BISICHI MINING PLC ANNUAL REPORT 2018
Contents
STRATEGIC REPORT
2 Chairman’s Statement
5
Principal activity, strategy
& business model
6 Mining Review
8 Sustainable development
14 Principal risks & uncertainties
18 Financial & performance review
GOVERNANCE
29 Directors and advisors
30 Five year summary
30 Financial calendar
31 Directors’ report
37 Statement of the Chairman
of the remuneration committee
38 Annual remuneration report
45 Audit committee report
47 Valuers’ certificates
48 Directors’ responsibilities statement
49 Independent auditor’s report
FINANCIAL STATEMENTS
56 Consolidated income statement
57 Consolidated statement of other
comprehensive income
58 Consolidated balance sheet
60 Consolidated statement of changes
in shareholders’ equity
61 Consolidated cash flow statement
62 Group accounting policies
69 Notes to the financial statements
91 Company balance sheet
92 Company statement of changes
in equity
93 Company accounting policies
s
s
e
c
c
u
s
n
o
g
n
d
i
l
i
u
B
e
l
t
t
a
W
k
c
a
B
l
t
a
Strategic report
The Directors present the
Strategic Report of the company
for the year ending 31 December
2018. 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.
Earnings before interest, tax, depreciation
and amortisation (EBITDA) of
£8.6 million
(2017: £3.7 million)
Operating profit before depreciation, fair value adjustments
and exchange movements (Adjusted EBITDA) of
£9.1million
(2017: £5.8 million)
Dividend yield of
6.5%
at year end share price.
Bisichi Mining PLC
11
Strategic Report
Strategic Report
Chairman’s Statement
For the year ended 31 December 2018, I am pleased to report that
your company achieved earnings before interest, tax, depreciation and
amortisation (EBITDA) of £8.6million (2017: £3.7 million) and operating
profit before depreciation, fair value adjustments and exchange
movements (Adjusted EBITDA) of £9.1million (2017: £5.8million).
These results can be attributed mainly
to the strong performance from Black
Wattle, our South African coal mining
operation, which continued to benefit
from the infrastructure improvements to the
coal washing plant that were reported to
shareholders in 2017. These improvements
have enabled the group to wash at
consistent levels of production and achieve
an increased overall yield compared to prior
years. In addition, the mine was able to
benefit from significantly improved coal prices
achievable for our coal during the year.
Looking forward, although we have seen
global economic factors impact coal
demand in some international markets,
the demand for South African coal has
remained strong and we expect overall
levels of production from Black Wattle to
remain consistent with 2018. Accordingly,
we continue to be confident about the
ability of our South African coal mining
operations to contribute strongly to our
group earnings and cash generation for
the foreseeable future.
I am also pleased to report that during the
course of the year Black Wattle signed an
agreement to acquire additional coal
reserves. This will enable us to further
benefit from the strong levels of domestic
demand and is in line with the group’s
strategy of actively seeking new
opportunities to extend the life of mine of
its existing mining operations. The new
2 Bisichi Mining PLC
reserve has an expected run of mine
tonnage of 1.9million metric tonnes and is
contiguous to Black Wattle’s operations.
The acquisition, which is still subject to
local regulatory approval, will be financed
from the group’s existing South African
cash resources and banking facilities.
A fuller explanation on the performance
of our mining operations for the year can
be found within the Mining Review and
Financial & Performance Review sections
of this report.
The group’s UK retail property portfolio,
which underpins the group and which is
managed actively by London &
Associated Properties Plc, continues to
perform well, with average rental yields
for the portfolio remaining stable during
the year. As reported to shareholders
earlier this year, the Group has formed a
joint venture with London & Associated
Properties PLC and Metroprop Real
Estate Ltd which has acquired the
freehold of a retail and residential
redevelopment in West Ealing, London.
The joint venture has planning consent
for 20 flats at first and second floor levels
which will be eligible for the UK
Government Help to Buy Scheme. Since
reporting this investment, the joint
venture has begun preparing a planning
application for a larger residential
redevelopment of 55 flats on the site and
we look forward to updating shareholders
as the development progresses. A fuller
explanation of the portfolio’s valuation
results and financial position are
discussed in the Financial & Performance
Review and Directors report.
Looking forward, management is currently
investigating other major investment
opportunities in both the mining sector
and the domestic property sector and is
conserving the group’s cash reserves
accordingly.
Finally, in light of the strong results achieved
for the year, your directors recommend a
special dividend of 2p (2017: 1p) per share
in addition to a final dividend of 3p (2017:
3p). Both dividends will be payable on
Friday 26 July 2019 to shareholders
registered at the close of business on
5 July 2019. This takes the total dividends
per share for the year to 6p (2017: 5p).
Based on the 2018 year end share price,
this represents a 6.5% yield.
On behalf of the Board and shareholders,
I would like to thank all of our staff for their
hard work during the course of the year.
Sir Michael Heller
Chairman
25 April 2019
We are
Committed
to providing
opportunities for
the sustainable
socioeconomic
development of
our stakeholders
Bisichi Mining PLC
33
Continued
high demand
impacted
positively
on prices
achievable
for our coal
in 2018
4 Bisichi Mining PLC
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
2
3
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.
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.
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 (cid:56)(cid:46)
property investment operations. The
company primarily invests in retail
property across the (cid:56)(cid:46) as well as
residential property development. The
(cid:56)(cid:46) (cid:53)etail 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.
Bisichi Mining PLC
55
Strategic Report
Mining Review
As noted in the Chairman’s statement, the group’s strong performance in 2018
can be attributed mainly to Black Wattle, our South African coal mining operation.
During the year the mine was able to benefit fully from the coal infrastructure
improvement implemented in 2017 achieving an increased overall yield compared
to the prior year and a consistent Run of Mine production through the washing
plant. This allowed the group to benefit from the higher prices achievable for
our coal during the year.
Production and operations
For the first half of 2018, the mine achieved
mining production of 670,000 metric tonnes
(2017 H1: 582,000 metric tonnes), improving
on the first half production achieved in
2017, which was impacted by water and
stone contamination issues. During the
second half of the year, production
remained fairly consistent with the
exception of some temporary blasting
and water issues at our opencast area
which had a limited impact on production
in the last quarter of the year. Overall the
mine achieved production of 649,000
metric tonnes (2017 H2: 714,000 metric
tonnes) during the second half of the year.
As a result of the higher production in the
first half of the year, overall mining
production from Black Wattle increased in
2018, with total mining production for the
year of 1.32million metric tonnes (2017:
1.30million metric tonnes). In 2019 we
have commenced mining in a new opencast
area at Black Wattle contiguous to the
area that was mined in 2018. This new
area will be mined throughout 2019 and
we expect mining production levels and
yields achieved in 2018 to be maintained
in 2019.
As mentioned in the Chairman’s statement,
we are pleased to report that Black Wattle
has signed an agreement to acquire a new
coal reserve contiguous to Black Wattle’s
operations. The reserve has an expected
run of mine tonnage of 1.9million metric
tonnes, can be mined by opencast and is
of a similar quality to Black Wattle’s existing
reserves. The acquisition is subject to
regulatory approval from the South African
Department of Mineral Resources and will
be financed out of the group’s existing
South African cash resources and banking
facilities. The group continues to seek
further opportunities to extend the life of
mine of its existing mining operations or
develop new independent mining
operations in South Africa.
The infrastructure improvements to the
washing plant that were completed in
2017, will allow the group to mine or buy
in coal from similar reserves within the
area that may be affected by stone
contamination issues. This broadens the
scope of new opportunities for the group
to achieve additional value from our coal
washing operations in South Africa
separate from the group’s existing mining
operations. In order to maximise these
opportunities, in January 2019, Black
Wattle transferred its washing plant
operations into a wholly owned subsidiary
called Sisonke Coal Processing which will
operate as a stand-alone commercial entity.
In addition, the group has committed to
further improvements to the washing
plant to be implemented in 2019, including
a new high-pressure filter press segment
which will improve the management and
quality of coal fines produced from our
washing plant. We look forward to the
positive impact the further improvements
to the washing plant will have on the
returns achievable from our remaining
reserves.
Main trends/markets
During 2018 management continued to
sell coal into both the export and
domestic market. Black Wattle’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.
6 Bisichi Mining PLC
Strategic Report Mining Review
A shortage of coal in the domestic market
and strong demand for coal in the
international market impacted positively on
the prices achievable for our coal during
the period. At the beginning of 2018, the
average weekly price of Free on Board
(FOB) Coal from Richards Bay Coal Terminal
(API4) was $95. During the year the API4
price remained mainly range bound
between $90 and $105 ending again at
$95 by the end of the year. Overall the
average weekly API4 price for 2018 was
$98 compared to $84 in 2017. The higher
overall coal prices compared to the prior
period, along with a year on year stable
Rand attributed to the group achieving an
overall increase in the average Rand price
of R879 per tonne of export coal sold in
2018 from the mine compared to R773 in
2017. Looking forward into 2019, although
we have seen a weakening in the API$
price in the first quarter of 2019, we expect
demand to remain stable for South
African coal in the seaborne market.
In the domestic market, a continued high
demand impacted positively on prices
achievable for our coal in 2018. Overall,
the group achieved an average price of
R500 per tonne of domestic coal sold in
2018 compared to R397 in 2017. Looking
forward, domestic prices to date have
remained stable and we have continued
to see strong demand for our coal.
Overall, the increase in group revenue,
compared to the prior year, can mainly be
attributed to the increased overall yield
and higher prices achieved for our coal at
Black Wattle.
Sustainable development
Black Wattle continues to strive to conduct
business in a safe, environmentally and
socially responsible manner. Some
highlights of our Health, Safety and
Environment performance in 2018:
• Black Wattle Colliery recorded one Lost
Time Injury during 2018 (2017: 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, 2018 (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 8.
Prospects
Looking forward to 2019, management
will focus on maintaining production at
Black Wattle at the levels achieved in
2018 and increasing our life of mine
through the acquisition of additional
reserves. Management will also seek
to achieve additional value from its
investments in the washing plant that is
now held in Sisonke Coal Processing.
With strong demand for our coal, we
believe the group is in a strong position
to achieve significant value from our
South African mining operations in 2019.
Andrew Heller
Managing Director
25 April 2019
Bisichi Mining PLC
77
Strategic Report
Sustainable development
The group is fully committed to ensuring the sustainability of both
our UK and South African mining 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)
Black Wattle 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 2018:
• 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.
• Black Wattle Colliery recorded one Lost
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.
time Injury during 2018.
• A Job Safety Analysis form is utilised to
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.
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.
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.
8 Bisichi Mining PLC
Strategic Report Sustainable development
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 has drawn up a new SLP
Plan for the next five years (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.
• Two new local community students
were enrolled at university for the 2019
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 (“DMR”), 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
Black Wattle is a level 7 contributor to
B-BBEE and has achieved a 50% BEE
procurement recognition level. In compliance
with the Mining Charter and the Mineral and
Petroleum Resource Development Act,
Black Wattle has implemented a BBBEE-
focussed procurement policy which strongly
encourages our suppliers to establish and
maintain BBBEE credentials. At present,
BBBEE companies provide approximately
92 percent of Black Wattle’s equipment
and services.
Bisichi Mining PLC
99
Black Wattle
achieved consistent
levels of mining
production in 2018
of 1.32million
metric tonnes
(2017: 1.30million
metric tonnes)
10 Bisichi Mining PLC
Bisichi Mining PLC
1111
Strategic Report Sustainable development
Mining Charter
In South Africa, the new government
regulated Broad-Based Socio-Economic
Empowerment Charter for the Mining and
Minerals Industry, 2018 (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
Black Wattle is 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
12 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 2018 were:
• 13 employees were trained in ABET
(Adult Basic Educational Training) on
various levels;
12 Bisichi Mining PLC
• An additional 5 disabled women
continued their training on ABET levels
one to four.
• 3 HDSA Females and 3 HDSA Males are
progressing in their respective
apprenticeships at the mine.
• Black Wattle had several of the staff of
Silver Solutions CC, a black owned
private contractor on the mine, trained
to become competent to perform plastic
pipe welding. The mine makes extensive
use of their services in this area.
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 7 directors (7 male, 0 female), 7
senior managers (6 male, 1 female) and
246 employees (175 male, 71 female).
The group’s carbon footprint:
Emissions source:
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 group has used the main requirements
of the ISO standard 14064-1 to calculate
the Scope 1 (Direct Emissions) and Scope
2 (Indirect Emissions) from coal extraction
and onsite mining processes for Black
Wattle Colliery. We have not measured and
reported on our Scope 3 emissions sources.
Excluded from the footprint boundary are
emission sources considered non material
by the group, including refrigerant use
onsite.
The following sources of the carbon
emissions factors was used:
• UK Government GHG Conversion
Factors for Company Reporting, 2018.
• IEA data from IEA CO2 emissions from
fuel combustion 2017.
• Methodology adapted from the
Intergovernmental Panel on Climate
Change (2006).
2018
CO2e
Tonnes
2017
CO2e
Tonnes
Scope 1 Combustion of fuel & operation of facilities
21,348
15,575
Scope 1 Emissions from coal mining activities (see note below) 27,428
27,004
Scope 2 Electricity, heat, steam and cooling purchased for own use
12,177
11,210
Total
Intensity:
Intensity 1 Tonnes of CO2 per pound sterling of revenue
Intensity 2 Tonnes of CO2 per tonne of coal produced
60,953
53,779
0.0012
0.0462
0.0013
0.0415
Note: The group has recalculated emissions from coal mining activities using a more up to date methane
conversion factor; because of this, 2017 emissions from coal mining activities have been restated.
Black Wattle
Colliery has
exceeded the
10 percent
women in
management
and core
mining target
Bisichi Mining PLC
1313
Strategic Report
Principal risks & uncertainties
PRINCIPAL RISK
PERFORMANCE AND MANAGEMENT OF THE RISK
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.
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.
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.
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 2018 and 2017.
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 any
regulatory changes related to climate change and governmental
CO2 emission commitments may have on the group’s mining
operations and future investment decisions.
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 6 for details of mining performance.
14 Bisichi Mining PLC
Strategic Report Principal risks & uncertainties
PRINCIPAL RISK
PERFORMANCE AND MANAGEMENT OF THE RISK
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.
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, 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.
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 2018 and 2017.
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.
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 6 as well as in the Sustainable
Development report on page 8 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.
Bisichi Mining PLC
1515
Strategic Report Principal risks & uncertainties
PRINCIPAL RISK
FLOODING RISK
PERFORMANCE AND MANAGEMENT OF THE 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.
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.
16 Bisichi Mining PLC
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 8.
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 8.
Black Wattle has implemented
various community related
agricultural projects and
training initiatives in 2018
PRINCIPAL RISK
PERFORMANCE AND MANAGEMENT OF THE RISK
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.
CASHFLOW RISK
Commodity price risk, currency volatility and the uncertainties
inherent in mining may result in favourable or unfavourable
cashflows.
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 impact of the United Kingdom leaving the
European Union (“Brexit”) 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.
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 12 for further details.
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 23 for details of the property portfolio performance.
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 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 23 for details of the property portfolio performance.
