Bisichi PLC
Annual Report 2021

Plain-text annual report

Bisichi PLC Annual Report 2021 Contents Principal activity, strategy & business model STRATEGIC REPORT 2 Chairman’s Statement 4 5 Mining Review 7 Sustainable development 11 Principal risks & uncertainties 16 Financial & performance review GOVERNANCE 23 Directors and advisors 24 Five year summary 24 Financial calendar 25 Directors’ report 31 Statement of the Chairman of the remuneration committee 32 Annual remuneration report 40 Audit committee report 42 Valuers’ certificates 43 Directors’ responsibilities statement 44 Independent auditor’s report FINANCIAL STATEMENTS 54 Consolidated income statement 55 Consolidated statement of other comprehensive income 56 Consolidated balance sheet 58 Consolidated statement of changes in shareholders’ equity 59 Consolidated cash flow statement 60 Group accounting policies 68 Notes to the financial statements 94 Company balance sheet 95 Company statement of changes in equity 96 Company accounting policies Strategic report The Directors present the Strategic Report of the company for the year ending 31 December 2021. 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. Bisichi PLC 11 Strategic Report Strategic Report Chairman’s Statement In the wake of the challenges arising from the Covid-19 pandemic, I am pleased to report to shareholders that for the year ended 31 December 2021, your company made a profit before interest, tax, depreciation and amortisation (EBITDA) of £5.8million (2020: loss: £2.4 million) and an operating profit before depreciation, fair value adjustments and exchange movements (Adjusted EBITDA) of £5.0million (2020: loss: £1.1million). £4.3million in adjusted EBITDA is attributable to the second half of the year. As we reflect back on the last two years, the most challenging priority for your Company was the continuity of our South African mining and processing operations, particularly during the peak of the Covid-19 pandemic. In early 2020, when global coal demand fell, the average weekly price of Free on Board (FOB) coal from Richards Bay Coal Terminal (API4 price) fell from a high of US$92 in January 2020 to $44 in mid-April 2020. Thereafter, prices remained largely supressed until the end of the year. Under these very difficult circumstances, your management worked tirelessly, along with our key stakeholders, to ensure that our South African operations continued operating in an efficient manner until global economic activity and our markets improved. As 2021 unfolded, an improvement in global economic activity had a significant impact on demand for coal in the international market, alleviating many of the challenges our South African operations faced in 2020. Strong demand for coal in the seaborne market resulted in significantly higher API4 prices, particularly in the second half of the year when the price peaked at over $245 in October. Overall, the API4 price averaged $125 in 2021 compared to $65 in 2020. Despite constraints in transporting coal for export on the South African rail network, constraints which were largely beyond our control, at Sisonke Coal Processing (our South African coal processing operation), we were able to take advantage of the improved international coal price by increasing our export sales during the year to 320,000 metric tonnes (2020: 230,000 metric tonnes). The overall increase in Group revenue, operating costs and earnings during the year is mainly attributable to our coal processing operations. The overall performance of our South African operations would have been even better if we had not encountered some difficult mining conditions at Black Wattle, our South African mining operation, which impacted adversely our coal production during the period. Overall, the mine achieved production of 1.04million metric tonnes compared to 1.18million metric tonnes in 2020. During the year we continued to work closely with Vunani Mining, our BEE partner in Black Wattle, to seek further opportunities to extend the life of mine at Black Wattle. At the end of last year, Black Wattle signed an agreement to acquire an additional coal reserve contiguous to Black Wattle which required further drilling to ascertain its commercial viability and indicative size. We are very pleased to report that the recently concluded geological assessment indicates an expected run of mine tonnage of 6.1million metric tonnes. This reserve will be mined by opencast methods, the coal will be processed at Sisonke Coal Processing, and then sold into our existing markets. This new reserve, which is subject to regulatory approval, will extend Black Wattle’s life of mine to eight years. Vunani Mining played a key role in acquiring these reserves, and will share equally in any distributable income as part of their non-controlling interest in Black Wattle. Further details of this acquisition can be found in our Mining and Financial and Performance Reviews. Looking forward, we expect the Group’s mining production to improve further once we complete our transition into new mining areas at Black Wattle in the first half of 2022. In addition, we have seen coal market conditions continue to improve in 2022 to date. In the first quarter of this year, the weekly API4 price averaged $238 and exports from our South African operations in the first quarter of 2022 have been in line with the average export tonnages we achieved in 2021. However, looking beyond the first 2 Bisichi PLC Strategic Report quarter, uncertainties remain, particularly with regard to the international coal price and the impact of constraints in transporting coal for export on the South African rail network. In the UK, despite the Covid-19 pandemic, we have seen rental revenue from our retail property portfolio remain stable in 2021. Overall, the Group billed revenue from our directly owned property portfolio of £1.12million (2020: £1.18million) during the year. The Group continues to hold its joint venture investment, with London & Associated Properties PLC and Metroprop Real Estate Ltd, in the freehold of a retail and residential redevelopment in West Ealing, London. As previously announced, planning permission for an expanded residential redevelopment of 56 flats on the site has been received. Planning approval documents for the planning consent are currently being finalised and we look forward to updating shareholders further on the situation in due course. Finally, in light of the strong results achieved for the year and in 2022 to date, your directors believe the company has the financial strength to recommence distribution of dividends to shareholders. For the year ended 31 December 2021 the directors recommend a dividend of 4p (2020: Nil) per share and a special dividend of 2p (2020: Nil) per share. The dividends will be payable on Friday 29 July 2022 to shareholders registered at the close of business on 8 July 2022. On behalf of the Board and shareholders, I would like to thank all of our staff for their hard work and dedication during the course of a difficult year. Sir Michael Heller Chairman 13 April 2022 Bisichi PLC 33 33 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 South African coal reserves in an economical and sustainable manner that delivers long term value to all our stakeholders. Processing & marketing The Group seeks to achieve value from its South African coal processing infrastructure 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 its existing mining and processing operations in South Africa. The Group aims to achieve this through new commercial arrangements and the acquisition of additional coal reserves nearby to our existing mining operations. In addition, we seek to balance the high risk of our mining operations with a dependable cash flow from our UK property investment operations and listed equity investment portfolios. The company primarily invests in retail property across the UK as well as residential property development. The UK Retail property portfolio is managed by London & Associated Properties PLC whose responsibility is to actively manage the portfolio to improve rental income and thus enhance the value of the portfolio over time. 4 Bisichi PLC Strategic Report Mining review We are pleased to report that, after a challenging 2020, higher prices for our coal have accelerated the recovery of our South African operations in 2021. Although we continued to manage the health and safety impact of the Covid-19 pandemic on the Group’s mining and processing operations in South Africa, business conditions significantly improved in 2021. Looking forward into 2022, to date we have continued to see higher coal prices contributing strongly to the performance of our South African operations. Covid-19 update The Group continues to consult with the government authorities and its stakeholders in South Africa to ensure appropriate measures are taken across its South African mining and processing operations. Such measures have been primarily focussed on the health and safety of our employees. Further details on these measures can be found in our Sustainability report on page 7. Production and operations Difficult mining conditions at Black Wattle, our South African mining operation, impacted production in 2021. Overall, the mine achieved production of 1.04 million metric tonnes compared to 1.18 million metric tonnes in 2020. Looking forward, the mine will be transitioning into new coal reserves over the first half of 2022 where mining conditions and production capacity is expected to improve in comparison to the reserves mined in 2021. Although mining production may be impacted in the first half of 2022, mining production is expected to improve once this transition to the new reserves is complete. Overall, we expect the Group’s mining production in 2022 to remain at similar levels to 2021. As noted in the Chairman’s statement, we are very pleased to report the acquisition of 6.1 million metric tonnes of coal reserves contiguous to Black Wattle. The new reserve, which is currently subject to regulatory approval, will extend the life of mine of Black Wattle to eight years. The acquisition was negotiated in conjunction with a re-negotiation of 2.1million metric tonnes of separate coal reserves previously acquired from the same seller, as announced in our 2018 annual report. In addition to a nominal financial consideration, an option for offtake of processed coal from both reserves has been entered into with the seller. We would like to thank Vunani Mining, our Black Economic Empowered shareholders at Black Wattle, for their significant contribution in acquiring these reserves. In light of their integral involvement, it has been agreed that Vunani Mining will share equally in any distributable income from the coal reserves as part of their non-controlling interest in Black Wattle. This has been achieved through the issue of new shares in Black Wattle. Further details on the share issue can be found in the Financial and Performance Review on page 16. Main trends/markets Improvement in global economic activity had a significant impact on demand and prices achievable for our coal in 2021. In the international market the average weekly price of Free On Board (FOB) Coal from Richard Bay Coal Terminal (API4 price) averaged $125 in 2021 compared to $65 in 2020 when coal prices and economic activity remained largely supressed due to the Covid-19 pandemic. The higher prices, along with a stable US Dollar compared to the South African Rand, resulted in the Group achieving an overall average Rand price of R1,129 per tonne of export coal sold from the mine in 2021 compared to R547 in 2020. The Group’s export sales are via Richards Bay Coal Terminal, primarily under the Quattro programme which allows junior black- economic empowerment coal producers direct access to the coal export market via the terminal. Although our export volumes to Richards Bay were limited by industry constraints in transporting coal for export on the South African rail network, overall exports volumes from our South African operations increased during the year to 320,000 metric tonnes compared to 230,000 metric tonnes in 2020. Bisichi PLC 55 Strategic Report Principal activity, strategy & business model Prospects Management would like to thank all our employees and stakeholders in helping overcome many of the unprecedented challenges presented by the Covid-19 pandemic over the last two years. Going forward, I am confident that 2022 should be another successful year for our South African operations. Andrew Heller Managing Director 13 April 2022 Sustainable development The Group’s South African operations continue to strive to conduct business in a safe, environmentally and socially responsible manner. Some highlights of our Health, Safety and Environment performance in 2021: • • The Group’s South African operations recorded two Lost time Injuries during 2021 (2020: 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, 2020 (New Mining Charter) came into force from March 2020. The New Mining Charter is a regulatory instrument that facilitates sustainable transformation, growth and development of the mining industry. The Group is committed to fully complying with the New Mining Charter and providing adequate resources to this area in order to ensure opportunities are expanded for historically disadvantaged South Africans (HDSAs) to enter the mining and minerals industry. In addition, we continue to adhere and make progress in terms of our Social and Labour Plan and our various BEE initiatives. A fuller explanation of these can be found in our Sustainable Development Report on page 7. These export constraints, arising from the problems of the rail network, contributed to a stable supply of coal to the South African domestic market in 2021. As a result, domestic coal prices in 2021 remained largely unchanged by comparison with the 2020 prices; the Group achieved an average domestic price of R470 per tonne coal sold compared to R450 in 2020. Overall, domestic sales volumes from our South African operations increased during the year to 1.13million metric tonnes (2020: 0.97million metric tonnes). Overall, the Group achieved an average Rand price per tonne of coal sold of R616 compared to R469 in 2020. In addition to the higher coal prices, higher overall sales volumes and a reduction in stocks contributed to the increase in Sterling Group revenue during the year. Looking forward into 2022, in the first quarter we have seen the API4 price average $238 and exports from our South African operations to date have been in line with the average export tonnages we achieved in 2021. However, looking beyond the first quarter, uncertainties remain. These are particularly with regard to the sustainability of the higher international coal price as well as the impact of continued constraints in transporting coal for export on the South African rail network. 6 Bisichi PLC Strategic Report Sustainable development The Group is fully committed to ensuring the sustainability of both our UK and South African operations and delivering long term value to all our stakeholders. Social, community and human rights issues The Group believes that it is in the shareholders’ interests to consider social and human rights issues when conducting business activities both in the UK and South Africa. Various policies and initiatives implemented by the Group that fall within these areas are discussed within this report. Health, Safety & Environment (HSE) The Group is committed to creating a safe and healthy working environment for its employees and the health and safety of our employees is of the utmost importance. HSE performance in 2021: • • • • • • • • No cases of Occupational Diseases were recorded. Zero claims for the Compensation for Occupational Diseases were submitted. No machines operating at Black Wattle exceeded the regulatory noise level. The Group’s South African operations recorded two Lost time Injuries during 2021. In addition to the required personnel appointments and assignment of direct health and safety responsibilities on the mine, a system of Hazard Identification and Risk Assessments has been designed, implemented and maintained at Black Wattle and at Sisonke Coal Processing. Health and Safety training is conducted on an ongoing basis. We are pleased to report all relevant employees to date have received training in hazard identification and risk assessment in their work areas. A medical surveillance system is also in place which provides management with information used in determining measures to eliminate, control and minimise employee health risks and hazards and all Occupational Health hazards are monitored on an ongoing 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. A Job Safety Analysis form is utilised to ensure effective identification of hazards in the workplace. In order to capture and record investigation findings from incidents, an incident recording sheet is utilised by line management and contractors. Black Wattle Colliery utilises ICAM (Incident Cause Analysis Method). On-going training on first aid is being conducted with all employees involved with this discipline. • • • • • • • • • • Covid-19 measures in 2021: The Group continues to monitor and adhere to all of the South African government’s Covid-19 related guidelines and regulations including all updates and advice from the National Department of Health, the Department of Minerals Resources and Energy and the Office of the President. These measures include: • • Regular communications with employees on all guidelines, government restrictions and best practice hygiene and health recommendations; Conducting various issue-based hazard identification and risk assessments; Temperature screening of those entering certain of our offices and sites; Working from home (in both the UK and South Africa), where possible or required; Social distancing measures at operating sites; Restrictions on non-essential visits to operating sites; and Intensified cleaning and hygiene at offices and sites. • • • • • • • • • • • • Bisichi PLC 77 Strategic Report Sustainable development In particular the Group has endeavoured to follow the guidelines of the 10-point plan developed by the Department of Minerals Resources and Energy in line with the guidelines of the Department of Health and the National Institute of Communicable Diseases (NICD) as follows: • • Educate employees on the virus, symptoms and prevention. Follow guidelines from the NICD, educate health workers on how to manage Covid-19. Consider alternate arrangements for supply of chronic medication to reduce crowds. Ensure that all health workers have access to protective clothing, gloves, masks, cleaning materials and pharmaceutical agents. Vaccinate employees for seasonal influenza. All employees are encouraged to know their status, get onto ARVs if positive for HIV. Manage suspected cases or contacts of cases using guidelines from the NICD. Liaise with the NICD on procedure to be followed for suspected and confirmed cases. Only essential travel to areas with Covid-19 should be undertaken. All suspected and confirmed cases in the mining industry should be reported to the NICD. Monitor and stay aware of the latest information on the Covid-19 pandemic. • • • • • • • • • • • • • • • • • • 8 Bisichi PLC 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). The STLM is still in the process of finalising its 2022-2027 Local Economic Development (LED) Plan. Once finalised, Black Wattle Colliery will select projects from the 2022-2027 STLM LED plan for the inclusion in its 2022-2027 SLP. The Black Wattle Colliery SLP will thereafter be submitted to the department of Mineral Resources and Energy for approval. The building of the new school hall at the Phumelele Secondary School in the Rockdale Township will be completed during the second quarter of 2022. Various upgrades were initiated at the Evergreen School nearby to Black Wattle. 