REG-Bisichi Mining PLC: Final Results <Origin Href="QuoteRef">BISI.L</Origin> - Part 4
30/04/2015 16:10
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Capital expenditure 48 3,012 - - 3,060
2. Operating costs
2014 2013
£'000 £'000
Mining 18,244 26,158
Property 97 192
Cost of sales 18,341 26,350
Administration 6,565 7,738
Operating costs 24,906 34,088
The direct property costs are:
Ground rent 8 5
Direct property expense 55 116
Bad debts 34 71
97 192
Operating costs above include depreciation of £2,682,000 (2013: £2,817,000).
3. Loss on revaluation and sale of investment properties
The reconciliation of the investment deficit to the loss on revaluation of
investment properties in the income statement is set out below:
2014 2013
£'000 £'000
Investment deficit (5) (47)
Loss on valuation movement in respect of head lease payments (1) (6)
Loss on revaluation of investment properties (6) (53)
4. Profit before taxation
Profit before taxation is arrived at after charging:
2014 2013
£'000 £'000
Staff costs (see note 28) 5,057 5,850
Depreciation 2,682 2,817
Exchange loss 143 880
Fees payable to the company's auditor for the audit of the 48 35
company's annual accounts
Fees payable to the company's auditor and its associates for
other services:
The audit of the company's subsidiaries pursuant to legislation 3 3
Other services 1 1
The directors consider the auditors were best placed to provide the above
non-audit services.
The audit committee reviews the nature and extent of non-audit services to
ensure that independence is maintained.
5. Directors' emoluments
Directors' emoluments are shown in the Directors' remuneration report on pages
28 and 29 under the heading Directors' remuneration which is within the audited
part of that report.
6. Interest payable
2014 2013
£'000 £'000
On bank overdrafts and bank loans 487 323
Unwinding of discount 87 89
Other interest payable 19 34
Interest payable 593 446
7. Taxation
2014 2013
£'000 £'000
(a) Based on the results for the year:
Corporation tax 16 -
Corporation tax - adjustment in respect of prior year - UK 20
Current tax 36 -
Deferred tax - current year 305 (213)
Deferred tax - adjustment in respect of prior year 24 (49)
Total tax in income statement 365 (262)
(b) Factors affecting tax charge for the year:
The corporation tax assessed for the year is different from that at the
standard rate of corporation tax in the United Kingdom of 23% (2013: 24%)
The differences are explained below:
Profit on ordinary activities before taxation 1,568 102
Tax on profit on ordinary activities at 21.5% (2013: 23.5%) 337 24
Effects of:
Expenses not deductible for tax purposes 45 6
Adjustment to tax rate (2) (101)
Other differences (59) (142)
Adjustment in respect of prior years 44 (49)
Total tax 365 (262)
(c) Analysis of United Kingdom and overseas tax
United Kingdom tax included in above:
2014 2013
£'000 £'000
Corporation tax - -
Adjustment in respect of prior years 20 -
Current tax 20 -
Deferred tax 38 (271)
58 (271)
Overseas tax included in above:
Corporation tax 16 -
Adjustment in respect of prior years - -
Current tax 16 -
Deferred tax 291 9
307 9
8. Dividends paid
2014 2014 2013 2013
Per £'000 Per £'000
share share
Dividends paid during the year relating to the 4.00p 427 4.00p 425
prior period
Dividends to be paid:
Interim dividend for 2014 paid on 6 February 2015 1.00p 107 1.00p 106
Proposed final dividend for 2014 3.00p 320 3.00p 319
4.00p 427 4.00p 425
The dividends to be paid are not accounted for until they have been approved at
the Annual General Meeting. The amount will be accounted for as an
appropriation of retained earnings in the year ending 31 December 2015.
