Final Results
30/04/2013 07:00
BISICHI MINING PLC
Results for the year ended 31 December 2012
STRONG PERFORMANCE IN 2012
Financial summary:
* Turnover: 35,962,000 (2011: 29,909,000)
* EBITDA: 4,573,000 (2011: 1,150,000)
Summary of performance:
* Strong performance at Black Wattle, South Africa
* Monthly Run of mine increased to an average of 165,000 metric tonnes per
month in second half 2012
* Increased output combined with weak SA Rand offset weaker international
coal price
* 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, Michael Heller, comments:
"Because of uncertainties of the price of coal during the remainder of 2013 it
is difficult to forecast the results for the whole year, however we remain
confident on the prospects for the business in 2013."
For further information, please call:
Andrew Heller or Garrett Casey, Bisichi Mining PLC 020 7415 5030
CHAIRMAN'S STATEMENT
In the year to 31 December 2012 Bisichi Mining is pleased to report that it
achieved earnings before interest, tax, depreciation and amortisation (EBITDA)
of 4.6million (2011: 1.2million).
This good result comes from a strong performance at Black Wattle, our South
African coal mining subsidiary where, as a result of the opening of a third
opencast pit, our monthly run of mine production has increased from an average
of 110,000 metric tonnes achieved in the first half of 2011 to 165,000 metric
tonnes in the second half of 2012.
The physical demand for the lower quality coal we are currently mining has
remained strong in both the domestic and export markets and the South African
coal market has continued to benefit from the improved performance of the South
African railway network, Transnet. This improved performance, along with the
weakening of the South African Rand against the US Dollar, has helped us offset
the impact of the weaker international coal prices. Demand is currently very
strong in both the domestic and export markets for high quality coal. We expect
to shortly address this demand by accessing higher quality reserves at Black
Wattle.
On health and safety, I am very pleased to report that Black Wattle had another
very good year. For further information on this please refer to the Mining
Review in this report.
The Company's UK retail property portfolio, which is managed by London &
Associated Properties PLC, continues to perform well despite the ongoing
difficulties in the UK retail property sector. Voids across the portfolio were
at the very low level of 2.27%.
Because of the uncertainties of the price of coal during the remainder of 2013
your directors are recommending a final dividend of 3p (2011: 3p) payable on 2
August 2013 to shareholders registered at the close of business on 5 July 2013
making the total for the year 4p (2011: 4p). Although it is difficult to
forecast the results for the whole year, we remain confident on the prospects
for the business in 2013.
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 18 April 2013
MINING REVIEW
As noted in the Chairman's statement, higher production contributed
significantly to Black Wattles' profitability in 2012. In addition, the
continued improved performance of Transnet, the State rail provider, ensured
strong demand for our coal. This demand along with the weakening of the South
African Rand against the US Dollar helped offset the impact of weaker
international coal prices throughout 2012.
Production
Run of mine production from Black Wattle continued strongly in 2012 with total
production for the year of 1.87million metric tonnes (2011: 1.45million metric
tonnes). The majority of this production came in the second half of the year
with overall monthly production increasing from 149,000 metric tonnes in the
first half of 2012 to 165,000 metric tonnes in the second half.
At the end of last year we began to expand further into our existing opencast
reserves by opening up additional opencast pits. The ability to source
production from various opencast pits has allowed Black Wattle to maintain
profitable levels of production.
Looking forward into 2013, Black Wattle will be mining into deeper reserves by
opencast mining. We will do everything that we can to keep costs under control
in these deeper reserves and to ensure that 2013 is another very good year.
Markets
Although domestic prices improved steadily in 2012, international coal prices
continued to weaken. At the beginning of 2012, the average weekly price of Free
on Board (FOB) Coal from Richards Bay Coal Terminal (API4) was over $100. By
the end of the first half of the year the price had weakened to under $90 where
it remained in a range of US$85 to US$90 for the rest of the year. However a
depreciation in the South African Rand against the US Dollar helped offset this
decline.
The performance of Transnet continues to have a positive effect on demand for
our coal. In 2012, Transnet railed 68.5 million tonnes to Richards Bay Coal
Terminal compared to 65.7million tonnes in 2011 and 62.8million tonnes in 2010.
In addition, strong demand in the domestic market, in particular from local
power utilities, ensured stockpiles remained low.
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. 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.
* 21 employees were trained in ABET (Accreditation Board for Engineering and
Technology) level one and another 19 will be trained in 2013 on level one,
two and three.
HSE performance in 2012:
* 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 2012
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 Colliery has substantially improved its water management by
erecting a new pollution control dam as well as upgrading existing dams in
consultation with the Department of Water Affairs and Forestry.
We are very pleased to report that Black Wattle received their approved water
licence from the Department of Water Affairs and Forestry. An external audit
was also conducted and completed on the approved water licence.
A performance assessment audit was conducted to verify compliance to our
Environmental Management Programme, no significant deviations were found.
Black Wattle Colliery Social and Labour Plan (SLP) progress
Black Wattle Colliery is committed to true transformation and empowerment
within the company 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 the company's stakeholders:
* 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.
* 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, through ongoing consultation with 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.
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 now a level 5 BBBEE
contributor.
Employment Equity
Black Wattle is committed to achieving the goals of the 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.
* 97 percent of the women at Black Wattle Colliery are HDSA females.
Prospects
Since permissions were granted in 2010 to mine opencast the reserves at Black
Wattle, management have worked tirelessly to increase production from our
opencast reserves in order to reach acceptable levels of profitability. Going
forward into 2013, we wish to build on the success of the past year not only at
Black Wattle but also, in partnership with our BEE partners, in growing our
reserve base in South Africa.
As a result, I am confident that 2013 should be another successful year for our
South African operations.
Andrew Heller
Managing Director
18 April 2013
BUSINESS REVIEW
Review of the group's development and performance
The Chairman's Statement and the Mining Review on the preceding pages 2 to 7
give a comprehensive review and assessment of the group's activities during the
past year and prospects for the forthcoming year.
Risk
Coal price risk: The group's mining operational earnings are largely dependent
on movements in the coal price. It does have the flexibility in terms of
markets where it can sell its coal domestically (to local industrial consumers
and the power industry) or to export to various international markets.
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.
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 is 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 is disclosed in the Mining Review on page 6.
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.
Future development
The group seeks to expand its operations in South Africa through the
acquisition of additional coal reserves.
Environment and employment
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.
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.
Financial Position
In the UK, a term loan facility of 5million and an overdraft facility of
2million were signed in March 2010 with Royal Bank of Scotland. The group is
working with the bank on the renewal of the current banking facilities and the
bank has agreed to an extension of the existing 5 million term facility and
2million overdraft to the 30 June 2013 from its original expiry date of 31
December 2012, whilst the discussions are on-going and the new facility is
documented.
The property portfolio was externally valued at 31 December 2012 and the value
of UK investment properties attributable to the group at year end was
11.6million (2011: 12.1million).
In South Africa, a structured trade finance facility of R60million (South
African Rand) was signed in March 2010 with Absa Bank Limited, a South African
subsidiary of Barclays Bank PLC. This facility comprises of a R40million
revolving loan to cover the working capital requirements of the group's South
African operations, and a R20million loan facility to cover guarantee
requirements related to the group's South African mining operations. The
R60million facility is renewed annually and is secured against inventory,
debtors and cash that are held in the group's South African operations.
The group's cash and cash equivalents (excluding bank overdrafts) at year end
were 1.8million (2011: 4.0million). The net assets of the group at the year
end were 17.8million (2011: 17.0million). During the year the company lent
2million to Dragon Retail Properties Limited, our joint venture company at
6.875 per cent annual interest.
Further details on the group's financial position are stated in the
Consolidated Balance Sheet on page 38.
Cashflow
The group's cashflow position remains strong. Cash and cash equivalents
(including bank overdrafts) of the group at year end were 0.7million (2011:
1.1million).
Further details on the group's cashflow position are stated in the Consolidated
Cashflow Statement on page 41. Cash and cash equivalents as per the Cashflow
Statement comprise Cash and cash equivalents as presented in the balance sheet
and bank overdrafts (secured).