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, the making, bagging and sales of charcoal. Certain community members have been identified for training in areas regarding mining and beneficiation. These areas include but are not limited to conveyor maintenance, operation of mining machinery and training in environmental waste management. An interlocking block manufacturing operation will be started during 2022, making interlocking blocks for building homes Two HDSA females completed their University studies in the 2021 academic year. Two local community HDSA members were enrolled for the new academic year. • • • • • • • • Strategic Report Sustainable development Environment & Environment Management Programme South Africa Under the terms of the mine’s Environmental Management Programme approved by the Department of Mineral Resource and Energy (“DMRE”), Black Wattle undertakes a host of environmental protection activities to ensure that the approved Environmental Management Plan is fully implemented. In addition to these routine activities, Black Wattle regularly carries out environmental monitoring activities on and around the mine, including evaluation of ground water quality, air quality, noise and lighting levels, ground vibrations, air blast monitoring, and assessment of visual impacts. In addition to this Black Wattle also performs quarterly monitoring of all boreholes around the mine to ensure that no contaminated water filters through to the surrounding communities. Black Wattle is fully compliant with the regulatory requirements of the Department of Water Affairs and Forestry and has an approved water use licence. Black Wattle Colliery has substantially improved its water management by erecting and upgrading all its pollution control dams in consultation with the Department of Water Affairs and Forestry. A performance assessment audit was conducted to verify compliance to our Environmental Management Programme and no significant deviations were found. United Kingdom The Group’s UK activities are principally retail property investment as well as residential property development whereby we provide or develop premises which are rented to retail businesses or sold on to end users. We seek to provide tenants and users in both these areas with good quality premises from which they can operate or reside in an environmentally sound manner. Procurement In compliance with the Mining Charter and the Mineral and Petroleum Resource Development Act, the Group’s South African operations has implemented a BBBEE-focussed procurement policy which strongly encourages our suppliers to establish and maintain BBBEE credentials. At present, BBBEE companies provide approximately 90 percent of Black Wattle’s equipment and services. Mining Charter In South Africa, the new government regulated Broad-Based Socio-Economic Empowerment Charter for the Mining and Minerals Industry, 2020 (New Mining Charter) came into force from March 2020. 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 2020. The Group is committed to providing adequate resources to this area in order to ensure full compliance to the New Mining Charter is achieved over the transitional period. As part of Black Wattle’s commitment to the New Mining Charter, the company seeks to: • • • • • • Expand opportunities for historically disadvantaged South Africans (HDSAs), including women and youth, to enter the mining and minerals industry and benefit from the extraction and processing of the country’s resources; Utilise the existing skills base for the empowerment of HDSAs; and Expand the skills base of HDSAs in order to serve the community. Employment The Group’s South African operations are committed to achieving the goals of the South African Employment Equity Act and is pleased to report the following: • • • • • • Black Wattle Colliery has exceeded the 10 percent women in management and core mining target. Black Wattle Colliery has achieved over 15 percent women in core mining. 94 percent of the women at Black Wattle Colliery are HDSA females. Black Wattle Colliery has successfully submitted their annual Employment Equity Report to the Department of Labour. In terms of staff training some highlights for 2021 were: • • • • • • • • 12 employees were trained in ABET (Adult Basic Educational Training) on various levels; An additional 9 disabled HDSA women continued their training on ABET levels one to four. We are pleased to confirm that 1 HDSA male completed his apprenticeships in 2021. Further to the above we confirm that 1 HDSA female was allocated a Bursary for the 2021 period whilst 2 HDSA males and 2 HDSA females continued their Bursaries. Highlights for 2021 for Sisonke Coal Processing: • • 5 employees were trained in ABET (Adult Basic Educational Training) on various levels Bisichi PLC 99 Strategic Report Sustainable development Employment terms and conditions for our employees based at our UK office and at our South African mining operations are regulated by and are operated in compliance with all relevant prevailing national and local legislation. Employment terms and conditions provided to mining staff meet or exceed the national average. The Group’s mining operations and coal washing plant facility are labour intensive and unionised. During the year no labour disputes, strikes or wage negotiations disrupted production or had a significant impact on earnings. The Group’s relations to date with labour representatives and labour related unions continue to remain strong. In terms of directors, employees and gender representation, at the year end the Group had 9 directors (8 male, 1 female), 6 senior managers (5 male, 1 female) and 229 employees (160 male, 69 female). Anti-slavery and human trafficking The Group is committed to the prevention of the use of forced labour and has a zero tolerance policy for human trafficking and slavery. The Group’s policies and initiatives in this area can be found within the Group’s Anti-slavery and human trafficking statement found on the Group’s website at www.bisichi.co.uk. Our reporting includes our energy use and emissions associated with our UK office, which are minimal (2 tonnes of CO2e). The IPCC methodology *Tier 1 (+2) Methodology (2006 with 2019 edits) - Low, Average, and High CH4 Emission Factors – Medium Scenario) was used to calculate emissions from surface coal mining activities. The Group has not implemented any energy efficiency programs or specific measures during the 2021 year. Green House Gas reporting We have reported on all of the emission sources required under the Companies Act 2006 (Strategic Report and Directors’ Reports) Regulations. The data detailed in these tables represent emissions and energy use for which the Group is responsible. To calculate our emissions, we have used the main requirements of the Greenhouse Gas Protocol Corporate Standard and a methodology adapted from the Intergovernmental Panel on Climate Change (2019), along with the UK Government GHG Conversion Factors for Company Reporting 2021. Any estimates included in our totals are derived from actual data which have been extrapolated to cover the full reporting periods. The group’s carbon footprint: Emissions source: Emissions from the combustion of fuel or the operation of any facility including fugitive emis-sions from refrigerants use 2021 CO2e Tonnes 2020 CO2e Tonnes 41,960 46,162 Emissions resulting from the purchase of electricity, heat, steam or cooling by the company for its own use (location based) 12,040 12,482 Total gross emissions Intensity: Tonnes of CO2 per £ sterling of revenue Tonnes of CO2 per tonne of coal produced 54,000 58,644 0.0011 0.0020 0.0516 0.0497 kWh kWh Energy consumption used to calculate above emissions 83,079,614 99,450,585 Of which UK 10,186 5,571 10 Bisichi PLC Strategic Report Principal risks & uncertainties PRINCIPAL RISK PERFORMANCE AND MANAGEMENT OF THE RISK COAL PRICE AND VOLUME RISK COVID-19 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 and coal processing 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 volume of export sales achievable can be influenced by rail capacity and export quota constraints at Richards Bay Coal Terminal under the Quattro programme. The domestic market coal prices are denominated in South African Rand and are primarily dependant on local demand and supply. In the short term, the Covid-19 pandemic and geo-political events in Ukraine may result in additional price volatility in both the export and domestic market due to fluctuations in both demand and supply. Longer term both the demand and supply of coal in the domestic and global market may be negatively impacted by regulatory changes related to climate change and governmental CO2 emission commitments. The Group primarily focuses on managing its underlying production and processing 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 2020 and 2021. The Group’s export and domestic sales are determined based on the ability to deliver the quality of coal required by each market together with the market factors set out opposite. Volumes of export sales achieved during the year were primarily dependent on the Group’s ability to produce the higher quality of coal required for export, obtaining adequate rail capacity and utilising allowable export quotas under the Quattro programme. The volume of domestic market sales achieved during the year were primarily dependant on local demand and supply as well as the Group’s ability to produce the overall quality of coal required. The Group continues to assess on an ongoing basis its dependence on the above factors and evaluate alternative means to ensure coal sales and prices achieved are optimised. The Group assesses on an ongoing basis the impact that Covid-19, geo-political events in Ukraine, regulatory changes related to climate change and governmental CO2 emission commitments may have on the Group’s mining operations and future investment decisions. Bisichi PLC 1111 Strategic Report Principal risks & uncertainties PRINCIPAL RISK 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. 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. PERFORMANCE AND MANAGEMENT OF THE RISK This risk is managed by engaging independent geological experts, referred to in the industry as the “Competent Person”, to determine the estimated reserves and their technical and commercial feasibility for extraction. In addition, management engage Competent Persons to assist management in the production of detailed life of mine plans as well as in the monitoring of actual mining results versus expected performance and management’s response to variances. The Group continued to engage an independent Competent Person in the current year. Refer to page 5 for details of mining performance. 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 2021 and 2020. 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. 12 Bisichi PLC Strategic Report Principal risks & uncertainties PRINCIPAL RISK PERFORMANCE AND MANAGEMENT OF THE RISK NEW RESERVES AND MINING PERMISSIONS The life of the mine, acquisition of additional reserves, permissions to mine (including ongoing and once-off permissions) and new mining opportunities in South Africa generally are contingent on a number of factors outside of the Group’s control such as approval by the Department of Mineral Resources and Energy, the Department of Water Affairs and Forestry and other regulatory or state owned entities. In addition, the Group’s South African operations are subject to the government Mining Charter with the New Mining Charter coming into force from March 2020. Failure to meet existing targets or further regulatory changes to the Mining Charter, could adversely affect the mine’s ability to retain its mining rights in South Africa. The work performed in the acquisition and renewal of mining permits as well as the maintenance of compliance with permits includes factors such as environmental management, health and safety, labour laws and Black Empowerment legislation (such as the New Mining Charter); as failure to maintain appropriate controls and compliance may in turn result in the withdrawal of the necessary permissions to mine. The management of these regulatory risks and performance in the year is noted in the Mining Review on page 5 as well as in the Sustainable Development report on page 7 and in this section under the headings environmental risk, health & safety risk and labour risk. Additionally, in order to mitigate this risk, the Group strives to provide adequate resources to this area including the employment of adequate personnel and the utilisation of third party consultants competent in regulatory compliance related to mining rights and mining permissions. The Group also continues to actively seek new opportunities to expand its mining operations in South Africa through the acquisition of additional coal reserves and new commercial arrangements with existing mining right holders. POWER SUPPLY RISK The current utility provider for power supply in South Africa is the government run Eskom. Eskom continues to undergo capacity problems resulting in power cuts and lack of provision of power supply to new projects. Any power cuts or lack of provision of power supply to the Group’s mining operations may disrupt mining production and impact on earnings. The Group’s mining operations have to date not been affected by power cuts. However the Group manages this risk through regular monitoring of Eskom’s performance and ongoing ability to meet power requirements. In addition, the Group continues to assess the ability to utilise diesel generators as an alternative means of securing power in the event of power outages. FLOODING RISK The Group’s mining operations are susceptible to seasonal flooding which could disrupt mining production and impact on earnings. Management monitors water levels on an ongoing basis and various projects have been completed, including the construction of additional dams, to minimise the impact of this risk as far as possible. Bisichi PLC 1313 Strategic Report Principal risks & uncertainties PRINCIPAL RISK PERFORMANCE AND MANAGEMENT OF THE RISK 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 as well as enhanced health and Safety measures related to Covid-19. LABOUR RISK The Group’s mining operations and coal washing plant facility are labour intensive and unionised. Any labour disputes, strikes or wage negotiations may disrupt production and impact earnings. In line with all South African mining companies, the management of this risk is based on compliance with the Environment Management Plan. In order to ensure compliance, the Group strives to provide adequate resources to this area including the employment of personnel and the utilisation of third party consultants competent in regulatory compliance related to environmental management. To date, Black Wattle is fully compliant with the regulatory requirements of the Department of Water Affairs and Forestry and has an approved water use licence. Further details of the Group’s Environment Management Programme are disclosed in the Sustainable development report on page 7. The Group has a comprehensive Health and Safety programme in place to mitigate this risk. Management strive to create an environment where Health and safety of our employees is of the utmost importance. Our Health & Safety programme provides clear guidance on the standards our mining operation is expected to achieve. In addition, management receive regular updates on how our mining operations are performing. Further details of the Group’s Health and Safety Programme are disclosed in the Sustainable Development report on page 7. In order to mitigate this risk, the Group strives to ensure open and transparent dialogue with employees across all levels. In addition, appropriate channels of communication are provided to all employment unions at Black Wattle to ensure effective and early engagement on employment matters, in particular wage negotiations and disputes. Refer to the ‘Employment’ section on page 9 for further details. 14 Bisichi PLC Strategic Report Principal risks & uncertainties PRINCIPAL RISK CASHFLOW RISK Commodity price risk, currency volatility and the uncertainties inherent in mining may result in favourable or unfavourable cashflows. PERFORMANCE AND MANAGEMENT OF THE RISK 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 and our equity investment portfolio. 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 Financial and Performance review on page 20 for details of the property and investment portfolio performance. PROPERTY VALUATION RISK Fluctuations in property values, which are reflected in the Consolidated Income Statement and Balance Sheet, are dependent on an annual valuation of the Group’s commercial and residential development properties. A fall in UK commercial and residential property can have a marked effect on the profitability and the net asset value of the Group as well as impact on covenants and other loan agreement obligations. The 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. The economic performance of the United Kingdom, including the potential final impact of the United Kingdom leaving the European Union (“Brexit”), the final impact of Covid-19 pandemic, an impact from geo-political events in Ukraine as well as the current overall 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. Management continues to monitor and evaluate the impact of Brexit, the Covid-19 pandemic, geo-political events in Ukraine 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 performance of the UK retail market on the Group’s banking covenants, loan obligations and future investment decisions. Refer to page 20 for details of the property portfolio performance. COVID-19 RISK The Group is continually assessing and managing any potential further risks brought about by the Covid-19 pandemic. Overall, the Group is primarily exposed to impacts on the health and safety of its employees and stakeholders. In the UK, uncertainties remain on the final impact on retail property revenue and values from the Covid-19 pandemic as outlined under property valuation risk above. In South Africa, the Group may be impacted by additional health and safety measures related to its workforce and coal price risk as outlined under the same heading above. Risks faced by the business are assessed by the Board on an ongoing basis. Strategies for mitigating the risks have been defined and specific measures for achieving these have already been implemented. These include the measures outlined in the Sustainability development section of this report. The final impact of the Covid-19 pandemic remains uncertain and the Group will adapt plans accordingly as any new information becomes available or government advice changes. Bisichi PLC 1515 Strategic Report Financial & performance review The movement in the Group’s Adjusted EBITDA from a loss of £1.1million in 2020 to a profit of £5.0million in 2021 can mainly be attributed to higher prices achievable for our coal and higher coal sale volumes from the Group’s South African operations in the second half of the year. This offset the higher operating costs achieved in 2021. EBITDA, adjusted EBITDA and mining production are used as key performance indicators for the Group and its mining activities as the Group has a strategic focus on the long term development of its existing mining reserves and the acquisition of additional mining reserves in order to realise shareholder value. Mining production can be defined as the coal quantity in metric tonnes extracted from our reserves during the period and held by the mine before any processing through the washing plant. Whilst profit/(loss) before tax is considered as one of the key overall performance indicators of the Group, the profitability of the Group and the Group’s mining activities can be impacted by the volatile and capital intensive nature of the mining sector. Accordingly, EBITDA and adjusted EBITDA are primarily used as key performance indicators as they are indicative of the value associated with the Group’s mining assets expected to be realised over the long term life of the Group’s mining reserves. In addition, for the Group’s property investment operations, the net property valuation and net property revenue are utilised as key performance indicators as the Group’s substantial property portfolio reduces the risk profile for shareholders by providing stable cash generative UK assets and access to capital appreciation. Certain key performance indicators below are not Generally Accepted Accounting Practice measures and are not intended as a substitute for those measures, and may or may not be the same as those used by other companies. Key performance indicators The key performance indicators for the group are: For the group: Operating profit /(loss) before depreciation, fair value adjustments and exchange movements (adjusted EBITDA) EBITDA Profit/(Loss) before tax For our property investment operations: Net property valuation Net property revenue For our mining activities: Operating profit/(loss) before depreciation, fair value adjustments and exchange movements (adjusted EBITDA) EBITDA Mining production Quantity of coal sold 16 Bisichi PLC 2021 £’000 2020 £’000 5,028 5,849 2,501 (1,111) (2,387) (5,196) 10,525 10,270 1,119 1,181 4,266 4,145 Tonnes ’000 1,046 1,447 (1,821) (1,782) Tonnes ’000 1,180 1,199 Strategic Report Financial & performance review 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 Gains on investments held at fair value through profit and loss (FVPL) Operating profit excluding depreciation Share of loss in joint venture EBITDA Net interest movement Depreciation Profit 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 (loss)/profit before depreciation, fair value adjustments and exchange movements (adjusted EBITDA) Exchange movements Fair value adjustments Gains on investments held at fair value through profit and loss (FVPL) Operating (loss)/profit excluding depreciation Share of loss in joint venture EBITDA Net interest movement Depreciation Loss before tax Mining £’000 49,226 (5,569) (32,438) (6,953) 4,266 (121) - - 4,145 - 4,145 Mining £’000 28,567 (1,906) (22,739) (5,743) (1,821) 39 - - (1,782) - (1,782) Property £’000 1,119 - - (527) 592 - 255 - 847 (125) 722 Other £’000 175 - - (5) 170 - - 812 982 - 982 Property £’000 1,181 Other £’000 57 - - (523) 658 - (1,295) - (637) (87) (724) - - (5) 52 - - 67 119 - 119 2021 £’000 50,520 (5,569) (32,438) (7,485) 5,028 (121) 255 812 5,974 (125) 5,849 (777) (2,571) 2,501 2020 £’000 29,805 (1,906) (22,739) (6,271) (1,111) 39 (1,295) 67 (2,300) (87) (2,387) (616) (2,193) (5,196) Bisichi PLC 1717 Strategic Report Financial & performance review Adjusted EBITDA is used as a key indicator of the operating trading performance of the Group and its operating segments representing operating profit before the impact of depreciation, fair value adjustments, gains/(losses) on disposal of other investments and foreign exchange movements. The Group’s operating segments include its South African mining operations and UK property. The performance of these two operating segments are discussed in more detail below. The Group achieved an EBITDA for the year of £5.8million (2020: loss £2.4million). The movement compared to the prior year can mainly be attributed to the operating profit before depreciation from our mining activities of £4.3million (2020: loss £1.8million). The Group’s fair value gains, related to our UK property were £0.3million (2020: loss £1.3million) and those related to investments held at fair value through profit and loss were £0.8million (2020: £0.1million). Overall, the Group reported an overall profit before tax of £2.5million (2020: loss £5.2 million). Taxation for the year increased to £0.8million (2020: gain of £1.4million). This resulted in the Group achieving an overall profit for the year after tax of £1.7million (2020: loss £3.8million), of which £1.5million (2020: loss £3.4million) was attributable to equity holders of the company. South African mining operations Performance The key performance indicators of the group’s South African mining operations are presented in South African Rand and UK Sterling as follows: Revenue Transport and loading costs Mining and washing costs South African Rand 2020 2021 R’000 R’000 1,004,444 602,581 2021 £’000 49,223 (113,641) (40,204) (5,569) UK Sterling 2020 £’000 28,567 (1,906) (661,929) (479,647) (32,438) (22,739) Operating profit before other operating costs and depreciation 228,874 82,730 Other operating costs (excluding depreciation) Operating profit before depreciation, fair value adjustments and exchange movements (adjusted EBITDA) Exchange movements 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 11,216 (6,950) 4,266 (121) 4,145 2021 ’000 1,046 2021 R 852 (633) 219 3,922 (5,743) (1,821) 39 (1,782) 2020 ’000 1,180 2020 R 477 (406) 71 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. 