REG-Bisichi Plc: Annual Financial Report
23/04/2021 07:05
BISICHI PLC
Results for the year ended 31 December 2020
Summary:
Reported EBITDA: Loss: £2,400,000 (2019: Profit: £5,900,000)
Adjusted EBITDA: Loss: £1,100,000 (2019: Profit: £7,400,000)
· 2020 was a very challenging year for the company due to the impact of
the Covid-19 pandemic.
· The Group’s South African mining and processing operations
continued to operate during lockdown periods because they were designated as
South African government-approved essential business operations.
· Consistent production of 1.18million tonnes (2019: 1.27million) of
coal achieved at Black Wattle Colliery.
· Planning permission obtained for an expanded residential
redevelopment of 56 flats in West Ealing joint venture investment with London
& Associated Properties PLC and Metroprop Real Estate Ltd.
· The Group’s present key priorities remain the health and safety of
its employees and stakeholders, and ensuring operations can continue in an
efficient manner.
· Despite everything that occurred in 2020, the Group ended the year
with considerable financial resources available at short notice, including
cash of £3.8million and listed investments of £2.6million.
· The Board has decided that it will not be proposing a final dividend
for the financial year ending 31 December 2020 and will review the dividend
position when there is greater visibility of the ongoing impact of COVID-19.
Chairman, Sir Michael Heller, comments:
“2020 has been a challenging period for your company due to the impact of
the Covid-19 pandemic on all of our operations. Although the overall situation
and its consequent impact continues to remain uncertain, in 2021 to date we
have seen a significant improvement in our coal markets arising from the
renewal of global economic activity.”
For further information, please call:
Andrew Heller or Garrett Casey, Bisichi PLC 020 7415 5030
BISICHI PLC
ANNUAL REPORT 2020
Strategic report
Strategic report
The Directors present the Strategic Report of the company for the year ending
31 December 2020. The aim of the Strategic Report is to provide shareholders
with the ability to assess how the Directors have performed their duty to
promote the success of the company for the collective benefit of shareholders.
STRATEGIC REPORT
Chairman’s Statement
2020 has been a challenging year for your company due to the impact of the
Covid-19 pandemic on all our operations. As a result, for the year ended 31
December 2020, your company made a loss before interest, tax, depreciation and
amortisation (EBITDA) of £2.4million (2019: profit: £5.9 million) and an
operating loss before depreciation, fair value adjustments and exchange
movements (Adjusted EBITDA) of £1.1million (2019: profit: £7.4million).
In a year dominated by the Covid-19 pandemic and its human and economic
impact, your management has been focussed on ensuring the Group’s key
priorities were addressed. These are the health and safety of our employees
and stakeholders, ensuring our operations continued in an efficient manner,
and maintaining balance sheet flexibility.
As previously announced, in order to help safeguard our people from the spread
of Covid-19, the Group implemented various health and safety measures during
the year, which were aligned with measures announced by both the UK and South
African governments, including guidelines and regulations from the South
African National Department of Health and the Department of Minerals Resources
and Energy. Further details on the health and safety measures we have
implemented can be found in our Mining Review and Sustainability Report.
In terms of business continuity, the Group’s South African coal mining and
processing operations were designated as essential business operations by the
South African Government, which allowed the Group’s operations to continue
during lockdown periods. In turn, this allowed Black Wattle Colliery, our
South African coal mining operation, to achieve consistent production during
the year of 1.18million metric tonnes of coal by comparison to 1.27million
metric tonnes achieved in 2019.
However, during the year the reduced global economic activity resulting from
the Covid-19 pandemic had a significant impact on demand for coal in the
international market. In January, the average weekly price of Free on Board
(FOB) Coal from Richard Bay Coal Terminal (API4 price) peaked at US$92. By
mid-April, as global economic activity slowed, the weekly API4 price had
fallen to US$44. Thereafter, coal prices remained largely supressed until the
end of the year. The impact on our operations was a build-up in our coal
stocks during the year and lower overall prices achieved for our coal. The
overall decrease in Group revenue, and the consequent financial performance
during the year, can mainly be attributed to this downturn. Further details on
the Group’s performance during the financial year can be found within the
Mining Review and Financial & Performance Review sections of this report.
Looking forward into 2021, although the overall impact of the Covid-19
pandemic on our South African operations and our coal markets continues to
remain uncertain, to date we have seen a significant improvement in our coal
markets arising from improvements in global economic activity. Your management
will continue to focus on keeping costs low at our South African operations,
in order to take the maximum financial performance advantage of the higher
prices achievable for our coal.
In the UK, the Covid-19 pandemic has had a significant impact on rental
revenue collections from the Group’s UK retail property portfolio and
property valuations. The government-imposed moratorium has temporarily
prevented us from being able to use normal measures to collect rent from
tenants who do not pay. Although the overall impact of the pandemic on the
portfolio remains uncertain, we expect much of the portfolio, including rental
collections, to recover as lockdown is eased and tenants resume full
operations.
The Group continues to hold its joint venture investment, with London &
Associated Properties PLC and Metroprop Real Estate Ltd, in the freehold of a
retail and residential redevelopment in West Ealing, London. We are pleased to
report that planning permission for an expanded residential redevelopment of
56 flats on the site has been received, and we look forward to updating
shareholders further on the situation in due course. A fuller explanation of
the Group’s property performance during the year and the Group’s future
prospects are discussed in the Financial & Performance Review and Directors
Report.
As previously announced, we are pleased to welcome John Wong to the Board of
Bisichi PLC as an independent non-executive director. The appointment took
effect on the 15 October 2020. John is a qualified Chartered Accountant and a
Chartered Financial Analyst. He has been in the fund management industry for
almost 20 years. John’s valuable experience in investment management, in
particular within the mining sector, makes him an excellent addition to the
Board. John’s knowledge and experience will bring a new perspective to the
Group’s strategy of growing the company’s existing and future spread of
business interests and investments.
Finally, during these uncertain and challenging times your management are
doing their utmost to ensure the Group’s stated priorities are delivered.
Therefore, until such time as the impact of Covid-19 can be fully assessed,
the Board has decided that it will not be wise to propose a final dividend for
the financial year ending 31 December 2020. We will review this when there is
greater visibility of the ongoing impact of COVID-19.
On behalf of the Board and shareholders, I would like to thank all our
employees and stakeholders for their support during this extremely difficult
time.
Sir Michael Heller
Chairman
22 April 2021
STRATEGIC REPORT
Principal activity, strategy & business model
The company carries on business as a mining company and its principal activity
is coal mining in South Africa. The company’s strategy is to create and
deliver long term sustainable value to all our stakeholders through our
business model which can be broken down into three key areas:
1 Acquisition & investment
The Group actively seeks new opportunities to extend the life of mine of its
existing mining operations or develop new independent mining operations in
South Africa. The Group aims to achieve this through new commercial
arrangements and the acquisition of additional coal reserves nearby to or
independent from our existing mining operations.
In addition, we seek to balance the high risk of our mining operations with a
dependable cash flow from our UK property investment operations. The company
primarily invests in retail property across the UK as well as residential
property development. The UK Retail property portfolio is managed by London &
Associated Properties PLC whose responsibility is to actively manage the
portfolio to improve rental income and thus enhance the value of the portfolio
over time.
2 Production & sustainability
The Group strives to mine its coal reserves in an economical and sustainable
manner that delivers long term value to all our stakeholders.
3 Processing & marketing
The Group seeks to achieve additional value from its mining investments
through the washing, transportation and marketing of coal into both the
domestic and export markets.
STRATEGIC REPORT
Mining Review
As we continue to manage the impact of the Covid-19 pandemic on the Group’s
mining and processing operations in South Africa, the health and safety of all
our employees and stakeholders and ensuring the efficient continuity of our
business have remained our key priorities. Although the overall impact of the
Covid-19 pandemic on our operations continues to remain uncertain, we have
seen business conditions improve in 2021, particularly in our coal markets.
Covid-19 update
During this difficult period, the Group has consulted with the government
authorities and its stakeholders in South Africa to determine and agree the
appropriate measures to be taken across its South African mining and
processing operations. Such measures have been focussed on the health and
safety of our employees, assisting in the continuing provision of coal as an
essential raw material, the security and integrity of the assets, and the
ability to maintain operations at levels of activity that is aligned with
government interests and the country’s broader economic interests.
The Group continues to monitor and adhere to all of the South African
government’s Covid-19 related guidelines and regulations including all
updates and advice from the National Department of Health, the Department of
Minerals Resources and Energy and the Office of the President.
These measures include:
- Regular communications with employees on all guidelines,
government restrictions and best practice hygiene and health recommendations;
- Conducting various issue-based hazard identification and risk
assessments;
- Temperature screening of those entering certain of our offices and
sites;
- Working from home (in both the UK and South Africa), where
possible or required;
- Social distancing measures at operating sites;
- Restrictions on non-essential visits to operating sites; and
- Intensified cleaning and hygiene at offices and sites;
In particular the Group has endeavoured to follow the guidelines of the
10-point plan developed by the Department of Minerals Resources and Energy in
line with the guidelines of the Department of Health and the National
Institute of Communicable Diseases (NICD) as follows:
- Educate employees on the virus, symptoms and prevention.
- Follow guidelines from the NICD, educate health workers on how to
manage Covid-19. Consider alternate arrangements for supply of chronic
medication to reduce crowds.
- Ensure that all health workers have access to protective clothing,
gloves, masks, cleaning materials and pharmaceutical agents.
- Vaccinate employees for seasonal influenza.
- All employees are encouraged to know their status, get onto ARVs
if positive for HIV.
- Manage suspected cases or contacts of cases using guidelines from
the NICD.
- Liaise with the NICD on procedure to be followed for suspected and
confirmed cases.
- Only essential travel to areas with Covid-19 should be undertaken.
- All suspected and confirmed cases in the mining industry should be
reported to the NICD.
- Monitor and stay aware of the latest information on the Covid-19
pandemic.
Production and operations
As mentioned in the Chairman’s statement, the Group’s South African coal
mining and processing operations have been designated essential business
operations as they fall within the supply chains of other essential
businesses, as defined by the South African government. Since late March 2020,
the Group’s South African operations, have continued, although with a
reduced or socially distanced workforce, to safeguard the health and safety of
our employees.
For the first half of 2020, Black Wattle achieved mining production of 580,000
metric tonnes (2019: 655,000 metric tonnes). During the second half of the
year, mining production remained fairly consistent at 600,000 metric tonnes
(2019 H2: 616,000 metric tonnes). Overall mining production from Black Wattle
decreased slightly in 2020, with total mining production for the year of
1.18million metric tonnes compared to 1.27million metric tonnes achieved in
2019.
Looking forward, although the Group’s overall mining production in 2021 is
expected to remain at similar levels to 2020, the Group will look at
supplementing our own production with buy-in coal for our coal processing
operations, in order to take advantage of the improved coal market conditions
seen in 2021 to date. In addition, we continue to work closely with our BEE
partner in South Africa, to seek further opportunities to extend the life of
mine of our existing mining operations or to develop new independent mining
operations in South Africa.
Main trends/markets
During 2020, management continued to sell coal into both the export and
domestic market through our coal processing entity Sisonke Coal Processing
(Pty) Ltd. The Group’s export sales were via Richards Bay Coal Terminal and
primarily under the Quattro programme, which allows junior black-economic
empowerment coal producers direct access to the coal export market via
Richards Bay Coal Terminal. We would like to thank Vunani Limited, our black
economic empowered shareholders at Black Wattle, for managing and developing
this opportunity.
As mentioned in the Chairman’s Statement, reduced global economic activity,
as a result of the Covid-19 pandemic, had a significant impact on demand and
prices achievable for our coal in 2020.
In the international market the average weekly price of Free On Board (FOB)
Coal from Richard Bay Coal Terminal (API4 price) peaked in the month of
January 2020 at US$92. By mid-April, as global economic activity slowed, the
weekly API4 price had fallen to US$44. Thereafter, coal prices remained
largely supressed until the end of November. Thereafter, international coal
prices significantly improved with the API4 price ending the year again above
$90. A weaker Rand to the US Dollar did not fully mitigate the lower overall
US Dollar coal prices during the year resulting in the Group achieving an
overall decrease in the average Rand price of R547 per tonne of export coal
sold from the mine in 2020 compared to R679 in 2019.
In the domestic market, a similar trend to the international market unfolded
during the year, impacted negatively on prices achievable for our coal. The
Group achieved an average price of R450 per tonne of domestic coal sold in
2020 compared to R615 in 2019.
Overall, the Group achieved an average Rand price per tonne of coal sold of
R469 compared to R624 in 2019. In addition to the lower coal prices, lower
mining production and sales and a decrease in the average exchange rate of the
Rand compared to UK Sterling also contributed to the decrease in Sterling
Group revenue during the year.
Looking forward into 2021, although the extent of the overall impact of
Covid-19 on our direct markets, and the prices achievable for our coal,
continues to remain uncertain, to date we have seen significant improvements
in our coal markets as global economies continue to open up. Your management
will look to take advantage of the higher prices achievable for our coal by
selling down stocks and maximising the use of our coal processing
infrastructure at Sisonke.
Sustainable development
The Group’s South African operations continue to strive to conduct business
in a safe, environmentally and socially responsible manner. Some highlights of
our Health, Safety and Environment performance in 2020:
• The Group’s South African operations recorded one Lost time
Injury during 2020 (2019: One).
• No cases of Occupational Diseases were recorded.
• Zero claims for the Compensation for Occupational Diseases were
submitted.
In South Africa, the new government regulated Broad-Based Socio-Economic
Empowerment Charter for the Mining and Minerals Industry, 2019 (New Mining
Charter) came into force from March 2019. The New Mining Charter is a
regulatory instrument that facilitates sustainable transformation, growth and
development of the mining industry. The Group is committed to fully complying
with the New Mining Charter and providing adequate resources to this area in
order to ensure opportunities are expanded for historically disadvantaged
South Africans (HDSAs) to enter the mining and minerals industry. In addition,
we continue to adhere and make progress in terms of our Social and Labour Plan
and our various BEE initiatives. A fuller explanation of these can be found in
our Sustainable Development Report on page 7.
Prospects
Looking forward into 2021, management remain committed to working with all our
stakeholders in helping overcome the unprecedented challenges presented by the
Covid-19 pandemic. We would like to thank all our employees and stakeholders
for their support during this difficult time.
Andrew Heller
Managing Director
22 April 2021
STRATEGIC REPORT
Sustainable development
The Group is fully committed to ensuring the sustainability of both our UK and
South African operations and delivering long term value to all our
stakeholders.
Social, community and human rights issues
The Group believes that it is in the shareholders’ interests to consider
social and human rights issues when conducting business activities both in the
UK and South Africa. Various policies and initiatives implemented by the Group
that fall within these areas are discussed within this report.
Health, Safety & Environment (HSE)
The Group is committed to creating a safe and healthy working environment for
its employees and the health and safety of our employees is of the utmost
importance.
HSE performance in 2020:
• No 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.
• The Group’s South African operations recorded one Lost time
Injury during 2020.
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 and at Sisonke Coal Processing.
Health and Safety training is conducted on an on going basis. We are pleased
to report all relevant 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 on going 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.
• Dover testing is conducted for all operators. Dover testing is a
risk detection and accident reduction tool which identifies employees’
problematic areas in their fundamental skills in order to receive appropriate
training.
• On going basic rigging training is being conducted for all washing
plant personnel.
• A Job Safety Analysis form is utilised to ensure effective
identification of hazards in the workplace.
• In order to capture and record investigation findings from
incidents, an incident recording sheet is utilised by line management and
contractors.
• Black Wattle Colliery utilises ICAM (Incident Cause Analysis
Method).
• On-going training on conveyor belt operation is being conducted
with all employees involved with this discipline.
Black Wattle Colliery Social and Labour Plan (SLP) and Community Projects
Black Wattle Colliery is committed to true transformation and empowerment as
well as poverty eradication within the surrounding and labour providing
communities.
Black Wattle is committed to providing opportunities for the sustainable
socio-economic development of its stakeholders, such as:
• Employees and their families, through Skills Development,
Education Development, Human Resource Development, Empowerment and Progression
Programmes.
• Surrounding and labour sending communities, through Local Economic
Development, Rural and Community Development, Enterprise Development and
Procurement Programmes.
• Empowering partners, through Broad-Based Black Economic
Empowerment (BBBEE) and Joint Ventures with Historically Disadvantaged South
African (HDSA) new mining entrants and enterprises.
• The company engages in on going consultation with its stakeholders
to develop strong company-employee relationships, strong company-community
relationships and strong company-HDSA enterprise relationships.
The key focus areas in terms of the detailed SLP programmes were updated as
follows:
• Implementation of new 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).
• Black Wattle continues to work with its current SLP Plan (2017 –
2021).
• 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.
• Included within the new SLP Plan is a new LED project which
includes the upgrading of Phumelele Secondary School in the Rockdale Township.
The primary focus is to build additional facilities, including classrooms to
cater for the growing population in the area.
• Various upgrades were initiated at the Evergreen School nearby to
Black Wattle including the erection of new toilet facilities for the boys and
girls, which formed part of the mines portable skills development programme
for our employees.
Black Wattle has implemented various community initiatives including:
• A community training environmental project, where local community
members are trained to safely cut and remove non-indigenous vegetation.
• Certain community members have been identified for training in
areas regarding mining and beneficiation. These areas include but are not
limited to conveyor maintenance and operation of mining machinery. 22
community members were identified and trained on how to operate an Articulated
Dump Truck ADT and a further 23 were trained in environmental waste
management.
• Two new local community students were enrolled at university for
the 2020 academic year whilst 2 HDSA females completed their University
studies in the 2020 academic year.
Environment & Environment Management Programme
South Africa
Under the terms of the mine’s Environmental Management Programme approved by
the Department of Mineral Resource and Energy (“DMRE”), 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. In addition to this Black
Wattle also performs quarterly monitoring of all boreholes around the mine to
ensure that no contaminated water filters through to the surrounding
communities.
Black Wattle is fully compliant with the regulatory requirements of the
Department of Water Affairs and Forestry and has an approved water use
licence.
Black Wattle Colliery has substantially improved its water management by
erecting and upgrading all its pollution control dams in consultation with the
Department of Water Affairs and Forestry.
A performance assessment audit was conducted to verify compliance to our
Environmental Management Programme and no significant deviations were found.
United Kingdom
The Group’s UK activities are principally retail property investment as well
as residential property development whereby we provide or develop premises
which are rented to retail businesses or sold on to end users. We seek to
provide tenants and users in both these areas with good quality premises from
which they can operate or reside in an environmentally sound manner.
Procurement
In compliance with the Mining Charter and the Mineral and Petroleum Resource
Development Act, the Group’s South African operations has implemented a
BBBEE-focussed procurement policy which strongly encourages our suppliers to
establish and maintain BBBEE credentials. At present, BBBEE companies provide
approximately 90 percent of Black Wattle’s equipment and services.
Mining Charter
In South Africa, the new government regulated Broad-Based Socio-Economic
Empowerment Charter for the Mining and Minerals Industry, 2019 (New Mining
Charter) came into force from March 2019. The New Mining Charter is a
regulatory instrument that facilitates sustainable transformation, growth and
development of the mining industry. The Group’s mining operation is expected
to reach various levels of compliance to the New Mining Charter over a period
of five years from March 2019. The Group is committed to providing adequate
resources to this area in order to ensure full compliance to the New Mining
Charter is achieved over the transitional period. As part of Black Wattle’s
commitment to the New Mining Charter, the company seeks to:
• Expand opportunities for historically disadvantaged South Africans
(HDSAs), including women and youth, to enter the mining and minerals industry
and benefit from the extraction and processing of the country’s resources;
• Utilise the existing skills base for the empowerment of HDSAs; and
• Expand the skills base of HDSAs in order to serve the community.
Employment
The Group’s South African operations are committed to achieving the goals of
the South African Employment Equity Act and is pleased to report the
following:
• Black Wattle Colliery has exceeded the 10 percent women in
management and core mining target.
• Black Wattle Colliery has achieved 15 percent women in core
mining.
• 94 percent of the women at Black Wattle Colliery are HDSA females.
Black Wattle Colliery has successfully submitted their annual Employment
Equity Report to the Department of Labour.
In terms of staff training some highlights for 2020 were:
• 11 employees were trained in ABET (Adult Basic Educational
Training) on various levels;
• An additional 9 disabled HDSA women continued their training on
ABET levels one to four.
• We are pleased to confirm that 1 HDSA male completed his
apprenticeships whilst 1 HDSA male continues their learning in 2021.
• Further to the above we confirm that 2 HDSA females were allocated
Bursaries for the 2020 period and 2 HDSA males continued their Bursaries,
These will continue in the 2021 period.
Highlights for 2020 for Sisonke Coal Processing:
· 5 employees were trained in ABET (Adult Basic Educational Training)
on various levels
Employment terms and conditions for our employees based at our UK office and
at our South African mining operations are regulated by and are operated in
compliance with all relevant prevailing national and local legislation.
Employment terms and conditions provided to mining staff meet or exceed the
national average. The Group’s mining operations and coal washing plant
facility are labour intensive and unionised. During the year no labour
disputes, strikes or wage negotiations disrupted production or had a
significant impact on earnings. The Group’s relations to date with labour
representatives and labour related unions continue to remain strong.
In terms of directors, employees and gender representation, at the year end
the Group had 9 directors (8 male, 1 female), 6 senior managers (5 male, 1
female) and 236 employees (163 male, 73 female).