Performance indicators
The Key Performance Indicators for our South African mining activities are
* Profit before Tax (PBT);
* Earnings before Interest, Tax, Depreciation, and Amortisation (EBITDA); and
* Cashflows from operating, investing and financing activities.
The Key Performance Indicator for our UK property investment operations is the
Net Property Valuation as shown in note 10.
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.
OJohn A Sibbald
BL (Non-executive)
John Sibbald has been a Director since 1988. After qualifying as a Chartered
Accountant he spent over 20 years in stockbroking, specialising in mining and
international investment.
*Member of the nomination committee
+ Senior independent director
O Member of the audit, nomination and remuneration committees.
Secretary & Registered office
Heather A Curtis ACIS
24 Bruton Place
London W1J 6NE
Black Wattle Colliery
Directors
Robert Corry (Chairman)
Andrew Heller (Managing Director)
Robert Grobler
Ethan Dube
Garrett Casey
Director of Property
Mike J Dignan FRICS
Auditor
PKF (UK) LLP
Principal bankers
United Kingdom
Barclays Bank PLC
National Westminster Bank 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
Leppan Beech Incorporated, Johannesburg
Routledge Modise attorneys, Johannesburg
Stockbrokers
Shore Capital & Corporate Ltd
Registrars and transfer office
Capita Registrars
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
Website: www.capitaregistrars.com
Email: ssd@capitaregistrars.com
Company Registration
Company registration No. 112155
(Incorporated in England and Wales)
Website
www.bisichi.co.uk
E-mail
admin@bisichi.co.uk
BISICHI MINING PLC
FINANCIAL CALENDAR
5 June 2013 Annual General Meeting
2 August 2013 Payment of final dividend for 2012 (if approved)
Late August 2013 Announcement of half-year results to 30 June 2013
18 November 2013 Second interim management statement
Late April 2014 Announcement of results for year ending 31 December 2013
Directors' report
The directors submit their report together with the audited financial
statements
for the year ended 31 December 2012.
Activities and review of business
The company continues its mining activities. Income for the year was derived
from sales of coal from its South African operations. The company 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 2012 are shown on pages 34 to 70 and in the Mining Review and
Business Review on pages 5 to 15. Future developments and prospects are also
covered in the Mining Review. 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 Mining and Business Reviews.
The management report referred to in the Director's responsibilities statement
encompasses this Directors' Report, the Chairmans' Statement on page 2 and the
Mining Review and Business Review on pages 5 to 15.
Corporate responsibility
Environment
The environmental issues of the group's South African coal mining operations
are covered in the Mining Review and Business Review on pages 5 to 15.
The group's UK activities are principally property investment whereby premises
are provided for rent to retail businesses.
The group seeks to provide those tenants with good quality premises from which
they can operate in an efficient and environmentally friendly manner. Wherever
possible, improvements, repairs and replacements are made in an environmentally
efficient manner and waste re-cycling arrangements are in place at all the
company's locations.
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
Mining Review 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 2012 of 1p was paid on 1 February 2013 (Interim 2011:
1p). The directors recommend the payment of a final dividend for 2012 of 3p per
ordinary share (2011: 3p) making a total dividend for 2012 of 4p (2011: 4p).
Subject to shareholder approval, the total dividend per Ordinary Share for 2012
will be 4p per Ordinary Share
The final dividend will be payable on Friday 2 August 2013 to shareholders
registered at the close of business on 5 July 2013.
Investment properties
The investment property portfolio is stated at its open market value of
11,612,000, at 31 December 2012 (2011: 12,068,000) as valued by professional
external valuers. The open market value of the company's shareholding of
investment properties included within its investments in joint ventures is
3,336,000 (2011: 3,505,000).
Financial instruments
Note 22 to the financial statements sets out the risks in respect of financial
instruments. The Board reviews and agrees overall treasury policies, delegating
appropriate authority to the managing director. 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, GJ Casey, C A Joll, R J Grobler (a South African citizen), and J A
Sibbald.
The directors retiring by rotation are Sir Michael Heller, Mr C A Joll and Mr J
A Sibbald who offer themselves for re-election. The board recommends their
re-election. Brief details of the directors standing for re-election are:
Sir Michael Heller has been an executive director since 1972 and chairman since
1981. He is a chartered accountant and has a contract of employment
determinable at six months notice.
Christopher Joll has been a director since 1 February 2001 and has a contract
of service determinable at three months notice. He has held a number of
non-executive directorships of both quoted and un-quoted companies and is
currently senior partner of MJ2 Events LLP an event management business.
John Sibbald has been a non-executive director since 1988. He is a retired
chartered accountant. For most of his career he was employed in stockbroking in
the City of London where he specialised in mining and international investment.
He has a contract of service determinable at three months notice.
No director had any material interest in any contract or arrangement with the
company during the year other than as shown in this report.
Directors' shareholdings
The interests of the directors in the shares of the company, including family
and trustee holdings where appropriate, were as follows:
Beneficial Non-beneficial
31.12.2012 1.1.2012 31.12.2012 1.1.2012
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 - - - -
There have not been any changes in the above shareholdings since 31 December
2012 and the date of this report.
Details of the options to subscribe for new ordinary shares of the company
granted to the directors are contained under "Share option schemes" in the
remuneration report on page29.
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 2013:
London & Associated Properties PLC - 4,432,618 shares representing 41.99 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 3.13 per cent. of the issued
capital.
A R Heller - 785,012 shares representing 7.44 per cent. of the issued capital.
Neil Kirton - 352,000 shares representing 3.33 per cent. of the issued capital.
Cavendish Asset Management Limited - 1,025,110 shares representing 9.71 per
cent. of the issued share capital.
Disclosure of information to auditor
The directors in office at 31 December 2012 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 Guidance for Smaller Quoted Companies (SQC)
published by the Quoted Companies Alliance. The Alliance provides guidance to
SQC and their guidance covers the implementation of The UK Corporate Governance
Code for SQC. The paragraphs below set out how the company has applied this
guidance during the year. The company has complied with the Quoted Companies
Alliance guidance throughout the year, except insofar that non-executive
directors are not appointed for fixed terms (section A.7.2).
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 page17. 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 page32. 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 27 to29.
? 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 page30.
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. As a
consequence he does not fully meet the criteria for independence set out in the
UK Corporate Governance Code (The Code).
John Sibbald has been a non-executive director for over twenty years. As a
consequence he does not fully meet the criteria for independence set out in the
UK Corporate Governance Code (The Code).
The Board encourages Christopher Joll and John Sibbald to act independently.
The criteria on which they fail to meet The Code's criteria is namely length of
service and a connection with the company's public relations advisers, which
should 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 2012 and attendance at regular Board meetings and
Board committees was as follows:
Meetings held Meetings attended
Sir Michael Heller Board 6 6
Nomination committee 1 1
A R Heller Board 6 6
Audit committee 2 2
G J Casey Board 6 6
Audit committee 2 2
R J Grobler Board 6 1
C A Joll Board 6 6
Audit committee 2 2
Nomination committee 1 1
Remuneration committee 1 1
J A Sibbald Board 6 6
Audit committee 2 2
Nomination committee 1 1
Remuneration committee 1 1
The audit committee had two meetings in 2012 with the external auditors
present, prior to release of the 2011 annual results. Members of the committee
discussed the 30 June 2011 half year results prior to their approval by the
full Board. The nomination committee held one meeting during the year.
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 2012 (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.
Payment of suppliers
The company agrees contract terms with suppliers when orders are placed.
Payments to suppliers are made in accordance with those terms, provided that
suppliers have complied with all relevant terms and conditions. Trade creditors
outstanding at the year-end represented 53 days trade purchases (2011 - 52
days).
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 while 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 every three years or more frequently. 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
have since completed an e-learning training course and continue to do so 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 the Royal Automobile Club, 89 Pall Mall, London SW1Y 5HS on Tuesday, 5
June 2013 at 11.00 a.m. Resolutions 1 to 10 will be proposed as ordinary
resolutions. More than 50 per cent. of shareholders' votes cast must be in
favour for these resolutions to be passed. Resolutions 11 to 13 will be
proposed as special resolutions. At least 75 per cent. of shareholders' votes
cast must be in favour for these 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.