9. Profit and diluted profit per share
Both the basic and diluted profit per share calculations are based on a profit
of £1,103,000 (2013: £355,000). The basic profit per share has been calculated
on a weighted average of 10,673,506 (2013: 10,596,839) ordinary shares being in
issue during the period. The diluted profit per share has been calculated on
the weighted average number of shares in issue of 10,673,506 (2013: 10,596,839)
plus the dilutive potential ordinary shares arising from share options of
110,975 (2013: 160,982) totalling 10,784,481 (2013: 10,757,821).
10. Investment properties
Freehold Long Total
£'000 Leasehold £'000
£'000
Valuation at 1 January 2014 9,035 2,524 11,559
Additions 22 - 22
Revaluation (132) 126 (6)
Valuation at 31 December 2014 8,925 2,650 11,575
Valuation at 1 January 2013 8,889 2,723 11,612
Revaluation 146 (199) (53)
Valuation at 31 December 2013 9,035 2,524 11,559
Historical cost
At 31 December 2014 4,823 728 5,551
At 31 December 2013 4,801 728 5,529
Long leasehold properties are those for which the unexpired term at the balance
sheet date is not less than 50 years.
All investment properties are held for use in operating leases and all
properties generated rental income during the period.
Freehold and Long Leasehold properties were externally professionally valued at
31 December on an open market basis by:
2014
£'000
Carter Towler 11,575
The valuations were carried out in accordance with the Statements of Asset
Valuation and Guidance Notes published by The Royal Institution of Chartered
Surveyors.
Each year external valuers are appointed by the Executive Directors on behalf
of the Board. The valuers are selected based upon their knowledge, independence
and reputation for valuing assets as those held by the group.
Valuations are performed annually and are performed consistently across all
investment properties in the group's portfolio. At each reporting date
appropriately qualified employees of the group verify all significant inputs
and review the computational outputs. Valuers submit their report to the Board
on the outcome of each valuation round.
Valuations take into account tenure, lease terms and structural condition. The
inputs underlying the valuations include market rent or business profitability,
likely incentives offered to tenants, forecast growth rates, yields, EBITDA,
discount rates, construction costs including any specific site costs (for
example section 106), professional fees, developer's profit including
contingencies, planning and construction timelines, lease regear costs,
planning risk and sales prices based on known market transactions for similar
properties to those being valued.
Valuations are based on what is determined to be the highest and best use. When
considering the highest and best use a valuer will consider, on a property by
property basis, its actual and potential uses which are physically, legally and
financially viable. Where the highest and best use differs from the existing
use, the valuer will consider the cost and likelihood of achieving and
implanting this change in arriving at its valuation.
There are often restrictions on Freehold and Leasehold property which could
have a material impact on the realisation of these assets. The most significant
of these occur when planning permission or lease extension and renegotiation of
use are required or when a credit facility is in place. These restrictions are
factored in the property's valuation by the external valuer.
IFRS 13 sets out a valuation hierarchy for assets and liabilities measured at
fair value as follows:
Level 1: valuation based on inputs on quoted market prices in active markets
Level 2: valuation based on inputs other than quoted prices included within
level 1 that maximise the use of observable data directly or from market prices
or indirectly derived from market prices.
Level 3: where one or more inputs to valuations are not based on observable
market data
The inter-relationship between key unobservable inputs and the groups'
properties is detailed in the table below:
Class of property Level 3 Carrying Valuation Key Range
/ technique unobservable (weighted
fair inputs average)
value 2014
2014
£'000
Freehold - external 8,925 Income Estimated £7
valuation capitalisation rental value
(£7)
Per sq ft p.a
7%
Equivalent
Yield (7%)
Long leasehold - external 2,650 Income Estimated £7- £26
valuation capitalisation rental value
(£19)
Per sq ft p.a
7.7% -
Equivalent 11.4%
yield
(9%)
At 31 December 2013 11,575
There are interrelationships between all these inputs as they are determined by
market conditions. The existence of an increase in more than one input would be
to magnify the input on the valuation. The impact on the valuation will be
mitigated by the interrelationship of two inputs in opposite directions, for
example, an increase in rent may be offset by an increase in yield.
