REG-Bisichi Mining PLC: Annual Financial Report <Origin Href="QuoteRef">BISI.L</Origin> - Part 3
28/04/2017 11:50
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company
up to an aggregate nominal value of £355,894. This represents approximately
1/3 (one third) of the ordinary share capital of the company in issue
(excluding treasury shares) at 26 April 2017 (being the last practicable date
prior to the publication of this Directors’ Report). Paragraph 8.1.2 of
resolution 8 would give the directors the authority to allot shares in the
company and grant rights to subscribe for, or convert any security into,
shares in the company up to a further aggregate nominal value of £355,894, in
connection with a pre-emptive rights issue. This amount represents
approximately 1/3 (one third) of the ordinary share capital of the company in
issue (excluding treasury shares) at 26 April 2017 (being the last practicable
date prior to the publication of this Directors’ Report).
Therefore, the maximum nominal value of shares or rights to subscribe for, or
convert any security into, shares which may be allotted or granted under
resolution 8 is £711,788.
Resolution 8 complies with guidance issued by the Investment Association (IA).
The authority granted by resolution 8 will expire on 31 August 2018 or, if
earlier, the conclusion of the next annual general meeting of the company. The
directors have no present intention to make use of this authority. However, if
they do exercise the authority, the directors intend to follow emerging best
practice as regards its use as recommended by the IA.
Disapplication of pre-emption rights (Resolution 9)
A special resolution will be proposed at the Annual General Meeting in respect
of the disapplication of pre-emption rights.
Shares allotted for cash must normally first be offered to shareholders in
proportion to their existing shareholdings. The directors will, at the
forthcoming Annual General Meeting seek power to allot equity securities (as
defined by section 560 of the Companies Act 2006) or sell treasury shares for
cash as if the pre-emption rights contained in Section 561 of the Companies
Act 2006 did not apply:
(a) in relation to pre-emptive offers and offers to holders of other equity
securities if required by the rights of those securities or as the directors
otherwise consider necessary, up to a maximum nominal amount of £355,894
which represents approximately 1/3 (one third) of the ordinary share capital
of the company in issue (excluding treasury shares) and, in relation to rights
issues only, up to a maximum additional amount of £355,894 which represents
approximately 1/3 (one third) of the ordinary share capital of the company in
issue (excluding treasury shares), in each case as at 26 April 2017 (being the
last practicable date prior to the publication of this Directors’ Report);
and
(b) in any other case, up to a maximum nominal amount of £53,384 which
represents approximately 5 per cent. of the ordinary share capital of the
company in issue (excluding treasury shares) as at 26 April 2017 (being the
last practicable date prior to the publication of this Directors’ Report).
In compliance with the guidelines issued by the Pre-emption group, the
directors will ensure that, other than in relation to a rights issue, no more
than 7.5 per cent. of the issued ordinary shares (excluding treasury shares)
will be allotted for cash on a non-pre-emptive basis over a rolling three year
period unless shareholders have been notified and consulted in advance.
The power in resolution 9 will expire when the authority given by resolution 8
is revoked or expires.
The directors have no present intention to make use of this authority.
Notice of General Meetings (Resolution 10)
Resolution 10 will be proposed to allow the company to call general meetings
(other than an Annual General Meeting) on 14 clear days’ notice. A
resolution in the same terms was passed at the Annual General Meeting in 2016.
The notice period required by the Companies Act 2006 for general meetings of
the company is 21 days unless shareholders approve a shorter notice period,
which cannot however be less than 14 clear days. Annual General Meetings must
always be held on at least 21 clear days’ notice. It is intended that the
flexibility offered by this resolution will only be used for time-sensitive,
non-routine business and where merited in the interests of shareholders as a
whole. The approval will be effective until the company’s next Annual
General Meeting, when it is intended that a similar resolution will be
proposed. In order to be able to call a general meeting on less than 21 clear
days’ notice, the company must make a means of electronic voting available
to all shareholders for that meeting.
Purchase of own Ordinary Shares (Resolution 11)
The effect of resolution 11 would be to renew the directors’ current
authority to make limited market purchases of the company’s ordinary shares
of 10 pence each. The power is limited to a maximum aggregate number of
1,067,683 ordinary shares (representing approximately 10 per cent. of the
company’s issued share capital as at 26 April 2017 (being the last
practicable date prior to publication of this Directors’ Report)). The
minimum price (exclusive of expenses) which the company would be authorised to
pay for each ordinary share would be 10 pence (the nominal value of each
ordinary share). The maximum price (again exclusive of expenses) which the
company would be authorised to pay for an ordinary share is an amount equal to
105 per cent. of the average market price for an ordinary share for the five
business days preceding any such purchase.
