 31 December 2013
Notes 2013 2012
£'000 £'000
Fixed assets
Tangible assets 33 11,605 11,614
Investment in joint ventures 34 1,810 1,734
Other investments 34 1,714 1,686
Debtors - amounts due in more than one year 35 1,313 1,055
16,442 16,089
Current assets
Debtors - amounts due within one year 35 3,082 3,436
Bank balances 799 1,136
3,881 4,572
Creditors - amounts falling due within one year 36 (7,425) (7,287)
Net current liabilities (3,554) (2,715)
Total assets less current liabilities 12,898 13,374
Creditors - amounts falling due in more than one year - 36 (90) (86)
medium term bank loan
Provision for liabilities and charges 37 - (40)
Net assets 12,808 13,248
Capital and reserves
Called up share capital 23 1,064 1,056
Share premium account 38 249 169
Revaluation reserve 38 5,632 5,685
Other reserves 38 503 443
Retained earnings 38 5,360 5,895
Shareholders' funds 12,808 13,248
The company financial statements were approved and authorised for issue by the
board of directors on 17 April 2014 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 2013
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.
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.
Interest rate derivatives
The company 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.
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 30 and 31 under the heading Share option schemes which is within the
audited part of this report.
32. Dividends
The aggregate amount of dividends comprises:
2013 2012
£'000 £'000
Final dividends in respect of prior year but not recognised as 425 422
liabilities in that year:
The aggregate amount of dividends to be paid and not recognised as liabilities
as at year end is £425,000 (2012: £422,000).
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 2013 8,889 2,723 48 53 11,713
Additions - - 38 10 48
Disposals - - (49) - (49)
Revaluation 146 (199) - - (53)
Cost or valuation at 31 December 2013 9,035 2,524 37 63 11,659
At valuation 9,035 2,524 - - 11,559
At cost - - 37 63 100
9,035 2,524 37 63 11,659
Accumulated depreciation at 1 January - - 48 51 99
2013
Charge for the year - - 2 2 4
Disposals - - (49) - (49)
Accumulated depreciation at 31 December - - 1 53 54
2013
Net book value at 31 December 2013 9,035 2,524 36 10 11,605
Net book value at 31 December 2012 8,889 2,723 - 2 11,614
Details of historical cost of investment properties are shown in note 10.
34. Investments
Joint Shares Loans Other Total
ventures £'000 £'000 investments £'000
shares £'000
£'000
Cost at 1 January 2013 1,734 361 1,325 - 1,686
Invested during year 76 - 3 26 29
Cost at 31 December 2013 1,810 361 1,328 - 1,715
Provision for impairment
As at 1 January - - - - -
Transfer - - - (1) (1)
As at 31 December 2013 - - - (1) (1)
Net book value at 31 December 2013 1,810 361 1,328 25 1,714
Net book value at 31 December 2012 1,734 361 1,325 - 1,686
Other investments comprise £25,000 (2012: £nil) shares.
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
2013 2012
£'000 £'000
Amounts due within one year:
Amounts due from subsidiary undertakings 295 928
Trade receivables 163 181
Other debtors 135 128
Joint venture 2,232 2,000
Prepayments and accrued income 257 199
3,082 3,436
Amounts due in more than one year:
Amounts due from subsidiary undertakings 1,295 1,055
Deferred taxation 18 -
1,313 1,055
36. Creditors
2013 2012
£'000 £'000
Amounts falling due within one year:
Bank overdraft (secured) 269 59
Bank loan (secured) 5,007 5,000
Joint venture 1,205 1,205
Current taxation 2 2
Other taxation and social security 95 86
Other creditors 323 233
Accruals and deferred income 524 702
7,425 7,287
Amounts falling due in more than one year:
Bank loan (secured) 90 86
2013 2012
£'000 £'000
Bank and other loan instalments by reference to the balance sheet
date:
Within one year 5,007 5,000
From one to two years 7 -
From two to five years 83 86
5,097 5,086
The bank loan of the company is secured by a charge over freehold and long
leasehold properties.
37. Provisions for liabilities
2013 2012
£'000 £'000
Deferred taxation
Balance at 1 January 40 -
Provision - 40
Transfer (40) -
- 40
No provision has been made for the approximate taxation liability at 23.5%
(2012: 24.5%) of £713,000 (2012: £895,000) which would arise 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 2013 1,056 169 5,685 443 5,895 13,248
Dividend paid - - - - (425) (425)
Revaluation of investment - - (53) - - (53)
property
Share options 8 80 - 60 - 148
Retained loss for the year - - - - (110) (110)
Balance at 31 December 2013 1,064 249 5,632 503 5,360 12,808
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 loss for the
financial year, before dividends, was £110,000 (2012: Profit: £164,000)
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 31 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 paid
recharged
by / (to)/
related by
party accrued
related
£'000 (to) / by
party
related
party £'000
£'000
Related party:
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)
Black Wattle Colliery (pty) Ltd (note (a)) (2,921) (1,396) 1,398
Ninghi Marketing Limited (note (b)) (102) - -
As at 31 December 2012 (3,023) (1,396) 1,398
(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 (2012: 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 and no repayments were 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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