Anti-slavery and human trafficking
The Group is committed to the prevention of the use of forced labour and has a
zero tolerance policy for human trafficking and slavery. The Group’s
policies and initiatives in this area can be found within the Group’s
Anti-slavery and human trafficking statement found on the Group’s website at
www.bisichi.co.uk.
Green House Gas reporting
We have reported on all of the emission sources required under the Companies
Act 2006 (Strategic Report and Directors’ Reports) Regulations.
The data detailed in these tables represent emissions and energy use for which
the Group is responsible. To calculate our emissions, we have used the main
requirements of the Greenhouse Gas Protocol Corporate Standard and a
methodology adapted from the Intergovernmental Panel on Climate Change (2019),
along with the UK Government GHG Conversion Factors for Company Reporting
2020. Any estimates included in our totals are derived from actual data which
have been extrapolated to cover the full reporting periods.
Our reporting includes our energy use and emissions associated with our UK
office, which are minimal (1.4tonnes of CO2e). The IPCC methodology *Tier 1
(+2) Methodology (2006 with 2019 edits) - Low, Average, and High CH4 Emission
Factors – Medium Scenario) was used to calculate emissions from surface coal
mining activities. The Group has not implemented any energy efficiency
programs or specific measures during the 2020 year.
The Group’s carbon footprint: 2020 CO2e Tonnes 2019 CO2e Tonnes
Emissions source:
Emissions from the combustion of fuel or the operation of any facility including fugitive emissions from refrigerants use 46,162 49,061
Emissions resulting from the purchase of electricity, heat, steam or cooling by the company for its own use (location based) 12,482 13,153
Total gross emissions 58,644 62,213
Intensity:
Tonnes of CO2 per £ sterling of revenue 0.0020 0.0013
Tonnes of CO2 per tonne of coal produced 0.0497 0.0486
kWh kWh
Energy consumption used to calculate above emissions 99,450,585 N/A
Of which UK 5,571 N/A
Principal risks & uncertainties
PRINCIPAL RISK PERFORMANCE AND MANAGEMENT OF THE RISK
COVID-19 RISK The Group is proactively assessing and managing the potential risks brought about by the uncertainty of the Covid-19 pandemic. Overall the Group is exposed to impacts on the health and safety of its employees and stakeholders and risks related to business continuity. In the UK, the Group expects there to be an impact on retail property revenue and values as outlined under property valuation risk below. In South Africa, the Group is expected to be impacted by additional health and safety measures related to its workforce and coal price risk as outlined under the same heading below. Risks faced by the business are assessed by the Board on an ongoing basis. Strategies for mitigating the risks have been defined and specific measures for achieving these
are already underway. These include the measures outlined in the Chairman’s Statement, Mining Review and Financial Review & Performance sections of this report. The final
impact of the Covid-19 pandemic remains uncertain and the Group will adapt plans accordingly as more information becomes available or government advice changes.
COAL PRICE RISK The Group is exposed to coal price risk as its future revenues will be derived based on contracts or agreements with physical off-take partners at prices that will be determined by reference to market prices of coal at delivery date. The Group’s South African mining operational earnings are significantly dependent on movements in both the export and domestic coal price. The price of export sales is derived from a US Dollar-denominated export coal price and therefore the price achievable in South African Rands can be influenced by movements in exchange rates and overall global demand and supply. The domestic market coal prices are denominated in South African Rand and are primarily dependant on local demand and supply. In the short term, the Covid-19 pandemic may result in additional price volatility in both the export and domestic market due to fluctuations in both demand and supply. Longer term both the demand and supply of coal in the domestic and global market may be negatively impacted by regulatory changes related to climate change and governmental CO2 emission commitments. The Group primarily focuses on managing its underlying production costs to mitigate coal price volatility as well as from time to time entering into forward sales
contracts with the goal of preserving future revenue streams. The Group has not entered into any such contracts in 2019 and 2020. The Group’s export and domestic sales
are determined based on the ability to deliver the quality of coal required by each market and Quattro programme quotas, together with the market factors set out
opposite. Volumes of export sales achieved during the year were primarily dependent on the mine’s ability to produce the higher quality of coal required for export as
well as allowable quotas under the Quattro programme and overall global demand. The volume of domestic market sales achieved during the year were primarily dependant on
local demand and supply as well as the mine’s ability to produce the lower overall quality of coal required. The Group assesses on an ongoing basis the impact of Covid-19
and any regulatory changes related to climate change and governmental CO2 emission commitments may have on the Group’s mining operations and future investment decisions.
MINING RISK 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. This can have a negative impact on revenue and earnings as the quality and quantity of coal mined and sold by our mining operations may be lower than expected. This risk is managed by engaging independent geological experts, referred to in the industry as the “Competent Person”, to determine the estimated reserves and their
technical and commercial feasibility for extraction. In addition, management engage Competent Persons to assist management in the production of detailed life of mine
plans as well as in the monitoring of actual mining results versus expected performance and management’s response to variances. The Group continued to engage an
independent Competent Person in the current year. Refer to page 5 for details of mining performance.
CURRENCY RISK The Group’s operations are sensitive to currency movements, especially those between the South African Rand, US Dollar and British Pound. These movements can have a negative impact on the Group’s mining operations revenue as noted above, as well as operational earnings. The Group is exposed to currency risk in regard to the Sterling value of inter-company trading balances with its South African operations. It arises as a result of the retranslation of Rand denominated inter-company trade receivable balances into Sterling that are held within the UK and which are payable by South African Rand functional currency subsidiaries. The Group is exposed to currency risk in regard to the retranslation of the Group’s South African functional currency net assets to the Sterling reporting functional currency of the Group. A weakening of the South African Rand against Sterling can have a negative impact on the financial position and net asset values reported by the Group. Export sales within the Group’s South African operations are derived from a US Dollar-denominated export coal price. A weakening of the US Dollar can have a negative
impact on the South African Rand prices achievable for coal sold by the Group’s South African mining operations. This in turn can have a negative impact on the Group’s
mining operations revenue as well as operational earnings as the Group’s mining operating costs are Rand denominated. In order to mitigate this, the Group may enter into
forward sales contracts in local currencies with the goal of preserving future revenue streams. The Group has not entered into any such contracts in 2020 and 2019.
Although it is not the Group’s policy to obtain forward contracts to mitigate foreign exchange risk on inter-company trading balances or on the retranslation of the
Group’s South African functional currency net assets, management regularly review the requirement to do so in light of any increased risk of future volatility. Refer to
the ‘Financial Review’ for details of significant currency movement impacts in the year.
NEW RESERVES AND MINING PERMISSIONS The life of the mine, acquisition of additional reserves, permissions to mine (including ongoing and once-off permissions) and new mining opportunities in South Africa generally are contingent on a number of factors outside of the Group’s control such as approval by the Department of Mineral Resources and Energy, the Department of Water Affairs and Forestry and other regulatory or state owned entities. In addition, the Group’s South African operations are subject to the government Mining Charter with the New Mining Charter coming into force from March 2019. Failure to meet existing targets or further regulatory changes to the Mining Charter, could adversely affect the mine’s ability to retain its mining rights in South Africa. The work performed in the acquisition and renewal of mining permits as well as the maintenance of compliance with permits includes factors such as environmental
management, health and safety, labour laws and Black Empowerment legislation (such as the New Mining Charter); as failure to maintain appropriate controls and compliance
may in turn result in the withdrawal of the necessary permissions to mine. The management of these regulatory risks and performance in the year is noted in the Mining
Review on page 5 as well as in the Sustainable Development report on page 7 and in this section under the headings environmental risk, health & safety risk and labour
risk. Additionally, in order to mitigate this risk, the Group strives to provide adequate resources to this area including the employment of adequate personnel and the
utilisation of third party consultants competent in regulatory compliance related to mining rights and mining permissions. The Group also continues to actively seek new
opportunities to expand it mining operations in South Africa through the acquisition of additional coal reserves and new commercial arrangements with existing mining
right holders.
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. Any power cuts or lack of provision of power supply to the Group’s mining operations may disrupt mining production and impact on earnings. The Group’s mining operations have to date not been affected by power cuts. However the Group manages this risk through regular monitoring of Eskom’s performance and
ongoing ability to meet power requirements. In addition, the Group continues to assess the ability to utilise diesel generators as an alternative means of securing power
in the event of power outages.
FLOODING RISK The Group’s mining operations are susceptible to seasonal flooding which could disrupt mining production and impact on earnings. Management monitors water levels on an ongoing basis and various projects have been completed, including the construction of additional dams, to minimise the impact of
this risk as far as possible.
ENVIRONMENTAL RISK The Group’s South African mining operations are required to adhere to local environmental regulations. Any failure to adhere to local environmental regulations, could adversely affect the mine’s ability to mine under its mining right in South Africa. In line with all South African mining companies, the management of this risk is based on compliance with the Environment Management Plan. In order to ensure compliance, the Group strives to provide adequate resources to this area including the employment of personnel and the utilisation of third party consultants competent in regulatory compliance related to environmental management. To date, Black Wattle is fully compliant with the regulatory requirements of the Department of Water Affairs and Forestry and has an approved water use licence. Further details of the Group’s Environment Management Programme are
disclosed in the Sustainable development report on page 7.
HEALTH & SAFETY RISK Attached to mining there are inherent health and safety risks. Any such safety incidents disrupt operations, and can slow or even stop production. In addition, the Group’s South African mining operations are required to adhere to local Health and Safety regulations as well as enhanced health and Safety measures related to Covid-19. The Group has a comprehensive Health and Safety programme in place to mitigate this risk. Management strive to create an environment where Health and safety of our employees is of the utmost importance. Our Health & Safety programme provides clear guidance on the standards our mining operation is expected to achieve. In addition, management receive regular updates on how our mining operations are performing. Further details of the Group’s Health and Safety Programme are disclosed in the Sustainable Development report on page 7.
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. In order to mitigate this risk, the Group strives to ensure open and transparent dialogue with employees across all levels. In addition, appropriate channels of communication are provided to all employment unions at Black Wattle to ensure effective and early engagement on employment matters, in particular wage negotiations and disputes. Refer to the ‘Employment’ section on page 9 for further details.
CASHFLOW RISK Commodity price risk, currency volatility and the uncertainties inherent in mining may result in favourable or unfavourable cashflows. In order to mitigate this, we seek to balance the high risk of our mining operations with a dependable cash flow from our UK property investment operations which are actively managed by London & Associated Properties PLC. Due to the long term nature of the leases, the effect on cash flows from property investment activities are expected to remain stable as long as tenants remain in operation. Refer to page 20 for details of the property portfolio performance.
PROPERTY VALUATION RISK Fluctuations in property values, which are reflected in the Consolidated Income Statement and Balance Sheet, are dependent on an annual valuation of the Group’s commercial and residential development properties. A fall in UK commercial and residential property can have a marked effect on the profitability and the net asset value of the Group as well as impact on covenants and other loan agreement obligations. The economic performance of the United Kingdom, including the potential final impact of the United Kingdom leaving the European Union (“Brexit”), the impact of Covid-19 pandemic, as well as the current economic performance and trends of the UK retail market, may impact the level of rental income, yields and associated property valuations of the Group’s UK property assets including its investments in Joint Ventures. The Group utilises the services of London & Associated Properties PLC whose responsibility is to actively manage the portfolio to improve rental income and thus enhance the value of the portfolio over time. In addition, management regularly monitor banking covenants and other loan agreement obligations as well as the performance of our property assets in relation to the overall market over time. Management continue to monitor and evaluate the impact of Brexit, the Covid-19 pandemic and the current economic performance of the UK retail market on the future performance of the Group’s existing UK portfolio. In
addition, the Group assesses on an ongoing basis the impact of Brexit and the current economic performance of the UK retail market on the Group’s banking covenants, loan obligations and future investment decisions. Refer to page 20 for details of the property portfolio performance.
Financial & performance review
The movement in the Group’s Adjusted EBITDA from £7.4million in 2019 to a
loss of £1.1million in 2020 can mainly be attributed to lower prices
achievable for our coal, lower coal production and sales from the Group’s
South African operations and a weakening in the South African Rand to UK
Sterling. This offset the lower operating costs achieved in 2020.
EBITDA, adjusted EBITDA and mining production are used as key performance
indicators for the Group and its mining activities as the Group has a
strategic focus on the long term development of its existing mining reserves
and the acquisition of additional mining reserves in order to realise
shareholder value. Mining production can be defined as the coal quantity in
metric tonnes extracted from our reserves during the period and held by the
mine before any processing through the washing plant. Whilst profit/(loss)
before tax is considered as one of the key overall performance indicators of
the Group, the profitability of the Group and the Group’s mining activities
can be impacted by the volatile and capital intensive nature of the mining
sector. Accordingly, EBITDA and adjusted EBITDA are primarily used as key
performance indicators as they are indicative of the value associated with the
Group’s mining assets expected to be realised over the long term life of the
Group’s mining reserves. In addition, for the Group’s property investment
operations, the net property valuation and net property revenue are utilised
as key performance indicators as the Group’s substantial property portfolio
reduces the risk profile for shareholders by providing stable cash generative
UK assets and access to capital appreciation. Certain key performance
indicators below are not Generally Accepted Accounting Practice measures and
are not intended as a substitute for those measures, and may or may not be the
same as those used by other companies.
Key performance indicators The key performance indicators for the Group are: 2020 £’000 2019 £’000
For the Group:
Operating (loss)/profit before depreciation, fair value adjustments and exchange movements (adjusted EBITDA) (1,111) 7,457
EBITDA (2,387) 5,868
(Loss)/ profit before tax (5,196) 3,027
For our property investment operations:
Net property valuation 10,270 11,565
Net property revenue 1,181 1,290
For our mining activities:
Operating (loss)/profit before depreciation, fair value adjustments and exchange movements (adjusted EBITDA) (1,821) 6,517
EBITDA (1,782) 6,394
Tonnes ‘000 Tonnes ‘000
Mining production 1,180 1,271
The key performance indicators of the Group can be reconciled as follows: Mining £’000 Property £’000 Other £’000 2020 £’000
Revenue 28,567 1,181 57 29,805
Transport and loading cost (1,906) - - (1,906)
Mining and washing costs (22,739) - - (22,739)
Other operating costs excluding depreciation (5,743) (523) (5) (6,271)
Operating (loss)/profit before depreciation, fair value adjustments and exchange movements (adjusted EBITDA) (1,821) 658 52 (1,111)
Exchange movements 39 - - 39
Fair value adjustments - (1,295) - (1,295)
Gains on investments held at fair value through profit and loss (FVPL) - - 67 67
Operating (loss)/profit excluding depreciation (1,782) (637) 119 (2,300)
Share of loss in joint venture - (87) - (87)
EBITDA (1,782) (724) 119 (2,387)
Net interest movement (616)
Depreciation (2,193)
Loss before tax (5,196)
The key performance indicators of the Group can be reconciled as follows: Mining £’000 Property £’000 Other £’000 2019 £’000
Revenue 46,704 1,290 112 48,106
Transport and loading cost (3,421) - - (3,421)
Mining and washing costs (30,047) - - (30,047)
Other operating costs excluding depreciation (6,719) (458) (4) (7,181)
Operating profit before depreciation, fair value adjustments and exchange movements (adjusted EBITDA) 6,517 832 108 7,457
Exchange movements (123) - - (123)
Fair value adjustments - (1,480) - (1,480)
Losses on investments held at fair value through profit and loss (FVPL) - - (6) (6)
Operating profit excluding depreciation 6,394 (648) 102 5,848
Share of (loss)/profit and write off’s in joint venture - 20 - 20
EBITDA 6,394 (628) 102 5,868
Net interest movement (651)
Depreciation (2,190)
Profit before tax 3,027
Adjusted EBITDA is used as a key indicator of the operating trading
performance of the Group and its operating segments representing operating
profit before the impact of depreciation, fair value adjustments,
gains/(losses) on disposal of other investments and foreign exchange
movements. The Group’s operating segments include its South African mining
operations and UK property. The performance of these two operating segments
are discussed in more detail below.
The Group achieved a loss EBITDA for the year of £2.4million (2019: profit
£5.9million). The movement compared to the prior year can mainly be
attributed to the operating loss before depreciation from our mining
activities of £1.8 million (2019: profit £6.4million).
Negative fair value adjustments, related to our UK property decreased to
£1.3million (2019: £1.5million). However, adjusted EBITDA from our UK
property decreased to £0.66million (2019: £0.83million) with the Group
reporting an overall loss before tax of £5.2million (2019: profit
£3.0million). Taxation for the year decreased to a gain of £1.4million
(2019: loss of £1.4million). This resulted in the Group achieving an overall
loss for the year after tax of £3.8million (2019: profit £1.6million), of
which £3.4million (2019: £1.0million) was attributable to equity holders of
the company.
South African mining operations
Performance The key performance indicators of the Group’s South African mining operations are presented in South African Rand and UK Sterling as follows: South African Rand UK Sterling
2020 R’000 2019 R’000 2020 £’000 2019 £’000
Revenue 602,581 860,876 28,567 46,704
Transport and loading costs (40,204) (63,058) (1,906) (3,421)
Mining and washing costs (479,647) (553,844) (22,739) (30,047)
Operating profit before other operating costs and depreciation 82,730 243,974 3,922 13,236
Other operating costs (excluding depreciation) (5,743) (6,719)
Operating profit before depreciation, fair value adjustments and exchange movements (adjusted EBITDA) (1,821) 6,517
Exchange movements 39 (123)
EBITDA (1,782) 6,394
2020 ‘000 2019 ‘000
Mining production in tonnes 1,180 1,271
2020 R 2019 R
Net Revenue per tonne of mining production 477 628
Mining and washing costs per tonne of mining production (406) (436)
Operating profit per tonne of mining production before other operating costs and depreciation 71 192
Net Revenue per tonne of mining production can be defined as the revenue price
achieved per metric tonne of mining production less transportation and loading
costs.
A breakdown of the quantity of coal sold and revenue of the Group’s South
African mining operations are presented in metric tonnes and South African
Rand as follows:
Domestic ‘000 Export ‘000 2020 ‘000 Domestic ‘000 Export ‘000 2019 ‘000
Quantity of coal sold in tonnes 969 230 1,199 1,094 184 1,278
Domestic R’000 Export R’000 2020 R’000 Domestic R’000 Export R’000 2019 R’000
Total Net Revenue 442,516 160,065 602,581 672,854 124,964 797,815
R R R R R R
Net Revenue per tonne of coal sold 450 547 469 615 679 624
The quantity of coal sold can be defined as the quantity of coal sold in
metric tonnes by the Group in any given period. Net Revenue per tonne of coal
sold can be defined as the revenue price achieved per metric tonne of coal
sold less transportation and loading costs.
Total net revenue per tonne of coal sold for the Group’s mining and
processing operations decreased for the year from R624 per tonne of coal sold
in 2019 to R469 in 2020, attributable to the average price decreases achieved
in the export and domestic market offsetting exchange gains due to a weaker
Rand to the Dollar in the export market. As a result of the overall lower
mining production and an increase in coal inventories due to weaker coal
demand, the quantity of coal sold for the year decreased to 1.199million
tonnes (2019: 1.278million tonnes). The decrease in mining production can be
attributable to temporary staff shortages during the first half of the year
and difficult mining conditions in the second half of the year. Overall, the
decrease in revenue per tonne of coal sold, lower production and increase in
coal inventories offset the weaker Rand to the Dollar resulting in a decrease
in revenue from the Group’s South African mining operations during the year
compared to the prior year at R602.6million (2019: R797.8million).
The decrease in total mining production and decrease in the mining and washing
cost per tonne from R436 per tonne to R406 per tonne resulted in a decrease in
total mining and washing costs for the Group to R479.6million (2019:
R553.8million).
Other operating costs (excluding depreciation) of £5.7million (2019:
£6.7million) include general administrative costs as well as administrative
salaries and wages related to our South African mining operations that are
incurred both in South Africa and in the UK. These costs are not significantly
impacted by movements in mining production and the decrease during the year
can mainly be attributed to exchange movements on the translation of South
African Rand costs into Sterling. Overall costs in South Africa were in line
with management’s expectations and local inflation.
Overall, the movement in the Group’s Adjusted EBITDA from £7.4million in
2019 to a loss of £1.1million in 2020 can mainly be attributed to lower
prices achievable for our coal, lower coal production and sales from the
Group’s South African operations and a weakening in the South African Rand
to UK Sterling. This offset the lower operating costs achieved in 2020. A
further explanation of the mines operational performance can be found in the
Mining Review on page 5.
UK property investment
Performance
The Group’s portfolio is managed actively by London & Associated Properties
plc and performed below prior year levels in 2020. Net property revenue
(excluding joint ventures and service charge income) across the portfolio
decreased during the year to £1.025million (2019: £1.109million). The
property portfolio was externally valued at 31 December 2020 and the value of
UK investment properties attributable to the Group at year end decreased to
£10.270million (2019: £11.565million) mainly due to valuation yields applied
due to the impact of Covid-19 and a challenging retail market.
Joint venture property investments
The Group holds a £0.7million (2019: £0.8million) joint venture investment
in Dragon Retail Properties Limited, a UK property investment company. The
open market value of the company’s share of investment properties included
within its joint venture investment in Dragon Retail Properties decreased
during the year to £1.065million (2019: £1.22million).
During the year the Group continued to hold a £0.6million (2019:
£0.5million) 50% joint venture investment in West Ealing Projects Limited, a
UK unlisted property development company. West Ealing Projects Limited’s
only asset is a property development in West Ealing, London. The carrying
value of the Group’s share of the trading property inventory included within
this development is valued at £3.5million (2019: £3.3million). The joint
venture has obtained planning consent for a residential development of 56
flats. We look forward to updating shareholders further in due course.