The authority conferred by resolution 11 will expire at the conclusion of the
company’s next annual general meeting or 15 months from the passing of the
resolution, whichever is the earlier. Any purchases of ordinary shares would
be made by means of market purchase through the London Stock Exchange. If
granted, the authority would only be exercised if, in the opinion of the
directors, to do so would result in an increase in earnings per share or net
asset value per share and would be in the best interests of shareholders
generally. In exercising the authority to purchase ordinary shares, the
directors may treat the shares that have been bought back as either cancelled
or held as treasury shares (shares held by the company itself). No dividends
may be paid on shares which are held as treasury shares and no voting rights
are attached to them.
As at 26 April 2017 (being the last practicable date prior to the publication
of this Directors’ Report) the total number of new ordinary shares over
which options have been granted was 380,000 shares representing 3.56 per cent.
of the company’s issued share capital (excluding treasury shares) as at that
date. Such number of options to subscribe for new ordinary shares would
represent approximately 3.95 per cent. of the reduced issued share capital of
the company (excluding treasury shares) assuming full use of the authority to
make market purchases sought under resolution 11.
Donations
No political or charitable donations were made during the year (2015: 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 6 and its financial position
is set out on page 21 of the Strategic Report. In addition Note 22 to the
financial statements includes the group’s treasury policy, interest rate
risk, liquidity risk, foreign exchange risks and credit risk.
The group has prepared cash flow forecasts which demonstrate that the group
has sufficient resources to meet its liabilities as they fall due for at least
the next 12 months.
In South Africa, a structured trade finance facility for R80million is held by
Black Wattle Colliery (Pty) Limited (“Black Wattle”) with Absa Bank
Limited, a South African subsidiary of Barclays Bank PLC. The facility is
renewable annually at 30 June and is secured against inventory, debtors and
cash that are held in the group’s South African operations. The Directors do
not foresee any reason why the facility will not continue to be renewed at the
next renewal date, in line with prior periods and based on their banking
relationships. This facility comprises of a R60million revolving loan to cover
the working capital requirements of the group’s South African operations,
and a R20million loan facility to cover guarantee requirements related to the
group’s South African mining operations.
The directors expect that the improved coal market conditions experienced by
Black Wattle Colliery, its direct mining asset, in the last quarter of 2016
and the first quarter of 2017 will be similar for at least the next 12 months.
The directors therefore have a reasonable expectation that the mine will
continue to achieve positive levels of cash generation for the group for at
least the next 12 months. As a consequence, the directors believe that the
group is well placed to manage its South African business risks successfully.
In the UK, a £6 million term loan facility repayable in 2019 is held with
Santander Bank PLC. The loan is secured against the company’s UK retail
property portfolio. The debt package has a five year term and is repayable at
the end of the term. The interest cost of the loan is 2.35% above LIBOR.
If required, the group has sufficient financial resources available at short
notice including cash, available-for-sale investments and its £2m loan to
Dragon Retail Properties Limited which is repayable on demand. In addition its
investment property assets benefit from long term leases with the majority of
its tenants.
As a result of the banking facilities held as well as the acceptable levels of
profitability and cash generation the group’s South African operations are
expected to achieve for at least the next 12 months, the Directors believe
that the group has adequate resources to continue in operational existence for
the foreseeable future and that the group is well placed to manage its
business risks. Thus they continue to adopt the going concern basis of
accounting in preparing the annual financial statements.
By order of the board
G.J Casey
Secretary
24 Bruton Place
London W1J 6NE
26 April 2017
Statement of the Chairman of the remuneration committee
The remuneration committee presents its report for the year ended 31 December
2016, which this year is presented in two parts in accordance regulations.
The first part is the Annual Remuneration Report which details remuneration
awarded to directors and non-executive directors during the year. The
shareholders will be asked to approve the Annual Remuneration Report as an
ordinary resolution (as in previous years) at the AGM in June 2017.
The current remuneration policy, which details the remuneration policy for
directors, can be found at www.bisichi.co.uk. The current remuneration policy
was subject to a binding vote which was approved by shareholders at the AGM in
June 2014. The approval will continue to apply for a 3 year period up to the
AGM on 7 June 2017.
The second part, is the new Remuneration Policy Report which can be found on
page 43. The new remuneration policy is subject to a binding vote which will
be proposed to shareholders at the AGM on 7 June 2017. Once approved, the
approval of the new policy will apply for a 3 year period effective from the
conclusion of the AGM on 7 June 2017.
