REG-Lon.&Assoc.Props PLC: Annual Financial Report <Origin Href="QuoteRef">LAS.L</Origin> - Part 5
28/04/2017 12:05
- Part 5: For the preceding part double click ID:nPRrS2637d
revised. In respect of the
share option scheme, the fair value of options granted is calculated using a
binomial method.
Pensions
The Company 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 trading balances and are not expected to be
repaid in the foreseeable future. Where foreign operations are sold or closed,
the cumulative exchange differences attributable to that foreign operation are
recognised in the consolidated income statement when the gain or loss on
disposal is recognised.
Transactions in foreign currencies are translated at the exchange rate ruling
on transaction date.
Financial instruments
Investments
Held to maturity investments are stated at amortised cost using the effective
interest rate method.
Investments held for trading are included in current assets at fair value. For
listed investments, fair value is the bid market listed value at the balance
sheet date. Realised and unrealised gains or losses arising from changes in
fair value are included in the income statement of the period in which they
arise.
Trade and other receivables
Trade and other receivables are recognised initially at fair value. A
provision for impairment of trade receivables is made when there is evidence
that the Group will not be able to collect all amounts due. Trade receivables
do not carry any interest, as any interest that would be recognised from
discounting future cash payments over the short period is not considered to be
material.
Trade and other payables
Trade and other payables are non-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.
Bank loans and overdrafts
Bank loans and overdrafts are included as financial liabilities on the Group
balance sheet net of the unamortised discount and costs of issue. The cost of
issue is recognised in the Group income Statement over the life of the bank
loan. Interest payable on those facilities is expensed as a finance cost in
the period to which it relates.
Debenture loans
The debenture loans are included as a financial liability on the balance sheet
net of the unamortised costs on issue. The cost of issue is recognised in the
Group income statement over the life of the debenture. Interest payable to
debenture holders is expensed in the period to which it relates.
Finance lease liabilities
Finance lease liabilities arise for those investment properties held under a
leasehold interest and accounted for as investment property. The liability is
calculated as the present value of the minimum lease payments, reducing in
subsequent reporting periods by the apportionment of payments to the lessor.
Lease payments are allocated between the liability and finance charges so as
to achieve a constant financing rate. Contingent rents payable, such as rent
reviews or those related to rental income, are charged as an expense in the
period in which they are incurred.
Interest rate derivatives
The Group uses derivative financial instruments to hedge the interest rate
risk associated with the financing of the Group’s business. No trading in
such financial instruments is undertaken. At each reporting date, these
interest rate derivatives are recognised at their fair value to the business,
being the Net Present Value of the difference between the hedged rate of
interest and the market rate of interest for the remaining period of the
hedge.
Ordinary shares
Shares are classified as equity when there is no obligation to transfer cash
or other assets. Incremental costs directly attributable to the issue of new
shares are shown in equity as a deduction, net of tax, from the proceeds.
Treasury shares
When the Group’s own equity instruments are repurchased, consideration paid
is deducted from equity as treasury shares until they are cancelled. When such
shares are subsequently sold or reissued, any consideration received is
included in equity.
Investment properties
Valuation
Investment properties are those that are held either to earn rental income or
for capital appreciation or both, including those that are undergoing
redevelopment. They are reported on the Group balance sheet at fair value,
being the amount for which an investment property could be exchanged between
knowledgeable and willing parties in an arm’s length transaction. The
directors’ property valuation is at fair value.
The external valuation of properties is undertaken by independent valuers who
hold recognised and relevant professional qualifications and have recent
experience in the locations and categories of properties being valued.
Surpluses or deficits resulting from changes in the fair value of investment
property are reported in the Group income statement in the period in which
they arise.
Capital expenditure
Investment properties are measured initially at cost, including related
transaction costs. Additions to capital expenditure, being costs of a capital
nature, directly attributable to the redevelopment or refurbishment of an
investment property, up to the point of it being completed for its intended
use, are capitalised in the carrying value of that property. The redevelopment
of an existing investment property will remain an investment property measured
at fair value and is not reclassified. Capitalised interest is calculated with
reference to the actual rate payable on borrowings for development purposes,
or for that part of the development costs financed out of borrowings the
capitalised interest is calculated on the basis of the average rate of
interest paid on the relevant debt outstanding.