Bisichi Mining PLC
1717
Strategic Report
Financial & performance review
The movement in the Group’s Adjusted EBITDA from £5.8million in 2017 to
£9.1million in 2018 can mainly be attributed to the increased overall yield and
higher prices achieved for our coal at Black Wattle offsetting the impact of higher
mining and washing costs. As we continue into 2019, the group’s financial
position remains strong and we expect to achieve significant value from our
existing mining operations as noted in the Mining Review.
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 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.
Key performance indicators
The key performance indicators for the group are:
For the group:
Operating profit before depreciation, fair value adjustments and exchange movements (adjusted EBITDA)
EBITDA
Profit/(loss) before tax
For our property investment operations:
Net property valuation (excluding joint ventures)
Net property revenue (excluding joint ventures)
For our mining activities:
Operating profit before depreciation, fair value adjustments and exchange movements (adjusted EBITDA)
EBITDA
Mining production
18 Bisichi Mining PLC
2018
£’000
2017
£’000
9,088
8,587
5,959
5,819
3,734
1,485
13,045
1,232
13,245
1,125
8,206
8,143
Tonnes
’000
1,320
4,894
2,811
Tonnes
’000
1,296
Strategic Report Financial & performance review
Revenue recognition restatement – presentation of revenue & costs
During the review of revenue recognition in South Africa a revenue recognition error was identified in respect of the treatment of transport
and loading costs to deliver export coal under certain export agreements. The costs in prior periods, have been recorded as a deduction
against revenue rather than being shown as an operating cost.
Although this impact has been correctly accounted for in the current year, the equivalent restatement in the prior year is to
increase both revenue and operating costs by £2,891,000. There is no profit or net assets impact as a result of the prior year
restatement. In prior year figures within the report where there has been an impact from the restatement, the column is reflected
with the word “Restated”.
The key performance indicators of the group
can be reconciled as follows:
Revenue
Transport and loading cost
Mining and washing costs
Other operating costs excluding depreciation
Operating profit before depreciation, fair value adjustments and
exchange movements (adjusted EBITDA)
Exchange movements
Fair value adjustments
Losses on investments held at fair value through profit and loss (FVPL)
Operating profit excluding depreciation
Share of (loss)/profit and write off’s in joint venture
EBITDA
Net interest movement
Depreciation
Profit/(loss) before tax
The key performance indicators of the group
can be reconciled as follows:
Revenue
Transport and loading cost
Mining and washing costs
Other operating costs excluding depreciation
Operating profit before depreciation, fair value adjustments and
exchange movements (adjusted EBITDA)
Exchange movements
Fair value adjustments
Gain on disposal of other investments
Operating profit excluding depreciation
Share of (loss)/profit and write off’s in joint venture
EBITDA
Net interest movement
Depreciation
Profit/(loss) before tax
Mining
£’000
48,666
(3,103)
(31,340)
(6,017)
8,206
(63)
-
-
8,143
-
8,143
Mining
£’000
Restated
39,191
(2,891)
(25,664)
(5,742)
4,894
(256)
-
-
4,638
(1,827)
2,811
Property
£’000
1,232
-
-
(394)
838
-
(215)
-
623
(52)
571
Property
£’000
1,125
-
-
(228)
897
-
(13)
-
884
8
892
Other
£’000
47
-
-
(3)
44
-
-
(171)
(127)
-
(127)
Other
£’000
34
-
-
(6)
28
-
-
3
31
-
31
2018
£’000
49,945
(3,103)
(31,340)
(6,414)
9,088
(63)
(215)
(171)
8,639
(52)
8,587
(515)
(2,113)
5,959
2017
£’000
Restated
40,350
(2,891)
(25,664)
(5,976)
5,819
(256)
(13)
3
5,553
(1,819)
3,734
(459)
(1,790)
1,485
Bisichi Mining PLC
1919
Strategic Report Financial & performance review
Black Wattle
is committed
to creating a
safe and healthy
working
environment
for its employees.
20 Bisichi Mining PLC
Strategic Report Financial & performance review
Adjusted EBITDA is used as a key indicator of the 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 EBITDA for the year of £8.6 million (2017: £3.7 million). The movement compared to the prior year can mainly
be attributed to increased operating profits before depreciation from our mining activities of £8.2million (2017: £4.9million) as well
as the group’s share of losses in joint venture mining assets of £1.8million incurred in 2017 which is discussed in further detail
below.
Depreciation for the year, related to our mining operations increased to £2.1million (2017: £1.8million) with the group reporting an
overall profit before tax of £6.0million (2017: £1.5million).
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:
Revenue
Transport and loading costs
Mining and washing costs
Operating profit before other operating costs and depreciation
Other operating costs (excluding depreciation)
Operating profit before depreciation, fair value adjustments and
exchange movements (adjusted EBITDA)
South African Rand
2017
R’000
Restated
2018
R’000
852,650
(54,366)
(549,090)
672,277
(49,586)
(440,241)
249,194
182,450
Exchange movements
Share of loss in joint ventures
EBITDA
Mining production in tonnes
Net Revenue per tonne of mining production
Mining and washing costs per tonne of mining production
Operating profit per tonne of mining production before other operating costs and depreciation
UK Sterling
2018
£’000
48,666
(3,103)
(31,340)
14,223
(6,017)
8,206
(63)
-
8,143
2018
’000
1,320
2018
R
605
(416)
189
2017
£’000
Restated
39,191
(2,891)
(25,664)
10,636
(5,742)
4,894
(256)
(1,827)
2,811
2017
’000
1,296
2017
R
480
(340)
140
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.
Bisichi Mining PLC
2121
Strategic Report Financial & performance review
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:
Quantity of coal sold in tonnes
Total Net Revenue
Net Revenue per tonne of coal sold
The quantity of coal sold can be defined as
the quantity of coal sold in metric tonnes
from the mine 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 for the group’s mining
operations increased for the year from
R438 per tonne of coal sold in 2017 to
R545 in 2018, attributable to the average
price increases achieved in both the
domestic and export market. As a result of
the overall higher mining production, the
quantity of coal sold for the year increased
to 1.466million tonnes (2017: 1.422million
tonnes). This increase in tonnes produced
can be attributed to the impact of water
and stone contamination issues on
production in 2017 which offset the
temporary blasting and water issues at our
opencast area in the second half of 2018.
Overall, the revenue for the group’s South
African mining operations increased in the
year to R798.3 million (2017: R622.7
million).
Domestic
’000
1,292
Domestic
R’000
645,386
R
500
Export
’000
174
Export
R’000
2018
’000
1,466
2018
R’000
Domestic
’000
1,267
Domestic
R’000
Export
’000
155
Export
R’000
2017
’000
1,422
2017
R’000
152,898
798,284
502,818
119,873
622,691
R
879
R
545
R
397
R
773
R
438
The overall increase in mining and washing
cost per tonne from R340 per tonne to
R416 per tonne can mainly be attributed to
higher inherent mining costs from mining
operations at our opencast reserves at
Black Wattle. As a result of the higher
mining cost per tonne and the increase in
total mining production, total mining and
washing costs for the group increased from
R440.2million in 2017 to R549.1million in
2018.
Other operating costs (excluding
depreciation) of £6.0million (2017:
£5.7million) 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 increase during
the year can mainly be attributed to salaries
and wages related to our South African
mining operations that are incurred in the
UK offset by 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 group’s South African mining
operations achieved an adjusted EBITDA of
£8.2million (2017: £4.9million) attributable
to the increase in mining production for the
year and higher prices achievable for our
coal offsetting the higher mining cost per
tonne of our opencast reserves at Black
Wattle.
The movement in the group’s EBITDA for
mining activities of £8.1million (2017:
£2.8million) for the year, in comparison to
the result achieved for adjusted EBITDA
was as a result of a small exchange rate
loss of £0.1million. In 2017, this movement
was impacted by the share of loss in joint
ventures of £1.8million related to the write
off of our investment in Ezimbokodweni
Mining (Pty) Ltd as well as an exchange
loss of £0.3million. These exchange
movements can mainly be attributable to
the retranslation of Rand denominated
inter-company trade receivable balances
with our South African mining operations
that are held within the UK.
A further explanation of the mines
operational performance can be found in
the Mining Review on page 6.
22 Bisichi Mining PLC
Strategic Report Financial & performance review
Other mining Investments
There were no movements in other mining
investments outside of Black Wattle
Colliery (Pty) Limited in 2018. During the
prior year the group wrote off its £1.8million
investment in Ezimbokodweni Mining (Pty)
Limited (“Ezimbokodweni”) made up of a
£1.4million loan and a £0.4million joint
venture investment.
As reported in the Mining review, in January
2019, Black Wattle Colliery (Pty) Limited
transferred its washing plant operations
into a wholly owned subsidiary called
Sisonke Coal Processing (Pty) Limited
which will operate as a stand-alone
commercial entity. As the transaction is
internal there was no material impact on
the financial reporting of the group. Further
details on the impact of the transaction on
the group’s finance facilities can be found
in the section on loans below.
UK property investment
Performance
The group’s portfolio is managed actively
by London & Associated properties plc and
continues to perform well. Net property
revenue (excluding joint ventures and
service charge income) across the portfolio
decreased marginally during the year to
£1.095million (2017: £1.125million). The
property portfolio was externally valued at
31 December 2018 and the value of UK
investment properties attributable to the
group at year end decreased to £13.045
million (2017: £13.250million) mainly due to
valuation yields applied in a more challenging
retail market compared to the prior year.
Joint venture property investments
The group holds a £0.8million (2017:
£0.9million) 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 marginally decreased during the
year to £1.24million (2017: £1.32million).
During the year the group acquired and
held a £0.5million (2017: £nil) 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 £3.1million (2017: £nil).
Overall, the group achieved net property
revenue of £1.2million (2017: £1.2million)
for the year which includes the company’s
share of net property revenue from its
investment in joint ventures of £95,000
(2017: £83,000).
Cashflow & financial position
The following table summarises the main components of the consolidated cashflow for the year:
Cash flow generated from operations before working capital and other items
Cash flow from operating activities
Cash flow from investing activities
Cash flow from financing activities
Net (decrease) / increase in cash and cash equivalents
Cash and cash equivalents at 1 January
Exchange adjustment
Cash and cash equivalents at 31 December
Cash and cash equivalents at 31 December comprise:
Cash and cash equivalents as presented in the balance sheet
Bank overdrafts (secured)
Year ended
31 December
2018
£’000
Year ended
31 December
2017
£’000
9,112
4,767
(3,373)
200
1,594
4,065
27
5,686
9,221
(3,535)
5,686
5,819
7,270
(1,936)
(429)
4,905
(890)
50
4,065
5,327
(1,262)
4,065
Bisichi Mining PLC
2323
Strategic Report Financial & performance review
24 Bisichi Mining PLC
Cash flow generated from operating
activities decreased compared to the
prior year to £4.8million (2017:
£7.3million). The improved operating
profit during the year of £6.5million
(2017: £3.8million) was offset by an
increase in income tax paid of
£2.28million (2017: £0.01million) both as
a result of the high profitability of our
South African mining operations. In
addition, cashflow generation from
operating activities was also impacted by
a cashflow decrease from trade
receivables of £0.9million (2017: increase
of £0.9million), as a result of an increase
in the trade receivables balances of our
South African domestic coal customers,
and a cashflow decrease from inventories
of £0.8million (2017: increase of
£0.9million), mainly as a result of reduced
export coal sales from our South African
mining operations in the last quarter of
2018 due to temporary weather related
issues at Richards Bay Coal Terminal.
Investing cashflows primarily reflect the
net effect of capital expenditure during
the year of £2.9million (2017: £1.8million)
which can mainly be attributable to mine
development costs at Black Wattle of
£1.2million (£0.4million), the acquisition of
new rehabilitation mining machinery of
£0.7million (2017: £nil) and infrastructure
improvements to the washing plant
facility, dams and rail siding at Black
Wattle of £0.8million (2017: £1.2million).
As at year end the group’s mining
reserves, plant and equipment had a
carrying value of £8.5million (2017:
£8.6million) with capital expenditure
being offset by depreciation of £2.1million
(2017: £1.8milion) and exchange
translation movements of £0.8million
(2017: £0.1million) for the year. Other
investing cashflows also include the new
joint venture investment in West Ealing
Projects limited of £0.5million (2017: £nil).
Cash inflows from financing activities
includes an increase in borrowings drawn
attributable to our South African banking
Strategic Report
facilities of £0.75million (2017:
£0.02million) related to mining asset
finance offset by dividends paid to
shareholders of £0.53million (2017: 0.43
million).
Overall, the group managed to achieve an
increase in cash and cash equivalents of
£1.6million (2017: £4.9million) for the
year. After taking into account an
exchange gain of £0.03million (2017: loss
of £0.05million) 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 £5.7
million (2017: £4.1million).
The group has considerable financial
resources available at short notice
including cash and cash equivalents
(excluding bank overdrafts) of £9.2million
(2017: £5.3million) and investments
available for sale of £0.9million (2017:
£1.1million). The above financial resources
totalling £10.1million (2017: £6.4million).
The net assets of the group reported as
at year end were £20.1million (2017:
£17.7million). Total assets increased to
£41.6million (2017: £36.6million) mainly
due to the movement in the groups’ cash
and cash equivalents, inventories and
trade receivables held at year end, along
with the groups’ joint venture investment
in West Ealing Projects limited as outlined
above.
Liabilities increased from £18.9million to
£21.5million during the year primarily due
to an increase in South African current
borrowings from £0.03million in 2017 to
£3.74million in 2018. This increase can
mainly be attributed to an increase in
borrowings drawn from the groups’ South
African structured trade facility utilised by
the groups’ 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 £0.4million (2017: gain
of £0.1million) as a result of the
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 61 and the Consolidated Balance
Sheet on page 58.
Loans
South Africa
The group has a South African structured
trade finance facility with Absa Bank
Limited for R100million (South African
Rand) which covers the fluctuating
working capital requirements of the
group’s South African operations. As part
of the process and sale of the washing
plant facilities from Black Wattle Colliery
(Pty) Limited to its wholly owned
subsidiary Sisonke Coal Processing (Pty)
Limited (“Sisonke Coal Processing”), the
R100million bank overdraft facility held by
Black Wattle Colliery (Pty) Limited with
Absa Bank Limited at year end was
replaced in January 2019 by a new
structured trade finance facility for
R100million held by Sisonke Coal
Processing (“new trade facility”). The new
trade 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
In December 2014, the group signed a £6
million term loan facility with Santander.
The Loan is secured against the group’s
UK retail property portfolio. The facility
has a five year term, and is repayable at
the end of the term in December 2019.
The amount repayable on the loan at year
end was £5.9million (2017: £5.9million).
The interest cost of the loan is 2.35%
above LIBOR. The group’s intention is to
enter into a new facility agreement prior
to the termination of the existing facility
agreement. Nonetheless the group has
adequate financial resources at short
notice, including cash and listed equity
investments, to repay the existing facility
should a new facility not be finalised prior
to December 2019. During the year the
group reduced its UK loan by £14,000 in
order to rectify a breach of one of its UK
loan banking covenants. No other
banking covenants were breached by the
group during the year.
Future prospects
As we continue into 2019, the group’s
financial position remains strong and we
expect to achieve significant additional
value from our existing mining operations.