To approve a loan of 116,000 to a director, Mr A R Heller (Resolution 9)
The directors are proposing that shareholder approval if given to approve,
affirm and ratify a loan that has been made to one of the directors, Mr A R
Heller, to fund his acquisition of a car. Under section 197(1) Companies Act
2006, approval of shareholders is required in relation to loans made by a
company to its directors. A company is permitted under section 214 Companies
Act 2006 to obtain such shareholders' approval after the loan transaction has
completed so long as it is within a reasonable period of time.
Memorandum pursuant to section 197 (3) Companies Act 2006
The company made a loan of 116,000 to Mr A R Heller (a director of the
company) ("Director's Loan") on
30 November 2012, the purpose of which was for Mr A R Heller to purchase a car.
Interest is payable on the Director's Loan at a rate of 6.14 per cent.. There
is no fixed repayment date for the Director's Loan. It is intended that the
principal amount of the Director's Loan will be repaid when the car purchased
by Mr A R Heller has been sold. Any tax and National Insurance contributions
arising will be bourne by Mr A R Heller.
The company took out a loan of 116,000 with ING Lease (UK) Limited ("ING
Loan") on 30 November 2012 in order to facilitate payment of the Director's
Loan. The ING Loan is repayable by the company on 30 December 2015 and interest
is payable on the ING Loan at a rate of 6.14 per cent..
Directors' authority to allot shares (Resolution 10)
In certain circumstances it is important for the company to be able to allot
shares up to a maximum amount without needing to seek shareholder approval
every time an allotment is required. Paragraph 10.1.1 of Resolution 10 would
give the directors the authority to allot shares in the company and grant
rights to subscribe for, or convert any security into, shares in the company up
to an aggregate nominal value of 351,894. This represents approximately 1/3
(one third) of the ordinary share capital of the company in issue (excluding
treasury shares) at 15 April 2013 (being the last practicable date prior to the
publication of this Directors' Report). Paragraph 10.1.2 of Resolution 10 would
give the directors the authority to allot shares in the company and grant
rights to subscribe for, or convert any security into, shares in the company up
to a further aggregate nominal value of 351,894, 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 2013 (being the last practicable date prior to the
publication of this Directors' Report).
Therefore, the maximum nominal value of shares or rights to subscribe for, or
convert any security into, shares which may be allotted or granted under
resolution 10 is 703,788.
Resolution 10 complies with guidance issued by the Association of British
Insurers (ABI).
The authority granted by resolution 10 will expire on 31 August 2014 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 11)
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 351,894 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 351,894 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 2013 (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 105,568 which
represents approximately 10 per cent. of the ordinary share capital of the
company in issue (excluding treasury shares) as at 15 April 2013 (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 11 will expire when the authority given by resolution
10 is revoked or expires.
The directors have no present intention to make use of this authority.
Notice of General Meetings (Resolution 12)
Resolution 12 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 2012. 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 13)
The effect of resolution 13 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 1,055,684 ordinary
shares (representing approximately 10 per cent. of the company's issued share
capital as at 15 April 2013 (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 13 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 2013 (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 798,000 shares representing 7.56 per cent.
of the company's issued share capital (excluding treasury shares) as at that
date. Such number of options to subscribe for new ordinary shares would
represent approximately 8.40 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 13.
Donations
No political or charitable donations were made during the year (2011: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 15 and it's financial position is set
out on page 12 of the Business Review. In addition Note 22 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 and long term leases with the majority of its tenants of its property
portfolio. Black Wattle Colliery, its direct mining asset returned to
profitability in the second half of 2011 and has been profitable to date. The
directors have a reasonable expectation that the mining and market conditions
experienced in 2012 will be similar going into 2013. As a consequence, the
directors believe that the company is well placed to manage its business risks
successfully. The group is working with the bank on the renewal of the current
banking facilities and the bank has agreed, in principle, to an extension of
the 5million term facility and 2 million overdraft to the 30th June 2013,
from its original expiry date of 31 December 2012, whilst the discussions are
on-going and the new facility is documented. The directors have a reasonable
expectation that the company has adequate resources to continue in operational
existence for the foreseeable future and that the company is well placed to
manage its business risks. Thus they continue to adopt the going concern basis
of accounting in preparing the annual financial statements.
Other matters
The auditors, PKF (UK) LLP, have merged their business into BDO LLP. A
resolution to appoint BDP LLP will be put to the Annual General Meeting.
By order of the board
Heather Curtis
Secretary
24 Bruton Place
London W1J 6NE
18 April 2013
Remuneration Report
The remuneration committee is pleased to present its report for the year ended
31 December 2012
The remuneration committee is a formally constituted committee and is comprised
exclusively of non-executive directors.
The members of the committee are Christopher Joll (chairman) and John Sibbald.
Remuneration policy for executive directors and non-executive directors
The principal function of the remuneration committee is to determine, on behalf
of the Board, the remuneration and other benefits of the executive directors
and senior executives, including pensions, share options and service contracts.
The company's policy is to ensure that the executive directors are rewarded
competitively in relation to other companies in order to retain and motivate
them. The emoluments of each executive director comprises basic salary, a bonus
at the discretion
of the remuneration committee, provision of a car, premiums paid in respect of
individual defined contribution pension arrangements, health insurance premium
and share options.
The remuneration committee receives updates on pay and employment conditions
applying to other group employees. These are taken into consideration when
setting executive directors' remuneration consistent with the group's general
aim of seeking to reward all employees fairly according to the nature of their
role, their performance and market forces.
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. No pension costs are incurred
on behalf of non-executive directors and they do not participate in the share
option schemes.
Service and employment 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 six months. All
directors' contracts, as amended from time to time, have run from the date of
appointment. Details of the directors standing for re-election are given under
"Directors'" in the Directors' report. The policy of the committee is not to
grant employment contracts or contracts of service in excess of six months and
there are no provisions for termination payments. A summary of terms of service
and employment is as follows:
Start date Unexpired Notice
of contract term period
Executive directors
Sir Michael Heller November 1972 Continuous 6 months
A R Heller January 1994 Continuous 3 months
G J Casey June 2010 Continuous 3 months
R J Grobler April 2008 Continuous 3 months
Non-executive directors
C A Joll February 2001 Continuous 3 months
J A Sibbald October 1988 Continuous 3 months
The following information has been audited:
Directors' remuneration
Salaries Bonus Benefits Total Pension Total Total
and fees before Contributions 2012 2011
Pensions
'000 '000 '000 '000 '000 '000 '000
Executive Directors
Sir Michael Heller 75 - - 75 - 75 75
A R Heller 350 150 14 514 30 544 626
G J Casey 109 75 9 193 15 208 177
R Grobler 162 - 26 188 8 196 232
696 225 49 970 53 1,023 1,110
Non- Executive
Directors
C A Joll 25 - - 25 - 25 24
J A Sibbald 2 - 3 5 - 5 4
27 - 3 30 - 30 28
Total 723 225 52 1,000 53 1,053 1,138
Pension schemes and incentives
Three (2011: three) directors have benefits under money purchase pension
schemes. Contributions in 2012 were 53,000 (2011: 53,000), see table above.
Directors are not entitled to benefits under any bonus or incentive schemes
apart from the share option schemes details of which are set out below. Bonuses
are awarded by the remuneration committee when merited.
Performance bonuses were awarded by the remuneration committee to two executive
directors during 2012 (2011:3).
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
price* January Granted December from to
2012 in 2012 2012
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 233,000 233,000 233,000 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.
The middle market price of Bisichi Mining PLC ordinary shares at 31 December
2012 was 110p (2011-145p). During the year the share price ranged between 95p
and 160p.
The board's policy is to grant options to executive directors, managers and
staff at appropriate times to provide them with an interest in the longer term
development of the group.
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 - Total Return
Index as a suitable index for this comparison as it gives an indication of
performance against a large spread of quoted companies.
Christopher Joll
Chairman - remuneration committee
24 Bruton Place
London
W1J 6NE
18 April 2013
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 5 to the financial statements.
External Auditors
PKF (UK) 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
PKF (Jhb) Inc. acts as the external auditor to the South African companies, and
the work of that firm was reviewed by PKF (UK) LLP for the purpose of the group
audit.