Disposal
The disposal of investment properties is recorded on completion of the
contract. On disposal, any gain or loss is calculated as the difference
between the net disposal proceeds and the valuation at the last year end plus
subsequent capitalised expenditure in the period.
Depreciation and amortisation
In applying the fair value model to the measurement of investment properties,
depreciation and amortisation are not provided in respect of investment
properties.
Other assets and depreciation
The cost, less estimated residual value, of other property, plant and
equipment is written off on a straight–line basis over the asset’s
expected useful life. Residual values and useful lives are reviewed, and
adjusted if appropriate, at each balance sheet date. Changes to the estimated
residual values or useful lives are accounted for prospectively. The
depreciation rates generally applied are:
Motor vehicles 25–33 per cent per annum
Office equipment 10–33 per cent per annum
Assets held for sale
Non-current assets, or disposal groups comprising assets and liabilities, are
classified as held-for-sale if it is highly probable that they will be
recovered primarily through sale rather through continuing use. Such assets,
or disposal groups, are generally measured at the lower of their carrying
amount and fair value less costs of sale. Any impairment loss on a disposal
group is allocated first to goodwill, and then to the remaining assets and
liabilities on a pro rata basis, except that no loss is allocated to
inventories, financial assets, deferred tax assets, employee benefit assets,
investment property which continue to be measured in accordance with the
Group’s other accounting policies. Impairment losses on initial
classification as held-for-sale and subsequent gains and losses on
remeasurement are recognised in profit or loss. Once classified as
held-for-sale, intangible assets and property, plant and equipment are no
longer amortised or depreciated, and any equity-accounted investment is no
longer equity accounted.
Available for sale assets
Financial assets available for sale are measured at fair value. Any changes in
fair value above cost are recognised in other comprehensive income and
accumulated in the available-for-sale reserve. For any changes in fair value
below cost a provision for impairment is recognised in the profit or loss
account.
Other investments classified as non-current available for sale investments
comprise shares in listed companies and are carried at fair value.
Income taxes
The charge for current taxation is based on the results for the year as
adjusted for disallowed or non–assessable items. Tax payable upon
realisation of revaluation gains recognised in prior periods is recorded as a
current tax charge with a release of the associated 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 recorded 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 historic cost of 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 equity, in which case it is
also dealt with in equity.
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, net of bank overdrafts.
Cash equivalents comprise 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.
Bisichi mining PLC
Mining revenue
Revenue is recognised when the customer has a legally binding obligation to
settle under the terms of the contract and has assumed all significant risks
and rewards of ownership.
Revenue is only recognised on individual sales of coal when all of the
significant risks and rewards of ownership have been transferred to a third
party. Export revenue is generally recognised when the product is delivered to
the export terminal location specified by the customer, at which point the
customer assumes risks and rewards under the contract. Domestic coal revenues
are generally recognised on collection by the customer from the mine when
loaded into transport, where the customer pays the transportation costs.
Mining costs
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.
Mining reserves, plant and equipment
The cost of property, plant and equipment comprises its purchase price and any
costs directly attributable to bringing the asset to the location and
condition necessary for it to be capable of operating in accordance with
agreed specifications. Freehold land is not depreciated. Other property, plant
and equipment is stated at historical cost less accumulated depreciation. The
cost recognised includes the recognition of any decommissioning assets related
to property, plant and equipment.
Heavy surface mining and other plant and equipment is depreciated at varying
rates depending upon its expected usage. The depreciation rates generally
applied are between 5-10 per cent per annum, but limited to the shorter of its
useful life or the life of the mine.
Other non–current assets, comprising motor vehicles and office equipment,
are depreciated at a rate of between 10% and 33% per annum which is calculated
to write off the cost, less estimated residual value of the assets, on a
straight line basis over their expected useful lives.
