REG-Bisichi Mining PLC: Annual Financial Report <Origin Href="QuoteRef">BISI.L</Origin> - Part 6
28/04/2017 11:50
- Part 6: For the preceding part double click ID:nPRrS92E4e
– Investment in joint ventures 1,198
– Loan to joint venture 900
– Non-current asset held for sale 1,168
Net assets as per balance sheet 15,631
Geographic analysis United Kingdom £’000 South Africa £’000 Total £’000
Revenue 1,047 24,608 25,655
Operating profit/(loss) and segment result 935 (785) 150
Non-current assets excluding investments 13,013 5,355 18,368
Total net assets 12,272 3,359 15,631
Capital expenditure 1,002 1,990 2,992
2. OPERATING COSTS
2016 £’000 2015 £’000
Mining 16,184 19,177
Property 211 111
Cost of sales 16,395 19,288
Administration 6,689 5,934
Operating costs 23,084 25,222
The direct property costs are:
Ground rent 10 10
Direct property expense 177 71
Bad debts 24 30
211 111
Operating costs above include depreciation of £1,785,000 (2015: £1,284,000).
3. GAIN ON REVALUATION OF INVESTMENT PROPERTIES
The reconciliation of the investment surplus to the gain on revaluation of
investment properties in the income statement is set out below:
2016 £’000 2015 £’000
Investment surplus 458 226
Loss on valuation movement in respect of head lease payments (13) (1)
Gain on revaluation of investment properties 445 225
4. (LOSS)/PROFIT BEFORE TAXATION
(Loss)/profit before taxation is arrived at after charging:
2016 £’000 2015 £’000
Staff costs (see note 29) 5,321 5,094
Depreciation 1,785 1,284
Exchange (gain)/loss (449) 497
Fees payable to the company’s auditor for the audit of the company’s annual accounts 40 31
Fees payable to the company’s auditor and its associates for other services:
The audit of the company’s subsidiaries pursuant to legislation 10 8
Audit related services 32 2
The directors consider the auditors were best placed to provide the above
audit related services which refer to regulatory matters. The audit committee
reviews the nature and extent of non-audit services to ensure that
independence is maintained.
5. DIRECTORS’ EMOLUMENTS
Directors’ emoluments are shown in the Directors’ remuneration report on
page 36 which is within the audited part of that report.
6. INTEREST PAYABLE
2016 £’000 2015 £’000
On bank overdrafts and bank loans 395 364
Unwinding of discount 78 79
Other interest payable 81 30
Interest payable 554 473
7. TAXATION
2016 £’000 2015 £’000
(a) Based on the results for the year:
Current tax - UK 10 -
Current tax - Overseas 60 -
Corporation tax – adjustment in respect of prior year – UK - (23)
Corporation tax – adjustment in respect of prior year – Overseas - 3
Current tax 70 (20)
Deferred tax (131) 128
Total tax in income statement (credit) / charge (61) 108
The 2016 deferred tax recognised in income of £131,000 includes a credit of
£168,000 arising on the correction of an error in the calculation of deferred
tax in 2015 related to the accounting of a deferred tax liability incorrectly
recognised in respect of management fees. The company has adjusted the effect
of this error in its 2016 financial statements by reducing the tax charge for
the year by £168,000 and reducing the associated deferred tax liability as it
is not considered to be material to the current or prior year financial
statements.
(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 20% (2015: 20.25%).