Overall, the Group achieved net property revenue of £1.3million (2019:
£1.4million) for the year which includes the company’s share of net
property revenue from its investment in joint ventures of £71,000 (2019:
£75,000).
Other Investments
During the year the Group’s investments held at fair value through profit
and loss increased from £0.3million in 2019 to £1.7million mainly due to net
additions during the year of £1.3million (2019: £0.3million). The
investments comprise of £0.9million (2019: £nil) investments listed on stock
exchanges in the United Kingdom and £0.8million (2019: £0.3million) of
investments listed on overseas stock exchanges.
Cashflow & financial position
The following table summarises the main components of the consolidated cashflow for the year: Year ended 31 December 2020 £’000 Year ended 31 December 2019 £’000
Cash flow generated from operations before working capital and other items (1,111) 7,457
Cash flow from operating activities 449 4,148
Cash flow from investing activities (4,292) (3,662)
Cash flow from financing activities (285) (3,322)
Net (decrease) / increase in cash and cash equivalents (4,128) (2,836)
Cash and cash equivalents at 1 January 2,878 5,686
Exchange adjustment 172 28
Cash and cash equivalents at 31 December (1,078) 2,878
Cash and cash equivalents at 31 December comprise:
Cash and cash equivalents as presented in the balance sheet 3,768 7,720
Bank overdrafts (secured) (4,846) (4,842)
(1,078) 2,878
Cash flow generated from operating activities decreased compared to the prior
year to £0.4million (2019: £4.1million). This can mainly be attributed to
the operating loss during the year of £4.5million (2019: profit £3.7million)
offset by a decrease in income tax paid of £0.2million (2019: £1.2million)
and an increase in trade and other payables of £3.4million (2019:
£0.3million) all as a result of the lower revenue and profitability and at
our South African mining and processing operations. In addition, cashflow
generation from operating activities was also impacted by a cashflow decrease
from inventory of £1.1million (2019: £0.9million), as a result of an
increase in coal stocks at our South African coal mining and processing
operations due to reduced domestic and export coal sales.
Investing cashflows primarily reflect the net effect of capital expenditure
during the year of £3.2million (2019: £3.2million) which can mainly be
attributable to mine development costs at Black Wattle of £2.5million (2019:
£1.7million) and infrastructure improvements to the washing plant at Sisonke
Coal Processing of £0.7million (2019:£1.0million). As at year end the
Group’s mining reserves, plant and equipment had a carrying value of
£10.1million (2019: £9.5million) with capital expenditure being offset by
depreciation of £2.2million (2019: £2.2milion) and exchange translation
movements of £0.6million (2019: £0.1million) for the year. Other investing
cashflows also include the net acquisition of listed investments of
£1.1million (2019:£0.5million).
Cash outflows from financing activities includes a net decrease in borrowings
of £0.2million (2019:£2.1million). In addition, dividends paid to
shareholders decreased during the year to £0.1million (2019: £0.64million)
and dividends paid to minority interests decreased to £nil (2019:
£0.5million).
Overall, the Group’s cash and cash equivalents decreased during the year by
£4.1million (2019: £2.86millon). After taking into account an exchange gain
of £0.2million (2019: £0.03million) on the translation of the Group’s year
end net balance of cash and cash equivalents that were held in South African
Rands, the Group’s net balance of cash and cash equivalents (including bank
overdrafts) at year end was a cash negative amount of £1.1million (2019: cash
positive of £2.8million).
The Group has considerable financial resources available at short notice
including cash and cash equivalents (excluding bank overdrafts) of
£3.8million (2019: £7.7 million) and listed investments of £2.6million
(2019: £1.4million) as at year end. The above financial resources totalling
£6.4million (2019: £9.1million).
The net assets of the Group reported as at year end were £16.2million (2019:
£20.6million) and total assets at £38.7million (2019: £41.7million).
Liabilities increased from £21.2million to £22.5million during the year
primarily due an increase in trade payables from £7.6million to £10.9million
offsetting a decrease in deferred tax liabilities from £2.1million in 2019 to
£0.5million in 2020 mainly as a result of the lower revenue and profitability
and at our South African mining operations. The overall exchange loss recorded
through the translation reserve on translation of the Group’s South African
net assets at year end increased to £0.40million (2019: £0.05million) as a
result of the higher weakening of the South African Rand against UK sterling
year to year.
Further details on the Group’s cashflow and financial position are stated in
the Consolidated Cashflow Statement on page 57 and the Consolidated Balance
Sheet on page 54.
Loans
South Africa
The Group has a structured trade finance facility with Absa Bank Limited for
R85million held by Sisonke Coal Processing (Pty) Limited, a 100% subsidiary of
Black Wattle Colliery (Pty) Limited. This facility comprises of an R85million
revolving facility to cover the working capital requirements of the Group’s
South African operations. The facility is renewable annually at 25 January and
is secured against inventory, debtors and cash that are held in the Group’s
South African operations.
United Kingdom
The Group holds a 5 year term facility of £3.9m with Julian Hodge Bank
Limited at an initial LTV of 40%. The loan is secured against the company’s
UK retail property portfolio. The amount repayable on the loan at year end was
£3.8million. The debt package has a five year term and is repayable at the
end of the term in December 2024. The interest cost of the loan is 4.00% above
LIBOR. The loan is 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 £10.3million. No banking covenants were breached by the Group during the
year.
Statement regarding Section 172 of the UK Companies Act
Section 172 of the UK Companies Act requires the Board to report on how the
directors have had regard to the matters outlined below in performing their
duties. The Board consider the Group’s customers, employees, local
communities, suppliers and shareholders as key stakeholders of the Group.
During the year, the Directors consider that they have acted in a way, and
have made decision that would, most likely promote the success of the Group
for the benefit of its members as a whole as outlined in the matters below:
- The likely consequences of any decision in the long term: see
Principal activity, strategy & business model on page 4 and Principal Risks
and Uncertainties on page 11;
- The interests of the Group’s employees; ethics and compliance;
fostering of the Company’s business relationships with suppliers, customers
and others; and the impact of the Group’s operations on the community and
environment: see Sustainability report on page 7;
- The need to act fairly between members of the Company: see the
Corporate Governance section on page 26.
Future prospects and impact of the Covid-19 pandemic
As we continue into 2021, your management have been fully engaged in managing
the impact of the Covid-19 pandemic on its operations both here in the UK and
in South Africa. Our priorities are the health and safety of all our employees
and stakeholders and the continuity of our business during this challenging
time.
In terms of business continuity, the Group’s South African coal mining and
processing operations have been designated as essential business operations.
At present, the final impact of the pandemic on the Group’s future prospects
and financial performance remains uncertain. However, to date, the Group’s
financial position has remained strong and at present, the Group has adequate
financial resources to ensure the Group remains viable for the foreseeable
future and that liabilities are met. A full going concern and viability
assessment can be found in the Directors report on page 30.
Outside of the impact of the Covid-19 pandemic, the Group continues to seek to
expand its operations in South Africa through the acquisition of additional
coal reserves. In the UK, management is looking forward to progressing its
development in West Ealing and is currently investigating other major
investment opportunities in the domestic property sector. This is in line with
the Groups’ overall strategy of balancing the high risk of our mining
operations with a dependable cash flow and capital appreciation from our UK
property investment operations.
Further information on the outlook of the company can be found in both the
Chairman’s Statement on page 2 and the Mining Review on page 5 which form
part of the Strategic Report.
Signed on behalf of the Board of Directors
Garrett Casey
Finance Director
22 April 2021
Governance
Governance
Management team
Bisichi PLC
* 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
currently runs his own event management business. He is also a published
author, lecturer and a writer and director of documentary films.
O * John A Sibbald
BL (Non-executive)
John Sibbald has been a Director since 1988. After qualifying as a Chartered
Accountant he spent over 20 years in stockbroking, specialising in mining and
international investment.
John Wong (Appointed 15 October 2020)
ACA, CFA (Non-executive)
John Wong was appointed a Director on 15 October 2020. After
training as a Chartered accountant he has worked in the fund management
industry for almost 20 years and has extensive experience in investment
management, in particular within the mining sector.
* Member of the nomination committee
+ Senior independent director
O Member of the audit, nomination and remuneration committees.
Other directors and advisors
Secretary and registered office
Garrett Casey CA (SA)
24 Bruton Place
London W1J 6NE
Black Wattle Colliery and Sisonke Coal Processing Directors
Andrew Heller
(Managing Director)
Ethan Dube
Robert Grobler
Garrett Casey
Millicent Zvarayi
Company Registration
Company registration No. 112155 (Incorporated in England and Wales)
Website
www.bisichi.co.uk
E-mail
admin@bisichi.co.uk
Auditor
BDO LLP, London
Principal bankers
United Kingdom
Julian Hodge Bank Limited
Santander UK PLC
Investec PLC
South Africa
ABSA Bank (SA)
First National Bank (SA)
Corporate solicitors
United Kingdom
Ashfords LLP, London
Fladgate LLP, London
Olswang LLP, London
Wake Smith Solicitors Limited, Sheffield
South Africa
Beech Veltman Inc, Johannesburg
Brandmullers Attorneys, Middelburg
Cliffe Decker Hofmeyer, Johannesburg
Herbert Smith Freehills, Johannesburg
Natalie Napier Inc, Johannesburg
Tugendhaft Wapnick Banchetti and Partners, Johannesburg
Stockbrokers
Shore Capital Stockbrokers Limited
Registrars and transfer office
Link Group
Shareholder Services
The Registry
10th Floor
Central Square
29 Wellington Street
Leeds
LS1 4DL
UK telephone: 0871 664 0300
International telephone: +44 371 664 0300
(Calls cost 12p per minute plus your phone company’s access charge. Calls
outside the United Kingdom will be charged at the applicable international
rate). Lines are open between 9.00am to 5.30pm, Monday to Friday, excluding
public holidays in England and Wales.
Website: www.linkassetservices.com
Email: enquiries@linkgroup.co.uk
Company registration number: 341829 (England and Wales)
Five year summary
2020 £’000 2019 £’000 2018 £’000 2017 £’000 2016 £’000
Consolidated income statement items
Revenue 29,805 48,106 49,945 40,350 24,923
Operating (loss)/profit (4,493) 3,658 6,526 3,763 637
(Loss)/profit before tax (5,196) 3,027 5,959 1,485 346
Trading (loss)/profit before tax (3,881) 4,493 6,397 3,317 (74)
Revaluation and impairment (loss)/profit before tax (1,315) (1,466) (438) (1,832) 420
EBITDA (2,387) 5,868 8,587 3,734 2,415
Operating profit before depreciation, fair value adjustments and exchange movements (adjusted EBITDA) (1,111) 7,457 9,088 5,819 1,516
Consolidated balance sheet items
Investment properties 10,270 11,565 13,045 13,245 13,245
Other non-current investments 3,001 1,629 1,357 925 2,703
13,271 13,194 14,402 14,170 15,948
Current Investments held at fair value 833 1,119 887 1,050 781
14,104 14,313 15,289 15,220 16,729
Other assets less liabilities less non-controlling interests 1,969 5,619 4,280 1,922 (72)
Total equity attributable to equity shareholders 16,073 19,932 19,569 17,142 16,657
Net assets per ordinary share (attributable) 150,5p 186.7p 183.3p 160.6p 156.0p
Dividend per share 0p 1.00p 6.00p 5.00p 4.00p
Financial calendar
22 June 2021 Annual General Meeting
Late August 2021 Announcement of half-year results to 30 June 2021
Late April 2022 Announcement of results for year ending 31 December 2021
Governance
Directors’ report
The directors submit their report together with the audited financial
statements for the year ended 31 December 2020.
Review of business, future developments and post balance sheet events
The Group continues its mining activities. Income for the year was derived
from sales of coal from its South African operations. The Group also has a
property investment portfolio for which it receives rental income and a joint
venture investment in a UK residential property development.
The results for the year and state of affairs of the Group and the company at
31 December 2020 are shown on pages 51 to 95 and in the Strategic Report on
pages 2 to 22. Future developments and prospects are also covered in the
Strategic Report and further details of any post balance sheet events can be
found in note 32 to the financial statements. Over 98 per cent of staff are
employed in the South African coal mining industry – employment matters and
health and safety are dealt with in the Strategic Report.
The management report referred to in the Director’s responsibilities
statement encompasses this Directors’ Report and Strategic Report on pages 2
to 22.
Corporate responsibility
Environment
The environmental considerations of the Group’s South African coal mining
operations are covered in the Strategic Report on pages 2 to 22.
The Group’s UK activities are principally property investment whereby
premises are provided for rent to retail businesses and a joint venture
investment in a UK residential property development.
The Group seeks to provide those tenants with good quality premises from which
they can operate in an efficient and environmentally friendly manner. Wherever
possible, improvements, repairs and replacements are made in an
environmentally efficient manner and waste re-cycling arrangements are in
place at all the company’s locations.
Greenhouse Gas Emissions
Details of the Group’s greenhouse gas emissions for the year ended 31
December 2020 can be found on page 10 of the Strategic Report.
Employment
The Group’s policy is to attract staff and motivate employees by offering
competitive terms of employment. The Group provides equal opportunities to all
employees and prospective employees including those who are disabled. The
Strategic Report gives details of the Group’s activities and policies
concerning the employment, training, health and safety and community support
and social development concerning the Group’s employees in South Africa.
Dividend policy
As outlined in the Strategic report on page 2 the directors are not proposing
the payment of a final dividend (2019: 0p) for 2020. No interim dividend for
2020 has been paid (Interim 2019: 1p).
The total dividend per ordinary share for 2020 will therefore be 0p (2019: 1p)
per ordinary share.
Investment properties and other properties
The investment property portfolio is stated at its open market value of
£10,270,000 at 31 December 2020 (2019: £11,565,000) as valued by
professional external valuers. The open market value of the company’s share
of investment properties and development property inventory held at cost
included within its investments in joint ventures is £4,597,000 (2019:
£4,553,000).
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. Treasury operations
are reported at each Board meeting and are subject to weekly internal
reporting.
Directors
The directors of the company for the year were Sir Michael Heller, A R Heller,
G J Casey, C A Joll, R J Grobler (a South African citizen), J A Sibbald and J
Wong (appointed 15 October 2020).
Mr J Wong was appointed as a non-executive director by the Board on 15 October
2020 and offers himself for re-election.
Mr J Wong is a qualified Chartered Accountant and a Chartered Financial
Analyst with extensive experience in the insurance and investment management
industries. The board recommends the re-election of Mr J Wong.
The directors retiring by rotation are Mr R J Grobler and Mr A R Heller whom
offer themselves for re-election.
Mr A R Heller has been an executive director of the company since 1998. He is
a Chartered Accountant and has been employed by the Group since 1994 under a
contract of employment determinable at three months’ notice. The board
recommends the re-election of Mr AR Heller.
Mr R J Grobler was appointed as General Mine Manager by Black Wattle Colliery
(Proprietary) Ltd on 1 May 2000. He was appointed to the Board of Bisichi PLC
as Director of Mining on 22 August 2008. He has over 40 years’ experience in
the South African coal mining industry. The board recommends the re-election
of RJ Grobler.
No director had any material interest in any contract or arrangement with the
company during the year other than as shown in this report.
Directors’ shareholdings
The interests of the directors in the shares of the company, including family
and trustee holdings where appropriate, are shown on page 34 of the Annual
Remuneration Report.
Substantial interests
The following have advised that they have an interest in 3 per cent. or more
of the issued share capital of the company as at 22 April 2021:
London & Associated Properties PLC – 4,432,618 shares representing 41.52 per
cent. of the issued capital. (Sir Michael Heller is a director and shareholder
of London & Associated Properties PLC).
Sir Michael Heller – 330,117 shares representing 3.09 per cent. of the issued capital.
A R Heller – 785,012 shares representing 7.35 per cent. of the issued capital.
Stonehage Fleming Investment Management Ltd – 1,971,154 shares representing 18.46 per cent. of the issued share capital.
James Hyslop – 345,000 shares representing 3.23 per cent. of the issued share capital.
Disclosure of information to auditor
The directors in office at the date of approval of the financial statements
have confirmed that as far as 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.
Indemnities and insurance
The Articles of Association and Constitution of the company provide for them
to indemnify, to the extent permitted by law, directors and officers
(excluding the Auditor) of the companies, including officers of subsidiaries,
and associated companies against liabilities arising from the conduct of the
Group’s business. The indemnities are qualifying third-party indemnity
provisions for the purposes of the UK Companies Act 2006 and each of these
qualifying third-party indemnities was in force during the course of the
financial year ended 31 December 2020 and as at the date of this Directors’
report. No amount has been paid under any of these indemnities during the
year.
The Group has purchased directors’ and officers’ insurance during the
year. In broad terms, the insurance cover indemnifies individual directors and
officers against certain personal legal liability and legal defence costs for
claims arising out of actions taken in connection with Group business.
Corporate Governance
The Board acknowledges the importance of good corporate governance. The
paragraphs below set out how the company has applied this guidance during the
year.
Principles of corporate governance
The Group’s Board appreciates the value of good corporate governance not
only in the areas of accountability and risk management, but also as a
positive contribution to business prosperity. The Board endeavours to apply
corporate governance principles in a sensible and pragmatic fashion having
regard to the circumstances of the Group’s business. The key objective is to
enhance and protect shareholder value.
Board structure
During the year the Board comprised the executive chairman, the managing
director, two other executive directors and three non-executive directors.
Their details appear on page 23. The Board is responsible to shareholders for
the proper management of the Group. The Directors’ responsibilities
statement in respect of the accounts is set out on page 43. 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 comprises of two non-executive directors
C A Joll (Chairman) and JA Sibbald as well as 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 of two non-executive directors C A Joll (Chairman) and
JA Sibbald. The company’s executive chairman is normally invited to attend
meetings. The report on directors’ remuneration is set out on pages 32
to 39.
• The audit committee comprises of two non-executive directors C A
Joll (Chairman) and JA Sibbald. 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
consideration of any matters that could affect independence or the perception
of independence;
• a review of the auditors’ own procedures for ensuring the
independence of the audit firm and partners and staff involved in the audit,
including the regular rotation of the audit partner; and
• obtaining written confirmation from the auditors that, in their
professional judgement, they are independent.
The audit committee report is set out on page 40.
An analysis of the fees payable to the external audit firm in respect of both
audit and non-audit services during the year is set out in Note 5 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
two independent non-executive directors are John Sibbald and John Wong.
Christopher Joll has been a non-executive director for over twenty years, John
Sibbald has been a non-executive director for over thirty years and John Wong
was appointed to the Board on 15 October 2020. The Board encourages the
non-executive directors to act independently. The board considers that their
length of service does not, and has not, resulted in their inability or
failure to act independently. In the opinion of the Board, Christopher Joll
and John Sibbald continue to fulfil their role as independent non-executive
directors.
The independent directors regularly meet prior to Board meetings to discuss
corporate governance issues.
Board and board committee meetings
The number of meetings during 2020 and attendance at regular Board meetings
and Board committees was as follows:
Meetings held Meetings Attended
Sir Michael Heller Board Nomination committee Audit committee 5 1 2 5 1 2
A R Heller Board Audit committee 5 2 5 2
G J Casey Board Audit committee 5 2 5 2
R J Grobler Board 5 1
C A Joll Board Audit committee Nomination committee Remuneration committee 5 2 1 1 5 2 1 1
J A Sibbald Board Audit committee Nomination committee Remuneration committee 5 2 1 1 2 1 1 0
J Wong Board 5 1
Internal control
The directors are responsible for the Group’s system of internal control and
review of its effectiveness annually. The Board has designed the Group’s
system of internal control in order to provide the directors with reasonable
assurance that its assets are safeguarded, that transactions are authorised
and properly recorded and that material errors and irregularities are either
prevented or would be detected within a timely period. However, no system of
internal control can eliminate the risk of failure to achieve business
objectives or provide absolute assurance against material misstatement or
loss.
The key elements of the control system in operation are:
• the Board meets regularly with a formal schedule of matters
reserved to it for decision and has put in place an organisational structure
with clearly defined lines of responsibility and with appropriate delegation
of authority;
• there are established procedures for planning, approval and
monitoring of capital expenditure and information systems for monitoring the
Group’s financial performance against approved budgets and forecasts;
• UK property and financial operations are closely monitored by
members of the Board and senior managers to enable them to assess risk and
address the adequacy of measures in place for its monitoring and control. The
South African operations are closely supervised by the UK based executives
through daily, weekly and monthly reports from the directors and senior
officers in South Africa. This is supplemented by regular 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 were no significant issues identified during the year ended 31 December
2020 (and up to the date of approval of the report) concerning material
internal control issues. The directors confirm that the Board has reviewed the
effectiveness of the system of internal control as described during the
period.
Communication with shareholders
Communication with shareholders is a matter of priority. Extensive information
about the Group and its activities is given in the Annual Report, which is
made available to shareholders. Further information is available on the
company’s website, www.bisichi.co.uk. There is a regular dialogue with
institutional investors. Enquiries from individuals on matters relating to
their shareholdings and the business of the Group are dealt with informatively
and promptly.
Takeover directive
The company has one class of share capital, ordinary shares. Each ordinary
share carries one vote. All the ordinary shares rank pari passu. There are no
securities issued in the company which carry special rights with regard to
control of the company. The identity of all substantial direct or indirect
holders of securities in the company and the size and nature of their holdings
is shown under the “Substantial interests” section of this report above.