Mine 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 to
completion and all relevant marketing, selling and distribution costs.
Mine provisions
Provisions are recognised when the Group has a present obligation as a result
of a past event which it is probable will result in an outflow of economic
benefits that can be reliably estimated.
A provision for rehabilitation of the mine is 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.
Mine impairment
Whenever events or changes in circumstance indicate that the carrying amount
of an asset may not be recoverable that asset is reviewed for impairment. A
review involves determining whether the carrying amounts are in excess of the
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
company or group level.
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). Any change in
carrying value is recognised in the comprehensive income statement.
Mine reserves and development cost
The purpose of mine development is to establish secure working conditions and
infrastructure to allow the safe and efficient extraction of recoverable
reserves. Depreciation on mine development is not charged until production
commences or the assets are put to use. On commencement of full 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
the extraction process as a run of mine 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.
Segmental reporting
For management reporting purposes, the Group is organised into business
segments distinguishable by economic activity. The Group’s business segments
are LAP operations, Bisichi operations and Dragon operations. 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 segmental 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 per cent 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 Group has no visibility over the
ultimate destination of the coal. Accordingly, the export sales are recorded
as South Africa revenue.
Notes to the financial statements
for the year ended 31 December 2016
1. Results for the year and segmental analysis
Operating Segments are based on the internal reporting and operational
management of the Group. LAP is focused primarily on property activities
(which generate trading income), but it also holds and manages investments.
IFRS 10 requires the Group to treat Bisichi as a subsidiary and therefore it
is consolidated, rather than being included in the accounts as an associate
using the equity method. The Group has also consolidated Dragon, a company
which the Company jointly controls with Bisichi; Bisichi is a coal mining
company with operations in South Africa and also holds investment property in
the United Kingdom and derives income from property rentals. Dragon is a
property investment company and derives its income from property rentals.
These operating segments (LAP, Bisichi and Dragon) are each viewed separately
and have been so reported below.
Business segments
BUSINESS ANALYSIS LAP £000 Bisichi £000 Dragon £000 2016 Total £000
Rental income 6,241 1,060 171 7,472
Management income from third party properties 501 – – 501
Mining – 21,731 – 21,731
Group Revenue 6,742 22,791 171 29,704
Direct property costs (1,168) (187) 5 (1,350)
Direct mining costs – (16,184) – (16,184)
Overheads (2,926) (4,903) (128) (7,957)
Exchange gains – 449 – 449
Depreciation (25) (1,785) (8) (1,818)
Operating profit before listed investments held for trading 2,623 181 40 2,844
Listed investments held for trading 2 – – 2
Operating profit 2,625 181 40 2,846
Finance income 11 132 1 144
Finance expenses (3,706) (554) (32) (4,292)
Result before valuation movements (1,070) (241) 9 (1,302)
Other segment items
Net increase/(decrease) on revaluation of investment properties 125 445 (38) 532
Increase in value of other investments – 12 – 12
Net increase on revaluation of investments held for trading 1 – – 1
Adjustment to interest rate derivative (206) – (11) (217)
Revaluation and other movements (80) 457 (49) 328
(Loss)/profit for the year before taxation (1,150) 216 (40) (974)
Segment assets
- Non-current assets – property 93,791 13,426 2,630 109,847
- Non-current assets – plant & equipment 112 8,520 21 8,653
- Cash & cash equivalents 3,706 2,444 115 6,265
- Non-current assets – other 1,874 32 – 1,906
- Non-current assets – deferred tax asset 1,134 – – 1,134
- Current assets – others 1,853 7,745 20 9,618
Total assets excluding investment in joint ventures and assets held for sale 102,470 32,167 2,786 137,423
Segment liabilities
Borrowings (58,068) (9,234) (1,207) (68,509)
Current liabilities (6,074) (6,811) (78) (12,963)
Non-current liabilities (5,379) (3,665) (81) (9,125)
Total liabilities (69,521) (19,710) (1,366) (90,597)
Net assets 32,949 12,457 1,420 46,826
Investment in joint ventures non segmental 1,805
Net assets as per balance sheet 48,631
Major customers: Customer A – 14,543 – 14,543
This customer is for mining revenue in South Africa.