The differences are explained below:
Profit/(Loss) on ordinary activities before taxation 346 (147)
Tax on profit on ordinary activities at 20% (2015: 20.25%) 69 (30)
Effects of:
Expenses not deductible for tax purposes 20 21
Capital gains on disposal 153 -
Adjustment to tax rate (117) (63)
Other differences (32) 200
Adjustment in respect of prior years (154) (20)
Total tax (61) 108
(c) Analysis of United Kingdom and overseas tax:
United Kingdom tax included in above:
2016 £’000 2015 £’000
Corporation tax 10 -
Adjustment in respect of prior years - (23)
Current tax 10 (23)
Deferred tax 8 12
18 (11)
Overseas tax included in above:
Corporation tax 60 -
Adjustment in respect of prior years - 3
Current tax 60 3
Deferred tax (139) 116
(79) 119
8. DIVIDENDS PAID
2016 Per share 2016 £’000 2015 Per share 2015 £’000
Dividends paid during the year relating to the prior period 4.00p 427 4.00p 427
Dividends relating to the current period:
Interim dividend for 2016 paid on 10 February 2017 1.00p 107 1.00p 107
Proposed final dividend for 2016 3.00p 320 3.00p 320
4.00p 427 4.00p 427
The dividends relating to the current period are not accounted for until they
have been approved at the Annual General Meeting. The amount, in respect of
2016, will be accounted for as an appropriation of retained earnings in the
year ending 31 December 2017.
9. PROFIT/(LOSS) AND DILUTED PROFIT/(LOSS) PER SHARE
Both the basic and diluted (loss)/profit per share calculations are based on a
profit/(loss) of £479,000 (2015: loss: £259,000). The basic profit/(loss)
per share has been calculated on a weighted average of 10,676,839 (2015:
10,676,839) ordinary shares being in issue during the period. The diluted
profit/(loss) per share has been calculated on the weighted average number of
shares in issue of 10,676,839 (2015: 10,676,839) plus the dilutive potential
ordinary shares arising from share options of nil (2015: nil) totalling
10,676,839 (2015: 10,676,839).
Share options exercisable as at 31 December 2016 do not have a dilutive effect
as the average market price of ordinary shares during the period does not
exceed the exercise price of the options. Dilutive potential ordinary shares
of 34,973 were excluded from the calculation of diluted ordinary shares for
the 2015 year end as there was no dilutive effect due to the loss for the
prior year.
10. INVESTMENT PROPERTIES
Freehold £’000 Long Leasehold £’000 Total £’000
Valuation at 1 January 2016 10,150 2,650 12,800
Additions - - -
Revaluation 400 45 445
Valuation at 31 December 2016 10,550 2,695 13,245
Valuation at 1 January 2015 8,925 2,650 11,575
Acquisition 960 - 960
Additions 40 - 40
Revaluation 225 - 225
Valuation at 31 December 2015 10,150 2,650 12,800
Historical cost
At 31 December 2016 5,823 728 6,551
At 31 December 2015 5,823 728 6,551
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:
2016 £’000 2015 £’000
Carter Towler 13,245 12,800
The valuations were carried out in accordance with the Statements of Asset
Valuation and Guidance Notes published by The Royal Institution of Chartered
Surveyors.
Each year external valuers are appointed by the Executive Directors on behalf
of the Board. The valuers are selected based upon their knowledge,
independence and reputation for valuing assets such as those held by the
group.
Valuations are performed annually and are performed consistently across all
investment properties in the group’s portfolio. At each reporting date
appropriately qualified employees of the group verify all significant inputs
and review the computational outputs. Valuers submit their report to the Board
on the outcome of each valuation round.
Valuations take into account tenure, lease terms and structural condition. The
inputs underlying the valuations include market rent or business
profitability, likely incentives offered to tenants, forecast growth rates,
yields, EBITDA, discount rates, construction costs including any specific site
costs (for example section 106), professional fees, developer’s profit
including contingencies, planning and construction timelines, lease regear
costs, planning risk and sales prices based on known market transactions for
similar properties to those being valued.
Valuations are based on what is determined to be the highest and best use.
When considering the highest and best use a valuer will consider, on a
property by property basis, its actual and potential uses which are
physically, legally and financially viable. Where the highest and best use
differs from the existing use, the valuer will consider the cost and
likelihood of achieving and implanting this change in arriving at its
valuation.