Christopher Joll
Chairman - audit committee
24 Bruton Place
London W1J 6NE
18 April 2013
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 2012 by the company as
detailed in our Valuation Report dated 21 February 2013.
Having regard to the foregoing, we are of the opinion that the open market
value as at 31 December 2012 of the interests owned by the Company was
11,612,000 being made up as follows:
000
Freehold 8,889
Leasehold 2,723
11,612
Leeds BNP Paribas Real Estate Advisory & Property Management UK Limited
21 February 2013 Regulated by Royal Institute of Chartered Surveyors
DIRECTORS' RESPONSIBILITIES STATEMENT
The directors are responsible for preparing the directors' report, the
directors' remuneration report and the financial statements in accordance with
applicable law and regulations.
Company law requires the directors to prepare financial statements for each
financial year. Under that law the directors are required to prepare the group
financial statements in accordance with International Financial Reporting
Standards as adopted by the European Union and have elected to prepare the
parent 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 company and the group and of the profit or loss of 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 judgments and accounting estimates that are reasonable and prudent;
* state whether the group financial statements have been prepared in
accordance with IFRSs as adopted by the European Union;
* state, with regard to the parent company financial statements, whether
applicable UK accounting standards have been followed, subject to any
material departures disclosed and explained in the financial statements;
* prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the company and the group will continue in
business.
The directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the company's transactions, to disclose with
reasonable accuracy at any time the financial position of the company and to
enable them to ensure that the financial statements comply with the Companies
Act 2006 and Article 4 of the IAS Regulation. They are also responsible for
safeguarding the assets of the company and the group and hence for taking
reasonable steps for the prevention and detection of fraud and other
irregularities.
The directors are responsible for the maintenance and integrity of the
corporate and financial information included on the company's website.
Legislation in the United Kingdom governing the preparation and dissemination
of the financial statements and other information included in annual reports
may differ from legislation in other jurisdictions.
The directors confirm, to the best of their knowledge:
* that the group financial statements, which have been prepared in accordance
with IFRS as adopted by the European Union, give a true and fair view of
the assets, liabilities, financial position and profit or loss of the
group; and
* that the management report included within the directors' report includes a
fair review of the development and performance of the business and the
position of the company and the undertakings included in the consolidation
taken as a whole, together with a description of the principal risks and
uncertainties that they face.
The names and functions of all the directors are stated on page17.
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 2012 which comprise the consolidated income statement, the
consolidated statement of comprehensive income, the consolidated and company
balance sheets, the consolidated cash flow statement, the consolidated
statement of changes in shareholders' equity 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 the 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 auditor
As explained more fully in the directors' responsibilities statement, 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 Auditing Practices Board's Ethical
Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the
financial statements sufficient to give reasonable assurance that the financial
statements are free from material misstatement, whether caused by fraud or
error. This includes an assessment of: whether the accounting policies are
appropriate to the group's and the parent company's circumstances and have been
consistently applied and adequately disclosed; the reasonableness of
significant accounting estimates made by the directors; and the overall
presentation of the financial statements. In addition, we read all the
financial and non-financial information in the annual report to identify
material inconsistencies with the audited financial statements. If we become
aware of any apparent material misstatements or inconsistencies we consider the
implications for our report.
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 2012 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 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 matters where the
Companies Act 2006 requires us to report to you if, in our opinion:
* adequate accounting records have not been kept by the parent company, or
returns adequate for our audit have not been received from branches not
visited by us; or
* the parent company financial statements and the part of the directors'
remuneration report to be audited are not in agreement with the accounting
records and returns; or
* certain disclosures of directors' remuneration specified by law are not
made; or
* we have not received all the information and explanations we require for
our audit.
Andrew Huddleston (Senior statutory auditor)
for and on behalf of PKF (UK) LLP, Statutory auditor
London, UK
18 April 2013
CONSOLIDATED INCOME STATEMENT
for the year ended 31 December 2012
2012 2012 2012 2011 2011 2011
Notes Trading Revaluations Total Trading Revaluations Total
'000 '000 '000 '000 '000 '000
Group revenue 1 35,962 - 35,962 29,909 - 29,909
Operating costs 2 (30,478) - (30,478) (27,565) - (27,565)
Operating profit 5,484 - 5,484 2,344 - 2,344
before depreciation,
fair value adjustments
and exchange movements
Depreciation 2 (2,253) - (2,253) (2,488) - (2,488)
Operating profit/ 1 3,231 - 3,231 (144) - (144)
(loss) before fair
value adjustments and
exchange movements
Exchange losses (357) - (357) (975) - (975)
Decrease in value of 3 - (456) (456) - (42) (42)
investment properties
Gains/(Loss) on held - 39 39 - (167) (167)
for trading
investments
Operating Profit/ 1 2,874 (417) 2,457 (1,119) (209) (1,328)
(loss)
Share of profit/(loss) 13 64 (201) (137) 21 (31) (10)
in joint ventures
Profit/(Loss) before 2,938 (618) 2,320 (1,098) (240) (1,338)
interest and taxation
Interest receivable 281 - 281 268 - 268
Interest payable 6 (411) - (411) (380) - (380)
Profit/Loss before tax 4 2,808 (618) 2,190 (1,210) (240) (1,450)
Taxation 7 (842) 192 (650) 762 142 904
Profit/(Loss) for the 1,966 (426) 1,540 (448) (98) (546)
year
Attributable to: 1,721 (426) 1,295 (346) (98) (444)
Equity holders of the
company
Non-controlling 27 245 - 245 (102) - (102)
interest
Profit/(Loss) for the 1,966 (426) 1,540 (448) (98) (546)
year
Profit/(Loss) per 9 16.30p (4.03)p 12.27p (3.30)p (0.93)p (4.23)p
share - basic
Profit/(Loss) per 9 16.05p (3.97)p 12.08p (3.30)p (0.93)p (4.23)p
share - 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 2012
2012 2011
'000 '000
Profit/(Loss) for the year 1,540 (546)
Other comprehensive income:
Exchange differences on translation of foreign (391) (575)
operations
Taxation - -
Other comprehensive income for the year net of (391) (575)
tax
Total comprehensive income for the year net of 1,149 (1,121)
tax
Attributable to:
Equity shareholders 936 (958)
Non-controlling interest 213 (163)
1,149 (1,121)
Company Registration No. 112155
CONSOLIDATED BALANCE SHEET
at 31 December 2012
Notes 2012 2011
'000 '000
Assets
Non-current assets
Value of investment properties 10 11,612 12,068
Fair value of head lease 31 202 222
11,814 12,290
Mining reserves, plant and equipment 11 8,638 7,926
Investments in joint ventures 12 3,061 2,579
Loan to joint venture 12 1,117 -
Other investments 12 131 148
Total non-current assets 24,761 22,943
Current assets
Inventories 16 1,876 1,206
Trade and other receivables 17 7,604 6,067
Corporation tax recoverable 49 133
Held for trading investments 18 787 730
Cash and cash equivalents 1,802 4,041
12,118 12,177
Non-current asset held for sale 14 - 1,785
Total current assets 12,218 13,962
Total assets 36,879 36,905
Liabilities
Current liabilities
Borrowings 20 (6,186) (8,157)
Trade and other payables 19 (9,218) (8,590)
Current tax liabilities (2) -
Total current liabilities (15,406) (16,747)
Non-current liabilities
Borrowings 20 (86) (86)
Provision for rehabilitation 21 (989) (965)
Finance lease liabilities 31 (202) (222)
Deferred tax liabilities 23 (2,437) (1,881)
Total non-current liabilities (3,714) (3,154)
Total liabilities (19,120) (19,901)
Net assets 17,759 17,004
Equity
Share capital 24 1,056 1,056
Share premium account 169 169
Translation reserve (805) (446)
Other reserves 25 528 500
Retained earnings 16,367 15,494
Total equity attributable to equity 17,315 16,773
shareholders
Non-controlling interest 27 444 231
Total equity 17,759 17,004
These financial statements were approved and authorised for issue by the board
of directors on 18 April 2013 and signed on its behalf by:
A R Heller G J Casey
Director Director