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 6 which form part
of the Strategic Report.
Signed on behalf of the Board of
Directors
Garrett Casey
Finance Director
25 April 2019
Bisichi Mining PLC
2525
Strategic Report Financial & performance review
We are
committed
to providing
opportunities for
surrounding and
labour sending
communities
through Black
Wattle’s Local
Economic
Development
programme
26 Bisichi Mining PLC
Governance
Governance
29 Directors and advisors
30 Five year summary
30 Financial calendar
31 Directors’ report
37 Statement of the Chairman of the remuneration committee
38 Annual remuneration report
45 Audit committee report
47 Valuers’ certificates
48 Directors’ responsibilities statement
49 Independent auditor’s report
Bisichi Mining PLC
2727
1
3
5
7
2
4
6
8
Governance
Management
team
1 SIR MICHAEL HELLER
Chairman
Bisichi Mining PLC
2 ANDREW HELLER
Managing Director
Bisichi Mining PLC
Managing Director
Black Wattle Colliery
3 CHRISTOPHER JOLL
Senior Independent Director
Chairman Audit and
(cid:53)emuneration Committees
4 GARRETT CASEY
Finance Director
Bisichi Mining PLC
Director
Black Wattle Colliery
5 ROBERT GROBLER
Director of Mining
Bisichi Mining PLC
Director
Black Wattle Colliery
6 ETHAN DUBE
Director
Black Wattle Colliery
7 MILLICENT ZVARAYI
Director
Black Wattle Colliery
8 NICO SERFONTEIN
Mine Manager
Black Wattle Colliery
28 Bisichi Mining PLC
Governance
Directors and advisors
SECRETARY AND
REGISTERED OFFICE
Garrett Casey CA (SA)
24 Bruton Place
London W1J 6NE
BLACK WATTLE COLLIERY
DIRECTORS
Andrew Heller
(Managing Director)
Ethan Dube
Robert Grobler
Garrett Casey
Millicent Zvarayi
PROPERTY PORTFOLIO
ASSET MANAGER
James Charlton BSc MRICS
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
Santander UK PLC
National Westminster Bank
PLC
Investec PLC
South Africa
ABSA Bank (SA)
First National Bank (SA)
Standard Bank (SA)
CORPORATE SOLICITORS
United Kingdom
Fladgate LLP, London
Memery Crystal, London
Olswang LLP, London
South Africa
Brandmullers Attorneys,
Middelburg
Herbert Smith Freehills,
Johannesburg
Hogan Lovells,
Johannesburg
Eversheds Sutherland,
Johannesburg
Tugendhaft Wapnick
Banchetti and Partners,
Johannesburg
STOCKBROKERS
Shore Capital Stockbrokers
Limited
REGISTRARS AND
TRANSFER OFFICE
Link Asset Services
Shareholder Services
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
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
* 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.
* Member of the nomination committee
+ Senior independent director
O Member of the audit, nomination
and remuneration committees.
Bisichi Mining PLC
2929
Governance
Five year summary
Consolidated income statement items
Revenue
Operating profit/(loss)
Profit/(loss) before tax
Trading profit/(loss) before tax
Revaluation and impairment (loss)/profit before tax
EBITDA
Operating profit before depreciation, fair value
adjustments and exchange movements (adjusted EBITDA)
Consolidated balance sheet items
Investment properties
Fixed asset investments
Investments held at fair value
Other assets less liabilities less non-controlling interests
Total equity attributable to equity shareholders
Net assets per ordinary share (attributable)
Dividend per share
Financial calendar
2018
£’000
49,945
6,526
5,959
6,397
(438)
8,587
9,088
13,045
1,357
14,402
887
15,289
4,280
19,569
183.3p
6.00p
2017
£’000
Restated
2016
£’000
Restated
2015
£’000
Restated
2014
£’000
Restated
40,350
3,763
1,485
3,317
(1,832)
3,734
5,819
13,245
925
14,170
1,050
15,220
1,922
17,142
160.6p
5.00p
24,923
637
346
(74)
420
2,415
1,516
13,245
2,703
15,948
781
16,729
(72)
16,657
156.0p
4.00p
27,603
150
(147)
(188)
41
1,365
1,717
12,800
2,112
14,912
594
15,506
(196)
15,310
143.4p
4.00p
28,716
1,364
1,568
1,157
411
4,609
4,276
11,575
4,090
15,665
796
16,461
854
17,315
162.2p
4.00p
11 June 2019
26 July 2019
Late August 2019
Late April 2020
Annual General Meeting
Payment of final and special dividend for 2018 (if approved)
Announcement of half-year results to 30 June 2019
Announcement of results for year ending 31 December 2019
30 Bisichi Mining PLC
Governance
Directors’ report
The directors submit their report together with the audited
financial statements for the year ended 31 December 2018.
a total dividend for 2018 of 6p (2017: 5p).
Subject to shareholder approval, the total
dividend per ordinary share for 2018 will
be 6p per ordinary share.
The final dividend and the special
dividend will be payable on Friday 26 July
2019 to shareholders registered at the
close of business on 5 July 2019.
Investment properties and other
properties
The investment property portfolio is
stated at its open market value of
£13,045,000 at 31 December 2018
(2017: £13,245,000) 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
£4,334,000 (2017: £1,315,000).
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 2018 are shown on pages
55 to 99 and in the Strategic Report on
pages 2 to 25. 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 99 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 25.
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 25.
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 2018 can be found on page 12
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
An interim dividend for 2018 of 1p was
paid on 8 February 2019 (Interim 2017:
1p). The directors recommend the
payment of a final dividend for 2018 of 3p
per ordinary share (2017: 3p) as well as a
special dividend of 2p (2017: 1p) making
Bisichi Mining PLC
3131
Governance Directors report
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. Financial instruments
are used to manage the financial risks
facing the group. Treasury operations are
reported at each Board meeting and are
subject to weekly internal reporting.
Directors
The directors of the company for the
whole year were Sir Michael Heller, A R
Heller, G J Casey, C A Joll, R J Grobler (a
South African citizen), and J A Sibbald.
The directors retiring by rotation are Sir M
A Heller, Mr C A Joll and Mr J A Sibbald
who offers themselves for re-election.
Sir Michael Heller has been an executive
Director since 1972 and Chairman since
1981. He is a Chartered Accountant and
has a contract of employment
determinable at six months’ notice.
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.
John Sibbald has been a non-executive
Director since 1988. He is a retired
Chartered Accountant. For most of his
career he was employed in stockbroking
in the City of London where he
specialised in mining and international
investment. He has a contract of service
determinable at three months’ notice.
No director had any material interest in
any contract or arrangement with the
company during the year other than as
shown in this report.
32 Bisichi Mining PLC
Directors’ shareholdings
The interests of the directors in the
shares of the company, including family
and trustee holdings where appropriate,
are shown on page 40 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
15 April 2019:
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
A R Heller –
Cavendish Asset
Management
Limited –
James Hyslop –
representing 3.09
per cent. of the
issued capital.
785,012 shares
representing 7.35
per cent. of the
issued capital.
1,946,154 shares
representing 18.23
per cent. of the
issued share capital.
350,000 shares
representing 3.28
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 2018
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.
Governance Directors report
Board structure
During the year the Board comprised the
executive chairman, the managing
director, two other executive directors
and two non-executive directors. Their
details appear on page 29. 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 48. 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 is chaired
by Christopher Joll and comprises the
non-executive directors and 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 the non-
executive directors. It is chaired by
Christopher Joll. The company’s
executive chairman is normally invited
to attend meetings. The report on
directors’ remuneration is set out on
pages 37 to 44.
• The audit committee comprises the two
non-executive directors and is chaired
by Christopher Joll. 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 45.
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.
Bisichi Mining PLC
3333
Governance Directors report
Independent directors
The senior independent non-executive
director is Christopher Joll. The other
independent non-executive director is
John Sibbald.
Christopher Joll has been a non-executive
director for over eighteen years and John
Sibbald has been a non-executive director
for over thirty years. The Board encourages
Christopher Joll and John Sibbald 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 2018 and
attendance at regular Board meetings
and Board committees was as follows:
Meetings
held
Meetings
Attended
Sir Michael Heller
A R Heller
G J Casey
R J Grobler
C A Joll
J A Sibbald
Board
Nomination committee
Audit committee
Board
Audit committee
Board
Audit committee
Board
Board
Audit committee
Nomination committee
Remuneration committee
Board
Audit committee
Nomination committee
Remuneration committee
5
1
2
5
2
5
2
5
5
2
1
1
5
2
1
1
5
1
2
5
2
5
2
1
5
2
1
1
5
2
1
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.
34 Bisichi Mining PLC
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 monthly 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.
Governance Directors report
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 2018
(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, 11 June 2019 at 11.00
a.m. Resolutions 1 to 10 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 10 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 10)
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 10.1.1 of resolution 10 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 24 April 2019 (being the last
practicable date prior to the publication of
this Directors’ Report). Paragraph 10.1.2
of resolution 10 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 24 April 2019 (being the last
practicable date prior to the publication of
this Directors’ Report).
Bisichi Mining PLC
3535
Governance 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 10 is £711,788.
Resolution 10 complies with guidance
issued by the Investment Association (IA).
The authority granted by resolution 10 will
expire on 31 August 2020 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 (2017: £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 6 to
7 and its financial position is set out on
page 23 of the Strategic Report. In
addition Note 22 to the financial
statements includes the group’s treasury
policy, interest rate risk, liquidity risk,
foreign exchange risks and credit risk.
The group has prepared cash flow
forecasts which demonstrate that the
group has sufficient resources to meet its
liabilities as they fall due for at least the
next 12 months.
In South Africa, a structured trade finance
facility with Absa Bank Limited for
R100million is held by Sisonke Coal
Processing (Pty) Limited, a 100%
subsidiary of Black Wattle Colliery (Pty)
Limited. This facility comprises of a
R100million 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.
The directors expect that the coal market
conditions experienced by Black Wattle
Colliery, its direct mining asset, in 2018
and the first quarter of 2019 will be
similar going into the remainder of 2019.
The directors therefore have a reasonable
expectation that the mine will achieve
positive levels of cash generation for the
group in 2019. As a consequence, the
directors believe that the group is well
placed to manage its South African
business risks successfully.
In the UK, a £6 million term loan facility
repayable in December 2019 is held with
Santander Bank PLC. The loan is secured
against the company’s UK retail property
portfolio. The amount repayable on the
loan at year end was £5.9million (2017:
£5.9million). The debt package has a five
year term and is repayable at the end of
the term. The interest cost of the loan is
2.35% above LIBOR. The group’s
intention is to enter into a new facility
agreement prior to the termination of the
existing facility agreement. Nonetheless
the group has adequate financial
resources at short notice, including cash
and listed equity investments, to repay
the existing facility should a new facility
not be finalised prior to December 2019.
In addition its investment property assets
benefit from long term leases with the
majority of its tenants.
As a result of the banking facilities held
as well as the acceptable levels of
profitability and cash generation the
group’s South African operations is
expected to achieve for 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
25 April 2019
36 Bisichi Mining PLC
Governance
Statement of the Chairman of the
remuneration committee
The remuneration committee presents its report for the year ended
31 December 2018
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
25 April 2019
The Annual Remuneration Report 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 2019.
A copy of the remuneration policy, which
details the remuneration policy for directors,
can be found at www.bisichi.co.uk. The
current remuneration policy was subject
to a binding vote which was approved by
shareholders at the AGM in June 2017.
The approved policy took effect from
7 June 2017 and will apply for a three
year period.
The remuneration committee reviewed
the existing policy and deemed no
changes necessary to the current
arrangements.
Both of the above reports have been
prepared in accordance with The Large
and Medium-sized Companies and
Groups (Accounts and Reports)
(Amendment) Regulations 2013.
Bisichi Mining PLC
3737
Governance
Annual remuneration report
The following information has been audited:
Single total figure of remuneration for the year ended 31 December 2018:
Executive Directors
Sir Michael Heller
A R Heller
G J Casey
R Grobler
Non–Executive Directors
C A Joll*
J A Sibbald*
Total
Salaries
and Fees
£’000
Bonuses
£’000
Benefits
£’000
Pension
£’000
82
495
143
201
33
2
956
200
500
200
137
-
-
1,037
2
71
28
27
-
3
131
-
5
20
14
-
-
39
*Members of the remuneration committee for the year ended 31 December 2018
Single total figure of remuneration for the year ended 31 December 2017:
Executive Directors
Sir Michael Heller
A R Heller
G J Casey
R Grobler
Non–Executive Directors
C A Joll*
J A Sibbald*
Total
Salaries
and Fees
£’000
Bonuses
£’000
Benefits
£’000
Pension
£’000
75
450
133
188
30
2
878
-
350
125
122
-
-
597
-
66
14
16
-
3
99
-
32
18
11
-
-
61
*Members of the remuneration committee for the year ended 31 December 2017
38 Bisichi Mining PLC
Total
before
Share
options
£’000
284
1,071
391
379
33
5
2,163
Total
before
Share
options
£’000
75
898
290
337
30
5
1,635
Share
options
£’000
-
2
2
-
-
-
4
Share
options
£’000
-
-
-
-
-
-
-
Total
2018
£’000
284
1,073
393
379
33
5
2,167
Total
2017
£’000
75
898
290
337
30
5
1,635
Governance Annual remuneration report
Summary of directors’ terms
Executive directors
Sir Michael Heller
A R Heller
G J Casey
R J Grobler
Non-executive directors
C A Joll
J A Sibbald
Date of contract
Unexpired
term
Notice
period
November 1972
Continuous
January 1994
Continuous
June 2010
April 2008
Continuous
Continuous
6 months
3 months
3 months
3 months
February 2001
October 1988
Continuous
Continuous
3 months
3 months
Pension schemes and incentives
Three (2017: Three) directors have benefits under money purchase pension schemes. Contributions in 2018 were £39,000 (2017:
£61,000), see table above.
Scheme interests awarded during the year
During the year the company granted options over ordinary shares in the Company of 10 pence (the “Options”) to the following
directors of the Company, under the Company’s Unapproved Executive Share Option Scheme 2012 (“the Scheme”), as set out below:
• Andrew Heller: 150,000 options granted on 6 February 2018 at an exercise price of £0.7350 per share
• Garrett Casey: 230,000 options granted on 6 February 2018 at an exercise price of £0.7350 per share
The above Options are subject to the terms and conditions set out in the rules of the Scheme, and subject to the memorandum and
articles of association of the Company. These Options are exercisable at any time during the next 10 years from the dates of grant
stated above. No consideration has been paid for the granting of these Options.
Share option schemes
The company currently has only 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. The “2010
Scheme” which was approved by shareholders on 7 June 2011, was cancelled on the 5 February 2018 when the company entered
into an agreement with Garrett Casey to surrender the 80,000 Options which were granted on 31 August 2010 under the Scheme.
The aggregate consideration paid by the Company to effect the cancellation was £1.