There are often restrictions on Freehold and Leasehold property which could
have a material impact on the realisation of these assets. The most
significant of these occur when planning permission or lease extension and
renegotiation of use are required or when a credit facility is in place. These
restrictions are factored in the property’s valuation by the external
valuer.
IFRS 13 sets out a valuation hierarchy for assets and liabilities measured at
fair value as follows:
Level 1: valuation based on inputs on quoted market prices in active
markets
Level 2: valuation based on inputs other than quoted prices included within
level 1 that maximise the use of observable data directly or from market
prices or indirectly derived from market prices.
Level 3: where one or more inputs to valuations are not based on observable
market data
The inter-relationship between key unobservable inputs and the groups’
properties is detailed in the table below:
Class of property Level 3 Valuation technique Key Carrying/ fair value 2016 £’000 Carrying/ fair value 2015 £’000 Range (weighted average) 2016 Range (weighted average) 2015
unobservable inputs
Freehold – external valuation Income capitalisation Estimated rental value per sq ft p.a 10,550 10,150 £7 – £27 (£20) £7 – £27 (£19)
Equivalent Yield 7.8% – 11.0% (8.9%) 8.0% – 12.6% (9.2%)
Long leasehold – external valuation Income capitalisation Estimated rental value per sq ft p.a 2,695 2,650 £8 – £8 (£8) £8 – £8 (£8)
Equivalent yield 7.6% – 7.6% (7.6%) 7.5% – 7.5% (7.5%)
At 31 December 2016 13,245 12,800
There are interrelationships between all these inputs as they are determined
by market conditions. The existence of an increase in more than one input
would be to magnify the input on the valuation. The impact on the valuation
will be mitigated by the interrelationship of two inputs in opposite
directions, for example, an increase in rent may be offset by an increase in
yield.
The table below illustrates the impact of changes in key unobservable inputs
on the carrying / fair value of the group’s properties:
Estimated rental value 10% increase or decrease Equivalent yield 25 basis point contraction or expansion
2016 £’000 2015 £’000 2016 £’000 2015 £’000
Freehold – external valuation 1,055 / (1,055) 1,015 / (1,015) 316 / (298) 300 / (263)
Long Leasehold – external valuation 270 / (270) 265 / (265) 92 / (86) 92 / (86)
11. MINING RESERVES, PLANT AND EQUIPMENT
Mining reserves £’000 Mining equipment and development costs £’000 Motor vehicles £’000 Office equipment £’000 Total £’000
Cost at 1 January 2016 995 15,453 150 120 16,718
Exchange adjustment 350 5,858 47 19 6,274
Additions - 2,814 38 7 2,859
Disposals - (401) - - (401)
Cost at 31 December 2016 1,345 23,724 235 146 25,450
Accumulated depreciation at 1 January 2016 949 10,201 99 95 11,344
Exchange adjustment 336 3,824 28 14 4,202
Charge for the year 2 1,746 27 10 1,785
Disposals - (401) - - (401)
Accumulated depreciation at 31 December 2016 1,287 15,370 154 119 16,930
Net book value at 31 December 2016 58 8,354 81 27 8,520
Cost at 1 January 2015 1,266 17,539 169 115 19,089
Exchange adjustment (271) (4,048) (30) (12) (4,361)
Additions - 1,964 11 17 1,992
Disposals - (2) - - (2)
Cost at 31 December 2015 995 15,453 150 120 16,718
Accumulated depreciation at 1 January 2015 1,149 11,705 77 94 13,025
Exchange adjustment (256) (2,679) (17) (11) (2,963)
Charge for the year 56 1,177 39 12 1,284
Disposals - (2) - - (2)
Accumulated depreciation at 31 December 2015 949 10,201 99 95 11,344
Net book value at 31 December 2015 46 5,252 51 25 5,374