The new policy is very much in line with the previous policy. Both of the
above reports have been prepared in accordance with The Large and Medium-sized
Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013.
The company’s auditors, BDO LLP are required by law to audit certain
disclosures and where disclosures have been audited they are indicated as
such.
Christopher Joll
Chairman – remuneration committee
24 Bruton Place
London W1J 6NE
26 April 2017
Annual remuneration report
The following information has been audited:
Single total figure of remuneration for the year ended 31 December 2016:
Salaries and Fees £’000 Bonuses £’000 Benefits £’000 Pension £’000 Total Share options £’000 Total 2016 £’000
before
Share
options
£’000
Executive Directors
Sir Michael Heller 75 - - - 75 - 75
A R Heller 450 300 68 32 850 - 850
G J Casey 133 100 14 18 265 - 265
R Grobler 154 60 14 8 236 - 236
Non–Executive Directors
C A Joll* 30 - - - 30 - 30
J A Sibbald* 2 - 3 - 5 - 5
Total 844 460 99 58 1,461 - 1,461
*Members of the remuneration committee for the year ended 31 December 2016
Single total figure of remuneration for the year ended 31 December 2015:
Salaries and Fees £’000 Bonuses £’000 Benefits £’000 Pension £’000 Total Share options £’000 Total 2015 £’000
before
Share
options
£’000
Executive Directors
Sir Michael Heller 75 - - - 75 - 75
A R Heller 450 300 67 36 853 59 912
G J Casey 133 100 15 18 266 59 325
R Grobler 146 62 14 7 229 - 229
Non–Executive Directors
C A Joll* 30 - - - 30 - 30
J A Sibbald* 2 - 3 - 5 - 5
Total 836 462 99 61 1,458 118 1,576
*Members of the remuneration committee for the year ended 31 December 2015
In addition, in the year ended 31 December 2015, A Heller received £109,000
in cash on cancellation of share options representing the increase in value of
the shares under option at the cancellation date.
Summary of directors’ terms Date of contract Unexpired term Notice 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
Pension schemes and incentives
Two (2015: two) directors have benefits under money purchase pension schemes.
Contributions in 2016 were £58,000 (2015: £61,000), see table above.
Scheme interests awarded during the year
No scheme interests were awarded in the year ended 31 December 2016.
The 2015 single figure share based payment charge of £118,000 relates to the
300,000 share options granted to A R Heller and G J Casey in 2015 which vested
in 2015. £9,000 of this charge was expensed in the financial statements in
the prior year as an IFRS 2 charge as part of the £31,000 accounting charge
which also included charges in respect of other options which had fully vested
prior to 2015. There were no vesting conditions attached to these share
options and therefore the £118,000 should have been fully expensed in 2015
under IFRS2. As the above error is not considered to be material to the
current or prior year financial statements the remaining £109,000 of the
charge has been expensed in the current year and therefore the error has been
corrected in the current period. The correction referred to above does not
affect the information in this section of the annual report, which was
correctly stated in both 2015 and 2016.
Share option schemes
The company currently has one “Unapproved” Share Option Schemes which is
not subject to HM Revenue and Customs (HMRC) approval. The “2010 Scheme”
was approved by shareholders on 7 June 2011. The “2012 Scheme” was
approved by the remuneration committee of the company on 28 September 2012.
Existing options over ordinary shares under the 2006 scheme lapsed during the
year.
Number of share options
Option price* 1 January 2016 Options lapsed in 2016 31 December 2016 Exercisable from Exercisable to
The 2006 Scheme
A R Heller 237.05p 275,000 (275,000) - 4/10/2009 3/10/2016
Employee 237.05p 50,000 (50.000) - 4/10/2009 3/10/2016
The 2010 Scheme
G J Casey 202.05p 80,000 - 80,000 31/08/2013 30/08/2020
The 2012 Scheme
A R Heller 87.01p 150,000 - 150,000 18/09/2015 17/09/2025
G J Casey 87.01p 150,000 - 150,000 18/09/2015 17/09/2025
*Middle market price at date of grant
No consideration is payable for the grant of options under the Unapproved
Share Option Scheme.
Performance conditions:
The exercise of options under the Unapproved Share Option Schemes, for certain
option issues, is subject to the satisfaction of objective performance
conditions specified by the remuneration committee, which will conform to
institutional shareholder guidelines and best practice provisions in force
from time to time. The performance conditions for the 2010 scheme, agreed by
members on 31 August 2010, requires growth in net assets over a three year
period to exceed the growth in the retail price index by a scale of
percentages. There are no performance conditions attached to the 2012
Unapproved Share Option scheme.