A relationship agreement dated 15 September 2005 (the “Relationship
Agreement”) was entered into between the company and London & Associated
Properties PLC (“LAP”) in regard to the arrangements between them whilst
LAP is a controlling shareholder of the company. The Relationship Agreement
includes a provision under which LAP has agreed to exercise the voting rights
attached to the ordinary shares in the company owned by LAP to ensure the
independence of the Board of directors of the company.
Other than the restrictions contained in the Relationship Agreement, there are
no restrictions on voting rights or on the transfer of ordinary shares in the
company. The rules governing the appointment and replacement of directors,
alteration of the articles of association of the company and the powers of the
company’s directors accord with usual English company law provisions. Each
director is re-elected at least every three years. The company is not party to
any significant agreements that take effect, alter or terminate upon a change
of control of the company following a takeover bid. The company is not aware
of any agreements between holders of its ordinary shares that may result in
restrictions on the transfer of its ordinary shares or on voting rights.
There are no agreements between the company and its directors or employees
providing for compensation for loss of office or employment that occurs
because of a takeover bid.
The Bribery Act 2010
The Bribery Act 2010 came into force on 1 July 2011, and the Board took the
opportunity to implement a new Anti-Bribery Policy. The company is committed
to acting ethically, fairly and with integrity in all its endeavours and
compliance of the code is closely monitored.
Annual General Meeting
The annual general meeting of the company (“Annual General Meeting”) will
be held at 24 Bruton Place, London W1J 6NE on Tuesday, 9 22 June 2021 at 11.00
a.m. Resolutions 1 to 8 will be proposed as ordinary resolutions. More than 50
per cent. of shareholders’ votes cast must be in favour for those
resolutions to be passed.
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 paragraph is a summary of resolution 9 to be
proposed at the Annual General Meeting and not the full text of the
resolution. You should therefore read this section in conjunction with the
full text of the resolutions contained in the notice of Annual General
Meeting.
Directors’ authority to allot shares (Resolution 8)
In certain circumstances it is important for the company to be able to allot
shares up to a maximum amount without needing to seek shareholder approval
every time an allotment is required. Paragraph 8.1.1 of resolution 8 would
give the directors the authority to allot shares in the company and grant
rights to subscribe for, or convert any security into, shares in the company
up to an aggregate nominal value of £355,894. This represents approximately
1/3 (one third) of the ordinary share capital of the company in issue
(excluding treasury shares) at 22 April 2021 (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 22 April 2021 (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 2022 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.
Donations
No political donations were made during the year (2019: £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.
In South Africa, the Covid-19 pandemic continues to have an impact on the
Group’s South African mining operations. In terms of business continuity,
the Group’s entities have remained in operation as the entities have been
classified as essential businesses. Although the final impact of Covid-19 is
uncertain, the directors have assessed the expected range of impact of the
pandemic on its cashflow forecasts and have a reasonable expectation that the
mine will retain adequate levels of cash to remain in operation for the
foreseeable future.
In addition, a structured trade finance facility with Absa Bank Limited for
R85million is held by Sisonke Coal Processing (Pty) Limited, a 100% subsidiary
of Black Wattle Colliery (Pty) Limited. This facility comprises of a
R85million revolving facility to cover the working capital requirements of the
Group’s South African operations. The facility is renewable annually at 25
January 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. As
a consequence, the directors believe that the Group is well placed to manage
its South African business risks successfully.
In the UK, both rental and investment income have been negatively impacted by
the pandemic. Although the final impact of the pandemic is uncertain, the
directors have assessed the range of expected impact of the pandemic on its UK
and Group cashflow forecasts. The forecasts demonstrate that the Group has
sufficient resources to meet its liabilities as they fall due for at least the
next 12 months, from the approval of the financial statements, including those
related to the Group’s UK Loan facility outlined below.
The Group holds a 5 year term facility of £3.9m with Julian Hodge Bank
Limited at an initial LTV of 40%. The loan is secured against the company’s
UK retail property portfolio. The amount repayable on the loan at year end was
£3.9million. The debt package has a five year term and is repayable at the
end of the term in December 2024. The interest cost of the loan is 4.0 % above
LIBOR. Although the final impact of the Covid-19 pandemic on the facility’s
banking covenants is uncertain, the directors have a reasonable expectation
that the Group has adequate financial resources at short notice, including
cash and listed equity investments, to ensure the existing facility’s
covenants are met on an ongoing basis.
Dragon Retail Properties Limited, the Group’s 50% owned joint venture, holds
a Santander bank loan of £1.2million secured against its investment property,
see note 14. The bank loan of £1.2million (Dragon) is secured by way of a
first charge on specific freehold property at a value of £2.13 million. The
interest cost of the loan is 2 per cent above LIBOR. A refinancing of this
loan is currently underway. The loan was repayable in January 2021 and an
extension to 31 October 2021 is currently being negotiated with Santander in
order to allow time for refinancing discussions to be concluded.
Detailed budget and cash flow forecasts for the Group’s operations
demonstrated that the Group has sufficient resources to meet its liabilities
as they fall due for at least the next 12 months. In addition, a sensitivity
analysis was performed in respect of the key assumptions underpinning the
forecasts in order to assess any possible further impact of Covid-19.
Our sensitivity analysis applied the following:
• A 100% reduction in cashflow from the South African mining
operations and a 5% reduction in pricing
• A 20% reduction in property values
• A 20% reduction in the recoverability of rent
• A 100% reduction in investment income
Although the final outcome of the impact of Covid-19 on the Group’s
operations is uncertain, when applying the above sensitivities to the
forecasts, the Group would be able to manage its business risks and have
adequate cash resources to continue in operational existence for the
foreseeable future.
As a result of the banking facilities held as well as the acceptable levels of
cash expected to be held by the Group over 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
22 April 2021
Governance
Statement of the Chairman of the remuneration committee
The remuneration committee presents its report for the year ended 31 December
2020. The report is presented in two parts in accordance with the remuneration
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 2021. During the
year, in light of the macro-economic climate and the impact of the Covid-19
Pandemic, the board determined not to award bonuses to the directors. During
the year, we also welcomed the appointment of Mr J Wong as a non-executive
director of the Company. After consideration of his duties and obligations to
the Company, the remuneration committee determined the appropriate fees to be
paid to Mr J Wong in connection with his appointment.
The second part is the Remuneration Policy which details the remuneration
policy for Directors, and 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 July 2020. The approval will continue to apply for
a 3 year period commencing from then. The committee reviewed the existing
policy and deemed that no changes were necessary to the current arrangements.
Both of the above reports have been prepared in accordance with The Large &
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
22 April 2021
Governance
Annual remuneration report
The following information has been audited:
Single total figure of remuneration for the year ended 31 December 2020:
Salaries and Fees £’000 Benefits £’000 Bonuses £’000 Long Term Incentive Awards £’000 Pension £’000 Total 2020 £’000 Total Fixed Remuneration £’000 Total Variable Remuneration £’000
Executive Directors
Sir Michael Heller 83 - - - - 83 83 -
A R Heller 495 56 - - - 551 551 -
G J Casey 154 20 - - 11 185 185 -
R Grobler 193 10 - - 16 219 219 -
Non–Executive Directors
C A Joll* 40 - - - - 40 40 -
J A Sibbald* 3 3 - - - 6 6 -
J Wong (appointed 15 October 2020) 12 - - - - 12 12 -
Total 980 88 - - 27 1,096 1,096 -
*Members of the remuneration committee for the year ended 31 December 2020
Single total figure of remuneration for the year ended 31 December 2019:
Salaries and Fees £’000 Benefits £’000 Bonuses £’000 Long Term Incentive Awards £’000 Pension £’000 Total 2019 £’000 Total Fixed Remuneration £’000 Total Variable Remuneration £’000
Executive Directors
Sir Michael Heller 83 - 200 - - 283 83 200
A R Heller 495 40 500 - - 1,035 535 500
G J Casey 149 17 200 - 20 386 186 200
R Grobler 208 12 195 - 16 431 236 195
Non–Executive Directors
C A Joll* 38 - - - - 38 38 -
J A Sibbald* 3 3 - - - 6 6 -
Total 976 72 1,095 - 36 2,179 1,084 1,095
*Members of the remuneration committee for the year ended 31 December 2019
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
J Wong October 2020 Continuous 3 months
Pension schemes and incentives
Two (2019: Two) directors have benefits under money purchase pension schemes.
Contributions in 2020 were £27,323 (2019: £36,640), see table above. There
are no additional benefits payable to any director in the event of early
retirement.
Scheme interests awarded during the year
During the year no share options were granted under share option schemes.
Share option schemes
The company currently has only one Unapproved Share Option Scheme which is not
subject to HM revenue and Customs (HMRC) approval. The 2012 scheme was
approved by the remuneration committee of the company on 28 September 2012.
Number of share options
Option price* 1 January 2020 Options granted/ (Surrendered) in 2020 31 December 2020 Exercisable from Exercisable to
The 2012 Scheme
A R Heller 87.01p 150,000 - 150,000 18/09/2015 17/09/2025
A R Heller 73.50p 150,000 - 150,000 06/02/2018 06/02/2028
G J Casey 87.01p 150,000 - 150,000 18/09/2015 17/09/2025
G J Casey 73.50p 230,000 - 230,000 06/02/2018 06/02/2028
*Middle market price at date of grant
No consideration is payable for the grant of options under the 2012 Unapproved
Share Option Scheme. There are no performance or service conditions attached
to the 2012 Unapproved Share Option scheme. No part of the award was
attributable to share price appreciation and no discretion has been exercised
as a result of share price appreciation or depreciation. During the year,
there were no changes to the exercise price or exercise period for the
options.
Payments to past directors
No payments were made to past directors in the year ended 31 December 2020
(2019: £nil).
Payments for loss of office
No payments for loss of office were made in the year ended 31 December 2020
(2019: £nil).
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
31.12.2020 1.1.2020 31.12.2020 1.1.2020
Sir Michael Heller 148,783 148,783 181,334 181,334
A R Heller 785,012 785,012 - -
R J Grobler - - - -
G J Casey 40,000 40,000 - -
C A Joll - - - -
J A Sibbald - - - -
J Wong - - - -
There are no requirements or guidelines for any director to own shares in the
Company.
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 PLC ordinary shares at 31 December 2020 was
60p (2019: 109p). During the year the share price ranged between 45p and 120p.
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 2010
to 31 December 2020.
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* %
2020 A R Heller 495 0% N/A
2019 A R Heller 1,035 34% N/A
2018 A R Heller 1,073 34% N/A
2017 A R Heller 898 25% N/A
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
Bisichi 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 and Company performance
Director Base Salary % Change 2020 v 2019 Benefits % Change 2020 v 2019 Bonuses % Change 2020 v 2019
Executive:
Sir Michael Heller 0% 0% (100%)
A R Heller 0% 40% (100%)
G J Casey 3% 18% (100%)
R Grobler (7%) (17%) (100%)
Non-Executive:
C A Joll 5% 0% 0%
J A Sibbald 0% 0% 0%
J Wong (1) N/A N/A N/A
Employee remuneration on a full-time equivalent basis:
Employees of the Company (2) 1% 33% (100%)
(1) Mr J Wong was appointed as a non-executive Director on 15 October 2020 so
the annual change is not applicable.
(2) 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 9 to the financial statements) is shown below:
2020 £’000 2019 £’000
Employee remuneration 5,890 7,783
Distribution to shareholders - 107
Statement of implementation of remuneration policy
The remuneration policy was approved at the AGM on 9 July 2020. The policy
took 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. During the year, there were no deviations
from the procedure for the implementation of the remuneration policy as set
out in the policy.
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 2020. The Company did not engage any consultants to provide
advice or services to materially assist the remuneration committee’s
considerations.
Shareholder voting
At the Annual General Meeting on 9 July 2020, there was an advisory vote on
the resolution to approve the remuneration report, other than the part
containing the remuneration policy. In addition, on 9 July 2020 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 (9 July 2020) 69.87% 30.13% -
Resolution to approve the Remuneration Policy (9 July 2020) 69.87% 30.13% -
The remuneration committee and directors have considered the percentage of
votes against the resolutions to approve the remuneration report and policy.
Reasons given by shareholders, as known by the directors, have been the level
of remuneration awarded and the general remuneration policy itself. The
remuneration committee consider the remuneration policy and performance
conditions within remain appropriate and therefore no further action has been
taken.
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 33 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 2020 AGM. The approved policy took effect from 9 July
2020. 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 No individual director will be awarded a base salary in excess of £700,000 per annum.
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 absolute 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 director will receive benefits of a value in excess of 30% of his
base salary. No specific performance conditions are attached to contractual benefits.
The value of benefits for each director for the year ended 31 December 2020 is shown
in the table on page 32.
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. There is no formal framework by which the company assesses
performance and performance conditions and measures will be assessed on an annual
basis by the remuneration committee. In determining the level of the bonus, the
remuneration committee will take into account internal and external factors and
circumstances that occur during the year under review. The performance measures
applied may be financial, non-financial, corporate, divisional or individual and in
such proportion as the remuneration committee considers appropriate to the prevailing
circumstances. The company does not consider, given the company’s size, nature and
stage of operations that a formal framework is required.
Share Options To provide executive directors with a long-term interest in the company Granted under existing schemes (see page 33) Offered at appropriate times by the remuneration committee Entitlement to share options is not subject to any specific performance conditions.
Share options will be offered by the remuneration committee as appropriate taking
into account the factors considered above in the decision making process in
determining remuneration policy. The aggregate number of shares over which options
may be granted under all of the company’s option schemes (including any options and
awards granted under the company’s employee share plans) in any period of ten years,
will not exceed, at the time of grant, 10% of the ordinary share capital of the
company from time to time. In determining the limits no account shall be taken of any
shares where the right to acquire the shares has been released, lapsed or has
otherwise become incapable of exercise. The company currently has one Share Option
Scheme (see page 33). For the 2012 scheme the remuneration committee has the ability
to impose performance criteria in respect of any new share options granted, however
there is no requirement to do so. There are no performance conditions attached to the
options already issued under the 2012 scheme, the options vest on issue and there are
no minimum hold periods for the resulting shares issued on exercise of the option.
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 No individual director will be awarded a base salary in excess of £60,000 per annum.
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 32) 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 the benefit offered is closely controlled and reviewed on
an annual basis. No director will receive benefits of a value in excess of 30% of his
base salary. No specific performance conditions are attached to contractual benefits.
Share Options Non-executive directors do not participate in the share option schemes
In order to ensure that shareholders have sufficient clarity over director
remuneration levels, the company has, where possible, specified a maximum that
may be paid to a director in respect of each component of remuneration. 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.
Details of remuneration of other company employees can be found in Note 29 to
the financial statements.
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 reports 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 related and non-audit services as set out in note 5 to the
financial statements.
Financial reporting
As part of its role, the Audit Committee assessed the audit findings that were
considered most significant to the financial statements, including those areas
requiring significant judgment and/or estimation. When assessing the
identified financial reporting matters, the committee assessed quantitative
materiality primarily by reference to profit before tax. The Board also gave
consideration to:
• the carrying value of the Group’s total assets, given that the
Group operates a principally asset based business;
• the value of revenues generated by the Group, given the importance
of production;
• Adjusted EBITDA, given that it is a key trading KPI, when
determining quantitative materiality; and
• Going concern, given the impact of Covid-19 pandemic on the
Group’s operations.
The qualitative aspects of any financial reporting matters identified during
the audit process were also considered when assessing their materiality. Based
on the considerations set out above we have considered quantitative errors
individually or in aggregate in excess of approximately £300,000 to £350,000
to be material.
External Auditors
BDO LLP held office throughout the year. In the United Kingdom the company is
provided with extensive administration and accounting services by London &
Associated Properties PLC which has its own audit committee and employs a
separate firm of external auditors, RSM UK Audit LLP. BDO South Africa Inc.
acts as the external auditor to the South African companies, and the work of
that firm was reviewed by BDO LLP for the purpose of the Group audit.
Christopher Joll
Chairman – audit committee
24 Bruton Place
London W1J 6NE
22 April 2021
Valuers’ certificates
To the directors of Bisichi PLC
In accordance with your instructions we have carried out a valuation of the
freehold property interests held as at 31 December 2020 by the company as
detailed in our Valuation Report dated 19 February 2021.
Having regard to the foregoing, we are of the opinion that the open market
value as at 31 December 2020 of the interests owned by the company was
£10,270,000 being made up as follows:
£’000
Freehold 7,875
Leasehold 2,395
10,270
Leeds 19 February 2021 Carter Towler Regulated by Royal Institute of Chartered Surveyors
Directors’ responsibilities statement
The directors are responsible for preparing the annual report and the
financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each
financial year. Under that law the directors are required to prepare the Group
financial statements in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006 and in accordance
with international financial reporting standards adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the European Union. The
directors have elected to prepare the company financial statements in
accordance with United Kingdom Generally Accepted Accounting Practice (United
Kingdom Accounting Standards and applicable law). Under company law the
directors must not approve the financial statements unless they are satisfied
that they give a true and fair view of the state of affairs of the Group and
company and of the profit or loss for the Group for that period.
In preparing these financial statements, the directors are required to:
• select suitable accounting policies and then apply them
consistently;
• make judgements and accounting estimates that are reasonable and
prudent;
• state with regard to the Group financial statements whether they
have been prepared in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006 and in accordance
with international financial reporting standards adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the European Union subject to
any material departures disclosed and explained in the financial statements;
• 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; and
• prepare a director’s report, a strategic report and director’s
remuneration report which comply with the requirements of the Companies Act
2006.
The directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the company’s transactions and disclose with
reasonable accuracy at any time the financial position of the company and
enable them to ensure that the financial statements comply with the Companies
Act 2006 and, as regards the Group financial statements, Article 4 of the IAS
Regulation. They are also responsible for safeguarding the assets of the
company and hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities. The Directors are responsible for ensuring
that the annual report and accounts, taken as a whole, are fair, balanced, and
understandable and provides the information necessary for shareholders to
assess the Group’s performance, business model and strategy.
Website publication
The directors are responsible for ensuring the annual report and the financial
statements are made available on a website. Financial statements are published
on the company’s website in accordance with legislation in the United
Kingdom governing the preparation and dissemination of financial statements,
which may vary from legislation in other jurisdictions. The maintenance and
integrity of the company’s website is the responsibility of the directors.
The directors’ responsibility also extends to the ongoing integrity of the
financial statements contained therein.
Directors’ responsibilities pursuant to DTR4
The directors confirm to the best of their knowledge:
• the Group financial statements have been prepared in accordance
with international accounting standards in conformity with the requirements of
the Companies Act 2006 and in accordance with international financial
reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it
applies in the European Union and Article 4 of the IAS Regulation and give a
true and fair view of the assets, liabilities, financial position and profit
and loss of the Group.
• the annual report includes a fair review of the development and
performance of the business and the financial position of the Group and the
parent company, together with a description of the principal risks and
uncertainties that they face.
Independent auditor’s report to the members of Bisichi Plc
Opinion on the financial statements
In our opinion:
• the financial statements give a true and fair view of the state
of the Group’s and of the Parent Company’s affairs as at 31 December 2020
and of the Group’s loss for the year then ended;
• the Group financial statements have been properly prepared in
accordance with international accounting standards in conformity with the
requirements of the Companies Act 2006;
• the Group financial statements have been properly prepared in
accordance with international financial reporting standards adopted pursuant
to Regulation (EC) No 1606/2002 as it applies in 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.
We have audited the financial statements of Bisichi Plc (the ‘Parent
Company’) and its subsidiaries (the ‘Group’) for the year ended 31
December 2020 which comprise the consolidated income statement, the
consolidated statement of other comprehensive income, the consolidated balance
sheet, the consolidated statement of changes in shareholders’ equity, the
consolidated cash flow statement, the company balance sheet, the company
statement of changes in equity and notes to the financial statements,
including a summary of significant accounting policies. The financial
reporting framework that has been applied in their preparation is applicable
law and international accounting standards in conformity with the requirements
of the Companies Act 2006 and international financial reporting standards
adopted pursuant to Regulation (EC) No 1606/2002 as it applies in 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, including Financial Reporting Standard
101 Reduced Disclosure Framework (United Kingdom Generally Accepted Accounting
Practice).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law. Our responsibilities under those
standards are further described in the Auditor’s responsibilities for the
audit of the financial statements section of our report. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion. Our audit opinion is consistent with the additional
report to the Audit Committee.
Independence
We were appointed by the members at the Annual General meeting on 09 July 2020
to audit the financial statements for the year ending 31 December 2020. The
period of total uninterrupted engagement including retenders and
reappointments is 33 years, covering the years ending 31 December 1987 to 31
December 2020. We remain independent of the Group and the Parent Company in
accordance with the ethical requirements that are relevant to our audit of the
financial statements in the UK, including the FRC’s Ethical Standard as
applied to listed public interest entities, and we have fulfilled our other
ethical responsibilities in accordance with these requirements. The non-audit
services prohibited by that standard were not provided to the Group or the
Parent Company.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors’
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate.
Management have undertaken a risk assessment and carried out various
sensitivities on the cash flow forecast to consider the impact of COVID-19 on
the Going Concern assumption. See page 58 for the Group’s disclosure on
Going Concern including a summary of trade facilities available and how the
Directors have assessed it appropriate to continue to adopt the Going Concern
basis.
Any significant changes in operations or unreasonable cash flow assumptions
used could result in the Group not being able to meet its liabilities as they
fall due. Given the current impact COVID-19 is having across the capital
markets we consider this to be a risk to the Going Concern assumption and a
key audit matter.