12. INVESTMENTS HELD AS NON-CURRENT ASSETS
2016 Net investment in joint ventures assets £’000 2016 Other £’000 2015 Net investment in joint ventures assets £’000 2015 Other £’000
At 1 January 1,198 29 2,898 156
Transfer to non-current asset held for sale - - (1,168) -
Written off - - - (126)
Share of gain in investment - 6 - -
Dividends received - - (105) -
Exchange adjustment 130 1 (358) (1)
Share of (loss)/gain in joint ventures (7) - 69 -
Loss on reclassification of non-current asset held for sale - - (138) -
Net assets at 31 December 1,321 36 1,198 29
Loan to joint venture (Ezimbokodweni):
At 1 January 900 - 1,040 -
Exchange adjustments 336 - (235) -
Additions - interest 114 - 95 -
At 31 December 1,350 - 900 -
At 31 December 2,671 36 2,098 29
Provision for diminution in value:
At 1 January - (15) - (4)
Transfer - - - -
Exchange adjustment - (1) - -
Write back/(down) of investment - 12 - (11)
At 31 December - (4) - (15)
Net book value at 31 December 2,671 32 2,098 14
2016 £’000 2015 £’000
Net book value of unquoted investments - -
Net book and market value of investments listed on overseas stock exchanges 32 14
32 14
The amounts written off in 2015 were expensed as part of other operating
costs.
13. JOINT VENTURES
Dragon Retail Properties Limited
The company owns 50% of the issued share capital of Dragon Retail Properties
Limited, an unlisted property investment company. At year end, the carrying
value of the investment held by the group was £866,000 (2015: £873,000). The
remaining 50% is held by London & Associated Properties PLC. Dragon Retail
Properties Limited is incorporated in England and Wales and its registered
address is 24 Bruton Place, London, W1J 6NE. It has issued share capital of
500,000 (2015: 500,000) ordinary shares of £1 each. No dividends were
received during the period.
Ezimbokodweni Mining (Pty) Ltd
The company owns 49% of the issued share capital of Ezimbokodweni Mining (Pty)
Limited (“Ezimbokodweni”), an unlisted coal exploration and development
company. The company is incorporated in South Africa and its registered
address is Samora Machel Street, Bethal Road, Middelburg, Mpumalanga, 1050. It
has issued share capital of 100 (2015: 100) ordinary shares of ZAR1 each. No
dividends were received during the period. Included within the carrying value
of the net investment in the joint venture assets in note 12 is a loan to
Ezimbokodweni of £1,350,000 (2015: £900,000) and an equity investment of
£455,000 (2015: £325,000). The loan bears interest at the South African
prime overdraft rate plus 1.5%. The loan is unsecured and repayable on demand.
Refer to page 60 for details of the significant judgment regarding the
carrying value of the asset.
Langney Shopping Centre Unit Trust
Prior to 11 March 2016, the company owned 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 were held by London & Associated
Properties PLC and 75% were held by Columbus UK GP limited, a partner acting
on behalf of Columbus UK Real Estate Fund. On the 11 March 2016, the company
disposed of its investment in Langney Shopping Centre Unit Trust. The net
proceeds from the sale were £1,168,000 which includes £30,000 of dividends
received. At 31 December 2015, the investment was transferred from investment
in joint ventures to non-current asset held for sale in the balance sheet. At
year end, the share of the net assets of the trust held by the group were
£nil (2015: £1,168,000) which includes a loss on the reclassification of the
asset to held for sale in the amount of £nil (2015: £138,000).