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
for the year ended 31 December 2012
Share Share Translation Other Retained Non-controlling Total
capital Premium reserves reserves earnings Total interest equity
'000 '000 '000 '000 '000 '000 '000 '000
Balance at 1 1,045 - 68 485 16,356 17,954 394 18,348
January 2011
Revaluation of - - - - (42) (42) - (42)
investment
properties
Other income - - - - (402) (402) (102) (504)
statement
movements
Loss for the year - - - - (444) (444) (102) (546)
Exchange - - (514) - - (514) (61) (575)
adjustment
Total - - (514) - (444) (958) (163) (1,121)
comprehensive
income for the
year
Dividend 11 169 - - (418) (238) - (238)
Equity share - - - 15 - 15 - 15
options
Balance at 1 1,056 169 (446) 500 15,494 16,773 231 17,004
January 2012
Revaluation of - - - - (456) (456) - (456)
investment
properties
Other income - - - - 1,751 1,751 245 1,996
statement
movements
Profit for the - - - - 1,295 1,295 245 1,540
year
Exchange - - (359) - - (359) (32) (391)
adjustment
Total - - (359) - 1,295 936 213 1,149
comprehensive
income for the
year
Dividend - - - - (422) (422) - (422)
Equity share - - - 28 - 28 - 28
options
Balance at 31 1,056 169 (805) 528 16,367 17,315 444 17,759
December 2012
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 December 2012
Year ended Year ended
31 December 2012 31 December
2011
'000 '000
Cash flows from operating activities
Operating profit/(loss) 2,457 (1,328)
Adjustments for:
Depreciation 2,253 2,488
Share based payment expense 27 15
(Gain)/Loss on investment held for trading (39) 167
Unrealised loss on investment properties 456 42
Share of profit of joint venture 64 21
Cash flow before working capital 5,218 1,405
Change in inventories (670) (501)
Change in trade and other receivables (2057) (2,385)
Change in trade and other payables 1150 2,340
Change in provisions 117 124
Acquisitions of held for trading investments (18) (291)
Cash generated from operations 3,740 692
Interest received 281 268
Interest paid (411) (380)
Income tax received 83 245
Cash flow from operating activities 3,693 825
Cash flows from investing activities
Acquisition of reserves, plant and equipment (3,681) (2,528)
Proceeds from sale of investment properties, - 7
reserves,
plant and equipment
Disposal/(Acquisitions) of investments 16 (888)
Cash flow from investing activities (3,665) (3,409)
Cash flows from financing activities
Borrowings drawn 86 -
Borrowings repaid (214) (347)
Equity dividends paid (422) (238)
Cash flow from financing activities (550) (585)
Net decrease in cash and cash equivalents (522) (3,169)
Cash and cash equivalents at 1 January 1,114 3,977
Exchange adjustment 126 306
Cash and cash equivalents at 31 December 718 1,114
Cash and cash equivalents at 31 December
comprise:
Cash and cash equivalents as presented in the 1,802 4,041
balance sheet
Bank overdrafts (secured) (1,084) (2,927)
718 1,114
GROUP ACCOUNTING POLICIES
for the year ended 31 December 2012
Basis of accounting
The results for the year ended 31 December 2012 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 and long term leases
with the majority of its tenants of its property portfolio. Black Wattle
Colliery, its direct mining asset returned to profitability in the second half
of 2011 and has been profitable to date. The directors have a reasonable
expectation that the mining and market conditions experienced in 2012 will be
similar going into 2013. As a consequence, the directors believe that the
company is well placed to manage its business risks successfully.
The group is working with the bank on the renewal of the current banking
facilities and the bank has agreed to an extension, in principle, of the
5million term facility and 2million overdraft to the 30th June 2013 from its
original expiry date of 31 December 2012, whilst the discussions are on-going
and the new facility is documented. The directors have reasonable expectation
that the company has adequate resources to continue in operational existence
for the foreseeable future and that the company is well placed to manage its
business risks. Thus they continue to adopt the going concern basis of
accounting in preparing the annual financial statements.
International Financial Reporting Standards (IFRS)
The financial statements are prepared in accordance with International
Financial Reporting Standards and Interpretations in force at the reporting
date. These are prepared under the historic cost basis as modified by the
revaluation of investment properties and held for trading investments.
During 2012 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. 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. Specifically, the Directors' have
considered the impact of IFRIC 20 which concerns the treatment of stripping
costs. The Directors are of the view that the accounting treatment detailed in
this standard would not result in a change of the Group's accounting policy.
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.
In addition the directors note that other areas, in particular the valuation of
the investment properties, are considered to be less judgemental due to the
nature of the underlying properties and the use of external valuers.
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' interest 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
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 28 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.
Non-current assets held for sale
Non-current assets held for sale are measured at the lower of carrying amount
and fair value less costs to sell.
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 an 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 2012
1. Segmental reporting
Business analysis
Mining Property 2012 Total
Other
'000 '000 '000 '000
Significant revenue 10,510 - - 10,510
customer A
Significant revenue 6,120 - - 6,120
customer B
Significant revenue 3,110 - - 3,110
customer C
Other revenue 15,212 957 53 16,222
Segment revenue 34,952 957 53 35,962
Operating profit before 2,519 666 46 3,231
fair value adjustments &
exchange movements
Revaluation of (357) (456) 39 (774)
investments & exchange
movements
Operating profit and 2,162 210 85 2,457
segment result
Segment assets 15,789 12,322 2,786 30,897
Unallocated assets
* Non-current assets 2
* Cash & cash 1,802
equivalents
Total assets excluding 32,701
investment in joint
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 4,178
ventures non segmental
Net assets as per balance 17,759
sheet
Geographic analysis
United South Other Unallocated Total
Kingdom Africa
'000 '000 '000 '000 '000
Revenue 1,010 34,952 - - 35,962
Operating profit and 295 2,162 - - 2,457
segment result
Non-current assets 11,814 8,638 - - 20,452
excluding investments
Total net assets 5,857 6,170 43 5,689 17,759
Capital expenditure 1 3,680 - - 3,681
1. Segmental reporting continued
Business analysis
Mining Property 2011 Total
Other
'000 '000 '000 '000
Significant revenue 8,577 - - 8,577
customer A
Significant revenue 7,527 - - 7,527
customer B
Significant revenue 2,280 - - 2,280
customer C
Other Revenue 10,508 989 28 11,525
Segment revenue 28,892 989 28 29,909
Operating (loss)/profit (787) 630 13 (144)
before fair value
adjustments & exchange
movements
Revaluation of investments (975) (42) (167) (1184)
& exchange movements
Operating (loss)/profit and (1,762) 588 (154) (1,328)
segment result
Segment assets 15,212 12,551 730 28,493
Unallocated assets
- Non-current assets 7
- Cash & cash equivalents 4,041
Total assets excluding 32,541
investment in joint
ventures
Segment liabilities (7,928) (2,498) (27) (10,453)
Borrowings (316) (5,000) - (5,316)
(8,244) (7,498) (27) (15,769)
Unallocated liabilities (4,132)
Total liabilities (19,901)
Net assets 12,640
Investment in joint 4,364
ventures non segmental
Net assets as per balance 17,004
sheet
Geographic analysis
United South Other Unallocated Total
Kingdom Africa
'000 '000 '000 '000 '000
Revenue 1,017 28,892 - - 29,909
Operating profit/(loss) 434 (1,762) - - (1,328)
and segment result
Non-current assets 12,290 7,920 - 6 20,216
excluding investments
Total net assets 5,725 6,944 57 4,278 17,004
Capital expenditure 1 2,527 - - 2,528
2. Operating costs
2012 2011
'000 '000
Mining 25,501 22,579
Property 135 104
Cost of sales 25,636 22,683
Administration 7,095 7,370
Operating costs 32,731 30,053
The direct property costs are:
Ground rent 9 6
Direct property expense 86 70
Bad debts 40 28
135 104
Operating costs above include depreciation of 2,253,000 (2011: 2,488,000)
3. (Loss)/Gain 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:
2012 2011
'000 '000
Investment deficit (476) (53)
Loss on valuation movement in respect of head lease 20 11
payments
Loss on revaluation of investment properties (456) (42)
4. Profit/(Loss) before taxation
Profit/(Loss) before taxation is arrived at after charging:
2012 2011
'000 '000
Staff costs (see note 29) 6,000 5,872
Depreciation 2,253 2,488
Exchange loss 357 975
Fees payable to the company's auditor for 33 26
the audit of the 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 31 34
legislation
Corporate finance 17 -
Other services 5 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
28 and 29 under the heading Directors' remuneration which is within the audited
part of that report.