18 Bisichi PLC 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 Revenue Net Revenue per tonne of coal sold Domestic ’000 1,127 Domestic R’000 530,905 R 470 Mining and washing costs per tonne of coal sold Operating profit per tonne of coal sold before other operating costs and depreciation Export ’000 320 Export R’000 2021 ’000 1,447 2021 R’000 473,539 1004,444 R 1,129 R 616 (457) 158 Domestic ’000 969 Domestic R’000 442,516 R 450 Export ’000 230 Export R’000 2020 ’000 1,199 2020 R’000 160,065 602,581 R 547 R 469 (400) 69 The quantity of coal sold can be defined as the quantity of coal sold in metric tonnes by the Group in any given period. Net Revenue per tonne of coal sold can be defined as the revenue price achieved less transportation and loading costs per metric tonne of coal sold. Total net revenue per tonne of coal sold for the Group’s mining and processing operations increased for the year from R469 per tonne of coal sold in 2020 to R616 in 2021, mainly attributable to the average price increase achieved in the export market. A decrease in mining production during the year, attributable to difficult mining conditions, was offset by an increase in buy-in coal processed and a decrease in coal inventories due to improved coal demand resulting in the quantity of coal sold for the year increasing to 1.447million tonnes (2020: 1.199million tonnes). Overall, the increase in revenue per tonne of coal sold and the higher coal sales volumes, particularly in the export market, resulted in revenue from the Group’s South African mining operations increasing during the year to R1.005billion compared to revenue of R0.603billion in the prior year. Mining and washing costs per tonne of coal sold during the year increased from R400 per tonne in 2020 to R457 per tonne in 2020 due to incremental increases in both mining and washing costs. This resulted in an increase in total mining and washing costs for the Group to R661.9million (2020: R479.6million). Other operating costs (excluding depreciation) of £6.95million (2020: £5.74million) 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 coal processing. The increase during the year can mainly be attributed to lower administrative salaries and wages costs incurred in 2020 due to the financial performance of the Group in the same period. Overall costs in South Africa were in line with management’s expectations and local inflation. Overall, the movement in the Group’s Adjusted EBITDA from a loss of £1.1million in 2020 to a profit of £5.0million in 2021 can mainly be attributed to higher prices achievable for our coal and increased coal sales from the Group’s South African coal processing operations. This offset the higher mining, washing and operating costs incurred in 2021. A further explanation of the mines operational performance can be found in the Mining Review on page 5. Non-controlling interest Black Wattle As mentioned in the Chairman’s statement and Mining Review, the Group’s subsidiary Black Wattle Colliery (Pty) Ltd signed an agreement to acquire additional coal reserves during the year. The new reserves of 6.1million metric tonnes, will extend the life of mine of Black Wattle to eight years and remains subject to regulatory approval. The acquisition was negotiated in conjunction with a re-negotiation of 2.1million metric tonnes of separate coal reserves previously acquired from the same seller, as previously announced in our 2018 annual report. Bisichi PLC 1919 Strategic Report Financial & performance review Vunani Mining (Pty) Ltd our black economic empowered shareholders at Black Wattle, were integral in the success in acquiring both of these reserves. As a result, it was agreed that Vunani Mining will share equally in any distributable economic benefit from the coal reserves as part of their non-controlling interest in Black Wattle. This has been achieved through a new shares issue in Black Wattle that was completed subsequent to year end on 12 April 2022. The total issued share capital in Black Wattle Colliery (Pty) Ltd was increased further from 1000 shares to 1002 shares at par of R1 through the following share issue: •• a subscription of 1 “B” Share at par by Bisichi Mining (Exploration Limited), a 100% subsidiary of the Group; •• a subscription of 1 “B” Share at par by Vunani Mining (Pty) Ltd The “B” shares rank pari passu with the ordinary shares save that they have sole rights to the distributable profits attributable to the above mining reserves held by Black Wattle Colliery (Pty) Ltd. A non-controlling interest is therefore recognised for all profits distributable to the “B” shares held by Vunani Mining (Pty) Ltd from the date of issue of the shares (12 April 2022). Details of Vunani’s non-controlling interest held at year end can be found in the Non-controlling interest note on page 88. UK property investment Performance The Group’s portfolio is managed actively by London & Associated Properties plc. Rental performance was marginally below levels achieved in 2021. Net property revenue (excluding joint ventures and service charge income) across the portfolio decreased during the year to £1.119million (2020: £1.181million). The property portfolio was externally valued at 31 December 2021 and the value of UK investment properties attributable to the Group at year end increased to £10.525million (2020: £10.270million) mainly due to the reduced impact of Covid-19. Joint venture property investments The Group holds a £0.6million (2020: £0.7million) joint venture investment in Dragon Retail Properties Limited, a UK property investment company. The open market value of the company’s share of investment properties included within its joint venture investment in Dragon Retail Properties decreased marginally during the year to £1.040million (2020: £1.065million). 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) 20 Bisichi PLC Year ended 31 December 2021 £’000 Year ended 31 December 2020 £’000 5,028 4,432 (2,706) (271) 1,455 (1,078) 105 482 3,018 (2,536) 482 (1,111) 449 (4,292) (285) (4,128) 2,878 172 (1,078) 3,768 (4,846) (1,078) Strategic Report Financial & performance review The Group continues to hold a £0.5million (2020: £0.6million) 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 £3.7million (2020: £3.5million). The joint venture has obtained planning consent for a residential development of 56 flats. We look forward to updating shareholders further in due course. During the year the Group acquired a one third joint venture investment holding in Development Physics Limited, a UK unlisted property development company. The remaining two thirds is held equally by London & Associated Properties PLC and Metroprop Real Estate Ltd. The company was set up with the purpose of delivering a residential development of 44 flats and 4 town houses in Purley, London. Development Physics acquired a series of options on the site and has registered for planning permission for its development. At year end, the negative carrying value of the investment held by the Group was £3,000 (2020: £Nil). We look forward to updating shareholders further in due course. Overall, the Group achieved net property revenue of £1.2million (2020: £1.3million) for the year which includes the company’s share of net property revenue from its investment in joint ventures of £88,000 (2020: £71,000). Other Investments During the year the Group’s non-current investments held at fair value through profit and loss increased from £1.7million in 2020 to £3.6million due to net additions during the year of £1.2million (2020: £1.3million) and gains from investments of £0.7million (2020: £0.2million). The investments comprise of £1.56million (2020: £0.96million) investments listed on stock exchanges in the United Kingdom and £2.07million (2020: £0.79million) of investments listed on overseas stock exchanges. Cashflow & financial position Cash flow generated from operating activities increased compared to the prior year to £4.4million (2020: £0.4million). This can mainly be attributed to the operating profit during the year of £3.4million (2020: loss £4.5million) and a positive cash movement attributable to a decrease in stocks of £2.1million (2020: cash decrease of £1.1million). This offset an increase in trade receivables of £1.9million (2020: decrease £0.1million). All of the above can mainly be attributed to the improved coal sales and revenue per tonne achieved during the year. Investing cashflows primarily reflect the net effect of capital expenditure during the year of £1.8million (2020: £3.2million) which can mainly be attributable to mine development costs at Black Wattle of £1.6million (2020: £2.5million). As at year end the Group’s mining reserves, plant and equipment had a carrying value of £9.0million (2020: £10.1 million) with capital expenditure being offset by depreciation of £2.5million (2020: £2.2milion) and exchange translation movements of £0.4million (2020: £0.6million) for the year. Other investing cashflows also include the net acquisition of listed investments of £0.9million (2020: £1.1million). Cash outflows from financing activities includes a net decrease in borrowings of £0.3million (2020:£0.2million). In addition, no dividends were paid to shareholders during the year (2020: £0.1million). Overall, the Group’s cash and cash equivalents increased during the year by £1.5million (2020: decrease £4.1million). After taking into account an exchange gain of £0.1million (2020: £0.2million) 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 £0.5million (2020: negative amount of £1.1million). The Group has considerable financial resources available at short notice including cash and cash equivalents (excluding bank overdrafts) of £3.0million (2020: £3.8 million) and listed investments of £4.3million (2020: £2.6million) as at year end. The above financial resources totalling £7.3million (2020: £6.4million). The net assets of the Group reported as at year end were £17.8million (2020: £16.2million) and total assets at £38.1million (2020: £38.7million). Liabilities decreased from £22.5million to £20.3million during the year primarily due to a decrease in current borrowings from £5.1million to £2.7million. The overall exchange loss recorded through the translation reserve on translation of the Group’s South African net assets at year end decreased to £0.05million (2020: £0.40million) as a result of the lower 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 59 and the Consolidated Balance Sheet on page 56 and 57. Bisichi PLC 2121 Strategic Report Financial & performance review Loans South Africa The Group has a structured trade finance facility with Absa Bank Limited for R85million held by Sisonke Coal Processing (Pty) Limited, a 100% subsidiary of Black Wattle Colliery (Pty) Limited. This facility comprises of an R85million revolving facility to cover the working capital requirements of the Group’s South African operations. The facility is renewable annually at 25 January and is secured against inventory, debtors and cash that are held in the Group’s South African operations. United Kingdom The Group holds a 5 year term facility of £3.9m with Julian Hodge Bank Limited at an initial LTV of 40%. The loan is secured against the company’s UK retail property portfolio. The amount repayable on the loan at year end was £3.8million. The debt package has a five year term and is repayable at the end of the term in December 2024. In the last quarter of 2021 the base interest rate on the loan changed from LIBOR to the Bank of England base rate. The overall interest cost of the loan is 4.00% above the Bank of England base rate. The loan is secured by way of a first charge over the investment properties in the UK which are included in the financial statements at a value of £10.5million. No banking covenants were breached by the Group during the year. 22 Bisichi PLC 22 Statement regarding Section 172 of the UK Companies Act Section 172 of the UK Companies Act requires the Board to report on how the directors have had regard to the matters outlined below in performing their duties. The Board consider the Group’s customers, employees, local communities, suppliers and shareholders as key stakeholders of the Group. During the year, the Directors consider that they have acted in a way, and have made decision that would, most likely promote the success of the Group for the benefit of its members as a whole as outlined in the matters below: • • The likely consequences of any decision in the long term: see Principal activity, strategy & business model on page 4 and Principal Risks and Uncertainties on page 11; The interests of the Group’s employees; ethics and compliance; fostering of the Company’s business relationships with suppliers, customers and others; and the impact of the Group’s operations on the community and environment: see Sustainability report on page 7; The need to act fairly between members of the Company: see the Corporate Governance section on page 26. • • • • The Group continues to seek opportunities to expand its operations in South Africa through the acquisition of additional coal reserves. In the UK, management is looking forward to progressing its property development opportunities in West Ealing and Development Physics as well as expanding on its equity investment portfolio. This is in line with the Group’s 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 and equity investments. To date, the Group’s financial position has remained strong and at present, the Group has adequate financial resources to ensure the Group remains viable for the foreseeable future and that liabilities are met. A full going concern and viability assessment can be found in the Directors report on page 30. Further information on the outlook of the company can be found in both the Chairman’s Statement on page 2 and the Mining Review on page 5 which form part of the Strategic Report. Signed on behalf of the Board of Directors Future prospects As mentioned in the Chairman’s statement, In the first quarter of the year, we have seen the API4 price average $238 and exports from our South African operations in the first quarter of 2022 have been in line with the average export tonnages we achieved in 2021. However, looking beyond the first quarter, uncertainties remain, particularly in regard to the sustainability of the higher international coal price and the impact of continued constraints in transporting coal for export on the South African rail network. Garrett Casey Finance Director 13 April 2022 Governance MANAGEMENT TEAM OTHER DIRECTORS AND ADVISORS * SIR MICHAEL HELLER MA, FCA (Chairman) ANDREW R HELLER MA, ACA (Managing Director) GARRETT CASEY CA (SA) (Finance Director) ROBERT GROBLER Pr Cert Eng (Director of mining) O+ CHRISTOPHER A JOLL MA (Non-executive) Christopher Joll was appointed a Director on 1 February 2001. He has held a number of non-executive directorships of quoted and un-quoted companies and currently runs his own event management business. He is also a published author, lecturer and a writer and director of documentary films. O * JOHN A SIBBALD BL (Non-executive) John Sibbald has been a Director since 1988. After qualifying as a Chartered Accountant he spent over 20 years in stockbroking, specialising in mining and international investment. JOHN WONG ACA, CFA (Non-executive) (Appointed 15 October 2020) John Wong was appointed a Director on 15 October 2020. After training as a Chartered accountant he has worked in the fund management industry for almost 20 years and has extensive experience in investment management, in particular within the mining sector. SECRETARY AND REGISTERED OFFICE Garrett Casey CA (SA) 12 Little Portland Street London W1W8BJ BLACK WATTLE COLLIERY AND SISONKE COAL PROCESSING DIRECTORS Andrew Heller (Managing Director) Ethan Dube Robert Grobler Garrett Casey Millicent Zvarayi COMPANY REGISTRATION Company registration No. 112155 (Incorporated in England and Wales) WEBSITE www.bisichi.co.uk E-MAIL admin@bisichi.co.uk AUDITOR Kreston Reeves LLP, London PRINCIPAL BANKERS United Kingdom Julian Hodge Bank Limited Santander UK PLC Investec PLC South Africa ABSA Bank (SA) First National Bank (SA) CORPORATE SOLICITORS United Kingdom Ashfords LLP, London Fladgate LLP, London Olswang LLP, London Wake Smith Solicitors Limited, Sheffield South Africa Beech Veltman Inc, Johannesburg Brandmullers Attorneys, Middelburg Cliffe Decker Hofmeyer, Johannesburg Herbert Smith Freehills, Johannesburg Natalie Napier Inc, Johannesburg Tugendhaft Wapnick Banchetti and Partners, Johannesburg STOCKBROKERS Shore Capital Stockbrokers Limited REGISTRARS AND TRANSFER OFFICE Link Group Shareholder Services The Registry 10th Floor Central Square 29 Wellington Street Leeds LS1 4DL * Member of the nomination committee + Senior independent director O Member of the audit, nomination and remuneration committees. UK telephone: 0371 664 0300 Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. The helpline is open between 9.00 a.m. – 5.30 p.m., Monday to Friday excluding public holidays in England and Wales. Website: https://www.linkgroup.com/ Email: shareholderenquiries@ linkgroup.co.uk Company registration number: 341829 (England and Wales) Bisichi PLC 2323 Governance Five year summary Consolidated income statement items Revenue Operating profit /(loss) Profit/(Loss) before tax Trading profit /(loss) before tax Revaluation and impairment profit /(loss) before tax EBITDA Operating profit before depreciation, fair value adjustments and exchange movements (adjusted EBITDA) Consolidated balance sheet items Investment properties Other non-current investments Current 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 2021 £’000 2020 £’000 2019 £’000 2018 £’000 2017 £’000 50,520 29,805 48,106 49,945 40,350 3,403 2,501 1,559 942 5,849 5,028 10,525 4,761 15,286 685 15,971 1,541 17,512 164.0p 6.00p (4,493) (5,196) (3,881) (1,315) (2,387) (1,111) 10,270 3,001 13,271 833 14,104 1,969 16,073 150,5p 0p 3,658 3,027 4,493 (1,466) 5,868 7,457 11,565 1,629 13,194 1,119 14,313 5,619 19,932 186.7p 1.00p 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 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 16 June 2022 Late August 2022 Late April 2023 Annual General Meeting Announcement of half-year results to 30 June 2022 Announcement of results for year ending 31 December 2022 24 Bisichi PLC Governance Directors’ report The directors submit their report together with the audited financial statements for the year ended 31 December 2021. 