The 2010 Scheme
G J Casey
The 2012 Scheme
A R Heller
A R Heller
G J Casey
G J Casey
*Middle market price at date of grant
Number of share options
Option
price*
1 January
2018
Options
granted/
(Surrendered)
in
2018
31
December
2018
Exercisable
from
Exercisable
to
202.05p
80,000
(80,000)
-
31/08/2013 30/08/2020
87.01p
73.50p
87.01p
73.50p
150,000
-
150,000
-
-
150,000
18/09/2015 17/09/2025
150,000
-
230,000
150,000 06/02/2018 06/02/2028
150,000
18/09/2015 17/09/2025
230,000 06/02/2018 06/02/2028
Bisichi Mining PLC
3939
Governance Annual remuneration report
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.
Payments to past directors
No payments were made to past directors in the year ended 31 December 2018 (2017: £nil).
Payments for loss of office
No payments for loss of office were made in the year ended 31 December 2018 (2017: £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
31.12.2018
1.1.2018
31.12.2018
148,783
785,012
148,783
785,012
-
-
-
-
-
40,000
-
40,000
181,334
-
-
-
-
-
1.1.2018
181,334
-
-
-
-
-
– Bisichi Mining
– FTSE All Share Mining
Sir Michael Heller
A R Heller
C A Joll
J A Sibbald
R J Grobler
G J Casey
The following section is unaudited.
The following graph illustrates the
company’s performance compared
with a broad equity market index over
a ten year period. Performance is
measured by total shareholder return.
The directors have chosen the FTSE
All Share Mining index as a suitable
index for this comparison as it gives
an indication of performance against
a spread of quoted companies in the
same sector.
The middle market price of Bisichi
Mining PLC ordinary shares at 31
December 2018 was 92.5p (2017:
70.5p). During the year the share
price ranged between 70.5p and
117.5p.
60.00%
40.00%
20.00%
0.00%
-20.00%
-40.00%
-60.00%
-80.00%
-100.00%
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
40 Bisichi Mining PLC
Governance Annual remuneration report
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 2009 to 31 December 2018.
Year
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
Managing
Director
A R Heller
A R Heller
A R Heller
A R Heller
A R Heller
A R Heller
A R Heller
A R Heller
A R Heller
A R Heller
Managing
Director
Single total
figure of
remuneration
£’000
1,073
898
850
912
862
614
721
626
568
817
Annual
bonus
payout
against
maximum
opportunity*
%
Long-term
incentive
vesting rates
against
maximum
opportunity*
%
34%
25%
22%
22%
22%
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Bisichi Mining PLC does not have a Chief Executive so the table includes the equivalent information for the Managing Director.
*There were no formal criteria or conditions to apply in determining the amount of bonus payable or the number of shares to be issued prior to 2014.
Percentage change in remuneration of director undertaking role of Managing Director
Base salary
Benefits
Bonuses
Managing Director
£’000
2017 % change
450
66
350
10%
8%
43%
2018
495
71
500
UK based employees
£’000
2017 % change
208
14
125
8%
114%
220%
2018
225
30
400
Bisichi Mining PLC does not have a Chief Executive so the table includes the equivalent information for the Managing Director. The
comparator group chosen is all UK based employees as the remuneration committee believe this provides the most accurate
comparison of underlying increases based on similar annual bonus performances utilised by the group.
Relative importance of spend on pay
The total expenditure of the group on remuneration to all employees (see Notes 29 and 9 to the financial statements) is shown below:
Employee remuneration
Distribution to shareholders
2018
£’000
7,335
641
2017
£’000
6,396
534
Bisichi Mining PLC
4141
Governance Annual remuneration report
Statement of implementation of new remuneration policy
The remuneration policy was approved at the AGM in June 2017. The policy took effect from 7 June 2017 and will apply for 3 years
unless changes are deemed necessary by the Remuneration committee. The company may not make a remuneration payment or
payment for loss of office to a person who is, is to be, or has been a director of the company unless that payment is consistent with
the approved remuneration policy, or has otherwise been approved by a resolution of members.
Consideration by the directors of matters relating to directors’ remuneration
The remuneration committee considered the executive directors remuneration and the board considered the non-executive
directors remuneration in the year ended 31 December 2018.
Shareholder voting
At the Annual General Meeting on 6 June 2018, there was an advisory vote on the resolution to approve the remuneration report,
other than the part containing the remuneration policy. In addition, on 7 June 2017 there was a binding vote on the resolution to
approve the current remuneration policy the results of which are detailed below:
Resolution to approve the Remuneration Report (6 June 2018)
Resolution to approve the Remuneration Policy (7 June 2017)
% of votes
for
% of votes
against
No of votes
withheld
70.72%
74.77%
29.28%
25.16%
-
-
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 39 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.
42 Bisichi Mining PLC
Governance Annual remuneration report
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 2017 AGM. The approved policy took effect from 7 June 2017. 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.
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
Annual
Bonus
To reward and
incentivise
Paid into money
purchase schemes
Contractual benefits
can include but are not
limited to:
Car or car allowance
Group health cover
Death in service cover
Permanent health
insurance
The committee retains
the discretion to approve
changes in contractual
benefits in exceptional
circumstances or where
factors outside the
control of the Group
lead to increased costs
(e.g. medical inflation)
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 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 2018 is shown in the table on
page 38.
The current maximum bonus opportunity will not
exceed 200% of base salary in any one year, but
the remuneration committee reserves the power to
award up to 300% in an exceptional year.
Performance conditions will be assessed on
an annual basis. The performance measures
applied may be financial, non-financial, corporate,
divisional or individual and in such proportion as the
remuneration committee considers appropriate
Bisichi Mining PLC
4343
Governance Annual remuneration report
Element Purpose
Share
Options
To provide
executive
directors with
a long-term
interest in the
company
Policy
Granted under existing
schemes (see page 39)
Operation
Offered at appropriate
times by the remuneration
committee
Opportunity and performance conditions
Entitlement to share options is not subject to any
specific performance conditions.
Share options will be offered by the remuneration
committee as appropriate.
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 two Share Option
Schemes (see page 39). The performance
conditions for the 2010 scheme requires growth
in net assets over a three year period to exceed
the growth in the retail price index by a scale
of percentages. 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.
No individual director will be awarded a base salary
in excess of £40,000 per annum.
No specific performance conditions are attached to
base salaries.
Reviewed annually
Non-executive directors
Base
salary
To recognise:
Skills
Experience
Value
Pension
Benefits
Share
Options
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.
No pension offered
No benefits offered except
to one non-executive
director who is eligible for
health
cover (see annual
remuneration report
page 38)
Non-executive directors do
not participate in the share
option schemes
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.
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.
For details of remuneration of other company employees can be found in Note 29 to the financial statements.
44 Bisichi Mining PLC
Governance
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.
• 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.
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;
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.
Bisichi Mining PLC
4545
Governance Audit committee report
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.
(formerly GT (Jhb) 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
25 April 2019
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 as well as the value of revenues
generated by the group, given the
importance of production, and its
Adjusted EBITDA, given that it is a key
trading KPI, when determining
quantitative materiality. 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.
46 Bisichi Mining PLC
Governance
Valuers’ certificates
To the directors of Bisichi Mining PLC
In accordance with your instructions we have carried out a valuation of the freehold property interests held as at 31 December
2018 by the company as detailed in our Valuation Report dated 28 January 2019.
Having regard to the foregoing, we are of the opinion that the open market value as at 31 December 2018 of the interests owned
by the company was £13,045,000 being made up as follows:
Freehold
Leasehold
Leeds
28 January 2019
£’000
10,350
2,695
13,045
Carter Towler
Regulated by Royal Institute of Chartered Surveyors
Bisichi Mining PLC
4747
Governance
Directors’ responsibilities statement
The directors are responsible for preparing the annual report and the financial
statements in accordance with applicable law and regulations.
• 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 Financial Reporting
Standards (IFRSs) as adopted by 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 or the principal risks
and uncertainties that they face.
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 Financial Reporting
Standards as adopted by the European
Union and 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 IFRSs as
adopted by 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;
48 Bisichi Mining PLC
Governance
Independent auditor’s report
To the members of Bisichi Mining PLC
Opinion
We have audited the financial statements
of Bisichi Mining Plc (the ‘Parent Company’)
and its subsidiaries (the ‘Group’) for the year
ended 31 December 2018 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
parent company balance sheet, the parent
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 the
preparation of the Group financial
statements is applicable law and
International Financial Reporting
Standards (IFRSs) as adopted by 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
FRS 101 Reduced Disclosure Framework
(United Kingdom Generally Accepted
Accounting Practice).
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 2018 and of the Group’s
profit for the year then ended;
• the Group financial statements have
been properly prepared in accordance
with IFRSs as adopted by the European
Union;
• the Parent Company financial statements
have been properly prepared in accordance
with United Kingdom Generally Accepted
Accounting Practice; and
• the directors’ use of the going concern
basis of accounting in the preparation
of the financial statements is not
appropriate; or
• 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.
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 are
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. We believe that the audit
evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Conclusions relating to going
concern and viability statement
We have nothing to report in respect of
the following information in the annual
report, in relation to which the ISAs (UK)
require us to report to you whether we
have anything material to add or draw
attention to:
• the directors have not disclosed in the
financial statements any identified
material uncertainties that may cast
significant doubt about the Group’s or
the Parent Company’s ability to continue
to adopt the going concern basis of
accounting for a period of at least twelve
months from the date when the financial
statements are authorised for issue.
Key audit matters
Key audit matters are those matters that,
in our professional judgment, 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.
The following key audit matters were
identified for the period under review:
Bisichi Mining PLC
4949
Governance Independent auditor’s report
Key Audit Matter
How the matter was addressed in our audit
PROPERTY VALUATION
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 requires significant judgement and estimates
by the Directors, including assessment of independent third party
valuations obtained for the portfolio.
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 judgments.
Given these factors, this area was considered to be a significant
focus for our audit given the subjective nature of certain
assumptions inherent in each valuation.
We obtained an understanding of management’s approach to the
valuation of investment properties.
We reviewed the independent external valuation reports and
confirmed their consistency with the valuations presented in the
financial statements. We met with the Group’s 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 assessed the competency, independence and objectivity of
the independent external valuer which included making inquiries
regarding interests and relationships that may have created a
threat to the valuer’s objectivity. We have reviewed the scope of the
valuation and confirmed that it is in accordance with the Statements
of Asset Valuation and Guidance Notes published by The Royal
Institution of Chartered Surveyors.
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.
KEY OBSERVATIONS
We found the valuations determined by the Group for its investment properties in note 11 and investment properties included within the
Dragon retail Joint Venture in note 14 to be consistent with the independent external valuation reports.
50 Bisichi Mining PLC
Governance Independent auditor’s report
Key Audit Matter
How the matter was addressed in our audit
REVENUE RECOGNITION
The group generated revenues from coal sales,
rental income and service charge income (See
note 2 and Group Accounting Policies).
We considered it appropriate, noting that this
was the first year of application of IFRS 15, to
assess the appropriateness of the group’s revenue
recognition policies and their application for
compliance with IFRS. In addition, we considered
there to be a risk that coal sales revenue is
recorded in the incorrect period.
As reported under the group accounting policies,
during the course of the audit a material error was
identified in respect of the group’s accounting
treatment of transport costs to deliver export coal
to the export terminal under a specific agreement.
Such transport costs were previously incorrectly
recorded as a deduction against revenue.
Management have revised the accounting
treatment in 2018 and restated the prior year
revenue and operating costs accordingly.
The impact on FY 2018 is to increase revenue
and operating costs by £3.1m. The impact of the
prior year restatement was to increase revenue
and operating costs by £2.9m. There is no profit
or net assets effect of the restatement.
KEY OBSERVATIONS
We assessed the group’s revenue recognition policy for domestic and export
coal sales for compliance with the relevant accounting standard. In doing so,
we reviewed sales contracts and terms with material customers.
We tested controls over domestic coal sales focused on the authorisation
and recording of revenue. We performed tests of detail verifying a sample of
domestic revenue to supporting documentation.
We obtained third party confirmations which we confirmed to amounts
recorded in the ledgers for export sales and confirmed a sample of sales to
contract terms.
We tested the recording of revenue around the year end and assessed the
revenue recognition point for consistency with the group’s revenue recognition
policy, customer terms and supporting documents regarding despatch /
delivery as applicable.
We reviewed credit notes around the year end for indications that revenue had
been inappropriately recorded.
In respect of the change in accounting treatment for transport costs and
associated restatement of the prior year revenues and operating costs, we
have reviewed the relevant contract and assessed the appropriateness of the
accounting treatment under relevant accounting standards for the current and
prior period. In doing so, we consulted with our financial reporting technical
experts.
We have agreed a sample of the costs to supporting documentation and
reviewed the general ledgers in detail to check the completeness and
accuracy of the adjustments in the current and prior period.
We found the Group’s revenue recognition policies to be compliant with IFRS and found that, subsequent to the restatement and
adjustment, revenue is recorded in line with the Group’s stated policies.
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. Importantly,
misstatements below these levels will not
necessarily be evaluated as immaterial as
we also take into 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.
The Materiality level we applied was
calculated based on 5% of profit before
tax (2017: 1% of total assets), reflecting
the result for the year and the fact that
the Group is no longer in a transitionary
phase of mining in respect of its South
African operations.
Bisichi Mining PLC
5151
Governance Independent auditor’s report
The key materiality figures used in the audit are detailed in the table below.
Materiality
Materiality for the Financial Statements as a whole
Performance Materiality levels used for the audits of the
significant components of the audit
FY2018
FY2017
£300,000
£26,000 to £188,000
£300,000
£24,000 to £170,000
Materiality for the Parent Company
Performance materiality for the Parent Company
£220,000
£165,000
£225,000
£170,000
Audit scope coverage
100% of total assets, 100%
of revenue and 100% of profit
before tax
100% of total assets, 100%
of revenue and 100% of profit
before tax
Performance materiality is the application of materiality at the individual account or balance level set at an amount to reduce to an
appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality for the
financial statements as a whole.
We agreed with the audit committee that we would report to the committee all individual audit differences identified during the
course of our audit in excess of £15,000 (2017: £15,000). We also agreed to report differences below these thresholds that, in our
view, warranted reporting on qualitative grounds.
An overview of the scope of our audit
Whilst Bisichi Mining Plc is a company
listed on the Standard Segment of the
London Stock Exchange, 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 6 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.
A BDO member firm performed a full
scope audit of the mine in South Africa,
under our direction and supervision as
Group auditors under ISA (UK) 600.
As part of our audit strategy, as Group
auditors:
• Detailed Group reporting instructions
were sent to the component auditor,
which included the significant areas to
be covered by the audit (including areas
that were considered to be key audit
matters as detailed above), and set out
the information required to be reported
to the Group audit team.
52 Bisichi Mining PLC
• The audit partner visited the Group’s
mining operation to update our
understanding of the operations and
meet with component management.
• We performed a review of the
component audit files and held
meetings with the component audit
team during the planning and
completion phases of their audit.
• 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 additional
procedures in respect of the significant
risk areas that represented Key Audit
Matters in addition to the procedures
performed by the component auditor.
• The remaining non-significant
companies within the Group were
principally subject to analytical review
procedures.
Other information
The Directors are responsible for the other
information. The other information comprises
the information included in the Bisichi
Mining Plc Annual Report 2018, 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. In connection
with our audit of the financial statements,
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 audit or
otherwise appears to be materially
misstated. If we identify such material
inconsistencies or apparent material
misstatements, we are required to determine
whether there is a material misstatement
in the financial statements or a material
misstatement of the other information. If,
based on the work we have performed, we
conclude that there is a material misstatement
of the other information, we are required
to report that fact.