The table below illustrates the impact of changes in key unobservable inputs on
the carrying / fair value of the Group's properties:
Estimated Equivalent
rental value yield
10% increase or 25 basis point
decrease contraction
£'000 or expansion
£'000
Freehold - external valuation 892 / (892) 276/ (260)
Long Leasehold - external valuation 265 / (265) 99 / (92)
11. Mining reserves, plant and equipment
Mining Mining Motor Office Total
reserves equipment vehicles equipment £'000
£'000 £'000 £'000 £'000
Cost at 1 January 2014 1,310 16,328 165 112 17,915
Exchange adjustment (44) (550) (4) (2) (600)
Additions - 1,838 38 5 1,881
Disposals - (77) (30) - (107)
Cost at 31 December 2014 1,266 17,539 169 115 19,089
Accumulated depreciation at 1 January 1,184 9,470 77 88 10,819
2014
Exchange adjustment (38) (329) (1) (1) (369)
Charge for the year 3 2,641 31 7 2,682
Disposals - (77) (30) - (107)
Accumulated depreciation at 31 1,149 11,705 77 94 13,025
December 2014
Net book value at 31 December 2014 117 5,834 92 21 6,064
Cost at 1 January 2013 1,651 16,835 159 112 18,757
Exchange adjustment (341) (3,479) (21) (12) (3,853)
Additions - 2,972 76 12 3,060
Disposals - - (49) - (49)
Cost at 31 December 2013 1,310 16,328 165 112 17,915
Accumulated depreciation at 1 January 1,438 8,462 129 90 10,119
2013
Exchange adjustment (296) (1,749) (15) (8) (2,068)
Charge for the year 42 2,757 12 6 2,817
Disposals in year - - (49) - (49)
Accumulated depreciation at 31 1,184 9,470 77 88 10,819
December 2013
Net book value at 31 December 2013 126 6,858 88 24 7,096
12. Investments held as non-current assets
2014 2014 2013 2013
Joint Other Joint Other
ventures £'000 ventures £'000
assets assets
£'000 £'000
At 1 January 3,235 156 3,061 131
Additions - - 75 26
Dividends received (900) - - -
Exchange adjustment - - - (1)
Share of gain in joint ventures 563 - 99 -
Net assets at 31 December 2,898 156 3,235 156
Loan to joint venture:
At 1 January 984 - 1,117 -
Exchange adjustments (36) - (242) -
Additions 92 - 109 -
At 31 December 1,040 - 984 -
At 31 December 3,938 156 4,219 156
Provision for diminution in value:
At 1 January - (5) - -
Transfer - - - (4)
Write back\(down) of investment - 1 - (1)
At 31 December - (4) - (5)
Net book value at 31 December 3,938 152 4,219 151
2014 2013
£'000 £'000
Net book value of unquoted investments 126 126
Net book and market value of investments listed on overseas stock 26 25
exchanges
152 151
13. Joint ventures
The company owns 50% of the issued share capital of Dragon Retail Properties
Limited, an unlisted property investment company. The remaining 50% is held by
London & Associated Properties PLC. Dragon Retail Properties Limited is
incorporated in England and Wales. It has issued share capital of 500,000
(2013: 500,000) ordinary shares of £1 each.
The company owns 12.5% of the units of Langney Shopping Centre Unit Trust, an
unlisted property unit trust incorporated
in Jersey. 12.5% of the units in the trust are held by London & Associated
Properties PLC and 75% are held by Columbus UK GP limited,
a partner acting on behalf of Columbus UK Real Estate Fund.
The company owns 49% of the issued share capital of Ezimbokodweni Mining (Pty)
Limited, an unlisted coal production company. The company is incorporated in
South Africa. It has issued share capital of 100 (2013: 100) ordinary shares of
ZAR1 each.