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 2021 are shown on pages 54 to 99 and in the Strategic Report on pages 2 to 22. Future developments and prospects are also covered in the Strategic Report and further details of any post balance sheet events can be found in note 32 to the financial statements. Over 98 per cent of staff are employed in the South African coal mining industry – employment matters and health and safety are dealt with in the Strategic Report. The management report referred to in the Director’s responsibilities statement encompasses this Directors’ Report and Strategic Report on pages 2 to 22. Corporate responsibility Environment The environmental considerations of the Group’s South African coal mining operations are covered in the Strategic Report on pages 2 to 22. The Group’s UK activities are principally property investment whereby premises are provided for rent to retail businesses and a joint venture investment in a UK residential property development. The Group seeks to provide those tenants with good quality premises from which they can operate in an efficient and environmentally friendly manner. Wherever possible, improvements, repairs and replacements are made in an environmentally efficient manner and waste re-cycling arrangements are in place at all the company’s locations. Greenhouse Gas Emissions Details of the Group’s greenhouse gas emissions for the year ended 31 December 2021 can be found on page 10 of the Strategic Report. Employment The Group’s policy is to attract staff and motivate employees by offering competitive terms of employment. The Group provides equal opportunities to all employees and prospective employees including those who are disabled. The Strategic Report gives details of the Group’s activities and policies concerning the employment, training, health and safety and community support and social development concerning the Group’s employees in South Africa. Dividend policy As outlined in the Strategic report on page 2 the directors are proposing the payment of a dividend of 4p (2020: 0p) and a special dividend of 2p (2020: Nil) per share for 2021. No interim dividend for 2021 has been paid (Interim 2020: 0p). The total dividend per ordinary share for 2021 will therefore be 6p (2020: 0p) per ordinary share. Investment properties and other properties The investment property portfolio is stated at its open market value of £10,525,000 at 31 December 2021 (2020: £10,270,000) 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 £4,787,000 (2020: £4,597,000). Financial instruments Note 22 to the financial statements sets out the risks in respect of financial instruments. The Board reviews and agrees overall treasury policies, delegating appropriate authority to the managing director. Treasury operations are reported at each Board meeting and are subject to weekly internal reporting. Directors The directors of the company for the year were Sir Michael Heller, A R Heller, G J Casey, C A Joll, R J Grobler (a South African citizen), J A Sibbald and J Wong. 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. Bisichi PLC 2525 Governance Directors’ report 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. Directors’ shareholdings The interests of the directors in the shares of the company, including family and trustee holdings where appropriate, are shown on page 34 of the Annual Remuneration Report. Substantial interests The following have advised that they have an interest in 3 per cent. or more of the issued share capital of the company as at 13 April 2022: 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 A R Heller 330,117 shares representing 3.09 per cent. of the issued capital. 785,012 shares representing 7.35 per cent. of the issued capital. 26 Bisichi PLC Stonehage Fleming Investment Management Ltd – 1,981,154 shares representing 18.56 per cent. of the issued share capital. James Hyslop 345,000 shares representing 3.23 per cent. of the issued share capital. Disclosure of information to auditor The directors in office at the date of approval of the financial statements have confirmed that as far as they are aware that there is no relevant audit information of which the auditor is unaware. Each of the directors has confirmed that they have taken all reasonable steps they ought to have taken as directors to make themselves aware of any relevant audit information and to establish that it has been communicated to the auditor. Indemnities and insurance The Articles of Association and Constitution of the company provide for them to indemnify, to the extent permitted by law, directors and officers (excluding the Auditor) of the companies, including officers of subsidiaries, and associated companies against liabilities arising from the conduct of the Group’s business. The indemnities are qualifying third-party indemnity provisions for the purposes of the UK Companies Act 2006 and each of these qualifying third-party indemnities was in force during the course of the financial year ended 31 December 2021 and as at the date of this Directors’ report. No amount has been paid under any of these indemnities during the year. The Group has purchased directors’ and officers’ insurance during the year. In broad terms, the insurance cover indemnifies individual directors and officers against certain personal legal liability and legal defence costs for claims arising out of actions taken in connection with Group business. Corporate Governance The Board acknowledges the importance of good corporate governance. The paragraphs below set out how the company has applied this guidance during the year. Principles of corporate governance The Group’s Board appreciates the value of good corporate governance not only in the areas of accountability and risk management, but also as a positive contribution to business prosperity. The Board endeavours to apply corporate governance principles in a sensible and pragmatic fashion having regard to the circumstances of the Group’s business. The key objective is to enhance and protect shareholder value. Board structure During the year the Board comprised the executive chairman, the managing director, two other executive directors and three non-executive directors. Their details appear on page 23. The Board is responsible to shareholders for the proper management of the Group. The Directors’ responsibilities statement in respect of the accounts is set out on page 43. The non-executive directors have a particular responsibility to ensure that the strategies proposed by the executive directors are fully considered. Governance Directors’ report • • To enable the Board to discharge its duties, all directors have full and timely access to all relevant information and there is a procedure for all directors, in furtherance of their duties, to take independent professional advice, if necessary, at the expense of the Group. The Board has a formal schedule of matters reserved to it and meets bi-monthly. The Board is responsible for overall Group strategy, approval of major capital expenditure projects and consideration of significant financing matters. • • The following Board committees, which have written terms of reference, deal with specific aspects of the Group’s affairs: • • The nomination committee comprises of two non-executive directors C A Joll (Chairman) and JA Sibbald as well as the executive chairman. The committee is responsible for proposing candidates for appointment to the Board, having regard to the balance and structure of the Board. In appropriate cases recruitment consultants are used to assist the process. Each director is subject to re-election at least every three years. The remuneration committee is responsible for making recommendations to the Board on the company’s framework of executive remuneration and its cost. The committee determines the contractual terms, remuneration and other benefits for each of the executive directors, including performance related bonus schemes, pension rights and compensation payments. The Board itself determines the remuneration of the non-executive directors. The committee comprises of two non-executive directors C A Joll (Chairman) and JA Sibbald. The company’s executive chairman is normally invited to attend meetings. The report on directors’ remuneration is set out on pages 32 to 39. The audit committee comprises of two non-executive directors C A Joll (Chairman) and JA Sibbald. Its prime tasks are to review the scope of external audit, to receive regular reports from the company’s auditor and to review the half-yearly and annual accounts before they are presented to the Board, focusing in particular on accounting policies and areas of management judgment and estimation. The committee is responsible for monitoring the controls which are in force to ensure the integrity of the information reported to the shareholders. The committee acts as a forum for discussion of internal control issues and contributes to the Board’s review of the effectiveness of the Group’s internal control and risk management systems and processes. The committee also considers annually the need for an internal audit function. It advises the Board on the appointment of external auditors and on their remuneration for both audit and non-audit work, and discusses the nature and scope of the audit with the external auditors. The committee, which meets formally at least twice a year, provides a forum for reporting by the Group’s external auditors. Meetings are also attended, by invitation, by the company chairman, managing director and finance director. The audit committee also undertakes a formal assessment of the auditors’ independence each year which includes: • • a review of non-audit services provided to the Group and related fees; discussion with the auditors of a written report detailing consideration of any matters that could affect independence or the perception of independence; • • • • • • a review of the auditors’ own procedures for ensuring the independence of the audit firm and partners and staff involved in the audit, including the regular rotation of the audit partner; and obtaining written confirmation from the auditors that, in their professional judgement, they are independent. The audit committee report is set out on page 40. An analysis of the fees payable to the external audit firm in respect of both audit and non-audit services during the year is set out in Note 5 to the financial statements. Performance evaluation – board, board committees and directors The performance of the board as a whole and of its committees and the non- executive directors is assessed by the chairman and the managing director and is discussed with the senior independent director. Their recommendations are discussed at the nomination committee prior to proposals for re-election being recommended to the Board. The performance of executive directors is discussed and assessed by the remuneration committee. The senior independent director meets regularly with the chairman and both the executive and non-executive directors individually outside of formal meetings. The directors will take outside advice in reviewing performance but have not found this necessary to date. Bisichi PLC 2727 Governance Directors’ report Independent directors The senior independent non-executive director is Christopher Joll. The other two independent non-executive directors are John Sibbald and John Wong. Christopher Joll has been a non- executive director for over twenty years, John Sibbald has been a non-executive director for over thirty years and John Wong was appointed to the Board on 15 October 2020. The Board encourages the non-executive directors to act independently. The board considers that their length of service does not, and has not, resulted in their inability or failure to act independently. In the opinion of the Board, Christopher Joll and John Sibbald continue to fulfil their role as independent non-executive directors. The independent directors regularly meet prior to Board meetings to discuss corporate governance issues. Internal control The directors are responsible for the Group’s system of internal control and review of its effectiveness annually. The Board has designed the Group’s system of internal control in order to provide the directors with reasonable assurance that its assets are safeguarded, that transactions are authorised and properly recorded and that material errors and irregularities are either prevented or would be detected within a timely period. However, no system of internal control can eliminate the risk of failure to achieve business objectives or provide absolute assurance against material misstatement or loss. The key elements of the control system in operation are: • • the Board meets regularly with a formal schedule of matters reserved to it for decision and has put in place an 28 Bisichi PLC Board and board committee meetings The number of meetings during 2021 and attendance at regular Board meetings and Board committees was as follows: Meetings 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 held 5 1 2 5 2 5 2 5 5 2 1 1 5 2 1 1 5 5 1 2 5 2 5 2 1 5 2 1 1 2 0 1 0 1 J Wong Board • • • • organisational structure with clearly defined lines of responsibility and with appropriate delegation of authority; there are established procedures for planning, approval and monitoring of capital expenditure and information systems for monitoring the Group’s financial performance against approved budgets and forecasts; UK property and financial operations are closely monitored by members of the Board and senior managers to enable them to assess risk and address the adequacy of measures in place for its monitoring and control. The South African operations are closely supervised by the UK based executives through daily, weekly and monthly reports from the directors and senior officers in South Africa. This is supplemented by regular visits by the UK based finance director to the South African operations which include checking the integrity of information supplied to the UK. The directors are guided by the internal control guidance for directors issued by the Institute of Chartered Accountants in England and Wales. During the period, the audit committee has reviewed the effectiveness of internal control as described above. The Board receives periodic reports from its committees. There were no significant issues identified during the year ended 31 December 2021 (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. Governance Directors’ report 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 Meeting Room 2, 12 Charles II Street, St James, London SW1Y 4QU on Thursday, 16 June 2022 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 13 April 2022 (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 13 April 2022 (being the last practicable date prior to the publication of this Directors’ Report). Therefore, the maximum nominal value of shares or rights to subscribe for, or convert any security into, shares which may be allotted or granted under resolution 10 is £711,788. Resolution 10 complies with guidance issued by the Investment Association (IA). The authority granted by resolution 109 will expire on 31 August 2023 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. Bisichi PLC 2929 Governance Directors’ report Donations No political donations were made during the year (2020: £nil). Going concern The Group’s business activities, together with the factors likely to affect its future development are set out in the Chairman’s Statement on the preceding page 2, the Mining Review on pages 5 to 6 and its financial position is set out on page 21 of the Strategic Report. In addition Note 22 to the financial statements includes the Group’s treasury policy, interest rate risk, liquidity risk, foreign exchange risks and credit risk. In South Africa, a structured trade finance facility with Absa Bank Limited for R85million is held by Sisonke Coal Processing (Pty) Limited, a 100% subsidiary of Black Wattle Colliery (Pty) Limited. This facility comprises of a R85million revolving facility to cover the working capital requirements of the Group’s South African operations. The facility is renewable annually at 25 January and is secured against inventory, debtors and cash that are held in the Group’s South African operations. The Directors do not foresee any reason why the facility will not continue to be renewed at the next renewal date, in line with prior periods and based on their banking relationships. The directors expect that the coal market conditions experienced by its South African coal mining and processing operations in 2021 will be similar going into 2022. The directors therefore have a reasonable expectation that the mine will achieve positive levels of cash generation for the Group in 2022. As a consequence, the directors believe that the Group is well placed to manage its South African business risks successfully. In the UK, forecasts demonstrate that the Group has sufficient resources to meet its liabilities as they fall due for at least the next 12 months, from the approval of the financial statements, including those related to the Group’s UK Loan facility outlined below. The Group holds a 5 year term facility of £3.9m with Julian Hodge Bank Limited at an initial LTV of 40%. The loan is secured against the company’s UK retail property portfolio. The amount repayable on the loan at year end was £3.9million. The debt package has a five year term and is repayable at the end of the term in December 2024. In the last quarter of 2021 the base interest rate on the loan changed from LIBOR to the Bank of England base rate. The overall interest cost of the loan is 4.00% above the Bank of England base rate. All covenants on the loan were met during the year and the directors have a reasonable expectation that the Group has adequate financial resources at short notice, including cash and listed equity investments, to ensure the existing facility’s covenants are met on an ongoing basis. Dragon Retail Properties Limited (“Dragon”), the Group’s 50% owned joint venture, holds a Santander bank loan of £1.2million secured against its investment property, see note 14. The bank loan of £1.164million is secured by way of a first charge on specific freehold property at a value of £2.08 million. The interest cost of the loan is 2.75 per cent above the bank’s base rate. A refinancing of this loan is currently underway. The loan originally expired in October 2020 but has been extended to April 2022, and the lender has offered to extend this further if required. Dragon has agreed terms with a new lender to refinance this loan in full and are expecting to complete this shortly. Subsequent to year end in the first quarter of 2022 geo-political events in Ukraine resulted in higher global energy prices. Although the final outcome of the events in Ukraine is uncertain, the Directors at present do not foresee the events having a significant negative impact on the Group’s UK and South African operations ability to remain in operation for the foreseeable future. Detailed budget and cash flow forecasts for the Group’s operations demonstrated that the Group has sufficient resources to meet its liabilities as they fall due for at least the next 12 months and the Directors believe the Group would be able to manage its business risks and have adequate cash resources to continue in operational existence for the foreseeable future. As a result of the banking facilities held as well as the acceptable levels of cash expected to be held by the Group over the next 12 months, the Directors believe that the Group has adequate resources to continue in operational existence for the foreseeable future and that the Group is well placed to manage its business risks. Thus they continue to adopt the going concern basis of accounting in preparing the annual financial statements. By order of the board G.J Casey Secretary 12 Little Portland Street London W1W8BJ 13 April 2022 30 Bisichi PLC Governance Statement of the Chairman of the remuneration committee The remuneration committee presents its report for the year ended 31 December 2021. The report is presented in two parts in accordance with the remuneration regulations. Both