We have nothing to report in this regard.
Governance Independent auditor’s report
Opinions on other matters
prescribed by the Companies
Act 2006
In our opinion, the part of the Directors’
remuneration report to be audited has
been properly prepared in accordance
with the Companies Act 2006.
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 those reports
have been prepared in accordance with
applicable legal requirements.
Matters on which we are required
to report by exception
In the light of the knowledge and
understanding of the Group and the
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.
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 set out on page
48, 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.
A further description of our
responsibilities for the audit of the
financial statements is located on the
Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities.
This description forms part of our
auditor’s report.
Other matters which we are
required to address
Following the recommendation of the
audit committee, we were appointed to
audit the financial statements for the year
ending 31 December 2018 and subsequent
financial periods. The period of total
uninterrupted engagement is 31 years,
covering the years ending 1987 to 2018.
Under the FRC’s Ethical Standard we are
required to rotate off as the Company’s
Auditors in 2021. During the uninterrupted
engagement period the engagement
partner has rotated in accordance with
the applicable requirements.
The non-audit services prohibited by the
FRC’s Ethical Standard were not provided
to the Group or the Parent Company and we
remain independent of the Group and the
Parent Company in conducting our audit.
Our audit opinion is consistent with the
additional report to the audit committee.
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.
Ryan Ferguson
(Senior Statutory Auditor)
For and on behalf of BDO LLP
Statutory Auditor, London, United Kingdom
25 April 2019
BDO LLP is a limited liability partnership
registered in England and Wales (with
registered number OC305127).
Bisichi Mining PLC
5353
54 Bisichi Mining PLC
Financial statements
Financial
statements
56 Consolidated income statement
57 Consolidated statement of other comprehensive income
58 Consolidated balance sheet
60 Consolidated statement of changes in shareholders’ equity
61 Consolidated cash flow statement
62 Group accounting policies
69 Notes to the financial statements
91 Company balance sheet
92 Company statement of changes in equity
93 Company accounting policies
Bisichi Mining PLC
5555
Financial statements
Consolidated income statement
for the year ended 31 December 2018
Group revenue
Operating costs
Operating profit before depreciation, fair value
adjustments and exchange movements
Depreciation
Operating profit before fair value adjustments and
exchange movements
Exchange losses
Decrease in value of investment properties
Gain on disposal of other investments available for sale
Loss on investments held at fair value
Operating profit/(loss)
Share of (loss)/profit in joint ventures
Write-off of investment in joint venture
Profit/(loss) before interest and taxation
Interest receivable
Interest payable
Profit/(loss) before tax
Taxation
Profit/(loss) for the year
Attributable to:
Equity holders of the company
Non-controlling interest
Profit/(loss) for the year
Profit per share – basic
Profit per share – diluted
2018
Trading
£’000
Notes
2
49,945
3 (40,857)
9,088
2018
Revaluations
and
impairment
£’000
-
-
-
2018
Total
£’000
49,945
(40,857)
9,088
2017
Trading
£’000
Restated
40,350
(34,531)
5,819
2017
Revaluations
and
impairment
£’000
-
-
-
2017
Total
£’000
Restated
40,350
(34,531)
5,819
(2,113)
6,975
(63)
-
-
-
6,912
-
-
6,912
126
(641)
6,397
(1,971)
4,426
3,697
729
4,426
3
1
4
1
13
13
7
5
8
27
10
10
-
-
(2,113)
6,975
(1,790)
4,029
-
-
-
(215)
-
(171)
(386)
(52)
-
(438)
-
-
(438)
55
(383)
(383)
-
(383)
(256)
-
3
-
3,776
-
-
3,776
205
(664)
3,317
(588)
2,729
-
(13)
-
-
(13)
8
(1,827)
(1,832)
-
-
(1,832)
24
(1,808)
2,557
172
2,729
(1,808)
-
(1,808)
(63)
(215)
-
(171)
6,526
(52)
-
6,474
126
(641)
5,959
(1,916)
4,043
3,314
729
4,043
31.05p
30.85p
(1,790)
4,029
(256)
(13)
3
-
3,763
8
(1,827)
1,944
205
(664)
1,485
(564)
921
749
172
921
7.02p
7.02p
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. A revenue recognition error was identified in respect of the prior year. An amount of £2,891,000
had been incorrectly recorded as a deduction against revenue rather than shown as an operating cost. The above
comparatives have been restated accordingly. Refer to the group’s accounting policies on page 62.
56 Bisichi Mining PLC
Financial statements
Consolidated statement of other
comprehensive income
for the year ended 31 December 2018
Profit for the year
Other comprehensive income/(expense):
Items that may be subsequently recycled to the income statement:
Exchange differences on translation of foreign operations
Gain on available for sale investments
Taxation
Other comprehensive income for the year net of tax
Total comprehensive income for the year net of tax
Attributable to:
Equity shareholders
Non-controlling interest
2018
£’000
4,043
(430)
-
-
(430)
3,613
2,937
676
3,613
2017
£’000
921
91
103
(20)
174
1,095
912
183
1,095
Bisichi Mining PLC
5757
Financial statements
Consolidated balance sheet
at 31 December 2018
Assets
Non-current assets
Value of investment properties
Fair value of head lease
Investment properties
Mining reserves, plant and equipment
Investments in joint ventures accounted for using equity method
Other investments at fair value through profit and loss (“FVPL”) (previously classified
as other investments available for sale)
Total non-current assets
Current assets
Inventories
Trade and other receivables
Corporation tax recoverable
Investments in listed securities held at FVPL (previously classified as Available for
sale investments)
Cash and cash equivalents
Total current assets
Total assets
Notes
2018
£’000
2017
£’000
11
31
12
13
13
16
17
18
13,045
185
13,230
8,531
1,322
35
13,245
152
13,397
8,613
874
51
23,118
22,935
1,511
6,837
19
887
9,221
18,475
41,593
828
6,417
-
1,050
5,327
13,622
36,557
58 Bisichi Mining PLC
Financial statements Consolidated balance sheet
Liabilities
Current liabilities
Borrowings
Trade and other payables
Current tax liabilities
Total current liabilities
Non-current liabilities
Borrowings
Provision for rehabilitation
Finance lease liabilities
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Share premium account
Translation reserve
Available for sale reserve
Other reserves
Retained earnings
Total equity attributable to equity shareholders
Non-controlling interest
Total equity
Notes
2018
£’000
2017
£’000
20
19
20
21
31
23
24
25
27
(9,580)
(7,257)
(92)
(16,929)
(547)
(1,571)
(185)
(2,226)
(4,529)
(21,458)
20,135
1,068
258
(2,048)
-
707
19,584
19,569
566
20,135
(1,288)
(7,381)
(356)
(9,025)
(5,872)
(1,349)
(152)
(2,485)
(9,858)
(18,883)
17,674
1,068
258
(1,671)
143
683
16,661
17,142
532
17,674
These financial statements were approved and authorised for issue by the board of directors on 25 April 2019 and signed on its
behalf by:
A R Heller
Director
G J Casey
Director
Company Registration No. 112155
Bisichi Mining PLC
5959
Financial statements
Consolidated statement of changes
in shareholders’ equity
Available-
for-sale
reserves
£’000
Other
reserves
£’000
Retained
earnings
£’000
Total
£’000
Non-
controlling
interest
£’000
Total
equity
£’000
60
-
-
-
83
83
-
143
(143)
-
-
-
-
-
-
-
-
-
683
16,339 16,657
349
17,006
-
-
-
-
-
-
(1,808)
2,557
(1,808)
2,557
749
-
749
749
163
912
-
172
172
11
183
(1,808)
2,729
921
174
1,095
(427)
(427)
-
(427)
683
16,661
17,142
532
17,674
-
143
-
683
16,804
17,142
(383)
3,697
3,314
-
(383)
3,697
3,314
(377)
-
532
-
729
729
(53)
-
17,674
(383)
4,426
4,043
(430)
3,314
2,937
676
3,613
-
24
(534)
-
(534)
24
(642)
-
(1,176)
24
707
19,584 19,569
566 20,135
-
-
-
-
-
for the year ended 31 December 2018
Share
capital
£’000
Share
Premium
£’000
Translation
reserves
£’000
Balance at 1 January 2017
1,068
258
(1,751)
Revaluation and impairments
Trading
Profit for the year
Other comprehensive income
Total comprehensive income
for the year
Dividend (note 9)
-
-
-
-
-
-
-
-
-
-
-
-
Balance at 31 December 2017
1,068
IFRS 9 Reclassification
-
Balance at 1 January 2018
1,068
258
-
258
Revaluation and impairments
Trading
Profit for the year
Other comprehensive
expense
Total comprehensive income
for the year
Dividend (note 9)
Share options charge
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
80
80
-
(1,671)
-
(1,671)
-
-
-
(377)
(377)
-
-
Balance at 31 December 2018
1,068
258
(2,048)
60 Bisichi Mining PLC
Financial statements
Consolidated cash flow statement
for the year ended 31 December 2018
Cash flows from operating activities
Operating profit
Adjustments for:
Depreciation
Share based payments
Unrealised loss/(gain) on investment properties
Realised gain on disposal of other investments available for sale
Loss on investments held at FVPL
Exchange adjustments
Cash flow before working capital
Change in inventories
Change in trade and other receivables
Change in trade and other payables
Cash generated from operations
Interest received
Interest paid
Income tax paid
Cash flow from operating activities
Cash flows from investing activities
Acquisition of reserves, property, plant and equipment
Investment in joint venture
Disposal of other investments
Acquisition of other investments
Cash flow from investing activities
Cash flows from financing activities
Borrowings drawn
Borrowings repaid
Equity dividends paid
Cash flow from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at 1 January
Exchange adjustment
Cash and cash equivalents at 31 December
Cash and cash equivalents at 31 December comprise:
Cash and cash equivalents as presented in the balance sheet
Bank overdrafts (secured)
Year ended
31 December
2018
£’000
Year ended
31 December
2017
£’000
6,526
3,763
2,113
24
215
-
171
63
9,112
(797)
(894)
100
7,521
126
(598)
(2,282)
4,767
(2,881)
(500)
8
-
(3,373)
753
(19)
(534)
200
1,594
4,065
27
5,686
9,221
(3,535)
5,686
1,790
-
13
(3)
-
256
5,819
896
919
69
7,703
124
(546)
(11)
7,270
(1,754)
14
(196)
(1,936)
23
(25)
(427)
(429)
4,905
(890)
50
4,065
5,327
(1,262)
4,065
Bisichi Mining PLC
6161
Financial statements
Group accounting policies
for the year ended 31 December 2018
Basis of accounting
The results for the year ended 31
December 2018 have been prepared in
accordance with International Financial
Reporting Standards (IFRS) as adopted
by the European Union and with those
parts of the Companies Act 2006
applicable to companies reporting under
IFRS. In applying the group’s accounting
policies and assessing areas of judgment
and estimation materiality is applied as
detailed on page 46 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:
Year-end rate
Annual average
£1 Sterling: Rand
2018
2017
£1 Sterling: Dollar
2018
2017
18.3723
17.5205
16.6686
17.1540
1.2690
1.3096
1.35028
1.29174
Revenue recognition restatement
During the review of revenue recognition in
South Africa a revenue recognition error
was identified in respect of the treatment of
transport and loading costs to deliver export
coal under certain export agreements. The
costs in prior periods, had been incorrectly
recorded as a deduction against revenue
rather than shown as an operating cost. In
the current year such costs have been
recorded in operating costs and the
comparatives restated accordingly.
The impact on the current year is to increase
both revenue and operating costs by
£3,101,000 and the prior year requires an
equivalent restatement totalling £2,891,000.
There is no profit or net assets impact as a
result of the prior year restatement.
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.
62 Bisichi Mining PLC
In South Africa, a structured trade finance
facility with Absa Bank Limited for
R100million is held by Sisonke Coal
Processing (Pty) Limited, a 100%
subsidiary of Black Wattle Colliery (Pty)
Limited. 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. This facility comprises of a
R100million revolving facility to cover the
working capital requirements of the group’s
South African operations.
The directors expect that the coal market
conditions experienced by Black Wattle
Colliery, its direct mining asset, in 2018
and the first quarter of 2019 will be
similar going into the remainder of 2019.
The directors therefore have a reasonable
expectation that the mine will achieve
positive levels of cash generation for the
group in 2019. As a consequence, the
directors believe that the group is well
placed to manage its South African
business risks successfully.
In the UK, a £6 million term loan facility
repayable in December 2019 is held with
Santander Bank PLC. The loan is secured
against the company’s UK retail property
portfolio. The amount repayable on the loan
at year end was £5.9million (2017:
£5.9million). The debt package has a five
year term and is repayable at the end of the
term. The interest cost of the loan is 2.35%
above LIBOR. . The group’s intention is to
enter into a new facility agreement prior to
the termination of the existing facility
agreement. Nonetheless the group has
adequate financial resources at short notice,
including cash and listed equity investments,
to repay the existing facility should a new
facility not be finalised prior to December
2019. In addition its investment property
assets benefit from long term leases with
the majority of its tenants.
Financial statements Group accounting policies
As a result of the banking facilities held
as well as the acceptable levels of
profitability and cash generation the
group’s South African operations is
expected to achieve for 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 2018.
IFRS 15 ‘Revenue from Contracts with
Customers’ was issued by the IASB in May
2014. It is effective for accounting periods
beginning on or after 1 January 2018. The
new standard replaces the existing
accounting standards, and provides
enhanced detail on the principle of
recognising revenue to reflect the transfer
of goods and services to customers at a
value which the company expects to be
entitled to receive. The standard also
updates revenue disclosure requirements.
The standard was endorsed by the EU on
22 September 2017. The Directors
assessed the impact of IFRS 15 on the
results of the Group and the only material
impact related to the inclusion of UK
property service charge income in revenue
rather than being set off against service
charge expenditure in operating costs.
The impact on the current year was an
increase in revenue and an increase in
operating costs in the income statement of
£137,000. Changes in accounting policies
resulting from IFRS 15 have been applied
using the full retrospective method, with
no restatement of comparative information
for prior year in accordance with the
practical expedient not to restate
contracts that begin and end within the
same annual reporting period.