Geographic analysis United Kingdom £’000 South Africa £’000 2016 Total £’000
Revenue 8,025 21,679 29,704
Operating profit/(loss) 3,441 (595) 2,846
Non-current assets excluding investments 111,117 8,517 119,634
Total net assets 43,916 4,715 48,631
Capital expenditure 164 2,858 3,022
BUSINESS ANALYSIS LAP £000 BISICHI £000 DRAGON £000 2015 TOTAL £000
Rental income 6,129 1,014 187 7,330
Management income from third party properties 696 – – 696
Mining – 24,640 – 24,640
Group Revenue 6,825 25,654 187 32,666
Direct property costs (1,530) (110) (13) (1,653)
Direct mining costs – (19,177) – (19,177)
Overheads (3,301) (4,651) (67) (8,019)
Exchange losses – (497) – (497)
Depreciation (39) (1,284) (6) (1,329)
Operating profit/(loss) before listed investments held for trading 1,955 (65) 101 1,991
Listed investments held for trading 1 – 2 3
Operating profit/(loss) 1,956 (65) 103 1,994
Finance income 16 107 – 123
Finance expenses (3,714) (473) (34) (4,221)
Debenture break costs (158) – – (158)
Result before valuation movements (1,900) (431) 69 (2,262)
Other segment items
Net (decrease)/increase on revaluation of investment properties (368) 225 (42) (185)
Decrease in value of other investments – (11) – (11)
Net decrease on revaluation of investments held for trading (1) – – (1)
Loss on sale of investment property – – (32) (32)
Adjustment to interest rate derivative 69 – 15 84
Share of (loss)/profit of joint ventures, net of tax (67) 138 – 71
Loss on reclassification of asset as held for sale (138) (138) – (276)
Revaluation and other movements (505) 214 (59) (350)
Profit from discontinued operations 519 – – 519
(Loss)/profit for the year before taxation (1,886) (217) 10 (2,093)
Segment assets
- Non – current assets – property 93,510 12,994 2,668 109,172
- Non – current assets – plant and equipment 148 5,374 30 5,552
- Cash and cash equivalents 3,192 1,608 9 4,809
- Non – current assets – other 1,995 14 – 2,009
- Non – current assets – deferred tax asset 2,390 – – 2,390
- Current assets – others 2,355 5,794 60 8,209
Total assets excluding investment in joint ventures and assets held for sale 103,590 25,784 2,767 132,141
Segment liabilities
Borrowings (57,815) (8,207) (1,196) (67,218)
Current liabilities (6,390) (3,918) (199) (10,507)
Non-current liabilities (5,177) (3,043) (104) (8,324)
Total liabilities (69,382) (15,168) (1,499) (86,049)
Net assets 34,208 10,616 1,268 46,092
Investment in joint ventures non segmental – – – 1,225
Assets held for sale – – – 2,335
Net assets as per balance sheet – – – 49,652
Major customers: Customer A – 14,126 – 14,126
This customer is for mining revenue in South Africa.
Geographic analysis United Kingdom £’000 South Africa £’000 2015 Total £’000
Revenue 8,058 24,608 32,666
Operating profit/(loss) 2,779 (785) 1,994
Non–current assets excluding investments 111,759 5,355 117,114
Total net assets 46,293 3,359 49,652
Capital expenditure 1,349 1,990 3,339
Group revenue is external to the Group and the directors consider that inter
segmental revenues are not material. Revenue includes contingent rents of
£0.2 million (2015: £0.3 million).