of the above reports have been prepared in accordance with The Large & Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013. The company’s auditors, Kreston reeves 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 12 Little Portland Street London W1W8BJ 13 April 2022 The first part is the Annual Remuneration Report which details remuneration awarded to Directors and non-executive Directors during the year. The shareholders will be asked to approve the Annual Remuneration Report as an ordinary resolution (as in previous years) at the AGM in June 2022. During the year, in light of the performance of the Group, the board determined to award bonuses to certain executive directors of the Group. The second part is the Remuneration Policy which details the remuneration policy for Directors, and can be found at www.bisichi.co.uk. The current remuneration policy was subject to a binding vote which was approved by shareholders at the AGM in July 2020. The approval will continue to apply for a 3 year period commencing from then. The committee reviewed the existing policy and deemed that no changes were necessary to the current arrangements. Bisichi PLC 3131 Governance Annual remuneration report The following information has been audited: Single total figure of remuneration for the year ended 31 December 2021: Salaries and Fees £’000 Benefits £’000 Bonuses £’000 Long Term Incentive Awards £’000 Pension £’000 Executive Directors Sir Michael Heller A R Heller G J Casey R Grobler Non–Executive Directors C A Joll* J A Sibbald* J Wong (appointed 15 October 2021) 83 495 185 205 40 3 50 - 34 17 11 - 3 - - 400 200 176 - - - Total 1,061 65 776 *Members of the remuneration committee for the year ended 31 December 2021 Single total figure of remuneration for the year ended 31 December 2020: - - - - - - - - Total Fixed Remuner- ation £’000 Total Variable Remuner- ation £’000 Total 2021 £’000 83 929 421 409 40 6 50 83 529 221 233 40 6 50 - 400 200 176 - - - - - 19 17 - - - 36 1,938 1,162 776 Salaries and Fees £’000 Benefits £’000 Bonuses £’000 Long Term Incentive Awards £’000 Pension £’000 Total Fixed Remuner- ation £’000 Total Variable Remuner- ation £’000 Total 2020 £’000 Executive Directors Sir Michael Heller A R Heller G J Casey R Grobler Non–Executive Directors C A Joll* J A Sibbald* J Wong (appointed 15 October 2020) 83 495 154 193 40 3 12 - 56 20 10 - 3 - Total 980 88 *Members of the remuneration committee for the year ended 31 December 2020 - - - - - - - - - - - - - - - - - - 11 16 - - - 83 551 185 219 40 6 12 83 551 185 219 40 6 12 27 1,096 1,096 - - - - - - - - 32 Bisichi PLC 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 J Wong Date of contract Unexpired term Notice period November 1972 Continuous January 1994 Continuous June 2010 April 2008 Continuous Continuous February 2001 Continuous October 1988 October 2020 Continuous Continuous 6 months 3 months 3 months 3 months 3 months 3 months 3 months Pension schemes and incentives Two (2020: Two) directors have benefits under money purchase pension schemes. Contributions in 2021 were £35,177 (2020: £27,323), see table above. There are no additional benefits payable to any director in the event of early retirement. Scheme interests awarded during the year During the year no share options were granted under share option schemes. Share option schemes The company currently has only one Unapproved Share Option Scheme which is not subject to HM revenue and Customs (HMRC) approval. The 2012 scheme was approved by the remuneration committee of the company on 28 September 2012. Number of share options Options granted/ (Surren- dered) in 2021 31 December 2021 Exercisable from Exercisable to - - - - 150,000 18/09/2015 17/09/2025 150,000 06/02/2018 06/02/2028 150,000 18/09/2015 17/09/2025 230,000 06/02/2018 06/02/2028 Option price* 1 January 2021 87.01p 73.50p 87.01p 73.50p 150,000 150,000 150,000 230,000 The 2012 Scheme A R Heller A R Heller G J Casey G J Casey *Middle market price at date of grant No consideration is payable for the grant of options under the 2012 Unapproved Share Option Scheme. There are no performance or service conditions attached to the 2012 Unapproved Share Option scheme. No part of the award was attributable to share price appreciation and no discretion has been exercised as a result of share price appreciation or depreciation. During the year, there were no changes to the exercise price or exercise period for the options. Bisichi PLC 3333 Governance Annual remuneration report Payments to past directors No payments were made to past directors in the year ended 31 December 2021 (2020: £nil). Payments for loss of office No payments for loss of office were made in the year ended 31 December 2021 (2020: £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: Sir Michael Heller A R Heller R J Grobler G J Casey C A Joll J A Sibbald J Wong Beneficial Non-beneficial 31.12.2021 1.1.2021 31.12.2021 148,783 785,012 - 148,783 785,012 - 40,000 40,000 - - - - - - 181,334 - - - - - - 1.1.2021 181,334 - - - - - - There are no requirements or guidelines for any director to own shares in the Company. The following section is unaudited. The following graph illustrates the company’s performance compared with a broad equity market index over a ten year period. Performance is measured by total shareholder return. The directors have chosen the FTSE All Share Mining index as a suitable index for this comparison as it gives an indication of performance against a spread of quoted companies in the same sector. The middle market price of Bisichi PLC ordinary shares at 31 December 2021 was 60p (2020: 109p). During the year the share price ranged between 45p and 120p. ) d e s a b e r ( e c i r P e r a h S 160.00 140.00 120.00 100.00 80.00 60.00 40.00 20.00 34 Bisichi PLC – Bisichi Mining – FTSE All Share 2012 2013 2014 2015 2016 2017 2018 2019 2020 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 2012 to 31 December 2021. Year 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 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 £’000 929 551 1,035 1,073 898 850 912 862 614 721 Annual bonus payout against maximum opportunity* % 27% 0% 34% 34% 25% 22% 22% 22% N/A N/A Long-term incentive vesting rates against maximum opportunity* % N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Bisichi PLC does not have a Chief Executive so the table includes the equivalent information for the Managing Director. *There were no formal criteria or conditions to apply in determining the amount of bonus payable or the number of shares to be issued prior to 2014. Percentage change in remuneration and Company performance Director Executive: Sir Michael Heller A R Heller 1 G J Casey 1 R Grobler 1 Non-Executive: C A Joll J A Sibbald J Wong 2 Employee remuneration on a full-time equivalent basis: Employees of the Company 1&3 Base Salary % Change 2021 v 2020 Benefits % Change 2021 v 2020 Bonuses % Change 2021 v 2020 0% 0% 20% 6% 0% 0% 0% 8% 0% (39%) (10%) 3% 0% 0% 0% (26%) 0% N/A N/A N/A 0% 0% 0% N/A 1 Bonus changes from 2021 to 2020 for AR Heller, G J Casey, R Grobler and Employees of the Company are disclosed as not applicable as no bonuses were awarded to the various directors and employees in 2020. 2 Mr J Wong was appointed as a non-executive Director on 15 October 2020 so the annual change is apportioned. 3 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. Bisichi PLC 3535 Governance Annual remuneration report 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 (see note below) 2021 £’000 7,491 641 2020 £’000 5,890 - The distribution to shareholders in the current year is subject to shareholder approval at next the Annual General Meeting. Statement of implementation of remuneration policy The remuneration policy was approved at the AGM on 9 July 2020. The policy took effect from the conclusion of the AGM and will apply for 3 years unless changes are deemed necessary by the remuneration committee. The company may not make a remuneration payment or payment for loss of office to a person who is, is to be, or has been a director of the company unless that payment is consistent with the approved remuneration policy, or has otherwise been approved by a resolution of members. During the year, there were no deviations from the procedure for the implementation of the remuneration policy as set out in the policy. Consideration by the directors of matters relating to directors’ remuneration The remuneration committee considered the executive directors remuneration and the board considered the non-executive directors remuneration in the year ended 31 December 2021. The Company did not engage any consultants to provide advice or services to materially assist the remuneration committee’s considerations. Shareholder voting At the Annual General Meeting on 22 June 2021, there was an advisory vote on the resolution to approve the remuneration report, other than the part containing the remuneration policy. In addition, on 9 July 2020 there was a binding vote on the resolution to approve the current remuneration policy the results of which are detailed below: Resolution to approve the Remuneration Report (22 June 2021) Resolution to approve the Remuneration Policy (9 July 2020) % of votes for % of votes against No of votes withheld 72.05% 69.87% 27.95% 30.13% - - The remuneration committee and directors have considered the percentage of votes against the resolutions to approve the remuneration report and policy. Reasons given by shareholders, as known by the directors, have been the level of remuneration awarded and the general remuneration policy itself. The remuneration committee consider the remuneration policy and performance conditions within remain appropriate and therefore no further action has been taken. Service contracts All executive directors have full-time contracts of employment with the company. Non-executive directors have contracts of service. No director has a contract of employment or contract of service with the company, its joint venture or associated companies with a fixed term which exceeds twelve months. Directors notice periods (see page 33 of the annual remuneration report) are set in line with market practice and of a length considered sufficient to ensure an effective handover of duties should a director leave the company. All directors’ contracts as amended from time to time, have run from the date of appointment. Service contracts are kept at the registered office. 36 Bisichi 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 2020 AGM. The approved policy took effect from 9 July 2020. A copy of the full policy can be found at www.bisichi.co.uk. Element Purpose Policy Operation Considered by remuneration committee on appointment. Reviewed annually Paid monthly in cash Executive directors Base salary To recognise: Skills Responsibility Accountability Experience Value Pension To provide competitive retirement benefits Set at a level considered appropriate to attract, retain motivate and reward the right individuals. Company contribution offered at up to 10% of base salary as part of overall remuneration package. Benefits To provide a competitive benefits package Contractual benefits can include but are not limited to: Car or car allowance Group health cover Death in service cover Permanent health insurance Opportunity and performance conditions 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. The contribution payable by the company is included in the Company contribution offered at up to 10% of base salary as part of overall remuneration package. director’s contract of employment. No specific performance conditions are attached to pension contributions. Paid into money purchase schemes The committee retains absolute discretion to approve changes in contractual benefits in exceptional circumstances or where factors outside the control of the Group lead to increased costs (e.g. medical inflation) The costs associated with benefits offered are closely controlled and reviewed on an annual basis. No director will receive benefits of a value in excess of 30% of his base salary. No specific performance conditions are attached to contractual benefits. The value of benefits for each director for the year ended 31 December 2021 is shown in the table on page 32. Bisichi PLC 3737 Governance Annual remuneration report Element Purpose Policy Operation Opportunity and performance conditions Annual Bonus To reward and incentivise In assessing the performance of the executive team, and in particular to determine whether bonuses are merited the remuneration committee takes into account the overall performance of the business. Bonuses are generally offered in cash The remuneration committee determines the level of bonus on an annual basis applying such performance conditions and performance measures as it considers appropriate Share Options To provide executive directors with a long-term interest in the company Granted under existing schemes (see page 33) Offered at appropriate times by the remuneration committee The current maximum bonus opportunity will not exceed 200% of base salary in any one year, but the remuneration committee reserves the power to award up to 300% in an exceptional year. There is no formal framework by which the company assesses performance and performance conditions and measures will be assessed on an annual basis by the remuneration committee. In determining the level of the bonus, the remuneration committee will take into account internal and external factors and circumstances that occur during the year under review. The performance measures applied may be financial, non-financial, corporate, divisional or individual and in such proportion as the remuneration committee considers appropriate to the prevailing circumstances. The company does not consider, given the company’s size, nature and stage of operations that a formal framework is required. Entitlement to share options is not subject to any specific performance conditions. Share options will be offered by the remuneration committee as appropriate taking into account the factors considered above in the decision making process in determining remuneration policy. The aggregate number of shares over which options may be granted under all of the company’s option schemes (including any options and awards granted under the company’s employee share plans) in any period of ten years, will not exceed, at the time of grant, 10% of the ordinary share capital of the company from time to time. In determining the limits no account shall be taken of any shares where the right to acquire the shares has been released, lapsed or has otherwise become incapable of exercise. The company currently has one Share Option Scheme (see page 33). For the 2012 scheme the remuneration committee has the ability to impose performance criteria in respect of any new share options granted, however there is no requirement to do so. There are no performance conditions attached to the options already issued under the 2012 scheme, the options vest on issue and there are no minimum hold periods for the resulting shares issued on exercise of the option. 38 Bisichi PLC Governance Annual remuneration report Element Purpose Policy Operation Opportunity and performance conditions Non-executive directors Base salary To recognise: Skills Experience Value Pension Benefits Share Options Reviewed annually No individual director will be awarded a base salary in excess of £60,000 per annum. No specific performance conditions are attached to base salaries. 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 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. 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) No benefits offered except to one non- executive director who is eligible for health cover (see annual remuneration report page 32) Non-executive directors do not participate in the share option schemes In order to ensure that shareholders have sufficient clarity over director remuneration levels, the company has, where possible, specified a maximum that may be paid to a director in respect of each component of remuneration. The remuneration committee consider the performance measures outlined in the table above to be appropriate measures of performance and that the KPI’s chosen align the interests of the directors and shareholders. Details of remuneration of other company employees can be found in Note 29 to the financial statements. Bisichi PLC 3939 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; • • • • • • 40 Bisichi PLC 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. • • • • • • • • Governance Audit committee report Financial reporting As part of its role, the Audit Committee assessed the audit findings that were considered most significant to the financial statements, including those areas requiring significant judgment and/ or estimation. When assessing the identified financial reporting matters, the committee assessed quantitative materiality primarily by reference to profit before tax. The Board also gave consideration to: • • the carrying value of the Group’s total assets, given that the Group operates a principally asset based business; the value of revenues generated by the Group, given the importance of coal production and processing; Adjusted EBITDA, given that it is a key trading KPI, when determining quantitative materiality; and Going concern, given the potential impact of macro-economic activity on the Group’s operations. • • • • • • External Auditors Kreston Reeves LLP were appointed as the statutory auditors during the year and they have expressed their willingness to continue in office and a resolution to reappoint them will be proposed at the forthcoming Annual General Meeting. In the United Kingdom the company is provided with extensive administration and accounting services by London & Associated Properties PLC which has its own audit committee and employs a separate firm of external auditors, RSM UK Audit LLP. BDO South Africa Inc. acts as the external auditor to the South African companies, and the work of that firm was reviewed by Kreston Reeves LLP for the purpose of the Group audit. Christopher Joll Chairman – audit committee 12 Little Portland Street London W1W8BJ 13 April 2022 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. Bisichi PLC 4141 Governance Valuers’ certificates To the directors of Bisichi PLC In accordance with your instructions we have carried out a valuation of the freehold property interests held as at 31 December 2021 by the company as detailed in our Valuation Report dated 16 February 2022. Having regard to the foregoing, we are of the opinion that the open market value as at 31 December 2021 of the interests owned by the company was £10,525,000 being made up as follows: Freehold Leasehold Leeds 16 February 2022 £’000 8,230 2,295 10,525 Carter Towler Regulated by Royal Institute of Chartered Surveyors 42 Bisichi PLC Governance Directors’ responsibilities statement The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations. Company law requires the directors to prepare financial statements for each financial year. Under that law the directors are required to prepare the Group financial statements in accordance with UK-adopted international accounting standards in conformity with the requirements of the Companies Act 2006. The directors have elected to prepare the company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and company and of the profit or loss for the Group for that period. • • • • In preparing these financial statements, the directors are required to: • • select suitable accounting policies and then apply them consistently; make judgements and accounting estimates that are reasonable and prudent; state with regard to the Group financial statements whether they have been prepared in accordance with UK- adopted international accounting standards in conformity with the requirements of the Companies Act 2006 subject to any material departures disclosed and explained in the financial statements; • • • • • • state with regard to the parent company financial statements, whether applicable UK accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company and the Group will continue in business; and prepare a director’s report, a strategic report and director’s remuneration report which comply with the requirements of the Companies Act 2006. The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are responsible for ensuring that the annual report and accounts, taken as a whole, are fair, balanced, and understandable and provides the information necessary for shareholders to assess the Group’s performance, business model and strategy. Website publication The directors are responsible for ensuring the annual report and the financial statements are made available on a website. Financial statements are published on the company’s website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the company’s website is the responsibility of the directors. The directors’ responsibility also extends to the ongoing integrity of the financial statements contained therein. Directors’ responsibilities pursuant to DTR4 The directors confirm to the best of their knowledge: • • the Group financial statements have been prepared in accordance with UK-adopted international accounting standards in conformity with the requirements of the Companies Act 2006 and give a true and fair view of the assets, liabilities, financial position and profit and loss of the Group. the annual report includes a fair review of the development and performance of the business and the financial position of the Group and the parent company, together with a description of the principal risks and uncertainties that they face. • • Bisichi PLC 4343 Independent auditor report to the shareholders of Bisichi Plc • • • • the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 Governance Independent auditor report to the shareholders of Bisichi Plc for the year ended 31 December 2021 Opinion We have audited the financial statements of Bisichi PLC (the ‘parent company’) and its subsidiaries (the ‘Group’) for the year ended 31 December 2021 which comprise the consolidated income statement, consolidated statement of other comprehensive income, consolidated and company balance sheets, consolidated and company statements of changes in equity, consolidated cash flow statement and notes to the financial statements, including a summary of significant Group accounting policies. The financial reporting framework that has been applied in their preparation of the group financial statements is applicable law and UK adopted international accounting standards. 