Payments to past directors
No payments were made to past directors in the year ended 31 December 2016.
Payments for loss of office
No payments for loss of office were made in the year ended 31 December 2016.
Statement of directors’ shareholding and share interest
Directors’ interests
The interests of the directors in the shares of the company, including family
and trustee holdings where appropriate, were as follows:
Beneficial Non-beneficial
31.12.2016 1.1.2016 31.12.2016 1.1.2016
Sir Michael Heller 148,783 148,783 181,334 181,334
A R Heller 785,012 785,012 - -
C A Joll - - - -
J A Sibbald - - - -
R J Grobler - - - -
G J Casey 40,000 40,000 - -
The following section is unaudited.
The following graph illustrates the company’s performance compared with a
broad equity market index over a ten year period. Performance is measured by
total shareholder return. The directors have chosen the FTSE All Share Mining
index as a suitable index for this comparison as it gives an indication of
performance against a spread of quoted companies in the same sector.
The middle market price of Bisichi Mining PLC ordinary shares at 31 December
2016 was 74p (2015-77.5p). During the year the share price ranged between
52.50p and 80.00p.
Remuneration of the Managing Director over the last ten years
The table below demonstrates the remuneration of the holder of the office of
Managing Director for the last ten years for the period from 1 January 2007
to 31 December 2016.
Year Managing Director Managing Director Single total figure of remuneration £’000 Annual bonus payout against maximum opportunity* % Long-term incentive vesting rates against maximum opportunity* %
2016 A R Heller 850 22% N/A
2015 A R Heller 912 22% N/A
2014 A R Heller 862 22% N/A
2013 A R Heller 614 N/A N/A
2012 A R Heller 721 N/A N/A
2011 A R Heller 626 N/A N/A
2010 A R Heller 568 N/A N/A
2009 A R Heller 817 N/A N/A
2008 A R Heller 961 N/A N/A
2007 A R Heller 716 N/A N/A
Bisichi Mining PLC does not have a Chief Executive so the table includes the
equivalent information for the Managing Director.
*There were no formal criteria or conditions to apply in determining the
amount of bonus payable or the number of shares to be issued prior to 2014.
Percentage change in remuneration of director undertaking role of Managing
Director
Managing Director £’000 UK based employees £’000
2016 2015 % change 2016 2015 % change
Base salary 450 450 0% 208 208 0%
Benefits 68 67 1% 14 15 (6%)
Bonuses 300 300 0% 100 100 0%
Bisichi Mining PLC does not have a Chief Executive so the table includes the
equivalent information for the Managing Director.
The comparator group chosen is all UK based employees as the remuneration
committee believe this provides the most accurate comparison of underlying
increases based on similar annual bonus performances utilised by the group.
Relative importance of spend on pay
The total expenditure of the group on remuneration to all employees (see Notes
29 and 8 to the financial statements) is shown below:
2016 £’000 2015 £’000
Employee remuneration 5,321 5,094
Distribution to shareholders 427 427
Statement of implementation of new remuneration policy
The new remuneration policy will be approved at the AGM on 7 June 2017. The
policy will take effect from the conclusion of the AGM and will apply for 3
years unless changes are deemed necessary by the Remuneration committee. The
company may not make a remuneration payment or payment for loss of office to a
person who is, is to be, or has been a director of the company unless that
payment is consistent with the approved remuneration policy, or has otherwise
been approved by a resolution of members.
Consideration by the directors of matters relating to directors’
remuneration
The remuneration committee considered the executive directors remuneration and
the board considered the non-executive directors remuneration in the year
ended 31 December 2016. No increases were awarded and no external advice was
taken in reaching this decision.
Shareholder voting
At the Annual General Meeting on 10 June 2016, there was an advisory vote on
the resolution to approve the remuneration report, other than the part
containing the remuneration policy. In addition, on 11 June 2014 there was a
binding vote on the resolution to approve the current remuneration policy the
results of which are detailed below:
% of votes for % of votes against No of votes withheld
Resolution to approve the Remuneration Report (10 June 2016) 99.96% 0.04% 1,859,302
Resolution to approve the Remuneration Policy (11 June 2014) 98.75% 1.04% 5,405
Service contracts
All executive directors have full-time contracts of employment with the
company. Non-executive directors have contracts of service. No director has a
contract of employment or contract of service with the company, its joint
venture or associated companies with a fixed term which exceeds twelve months.
Directors notice periods (see page 37 of the annual remuneration report) are
set in line with market practice and of a length considered sufficient to
ensure an effective handover of duties should a director leave the company.