2. Loss before taxation
2016 £’000 2015 £’000
Loss before taxation is stated after charging/(crediting):
Staff costs (see note 29) 7,173 7,219
Depreciation on tangible fixed assets - owned assets 1,818 1,329
Operating lease rentals - land and buildings 442 422
Exchange (gain)/loss (449) 497
Profit on disposal of motor vehicles and office equipment (32) –
Amounts payable to the auditor in respect of both audit and non-audit services
Audit services
Statutory - Company and consolidation 88 115
Subsidiaries - audited by RSM 20 22
Subsidiaries - audited by other auditors 50 39
Further assurance services 4 13
Other services 32 2
194 191
Staff costs are included in overheads.
Gain on revaluation of investment properties
2016 £’000 2015 £’000
Investment surplus/(deficit) 549 (181)
Loss on valuation movement in respect of head lease payments (17) (4)
532 (185)
3. Listed investments held for trading
2016 £’000 2015 £’000
Dealing loss – (6)
Dividends receivable 2 9
Net profit from listed investments 2 3
4. Directors’ emoluments
2016 £’000 2015 £’000
Emoluments 988 1,199
Defined contribution pension scheme contributions 45 73
1,033 1,272
Sir Michael Heller received £75,000 (2015: £75,000) as a Director of Bisichi
Mining PLC.
Details of directors’ emoluments and share options are set out in the
remuneration report.
5. Finance income and expenses
2016 £’000 2015 £’000
Finance income 144 123
Finance expenses
Interest on bank loans and overdrafts (2,243) (2,258)
Unwinding of discount (Bisichi) (78) (79)
Other loans (1,420) (1,359)
Interest on derivatives (302) (295)
Interest on obligations under finance leases (249) (230)
Total finance expenses (4,292) (4,221)
(4,148) (4,098)
6. Income tax
2016 £’000 2015 £’000
Current tax
Corporation tax on profit of the period 73 10
Corporation tax on profit of previous periods – (20)
Total current tax 73 (10)
Deferred tax
Origination of timing differences 874 864
Revaluation of investment properties 472 (1,035)
Accelerated capital allowances (48) (97)
Fair value of interest derivatives (40) 22
Adjustment in respect of prior years (156) 209
Total deferred tax (notes 24 and 25) 1,102 (37)
Tax on profit on ordinary activities 1,175 (47)
The 2016 deferred tax recognised in income of £1,102,000 includes a credit of
£168,000 arising in the Bisichi Group on the correction of an error in the
calculation of deferred tax in 2015 related to the accounting of a deferred
tax liability incorrectly recognised in respect of management fees. The Group
has adjusted the effect of this error in its 2016 financial statements by
reducing the tax charge for the year by £168,000 and reducing the associated
deferred tax liability as it is not considered to be material to the current
or prior year financial statements.
Factors affecting tax charge/(credit) for the year
The corporation tax assessed for the year is different from that at the
effective rate of corporation tax in the United Kingdom of 20 per cent
(2015: 20.25 per cent). The differences are explained below:
2016 2015 £’000
£’000
Loss for the year before taxation (974) (2,093)
Taxation at 20 per cent (2015: 20.25 per cent) (195) (424)
Effects of:
Other differences 1,306 (607)
Adjustment in respect of prior years (157) 189
Deferred tax rate adjustment 221 795
Income tax charge/(credit) for the year 1,175 (47)
The main component of other differences in the reconciliation relates to
capital gains of £0.8 million (2015: losses £1.1 million) and indexation
allowances of £nil (2015: (£0.1 million)), and others £0.5 million (2015:
£0.3 million).
Analysis of United Kingdom and overseas tax:
United Kingdom tax included in above:
2016 £’000 2015 £’000
Corporation tax 13 10
Adjustment in respect of prior years – (23)
Current tax 13 (13)
Deferred tax 1,241 (153)
1,254 (166)
Overseas tax included above:
2016 £’000 2015 £’000
Corporation tax 60 –
Adjustment in respect of prior years – 3
Current tax 60 3
Deferred tax (139) 116
(79) 119
Factors that may affect future tax charges:
Based on current capital expenditure plans, the Group expects to continue to
be able to claim capital allowances in excess of depreciation in future years,
but at a slightly lower level than in the current year.
A deferred tax provision has been made for gains on revaluing investment
properties. At present it is not envisaged that any tax will become payable in
the foreseeable future.