Langney Dragon Ezimbokodweni 2014 2013
12.5% 50% 49% £'000 £'000
£'000 £'000 £'000
Turnover 136 100 - 236 269
Profit and loss
(Loss)/Profit before tax 563 1 - (564) 116
Taxation - (1) - (1) (17)
(Loss)/Profit after taxation 563 - - (563) 99
Balance sheet
Non-current assets 2,461 1,562 1,037 5,060 4,588
Current assets 385 1,347 3 1,735 2,054
Current liabilities (172) (1,117) (1,040) (2,329) (1,753)
Non-current liabilities (1,299) (952) - (2,251) (2,337)
Share of net assets at 31 December 1,375 840 - 2,215 2,552
14. Subsidiary companies
The company owns the following ordinary share capital of the principal
subsidiaries which are included within the consolidated financial statements:
Activity Percentage Country of
of incorporation
share
capital
Mineral Products Limited Share 100% England and
dealing Wales
Bisichi (Properties) Limited Property 100% England and
Wales
Black Wattle Colliery (Pty) Limited Coal 62.5% South Africa
mining
Bisichi Coal Mining (Pty) Limited Coal 100% South Africa
mining
Bisichi Mining (Exploration) Limited Holding 100% England and
company Wales
Ninghi Marketing Limited Dormant 90.1% England and
Wales
Details on the non-controlling interest in subsidiaries are shown under note 26.
15. Inventories
2014 2013
£'000 £'000
Coal
Washed 606 481
Run of mine 1,070 754
Work in progress 45 487
Other 39 34
1,760 1,756
16. Trade and other receivables
2014 2013
£'000 £'000
Amounts falling due within one year:
Trade receivables 4,046 5,658
Amount owed by joint venture 2,168 2,232
Other receivables 419 511
Prepayments and accrued income 227 258
6,860 8,659
17. Available for sale investments
2014 2013
£'000 £'000
Market value of listed Investments:
Listed in Great Britain 758 778
Listed outside Great Britain 38 44
796 822
Original cost of listed investments 740 737
Unrealised surplus of market value over cost 56 85
During the year the held for trading investments were redefined as available
for sale.
18. Trade and other payables
2014 2013
£'000 £'000
Trade payables 1,682 4,214
Amounts owed to joint ventures 305 1,205
Other payables 1,320 704
Accruals and deferred income 1,679 1,957
4,986 8,080
19. Financial liabilities - borrowings
Current Non-current
2014 2013 2014 2013
£'000 £'000 £'000 £'000
Bank overdraft (secured) 2,119 3,029 - -
Bank loan (secured) 20 5,013 6,013 118
2,139 8,042 6,013 118
Bank overdraft and loan instalments by reference to
the balance sheet date:
Within one year 2,139 8,042
From one to two years 21 14
From two to five years 5,992 104
8,152 8,160
Bank overdraft and loan analysis by origin:
United Kingdom 5,973 5,366
Southern Africa 2,179 2,794
8,152 8,160
The United Kingdom bank loans and overdraft are secured by way of a first
charge over the investment properties in the UK which are included in the
financial statements at a value of £11,575,000. At year-end an amount of £
472,500 was held in a blocked account by Santander UK PLC that relates to the
new £6million loan facility. The funds have been blocked in order to satisfy
the bank that certain conditions relating to the facility will be fulfilled.
Subsequent to year end these conditions have been fulfilled and Santander UK
PLC have confirmed that these funds will be released in the near future.
The South African bank loans are secured by way of a first charge over specific
pieces of mining equipment, inventory and the debtors of the relevant company
which holds the loan which are included in the financial statements at a value
of £6,264,000.