Our response to this key audit matter and our evaluation of the Directors’
assessment of the Group and the Parent Company’s ability to continue to
adopt the going concern basis of accounting included:
We inspected the confirmation from the South African Government that Black
Wattle Colliery is able to continue production and sale of coal in both the
domestic markets and export markets.
We performed a detailed review of management’s going concern assessment and
supporting cash flow forecast, challenging the key operating assumptions based
on 2020 and 2021 actual results and external data and market commentary, where
possible.
We tested the integrity of the forecast model checking the accuracy and
completeness of the model, including challenging the appropriateness of
estimates and assumptions with reference to empirical data and external
evidence with specific focus on the following assumptions: starting cash
balance, property prices, rent recoverability, yields achieved, pricing,
production levels and exchange rates and assessed their consistency with
approved budgets and the mine development plan, as applicable.
We discussed the potential impact of COVID-19 with management including their
assessment of risks and uncertainties associated with areas such as the
Group’s workforce, supply chain, production disruption, sales, price
volatility and the ability to renew existing facilities under such scenarios.
We formed our own assessment of risks and uncertainties based on our
understanding of the business and mining sector and compared this to
Management’s model.
We evaluated management’s sensitivity analysis and performed our own
sensitivity analysis in respect of the key assumptions underpinning the
forecasts including specific scenarios associated with COVID-19.
We have performed a reverse stress test sensitivity and note that the
breakeven point of the models (combined) would be a 72% reduction in rent,
100% reduction in investment income, 100% reduction in cash flow from SA, 30%
reduction in property valuations and a 10% decrease in coal prices.
We assessed the reasonableness of any mitigating actions identified by
Management by checking these were contractually possible, this included
reviewing the group’s banking facility contracts to vouch remedial action
should covenants be breached.
We confirmed the terms of all facilities in place and the consistency of the
forecasts with the facilities. We assessed the risk of any covenant breaches
under the base case and sensitivity scenarios.
We note that during the year covenants were breached in the mining operations
in South Africa. These covenant breaches were waived and the facility was
renewed post year end. This has been disclosed in note 20.
We reviewed post year-end operational and financial data comparing it to the
current level of operations which the Group maintains.
We reviewed the adequacy and completeness of the disclosure included within
the financial statements in respect of going concern.
Based on the work we have performed, we have not identified any material
uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the entity’s ability to continue
as a going concern for a period of at least twelve months from when the
financial statements are authorised for issue.
Our responsibilities and the responsibilities of the Directors with respect to
going concern are described in the relevant sections of this report.
Overview
Coverage 100% (2019: 100%) of Group total assets 100% (2019: 100%) of Group revenue
Key audit matters
2020 2019
Valuation of investment and development property a a
Going concern and covenant compliance a a
Materiality Group financial statements as a whole £300,000 (2019: £300,000) based on 1% of total revenue (2019: 5.4% adjusted Profit before tax)
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the Group and its
environment, including the Group’s system of internal control, and assessing
the risks of material misstatement in the financial statements. We also
addressed the risk of management override of internal controls, including
assessing whether there was evidence of bias by the Directors that may have
represented a risk of material misstatement.
The Group’s operations principally comprise property interests in the United
Kingdom and an operating mine located in South Africa. We assessed there to be
7 significant components within the Group, comprising the mine in South
Africa, corporate accounting function and property companies.
We performed a full scope audit of each of the UK property companies,
corporate accounting function and consolidation. The remaining non-significant
companies within the Group were principally subject to analytical review
procedures. Two of the significant components are joint ventures and we
carried out a full scope audit of these entities.
A BDO member firm performed a full scope audit of the mine in South Africa,
under our direction and supervision as Group auditors.
Our involvement with component auditors
For the work performed by component auditors, we determined the level of
involvement needed in order to be able to conclude whether sufficient
appropriate audit evidence has been obtained as a basis for our opinion on the
Group financial statements as a whole. Our involvement with component auditors
included the following:
· Providing detailed Group reporting instructions which were sent
to the component auditor and included the significant areas to be covered by
the audit (including areas that were considered to be key audit matters as
detailed below), and set out the information required to be reported to the
Group audit team.
· Performed a review of the component audit files and held virtual
meetings with the component audit team during the planning and completion
phases of their audit.
· Directed a site visit undertaken by the component auditors.
Instructed on specific areas to be viewed and attended a debrief call on the
results of the site visit
· The Group audit team was actively involved in the direction of
the audits performed by the component auditors for Group reporting purposes,
along with the consideration of findings and determination of conclusions
drawn. We performed our own procedures in respect of the significant risk
areas that represented Key Audit Matters in addition to the procedures
performed by the component auditor.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were
of most significance in our audit of the financial statements of the current
period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) that we identified, including those
which had the greatest effect on: the overall audit strategy, the allocation
of resources in the audit, and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters. In addition to the key audit
matter described in the Conclusions relating to going concern section, we have
determined the matter described below to be a key audit matter.
Key audit matter How the scope of our audit addressed the key audit matter
Valuation of Investment property and development property The Group holds investment property at fair value (see note 11 and Key judgements and estimates) together with further investment property held at fair value in the Group’s Dragon Retail Joint Venture (note 14). The assessment of fair value for the property portfolio is a significant judgement taken in the Annual Report and includes estimates made by the Directors, including assessment of independent third party valuations obtained for the portfolio which have a significant impact on the results of the Group. Each valuation requires consideration of the individual nature of the property, its location, its cash flows and comparable market transactions. The valuation of these properties requires assessment of the market yield as well as consideration of the current rental agreements. Any significant input inaccuracies or unreasonable bases used in these judgements (such as in respect of estimated rental value and net initial yield applied) could result in a material misstatement. There is also an inherent risk that management may influence valuation judgements. Given these factors, this was considered to be an area of focus for our audit. We assessed the competency, independence and objectivity of the Group’s independent external valuers which included making inquiries regarding interests and relationships
that may have created a threat to the valuer’s objectivity. We reviewed the scope of the valuations and confirmed that it was in accordance with the Statements of Asset
Valuation and Guidance Notes published by The Royal Institution of Chartered Surveyors. We reviewed the independent external valuation reports and confirmed their
consistency with the valuations presented in the financial statements. We met with the independent external valuers, who valued all of the Group’s investment properties,
to understand the assumptions and methodologies used in valuing these properties, the market evidence supporting the valuation assumptions and the valuation movements in
the period. We used our knowledge and experience to evaluate and challenge the valuation assumptions, methodologies and the inputs used. This included establishing our
own range of expectations for the valuation of investment property based on externally available metrics. We agreed a sample of key observable valuation inputs supplied
to and used by the external valuer and Directors to information audited by us, where applicable, or supporting market documentation. We reviewed the disclosures
contained within the financial statements, specifically including COVID-19 and the impact on the property portfolio. In particular we reviewed the risk disclosures
including the principal risks and uncertainties and key judgements and estimates. Key observations: We found that the key judgments and estimates included in the
valuation calculation to be reasonable, and the disclosures to be in line with the accounting standards.
Our application of materiality
We apply the concept of materiality both in planning and performing our audit,
and in evaluating the effect of misstatements. We consider materiality to be
the magnitude by which misstatements, including omissions, could influence the
economic decisions of reasonable users that are taken on the basis of the
financial statements.
In order to reduce to an appropriately low level the probability that any
misstatements exceed materiality, we use a lower materiality level,
performance materiality, to determine the extent of testing needed.
Importantly, misstatements below these levels will not necessarily be
evaluated as immaterial as we also take account of the nature of identified
misstatements, and the particular circumstances of their occurrence, when
evaluating their effect on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the
financial statements as a whole and performance materiality as follows:
Group financial statements Parent company financial statements
2020 £’000 2019 £’000 2020 £’000 2019 £’000
Materiality 300 300 135 135
Basis for determining materiality 1% of total revenue 5.4% of profit before tax Restricted to 45% of Group materiality Restricted to 45% of Group materiality
Rationale for the benchmark applied Revenue was used as the Group was loss making during the period As the Group was in a profit making position profit before tax was considered the most appropriate benchmark. The Parent Company materiality was capped at a percentage of Group materiality. This was to address the aggregation risk in the group audit. The Parent Company materiality was capped at a percentage of Group materiality. This was to address
the aggregation risk in the group audit.
Performance materiality 225 225 101 101
Basis for determining performance materiality Performance materiality was set at 75% of the above materiality based on our assessment of a number of factors including the expected total value of known and likely misstatements (based on past experience), our knowledge of the group’s internal controls and management’s attitude towards proposed Performance materiality was set at 75% of the above materiality level based on our assessment of a number of factors including the expected total value of known and likely misstatements (based on past experience), our knowledge of the group’s internal
adjustments. controls and management’s attitude towards proposed adjustments.
Component materiality
We set materiality for each component of the Group based on a percentage of
between 15% and 75% of Group materiality dependent on the size and our
assessment of the risk of material misstatement of that component. Component
materiality ranged from £18,000 to £225,000. In the audit of each component,
we further applied performance materiality levels of 75% of the component
materiality to our testing to ensure that the risk of errors exceeding
component materiality was appropriately mitigated.
Reporting threshold
We agreed with the Audit Committee that we would report to them all individual
audit differences in excess of £6,000 (2019: £15,000). We also agreed to
report differences below this threshold that, in our view, warranted reporting
on qualitative grounds.
Other information
The directors are responsible for the other information. The other information
comprises the information included in the annual report other than the
financial statements and our auditor’s report thereon. Our opinion on the
financial statements does not cover the other information and, except to the
extent otherwise explicitly stated in our report, we do not express any form
of assurance conclusion thereon. Our responsibility is to read the other
information and, in doing so, consider whether the other information is
materially inconsistent with the financial statements or our knowledge
obtained in the course of the audit, or otherwise appears to be materially
misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether this gives rise to a
material misstatement in the financial statements themselves. If, based on the
work we have performed, we conclude that there is a material misstatement of
this other information, we are required to report that fact.
We have nothing to report in this regard.
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed during
the course of the audit, we are required by the Companies Act 2006 and ISAs
(UK) to report on certain opinions and matters as described below.
Strategic report and Directors’ report In our opinion, based on the work undertaken in the course of the audit: · the information given in the Strategic report and the Directors’ report for the financial year for which the financial statements are prepared is consistent with the financial
statements; and · the Strategic report and the Directors’ report have been prepared in accordance with applicable legal requirements. In the light of the knowledge and understanding of the Group and Parent Company and its environment obtained in the
course of the audit, we have not identified material misstatements in the Strategic report or the Directors’ report.
Directors’ remuneration In our opinion, the part of the Directors’ remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006.
Matters on which we are required to report by exception We have nothing to report in respect of the following matters in relation to which 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.
Responsibilities of Directors
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, and for such internal
control as the Directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the Directors are responsible for
assessing the Group’s and the Parent Company’s ability to continue as a
going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the Directors either intend
to liquidate the Group or the Parent Company or to cease operations, or have
no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
Extent to which the audit was capable of detecting irregularities, including
fraud
Irregularities, including fraud, are instances of non-compliance with laws and
regulations. We design procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below:
· We gained an understanding of the legal and regulatory framework
applicable to the group and the industry in which it operates, and considered
the risk of acts by the group which were contrary to applicable laws and
regulations, including fraud. These included but were not limited to
compliance with Companies Act 2006 and international accounting standards
· We communicated relevant identified laws and regulations and
potential fraud risks to all engagement team members including the component
auditor and remained alert to any indications of fraud or non-compliance with
laws and regulations throughout the audit.
· We focused on laws and regulations that could give rise to a
material misstatement in the financial statements. Our tests included, but
were not limited to:
o agreement of the financial statement disclosures to underlying
supporting documentation;
o enquiries of management;
o review of minutes of board meetings throughout the period; and
o Obtaining an understanding of the control environment in monitoring
compliance with laws and regulations which included consideration of the South
African Mining Charter
· We gained an understanding of the key estimates and judgements
and evaluated whether there was evidence of bias by the directors.
· We also addressed the risk of management override of internal
controls, including testing journals and evaluating whether there was evidence
of bias by the directors that represented a risk of material misstatement due
to fraud.
Our audit procedures were designed to respond to risks of material
misstatement in the financial statements, recognising that the risk of not
detecting a material misstatement due to fraud is higher than the risk of not
detecting one resulting from error, as fraud may involve deliberate
concealment by, for example, forgery, misrepresentations or through collusion.
There are inherent limitations in the audit procedures performed and the
further removed non-compliance with laws and regulations is from the events
and transactions reflected in the financial statements, the less likely we are
to become aware of it.
A further description of our responsibilities is available on the Financial
Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities.
This description forms part of our auditor’s report.
Use of our report
This report is made solely to the Parent 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 Parent 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 Parent Company
and the Parent Company’s members as a body, for our audit work, for this
report, or for the opinions we have formed.
Laura Pingree (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London, United Kingdom
Date
BDO LLP is a limited liability partnership registered in England and Wales
(with registered number OC305127).
Bisichi PLC
Financial statements
51 Consolidated income statement
52 Consolidated statement of other comprehensive income
53 Consolidated balance sheet
55 Consolidated statement of changes in shareholders’ equity
56 Consolidated cash flow statement
56 Group accounting policies
65 Notes to the financial statements
89 Company balance sheet
90 Company statement of changes in equity
91 Company accounting policies
Consolidated income statement
for the year ended 31 December 2020
Notes 2020 Trading £’000 2020 Revaluations and impairment £’000 2020 Total £’000 2019 Trading £’000 2019 Revaluations and impairment £’000 2019 Total £’000
Group revenue 2 29,805 - 29,805 48,106 - 48,106
Operating costs 3 (30,916) - (30,916) (40,649) - (40,649)
Operating (loss)/profit before depreciation, fair value adjustments and exchange movements (1,111) - (1,111) 7,457 - 7,457
Depreciation 3 (2,193) - (2,193) (2,190) - (2,190)
Operating (loss)/profit before fair value adjustments and exchange movements 1 (3,304) - (3,304) 5,267 - 5,267
Exchange gains/(losses) 39 - 39 (123) - (123)
Decrease in value of investment properties 4 - (1,295) (1,295) - (1,480) (1,480)
Gain/(Loss) on investments held at fair value - 67 67 - (6) (6)
Operating (loss)/profit 1 (3,265) (1,228) (4,493) 5,144 (1,486) 3,658
Share of (loss)/profit in joint ventures 13 - (87) (87) - 20 20
(Loss)/Profit before interest and taxation (3,265) (1,315) (4,580) 5,144 (1,466) 3,678
Interest receivable 25 - 25 28 - 28
Interest payable 7 (641) - (641) (679) - (679)
(Loss)/Profit before tax 5 (3,881) (1,315) (5,196) 4,493 (1,466) 3,027
Taxation 8 1,225 177 1,402 (1,592) 160 (1,432)
(Loss)/ Profit for the year (2,656) (1,138) (3,794) 2,901 (1,306) 1,595
Attributable to:
Equity holders of the company (2,216) (1,138) (3,354) 2,352 (1,306) 1,046
Non-controlling interest 27 (440) - (440) 549 - 549
(Loss)/Profit for the year (2,656) (1,138) (3,794) 2,901 (1,306) 1,595
(Loss)/Profit per share – basic 10 (31.42p) 9.80p
(Loss)/Profit per share – diluted 10 (31.42p) 9.63p
Trading gains and losses reflect all the trading activity on mining and
property operations and realised gains. Revaluation gains and losses reflects
the revaluation of investment properties and other assets within the Group and
any proportion of unrealised gains and losses within Joint Ventures. The total
column represents the consolidated income statement presented in accordance
with IAS 1.
Financial statements
Consolidated statement of other comprehensive income
for the year ended 31 December 2020
2020 £’000 2019 £’000
(Loss)/Profit for the year (3,794) 1,595
Other comprehensive income/(expense):
Items that may be subsequently recycled to the income statement:
Exchange differences on translation of foreign operations (467) (49)
Other comprehensive income for the year net of tax (467) (49)
Total comprehensive income for the year net of tax (4,261) 1,546
Attributable to:
Equity shareholders (3,752) 1,004
Non-controlling interest (509) 542
(4,261) 1,546
Financial statements
Consolidated balance sheet
at 31 December 2020
Notes 2020 £’000 2019 £’000
Assets
Non-current assets
Investment properties 11 10,471 11,748
Mining reserves, plant and equipment 12 10,174 9,508
Investments in joint ventures accounted for using equity method 13 1,255 1,342
Other investments at fair value through profit and loss (“FVPL”) 13 1,746 287
Total non-current assets 23,646 22,885
Current assets
Inventories 16 3,445 2,432
Trade and other receivables 17 6,958 7,559
Corporation tax recoverable - 19
Investments in listed securities held at FVPL 18 833 1,119
Cash and cash equivalents 3,768 7,720
Total current assets 15,004 18,849
Total assets 38,650 41,734
Liabilities
Current liabilities
Borrowings 20 (5,110) (5,103)
Trade and other payables 19 (10,856) (7,619)
Current tax liabilities (209) (457)
Total current liabilities (16,175) (13,179)
Non-current liabilities
Borrowings 20 (3,943) (4,141)
Provision for rehabilitation 21 (1,442) (1,554)
Lease liabilities 31 (427) (232)
Deferred tax liabilities 23 (474) (2,071)
Total non-current liabilities (6,286) (7,998)
Total liabilities (22,461) (21,177)
Net assets 16,189 20,557
Equity
Share capital 24 1,068 1,068
Share premium account 258 258
Translation reserve (2,488) (2,090)
Other reserves 25 707 707
Retained earnings 16,528 19,989
Total equity attributable to equity shareholders 16,073 19,932
Non-controlling interest 27 116 625
Total equity 16,189 20,557
These financial statements were approved and authorised for issue by the board
of directors on 22 April 2021 and signed on its behalf by:
A R Heller G J
Casey Company
Registration No. 112155
Director Director
Financial statements
Consolidated statement of changes in shareholders’ equity
for the year ended 31 December 2020
Share capital £’000 Share Premium £’000 Translation reserves £’000 Other reserves £’000 Retained earnings £’000 Total £’000 Non- controlling interest £’000 Total equity £’000
Balance at 1 January 2019 1,068 258 (2,048) 707 19,584 19,569 566 20,135
Profit for the year - - - - 1,046 1,046 549 1,595
Other comprehensive income - - (42) - - (42) (7) (49)
Total comprehensive income for the year - - (42) - 1,046 1,004 542 1,546
Dividend (note 9) - - - - (641) (641) (483) (1,124)
Balance at 1 January 2020 1,068 258 (2,090) 707 19,989 19,932 625 20,557
Loss for the year - - - - (3,354) (3,354) (440) (3,794)
Other comprehensive expense - - (398) - - (398) (69) (467)
Total comprehensive expense for the year - - (398) - (3,354) (3,752) (509) (4,261)
Dividend (note 9) - - - - (107) (107) - (107)
Balance at 31 December 2020 1,068 258 (2,488) 707 16,528 16,073 116 16,189
Consolidated cash flow statement
for the year ended 31 December 2020
Year ended 31 December 2020 £’000 Year ended 31 December 2019 £’000
Cash flows from operating activities
Operating profit (4,493) 3,658
Adjustments for:
Depreciation 2,193 2,190
Unrealised loss on investment properties 1,295 1,480
(Gain)/Loss on investments held at FVPL (67) 6
Exchange adjustments (39) 123
Cash flow before working capital (1,111) 7,457
Change in inventories (1,127) (945)
Change in trade and other receivables 122 (790)
Change in trade and other payables 3,379 276
Cash generated from operations 1,263 5,998
Interest received 25 28
Interest paid (641) (679)
Income tax paid (198) (1,199)
Cash flow from operating activities 449 4,148
Cash flows from investing activities
Acquisition of reserves, property, plant and equipment (3,186) (3,172)
Investment in joint venture - -
Disposal of other investments 253 -
Acquisition of other investments (1,359) (490)
Cash flow from investing activities (4,292) (3,662)
Cash flows from financing activities
Borrowings drawn 61 3,818
Borrowings and lease liabilities repaid (239) (6,016)
Equity dividends paid (107) (641)
Minority dividends paid - (483)
Cash flow from financing activities (285) (3,322)
Net increase in cash and cash equivalents (4,128) (2,836)
Cash and cash equivalents at 1 January 2,878 5,686
Exchange adjustment 172 28
Cash and cash equivalents at 31 December (1,078) 2,878
Cash and cash equivalents at 31 December comprise:
Cash and cash equivalents as presented in the balance sheet 3,768 7,720
Bank overdrafts (secured) (4,846) (4,842)
(1,078) 2,878
Financial statements
Group accounting policies
for the year ended 31 December 2020
Basis of accounting
The results for the year ended 31 December 2020 have been prepared in
accordance with international accounting standards in conformity with the
requirements of the Companies Act 2006 and in accordance with international
financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002
as it applies in the European Union. In applying the Group’s accounting
policies and assessing areas of judgment and estimation materiality is applied
as detailed on page 40 of the Audit Committee Report. 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.
The functional currency for each entity in the Group, and for joint
arrangements and associates, is the currency of the country in which the
entity has been incorporated. Details of which country each entity has been
incorporated can be found in Note 15 for subsidiaries and Note 14 for joint
arrangements and associates.
The exchange rates used in the accounts were as follows:
£1 Sterling: Rand £1 Sterling: Dollar
2020 2019 2020 2019
Year-end rate 20.0145 18.5759 1.3663 1.3254
Annual average 21.0936 18.4326 1.2833 1.2781
Going concern
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 from date of signing.