The Finance Bill 2016 was substantively enacted on 7 September 2016. This
includes a reduction in the rate of Corporation tax from 19% effective 1 April
2017 to 17% from 1 April 2020.
7. Discontinued operations
As part of the Group’s strategy to focus on core assets, the Group disposed
of King Edward Court, Windsor in 2013. The profits and losses arising from
this disposal were classified as discontinued operations. Contracts for the
sale of King Edward Court had been exchanged in 2013 and completion took place
in January 2014. Following the settlement of a dispute additional proceeds of
£414,000 were received by the Group in 2016.
8. Dividend
2016 Per share £’000 2015 Per share £’000
Dividends paid during the year relating to the prior period 0.16p 136 0.156p 133
Dividends to be paid:
Proposed final dividend for the year 0.165p 141 0.16p 136
9. (Loss)/profit per share and net assets per share
(Loss)/profit per share has been calculated as follows:
2016 2015
Loss for the year for the purposes of basic and diluted profit per share (£’000) (2,357) (1,899)
Weighted average number of ordinary shares in issue for the purpose of basic profit per share (’000) 85,107 84,951
Basic loss per share (2.77)p (2.24)p
Weighted average number of ordinary shares in issue for the purpose of diluted profit per share (’000) 85,107 84,951
Fully diluted loss per share (2.77)p (2.24)p
Weighted average number of shares in issue is calculated after excluding
treasury shares of 221,061 (2015: 734,816).
The loss for continuing operations was £2,357,000 (2015: £2,418,000) and the
profit for discontinued operations was £nil (2015: £519,000).
Net assets per share have been calculated as follows:
2016 2015
Net assets (£’000) 38,242 40,078
Shares in issue (’000) 85,322 84,808
Basic net assets per share 44.83p 47.26p
Net assets diluted (£’000) 38,242 40,078
Shares in issue (’000) 85,322 84,808
Diluted net assets per share 44.83p 47.26p
10. Investment properties
Total £000 Freehold £000 Leasehold over 50 Leasehold under 50 years £000
years £000
Cost or valuation at 1 January 2016 109,172 86,468 21,060 1,644
Additions in year 160 160 – –
Decrease in present value of head leases (17) – (15) (2)
Increase/(decrease) on revaluation 532 1,957 (1,425) –
At 31 December 2016 109,847 88,585 19,620 1,642
Representing assets stated at:
Valuation 105,080 88,585 15,495 1,000
Present value of head leases 4,767 – 4,125 642
109,847 88,585 19,620 1,642
At 31 December 2016 109,847 88,585 19,620 1,642
At 31 December 2015 109,172 86,468 21,060 1,644
Total £’000 Freehold £’000 Leasehold over 50 years £’000 Leasehold under 50 years £’000
Cost or valuation at 1 January 2015 108,443 85,080 21,591 1,772
Acquisition of property 960 960 - -
Additions in year 357 210 147 -
Disposals (400) (400) - -
Decrease in present value of head leases (3) - - (3)
Increase/(decrease) on revaluation (185) 618 (678) (125)
At 31 December 2015 109,172 86,468 21,060 1,644
Representing assets stated at:
Valuation 104,388 86,468 16,920 1,000
Present value of head leases 4,784 - 4,140 644
109,172 86,468 21,060 1,644
At 31 December 2015 109,172 86,468 21,060 1,644
At 31 December 2014 108,443 85,080 21,591 1,772
The leasehold and freehold properties, excluding the present value of head
leases and directors’ valuations, were valued as at 31 December 2016 by
professional firms of chartered surveyors. The valuations were made at fair
value. The directors’ property valuations were made at fair value.