6. Interest payable
2012 2011
'000 '000
On bank overdrafts and bank loans 352 369
Other interest payable 59 11
Interest payable 411 380
7. Taxation
2012 2011
'000 '000
(a) Based on the results for the year:
Corporation tax 7 -
Adjustment in respect of prior years - SA - (332)
Current tax 7 (332)
Deferred tax - current year 643 (572)
Total tax in income statement 650 (904)
(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 24.5% (2011: 26.5%)
The differences are explained below:
Profit/(Loss) on ordinary activities before taxation 2,190 (1,450)
Tax on profit/ (loss) on ordinary activities at 24.5% 537 (384)
(2011: 26.5%)
Effects of:
Expenses not deductible for tax purposes 25 30
Capital losses on disposal - (11)
Non-taxable income - (37)
Other differences 88 (170)
Adjustment in respect of prior years - (332)
Total tax 650 (904)
(c) Analysis of United Kingdom and Overseas tax
United Kingdom tax included in above:
Corporation tax 2 -
Adjustment in respect of prior years - -
Current tax 2 -
Deferred tax (101) (201)
(99) (201)
Overseas tax included in above:
Corporation tax 5 -
Adjustment in respect of prior years - (332)
Current tax 5 (332)
Deferred tax 744 (371)
749 (703)
8. Dividends paid
2012 2012 2011 2011
Per share '000 Per share '000
Dividends paid during the year 4.00 p 422 4.00 p 418
relating to the prior period
Dividends to be paid:
Interim dividend for 2012 paid on 1 1.00 p 105 1.00 p 105
February 2013
Proposed final dividend for 2012 3.00 p 317 3.00 p 317
4.00 p 422 4.00 p 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 2013.
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 1,295,000 (2011: loss of 444,000). The basic profit/(loss) per
share has been calculated on a weighted average of 10,556,839 (2011:
10,495,395) 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 10,556,839 (2011: 10,495,395) plus the dilutive potential
ordinary shares arising from share options of 165,722 (2011: nil) totalling
10,722,561 (2011: 10,495,395).
In 2011, dilutive potential ordinary shares of 239,607 were excluded from the
calculation of diluted ordinary shares as there was no dilutive effect due to
the loss for the year.
10. Investment properties
Freehold Long Total
'000 Leasehold '000
'000
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
Valuation at 1 January 2011 9,110 3,000 12,110
Revaluation 8 (50) (42)
Valuation at 31 December 2011 9,118 2,950 12,068
Historical cost
At 31 December 2012 4,801 728 5,529
At 31 December 2011 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:
2012
'000
BNP Paribas Real Estate 11,612
11,612
The valuations were carried out in accordance with the Statements of Asset
Valuation and Guidance Notes published by
The Royal Institution of Chartered Surveyors.
11. Mining reserves, plant and equipment
Mining Mining Motor Office Total
Reserves equipment Vehicles equipment
'000 '000 '000 '000 '000
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
Cost at 31 December 2012 1,651 16,835 159 112 18,757
Accumulated depreciation 1,523 6,905 127 86 8,641
at 1 January 2012
Exchange adjustment (138) (626) (7) (4) (775)
Charge for the year 53 2,183 9 8 2,253
Accumulated depreciation 1,438 8,462 129 90 10,119
at 31 December 2012
Net book value at 31 213 8,373 30 22 8,638
December 2012
Cost at 1 January 2011 2,212 14,940 429 128 17,709
Exchange adjustment (397) (2,683) (53) (14) (3,147)
Additions - 2,526 - 2 2,528
Disposals - (316) (206) (1) (523)
Cost at 31 December 2011 1,815 14,467 170 115 16,567
Accumulated depreciation 1,768 5,897 345 84 8,094
at 1 January 2011
Exchange adjustment (318) (1,059) (41) (7) (1,425)
Charge for the year 73 2,383 22 10 2,488
Disposals in year - (316) (199) (1) (516)
Accumulated depreciation 1,523 6,905 127 86 8,641
at 31 December 2011
Net book value at 31 292 7,562 43 29 7,926
December 2011
12. Investments held as non-current assets
2012 2012 2011 2011
Joint Other Joint Other
Ventures Ventures
Assets Assets
'000 '000 '000 '000
At 1 January 2579 431 2,404 433
Transfers 618 (298) (703) -
Additions - - 888 -
Exchange adjustment - (2) - (2)
Share of (loss)/gain in joint (136) - (10) -
ventures
Net assets at 31 December 3,061 131 2,579 431
Loan to joint venture:
At 1 January - - 1,203 -
Exchange adjustments (100) (216)
Additions 114 - 116 -
Transfers 1,103 - (1,103) -
At 31 December 1,117 - - -
At 31 December 4,178 131 2,579 431
Provision for diminution in value:
At 1 January - (283) - (283)
Transfer - 283 - -
At 31 December - - - (283)
Net book value at 31 December 4,178 131 2,579 148
Included in other investments are: 2012 2011
'000 '000
Net book value of unquoted 124 135
investments
Net book value of investments listed 7 13
on overseas stock exchanges
131 148
Market value of the overseas listed 11 13
investments
The transfer of the investment and loan to joint venture relates to the stake
in the joint venture company, Ezimbokodweni Mining (Proprietary) Limited which
was held as a non-current asset held for sale in the prior year. Further
details are disclosed in note 14.
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
(2011: 500,000) ordinary shares of 1 each.
During 2011 the company acquired 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. This asset was reclassified as a non-current asset held for sale in
the prior year but was transferred back to investments in joint ventures in
2012. Further details are provided in note 14.
Langney Dragon Ezimbokodweni
12.5% 50% 49% 2012 2011
'000 '000 '000 '000 '000
Turnover 90 102 - 192 183
Profit and loss
(Loss)/Profit before tax (42) (93) - (135) (9)
Taxation - (2) - (2) (1)
(Loss)/Profit after (42) (95) - (137) (10)
taxation
Balance sheet
Non-current assets 1,931 1,405 1,114 4,450 3,519
Current assets 112 1,789 3 1,904 1,425
Current liabilities (87) (1,487) (1,117) (2,691) (1,131)
Non-current liabilities (1,174) (110) - (1,284) (1,234)
Share of net assets at 31 782 1,597 - 2,379 2,579
December
14. Non-current assets held for sale
2012 2011
'000 '000
At 1 January 1785 -
Transfer of stake in joint venture company - 1,785
now held for sale
Transfer of stake in joint venture company (1785) -
now held as non-current asset investment
Net assets at 31 December - 1,785
On 26 January 2012 the Company announced that it had entered into an agreement
for the sale of its 49% participation in a South African registered joint
venture company, Ezimbokodweni Mining (Proprietary) Limited ("Ezimbokodweni"),
for ZAR 54.2 million.
Ezimbokodweni was established in 2005 with Endulwini Coal Limited to acquire
from BHP Billiton Energy Coal South Africa Limited ("BECSA") a shallow coal
deposit located in the Witbank coalfield of Mpumalanga, some 40 km from the
Company's existing coal mining operations at the Black Wattle colliery. Since
then, Ezimbokodweni has been negotiating with BECSA and the South African
Department of Mineral Resources ("DMR") to finalise the acquisition and prepare
for opencast mining.
In 2011, following the intervention of the DMR, the Company had agreed to
dispose of its stake in Ezimbokodweni. The agreement made on 26 January 2012
was conditional on the satisfaction by 15 May 2012 of conditions precedent. At
15 May 2012 the conditions precedent remained unfulfilled and the agreement to
dispose of its stake in Ezimbokodweni lapsed.
However to date, Ezimbokodweni has continued to negotiate with the respective
parties to finalise the acquisition of the reserve and prepare for opencast
mining. As a result the asset has been reallocated to investments in joint
ventures. Details of which can be found in Note 12.