Dragon 50% £’000 Ezimbokodweni 49% £’000 2016 £’000 2015 £’000
Turnover 86 - 86 258
Profit and loss
Profit/(loss) before depreciation, interest and taxation 12 - 12 (80)
Depreciation and amortisation (13) - (13) (7)
Loss before interest and taxation (1) - (1) (87)
Interest Income 69 - 69 69
Interest expense (85) - (85) (121)
Loss before taxation (17) - (17) (139)
Taxation 10 - 10 70
Loss after taxation (7) - (7) (69)
Balance sheet
Non-current assets 1,326 1,346 2,672 4,530
Cash and cash equivalents 58 3 61 67
Other current assets 1,165 - 1,165 1,311
Current borrowings - - - (6)
Other current liabilities (1,039) (1,349) (2,388) (2,037)
Net current assets 184 (1,346) (1,162) (665)
Non-current borrowings (603) - (603) (1,772)
Other non-current liabilities (41) - (41) (52)
Share of net assets at 31 December 866 - 866 2,041
Reconciliation of net assets to carrying value of joint venture assets:
Share of net assets at 31 December 866 - 866 2,041
Pre-acquisition costs capitalised - 455 455 325
Transfer to non-current assets held for sale - - - (1,168)
Carrying value of joint venture assets at 31 December 866 455 1,321 1,198
14. NON-CURRENT ASSETS HELD FOR SALE
2016 £’000 2015 £’000
Investment in Langney Shopping Centre Unit Trust
Balance at 1 January 1,168 -
Transfer - 1,168
Disposal (1,168) -
- 1,168
On the 11 March 2016, the company disposed of its investment in Langney
Shopping Centre Unit Trust, an unlisted property unit trust incorporated in
Jersey. At year end, the company owned 12.5% of the units of the trust. The
net proceeds from the sale were £1,138,000 (excluding dividend of £30,000).
At year end, the company’s share of the net assets of the trust were £nil
(2015: £1,168,000). A loss on reclassification of the asset as held for sale
of £nil (2015: £138,000) was recorded during the year.
15. SUBSIDIARY COMPANIES
The company owns the following ordinary share capital of the subsidiaries
which are included within the consolidated financial statements:
Activity Percentage of share capital Registered address Country of incorporation
Mineral Products Limited Share dealing 100% 24 Bruton Place, London, W1J6NE England and Wales
Bisichi (Properties) Limited Property 100% 24 Bruton Place, London, W1J6NE England and Wales
Bisichi Northampton Limited Property 100% 24 Bruton Place, London, W1J6NE England and Wales
Bisichi Trustee Limited Property 100% 24 Bruton Place, London, W1J6NE England and Wales
Urban First (Northampton) Limited Property 100% 24 Bruton Place, London, W1J6NE England and Wales
Bisichi Mining (Exploration) Limited Holding company 100% 24 Bruton Place, London, W1J6NE England and Wales
Ninghi Marketing Limited Dormant 90.1% 24 Bruton Place, London, W1J6NE England and Wales
Bisichi Mining Managements Services Limited Dormant 100% 24 Bruton Place, London, W1J6NE England and Wales
Black Wattle Colliery (Pty) Limited Coal mining 62.5% Samora Machel Street, Bethal Road, Middelburg, Mpumalanga, 1050 South Africa
Bisichi Coal Mining (Pty) Limited Coal mining 100% Samora Machel Street, Bethal Road, Middelburg, Mpumalanga, 1050 South Africa
Black Wattle Klipfontein (Pty) Limited Coal mining 62.5% Samora Machel Street, Bethal Road, Middelburg, Mpumalanga, 1050 South Africa
Amandla Ehtu Mineral Resource Development (Pty) Limited Dormant 70% Samora Machel Street, Bethal Road, Middelburg, Mpumalanga, 1050 South Africa
Details on the non-controlling interest in subsidiaries are shown under note
27.
16. INVENTORIES
2016 £’000 2015 £ED PAYMENTS
Details of the share option scheme are shown in the Directors’ remuneration
report on page 37 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 grant Subscription price per share Period within which options exercisable Number of share for which options outstanding at 31 December 2015 Number of share options lapsed during year Number of share for which options outstanding at 31 December 2016
2006 237.5p Oct 2009 – Oct 2016 325,000 (325,000) -
2010 202.5p Aug
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