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 FRS 101 Reduced Disclosure Framework (United Kingdom Generally Accepted Accounting Practice). Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the Group 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 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. Evidence obtained that management have undertaken a formal going concern assessment, including sensitivity analysis on cash flow forecasts, clear consideration of external factors including the COVID pandemic and the war in Ukraine and the potential liquidity impact of these on cash balances including available facilities. Analysed the financial strength of the business at the year end date and considered key trends in balance sheet strength and business performance over the last three years. Confirmations gained that operation of the business, including mine production and sale at Black Wattle Colliery have not been disrupted in the period by any external or internal factors. Testing the mechanical integrity of forecast model by checking the accuracy and completeness of the model, including challenging the appropriateness of estimates and assumptions with reference to empirical data and external evidence. • • • • • • In our opinion, the financial statements: • • • • • • 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 2021 and of the Group’s profit for the year then ended; the group financial statements have been properly prepared in accordance with UK adopted international accounting standards; the parent company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and 44 Bisichi PLC Conclusions relating to going concern In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors assessment of the Group and Parent companies ability to continue to adopt the going concern basis of accounting including the following: • • Gained an understanding of the systems and controls around managements’ going concern assessment, including for the preparation and review process for forecasts and budgets. • • • • • • Based on our above assessment we performed our own sensitivity analysis in respect of the key assumptions underpinning the forecasts. We performed stress-testing analysis on the core cash generating units of the business to confirm cash inflow levels needed to maintain minimal liquidity required to meet liabilities as they fall due. We considered post year end performance of the business, comparing this to budget as well as considering the development of key liquidity ratios in the business. Governance Independent auditor report to the shareholders of Bisichi Plc An overview of the scope of our audit As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In particular, we looked at where the directors made subjective judgements, for example in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits we also addressed the risk of management override of internal controls, including evaluating whether there was evidence of bias by the directors that represented a risk of material misstatement due to fraud. • • The group’s banking facility documentation was reviewed to ensure that any covenants in place have not been breached. • • We reviewed the adequacy and completeness of the disclosure included within the financial statements in respect of going concern. Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the entity’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. In relation to the Group and Parent Company’s reporting on how they have applied the UK Corporate Governance Code, we have nothing material to add or draw attention to in relation to the directors’ statement in the financial statements about whether the directors considered it appropriate to adopt the going concern basis of accounting. Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the Group’s and Parent Company’s ability to continue as a going concern. Corporate Governance Statement The Listing Rules require us to review the directors’ statement in relation to going concern, longer-term viability and that part of the Corporate Governance Statement relating to the Group’s and Parent Company’s compliance with the provisions of the UK Corporate Governance Code specified for our review. Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance Statement is materially consistent with the financial statements or our knowledge obtained during the audit: • • Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any material uncertainties identified set out on page 30; • • Directors’ explanation as to its assessment of the company’s prospects, the period this assessment covers and why the period is appropriate set out on page 22; • • Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on pages 11 to 15; • • The section of the Annual Report that describes the review of effectiveness of risk management and internal control systems set out on page 28 and • • The section describing the work of the Risk and Audit Committee set out on page 27. Bisichi PLC 4545 Governance Independent auditor report to the shareholders of Bisichi Plc Our application of materiality Materiality £359,600 £355,000 Group financial statements Parent company financial statements Basis for determining materiality Rationale for benchmark applied 2% of net assets Capped below group materiality The group's principal activity of that of an exploration and mining operation and investment property holdings. To this end the business is highly asset focused. Therefore a benchmark for materiality of the NA's of the group is considered to be appropriate. The parent company materiality has been capped at below group materiality. This was to address the aggregation risk in the group audit. Performance materiality £269,700 £269,600 Basis for determining performance materiality Rationale for performance materiality applied 75% of materiality Capped below group materiality On the basis of our risk assessments, together with our assessment of the Group’s overall control environment, our judgement was that performance materiality was 75% of our planning materiality. In assessing the appropriate level, we consider the nature, the number and impact of the audit differences identified in the previous year’s audit. The parent company performance materiality has been capped at below group performance materiality. This was to address the aggregation risk in the group audit. Triviality threshold £17,980 £17,975 Basis for determining triviality threshold 5% of materiality Capped below group materiality We reported all audit differences found in excess of our triviality threshold to the directors and the management board. For each Group company within the scope of our Group audit, we allocated a materiality that is less than our overall Group materiality. The range of materiality allocated across each Group company was between £227,000 and £23,300. The scope of our audit was influenced by our application of materiality as we set certain quantitative thresholds for performance materiality and use these thresholds as a consideration tool to help to determine the scope of our audit and the nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both individually and in aggregate on the financial statements as a whole. We determined component materiality for the parent company to be capped at below group materiality. This was also the case for group subsidiaries registered outside of the UK. For the UK-registered trading subsidiaries, 4% of that subsidiary’s net assets was used. Performance materiality was set in the range of 70-80% of component materiality. 46 Bisichi PLC Governance Independent auditor report to the shareholders of Bisichi Plc Coverage overview Totals at 31 December 2021: Full statutory audit (Kreston Reeves and BDO) Group revenue £50,519,592 Group profit/(loss) before tax £2,501,171 Group net assets £17,835,066 £50,519,592 (100%) £2,377,426 (95%) £17,092,472 (96%) Limited procedures £Nil £123,745 (5%) £742,594 (4%) We tailored the scope of our audit to ensure that we performed sufficient work to be able to give an opinion on the financial statements as a whole, taking into account the structure of the Group and the parent company, the accounting processes and controls, and the industry in which they operate. Our scoping considerations for the Group audit were based both on financial information and risk. As noted above limited assurance audit work – which is to say the audit of balances and transactions material at a group level – was only applied in respect of a small element of the group. The below table summarises for the parent company, and its subsidiaries, in terms of the level of assurance gained: Group component Bisichi PLC Mineral Products Limited Bisichi (Properties) Limited Bisichi Northampton Limited Black Wattle Colliery (Pty) Limited Sisonke Coal Processing (Pty) Limited Black Wattle Klipfontein (Pty) Limited Bisichi Coal Mining (Pty) Limited All other group undertakings Level of assurance Full statutory audit (Kreston Reeves) Full statutory audit (Kreston Reeves) Full statutory audit (Kreston Reeves) Full statutory audit (Kreston Reeves) Full statutory audit (BDO) Full statutory audit (BDO) Full statutory audit (BDO) Full statutory audit (BDO) Limited assurance (Kreston Reeves) Bisichi PLC 4747 Governance Independent auditor report to the shareholders of Bisichi Plc 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. This is not a complete list of all risks identified by our audit. Revenue recognition: £50,519,592 Significance and nature of key risk Revenue is a key performance indicator for users in assessing the group’s financial statements. Revenue generated has a significant impact on cash inflows and profit before tax for the group. As such revenue is a key determinant in profitability and the group’s ability to generate cash. Revenue comprises two key revenue streams: the sale of coal and property rental income. Coal revenue is recognised when the customer has a legally binding obligation to settle under the terms of the contract. Rental income is recognised in the Group income statement on a straight-line basis over the term of the lease. How our audit addressed the key risk Sales of coal and coal processing services in the period were tested from the trigger point of the sale to the point of recognition in the financial statements, corroborating this to contract sales or service terms and the recognition stages detailed in IFRS 15. Rental income revenue was recalculated based on the terms included in signed lease agreements. Again, the recognition stages detailed the relevant standards were carefully considered to ensure revenue recognised was in line with these. This substantive testing covered 100% of total property rental revenues. Revenue streams were further analytically reviewed via comparison to our expectations. Expectations were based on a combination of prior financial data/budgets and our own assessments based on our knowledge gained of the business. Cut-off of revenue was reviewed by analysing sales recorded during the period just before and after the financial year end and determining if the recognition applied was appropriate. Walkthrough testing was performed to ensure that key systems and controls in place around the revenue cycle operated as designed. The accuracy of revenue disclosures in the accounts were confirmed to be consistent with the revenue cycle observed and audited. The completeness of these disclosures was confirmed by reference to the full disclosure requirements as detailed in IFRS 15. Key observations communicated to the Risk and Audit Committee We have no concerns over the material accuracy of revenue recognised in the financial statements. 48 Bisichi PLC Governance Independent auditor report to the shareholders of Bisichi Plc Valuation/impairment of investment properties: £10,700,134 Significance and nature of key risk Investment properties comprise freehold and long leasehold land and buildings. Investment properties are carried at fair value in accordance with IAS 40. How our audit addressed the key risk Appropriate classification of investment properties under IAS 40 was considered, especially in relation to long leasehold land and buildings. 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. External valuation reports were obtained and vouched to stated fair values. The competence and independence of the valuation experts was carefully considered to ensure that the reports they produce can be relied upon. The key assumptions made within these reports were reviewed and considered for reasonableness, including rental yield analysis. We have further performed our own separate impairment considerations to consider if events/factors in place at year end present material impairment indicators. Key observations communicated to the Risk and Audit Committee We have no concerns over the material accuracy of investment property values recognised in the financial statements. Valuation/impairment of mining reserves and development: £8,896,000 Significance and nature of key risk The purpose of mine development is to establish secure working conditions and infrastructure to allow the safe and efficient extraction of recoverable reserves. How our audit addressed the key risk The accounting requirements of IFRS 6 and IAS 16 were considered to ensure capitalisation of costs to mine development under IAS 16 was appropriate. 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. In considering impairment indicators, as governed by IAS 36, the life of mine assessment was obtained. All significant input variables were considered and stress-tested to assess headroom between modelling and the value of mine development. Consideration was given to the competence and independence of the technical expert involved with the production of historic technical reports on which the life of mine assessment is partially built. Depreciation of mine development was recalculated based on the unit of production basis to ensure accurately recorded. This basis was also considered for reasonableness by reference to the accounting policies of industry peers. The accuracy and appropriateness of mine development disclosures in the accounts were confirmed to be consistent with the mine development accounting cycle observed and audited. Key observations communicated to the Risk and Audit Committee We have no concerns over the material accuracy of mining reserves and development values recognised in the financial statements. Bisichi PLC 4949 Governance Independent auditor report to the shareholders of Bisichi Plc Other information The other information comprises the information included in the annual report other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Our opinion on the remuneration report Kreston Reeves has audited the Annual remuneration report set out on pages 32 to 39 of the Annual Report for the year ended 31 December 2021. The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with the Companies Act 2006. Kreston Reeves’ responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with International Accounting Standards. In Kreston Reeves’ opinion, the Remuneration Report of the Group for the year, complies with the requirements of the Companies Act 2006. 50 Bisichi PLC Our consideration of climate change related risks The financial impacts on the Group of climate change and the transition to a low carbon economy (“climate change”) were considered in our audit where they have the potential to directly or indirectly impact key judgements and estimates within the financial statements. The Group continues to develop its assessment of the potential impacts of climate change. Climate risks have the potential to materially impact the key judgements and estimates within the financial report. Our audit considered those risks that could be material to the key judgement and estimates in the assessment of the carrying value of non-current assets and closure and rehabilitation provisions. The key judgements and estimates included in the financial statements incorporate actions and strategies, to the extent they have been approved and can be reliably estimated in accordance with the Group’s accounting policies. Accordingly, our key audit matters address how we have assessed the Group’s climate related assumptions to the extent they impact each key audit matter. Our audit procedures were performed with the involvement of our climate change and valuation specialists. Opinions on other matters prescribed by 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 •• the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements. Matters on which we are required to report by exception In the light of our knowledge and understanding of the Group and parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors’ report. 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 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 43), 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 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 parent company or to cease Governance Independent auditor report to the shareholders of Bisichi Plc 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. Capability of the audit in detecting irregularities, including fraud Based on our understanding of the group and industry, and through discussion with the directors and other management (as required by auditing standards), we identified that the principal risks of non-compliance with laws and regulations related to health and safety, anti-bribery and employment law. We considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as the Companies Act 2006. We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance throughout the audit. We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to posting inappropriate journal entries to increase revenue or reduce expenditure, management bias in accounting estimates and judgemental areas of the financial statements such as the valuation of investment properties and mining reserve and development asset. Audit procedures performed by the group engagement team and component auditors included: •• We obtained an understanding of the legal and regulatory frameworks that are applicable to the Group and determined that the most significant are those that relate to the reporting framework and the relevant tax compliance regulations in the jurisdictions in which Bisichi PLC operates. In addition, we concluded that there are certain significant laws and regulations that may have an effect on the determination of the amounts and disclosures in the financial statements, mainly relating to health and safety, employee matters, bribery and corruption practices, environmental and certain aspects of company legislation recognising the regulated nature of the Group’s mining and oil and gas activities and its legal form. •• Detailed discussions were held with management to identify any known or suspected instances of non- compliance with laws and regulations. •• Identifying and assessing the design effectiveness of controls that management has in place to prevent and detect fraud. •• Challenging assumptions and judgements made by management in its significant accounting estimates, including assessing the capabilities of the property valuers and discussing with the valuers how their valuations were calculated and the data and assumptions they have used to calculate these. •• Performing analytical procedures to identify any unusual or unexpected relationships, including related party transactions, that may indicate risks of material misstatement due to fraud. •• Confirmation of related parties with management, and review of transactions throughout the period to identify any previously undisclosed transactions with related parties outside the normal course of business. •• Reading minutes of meetings of those charged with governance, reviewing internal audit reports and reviewing correspondence with relevant tax and regulatory authorities. •• Review of significant and unusual transactions and evaluation of the underlying financial rationale supporting the transactions. •• Identifying and testing journal entries, in particular any manual entries made at the year end for financial statement preparation. •• We ensured our global audit team (including Kreston Reeves and BDO) has deep industry experience through working for many years on relevant audits, including experience of mining and investment property management. Our audit planning included considering external market factors, for example geopolitical risk, the potential impact of climate change, commodity price risk and major trends in the industry. Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non- compliance. Bisichi PLC 5151 Governance Independent auditor report to the shareholders of Bisichi Plc Use of our report This report is made solely to the 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 company’s members those matters we are required to state to them in an auditor 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 company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Anne Dwyer BSc(Hons) FCA (Senior Statutory Auditor) For and on behalf of Kreston Reeves LLP Chartered Accountants Statutory Auditor London Date: 19 April 2022 As part of an audit in accordance with ISAs (UK), we exercise professional judgment and maintain professional scepticism throughout the audit. We also: report. However, future events or conditions may cause the Group or the parent company to cease to continue as a going concern. •• Identify and assess the risks of material •• Evaluate the overall presentation, misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. •• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. •• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. •• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s or the parent company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. •• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Other matters which we are required to address We were appointed by the audit committee on 19 November 2021 to audit the financial statements for the year ending 31 December 2021. Our total uninterrupted period of engagement is 1 year, covering the year ended 31 December 2021. 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. During the period under review, agreed upon procedures were completed in respect of a number of the group’s service charge accounts. Our audit opinion is consistent with the additional report to the audit committee. 52 Bisichi PLC Financial statements 54 Consolidated income statement 55 Consolidated statement of other comprehensive income 56 Consolidated balance sheet 58 Consolidated statement of changes in shareholders’ equity 59 Consolidated cash flow statement 60 Group accounting policies 68 Notes to the financial statements 94 Company balance sheet 95 Company statement of changes in equity 96 Company accounting policies Bisichi PLC 53 Financial statements Financial statements Consolidated income statement for the year ended 31 December 2021 Group revenue Operating costs Operating profit/(loss) before depreciation, fair value adjustments and exchange movements Depreciation Operating profit/(loss) before fair value adjustments and exchange movements Exchange (losses)/gains Increase/(Decrease) in value of investment properties Gain on investments held at fair value Operating profit/(loss) Share of loss in joint ventures 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/(Loss) per share – basic Profit/(Loss) per share – diluted Notes 2 3 3 1 4 1 13 7 5 8 27 10 10 2021 Revaluations and impairment £’000 - - - - - - 255 812 1,067 (125) 942 - - 942 (342) 600 600 - 600 2021 Trading £’000 50,520 (45,492) 5,028 (2,571) 2,457 (121) - - 2,336 - 2,336 22 (799) 1,559 (453) 1,106 891 215 1,106 2021 Total £’000 50,520 (45,492) 5,028 2020 Trading £’000 29,805 (30,916) (1,111) (2,571) 2,457 (2,193) (3,304) 39 - - (3,265) - (3,265) 25 (641) (3,881) 1,225 (2,656) (2,216) (440) (2,656) (121) 255 812 3,403 (125) 3,278 22 (799) 2,501 (795) 1,706 1,491 215 1,706 13.96p 13.94p 2020 Revaluations and impairment £’000 - - - - - - 2020 Total £’000 29,805 (30,916) (1,111) (2,193) (3,304) 39 (1,295) (1,295) 67 (1,228) (87) (1,315) - - (1,315) 177 (1,138) (1,138) - (1,138) 67 (4,493) (87) (4,580) 25 (641) (5,196) 1,402 (3,794) (3,354) (440) (3,794) (31.42p) (31.42p) 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. 54 Bisichi PLC Financial statements Consolidated statement of other comprehensive income for the year ended 31 December 2021 Profit/(Loss) for the year Other comprehensive income/(expense): Items that may be subsequently recycled to the income statement: Exchange differences on translation of foreign operations 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 2021 £’000 1,706 (60) (60) 1,646 1,439 207 1,646 2020 £’000 (3,794) (467) (467) (4,261) (3,752) (509) (4,261) Bisichi PLC 55 Financial statements Consolidated balance sheet at 31 December 2021 Assets Non-current assets 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”) Total non-current assets Current assets Inventories Trade and other receivables Investments in listed securities held at FVPL Cash and cash equivalents Total current assets Total assets Liabilities Current liabilities Borrowings Trade and other payables Current tax liabilities Total current liabilities Non-current liabilities Borrowings Provision for rehabilitation Lease liabilities Deferred tax liabilities Total non-current liabilities Total liabilities Net assets 56 Bisichi PLC Notes 2021 £’000 2020 £’000 11 12 13 13 16 17 18 20 19 20 21 31 23 10,700 9,065 1,130 3,631 24,526 1,253 8,626 685 3,018 13,582 38,108 (2,666) (10,743) (726) (14,135) (3,853) (1,390) (389) (506) (6,138) (20,273) 17,835 10,471 10,174 1,255 1,746 23,646 3,445 6,958 833 3,768 15,004 38,650 (5,110) (10,856) (209) (16,175) (3,943) (1,442) (427) (474) (6,286) (22,461) 16,189 Financial statements Consolidated balance sheet Equity Share capital Share premium account Translation reserve Other reserves Retained earnings Total equity attributable to equity shareholders Non-controlling interest Total equity Notes 24 25 27 2021 £’000 1,068 258 2020 £’000 1,068 258 (2,540) (2,488) 707 18,019 17,512 323 17,835 707 16,528 16,073 116 16,189 These financial statements were approved and authorised for issue by the board of directors on 13 April 2022 and signed on its behalf by: A R Heller Director G J Casey Director Company Registration No. 112155 Bisichi PLC 5757 Financial statements Consolidated statement of changes in shareholders’ equity for the year ended 31 December 2021 Balance at 1 January 2020 Loss for the year Other comprehensive expense Total comprehensive expense for the year Dividend (note 9) Share capital £’000 1,068 - - - - Share Premium £’000 Transla- tion reserves £’000 Other reserves £’000 Retained earnings £’000 Total £’000 258 (2,090) 707 19,989 19,932 Non- controlling interest £’000 625 - - - - - (398) (398) - - - - - (3,354) - (3,354) (3,354) (398) (3,752) (107) (107) Balance at 1 January 2021 1,068 258 (2,488) 707 16,528 16,073 Profit for the year Other comprehensive income Total comprehensive income for the year Dividend (note 9) - - - - - - - - - (52) (52) - - - - - 1,491 - 1,491 1,491 (52) 1,439 - - Balance at 31 December 2021 1,068 258 (2,540) 707 18,019 17,512 58 Bisichi PLC Total equity £’000 20,557 (3,794) (467) (4,261) (107) 16,189 1,706 (60) 1,646 - 17,835 (440) (69) (509) - 116 215 (8) 207 - 323 Financial statements Consolidated cash flow statement for the year ended 31 December 2021 Cash flows from operating activities Operating profit/Loss Adjustments for: Depreciation Unrealised (gain)/loss on investment properties Gain 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, motor vehicles, 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 and lease liabilities repaid Equity dividends paid Minority 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 2021 £’000 Year ended 31 December 2020 £’000 3,403 (4,493) 2,571 (255) (812) 121 5,028 2,105 (1,900) 192 5,425 22 (799) (216) 4,432 (1,781) - 705 (1,630) (2,706) 46 (317) - - (271) 1,455 (1,078) 105 482 3,018 (2,536) 482 2,193 1,295 (67) (39) (1,111) (1,127) 122 3,379 1,263 25 (641) (198) 449 (3,186) - 253 (1,359) (4,292) 61 (239) (107) - (285) (4,128) 2,878 172 (1,078) 3,768 (4,846) (1,078) Bisichi PLC 5959 Financial statements Group accounting policies for the year ended 31 December 2021 Basis of accounting The results for the year ended 31 December 2021 have been prepared in accordance with UK-adopted international accounting standards in conformity with the requirements of the Companies Act 2006. In applying the Group’s accounting policies and assessing areas of judgment and estimation materiality is applied as detailed on page 40 of the Audit Committee Report. The principal accounting policies are described below: The Group financial statements are presented in £ sterling and all values are rounded to the nearest thousand pounds (£000) except when otherwise stated. The functional currency for each entity in the Group, and for joint arrangements and associates, is the currency of the country in which the entity has been incorporated. Details of which country each entity has been incorporated can be found in Note 15 for subsidiaries and Note 14 for joint arrangements and associates. The exchange rates used in the accounts were as follows: Year-end rate Annual average £1 Sterling: Rand 2021 2020 £1 Sterling: Dollar 2021 2020 20.7672 20.4060 20.0145 21.0936 1.3706 1.3685 1.3663 1.2833 Going concern The Group has prepared cash flow forecasts which demonstrate that the Group has sufficient resources to meet its liabilities as they fall due for at least the next 12 months from date of signing. In South Africa, a structured trade finance facility with Absa Bank Limited for R85million is held by Sisonke Coal Processing (Pty) Limited, a 100% subsidiary of Black Wattle Colliery (Pty) Limited. This facility comprises of a R85million revolving facility to cover the working capital requirements of the Group’s South African operations. The facility is renewable annually at 25 January and is secured against inventory, debtors and cash that are held in the Group’s South African operations. The Directors do not foresee any reason why the facility will not continue to be renewed at the next renewal date, in line with prior periods and based on their banking relationships. The directors expect that the coal market conditions experienced by its South African coal mining and processing operations in 2021 will be similar going into 2022. The directors therefore have a reasonable expectation that the mine will achieve positive levels of cash generation for the Group in 2022. As a consequence, the directors believe that the Group is well placed to manage its South African business risks successfully. In the UK, forecasts demonstrate that the Group has sufficient resources to meet its liabilities as they fall due for at least the next 12 months, from the approval of the financial statements, including those related to the Group’s UK Loan facility outlined below. The Group holds a 5 year term facility of £3.9m with Julian Hodge Bank Limited at an initial LTV of 40%. The loan is secured against the company’s UK retail property portfolio. The amount repayable on the loan at year end was £3.9million. The debt package has a five year term and is repayable at the end of the term in December 2024. In the last quarter of 2021 the base interest rate on the loan changed from LIBOR to the Bank of England base rate. The overall interest cost of the loan is 4.00% above the Bank of England base rate. All covenants on the loan were met during the year and the directors have a reasonable expectation that the Group has adequate financial resources at short notice, including cash and listed equity investments, to ensure the existing facility’s covenants are met on an ongoing basis. Dragon Retail Properties Limited (“Dragon”), the Group’s 50% owned joint venture, holds a Santander bank loan of £1.2million secured against its investment property, see note 14. The bank loan of £1.164million is secured by way of a first charge on specific freehold property at a value of £2.08 million. 60 Bisichi PLC Financial statements Group accounting policies The interest cost of the loan is 2.75 per cent above the bank’s base rate. A refinancing of this loan is currently underway. The loan originally expired in October 2020 but has been extended to April 2022, and the lender has offered to extend this further if required. Dragon has agreed terms with a new lender to refinance this loan in full and are expecting to complete this shortly. Subsequent to year end in the first quarter of 2022 geo-political events in Ukraine resulted in higher global energy prices. Although the final outcome of the events in Ukraine is uncertain, the Directors at present do not foresee the events having a significant negative impact on the Group’s UK and South African operations ability to remain in operation for the foreseeable future. As a result of the banking facilities held as well as the acceptable levels of cash expected to be held by the Group over the next 12 months, the Directors believe that the Group has adequate resources to continue in operational existence for the foreseeable future and that the Group is well placed to manage its business risks. Thus they continue to adopt the going concern basis of accounting in preparing the annual financial statements. International Financial Reporting Standards (IFRS) The Group has adopted all of the new and revised Standards and Interpretations issued by the International Accounting Standards Board (“IASB”) that are relevant to its operations and effective for accounting periods beginning 1 January 2021. A number of new standards, amendments to standards and interpretations have been issued but are not yet effective for the Group. The Group has not adopted any Standards or Interpretations in advance of the required implementation dates. The application of these new standards, amendments and interpretations are not expected to have a significant impact on the Group’s income statement or balance sheet. We are committed to improving disclosure and transparency and will continue to work with our different stakeholders to ensure they understand the detail of these accounting changes. We continue to remain committed to a robust financial policy. Key judgements and estimates Areas where key estimates and judgements are considered to have a significant effect on the amounts recognised in the financial statements include: Life of mine and reserves The directors consider their judgements and estimates surrounding the life of the mine and its reserves to have significant effect on the amounts recognised in the financial statements and to be an area where the financial statements are subject to significant estimation uncertainty. The life of mine remaining is currently estimated at 8 years. This life of mine is based on the Group’s existing coal reserves including reserves acquired but subject to regulatory approval. The Group actively seeks new opportunities to extend the life of mine of its existing mining operations or develop new independent mining operations in South Africa. The life of mine excludes future coal purchases and coal reserve acquisitions. The Group’s estimates of proven and probable reserves are prepared utilising the South African code for the reporting of exploration results, mineral resources and mineral reserves (the SAMREC code) and are subject to assessment by an independent Competent Person experienced in the field of coal geology and specifically opencast and pillar coal extraction. Estimates of coal reserves impact assessments of the carrying value of property, plant and equipment, depreciation calculations and rehabilitation and decommissioning provisions. There are numerous uncertainties inherent in estimating coal reserves and changes to these assumptions may result in restatement of reserves. These assumptions include geotechnical factors as well as economic factors such as commodity prices, production costs and yield. Depreciation, amortisation of mineral rights, mining development costs and plant & equipment The annual depreciation/amortisation charge is dependent on estimates, including coal reserves and the related life of mine, expected development expenditure for probable reserves, the allocation of certain assets to relevant ore reserves and estimates of residual values of the processing plant. The charge can fluctuate when there are significant changes in any of the factors or assumptions used, such as estimating mineral reserves which in turn affects the life of mine or the expected life of reserves. Estimates of proven and probable reserves are prepared by an independent Competent Person. Assessments of depreciation/ amortisation rates against the estimated reserve base are performed regularly. Details of the depreciation/amortisation charge can be found in note 12. Bisichi PLC 6161 Financial statements Group accounting policies Provision for mining rehabilitation including restoration and de-commissioning costs A provision for future rehabilitation including restoration and decommissioning costs requires estimates and assumptions to be made around the relevant regulatory framework, the timing, extent and costs of the rehabilitation activities and of the risk free rates used to determine the present value of the future cash outflows. The provisions, including the estimates and assumptions contained therein, are reviewed regularly by management. The Group annually engages an independent expert to assess the cost of restoration and final decommissioning as part of management’s assessment of the provision. Details of the provision for mining rehabilitation can be found in note 21. Impairment Property, plant and equipment representing the Group’s mining assets in South Africa are reviewed for impairment when there are indicators of impairment. The impairment test is performed using the approved Life of Mine plan and those future cash flow estimates are discounted using asset specific discount rates and are based on expectations about future operations. The impairment test requires estimates about production and sales volumes, commodity prices, proven and probable reserves (as assessed by the Competent Person), operating costs and capital expenditures necessary to extract reserves in the approved Life of Mine plan. Changes in such estimates could impact recoverable values of these assets. Details of the carrying value of property, plant and equipment can be found in note 12. The impairment test indicated significant headroom as at 31 December 2021 and therefore no impairment is considered appropriate. The key assumptions include: coal prices, including domestic coal prices based on recent pricing and assessment of market forecasts for export coal; production based on proven and probable reserves assessed by the independent Competent Person and yields associated with mining areas based on assessments by the Competent Person and empirical data. An 10% reduction in average forecast coal prices or a 14% reduction in yield would give rise to a breakeven scenario. However, the directors consider the forecasted yield levels and pricing to be appropriate and supportable best estimates. Fair value measurements of investment properties An assessment of the fair value of investment properties, is required to be performed. In such instances, fair value measurements are estimated based on the amounts for which the assets and liabilities could be exchanged between market participants. To the extent possible, the assumptions and inputs used take into account externally verifiable inputs. However, such information is by nature subject to uncertainty. The fair value of investment property is set out in note 11, whilst the carrying value of investments in joint ventures which themselves include investment property held at fair value by the joint venture is set out at note 13. Measurement of development property The development property included within the Group’s joint venture investment in West Ealing Projects limited is considered by Management to fall outside the scope of investment property. A property intended for sale in the ordinary course of business or in the process of construction or development for such sale, for example, property acquired exclusively with a view to subsequent disposal in the near future or for development and resale is expected to be recorded under the accounting standard of IAS 2 Inventories. The directors have discussed the commercial approach with the directors of the underlying joint venture and the current plan is to sell or to complete the development and sell. The Directors therefore consider the key judgement of accounting treatment of the property development under IAS 2 Inventories to be correct. IAS 2 Inventories require the capitalised costs to be held at the lower of cost or net realisable value. At 31 December 2021, the costs capitalised within the development based on a director’s appraisal for the property estimated the net realisable value at a surplus over the cost for the development. The directors have reviewed the underlying inputs and key assumptions made in the appraisal and consider them adequate. However, such information is by nature subject to uncertainty. The cost of the development property is set out in note 14. Basis of consolidation The Group accounts incorporate the accounts of Bisichi PLC and all of its subsidiary undertakings, together with the Group’s share of the results of its joint ventures. Non-controlling interests in subsidiaries are presented separately from the equity attributable to equity owners of the parent company. On acquisition of a non-wholly owned subsidiary, the non-controlling shareholders’ interests are initially measured at the non-controlling interests’ proportionate share of the fair value of the subsidiaries net assets. 