Consistent with others in the mining and property industry, the group monitors
its capital by its gearing levels. This is calculated as the net debt (loans
less cash and cash equivalents) as a percentage of the equity. At year end the
gearing of the group was 30.7% (2013: 38.8%) which was calculated as follows:
2014 2013
£'000 £'000
Total debt 8,152 8,160
Less cash and cash equivalents (2,838) (1,707)
Net debt 5,314 6,453
Total equity 17,315 16,628
Gearing 30.7% 38.8%
20. Provision for rehabilitation
2014 2013
£'000 £'000
As at 1 January 874 989
Exchange adjustment (31) (204)
Unwinding of discount 87 89
As at 31 December 930 874
21. Financial instruments
Total financial assets and liabilities
The group's financial assets and liabilities are as follows, representing both
the fair value and the carrying value:
Loans and Financial Assets 2014 2013
receivables Liabilities at fair £'000 £'000
£'000 measured at value
amortised through
cost profit
£'000 and
loss
£'000
Cash and cash equivalents 2,838 - - 2,838 1,707
Investments held for trading - - 796 796 822
Other investments - - 152 152 151
Trade and other receivables 7,673 - - 7,673 9,385
Bank borrowings - (8,152) - (8,152) (8,160)
Finance leases - (195) - (195) (196)
Other liabilities - (4,836) - (4,836) (7,901)
10,511 (13,183) 948 (1,724) (4,192)
Investments held for trading fall under level 1 of the fair value hierarchy
into which fair value measurements are recognised in accordance with the levels
set out in IFRS 7. Other investments are held at cost. The directors are of the
opinion that the difference in value between cost and fair value of other
investments is not significant or material. The comparative figures for 2013
fall under the same category of financial instrument as 2014.
Treasury policy
Although no derivative transactions were entered into during the current and
prior year, the group may use derivative transactions such as interest rate
swaps and forward exchange contracts as necessary in order to help manage the
financial risks arising from the group's activities. The main risks arising
from the group's financing structure are interest rate risk, liquidity risk,
market risk, credit risk, currency risk and commodity price risk. There have
been no changes during the year of the main risks arising from the group's
finance structure. The policies for managing each of these risks and the
principal effects of these policies on the results are summarised below.
Interest rate risk
Interest rate risk is the risk that the value of a financial instrument or
cashflows associated with the instrument will fluctuate due to changes in
market interest rates. Interest rate risk arises from interest bearing
financial assets and liabilities that the group uses. Treasury activities take
place under procedures and policies approved and monitored by the Board to
minimise the financial risk faced by the group. Interest bearing assets
comprise cash and cash equivalents which are considered to be short-term liquid
assets and loans to joint ventures. Interest bearing borrowings comprise bank
loans, bank overdrafts and variable rate finance lease obligations. The rates
of interest vary based on LIBOR in the UK and PRIME in South Africa.
As at 31 December 2014, with other variables unchanged, a 1% increase or
decrease in interest rates, on investments and borrowings whose interest rates
are not fixed, would respectively decrease or increase the loss for the year by
£79,000 (2013: £18,000). The effect on equity of this change would be an
equivalent decrease or increase for the year of £79,000 (2013: £18,000).
Liquidity risk
The group's policy is to minimise refinancing risk. Efficient treasury
management and strict credit control minimise the costs and risks associated
with this policy which ensures that funds are available to meet commitments as
they fall due. As at year end the group held borrowing facilities in the UK in
Bisichi Mining PLC and in South Africa in Black Wattle Colliery (Pty) Ltd.
The following table sets out the maturity profile of the financial liabilities
as at 31 December:
2014 2013
£'000 £'000
Within one year 7,400 15,956
From one to two years 223 38
From two to five years 6,539 129
Beyond five years 134 134
14,296 16,257
The following table sets out the maturity profile of the financial liabilities
as at 31 December maturing within one year:
2014 2013
£'000 £'000
Within one month 1,587 10,207
From one to three months 2,438 1,998
From four to twelve months 3,375 3,751
7,400 15,956
In South Africa, an increase in the structured trade finance facility from
R60million (South African Rand) to R80million was signed by Black Wattle
Colliery (Pty) Limited in October 2013 with Absa Bank Limited, a South African
subsidiary of Barclays Bank PLC. The facility is renewed annually at 30 June
and is secured against inventory, debtors and cash that are held by Black
Wattle Colliery (Pty) Limited. This facility comprises of a R60million
revolving loan to cover the working capital requirements of the group's South
African operations, and a R20million loan facility to cover guarantee
requirements related to the group's South African mining operations. During the
year Black Wattle breached one of the covenants of the facility related to the
accounting net asset value of the company. Due to the improved performance of
the company the breach was subsequently rectified and the breach did not affect
the ongoing use of the facility, or the ability to renew the facility again at
the appropriate times.