15. Subsidiary companies
The company owns the following ordinary share capital of the principal
subsidiaries which are included within the consolidated financial statements:
Activity Percentage of Country of
share capital incorporation
Mineral Products Limited Share dealing 100% England and Wales
Black Wattle Colliery Coal mining 62.5% South Africa
(pty) Limited
Bisichi Coal Mining (pty) Coal mining 100% South Africa
Limited
Bisichi Mining Holding company 100% England and Wales
(Exploration) Limited
Ninghi Marketing Limited Dormant 90.1% England and Wales
Details on the non-controlling interest in subsidiaries are shown under note
27.
16. Inventories
2012 2011
'000 '000
Coal
Washed 1,165 284
Run of mine 365 440
Work in progress 290 432
Other 56 50
1,876 1,206
17. Trade and other receivables
2012 2011
'000 '000
Amounts falling due within
one year:
Trade receivables 5,089 5,818
Amount owed by joint 2,000 -
venture
Other receivables 315 130
Prepayments and accrued 200 119
income
7,604 6,067
18. Held for trading investments
2012 2011
'000 '000
Market value of Listed
Investments:
Listed in Great Britain 731 657
Listed outside Great Britain 56 73
787 730
Original cost of Listed 749 749
Investments
Unrealised surplus/(deficit) of 38 (19)
market value over cost
19. Trade and other payables
2012 2011
'000 '000
Trade payables 4,824 4,313
Amounts owed to joint 1,205 1,205
ventures
Other payables 545 528
Accruals and deferred income 2,644 2,544
9,218 8,590
20. Financial liabilities - borrowings
Current Non-current
2012 2011 2012 2011
'000 '000 '000 '000
Bank overdraft (secured) 1,084 2,927 - -
Bank loan (secured) 5,102 5,230 86 86
6,186 8,157 86 86
2012 2011
'000 '000
Bank overdraft and loan
instalments by reference
to the balance sheet date:
Within one year 6,186 8,157
From one to two years - 86
From two to five years 86 -
6,272 8,243
Bank overdraft and loan
analysis by origin:
United Kingdom 5,145 5,000
Southern Africa 1,127 3,243
6,272 8,243
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 11,612,000. 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 8,505,000.
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. During 2012 this
increased to 25.8% (2011: 25.1%) which was calculated as follows:
2012 2011
'000 '000
Total debt 6,272 8,243
Less cash and cash (1,802) (4,041)
equivalents
Net debt 4,470 4,202
Total equity 17,315 16,773
Gearing 25.8% 25.1%
21. Provision for rehabilitation
2012 2011
'000 '000
As at 1 January 965 1,025
Exchange adjustment (87) (184)
Additions 111 124
As at 31 December 989 965
22. Financial instruments
Treasury policy
The group enters into 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 2012, 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
19,000 (2011: 28,000). The effect on equity of this change would be an
equivalent decrease or increase for the year of 19,000 (2011: 28,000).
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:
2012 2011
'000 '000
Within one year 15,239 16,578
From one to two years 13 185
From two to five years 123 37
Beyond five years 139 73
15,514 16,873
In South Africa, a structured trade finance facility of R60million (South
African Rand) was signed by Black Wattle Colliery (pty) Limited in March 2010
with Absa Bank Limited, a South African subsidiary of Barclays Bank PLC. The
facility is renewed annually and is secured against inventory, debtors and cash
that are held by Black Wattle Colliery (pty) Limited. This facility comprises
of a R40million revolving loan to cover the working capital requirements of the
group's South African operations, and a R20million loan facility to cover
guarantee requirements related to the group's South African mining operations.
The facility is renewed on an annual basis.
In the UK, a term loan facility of 5million and an overdraft facility of
2million were signed by Bisichi Mining Plc in March 2010 with Royal Bank of
Scotland. This facility is secured against the group's UK retail property
portfolio. At 31 December 2012 the group was within its bank borrowing
facilities and had not breached any of its covenants. The group is working with
the bank on the renewal of the current banking facilities and the bank has
agreed to an extension, in principle, of the existing facilities to the 30 June
2013 from its original expiry date of 31 December 2012, whilst the discussions
are on-going and the new facility is documented.
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.
At the balance sheet date there was no significant concentration of credit
risk. The maximum exposure to credit risk is represented by the carrying amount
of each financial asset in the balance sheet which at year end amounted to
10,323,000 (2011: 9,989,000).
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 147,000 (2011: 313,000). The amount of trade receivables held past
due date has subsequently been settled.
Financial assets maturity
On 31 December 2012, cash at bank and in hand amounted to 1,802,000 (2011:
4,041,000) 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 at 2012 2011
receivables Liabilities fair value
measured at through '000 '000
'000 amortised profit and
cost loss '000
'000
Cash and cash 1,802 - - 1,802 4,041
equivalents
Investments held - - 787 787 730
for trading
Other Investments - - 131 131 148
Trade and other 8,521 - - 8,521 5,948
receivables
Bank Borrowings - (6,272) - (6,272) (8,243)
Finance leases - (202) - (202) (222)
Other Liabilities - (9,040) - (9,040) (8,407)
10,323 (15,514) 918 (4,273) (6,005)
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 2011
fall under the same category of financial instrument as 2012.
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 2012 and 2011 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:
2012 2011
'000 '000
Sterling 131 2,152
South African Rand 1,527 1,737
US Dollar 144 152
1,802 4,041
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:
2012:
Sterling South
African
'000 Rands
'000
Sterling (4,187) -
South African Rand 1,054 (1,296)
US Dollar 157 -
(2,976) (1,296)
2011:
Sterling South
African
'000 Rands
'000
Sterling (4,461) -
South African Rand 1,172 (2,888)
US Dollar 172 -
(3,117) (2,888)
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.
23. Deferred taxation
2012 2011
'000 '000
Balance at 1 January 1,881 2,340
Recognised in income 643 (572)
Reallocated - 291
Exchange adjustment (87) (178)
2,437 1,881
The deferred tax balance
comprises the following:
Revaluation of properties 895 1,089
Capital allowances 1,312 678
Short-term timing 230 114
differences
2,437 1,881
24. Share capital
2012 2011
'000 '000
Authorised: 1,300 1,300
13,000,000 ordinary shares
of 10p each
Allotted and fully paid: 1,056 1,056
10,556,839 (2011:
10,556,839) ordinary
shares
25. Other reserves
2012 2011
'000 '000
Equity share options 442 414
Net premium on share 86 86
capital in joint
venture
528 500
26. Share based payments
Details of the share option scheme are shown in the Directors' remuneration
report on page 28 and 29 under the heading Share option schemes which is within
the audited part of this report. Further details of the share option schemes
are set out below.
The Bisichi Mining PLC Unapproved Option Schemes:
Year of Subscription Period within Number of Number of Number of
grant price per which options share for share share
share which options
exercisable options issued/ for which
outstanding exercised/ options
at 31 (cancelled)
December during year outstanding
2011 at
31 December
2012
2002 34.0p Sep 2005 - Sep 313,000 (313,000) -
2012
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.
2012 2012 2011 2011
Number Weighted Number Weighted
average average
Exercise Exercise
price price
Outstanding at 1 January 798,000 145.2p 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 718,000 157.6p 798,000 145.2p
Exercisable at 31 December 638,000 152.0p 718,000 138.9p
27. Non-controlling Interest
2012 2011
'000 '000
As at 1 January 231 394
Share of profit/(loss) for the year 245 (102)
Exchange adjustment (32) (61)
As at 31 December 444 231
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 1000 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.
28. Related Party Transactions
At 31 During the
December year
Amounts Amounts Costs Cash paid
owed owed recharged (to)
to related by related (to) / by / by
related related
party party
party party
'000 '000
'000 '000
Related party:
London & Associated Properties 6 - 172 (533)
PLC (note (a))
Langney Shopping Centre Unit - (15) - 64
Trust (note (b))
Dragon Retail Properties 1,205 (2,000) (145) (1,855)
Limited (note (c))
Ezimbokodweni Mining (pty) - (1,117) (14) -
Limited (note (d))
As at 31 December 2012 1,211 (3,132) 13 (2,324)
London & Associated Properties 367 - 275 (234)
PLC (note (a))
Langney Shopping Centre Unit - (15) (21) 6
Trust (note (b))
Dragon Retail Properties 1,205 - (42) 42
Limited (note (c))
Ezimbokodweni Mining (pty) - (1,103) 100 -
Limited (note (d))
As at 31 December 2011 1,572 (1,118) 312 (186)
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 Retail Properties Limited ("Dragon") is owned equally by the company and
London & Associated Properties PLC. During the year the company lent 2million
to Dragon at 6.875 per cent annual interest.