In South Africa, the Covid-19 pandemic continues to have an impact on the
Group’s South African mining operations. In terms of business continuity,
the Group’s entities has remained in operation as the entities have been
classified as essential businesses. Although the final impact of Covid-19 is
uncertain, the directors have assessed the expected range of impact of the
pandemic on its cashflow forecasts and have a reasonable expectation that the
mine will retain adequate levels of cash to remain in operation for the
foreseeable future.
In addition, a structured trade finance facility with Absa Bank Limited for
R85million is held by Sisonke Coal Processing (Pty) Limited, a 100% subsidiary
of Black Wattle Colliery (Pty) Limited. This facility comprises of an
R85million revolving facility to cover the working capital requirements of the
Group’s South African operations. The facility is renewable annually at 25
January 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. As
a consequence, the directors believe that the Group is well placed to manage
its South African business risks successfully.
In the UK, both rental and investment income have been negatively impacted by
the pandemic. Although the final impact of the pandemic is uncertain, the
directors have assessed the range of expected impact of the pandemic on its UK
and Group cashflow forecasts. The forecasts demonstrate that the Group has
sufficient resources to meet its liabilities as they fall due for at least the
next 12 months from date of signing including those related to the Group’s
UK Loan facility outlined below.
The Group holds a 5 year term facility of £3.9m with Julian Hodge Bank
Limited at an initial LTV of 40%. The loan is secured against the company’s
UK retail property portfolio. The amount repayable on the loan at year end was
£3.8million. The debt package has a five year term and is repayable at the
end of the term. The interest cost of the loan is 4.0% above LIBOR. Although
the final impact of the Covid-19 pandemic on the new facility’s banking
covenants is uncertain, the directors have a reasonable expectation that the
Group has adequate financial resources at short notice, including cash and
listed equity investments, to ensure the existing facility’s covenants are
met on an ongoing basis.
Dragon Retail Properties Limited, the Group’s 50% owned joint venture, holds
a Santander bank loan of £1.2million secured against its investment property,
see note 14. The bank loan of £1.2million (Dragon) is secured by way of a
first charge on specific freehold property at a value of £2.13 million. The
interest cost of the loan is 2 per cent above LIBOR. A refinancing of this
loan is currently underway. The loan was repayable in January 2021 and an
extension to 31 October 2021 is currently being negotiated with Santander in
order to allow time for refinancing discussions to be concluded.
Detailed budget and cash flow forecasts for the Group’s operations
demonstrated that the Group has sufficient resources to meet its liabilities
as they fall due for at least the next 12 months. In addition, a sensitivity
analysis was performed in respect of the key assumptions underpinning the
forecasts in order to assess any possible further impact of Covid-19.
Our sensitivity analysis applied the following:
• A 100% reduction in cashflow from the South African mining
operations and a 5% reduction in pricing
• A 20% reduction in property values
• A 20% reduction in the recoverability of rent
• A 100% reduction in investment income
Although the final outcome of the impact of Covid-19 on the Group’s
operations is uncertain, when applying the above sensitivities to the
forecasts, the Group would be able to manage its business risks and have
adequate cash resources to continue in operational existence for the
foreseeable future.
As a result of the banking facilities held as well as the acceptable levels of
cash expected to be held by the Group over 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.
International Financial Reporting Standards (IFRS)
The Group has adopted all of the new and revised Standards and Interpretations
issued by the International Accounting Standards Board (“IASB”) that are
relevant to its operations and effective for accounting periods beginning 1
January 2020.
The Group has not adopted any Standards or Interpretations in advance of the
required implementation dates.
We are committed to improving disclosure and transparency and will continue to
work with our different stakeholders to ensure they understand the detail of
these accounting changes. We continue to remain committed to a robust
financial policy.
Key judgements and estimates
Areas where key estimates and judgements are considered to have a significant
effect on the amounts recognised in the financial statements include:
Life of mine and reserves
The directors consider their judgements and estimates surrounding the life of
the mine and its reserves to have significant effect on the amounts recognised
in the financial statements and to be an area where the financial statements
are subject to significant estimation uncertainty. The life of mine remaining
is currently estimated at 4 years. This life of mine is based on the Group’s
existing coal reserves including reserves acquired but subject to regulatory
approval. The Group actively seeks new opportunities to extend the life of
mine of its existing mining operations or develop new independent mining
operations in South Africa. The life of mine excludes future coal purchases
and coal reserve acquisitions. The Group’s estimates of proven and probable
reserves are prepared utilising the South African code for the reporting of
exploration results, mineral resources and mineral reserves (the SAMREC code)
and are subject to assessment by an independent Competent Person experienced
in the field of coal geology and specifically opencast and pillar coal
extraction. Estimates of coal reserves impact assessments of the carrying
value of property, plant and equipment, depreciation calculations and
rehabilitation and decommissioning provisions. There are numerous
uncertainties inherent in estimating coal reserves and changes to these
assumptions may result in restatement of reserves. These assumptions include
geotechnical factors as well as economic factors such as commodity prices,
production costs and yield.
Depreciation, amortisation of mineral rights, mining development costs and
plant & equipment
The annual depreciation/amortisation charge is dependent on estimates,
including coal reserves and the related life of mine, expected development
expenditure for probable reserves, the allocation of certain assets to
relevant ore reserves and estimates of residual values of the processing
plant. The charge can fluctuate when there are significant changes in any of
the factors or assumptions used, such as estimating mineral reserves which in
turn affects the life of mine or the expected life of reserves. Estimates of
proven and probable reserves are prepared by an independent Competent Person.
Assessments of depreciation/amortisation rates against the estimated reserve
base are performed regularly. Details of the depreciation/amortisation charge
can be found in note 12.
Provision for mining rehabilitation including restoration and de-commissioning
costs
A provision for future rehabilitation including restoration and
decommissioning costs requires estimates and assumptions to be made around the
relevant regulatory framework, the timing, extent and costs of the
rehabilitation activities and of the risk free rates used to determine the
present value of the future cash outflows. The provisions, including the
estimates and assumptions contained therein, are reviewed regularly by
management. The Group annually engages an independent expert to assess the
cost of restoration and final decommissioning as part of management’s
assessment of the provision. Details of the provision for mining
rehabilitation can be found in note 21.
Impairment
Property, plant and equipment representing the Group’s mining assets in
South Africa are reviewed for impairment when there are indicators of
impairment. The impairment test is performed using the approved Life of Mine
plan and those future cash flow estimates are discounted using asset specific
discount rates and are based on expectations about future operations. The
impairment test requires estimates about production and sales volumes,
commodity prices, proven and probable reserves (as assessed by the Competent
Person), operating costs and capital expenditures necessary to extract
reserves in the approved Life of Mine plan. Changes in such estimates could
impact recoverable values of these assets. Details of the carrying value of
property, plant and equipment can be found in note 12.
The impairment test indicated significant headroom as at 31 December 2020 and
therefore no impairment is considered appropriate. The key assumptions
include: coal prices, including domestic coal prices based on recent pricing
and assessment of market forecasts for export coal; production based on proven
and probable reserves assessed by the independent Competent Person and yields
associated with mining areas based on assessments by the Competent Person and
empirical data. An 8% reduction in average forecast coal prices or a 10%
reduction in yield would give rise to a breakeven scenario. However, the
directors consider the forecasted yield levels and pricing to be appropriate
and supportable best estimates.
Fair value measurements of investment properties
An assessment of the fair value of investment properties, is required to be
performed. In such instances, fair value measurements are estimated based on
the amounts for which the assets and liabilities could be exchanged between
market participants. To the extent possible, the assumptions and inputs used
take into account externally verifiable inputs. However, such information is
by nature subject to uncertainty. The fair value of investment property is set
out in note 11, whilst the carrying value of investments in joint ventures
which themselves include investment property held at fair value by the joint
venture is set out at note 13.
Measurement of development property
The development property included within the Group’s joint venture
investment in West Ealing Projects limited is considered by Management to fall
outside the scope of investment property. A property intended for sale in the
ordinary course of business or in the process of construction or development
for such sale, for example, property acquired exclusively with a view to
subsequent disposal in the near future or for development and resale is
expected to be recorded under the accounting standard of IAS 2 Inventories.
The directors have discussed the commercial approach with the directors of the
underlying joint venture and the current plan is to obtain further planning
permission for the development and then sell or to complete the development
and sell. The Directors therefore consider the key judgement of accounting
treatment of the property development under IAS 2 Inventories to be correct.
IAS 2 Inventories require the capitalised costs to be held at the lower of
cost or net realisable value. At 31 December 2020, the costs capitalised
within the development based on a director’s appraisal for the property
estimated the net realisable value at a surplus over the cost for the
development. The directors have reviewed the underlying inputs and key
assumptions made in the appraisal and consider them adequate. However, such
information is by nature subject to uncertainty. The cost of the development
property is set out in note 14.
Basis of consolidation
The Group accounts incorporate the accounts of Bisichi 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. On acquisition of a non-wholly owned subsidiary, the non-controlling
shareholders’ interests are initially measured at the non-controlling
interests’ proportionate share of the fair value of the subsidiaries net
assets. Thereafter, 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. For subsequent changes in
ownership in a subsidiary that do not result in a loss of control, the
consideration paid or received is recognised entirely in equity.
The definition of control assumes the simultaneous fulfilment of the following
three criteria:
• The parent company holds decision-making power over the relevant
activities of the investee,
• The parent company has rights to variable returns from the
investee, and
• The parent company can use its decision-making power to affect the
variable returns.
Investees are analysed for their relevant activities and variable returns, and
the link between the variable returns and the extent to which their relevant
activities could be influenced in order to ensure the definition is correctly
applied.
Revenue
Revenue comprises the sale of coal and property rental income. Coal revenue is
recognised when the customer has a legally binding obligation to settle under
the terms of the contract when the performance obligations have been
satisfied, which is once control of the goods has transferred to the buyer at
the delivery point. Coal Revenue is measured based on consideration specified
in the contract with a customer on a per metric tonne basis.
Export revenue is generally recognised when the product is delivered to the
export terminal location specified in the customer contract, at which point
control of the goods have been transferred to the customer. Domestic coal
revenues are generally recognised on collection by the customer from the mine
or from the mine’s rail siding when loaded into transport, where the
customer pays the transportation costs. Fulfilment costs to satisfy the
performance obligations of coal revenues such as transport and loading costs
borne by the Group from the mine to the delivery point are recoded in
operating costs.
Rental income 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. Service charges recoverable from tenants are recognised over time
as the service is rendered.
Expenditure
Expenditure is recognised in respect of goods and services received. Where
coal is purchased from third parties at point of extraction the expenditure is
only recognised when the coal is extracted and all of the significant risks
and rewards of ownership have been transferred.
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. 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 and development cost
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 included within mining reserves is not
depreciated. Other property, plant and equipment is stated at historical cost
less accumulated depreciation. The cost recognised includes the recognition of
any decommissioning assets related to property, plant and equipment.
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 costs is not charged until
production commences or the assets are put to use. On commencement of full
commercial production, depreciation is charged over the life of the associated
mine reserves extractable using the asset on a unit of production basis. The
unit of production calculation is based on tonnes mined as a ratio to proven
and probable reserves and also includes future forecast capital expenditure.
The cost recognised includes the recognition of any decommissioning assets
related to mine development.
Post production stripping
In surface mining operations, the Group may find it necessary to remove waste
materials to gain access to coal reserves prior to and after production
commences. Prior to production commencing, stripping costs are capitalised
until the point where the overburden has been removed and access to the coal
seam commences. Subsequent to production, waste stripping continues as part of
extraction process as a mining production activity. There are two benefits
accruing to the Group from stripping activity during the production phase:
extraction of coal that can be used to produce inventory and improved access
to further quantities of material that will be mined in future periods.
Economic coal extracted is accounted for as inventory. The production
stripping costs relating to improved access to further quantities in future
periods are capitalised as a stripping activity asset, if and only if, all of
the following are met:
• it is probable that the future economic benefit associated with
the stripping activity will flow to the Group;
• the Group can identify the component of the ore body for which
access has been improved; and
• the costs relating to the stripping activity associated with that
component or components can be measured reliably.
In determining the relevant component of the coal reserve for which access is
improved, the Group componentises its mine into geographically distinct
sections or phases to which the stripping activities being undertaken within
that component are allocated. Such phases are determined based on assessment
of factors such as geology and mine planning.
The Group depreciates deferred costs capitalised as stripping assets on a unit
of production method, with reference the tons mined and reserve of the
relevant ore body component or phase. The cost is recognised within Mine
development costs within the balance sheet.
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. This includes the washing plant and other key surface
infrastructure. 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 5 – 10 per cent per annum of the earlier of its useful life or the life of the mine
Motor vehicles 25 – 33 per cent per annum
Office equipment 10 – 33 per cent per annum
Provisions and contingent liabilities
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 initially recorded at present
value and the discounting effect is unwound over time as a finance cost.
Changes to the provision as a result of changes in estimates are recorded as
an increase / decrease in the provision and associated decommissioning asset.
The decommissioning asset is depreciated in line with the Group’s
depreciation policy over the life of mine. The provision includes the
restoration of the underground, opencast, surface operations and
de-commissioning of plant and equipment. 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.
Management exercises judgment in measuring the Group’s exposures to
contingent liabilities through assessing the likelihood that a potential claim
or liability will arise and where possible in quantifying the possible range
of financial outcomes. Where there is a dispute and where a reliable estimate
of the potential liability cannot be made, or where the Group, based on legal
advice, considers that it is improbable that there will be an outflow of
economic resources, no provision is recognised.
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. Payments made to
employees on the cancellation or settlement of options granted are accounted
for as the repurchase of an equity interest, i.e. as a deduction from equity.
Details of the share options in issue are disclosed in the Directors’
Remuneration Report on page 32 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, including inter-company trading balances 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. Foreign exchange
differences on intercompany loans are recorded in other comprehensive income
when the loans are not considered as trading balances and are not expected to
be repaid in the foreseeable future. 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 the transaction date.
Financial instruments
Financial assets and financial liabilities are recognised in the Group’s
consolidated statement of financial position when the Group becomes a party to
the contractual provisions of the instrument.
Financial assets
Financial assets are classified as either financial assets at amortised cost,
at fair value through other comprehensive income (“FVTOCI”) or at fair
value through profit or loss (“FVPL”) depending upon the business model
for managing the financial assets and the nature of the contractual cash flow
characteristics of the financial asset.
A loss allowance for expected credit losses is determined for all financial
assets, other than those at FVPL, at the end of each reporting period. The
Group applies a simplified approach to measure the credit loss allowance for
trade receivables using the lifetime expected credit loss provision. The
lifetime expected credit loss is evaluated for each trade receivable taking
into account payment history, payments made subsequent to year end and prior
to reporting, past default experience and the impact of any other relevant and
current observable data. The Group applies a general approach on all other
receivables classified as financial assets. The general approach recognises
lifetime expected credit losses when there has been a significant increase in
credit risk since initial recognition.
The Group derecognises a financial asset when the contractual rights to the
cash flows from the asset expire, or when it transfers the financial asset and
substantially all the risks and rewards of ownership of the asset to another
party. The Group derecognises financial liabilities when the Group’s
obligations are discharged, cancelled or have expired.
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.
Lease liabilities
For any new contracts entered into the Group considers whether a contract is,
or contains a lease. A lease is defined as ‘a contract, or part of a
contract, that conveys the right to use an asset (the underlying asset) for a
period of time in exchange for consideration’. To apply this definition the
Group assesses whether the contract contains an identified asset and has the
right to obtain substantially all of the economic benefits from use of the
identified asset throughout the period of use.
At lease commencement date, the Group recognises a right-of-use asset and a
lease liability on the balance sheet.
Right-of-use assets, excluding property head leases, have been included in
property, plant and equipment and are measured at cost, which is made up of
the initial measurement of the lease liability and any initial direct costs
incurred by the Group. The Group depreciates the right-of-use assets on a
straight-line basis from the lease commencement date to the earlier of the end
of the useful life of the right-of-use asset or the end of the lease term.
At the commencement date, the Group measures the lease liability at the
present value of the lease payments unpaid at that date, discounted using the
interest rate implicit in the lease if that rate is readily available or the
Group’s incremental borrowing rate. Liabilities relating to short term
leases are included within trade and other payables.
Lease payments included in the measurement of the lease liability are made up
of fixed payments and variable payments based on an index or rate, initially
measured using the index or rate at the commencement date. Subsequent to
initial measurement, the liability will be reduced for payments made and
increased for interest. It is re-measured to reflect any reassessment or
modification. When the lease liability is re-measured, the corresponding
adjustment is reflected in the right-of-use asset, or profit and loss if the
right-of-use asset is already reduced to zero.
Lease liabilities that arise for investment properties held under a leasehold
interest and accounted for as investment property are initially calculated as
the present value of the minimum lease payments, reducing in subsequent
reporting periods by the apportionment of payments to the lessor.
The Group has elected to account for short-term leases and leases of low-value
assets using the practical expedients available in IFRS 16. Instead of
recognising a right-of-use asset and lease liability, the payments in relation
to these are recognised as an expense in profit or loss on a straight-line
basis over the lease term.
Investments
Current financial asset investments and other investments classified as
non-current (“The investments”) comprise of shares in listed companies.
The investments are measured at fair value. Any changes in fair value are
recognised in the profit or loss account and accumulated in retained earnings.
Trade receivables
Trade receivables are accounted for at amortised cost. Trade receivables do
not carry any interest and are stated at their nominal value as reduced by
appropriate expected credit loss 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 cost 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 Group’s 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. Dividends received are credited against the investment. Joint
control is the contractually agreed sharing of control over an arrangement,
which exists only when decisions about relevant strategic and/or key operating
decisions require unanimous consent of the parties sharing control. Control
over the arrangement is assessed by the Group in accordance with the
definition of control under IFRS 10. Loans to joint ventures are classified as
non-current assets when they are not expected to be received in the normal
working capital cycle. Trading receivables and payables to joint ventures are
classified as current assets and liabilities.
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. Cost is determined using the weighted average method. Net
realisable value is based on estimated selling price less all further costs of
completion and all relevant marketing, selling and distribution costs.
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. This
includes mining reserves, plant and equipment and net investments in joint
ventures. A review involves determining whether the carrying amounts are in
excess of their recoverable amounts. An asset’s recoverable amount is
determined as the higher of its fair value less costs of disposal and its
value in use. Such reviews are undertaken on an asset-by-asset basis, except
where assets do not generate cash flows independent of other assets, in which
case the review is undertaken on a cash generating unit basis.
If the carrying amount of an asset exceeds its recoverable amount 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. Any change in carrying value is recognised
in the comprehensive income statement.
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 that are repayable on demand as per IAS 7. This includes the
structured trade finance facility held in South Africa as detailed in note 22.
These facilities are considered to form an integral part of the treasury
management of the Group and can fluctuate from positive to negative balances
during the period.
Segmental reporting
For management reporting purposes, the Group is organised into business
segments distinguishable by economic activity. The Group’s material business
segments are mining activities and investment properties. These business
segments are subject to risks and returns that are different from those of
other business segments and are the primary basis on which the Group reports
its segment information. This is consistent with the way the Group is managed
and with the format of the Group’s internal financial reporting. Significant
revenue from transactions with any individual customer, which makes up 10
percent or more of the total revenue of the Group, is separately disclosed
within each segment. All coal exports are sales to coal traders at Richard
Bay’s terminal in South Africa with the risks and rewards passing to the
coal trader at the terminal. Whilst the coal traders will ultimately sell the
coal on the international markets the Company has no visibility over the
ultimate destination of the coal. Accordingly, the export sales are recorded
as South African revenue.
Financial statements
Notes to the financial statements
for the year ended 31 December 2020
1. SEGMENTAL REPORTING
2020
Business analysis Mining £’000 Property £’000 Other £’000 Total £’000
Significant revenue customer A 9,042 - - 9,042
Significant revenue customer B 7,588 - - 7,588
Significant revenue customer C 6,291 - - 6,291
Other revenue 5,646 1,181 57 6,884
Segment revenue 28,567 1,181 57 29,805
Operating (loss)/profit before fair value adjustments & exchange movements (4,014) 658 52 (3,304)
Revaluation of investments & exchange movements 39 (1,295) 67 (1,189)
Operating profit and segment result (3,975) (637) 119 (4,493)
Segment assets 19,110 11,891 2,581 33,582
Unallocated assets
– Non-current assets 45
– Cash & cash equivalents 3,768
Total assets excluding investment in joint ventures and assets held for sale 37,395
Segment liabilities (11,919) (1,471) (19) (13,409)
Borrowings (5,253) (3,799) - (9,052)
Total liabilities (17,172) (5,270) (19) (22,461)
Net assets 14,934
Non segmental assets
– Investment in joint ventures 1,255
Net assets as per balance sheet 16,189
Geographic analysis United Kingdom £’000 South Africa £’000 Total £’000
Revenue 1,238 28,567 29,805
Operating profit/(loss) and segment result (931) (3,562) (4,493)
Depreciation (21) (2,172) (2,193)
Non-current assets excluding investments 10,516 10,129 20,645
Total net assets 13,279 2,910 16,189
Capital expenditure 36 3,435 3,471
2019
Business analysis Mining £’000 Property £’000 Other £’000 Total £’000
Significant revenue customer A 32,424 - - 32,424
Significant revenue customer B 10,985 - - 10,985
Other revenue 3,295 1,290 112 4,697
Segment revenue 46,704 1,290 112 48,106
Operating (loss)/profit before fair value adjustments & exchange movements 4,327 832 108 5,267
Revaluation of investments & exchange movements (123) (1,480) (6) (1,609)
Operating profit and segment result 4,204 (648) 102 3,658
Segment assets 18,577 12,927 1,138 32,642
Unallocated assets
– Non-current assets 30
– Cash & cash equivalents 7,720
Total assets excluding investment in joint ventures and assets held for sale 40,392
Segment liabilities (9,385) (2,382) (166) (11,933)
Borrowings (5,485) (3,759) - (9,244)
Total liabilities (14,870) (6,141) (166) (21,177)
Net assets 19,215
Non segmental assets
– Investment in joint ventures 1,342
Net assets as per balance sheet 20,557
Geographic analysis United Kingdom £’000 South Africa £’000 Total £’000
Revenue 1,402 46,704 48,106
Operating profit/(loss) and segment result (616) 4,274 3,658
Depreciation (6) (2,184) (2,190)
Non-current assets excluding investments 11,778 9,477 21,255
Total net assets 15,505 5,052 20,557
Capital expenditure 34 3,234 3,268
2. REVENUE
2020 £’000 2019 £’000
Revenue from contracts with customers:
Coal sales and processing 28,567 46,704
Service charges recoverable from tenants 156 181
Other:
Rental income 1,025 1,109
Other revenue 57 112
Revenue 29,805 48,106
Segmental mining revenue is derived principally from coal sales and is
recognised once the control of the goods has transferred from the Group to the
buyer. Segmental property revenue is derived from rental income and service
charges recoverable from tenants. This is consistent with the revenue
information disclosed for each reportable segment (see note 1). Rental income
is recognised on a straight-line basis over the term of the lease. Service
charges recoverable from tenants are recognised over time as the service is
rendered. Revenue is measured based on the consideration specified in the
contract with the customer or tenant.