In December 2014, the group signed a £6 million term loan facility with
Santander. This new loan replaces the previous £5 million term facility and
overdraft held with Royal Bank of Scotland. The Loan is secured against the
group's UK retail property portfolio. The new debt package has a five year term
and is repayable at the end of the term. The interest cost of the loan is 2.35%
above LIBOR.
As a result of the completion of the above agreed banking facilities, the
Directors believe that the group is well placed to manage its liquidity risk.
Credit risk
The group is exposed to credit risk on its cash and cash equivalents, trade and
other receivables and amounts owed by joint ventures as per the balance sheet.
The maximum exposure to credit risk is represented by the carrying amount of
each financial asset in the balance sheet which at year end amounted to £
10,511,000 (2013: £11,092,000). The group's credit risk is primarily
attributable to its trade receivables. The group had amounts due from its
significant revenue customers at the year end that represented 87% of the trade
receivables balance. These amounts have been subsequently settled.
Trade debtor's credit ratings are reviewed regularly. The group only deposits
surplus cash with well-established financial institutions of high quality
credit standing. As at year end the amount of trade receivables held past due
date was £130,000 (2013: £137,000). To date, the amount of trade receivables
held past due date that has not subsequently been settled is £85,000 (2013: £
118,000). Management have no reason to believe that this amount will not be
settled.
Financial assets maturity
On 31 December 2014, cash at bank and in hand amounted to £2,838,000 (2013: £
1,707,000) which is invested in short term bank deposits maturing within one
year bearing interest at the bank's variable rates. Cash and cash equivalents
all have a maturity of less than 3 months. At year-end an amount of £472,500
was held in a blocked account by Santander UK PLC that relates to the new £
6million loan facility. The funds have been blocked in order to satisfy the
bank that certain conditions relating to the facility will be fulfilled.
Subsequent to year end these conditions have been fulfilled and Santander UK
PLC have confirmed that these funds will be released in the near future.
Commodity price risk
Commodity price risk is the risk that the group's future earnings will be
adversely impacted by changes in the market of commodities. The group is
exposed to commodity price risk as its future revenues will be derived based on
a contract with a physical off-take partner at prices that will be determined
by reference to market prices of coal at the delivery date.
From time to time the group may manage its exposure to commodity price risk by
entering into forward sales contracts with the goal of preserving future
revenue streams.
Foreign exchange risk
All trading is undertaken in the local currencies. Funding is also in local
currencies other than inter-company investments and loans and it is not the
group's policy to obtain forward contracts to mitigate foreign exchange risk on
these amounts. During 2014 and 2013 the group did not hedge its exposure of
foreign investments held in foreign currencies.
The table below shows the currency profiles of cash and cash equivalents:
2014 2013
£'000 £'000
Sterling 1,697 139
South African Rand 1,138 1,426
US Dollar 3 142
2,838 1,707
Cash and cash equivalents earn interest at rates based on LIBOR in Sterling and
Prime in Rand.
The tables below shows the currency profiles of net monetary assets and
liabilities by functional currency of the group:
2014: Sterling South
£'000 African
Rands
£'000
Sterling (2,515) -
South African Rand 153 618
US Dollar 20 -
(2,342) 618
2013: Sterling South
£'000 African
Rands
£'000
Sterling (4,082)
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