IFRS 9 was published in July 2014 and is
effective for the group from 1 January
2018. The standard was endorsed by the
EU on 22 November 2017. IFRS 9
supersedes IAS 39 “Financial Instruments:
Recognition and Measurement” and is
applicable to financial assets and financial
liabilities, and covers the classification,
measurement, impairment and de-
recognition of financial assets and
financial liabilities together with a new
hedge accounting model. The adoption of
IFRS 9 has resulted in changes in the
Group’s accounting policies for the
recognition, classification and
measurement of financial assets and
financial liabilities and impairment of
financial assets. IFRS 9 modifies the
classification and measurement of certain
classes of financial assets and liabilities
and required the Group to reassess
classification of financial assets into three
primary categories (amortised cost, fair
value through profit and loss, fair value
through other comprehensive income),
reflecting the business model in which
assets are managed and their cash flow
characteristics. Financial liabilities
continue to be measured at either fair
value through profit and loss or amortised
cost. In addition, IFRS 9 introduced an
expected credit loss (“ECL”) impairment
model, which means that anticipated as
opposed to incurred credit losses are
recognised which may result in earlier
recognition of impairments. The only
material impact of IFRS 9 on the Group
financial statements related to the
movement in fair value of the Groups held
for trading (previously available for sale)
investments and non-current other
investments (“the investments”). Under IAS
39 the movement in the investments was
measured at fair value through other
comprehensive income and taken to an
available for sale reserve. Under IFRS 9
the movements are measured at fair value
through profit and loss and recorded in the
income statement. The Group has not
restated prior periods as allowed by the
transition provisions of IFRS 9. In order to
reclassify the impact of historic
movements on the investments, an
adjustment of £143,000 has been made to
the Group statement of changes in equity
at 1 January 2018 transferring the
historical fair value movements of the
investments from the available for sale
reserve to retained earnings.
The Group has not adopted any Standards
or Interpretations in advance of the
required implementation dates. The
following new and revised IFRS standards,
which are applicable to the group, were
issued but are not yet effective:
IFRS 16 ‘Leases’ – IFRS 16 ‘Leases’ was
issued by the IASB in January 2017 and
is effective for accounting periods
beginning on or after 1 January 2019. The
new standard will replace IAS 17 ‘Leases’
and will eliminate the classification of
leases as either operating leases or
finance leases and, instead, introduce a
single lessee accounting model. The
standard, which has been endorsed by
the EU, provides a single lessee
accounting model, specifying how leases
are recognised, measured, presented and
disclosed. The Directors are currently
evaluating the financial and operational
impact of this standard including the
application to service contracts at the
mine containing leases. The review of the
impact of IFRS 16 will require an
assessment of all leases and the impact
of adopting this standard cannot be
reliably estimated until this work is
substantially complete.
The Directors do not anticipate that the
adoption of the other standards and
interpretations not listed above will have a
material impact on the accounts. Certain
of these standards and interpretations will,
when adopted, require addition to or
amendment of disclosures in the accounts.
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.
Bisichi Mining PLC
6363
Financial statements Group accounting policies
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 of 1.9million tonnes. 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
64 Bisichi Mining PLC
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
at each reporting date. 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 2018 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. A 15%
reduction in average forecast coal prices
or a 17% 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 directors note that the
fair value measurement of the investment
properties, can be considered to be less
judgemental where external valuers have
been used and as a result of the nature of
the underlying assets. 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.
Financial statements Group accounting policies
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 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
2018, 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 12.
Basis of consolidation
The group accounts incorporate the
accounts of Bisichi Mining 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 sales 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.
Bisichi Mining PLC
6565
Financial statements Group accounting policies
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
Motor vehicles
Office equipment
5 – 10 per cent per annum, but shorter of its useful life or the life of the mine
25 – 33 per cent per annum
10 – 33 per cent per annum
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
66 Bisichi Mining PLC
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.
Financial statements Group accounting policies
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, ie as a deduction from
equity. Details of the share options in
issue are disclosed in the Directors’
Remuneration Report on page 39 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.
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.
Transactions in foreign currencies are
translated at the exchange rate ruling on
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
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.
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 initially
calculated as the present value of the
minimum lease payments, reducing in
subsequent reporting periods by the
apportionment of payments to the lessor.
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.
Bisichi Mining PLC
6767
Financial statements Group accounting policies
Other financial assets and liabilities
The groups 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 to 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
68 Bisichi Mining PLC
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 2018
1. SEGMENTAL REPORTING
Business analysis
Significant revenue customer A
Significant revenue customer B
Significant revenue customer C
Other revenue
Segment revenue
Operating (loss)/profit before fair value adjustments
& exchange movements
Revaluation of investments & exchange movements
Operating profit and segment result
Segment assets
Unallocated assets
– Non-current assets
– Cash & cash equivalents
Total assets excluding investment in joint ventures and assets held for sale
Mining
£’000
34,112
11,557
1,040
1,957
48,666
6,093
(63)
6,030
15,809
Segment liabilities
Borrowings
Total liabilities
Net assets
Non segmental assets
– Investment in joint ventures
Net assets as per balance sheet
Geographic analysis
Revenue
Operating profit/(loss) and segment result
Non-current assets excluding investments
Total net assets
Capital expenditure
2018
Property
£’000
Other
£’000
-
-
-
1,232
1,232
838
(215)
623
14,333
-
-
-
47
47
44
(171)
(127)
906
(210)
-
(210)
United
Kingdom
£’000
1,279
441
13,231
15,567
17
South
Africa
£’000
48,666
6,085
8,530
4,568
2,864
Total
£’000
34,112
11,557
1,040
3,236
49,945
6,975
(449)
6,526
31,048
2
9,221
40,271
(11,331)
(10,127)
(21,458)
18,813
1,322
20,135
Total
£’000
49,945
6,526
21,761
20,135
2,881
Bisichi Mining PLC
6969
(8,729)
(4,287)
(13,016)
(2,392)
(5,840)
(8,232)
Financial statements Notes to the financial statements
1. SEGMENTAL REPORTING CONTINUED
Business analysis
Significant revenue customer A
Significant revenue customer B
Significant revenue customer C
Other revenue
Segment revenue
Operating (loss)/profit before fair value adjustments & exchange movements
Revaluation of investments & exchange movements
Operating profit and segment result
Segment assets
Unallocated assets
– Non-current assets
– Cash & cash equivalents
Total assets excluding investment in joint ventures and assets held for sale
Segment liabilities
Borrowings
Total liabilities
Net assets
Non segmental assets
– Investment in joint ventures
Net assets as per balance sheet
Geographic analysis
Revenue
Operating profit/(loss) and segment result
Non-current assets excluding investments
Total net assets
Capital expenditure
70 Bisichi Mining PLC
Mining
£’000
Restated
27,528
10,117
412
1,134
39,191
3,104
(256)
2,848
13,500
2017
Property
£’000
Other
£’000
-
-
-
1,125
1,125
897
(13)
884
-
-
-
34
34
28
3
31
Total
£’000
Restated
27,528
10,117
412
2,293
40,350
4,029
(266)
3,763
13,803
3,050
30,353
(9,238)
(1,329)
(10,567)
(2,270)
(5,832)
(8,102)
(214)
-
(214)
United
Kingdom
£’000
1,159
854
13,400
13,416
13
South
Africa
£’000
Restated
39,191
2,909
8,610
4,258
1,741
3
5,327
35,683
(11,722)
(7,161)
(18,883)
16,800
874
17,674
Total
£’000
Restated
40,350
3,763
22,010
17,674
1,754
Financial statements Notes to the financial statements
2. REVENUE
Revenue from contracts with customers:
Coal Sales
Service charges recoverable from tenants
Other:
Rental income
Other revenue
Revenue
2018
£’000
2017
£’000
Restated
48,666
39,191
137
-
1,095
47
1,125
34
49,945
40,350
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
Mining
Property
Cost of sales
Administration
Operating costs
The direct property costs are:
Ground rent
Direct property expense
Bad debts
2018
£’000
34,443
338
34,781
8,189
42,970
11
297
30
338
2017
£’000
Restated
28,555
151
28,706
7,615
36,321
8
130
13
151
Operating costs above include depreciation of £2,113,000 (2017: £1,790,000).
4. (LOSS)/GAIN ON REVALUATION OF INVESTMENT PROPERTIES
The reconciliation of the investment surplus to the gain on revaluation of investment properties in the income statement is set out below:
Investment (deficit)/surplus
Gain/(Loss) on valuation movement in respect of head lease payments
Loss on revaluation of investment properties
2018
£’000
(248)
33
(215)
2017
£’000
16
(29)
(13)
Bisichi Mining PLC
7171
Financial statements Notes to the financial statements
5. PROFIT BEFORE TAXATION
Profit before taxation is arrived at after charging:
Staff costs (see note 29)
Depreciation
Exchange loss
Fees payable to the company’s auditor for the audit of the company’s annual accounts
Fees payable to the company’s auditor and its associates (2017: affiliate) for other services:
The audit of the company’s subsidiaries pursuant to legislation
Audit related services
Non-audit related services
2018
£’000
7,335
2,113
63
56
22
1
6
2017
£’000
6,396
1,790
256
41
10
1
1
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 38 which is within the audited part of that report.
7. INTEREST PAYABLE
On bank overdrafts and bank loans
Unwinding of discount
Other interest payable
Interest payable
8. TAXATION
(a) Based on the results for the year:
Current tax - UK
Current tax - Overseas
Corporation tax - adjustment in respect of prior year – UK
Current tax
Deferred tax
Total tax in income statement charge
72 Bisichi Mining PLC
2018
£’000
539
43
59
641
2018
£’000
-
2,026
(19)
2,007
(91)
1,916
2017
£’000
443
92
129
664
2017
£’000
231
136
(5)
362
202
564
Financial statements Notes to the financial statements
8. TAXATION CONTINUED
(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% (2017: 19.25%).
The differences are explained below:
Profit on ordinary activities before taxation
Tax on profit on ordinary activities at 19.00% (2017: 19.25%)
Effects of:
Expenses not deductible for tax purposes
Adjustment to tax rate
Other differences
Adjustment in respect of prior years
Total tax in income statement (credit) / charge
(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
Overseas tax included in above:
Current tax
Deferred tax
2018
£’000
2017
£’000
5,959
1,132
56
623
124
(19)
1,916
-
(19)
(19)
(175)
(194)
2,026
84
2,110
1,485
286
107
201
(27)
(3)
564
231
(5)
226
(197)
29
136
399
535
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% (2017: 28%).
9. SHAREHOLDER DIVIDENDS
Dividends paid during the year relating to the prior period
Dividends relating to the current period:
Interim dividend for 2018 paid on 8 February 2019
Proposed final dividend for 2018
Proposed special dividend for 2018
2018
Per share
5.00p
2018
£’000
534
2017
Per share
4.00p
1.00p
3.00p
2.00p
6.00p
107
320
214
641
1.00p
3.00p
1.00p
5.00p
2017
£’000
427
107
320
107
534
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 2018, will be accounted for as an appropriation of retained earnings in the year ending 31 December 2019.
Bisichi Mining PLC
7373
Financial statements Notes to the financial statements
10. PROFIT AND DILUTED PROFIT PER SHARE
Both the basic and diluted profit per share calculations are based on a profit after tax of £3,314,000 (2017: £749,000). The basic
profit per share has been calculated on a weighted average of 10,676,839 (2017: 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 (2017: 10,676,839) plus the dilutive potential ordinary shares arising from share options of 67,350 (2017: nil) totalling
10,744,189 (2017: 10,676,839).
Share options exercisable as at 31 December 2018 do not have a dilutive effect as the average market price of ordinary shares
during the period does not exceed the exercise price of the options.
11. INVESTMENT PROPERTIES
Valuation at 1 January 2018
Additions
Revaluation
Valuation at 31 December 2018
Valuation at 1 January 2017
Addition
Revaluation
Valuation at 31 December 2017
Historical cost
At 31 December 2018
At 31 December 2017
Freehold
£’000
10,550
15
(215)
10,350
10,550
13
(13)
Long
Leasehold
£’000
2,695
-
-
2,695
2,695
-
-
Total
£’000
13,245
15
(215)
13,045
13,245
13
(13)
10,550
2,695
13,245
5,851
5,836
728
728
6,579
6,564
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:
Carter Towler
2018
£’000
13,045
2017
£’000
13,245
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.
74 Bisichi Mining PLC
Financial statements Notes to the financial statements
11. INVESTMENT PROPERTIES CONTINUED
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
2018
£’000
Carrying/
fair value
2017
£’000
Range
(weighted
average)
2018
Range
(weighted
average)
2017
Freehold – external valuation Income
Estimated rental
10,350
10,550
£7 – £28
£7 – £25
capitalisation
Long leasehold – external
valuation
Income
capitalisation
value per sq ft p.a
Equivalent Yield
Estimated rental
value per sq ft p.a
Equivalent yield
2,695
2,695
(£20)
8.4% – 11.8%
(£18)
7.1% – 11.0%
(9.3%)
£8 – £8
(£8)
(8.7%)
£8 – £8
(£8)
7.9% – 7.9%
7.7% – 7.7%
(7.9%)
(7.7%)
At 31 December 2018
13,045
13,245
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
2018
£’000
2017
£’000
Freehold – external valuation
1,035 / (1,035)
1,055 / (1,055)
Long Leasehold – external valuation
270 / (270)
270 / (270)
Equivalent yield
25 basis point contraction
or expansion
2018
£’000
292 / (276)
88 / (83)
2017
£’000
331 / (311)
90 / (85)
Bisichi Mining PLC
7575
Financial statements Notes to the financial statements
12. MINING RESERVES, PLANT AND EQUIPMENT
Cost at 1 January 2018
Exchange adjustment
Additions
Disposals
Cost at 31 December 2018
Accumulated depreciation at 1 January 2018
Exchange adjustment
Charge for the year
Disposals
Accumulated depreciation at 31 December 2018
Net book value at 31 December 2018
Cost at 1 January 2017
Exchange adjustment
Additions
Disposals
Cost at 31 December 2017
Accumulated depreciation at 1 January 2017
Exchange adjustment
Charge for the year
Disposals
Accumulated depreciation at 31 December 2017
Net book value at 31 December 2017
Mining
equipment
and
development
costs
£’000
Motor
vehicles
£’000
Office
equipment
£’000
25,902
(2,531)
2,777
-
26,148
17,441
(1,712)
2,048
-
17,777
8,371
23,724
447
1,731
-
25,902
15,370
308
1,763
-
17,441
8,461
200
(22)
75
-
253
135
(14)
30
-
151
102
235
3
-
(38)
200
154
2
17
(38)
135
65
158
(9)
14
-
163
129
(6)
9
-
132
31
146
2
10
-
158
119
1
9
-
129
29
Mining
reserves
£’000
1,367
(127)
-
-
1,240
1,309
(122)
26
-
1,213
27
1,345
22
-
-
1,367
1,287
21
1
-
1,309
58
Total
£’000
27,627
(2,689)
2,866
-
27,804
19,014
(1,854)
2,113
-
19,273
8,531
25,450
474
1,741
(38)
27,627
16,930
332
1,790
(38)
19,014
8,613
76 Bisichi Mining PLC
Financial statements Notes to the financial statements
13. INVESTMENTS HELD AS NON-CURRENT ASSETS
At 1 January
Reclassification IFRS 9
Share of (loss)/gain in investment
Additions
Exchange adjustment
Share of (loss)/gain in joint ventures
Write-off of investment
Net assets at 31 December
Loan to joint venture (Ezimbokodweni):
At 1 January
Exchange adjustments
Additions - interest
Write-off of loan
At 31 December
At 31 December
Provision for diminution in value:
At 1 January
Reclassification IFRS 9
At 31 December
Net book value at 31 December
2018
Net
investment in
joint
ventures
assets
£’000
874
-
-
500
-
(52)
-
1,322
-
-
-
-
-
1,322
-
-
-
1,322
Net book value of unquoted investments
Net book and market value of investments listed on overseas stock exchanges
2018
Other
£’000
55
(4)
(15)
-
(1)
-
-
35
-
-
-
-
-
35
(4)
4
-
35
2017
Net
investment
in joint
ventures
assets
£’000
1,321
-
-
(8)
8
(447)
874
1,350
(16)
46
(1,380)
-
874
-
-
-
874
2018
£’000
-
35
35
2017
Other
£’000
36
-
19
-
-
-
55
-
-
-
-
-
55
(4)
-
(4)
51
2017
£’000
-
51
51
The adoption of IFRS 9 has resulted in the reclassification of the group’s non-current other investments. In the prior year the
investments were classified as available for sale investments measured at fair value with movements taken through other
comprehensive income and available for sale reserves. In the current year the investments were reclassified as non-current other
investments held at fair value with movements taken through profit and loss and retained earnings. The Group has not restated
prior periods as allowed by the transition provisions of IFRS 9.