3. OPERATING COSTS
2020 £’000 2019 £’000
Mining 24,645 33,468
Property 342 399
Cost of sales 24,987 33,867
Administration 8,122 8,972
Operating costs 33,109 42,839
The direct property costs are:
Direct property expense 272 358
Bad debts 70 41
342 399
Operating costs above include depreciation of £2,193,000 (2019: £2,190,000).
4. (LOSS)/GAIN ON REVALUATION OF INVESTMENT PROPERTIES
The reconciliation of the investment (deficit)/surplus to the gain on
revaluation of investment properties in the income statement is set out below:
2020 £’000 2019 £’000
Investment deficit (1,313) (1,478)
Gain/(Loss) on valuation movement in respect of head lease payments 18 (2)
Loss on revaluation of investment properties (1,295) (1,480)
5. PROFIT BEFORE TAXATION
Profit before taxation is arrived at after charging:
2020 £’000 2019 £’000
Staff costs (see note 29) 5,890 7,783
Depreciation 2,193 2,190
Exchange loss 39 123
Fees payable to the company’s auditor for the audit of the company’s annual accounts 84 61
Fees payable to the company’s auditor and its associates (2019: affiliate) for other services:
The audit of the company’s subsidiaries pursuant to legislation 26 28
Audit related services 4 1
Non-audit related services 2 7
(Increase)/Decrease in value of Inventory (1,128) (945)
The directors consider the auditors were best placed to provide the above
non-audit and 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.
6. DIRECTORS’ EMOLUMENTS
Directors’ emoluments are shown in the Directors’ remuneration report on
page 32 which is within the audited part of that report.
7. INTEREST PAYABLE
2020 £’000 2019 £’000
On bank overdrafts and bank loans 547 655
Unwinding of discount - -
Lease liabilities 26 15
Other interest payable 68 9
Interest payable 641 679
8. TAXATION
2020 £’000 2019 £’000
(a) Based on the results for the year:
Current tax - UK - -
Current tax - Overseas 12 1,570
Corporation tax - adjustment in respect of prior year – UK 2 (2)
Current tax 14 1,568
Deferred tax (1,416) (136)
Total tax in income statement charge (1,402) 1,432
(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 19.00% (2019: 19%).
The differences are explained below:
Loss/Profit on ordinary activities before taxation (5,196) 3,027
Tax on loss/profit on ordinary activities at 19.00% (2019: 19.00%) (987) 575
Effects of:
Expenses not deductible for tax purposes 23 -
Adjustment to tax rate (360) 463
Other differences (80) 396
Adjustment in respect of prior years 2 (2)
Total tax in income statement (credit) / charge (1,402) 1,432
(c) Analysis of United Kingdom and overseas tax:
United Kingdom tax included in above:
Corporation tax - -
Adjustment in respect of prior years - -
Current tax - -
Deferred tax (312) (176)
(312) (176)
Overseas tax included in above:
Current tax 12 1,570
Adjustment in respect of prior years 2 (2)
Current tax 14 1,568
Deferred tax (1,104) 40
(1,090) 1,608
Overseas tax is derived from the Group’s South African mining operation.
Refer to note 1 for a report on the Groups’ mining and South African
segmental reporting. The adjustment to tax rate arises due to the corporation
tax rate assessed in South Africa for the year being different from that in
the UK. The South African rate assessed is 28% (2019: 28%).
9. SHAREHOLDER DIVIDENDS
2020 Per share 2020 £’000 2019 Per share 2019 £’000
Dividends paid during the year relating to the prior period 1.00p 107 6.00p 641
Dividends relating to the current period:
Interim dividend for 2019 paid on 14 February 2020 - - 1.00p 107
- - 1.00p 107
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
2019, is accounted for as an appropriation of retained earnings in the year
ending 31 December 2020.
10. (LOSS)/PROFIT AND DILUTED (LOSS)/PROFIT PER SHARE
Both the basic and diluted (loss)/profit per share calculations are based on a
loss after tax of £3,354,000 (2019: profit of £1,046,000). The basic
(loss)/profit per share has been calculated on a weighted average of
10,676,839 (2019: 10,676,839) 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 10,676,839 (2019: 10,676,839) plus the
dilutive potential ordinary shares arising from share options of Nil (2019:
183,920) totalling 10,676,839 (2019: 10,860,759).
11. INVESTMENT PROPERTIES
Freehold £’000 Long Leasehold £’000 Head Lease £’000 Total £’000
Valuation at 1 January 2020 9,020 2,545 183 11,748
Revaluation (1,145) (150) 18 (1,277)
Valuation at 31 December 2020 7,875 2,395 201 10,471
Valuation at 1 January 2019 10,350 2,695 185 13,230
Revaluation (1,330) (150) (2) (1,482)
Valuation at 31 December 2019 9,020 2,545 183 11,748
Historical cost
At 31 December 2020 5,851 728 - 6,579
At 31 December 2019 5,851 728 - 6,579
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:
2020 £’000 2019 £’000
Carter Towler 10,270 11,565
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 significant 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 unobservable inputs Carrying/ fair value 2020 £’000 Carrying/ fair value 2019 £’000 Range (weighted average) 2020 Range (weighted average) 2019
Freehold – external valuation Income capitalisation Estimated rental value per sq ft p.a 7,875 9,020 £6 – £27 (£19) £7 – £26 (£19)
Equivalent Yield 9.4% – 16.7% (11.8%) 8.4% – 13.8% (10.7%)
Long leasehold – external valuation Income capitalisation Estimated rental value per sq ft p.a 2,395 2,545 £8 – £8 (£8) £8 – £8 (£8)
Equivalent yield 8.9% – 8.9% (8.9%) 8.2% – 8.2% (8.2%)
At 31 December 2020 10,270 11,565
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
2020 £’000 2019 £’000 2020 £’000 2019 £’000
Freehold – external valuation 788 / (788) 902 / (902) 185 / (177) 235 / (223)
Long Leasehold – external valuation 240 / (240) 255 / (255) 69 / (65) 80 / (76)
12. 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 2020 1,226 26,674 361 175 28,436
Exchange adjustment (88) (1,733) (25) (6) (1,852)
Additions - 3,430 36 5 3,471
Disposals - - - - -
Cost at 31 December 2020 1,138 28,371 372 174 30,055
Accumulated depreciation at 1 January 2020 1,212 17,405 171 140 18,928
Exchange adjustment (89) (1,136) (10) (5) (1,240)
Charge for the year - 2,130 54 9 2,193
Disposals - - - - -
Accumulated depreciation at 31 December 2020 1,123 18,399 215 144 19,881
Net book value at 31 December 2020 15 9,972 157 30 10,174
Cost at 1 January 2019 1,240 26,148 253 163 27,804
Exchange adjustment (14) (293) (1) (2) (310)
Additions - 3,131 123 14 3,268
Disposals - (2,312) (14) - (2,326)
Cost at 31 December 2019 1,226 26,674 361 175 28,436
Accumulated depreciation at 1 January 2019 1,213 17,777 151 132 19,273
Exchange adjustment (14) (193) (1) (1) (209)
Charge for the year 13 2,133 35 9 2,190
Disposals - (2,312) (14) - (2,326)
Accumulated depreciation at 31 December 2019 1,212 17,405 171 140 18,928
Net book value at 31 December 2019 14 9,269 190 35 9,508
Included in the above line items are right-of-use assets over the following:
Mining Equipment and development costs £’000 Motor vehicles £’000 Total £’000
Net book value at 1 January 2020 52 29 81
Additions 248 36 284
Exchange adjustment (18) - (18)
Depreciation (19) (20) (39)
Net book value at 31 December 2020 263 45 308
Net book value at 1 January 2019 - - -
IFRS 16 Reclassification 57 - 57
Additions 5 33 38
Exchange adjustment (1) - (1)
Depreciation (9) (4) (13)
Net book value at 31 December 2019 52 29 81
13. INVESTMENTS HELD AS NON-CURRENT ASSETS
2020 Net investment in joint ventures assets £’000 2020 Other £’000 2019 Net investment in joint ventures assets £’000 2019 Other £’000
At 1 January 1,342 287 1,322 35
Share of (loss)/gain in investment - 201 - (3)
Additions - 1,359 - 255
Disposals - (101) - -
Share of (loss)/gain in joint ventures (87) - 20 -
Net assets at 31 December 1,255 1,746 1,342 287
2020 £’000 2019 £’000
Net book value of unquoted investments - -
Net book and market value of investments listed on stock exchanges in the United Kingdom 959 -
Net book and market value of investments listed on overseas stock exchanges 787 287
1,746 287
14. 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 £670,000 (2019: £806,000). 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 (2019: 500,000) ordinary shares of £1 each. No dividends were
received during the period. It holds a Santander bank loan of £1.2million
secured against its investment property. The bank loan of £1.2million
(Dragon) is secured by way of a first charge on specific freehold property at
a value of £2.13 million. The interest cost of the loan is 2 per cent above
LIBOR. A refinancing of this loan is currently underway. The loan was
repayable in January 2021 and an extension to 31 October 2021 is currently
being negotiated with Santander in order to allow time for refinancing
discussions to be concluded.
West Ealing Projects Limited
The company owns 50% of the issued share capital of West Ealing Projects
Limited, an unlisted property development company. At year end, the carrying
value of the investment held by the Group was £585,000 (2019: £536,000). The
remaining 50% is held by London & Associated Properties PLC. West Ealing
Projects Limited is incorporated in England and Wales and its registered
address is 24 Bruton Place, London, W1J 6NE. It has issued share capital of
1,000,000 (2019: £1,000,000) ordinary shares of £1 each. No dividends were
received during the period.
Dragon £’000 West Ealing £’000 2020 £’000 Dragon £’000 Restated West Ealing £’000 Restated 2019 £’000 Restated
Turnover 143 192 335 - 150 150
Profit and loss:
(Loss)/Profit before depreciation, interest and taxation (280) 100 (180) 34 74 108
Depreciation and amortisation (10) - (10) (14) - (14)
(Loss)/Profit before interest and taxation (290) 100 (190) 20 74 94
Interest Income - - - - - -
Interest expense (28) - (28) (34) - (34)
(Loss)/Profit before taxation (318) 100 (218) (14) 74 60
Taxation 44 - 44 (4) (16) (20)
(Loss)/Profit after taxation (274) 100 (174) (18) 58 40
Balance sheet
Non-current assets 2,146 - 2,146 2,458 - 2,458
Cash and cash equivalents 12 27 39 104 22 1,026
Property inventory - 7,056 7,056 - 6,666 6,666
Other current assets 460 103 563 344 58 402
Other current liabilities (92) (5,962) (6,054) (80) (2,068) (2,148)
Net current assets 380 1,224 1,604 368 4,678 5,046
Non-current borrowings (1,186) (54) (1,240) (1,176) (3,606) (4,782)
Other non-current liabilities - - - (38) - (38)
Net assets at 31 December 1,340 1,170 2,510 1612 1,072 2,684
Share of net assets at 31 December 670 585 1,255 806 536 1,342
Prior year figures in the above table have been restated to show 100% of the
Group’s joint venture’s financial position rather than Group’s share of
50%.
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
Directly held:
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
Bisichi Coal Mining (Pty) Limited Coal mining 100% Samora Machel Street, Bethal Road, Middelburg, Mpumalanga, 1050 South Africa
Indirectly held:
Black Wattle Colliery (Pty) Limited Coal mining 62.5% Samora Machel Street, Bethal Road, Middelburg, Mpumalanga, 1050 South Africa
Sisonke Coal Processing (Pty) Limited Coal processing 62.5% 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
2020 £’000 2019 £’000
Coal
Washed 2,924 2,037
Mining Production 394 135
Work in progress 111 215
Other 16 45
3,445 2,432
17. TRADE AND OTHER RECEIVABLES
2020 £’000 2019 £’000
Financial assets falling due within one year:
Trade receivables 5,155 5,922
Amount owed by joint venture 952 840
Other receivables 680 714
Non-financial instruments falling due within one year:
Prepayments and accrued income 171 83
6,958 7,559
Financial assets falling due within one year are held at amortised cost. The
fair value of trade and other receivables approximates their carrying amounts.
The Group applies a simplified approach to measure the credit loss allowance
for trade receivables using the lifetime expected credit loss provision. The
lifetime expected credit loss is evaluated for each trade receivable taking
into account payment history, payments made subsequent to year end and prior
to reporting, past default experience and the impact of any other relevant and
current observable data. The Group applies a general approach on all other
receivables classified as financial assets. At year end, the Group allowance
for doubtful debts provided against trade receivables was £91,000 (2019:
£23,000).
18. INVESTMENTS IN LISTED SECURITIES HELD AT FVPL
2020 £’000 2019 £’000
Market value of listed Investments:
Listed in Great Britain 567 863
Listed outside Great Britain 266 256
833 1,119
Original cost of listed investments 1,098 1,150
Unrealised surplus / deficit of market value versus cost (265) (31)
19. TRADE AND OTHER PAYABLES
2020 £’000 2019 £’000
Trade payables 7,168 3,902
Amounts owed to joint ventures 156 148
Lease liabilities (Note 31) 81 30
Other payables 1,839 1,926
Accruals 1,374 1,400
Deferred Income 238 213
10,856 7,619
20. FINANCIAL LIABILITIES – BORROWINGS
Current Non-current
2020 £’000 2019 £’000 2020 £’000 2019 £’000
Bank overdraft (secured) 4,846 4,842 - -
Bank loan (secured) 264 261 3,943 4,141
5,110 5,103 3,943 4,141
2020 £’000 2019 £’000
Bank overdraft and loan instalments by reference to the balance sheet date:
Within one year 5,110 5,103
From one to two years 128 270
From two to five years 3,815 3,871
9,053 9,244
Bank overdraft and loan analysis by origin:
United Kingdom 3,799 3,759
Southern Africa 5,254 5,485
9,053 9,244
In South Africa, an R85million trade facility is held with Absa Bank Limited
by Sisonke Coal Processing (Pty) Limited (“Sisonke Coal Processing”) in
order to cover the working capital requirements of the Group’s South African
operations. The interest cost of the loan is at the South African prime
lending rate plus 3.8% The facility is renewable annually each January, is
repayable on demand and is 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 £11,254,605. All banking covenants were either adhered to or waived by
Absa Bank Limited during the year.
In the UK, the Group holds a £3.96million term loan facility with Julian
Hodge Bank Limited. The loan is secured against the Group’s UK retail
property portfolio. The debt package has a five year term and is repayable at
the end of the term in December 2024. The interest cost of the loan is 4.00%
above LIBOR. The loan is 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 £10,270,000. No banking covenants were breached by the Group during the
year.
Consistent with others in the mining and property industry, the Group monitors
its capital by its gearing levels. This is calculated as the total bank loans
and overdraft less remaining cash and cash equivalents as a percentage of
equity. At year end the gearing of the Group was calculated as follows:
2020 £’000 2019 £’000
Total bank loans and overdraft 9,053 9,244
Less cash and cash equivalents (excluding overdraft) (3,768) (7,720)
Net debt 5,285 1,524
Total equity attributable to shareholders of the parent 16,073 19,932
Gearing 32.9% 7.6%
Analysis of the changes in liabilities arising from financing activities:
Bank borrowings £’000 Bank overdrafts £’000 Lease liabilities £’000 2020 £’000 Bank borrowings £’000 Bank overdrafts £’000 Lease liabilities £’000 2019 £’000
Balance at 1 January 4,402 4,842 262 9,506 6,592 3,535 185 10,312
Exchange adjustments (56) (330) (18) (404) (8) (49) - (57)
Cash movements excluding exchange adjustments (139) 334 (39) 156 (2,182) 1,356 (16) (842)
Additions - - 303 303 - - 93 93
Balance at 31 December 4,207 4,846 508 9,561 4,402 4,842 262 9,506
21. PROVISION FOR REHABILITATION
2020 £’000 2019 £’000
As at 1 January 1,554 1,571
Exchange adjustment (112) (17)
Increase in provision - -
Unwinding of discount - -
As at 31 December 1,442 1,554
22. 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:
Financial Assets measured at amortised cost £’000 Financial Liabilities measured at amortised cost £’000 Investments held at FVPL £’000 2020 £’000 Financial Assets measured at amortised cost £’000 Financial Liabilities measured at amortised cost £’000 Investments held at FVPL £’000 2019 £’000
Cash and cash equivalents 3,768 - - 3,768 7,720 - - 7,720
Non-current other investments held at FVPL - - 1,746 1,746 - - 287 287
Investments in listed securities held at FVPL - - 833 833 - - 1,119 1,119
Trade and other receivables 6,787 - - 6,787 7,476 - - 7,476
Bank borrowings and overdraft - (9,053) - (9,053) - (9,244) - (9,244)
Lease Liabilities - (508) - (508) - (262) - (262)
Other liabilities - (10,746) - (10,746) - (7,833) - (7,833)
10,555 (20,307) 2,579 (7,173) 15,196 (17,339) 1,406 (737)
Investments in listed securities held at fair value through profit and loss
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.
The comparative figures for 2019 fall under the same category of financial
instrument as 2020.
The carrying amount of short term (less than 12 months) trade receivable and
other liabilities approximate their fair values. The fair value of non-current
borrowings in note 20 approximates its carrying value and was determined under
level 2 of the fair value hierarchy and is estimated by discounting the future
contractual cash flows at the current market interest rates for UK borrowings
and for the South African overdraft facility. The fair value of the lease
liabilities in note 31 approximates its carrying value and was determined
under level 2 of the fair value hierarchy and is estimated by discounting the
future contractual cash flows at the current market interest rates.
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 2020, with other variables unchanged, a 1% increase or
decrease in interest rates, on investments and borrowings whose interest rates
are not fixed, would respectively change the profit/loss for the year by
£37,000 (2019: £107,000). The effect on equity of this change would be an
equivalent decrease or increase for the year of £37,000 (2019: £107,000).
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 PLC and in South Africa in Black Wattle Colliery (Pty) Ltd.
The following table sets out the maturity profile of contractual undiscounted
cash flows of financial liabilities as at 31 December:
2020 £’000 2019 £’000
Within one year 16,174 13,183
From one to two years 371 458
From two to five years 4,268 4,304
Beyond five years 232 135
21,045 18,080
The following table sets out the maturity profile of contractual undiscounted
cash flows of financial liabilities as at 31 December maturing within one
year:
2020 £’000 2019 £’000
Within one month 13,088 10,164
From one to three months 2,106 2,120
From four to twelve months 980 899
16,174 13,183
In South Africa, an R85million trade facility is held with Absa Bank Limited
by Sisonke Coal Processing (Pty) Limited (“Sisonke Coal Processing”) in
order to cover the working capital requirements of the Group’s South African
operations. The interest cost of the loan is at the South African prime
lending rate plus 3.8% The facility is renewable annually each January, is
repayable on demand and is secured against inventory, debtors and cash that
are held by Sisonke Coal Processing (Pty) Limited. The facility is included in
cash and cash equivalents within the cashflow statement.
In the UK, the Group holds a £3.96million term loan facility with Julian
Hodge Bank Limited. The loan is secured against the Group’s UK retail
property portfolio. The debt package has a five year term and is repayable at
the end of the term in December 2024. The interest cost of the loan is 4.00%
above LIBOR.
As a result 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 mainly 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 £10,555,000 (2019: £15,173,000).
To mitigate risk on its cash and cash equivalents, the Group only deposits
surplus cash with well-established financial institutions of high quality
credit standing.
The Group’s credit risk is primarily attributable to its trade receivables.
Trade debtor’s credit ratings are reviewed regularly. The Group's review
includes measures such as the use of external ratings and establishing
purchase limits for each customer. The Group had amounts due from its
significant revenue customers at the year end that represented 68% (2019: 73%)
of the trade receivables balance. These amounts have been subsequently
settled. The Group approach to measure the credit loss allowance for trade
receivables is outlined in note 17. At year end, the Group allowance for
doubtful debts provided against trade receivables was £91,000 (2019:
£21,000). As at year end the amount of trade receivables held past due date
less credit loss allowances was £282,000 (2019: £23,000). To date, the
amount of trade receivables held past due date less credit loss allowances
that has not subsequently been settled is £155,000 (2019: £14,000).