2016 £’000 2015 £’000
Allsop LLP 90,010 87,095
Carter Towler 13,245 12,800
Directors’ valuations 1,825 4,493
105,080 104,388
Add: present value of headleases 4,767 4,784
109,847 109,172
The historical cost of investment properties, including total capitalised
interest of £1,161,000 (2015: £1,161,000) was as follows:
2016 2015
Freehold £’000 Leasehold Over 50 years £’000 Leasehold under 50 years £’000 Freehold £’000 Leasehold Over 50 years £’000 Leasehold under 50 years £’000
Cost at 1 January 72,551 17,653 1,939 71,601 17,506 1,939
Acquisition of property – – – 960 – –
Additions 160 – – 210 147 –
Disposals – – – (220) – –
Cost at 31 December 72,711 17,653 1,939 72,551 17,653 1,939
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
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.
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 the 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 implementing this change in arriving at the
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 into the property’s valuation by the external
valuer.
The methods of fair value measurement are classified into a hierarchy based on
the reliability of the information used to determine the valuation,
as follows:
Level 1: valuation based on inputs on quoted market prices in active
markets.
Level 2: valuation based on inputs other than quoted prices included
within level 1 that maximise the use of observable data directly or from
market prices or indirectly derived from market prices.
Level 3: where one or more inputs to valuations are not based on
observable market data.
Class of property Level 3 Carrying / Fair value 2016 £’000 Carrying/ Fair value 2015 £’000 Valuation Key unobservable inputs Range (weighted average) 2016 Range (weighted average) 2015
technique
Freehold – external valuation 86,760 81,975 Income capitalisation Estimated Rental Value Per sq ft p.a Equivalent Yield £5 – £37 (£19) 5% – 14% (8%) £5 – £37 (£18) 5% – 15% (8%)
Leasehold over 50 years – external valuation 15,495 16,920 Income capitalisation Estimated Rental Value Per sq ft p.a Equivalent Yield £5 – £11 (£9) 7% – 18% (11%) £5 – £11 (£10) 7% –18% (11%)
Leasehold under 50 years – external valuation 1,000 1,000 Income capitalisation Estimated Rental Value Per sq ft p.a Equivalent Yield £3 – £5 (£4) 18% – 23% (19%) £4 – £5 (£4) 23% – 26% (25%)
Freehold – Directors’ valuation 1,825 4,493 Income capitalisation Estimated Rental Value Per sq ft p.a Equivalent Yield £5 – £5 (£5) 6% – 6% (6%) £5 – £24 (£16) 6% – 6% (6%)
At 31 December 105,080 104,388
There are interrelationships between all these inputs as they are determined
by market conditions. The existence of an increase in more than one input
would be to magnify the input on the valuation. The impact on the valuation
will be mitigated by the interrelationship of two inputs in opposite
directions, for example, an increase in rent may be offset by an increase in
yield.
The table below illustrates the impact of changes in key unobservable inputs
on the carrying / fair value of the Group’s properties.
Estimated rental value 10% increase or (decrease) Equivalent yield 25 basis point contraction or (expansion)
2016 £’000 2015 £’000 2016 £’000 2015 £’000
Freehold – external valuation 8,671/(8,671) 8,064/(8,064) 3,585/(3,298) 3,288/(3,027)
Leasehold over 50 years – external valuation 1,545/(1,545) 1,692/(1,692) 394/(375) 440/(418)
Leasehold under 50 years – external valuation 100/(100) 100/(100) 13/(13) 10/(10)
Freehold – Directors’ valuation 183/(183) 443/(443) 78/(72) 183/(169)
11. Mining reserves, plant and equipment
Total £’000 Mining reserves £’000 Mining equipment £’000 Office equipment and motor vehicles £’000
Cost at 1 January 2016 17,188 995 15,453 740
Exchange adjustment 6,273 349 5,858 66
Additions 2,862 – 2,814 48
Disposals (506) – (401) (105)
At 31 December 2016 25,817 1,344 23,724 749
Accumulated depreciation at 1 January 2016 11,636 949 10,201 486
Exchange adjustment 4,202 336 3,824 42
Charge for the year 1,818 2 1,746 70
Disposals in year (492) – (401) (91)
Accumulated depreciation at 31 December 2016 17,164 1,287 15,370 507
Net book value at 31 December 2016 8,653 57 8,354 242
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