Bisichi Mining PLC
7777
Financial statements Notes to the financial statements
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 £815,000 (2017: £874,000). 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 (2017: 500,000) ordinary
shares of £1 each. No dividends were received during the period.
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 £507,000 (2017: £nil). 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 (2017: £nil) ordinary shares of £1 each. No
dividends were received during the period.
Dragon
50%
£’000
83
(53)
(6)
(59)
51
(68)
(76)
17
(59)
1,235
45
-
207
-
(73)
179
(582)
(17)
815
West Ealing
50%
£’000
12
8
-
8
-
-
8
(1)
7
-
22
3,099
39
-
(951)
2,209
(1,702)
-
507
2018
£’000
95
2017
£’000
83
(45)
(6)
(51)
51
(68)
(68)
16
(52)
1,235
67
3,099
246
-
(1,024)
2,388
(2,284)
(17)
1,322
26
(6)
20
68
(83)
5
3
8
1,317
46
-
1,218
-
(1,062)
202
(609)
(36)
874
Turnover
Profit and loss:
(Loss)/Profit before depreciation, interest and taxation
Depreciation and amortisation
(Loss)/Profit before interest and taxation
Interest Income
Interest expense
(Loss)/Profit before taxation
Taxation
(Loss)/Profit after taxation
Balance sheet
Non-current assets
Cash and cash equivalents
Property inventory
Other current assets
Current borrowings
Other current liabilities
Net current assets
Non-current borrowings
Other non-current liabilities
Share of net assets at 31 December
78 Bisichi Mining PLC
Financial statements Notes to the financial statements
15. SUBSIDIARY COMPANIES
The company owns the following ordinary share capital of the subsidiaries which are included within the consolidated financial statements:
Percentage
of share
Activity
capital Registered address
Mineral Products Limited
Share dealing
100% 24 Bruton Place, London, W1J6NE
Bisichi (Properties) Limited
Property
100% 24 Bruton Place, London, W1J6NE
Bisichi Northampton Limited
Property
100% 24 Bruton Place, London, W1J6NE
Bisichi Trustee Limited
Property
100% 24 Bruton Place, London, W1J6NE
Urban First (Northampton) Limited
Property
100% 24 Bruton Place, London, W1J6NE
Bisichi Mining (Exploration) Limited
Ninghi Marketing Limited
Holding
company
Dormant
100% 24 Bruton Place, London, W1J6NE
90.1% 24 Bruton Place, London, W1J6NE
Bisichi Mining Managements Services Limited Dormant
100% 24 Bruton Place, London, W1J6NE
Country of
incorporation
England and
Wales
England and
Wales
England and
Wales
England and
Wales
England and
Wales
England and
Wales
England and
Wales
England and
Wales
Black Wattle Colliery (Pty) Limited
Coal mining
62.5% Samora Machel Street, Bethal Road,
South Africa
Middelburg, Mpumalanga, 1050
Bisichi Coal Mining (Pty) Limited
Coal mining
100% Samora Machel Street, Bethal Road,
South Africa
Sisonke Coal Processing (Pty) Limited
Black Wattle Klipfontein (Pty) Limited
Amandla Ehtu Mineral Resource
Development (Pty) Limited
Coal
processing
Coal mining
Dormant
Middelburg, Mpumalanga, 1050
62.5% Samora Machel Street, Bethal Road,
South Africa
Middelburg, Mpumalanga, 1050
62.5% Samora Machel Street, Bethal Road,
South Africa
Middelburg, Mpumalanga, 1050
70% Samora Machel Street, Bethal Road,
South Africa
Middelburg, Mpumalanga, 1050
Details on the non-controlling interest in subsidiaries are shown under note 27.
16. INVENTORIES
Coal
Washed
Mining Production
Work in progress
Other
2018
£’000
2017
£’000
777
316
378
40
1,511
301
286
227
14
828
Bisichi Mining PLC
7979
Financial statements Notes to the financial statements
17. TRADE AND OTHER RECEIVABLES
Financial assets falling due within one year:
Trade receivables
Amount owed by joint venture
Other receivables
Non-financial instruments falling due within one year:
Prepayments and accrued income
2018
£’000
2017
£’000
5,311
752
337
437
6,837
3,908
2,000
415
94
6,417
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 £12,000 (2017: £19,000). There was no
additional loss allowance or impairment required during the year as a result of the implementation of IFRS 9.
18. INVESTMENTS IN LISTED SECURITIES HELD AT FVPL (PREVIOUSLY CLASSIFIED AS AVAILABLE FOR SALE
INVESTMENTS)
Market value of listed Investments:
Listed in Great Britain
Listed outside Great Britain
Original cost of listed investments
Unrealised surplus / deficit of market value versus cost
2018
£’000
2017
£’000
847
40
887
916
(29)
1,003
47
1,050
922
128
The adoption of IFRS 9 has resulted in the reclassification of the groups Investments in listed securities. In the prior year the
investments were classified as available for sale investments measured at fair value with movements taken through other
comprehensive income and available for sale reserves. In the current year the investments were reclassified as Investments in
listed securities held at fair value with movements taken through profit and loss and retained earnings. The Group has not restated
prior periods as allowed by the transition provisions of IFRS 9.
19. TRADE AND OTHER PAYABLES
Trade payables
Amounts owed to joint ventures
Other payables
Accruals
Deferred Income
80 Bisichi Mining PLC
2018
£’000
3,949
192
1,791
1,089
236
7,257
2017
£’000
3,771
192
1,402
1,787
229
7,381
Financial statements Notes to the financial statements
20. FINANCIAL LIABILITIES – BORROWINGS
Bank overdraft (secured)
Bank loan (secured)
Bank overdraft and loan instalments by reference to the balance sheet date:
Within one year
From one to two years
From two to five years
Bank overdraft and loan analysis by origin:
United Kingdom
Southern Africa
Current
Non-current
2018
£’000
3,535
6,045
9,580
2017
£’000
1,262
26
1,288
2018
£’000
-
547
547
2018
£’000
9,580
223
324
10,127
5,840
4,287
10,127
2017
£’000
-
5,872
5,872
2017
£’000
1,288
17
5,855
7,160
5,832
1,328
7,160
In South Africa, as part of a restructuring and sale of the washing plant facilities from Black Wattle Colliery (Pty) Limited (“Black Wattle”) to
its wholly owned subsidiary Sisonke Coal Processing (Pty) Limited (“Sisonke Coal Processing”), the R100million bank overdraft facility held
by Black Wattle with Absa Bank Limited at year end (“old trade facility”) was replaced in January 2019 by a new structured trade finance
facility for R100million held by Sisonke Coal Processing (“new trade facility”). The South African bank loans are secured by way of a first
charge over specific pieces of mining equipment, inventory and the debtors of the relevant company which holds the loan which are
included in the financial statements at a value of £8,640,000.
The United Kingdom bank loans and overdraft are secured by way of a first charge over the investment properties in the UK which are
included in the financial statements at a value of £13,045,000. During the year the group reduced its UK loan by £14,000 in order to
rectify a breach of one of its UK loan banking covenants. No other 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:
Total bank loans and overdraft
Less cash and cash equivalents (excluding overdraft)
Net debt
Total equity attributable to shareholders of the parent
Gearing
Analysis of the changes in liabilities arising from financing activities:
Balance at 1 January
Exchange adjustments
Cash movements excluding exchange
adjustments
Valuation movements
Balance at 31 December
Bank borrowings (including overdraft)
£’000
7,160
(273)
3,240
Finance leases
£’000
152
-
-
-
10,127
33
185
2018
£’000
10,127
(9,221)
906
19,569
4.6%
2018
£’000
7,312
(273)
3,240
33
10,312
2017
£’000
7,160
(5,327)
1,833
17,142
10.7%
2017
£’000
9,415
(4)
(2,070)
(29)
7,312
Bisichi Mining PLC
8181
Financial statements Notes to the financial statements
21. PROVISION FOR REHABILITATION
As at 1 January
Exchange adjustment
Increase in provision
Unwinding of discount
As at 31 December
2018
£’000
1,349
(150)
329
43
1,571
2017
£’000
1,236
21
-
92
1,349
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:
Cash and cash equivalents
Non-current other investments held at FVPL (previously
classified as other investments available for sale)
Investments in listed securities held at FVPL
(previously classified as Available for sale investments)
Trade and other receivables
Bank borrowings and overdraft
Finance leases
Other liabilities
Financial
Assets
measured at
amortised
cost
£’000
Financial
Liabilities
measured at
amortised
cost
£’000
9,221
-
-
6,400
-
-
-
15,621
-
-
-
-
(10,127)
(185)
(7,113)
17,425
Investments
held at FVPL
£’000
-
35
2018
£’000
9,221
35
2017
£’000
5,327
51
887
887
1,050
-
-
-
-
922
6,400
(10,127)
(185)
(7,113)
(882)
6,323
(7,160)
(152)
(7,152)
(1,713)
Investments in listed securities held at fair value through profit and loss (previously classified as Available for sale investments) 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 2017 fall under the same category of financial instrument as 2018.
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 finance 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.
82 Bisichi Mining PLC
Financial statements Notes to the financial statements
22. FINANCIAL INSTRUMENTS CONTINUED
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 2018, 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 £101,000 (2017: £82,000).
The effect on equity of this change would be an equivalent decrease or increase for the year of £101,000 (2017: £82,000).
Liquidity risk
The group’s policy is to minimise refinancing risk. Efficient treasury management and strict credit control minimise the costs and
risks associated with this policy which ensures that funds are available to meet commitments as they fall due. As at year end the
group held borrowing facilities in the UK in Bisichi Mining PLC and in South Africa in Black Wattle Colliery (Pty) Ltd.
The following table sets out the maturity profile of contractual undiscounted cash flows of financial liabilities as at 31 December:
Within one year
From one to two years
From two to five years
Beyond five years
2018
£’000
17,329
290
392
127
18,138
2017
£’000
9,110
198
6,054
105
15,467
The following table sets out the maturity profile of contractual undiscounted cash flows of financial liabilities as at 31 December
maturing within one year:
Within one month
From one to three months
From four to twelve months
2018
£’000
3,627
3,117
10,585
17,329
2017
£’000
3,824
2,278
3,008
9,110
Bisichi Mining PLC
8383
Financial statements Notes to the financial statements
22. FINANCIAL INSTRUMENTS
CONTINUED
In South Africa, as part of the restructuring
and sale of the washing plant facilities from
Black Wattle Colliery (Pty) Limited (“Black
Wattle”) to its wholly owned subsidiary
Sisonke Coal Processing (Pty) Limited
(“Sisonke Coal Processing”), the R100million
facility held by Black Wattle with Absa Bank
Limited at year end (“old trade facility”) was
replaced in January 2019 by a new
structured trade finance facility for
R100million held by Sisonke Coal
Processing (“new trade facility”).
The new trade facility comprises of a
R100million revolving facility 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. The new trade
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 old trade facility, which was also
repayable on demand, is included in cash
and cash equivalents within the cashflow
statement.
In December 2014, the group signed a £6
million term loan facility with Santander.
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 2019. The
interest cost of the loan is 2.35% above
LIBOR. The group’s intention is to enter
into a new facility agreement prior to the
termination of the existing facility
agreement. Nonetheless the group has
adequate financial resources to repay the
existing facility should a new facility not be
finalised prior to December 2019.
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
£15,621,000 (2017: £11,650,000).
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 92%
(2017: 93%) 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 £12,000 (2017: £19,000). As at year
end the amount of trade receivables held
past due date less credit loss allowances
was £17,000 (2017: £24,000). To date,
the amount of trade receivables held past
due date less credit loss allowances that
has not subsequently been settled is
£14,000 (2017: £18,000). 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 2018, cash at bank and
in hand amounted to £9,221,000 (2017:
£5,327,000) 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
2018 and 2017 the group did not hedge
its exposure of foreign investments held in
foreign currencies.
The principle 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 2018, 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
£130,000 (2017: £34,000). 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 £216,000 (2017: £56,000).
The 25% sensitivity has been determined
based on the average historic volatility of
the exchange rate for 2017 and 2018.
84 Bisichi Mining PLC
Financial statements Notes to the financial statements
22. FINANCIAL INSTRUMENTS CONTINUED
The table below shows the currency profiles of cash and cash equivalents:
Sterling
South African Rand
US Dollar
2018
£’000
6,897
2,322
2
9,221
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:
2018:
Sterling
South African Rand
US Dollar
2017:
Sterling
South African Rand
US Dollar
23. DEFERRED TAXATION
As at 1 January
Recognised in income
Exchange adjustment
As at 31 December
The deferred tax balance comprises the following:
Revaluation of properties
Capital allowances
Short term timing difference
Unredeemed capital deductions
Losses and other deductions
Sterling
£’000
1,042
37
13
1,092
Sterling
£’000
(832)
54
13
(765)
2018
£’000
2,485
(91)
(168)
2,226
636
2,369
(662)
-
(117)
2,226
2017
£’000
3,402
1,923
2
5,327
South
African
Rands
£’000
-
(1,974)
-
(1,974)
South
African
Rands
£’000
-
(1,304)
-
(1,304)
2017
£’000
2,248
202
35
2,485
691
2,389
(513)
(80)
(2)
2,485
Refer to note 8 for details of deferred tax recognised in income in the current year. Tax rates of 17% (2017: 17%) in the UK and
28% (2017: 28%) in South Africa were utilised to calculate year end deferred tax balances.
Bisichi Mining PLC
8585
Financial statements Notes to the financial statements
24. SHARE CAPITAL
Authorised: 13,000,000 ordinary shares of 10p each
Allotted and fully paid:
At 1 January and outstanding at 31 December
25. OTHER RESERVES
Equity share options
Net investment premium on share capital in joint venture
2018
Number of
ordinary
shares
10,676,839
2017
Number of
ordinary
shares
10,676,839
2018
£’000
1,300
2018
£’000
1,068
2018
£’000
621
86
707
2017
£’000
1,300
2017
£’000
1,068
2017
£’000
597
86
683
26. SHARE BASED PAYMENTS
Details of the share option scheme are shown in the Directors’ remuneration report on page 39 under the heading Share option
schemes which is within the audited part of this report. Further details of the share option schemes are set out below.