Management have no reason to believe that this amount will not be settled.
The Group exposure to credit risk on its loans to joint ventures and other
receivables is mitigated through ongoing review of the underlying performance
and resources of the counterparty including evaluation of different scenarios
of probability of default and expected loss applicable to each of the
underlying balances.
Financial assets maturity
On 31 December 2020, cash at bank and in hand amounted to £3,768,000 (2019:
£7,697,000) 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.
Foreign exchange risk
All trading is undertaken in the local currencies except for certain export
sales which are invoiced in dollars. It is not the Group’s policy to obtain
forward contracts to mitigate foreign exchange risk on these contracts as
payment terms are within 15 days of invoice or earlier. Funding is also in
local currencies other than inter-company investments and loans and it is also
not the Group’s policy to obtain forward contracts to mitigate foreign
exchange risk on these amounts. During 2020 and 2019 the Group did not hedge
its exposure of foreign investments held in foreign currencies.
The principal currency risk to which the Group is exposed in regard to
inter-company balances is the exchange rate between Pounds sterling and South
African Rand. It arises as a result of the retranslation of Rand denominated
inter-company trade receivable balances held within the UK which are payable
by South African Rand functional currency subsidiaries.
Based on the Group’s net financial assets and liabilities as at 31 December
2020, a 25% strengthening of Sterling against the South African Rand, with all
other variables held constant, would decrease the Group’s profit after
taxation by £360,000 (2019: £176,000). A 25% weakening of Sterling against
the South African Rand, with all other variables held constant would increase
the Group’s profit after taxation by £601,000 (2019: £294,000).
The 25% sensitivity has been determined based on the average historic
volatility of the exchange rate for 2019 and 2020.
The table below shows the currency profiles of cash and cash equivalents:
2020 £’000 2019 £’000
Sterling 1,641 4,741
South African Rand 809 1,672
US Dollar 1,318 1,307
3,768 7,720
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:
2020: Sterling £’000 South African Rands £’000
Sterling (70) -
South African Rand 39 (8,878)
US Dollar 1,736 -
1,705 (8,878)
2019: Sterling £’000 South African Rands £’000
Sterling 1,151 -
South African Rand 40 (3,510)
US Dollar 1,582 -
2,773 (3,510)
23. DEFERRED TAXATION
2020 £’000 2019 £’000
As at 1 January 2,071 2,226
Recognised in income (1,416) (136)
Exchange adjustment (181) (19)
As at 31 December 474 2,071
The deferred tax balance comprises the following:
Revaluation of properties 299 476
Capital allowances 2,478 2,419
Short term timing difference (692) (707)
Unredeemed capital deductions (645) -
Losses and other deductions (966) (117)
474 2,071
Refer to note 8 for details of deferred tax recognised in income in the
current year. Tax rates of 19% (2019: 17%) in the UK and 28% (2019: 28%) in
South Africa were utilised to calculate year end deferred tax balances.
24. SHARE CAPITAL
2020 £’000 2019 £’000
Authorised: 13,000,000 ordinary shares of 10p each 1,300 1,300
Allotted and fully paid:
2020 Number of ordinary shares 2019 Number of ordinary shares 2020 £’000 2019 £’000
At 1 January and outstanding at 31 December 10,676,839 10,676,839 1,068 1,068
25. OTHER RESERVES
2020 £’000 2019 £’000
Equity share options 621 621
Net investment premium on share capital in joint venture 86 86
707 707
26. SHARE BASED PAYMENTS
Details of the share option scheme are shown in the Directors’ remuneration
report on page 33 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 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 2019 Number of share options lapsed/surrendered /awarded during year Number of share for which options outstanding at 31 December 2020
2015 87.0p Sep 2015 – Sep 2025 300,000 - 300,000
2018 73.50p Feb 2018 – Feb 2028 380,000 - 380,000
There are no performance or service conditions attached to 2015 and 2018
options which are outstanding at 31 December 2020.
2020 Number 2020 Weighted average exercise price 2019 Number 2019 Weighted average exercise price
Outstanding at 1 January 680,000 79.46p 680,000 79.46p
Lapsed/Surrendered during the year - - - -
Issued during the year - - - -
Outstanding at 31 December 680,000 79.46p 680,000 79.46p
Exercisable at 31 December 680,000 79.46p 680,000 79.46p
27. NON-CONTROLLING INTEREST
2020 £’000 2019 £’000
As at 1 January 625 566
Share of (loss)/profit for the year (440) 549
Dividends paid - (483)
Exchange adjustment (69) (7)
As at 31 December 116 625
The non-controlling interest comprises of a 37.5% interest in Black Wattle
Colliery (Pty) Ltd and its wholly owned subsidiary Sisonke Coal Processing
(Pty) Ltd. Black Wattle Colliery (Pty) Ltd is a coal mining company and
Sisonke Coal Processing (Pty) Ltd is a coal processing company both
incorporated in South Africa. Summarised financial information reflecting 100%
of the underlying consolidated relevant figures of Black Wattle Colliery (Pty)
Ltd’s and its wholly owned subsidiary Sisonke Coal Processing (Pty) Ltd is
set out below.
2020 £’000 2019 £’000
Revenue 28,555 46,706
Expenses (31,498) (43,040)
Profit/(loss) for the year (2,943) 3,666
Other comprehensive Income - -
Total comprehensive income for the year (2,943) 3,666
Balance sheet
Non-current assets 10,130 9,480
Current assets 9,781 10,462
Current liabilities (16,915) (12,087)
Non-current liabilities (2,224) (3,682)
Net assets at 31 December 772 4,173
The non-controlling interest originates from the disposal of a 37.5%
shareholding in Black Wattle Colliery (Pty) Ltd in 2010 when the total issued
share capital in Black Wattle Colliery (Pty) Ltd was increased from 136 shares
to 1,000 shares at par of R1 (South African Rand) through the following shares
issue:
- a subscription for 489 ordinary shares at par by Bisichi Mining
(Exploration) Limited increasing the number of shares held from 136 ordinary
shares to a total of 625 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
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 December During the year
Amounts owed to related party £’000 Amounts owed by related party £’000 Costs recharged (to)/by related party £’000 Cash paid (to)/by related party £’000
Related party:
London & Associated Properties PLC (note (a)) 43 - 200 (190)
West Ealing Projects Limited (note (b)) - (952) - (112)
Dragon Retail Properties Limited (note (c)) 156 - (36) 44
As at 31 December 2020 199 (952) 164 (258)
London & Associated Properties PLC (note (a)) 33 - 200 (170)
West Ealing Projects Limited (note (b)) - (840) - (88)
Dragon Retail Properties Limited (note (c)) 149 - - (44)
As at 31 December 2019 182 (840) 200 (302)
(a) London & Associated Properties PLC – London & Associated Properties
PLC (“LAP”) is a substantial shareholder and parent company of Bisichi
PLC. Property management, office premises, general management, accounting and
administration services are provided for Bisichi PLC and its UK subsidiaries.
Bisichi PLC continues to operate as a fully independent company and currently
LAP owns only 41.52% of the issued ordinary share capital. However, LAP is
deemed under IFRS 10 to have effective control of Bisichi PLC for accounting
purposes.
(b) West Ealing Projects Limited – West Ealing Projects Limited (“West
Ealing”) is an unlisted property company incorporated in England and Wales.
West Ealing is owned equally by the company and London & Associated Properties
PLC and is accounted as a joint venture and treated as a non-current asset
investment.
(c) Dragon Retail Properties Limited – (“Dragon”) is owned equally by
the company and London & Associated Properties PLC. Dragon is accounted as a
joint venture and is treated as a non-current asset investment.
Key management personnel comprise of the directors of the company who have the
authority and responsibility for planning, directing, and controlling the
activities of the company. Details of key management personnel compensation
and interest in share options are shown in the Directors’ Remuneration
Report on pages 32 and 33 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 £97,000 (2019: £223,000).
In 2012 a loan was made to one of the directors, Mr A R Heller, for £116,000.
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. The loan amount
outstanding at year end was £41,000 (2019: £41,000) and no repayment (2019:
£nil) was made during the year.
The non-controlling interest to Vunani Limited is shown in note 27. In
addition, the Group holds an investment in Vunani Limited classified as
non-current available for sale investments with a fair value of £37,000
(2019: £38,000).
29. EMPLOYEES
2020 £’000 2019 £’000
Staff costs during the year were as follows:
Salaries 5,512 7,251
Social security costs 97 223
Pension costs 281 309
Share based payments - -
5,890 7,783
2020 2019
The average weekly numbers of employees of the Group during the year were as follows:
Production 221 204
Administration 15 15
236 219
30. CAPITAL COMMITMENTS
2020 £’000 2019 £’000
Commitments for capital expenditure approved and contracted for at the year end 485 -
31. LEASE LIABILITIES AND FUTURE PROPERTY LEASE RENTALS
The lease liabilities are secured by the related underlying assets. The
undiscounted maturity analysis of lease payments at 31 December 2020 is as
follows:
Mining Equipment & Development costs £’000 Motor Vehicles £’000 Head Lease Property £’000 2020 £’000 2019 £’000
Within one year 41 30 13 84 35
Second to fifth year 170 16 50 236 117
After five years 132 - 1,548 1,680 1,419
343 46 1,611 2,000 1,571
Discounting adjustment (81) (1) (1,410) (1,492) (1,309)
Present value 262 45 201 508 262
The present value of minimum lease payments at 31 December 2020 is as follows:
Mining Equipment & Development costs £’000 Motor Vehicles £’000 Head Lease Property £’000 2020 £’000 2019 £’000
Within one year (Note 19) 40 29 12 81 30
Second to fifth year 139 16 40 195 96
After five years 83 - 149 232 136
Present value 262 45 201 508 262
With the exception of short-term leases and leases of low-value underlying
assets, each lease is reflected on the balance sheet as a right-of-use asset
and a lease liability. The Group classifies its right-of-use assets in a
consistent manner to its property, plant and equipment. Lease liabilities due
within one year are classified within trade and other payables in the balance
sheet.
The Group has one lease for mining equipment in South Africa and one lease for
motor vehicles in the United Kingdom. Both leases have terms of less than 5
years are either non-cancellable or may only be cancelled by incurring a
substantive termination fee. Lease payments for mining equipment are subject
to changes in consumer price inflation in South Africa.
The Group has one lease contract for an investment property. The remaining
term for the leased investment property is 128 years. The annual rent payable
is the higher of £7,500 or 6.25% of the revenue derived from the leased
assets.
The Group has entered into rental leases on its investment property portfolio
consisting mainly of commercial properties. These leases have terms of between
1 and 107 years. All leases include a clause to enable upward revision of the
rental charge on an annual basis according to prevailing market conditions.
The future aggregate minimum rentals receivable under non-cancellable
operating leases are as follows:
2020 £’000 2019 £’000
Within one year 814 856
Second year 711 724
Third year 590 614
Fourth year 536 478
Fifth year 471 433
After five years 9,562 9,673
12,684 12,778
32. CONTINGENT LIABILITIES AND POST BALANCE SHEET EVENTS
Bank Guarantees
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:
2020 £’000 2019 £’000
Rail siding 50 54
Rehabilitation of mining land 1,441 1,553
Water & electricity 48 52
Covid-19 Pandemic
The Group’s operations both in the United Kingdom and in South Africa
continue to be impacted by the Covid-19 pandemic.
In South Africa the Group has been impacted by additional health and safety
measures related to its workforce and stakeholders and risks related to
business continuity and coal price. As at 22 April 2021, the Group’s South
African mining operations have remained in operation as the entities have been
classified as essential businesses. In 2021 to date, demand for our particular
coal and coal prices have remained stable. Looking forward, the duration and
extent of the impact of the Covid-19 pandemic on our South African operations,
particularly in terms of our coal markets, continue to remains uncertain.
In the UK, we have seen the Covid-19 pandemic have a significant impact on
rental revenue collections from the Group’s UK retail property portfolio and
property valuations. Although the final impact of the pandemic on the
portfolio remains uncertain, we expect much of the portfolio to recover once
tenants are allowed to fully resume operating.
Although the final impact of Covid-19 is uncertain and an estimate of the
overall financial effect cannot be made, 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.
Contingent tax liability
The interpretation of laws and regulations in South Africa where the Group
operates can be complex and can lead to challenges from or disputes with
regulatory authorities. Such situations often take significant time to
resolve. Where there is a dispute and where a reliable estimate of the
potential liability cannot be made, or where the Group, based on legal advice,
considers that it is improbable that there will be an outflow of economic
resources, no provision is recognised.
Black Wattle Colliery (Pty) Ltd is currently involved in a tax dispute in
South Africa related to VAT. The dispute arose during the year and is related
to events which occurred prior to the years ended 31 December 2020. As at 22
April 2021, the Group has been advised that it has a strong legal case, that
it has complied fully with the legislation and, therefore, no economic outflow
is expected to occur. Because of the nature and complexity of the dispute, the
possible financial effect of a negative decision cannot be measured reliably.
Accordingly, no provision has been booked at the year end. At this stage,
the Group believes that the dispute will be resolved in its favour.
Company balance sheet
at 31 December 2020
Notes 2020 £’000 2019 £’000
Fixed assets
Tangible assets 35 90 74
Investment in joint ventures 36 665 665
Other investments 36 8,102 6,643
8,857 7,382
Current assets
Debtors – amounts due within one year 37 4,782 4,237
Debtors – amounts due in more than one year 37 248 113
Bank balances 1,810 4,900
6,840 9,250
Creditors – amounts falling due within one year 38 (563) (1,473)
Net current assets 6,277 7,777
Total assets less current liabilities 15,134 15,159
Creditors – amounts falling in more than one year 38 (16) (17)
Net assets 15,118 15,142
Capital and reserves
Called up share capital 24 1,068 1,068
Share premium account 258 258
Available for sale reserve - -
Other reserves 622 622
Retained earnings 33 13,170 13,194
Shareholders’ funds 15,118 15,142
The profit for the financial year, before dividends, was £83,000 (2019:
£2,095,000)
The company financial statements were approved and authorised for issue by the
board of directors on 22 April 2021 and signed on its behalf by:
A R Heller G J
Casey Company
Registration No. 112155
Director
Director
Company statement of changes in equity
for the year ended 31 December 2020
Share capital £’000 Share premium £’000 Other reserve £’000 Retained earnings £’000 Shareholders funds £’000
Balance at 1 January 2019 1,068 258 622 11,740 13,688
Dividend paid - - - (641) (641)
Profit and total comprehensive income for the year - - - 2,095 2,095
Balance at 1 January 2020 1,068 258 622 13,194 15,142
Dividend paid - - - (107) (107)
Profit and total comprehensive income for the year - - - 83 83
Balance at 31 December 2020 1,068 258 622 13,170 15,118
Company accounting policies
for the year ended 31 December 2020
The following are the main accounting policies of the company:
Basis of preparation
The financial statements have been prepared in accordance with Financial
Reporting Standard 100 Application of Financial Reporting Requirements and
Financial Reporting Standard 101 Reduced Disclosure Framework. The principal
accounting policies adopted in the preparation of the financial statements are
set out below.
The financial statements have been prepared on a historical cost basis, except
for the revaluation of leasehold property and certain financial instruments.
Going concern
Details on the Group’s adoption of the going concern basis of accounting in
preparing the annual financial statements can be found on page 58.
Disclosure exemptions adopted
In preparing these financial statements the company has taken advantage of all
disclosure exemptions conferred by FRS 101 as well as disclosure exemptions
conferred by IFRS 2, 7, 13 and 16.
Therefore these financial statements do not include:
• certain comparative information as otherwise required by IFRS;
• certain disclosures regarding the company’s capital;
• a statement of cash flows;
• the effect of future accounting standards not yet adopted;
• the disclosure of the remuneration of key management personnel;
and
• disclosure of related party transactions with the company’s
wholly owned subsidiaries.
In addition, and in accordance with FRS 101, further disclosure exemptions
have been adopted because equivalent disclosures are included in the
company’s Consolidated Financial Statements.
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:
Office equipment 10 – 33 percent
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.
Other Investments
Investments of the company in subsidiaries are stated in the balance sheet as
fixed assets at cost less provisions for impairment.
Other investments comprising of shares in listed companies are classified at
fair value through profit and loss.
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.
Financial instruments
Details on the Group’s accounting policy for financial instruments can be
found on page 63.
Deferred taxation
Details on the Group’s accounting policy for deferred taxation can be found
on page 65.
Leased assets and liabilities
Details on the Group’s accounting policy for leased assets and liabilities
can be found on page 64.
Pensions
Details on the Group’s accounting policy for pensions can be found on page
63.
Share based remuneration
Details on the Group’s accounting policy for share based remuneration can be
found on page 63. Details of the share options in issue are disclosed in the
directors’ remuneration report on page 33 under the heading share option
schemes which is within the audited part of this report.
33. PROFIT & LOSS ACCOUNT
A separate profit and loss account for Bisichi PLC has not been presented as
permitted by Section 408(2) of the Companies Act 2006. The loss for the
financial year, before dividends paid, was £83,000 (2019: £2,095,000)
Details of share capital are set out in note 24 of the Group financial
statements and details of the share options are shown in the Directors’
Remuneration Report on page 33 under the heading Share option schemes which is
within the audited part of this report and note 26 of the Group financial
statements.
34. DIVIDENDS
Details on dividends can be found in note 9 in the Group financial statements.
35. TANGIBLE FIXED ASSETS
Leasehold Property £’000 Motor Vehicles £’000 Office equipment £’000 Total £’000
Cost at 1 January 2020 45 33 70 148
Additions - 36 - 36
Cost at 31 December 2020 45 69 70 184
Accumulated depreciation at 1 January 2020 - 5 69 74
Charge for the year - 19 1 20
Accumulated depreciation at 31 December 2020 - 24 70 94
Net book value at 31 December 2020 45 45 - 90
Net book value at 31 December 2019 45 28 1 74
Leasehold property consists of a single unit with a long leasehold tenant. The
term remaining on the lease is 39 years. Motor Vehicles comprise wholly of
Right of Use leased assets.
36. INVESTMENTS
Joint ventures shares £’000 Shares in subsidiaries £’000 Other investments £’000 Total £’000
Net book value at 1 January 2020 665 6,356 287 6,643
Invested during the year - - 1,359 1,359
Repayment - - (101) (101)
Unrealised surplus/deficit over cost - - 201 201
Net book value at 31 December 2020 665 6,356 1,746 8,102
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.
Other investments comprise of £1,746,000 (2019: £287,000) shares in listed
companies.
37. DEBTORS
2020 £’000 2019 £’000
Amounts due within one year:
Amounts due from subsidiary undertakings 3,709 3,285
Other debtors 85 79
Joint venture 952 840
Prepayments and accrued income 36 33
4,782 4,237
Amounts due in more than one year:
Deferred taxation 248 113
248 113
Amounts due within one year are held at amortised cost. The Group applies a
simplified approach to measure the loss allowance for trade receivables using
the lifetime expected loss provision. The Group applies a general approach on
all other receivables. The general approach recognises lifetime expected
credit losses when there has been a significant increase in credit risk since
initial recognition. The company has reviewed and assessed the underlying
performance and resources of its counterparties including its subsidiary
undertakings and joint ventures.
38. CREDITORS
2020 £’000 2019 £’000
Amounts falling due within one year:
Joint venture 156 148
Other taxation and social security 63 21
Other creditors 188 1,221
Lease Liabilities 29 10
Accruals and deferred income 127 73
563 1,473
Amounts falling due in more than one year:
Lease Liabilities 16 17
Lease liabilities comprise of leases on Motor vehicles with remaining leases
of 1-2 years. With the exception of short-term leases and leases of low-value
underlying assets, each lease is reflected on the balance sheet as a
right-of-use asset and a lease liability.
39. RELATED PARTY TRANSACTIONS
At 31 December During the year
At 31 December Amounts owed by related party £’000 Costs recharged / accrued (to)/ by related party £’000 Cash paid (to)/ by related party £’000
Related party:
Black Wattle Colliery (Pty) Ltd (note (a)) (1,331) (958) -
Ninghi Marketing Limited (note (b)) (102) - -
As at 31 December 2020 (1,433) (958) -
Black Wattle Colliery (Pty) Ltd (note (a)) (373) (1,053) 813
Ninghi Marketing Limited (note (b)) (102) - -
As at 31 December 2019 (475) (1,053) 813
(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.
Black Wattle Colliery (Pty) Ltd and NInghi Marketing Limited are subsidiaries
of the company.
In addition to the above, the company has issued a company guarantee of
R20,061,917 (2019: R20,061,917) (South African Rand) to the bankers of Black
Wattle Colliery (Pty) Ltd in order to cover bank guarantees issued to third
parties in respect of the rehabilitation of mining land.
A provision of £102,000 has been raised against the amount owing by Ninghi
Marketing Limited in prior years as the company is dormant.
In 2012 a loan was made to one of the directors, Mr A R Heller, for £116,000.
Further details on the loan can be found in Note 28 of the Group financial
statements.
Under FRS 101, 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.
41. EMPLOYEES
2020 £’000 2019 £’000
The average weekly numbers of employees of the company during the year were as follows:
Directors & administration 5 5
Staff costs during the year were as follows:
Salaries 758 1,687
Social security costs 97 223
Pension costs 28 37
Share based payments - -
883 1,947
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