All directors’ contracts as amended from time to time, have run from the
date of appointment. Service contracts are kept at the registered office.
Remuneration policy table
The remuneration policy table below is an extract of the group’s current
remuneration policy on directors’ remuneration, which was approved by a
binding vote at the 2014 AGM. The approved policy took effect from 11 June
2014. A copy of the full policy can be found at www.bisichi.co.uk.
Element Purpose Policy Operation Opportunity and performance conditions
Executive directors
Base salary To recognise: Skills Responsibility Accountability Experience Value Considered by remuneration committee on appointment Set at a level considered appropriate to attract, retain motivate and reward the right individuals Reviewed annually Paid monthly in cash There is no prescribed maximum salary or maximum rate of
increase No specific performance conditions are attached
to base salaries
Pension To provide competitive retirement benefits Company contribution offered at up to 10% of base salary as part of overall remuneration package The contribution payable by the company is included in the director’s contract of employment Paid into money purchase schemes Company contribution offered at up to 10% of base salary
as part of overall remuneration package No specific
performance conditions are attached to pension
contributions
Benefits To provide a competitive benefits package Contractual benefits can include but are not limited to: Car or car allowance Group health cover Death in service cover Permanent health insurance The committee retains the discretion to approve changes in contractual benefits in exceptional circumstances or where factors outside the control of the group lead to increased costs (e.g. medical inflation) The costs associated with benefits offered are closely
controlled and reviewed on an annual basis No specific
performance conditions are attached to contractual
benefits The value of benefits for each director for the
year ended 31 December 2016 is shown in the table on
page 36
Annual Bonus To reward and incentivise In assessing the performance of the executive team, and in particular to determine whether bonuses are merited the remuneration committee takes into account the overall performance of the business Bonuses are generally offered in cash The remuneration committee determines the level of bonus on an annual basis applying such performance conditions and performance measures as it considers appropriate The current maximum bonus opportunity will not exceed
200% of base salary in any one year, but the
remuneration committee reserves the power to award up to
300% in an exceptional year Performance conditions will
be assessed on an annual basis. The performance measures
applied may be financial, non-financial, corporate,
divisional or individual and in such proportion as the
remuneration committee considers appropriate
Share Options To provide executive directors with a long-term interest in the company Granted under existing schemes (see page 37) Offered at appropriate times by the remuneration committee Entitlement to share options is not subject to any
performance conditions Share options will be offered by
the remuneration committee as appropriate There are no
maximum levels for share options offered
Element Purpose Policy Operation Opportunity and performance conditions
Non-executive directors
Base salary To recognise: Skills Experience Value Considered by the board on appointment Set at a level considered appropriate to attract, retain and motivate the individual Experience and time required for the role are considered on appointment Reviewed annually There is no prescribed maximum salary or maximum rate of increase No specific performance conditions are attached to base salaries
Pension No pension offered
Benefits No benefits offered except to one non-executive director who is eligible for health cover (see annual remuneration report page 36) The costs associated with the benefit offered is closely controlled and reviewed on an annual basis No specific performance conditions are
attached to contractual benefits
Share Options Non-executive directors do not participate in the share option schemes
The remuneration committee consider the performance measures outlined in the
table above to be appropriate measures of performance and that the KPI’s
chosen align the interests of the directors and shareholders.
Remuneration Policy
The remuneration policy below is the group’s new remuneration policy on
directors’ remuneration, which will be proposed for a binding vote at the
2017 AGM. If approved it is intended that the policy take effect from the
conclusion of the AGM on 7 June 2017.
In setting the policy, the Remuneration Committee has taken the following into
account:
• The need to attract, retain and motivate individuals of a calibre who will
ensure successful leadership and management of the company
• The group’s general aim of seeking to reward all employees fairly
according to the nature of their role and their performance
• Remuneration packages offered by similar companies within the same sector
• The need to align the interests of shareholders as a whole with the
long-term growth of the group; and
• The need to be flexible and adjust with operational changes throughout the
term of this policy
The remuneration of non-executive directors is determined by the board, and
takes into account additional remuneration for services outside the scope of
the ordinary duties of non-executive directors.
Future policy table
Element Purpose Policy Operation Opportunity and performance conditions
Executive directors
Base salary To recognise: Skills Responsibility Accountability Experience Value Considered by remuneration committee on appointment. Set at a level considered appropriate to attract, retain motivate and reward the right individuals. Reviewed annually Paid monthly in cash No individual director will be awarded a base salary in excess
of £700,000 per annum. No specific performance conditions are
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