The Bisichi Mining PLC Unapproved Option Schemes:
Subscription
price per share
Period within
which options
exercisable
Number of share
for which options
outstanding at
31 December
2017
202.5p
87.0p
73.50p
Aug 2013 – Aug 2020
Sep 2015 – Sep 2025
Feb 2018 – Feb 2028
80,000
300,000
-
Number of
share options
lapsed/
surrendered/
awarded
during year
(80,000)
-
380,000
Number of share
for which options
outstanding at
31 December
2018
-
300,000
380,000
Year of grant
2010
2015
2018
On the 5 February 2018 the company entered into an agreement with G. Casey to surrender the 80,000 options which were
granted in 2010. The aggregate consideration paid by the group to effect the cancellation was £1.
There are no performance or service conditions attached to 2015 options which are outstanding at 31 December 2018 which vested in 2015.
On 6 February 2018 the company granted additional options to the following directors of the company:
• A. Heller 150,000 options at an exercise price of 73.50p per share.
• G. Casey 230,000 options at an exercise price of 73.50p per share.
The above options vest on date of grant and are exercisable within a period of 10 years from date of grant. There are no performance or
service conditions attached to the options. The options were valued at £24,000 at date of grant using the Black-Scholes-Merton
model with the following assumptions:
Expected volatility
Expected life
Risk free rate
Expected dividends
23.90%
4 years
0.785%
6.71%
86 Bisichi Mining PLC
Financial statements Notes to the financial statements
26. SHARE BASED PAYMENTS CONTINUED
Expected volatility was determined by reference to the historical volatility of the share price over a period commensurate with the
option’s expected life. The expected life used in the model is used on the risk-averse balance likely to be required by the option holders.
Outstanding at 1 January
Lapsed/Surrendered during the year
Issued during the year
Outstanding at 31 December
Exercisable at 31 December
27. NON-CONTROLLING INTEREST
As at 1 January
Share of profit/(loss) for the year
Dividends received
Exchange adjustment
As at 31 December
2018
Weighted
average
exercise
price
111.3p
202.5p
73.5p
79.46p
79.46p
2018
Number
380,000
(80,000)
380,000
680,000
680,000
2017
Weighted
average
exercise
price
111.3p
-
-
111.3p
111.3p
2017
£’000
349
172
-
11
532
2017
Number
380,000
-
-
380,000
380,000
2018
£’000
532
729
(641)
(54)
566
The non-controlling interest comprises of a 37.5% shareholding in Black Wattle Colliery (Pty) Ltd. A coal mining company incorporated
in South Africa. Summarised financial information reflecting 100% of the underlying subsidiary’s relevant figures, is set out below.
Revenue
Expenses
Profit/(loss) for the year
Other comprehensive Income
Total comprehensive income for the year
Balance sheet
Non-current assets
Current assets
Current liabilities
Non-current liabilities
Net assets at 31 December
2018
£’000
48,666
(43,801)
4,865
-
4,865
8,532
9,587
(10,540)
(3,800)
3,779
2017
£’000
Restated
39,191
(38,041)
1,150
-
1,150
8,613
6,747
(8,652)
(3,155)
3,553
Bisichi Mining PLC
8787
Financial statements Notes to the financial statements
27. NON-CONTROLLING INTEREST CONTINUED
The non-controlling interest relates to 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 Mining 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
3
-
193
-
196
33
-
147
-
180
-
(752)
-
-
(752)
-
-
(2,000)
-
(2,000)
153
-
-
-
153
138
-
(180)
(46)
(88)
(183)
(752)
2,046
-
1,111
(140)
-
204
-
64
Related party:
London & Associated Properties PLC (note (a))
West Ealing Projects Limited (note (b))
Dragon Retail Properties Limited (note (c))
Ezimbokodweni Mining (Pty) Limited (note (d))
As at 31 December 2018
London & Associated Properties PLC (note (a))
Langney Shopping Centre Unit Trust (note (b))
Dragon Retail Properties Limited (note (c))
Ezimbokodweni Mining (Pty) Limited (note (d))
As at 31 December 2017
88 Bisichi Mining PLC
Financial statements Notes to the financial statements
28. RELATED PARTY TRANSACTIONS CONTINUED
(a) London & Associated Properties PLC – London & Associated Properties PLC is a substantial shareholder and parent company
of Bisichi Mining PLC. Property management, office premises, general management, accounting and administration services
are provided for Bisichi Mining PLC and its UK subsidiaries.
(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.
(d) Ezimbokodweni Mining (Pty) Limited – Ezimbokodweni Mining is a dormant prospective coal production company based in
South Africa and is accounted as a joint venture.
Details of key management personnel compensation and interest in share options are shown in the Directors’ Remuneration Report
on pages 38 and 39 under the headings Directors’ remuneration, Pension schemes and incentives and Share option schemes
which is within the audited part of this report. Refer also to note 26 for details of IFRS 2 charges. The total employers’ national
insurance paid in relation to the remuneration of key management was £225,000 (2017: 156,000). 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 (2017: £56,000) and a repayment
of £15,000 (2017: £15,000) 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 £35,000 (2017: £51,000).
29. EMPLOYEES
The average weekly numbers of employees of the group during the year were as follows:
Production
Administration
Staff costs during the year were as follows:
Salaries
Social security costs
Pension costs
Share based payments
30. CAPITAL COMMITMENTS
Commitments for capital expenditure approved and contracted for at the year end
2018
£’000
2017
£’000
231
15
246
192
15
207
6,809
5,993
231
271
24
161
242
-
7,335
6,396
2018
£’000
751
2017
£’000
-
Bisichi Mining PLC
8989
Financial statements Notes to the financial statements
31. HEAD LEASE COMMITMENTS AND FUTURE PROPERTY LEASE RENTALS
Present value of head leases on properties
Within one year
Second to fifth year
After five years
Discounting adjustment
Present value
Minimum lease
payments
2018
£’000
12
46
1,443
1,501
(1,316)
185
2017
£’000
10
38
1,199
1,247
(1,095)
152
Present value of
minimum lease
payments
2018
£’000
2017
£’000
12
37
136
185
-
185
10
30
112
152
-
152
The Company has one finance lease contract for an investment property. The remaining term for the leased investment property is
130 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 operating leases on its investment property portfolio consisting mainly of commercial properties. These
leases have terms of between 1 and 109 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:
Within one year
Second to fifth year
After five years
2018
£’000
919
2,456
9,765
13,140
2017
£’000
914
2,460
9,327
12,701
32. CONTINGENT LIABILITIES AND POST BALANCE SHEET EVENTS
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:
Rail siding
Rehabilitation of mining land
Water & electricity
90 Bisichi Mining PLC
2018
£’000
54
1,259
52
2017
£’000
64
1,387
58
Financial statements
Company balance sheet
at 31 December 2018
Fixed assets
Tangible assets
Investment in joint ventures
Other investments
Current assets
Debtors – amounts due within one year
Bank balances
Creditors – amounts falling due within one year
Net current assets
Total assets less current liabilities
Provision for liabilities and charges
Net assets
Capital and reserves
Called up share capital
Share premium account
Available for sale reserve
Other reserves
Retained earnings
Shareholders’ funds
Notes
35
36
36
37
38
39
24
33
2018
£’000
47
665
6,391
7,103
3,028
5,132
8,160
(1,575)
6,585
13,688
-
13,688
1,068
258
-
622
11,740
13,688
2017
£’000
48
165
7,395
7,608
3,471
2,129
5,600
(1,406)
4,194
11,802
(18)
11,784
1,068
258
25
598
9,835
11,784
The profit for the financial year, before dividends, was £2,414,000 (2017: loss of £173,000)
The company financial statements were approved and authorised for issue by the board of directors on 25 April 2019 and signed
on its behalf by:
A R Heller
Director
G J Casey
Director
Company Registration No. 112155
Bisichi Mining PLC
9191
Financial statements
Company statement of changes in equity
Share
premium
£’000
Available for
sale reserve
£’000
Other
reserve
£’000
Retained
earnings
£’000
Shareholders
funds
£’000
6
-
19
25
(25)
-
-
-
-
598
10,435
12,365
-
-
598
-
-
24
-
(427)
(173)
9,835
25
(534)
-
2,414
(427)
(154)
11,784
-
(534)
24
2,414
622
11,740
13,688
for the year ended 31 December 2018
Balance at 1 January 2017
Dividend paid
Loss and total comprehensive income
for the year
Balance at 1 January 2018
IFRS 9 Reclassification
Dividend paid
Share option charge
Profit and total comprehensive income
for the year
Share
capital
£’000
1,068
-
-
1,068
-
-
-
-
258
-
-
258
-
-
-
-
Balance at 31 December 2018
1,068
258
92 Bisichi Mining PLC
Financial statements
Company accounting policies
for the year ended 31 December 2018
The following are the main accounting
policies of the company:
investments from the available for sale
reserve to retained earnings.
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 investment property
and certain financial instruments.
The adoption of IFRS 9 has resulted in
changes in the company’s accounting
policies for the recognition, classification
and measurement of financial assets and
financial liabilities and impairment of
financial assets. The only material impact
of IFRS 9 on the Company financial
statements related to the movement in
fair value of other investments comprising
of shares in listed companies. Under IAS
39 the movement in the investments was
measured at fair value through other
comprehensive income and taken to an
available for sale reserve. Under IFRS 9
the movements are measured at fair
value through profit and loss and taken to
retained earnings. The Group has not
restated prior periods as allowed by the
transition provisions of IFRS 9. In order to
reclassify the impact of historic
movements on the other investments, an
adjustment of £25,000 has been made to
the Group statement of changes in equity
at 1 January 2018 transferring the
historical fair value movements of the
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 and 13.
Therefore these financial statements do
not include:
• certain comparative information as
otherwise required by EU endorsed 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:
Motor vehicles
Office equipment
25 – 33 per cent
10 – 33 per cent
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.
The adoption of IFRS 9 has resulted in
changes in the recognition, classification
and measurement of other investments.
Other investments comprising of shares
in listed companies are classified in the
current year at fair value through profit
and loss. In the previous year other
investments are classified as non-current
available for sale investments carried at
fair value. In the prior year any changes in
fair value above cost were recognised in
other comprehensive income and
accumulated in the available-for-sale
reserve and any changes in fair value
below cost a provision for impairment
were recognised in the profit or loss
account.
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 67.
Bisichi Mining PLC
9393
Financial statements Company accounting policies
Deferred taxation
Details on the group’s accounting policy
for deferred taxation can be found on
page 68.
Leased assets and obligations
All leases are “Operating Leases” and the
annual rentals are charged to the profit
and loss account on a straight line basis
over the lease term. Rent free periods or
other incentives received for entering into
a lease are accounted for over the period
of the lease so as to spread the benefit
received over the lease term.
Pensions
Details on the group’s accounting policy
35. TANGIBLE FIXED ASSETS
for pensions can be found on page 67.
Share based remuneration
Details on the group’s accounting policy for
share based remuneration can be found on
page 67. Details of the share options in
issue are disclosed in the directors’
remuneration report on page 39 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 Mining PLC has not been
presented as permitted by Section 408(2)
of the Companies Act 2006. The profit
for the financial year, before dividends
paid, was £2,414,000 (2017: loss of
£173,000)
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 39 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.
Cost at 1 January 2018
Revaluation
Cost at 31 December 2018
Accumulated depreciation at 1 January 2018
Charge for the year
Accumulated depreciation at 31 December 2018
Net book value at 31 December 2018
Net book value at 31 December 2017
Leasehold
Property
£’000
Motor
vehicles
£’000
Office
equipment
£’000
45
-
45
-
-
-
45
45
-
-
-
-
-
-
-
-
67
2
69
64
3
67
2
3
Leasehold property consists of a single unit with a long leasehold tenant. The term remaining on the lease is 41 years.
36. INVESTMENTS
Net book value at 1 January 2018
Invested during the year
Exchange loss
Repayment
Transfer
Unrealised surplus over cost
Joint
ventures
shares
£’000
165
500
-
-
-
-
Shares in
subsidiaries
£’000
6,356
-
-
-
-
-
Net book value at 31 December 2018
665
6,356
Loans
£’000
Other
investments
£’000
988
-
(52)
(94)
(842)
-
-
51
-
-
-
-
(16)
35
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 £35,000 (2017: £51,000) shares.
94 Bisichi Mining PLC
Total
£’000
112
2
114
64
3
67
47
48
Total
£’000
7,395
-
(52)
(94)
(842)
(16)
6,391
Financial statements Notes to the company financial statements
37. DEBTORS
Amounts due within one year:
Amounts due from subsidiary undertakings
Trade receivables
Other debtors
Joint venture
Prepayments and accrued income
2018
£’000
2017
£’000
2,140
1,289
6
58
752
72
3,028
16
78
2,000
88
3,471
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. There was no additional loss allowance or impairment required during the
year as a result of the implementation of IFRS 9.
38. CREDITORS
Amounts falling due within one year:
Amounts due to subsidiary undertakings
Joint venture
Current taxation
Other taxation and social security
Other creditors
Accruals and deferred income
39. PROVISIONS FOR LIABILITIES
Deferred taxation:
Balance at 1 January
Provision
Transfer
2018
£’000
2017
£’000
138
192
-
6
1,162
77
1,575
279
192
123
38
659
115
1,406
2018
£’000
2017
£’000
18
-
(18)
-
18
-
-
18
Bisichi Mining PLC
9595
Financial statements Notes to the company financial statements
40. RELATED PARTY TRANSACTIONS
At 31 December
Related party:
Black Wattle Colliery (Pty) Ltd (note (a))
Ninghi Marketing Limited (note (b))
As at 31 December 2018
Black Wattle Colliery (Pty) Ltd (note (a))
Ninghi Marketing Limited (note (b))
As at 31 December 2017
At 31
December
Amounts owed
by related
party
£’000
During the year
Costs
recharged/
accrued (to)/
by related
party
£’000
Cash paid
(to)/by
related party
£’000
(134)
(102)
(236)
(165)
(102)
(267)
(1,093)
-
(1,093)
(999)
-
(999)
1,125
-
1,125
2,768
-
2,768
(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 (2017: R17,000,000) (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
The average weekly numbers of employees of the company during the year were as follows:
Directors & administration
Staff costs during the year were as follows:
Salaries
Social security costs
Pension costs
Share based payments
96 Bisichi Mining PLC
2018
£’000
2017
£’000
5
5
1,752
1,227
231
38
24
161
62
-
2,045
1,450
design sg-design.co.uk
Printed by Park Communications on
FSC® certified paper.
Park is an EMAS certified company and
its Environmental Management System
is certified to ISO 14001.
100% of the inks used are vegetable
oil based, 95% of press chemicals are
recycled for further use and, on average
99% of any waste associated with this
production will be recycled.
This document is printed on Galerie gloss,
a paper containing 15% recycled fibre
and 85% virgin fibre sourced from well
managed, responsible, FSC® certified
forests. The pulp used in this product is
bleached using an elemental chlorine free
(ECF) process.
This is a certified CarbonNeutral®
publication. Emissions generated during
the manufacture and delivery of this
product have been measured and reduced
to net zero through a verified carbon
offsetting project via The CarbonNeutral
Company. This is in accordance with The
CarbonNeutral Protocol, the global leading
standard for carbon neutrality.
www.bisichi.co.uk
Bisichi Mining PLC
24 Bruton Place
London W1J 6NE
email: admin@bisichi.co.uk