(d) Ezimbokodweni Mining (pty) Limited
Ezimbokodweni Mining is a prospective coal production company based in South
Africa.
Details of key management personnel compensation and interest in share options
are shown in the Directors' Remuneration Report on pages 28 to 29 under the
headings Directors' remuneration, Pension schemes and incentives and Share
option schemes which is within the audited part of this report. The total
employers' national insurance paid in relation to the remuneration of key
management was 108,000. A loan has been made to one of the directors, Mr A R
Heller, for 116,000. This loan is subject to shareholder approval. Details of
loans to directors can also be found in the Directors' Report on page 24.
29. Employees
2012 2011
Number Number
The average weekly numbers of employees of the
group during the year were as follows:
Production 218 229
Administration 19 18
237 247
'000 '000
Staff costs during the year were as follows:
Salaries 5,607 5,485
Social security costs 129 117
Pension costs 236 255
Share based payments 28 15
6,000 5,872
30. Capital commitments
2012 2011
'000 '000
Commitments for capital expenditure approved 507 558
but not contracted for at the year end
Share of commitment of capital expenditure in 1,829 -
joint venture
31. Head lease commitments and future property lease rentals
Present value of head leases on properties
Minimum lease payments Present value of
minimum lease payments
2012 2011 2012 2011
'000 '000 '000 '000
Within one year 13 13 13 13
Second to fifth year 50 53 47 50
After five years 1,527 1,627 142 159
1,590 1,693 202 222
Discounting (1,388) (1,471) - -
adjustment
Present value 202 222 202 222
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:
2012 2011
'000 '000
Within one year 847 902
Second to fifth year 2,718 2,669
After five years 10,332 10,169
13,897 13,740
32. 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:
2012 2011
'000 '000
Rail siding 78 2
Rehabilitation of mining land 1,454 1,599
Water & electricity 68 74
Company Registration No. 112155
COMPANY BALANCE SHEET
at 31 December 2012
2012 2011
Notes '000 '000
Fixed assets
Tangible assets 34 11,614 12,075
Investment in joint ventures 35 1,734 1,734
Other investments 35 1,686 1,698
Debtors - amounts due in more than one year 36 1,055 -
16,089 15,507
Current assets
Debtors - amounts due within one year 36 3,436 2,584
Bank balances 1,136 3,237
4,572 5,821
Creditors - amounts falling due within one year 37 (7,287) (7,394)
Net current liabilities (2,715) (1,573)
Total assets less current liabilities 13,374 13,934
Creditors - amounts falling due in more than one 37 (86) -
year - medium term bank loan
Provision for liabilities and charges 38 (40) -
Net assets 13,248 13,934
Capital and reserves
Called up share capital 24 1,056 1,056
Share premium account 39 169 169
Revaluation reserve 39 5,685 6,141
Other reserves 39 443 415
Retained earnings 39 5,895 6,153
Shareholders' funds 13,248 13,934
The company financial statements were approved and authorised for issue by the
board of directors on 18 April 2013 and signed on its behalf by:
A R Heller G J Casey
Director Director
COMPANY ACCOUNTING POLICIES
for the year ended 31 December 2012
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 28 and 29 under the heading Share option schemes which is within the
audited part of this report.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
For the year ended 31 December 2012
33. Dividends
The aggregate amount of dividends comprises:
2012 2011
'000 '000
Final dividends in respect of prior year but not recognised 422 418
as liabilities in that year:
The aggregate amount of dividends to be paid and not recognised as liabilities
as at year end is 422,000 (2011: 422,000).
34. Tangible fixed assets
Investment properties
Freehold Long Motor Office Total
'000 Leasehold Vehicles Equipment '000
'000 '000 '000
Cost or valuation at 1 9,118 2,950 48 52 12,168
January 2012
Additions - - - 1 1
Revaluation (229) (227) - - (456)
Cost or valuation at 31 8,889 2,723 48 53 11,713
December 2012
At valuation 8,889 2,723 - - 11,612
At cost - - 48 53 101
8,889 2,723 48 53 11,713
Accumulated depreciation - - 47 46 93
at 1 January 2012
Charge for the year - - 1 5 6
Accumulated depreciation - - 48 51 99
at 31 December 2012
Net book value at 31 December 8,889 2,723 - 2 11,614
2012
Net book value at 31 December 9,118 2,950 1 6 12,075
2011
Details of historical cost of investment properties are shown in note 10.
35. Investments
Joint Subsidiaries
ventures
Shares Shares Loans Other Total
Investments
'000 '000 '000 '000 '000
Cost at 1 January 2012 1,734 361 1,320 300 1,981
Drawn in year - - 5 - 5
Transfer - - - (300) (300)
Cost at 31 December 2012 1,734 361 1,325 - 1,686
Provision for impairment
As at 1 January - - - (283) (283)
Transfer - - - 283 283
As at 31 December 2012 - - - - -
Net book value at 31 December 1,734 361 1,325 - 1,686
2012
Net book value at 31 December 1,734 361 1,320 17 1,698
2011
Other investments comprise nil (2011: 17,000) shares.
Investments in subsidiaries are detailed in note 15. In the opinion of the
directors the aggregate value of the investment in subsidiaries is not less
than the amount shown in these financial statements.
36. Debtors
2012 2011
'000 '000
Amounts due within one year:
Amounts due from subsidiary undertakings 928 2,322
Tax recoverable - 21
Other debtors 309 128
Joint venture 2000 -
Prepayments and accrued income 199 113
3,436 2,584
Amounts due in more than one year:
Amounts due from subsidiary 1,055 -
undertakings
37. Creditors
2012 2011
'000 '000
Amounts falling due within one year:
Bank overdraft (secured) 59 -
Bank loan (secured) 5,000 5,000
Joint venture 1205 1,205
Current taxation 2 -
Other taxation and social security 86 96
Other creditors 233 246
Accruals and deferred income 702 847
7,287 7,394
Amounts falling due in more than one
year:
Bank loan (secured) 86 -
2012 2011
'000 '000
Bank and other loan
instalments by reference
to the balance sheet date:
Within one year 5000 5000
From one to two years - -
From two to five years 86 -
5,086 5,000
The bank loan of the company is secured by a charge over freehold and long
leasehold properties.
38. Provisions for liabilities
Deferred taxation
Balance at 1 January - -
Provision 40 -
40 -
No provision has been made for the approximate taxation liability at 24.5%
(2011: 26.5%) of 895,000 (2011: 1,086,000) which would arise if the
investment properties were sold at the stated valuation.
39. 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 1,056 169 6,141 415 6,153 13,934
2012
Dividend paid - - - - (422) (422)
Revaluation of - - (456) - - (456)
investment property
Share options - - - 28 - 28
Retained profit for - - - - 164 164
the year
Balance at 31 1,056 169 5,685 443 5,895 13,248
December 2012
A profit and loss account for Bisichi Mining PLC has not been presented as
permitted by Section 408(2) of the Companies Act 2006. The profit for the
financial year, before dividends, was 164,000 (2011: 75,000)
Details of share capital are set out in note 24 and details of the share
options are shown in the Directors' Remuneration Report on page 28 under the
heading Share option schemes which is within the audited part of this report
and note 26.
40. Related party transactions
At 31 During the year
December
Amounts Costs Cash paid
owed recharged (to)
by related (to) / by / by
party related related
party
'000 party
'000
'000
Related party:
Black Wattle Colliery (pty) Ltd (171) 107 -
(note (a))
Ninghi Marketing Limited (note (102) - -
(b))
As at 31 December 2012 (273) 107 -
Black Wattle Colliery (pty) Ltd (300) 1,485 654
(note (a))
Ninghi Marketing Limited (note (102) - -
(b))
As at 31 December 2011 (402) 1,485 654
(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
R20,000,000 (2011: R20,000,000) (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.
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 28 of the Group
financial statements.
END