62 Bisichi PLC Financial statements Group accounting policies 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 The Group’s revenue from contracts with customers, as defined under IFRS 15, includes coal revenue and service charge income. Coal revenue is derived principally from export revenue and domestic revenue. Both export revenue and domestic 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. For export revenue this 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. For domestic coal revenues this is 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. Coal revenue is measured based on consideration specified in the contract with a customer on a per metric tonne basis. Both export and domestic contracts are typically on a specified coal volume basis and less than a year in duration. Export contracts are typically linked to the price of Free on Board (FOB) Coal from Richards Bay Coal Terminal (API4 price). Domestic contracts are typically linked to a contractual price agreed. Service charges recoverable from tenants are recognised over time as the service is rendered. Lease property rental income, as defined under IFRS 16, 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. Expenditure Expenditure is recognised in respect of goods and services received. Where coal is purchased from third parties at point of extraction the expenditure is only recognised when the coal is extracted and all of the significant risks and rewards of ownership have been transferred. Investment properties Investment properties comprise freehold and long leasehold land and buildings. Investment properties are carried at fair value in accordance with IAS 40 ‘Investment Properties’. Properties are recognised as investment properties when held for long-term rental yields, and after consideration has been given to a number of factors including length of lease, quality of tenant and covenant, value of lease, management intention for future use of property, planning consents and percentage of property leased. Investment properties are revalued annually by professional external surveyors and included in the balance sheet at their fair value. Gains or losses arising from changes in the fair values of assets are recognised in the consolidated income statement in the period to which they relate. In accordance with IAS 40, investment properties are not depreciated. The fair value of the head leases is the net present value of the current head rent payable on leasehold properties until the expiry of the lease. Mining reserves, plant and equipment and development cost The cost of property, plant and equipment comprises its purchase price and any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in accordance with agreed specifications. Freehold land included within mining reserves is not depreciated. Other property, plant and equipment is stated at historical cost less accumulated depreciation. The cost recognised includes the recognition of any decommissioning assets related to property, plant and equipment. Bisichi PLC 6363 Financial statements Group accounting policies • • • • 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 of the earlier of its useful life or the life of the mine 25 – 33 per cent per annum 10 – 33 per cent per annum Provisions and contingent liabilities Provisions are recognised when the Group has a present obligation as a result of a past event which it is probable will result in an outflow of economic benefits that can be reliably estimated. A provision for rehabilitation of the mine is initially recorded at present value and the discounting effect is unwound over time as a finance cost. Changes to the provision as a result of changes in estimates are recorded as an increase / decrease in the provision and associated decommissioning asset. The decommissioning asset is depreciated in line with the Group’s depreciation policy over the life of mine. The provision includes the restoration of the underground, opencast, surface operations and de-commissioning of plant and equipment. The timing and final cost of the rehabilitation is uncertain and will depend on the duration of the mine life and the quantities of coal extracted from the reserves. 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; 64 Bisichi PLC Financial statements Group accounting policies Management exercises judgment in measuring the Group’s exposures to contingent liabilities through assessing the likelihood that a potential claim or liability will arise and where possible in quantifying the possible range of financial outcomes. Where there is a dispute and where a reliable estimate of the potential liability cannot be made, or where the Group, based on legal advice, considers that it is improbable that there will be an outflow of economic resources, no provision is recognised. Employee benefits Share based remuneration The company operates a share option scheme. The fair value of the share option scheme is determined at the date of grant. This fair value is then expensed on a straight-line basis over the vesting period, based on an estimate of the number of shares that will eventually vest. The fair value of options granted is calculated using a binomial or Black- Scholes-Merton model. Payments made to employees on the cancellation or settlement of options granted are accounted for as the repurchase of an equity interest, i.e. as a deduction from equity. Details of the share options in issue are disclosed in the Directors’ Remuneration Report on page 32 under the heading Share option schemes which is within the audited part of that report. Pensions The Group operates a defined contribution pension scheme. The contributions payable to the scheme are expensed in the period to which they relate. Foreign currencies Monetary assets and liabilities are translated at year end exchange rates and the resulting exchange rate differences are included in the consolidated income statement within the results of operating activities if arising from trading activities, including inter-company trading balances and within finance cost/income if arising from financing. For consolidation purposes, income and expense items are included in the consolidated income statement at average rates, and assets and liabilities are translated at year end exchange rates. Translation differences arising on consolidation are recognised in other comprehensive income. Foreign exchange differences on intercompany loans are recorded in other comprehensive income when the loans are not considered as trading balances and are not expected to be repaid in the foreseeable future. Where foreign operations are disposed of, the cumulative exchange differences of that foreign operation are recognised in the consolidated income statement when the gain or loss on disposal is recognised. Transactions in foreign currencies are translated at the exchange rate ruling on the transaction date. Financial instruments Financial assets and financial liabilities are recognised in the Group’s consolidated statement of financial position when the Group becomes a party to the contractual provisions of the instrument. Financial assets Financial assets are classified as either financial assets at amortised cost, at fair value through other comprehensive income (“FVTOCI”) or at fair value through profit or loss (“FVPL”) depending upon the business model for managing the financial assets and the nature of the contractual cash flow characteristics of the financial asset. A loss allowance for expected credit losses is determined for all financial assets, other than those at FVPL, at the end of each reporting period. The Group applies a simplified approach to measure the credit loss allowance for trade receivables using the lifetime expected credit loss provision. The lifetime expected credit loss is evaluated for each trade receivable taking into account payment history, payments made subsequent to year end and prior to reporting, past default experience and the impact of any other relevant and current observable data. The Group applies a general approach on all other receivables classified as financial assets. The general approach recognises lifetime expected credit losses when there has been a significant increase in credit risk since initial recognition. The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. The Group derecognises financial liabilities when the Group’s obligations are discharged, cancelled or have expired. Bank loans and overdrafts Bank loans and overdrafts are included as financial liabilities on the Group balance sheet at the amounts drawn on the particular facilities net of the unamortised cost of financing. Interest payable on those facilities is expensed as finance cost in the period to which it relates. Bisichi PLC 6565 Financial statements Group accounting policies Lease liabilities For any new contracts entered into the Group considers whether a contract is, or contains a lease. A lease is defined as ‘a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration’. To apply this definition the Group assesses whether the contract contains an identified asset and has the right to obtain substantially all of the economic benefits from use of the identified asset throughout the period of use. At lease commencement date, the Group recognises a right-of-use asset and a lease liability on the balance sheet. Right-of-use assets, excluding property head leases, have been included in property, plant and equipment and are measured at cost, which is made up of the initial measurement of the lease liability and any initial direct costs incurred by the Group. The Group depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. At the commencement date, the Group measures the lease liability at the present value of the lease payments unpaid at that date, discounted using the interest rate implicit in the lease if that rate is readily available or the Group’s incremental borrowing rate. Liabilities relating to short term leases are included within trade and other payables. Lease payments included in the measurement of the lease liability are made up of fixed payments and variable payments based on an index or rate, initially measured using the index or rate at the commencement date. Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest. It is re-measured to reflect any reassessment or modification. When the lease liability is re-measured, the corresponding adjustment is reflected in the right-of-use asset, or profit and loss if the right-of-use asset is already reduced to zero. Lease liabilities that arise for investment properties held under a leasehold interest and accounted for as investment property are initially calculated as the present value of the minimum lease payments, reducing in subsequent reporting periods by the apportionment of payments to the lessor. The Group has elected to account for short-term leases and leases of low-value assets using the practical expedients available in IFRS 16. Instead of recognising a right-of-use asset and lease liability, the payments in relation to these are recognised as an expense in profit or loss on a straight-line basis over the lease term. Investments Current financial asset investments and other investments classified as non- current (“The investments”) comprise of shares in listed companies. The investments are measured at fair value. Any changes in fair value are recognised in the profit or loss account and accumulated in retained earnings. 66 Bisichi PLC Trade receivables Trade receivables are accounted for at amortised cost. Trade receivables do not carry any interest and are stated at their nominal value as reduced by appropriate expected credit loss allowances for estimated recoverable amounts as the interest that would be recognised from discounting future cash payments over the short payment period is not considered to be material. Trade payables Trade payables cost are not interest bearing and are stated at their nominal value, as the interest that would be recognised from discounting future cash payments over the short payment period is not considered to be material. Other financial assets and liabilities The Group’s other financial assets and liabilities not disclosed above are accounted for at amortised cost. Joint ventures Investments in joint ventures, being those entities over whose activities the Group has joint control, as established by contractual agreement, are included at cost together with the Group’s share of post-acquisition reserves, on an equity basis. Dividends received are credited against the investment. Joint control is the contractually agreed sharing of control over an arrangement, which exists only when decisions about relevant strategic and/or key operating decisions require unanimous consent of the parties sharing control. Control over the arrangement is assessed by the Group in accordance with the definition of control under IFRS 10. Loans to joint ventures are classified as non-current assets when they are not expected to be received in the normal working capital cycle. Trading receivables and payables to joint ventures are classified as current assets and liabilities. Financial statements Group accounting policies Inventories Inventories are stated at the lower of cost and net realisable value. Cost includes materials, direct labour and overheads relevant to the stage of production. Cost is determined using the weighted average method. Net realisable value is based on estimated selling price less all further costs of completion and all relevant marketing, selling and distribution costs. Impairment Whenever events or changes in circumstance indicate that the carrying amount of an asset may not be recoverable an asset is reviewed for impairment. This includes mining reserves, plant and equipment and net investments in joint ventures. A review involves determining whether the carrying amounts are in excess of their recoverable amounts. An asset’s recoverable amount is determined as the higher of its fair value less costs of disposal and its value in use. Such reviews are undertaken on an asset-by- asset basis, except where assets do not generate cash flows independent of other assets, in which case the review is undertaken on a cash generating unit basis. If the carrying amount of an asset exceeds its recoverable amount an asset’s carrying value is written down to its estimated recoverable amount (being the higher of the fair value less cost to sell and value in use) if that is less than the asset’s carrying amount. Any change in carrying value is recognised in the comprehensive income statement. Deferred tax Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the tax computations, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. In respect of the deferred tax on the revaluation surplus, this is calculated on the basis of the chargeable gains that would crystallise on the sale of the investment portfolio as at the reporting date. The calculation takes account of indexation on the historical cost of the properties and any available capital losses. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the Group income statement, except when it relates to items charged or credited directly to other comprehensive income, in which case it is also dealt with in other comprehensive income. Dividends Dividends payable on the ordinary share capital are recognised as a liability in the period in which they are approved. Cash and cash equivalents Cash comprises cash in hand and on-demand deposits. Cash and cash equivalents comprises short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value and original maturities of three months or less. The cash and cash equivalents shown in the cashflow statement are stated net of bank overdrafts that are repayable on demand as per IAS 7. This includes the structured trade finance facility held in South Africa as detailed in note 22. These facilities are considered to form an integral part of the treasury management of the Group and can fluctuate from positive to negative balances during the period. Segmental reporting For management reporting purposes, the Group is organised into business segments distinguishable by economic activity. The Group’s material business segments are mining activities and investment properties. These business segments are subject to risks and returns that are different from those of other business segments and are the primary basis on which the Group reports its segment information. This is consistent with the way the Group is managed and with the format of the Group’s internal financial reporting. Significant revenue from transactions with any individual customer, which makes up 10 percent or more of the total revenue of the Group, is separately disclosed within each segment. All coal exports are sales to coal traders at Richard Bay’s terminal in South Africa with the risks and rewards passing to the coal trader at the terminal. Whilst the coal traders will ultimately sell the coal on the international markets the Company has no visibility over the ultimate destination of the coal. Accordingly, the export sales are recorded as South African revenue. Bisichi PLC 6767 Financial statements Notes to the financial statements for the year ended 31 December 2021 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 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 Depreciation Non-current assets excluding investments Total net assets Capital expenditure 68 Bisichi PLC Mining £’000 23,206 12,656 6,169 7,195 49,226 1,695 (121) 1,574 17,350 2021 Property £’000 Other £’000 - - - 1,119 1,119 592 255 847 12,242 - - - 175 175 170 812 982 4,319 (12,227) (2,680) (14,907) (1,522) (3,839) (5,361) (5) - (5) United Kingdom £’000 1,294 687 (32) 10,748 14,400 35 South Africa £’000 49,222 2,716 (2,539) 9,018 3,435 1,781 Total £’000 23,206 12,656 6,169 8,489 50,520 2,457 946 3,403 33,911 48 3,018 36,977 (13,754) (6,519) (20,273) 16,704 1,131 17,835 Total £’000 50,516 3,403 (2,571) 19,766 17,835 1,816 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 Mining £’000 9,042 7,588 6,291 5,646 28,567 (4,014) 39 (3,975) 19,110 2020 Property £’000 Other £’000 - - - 1,181 1,181 658 (1,295) (637) 11,891 - - - 57 57 52 67 119 2,581 (11,919) (5,253) (17,172) (1,471) (3,799) (5,270) (19) - (19) Total £’000 9,042 7,588 6,291 6,884 29,805 (3,304) (1,189) (4,493) 33,582 45 3,768 37,395 (13,409) (9,052) (22,461) 14,934 1,255 16,189 Bisichi PLC 6969 Financial statements Notes to the financial statements 1. SEGMENTAL REPORTING CONTINUED Geographic analysis Revenue Operating profit/(loss) and segment result Depreciation Non-current assets excluding investments Total net assets Capital expenditure 2. REVENUE Revenue from contracts with customers: Coal sales and processing Service charges recoverable from tenants Other: Rental income Other revenue Revenue United Kingdom £’000 1,238 (931) (21) 10,516 13,279 36 South Africa £’000 28,567 (3,562) (2,172) 10,129 2,910 3,435 Total £’000 29,805 (4,493) (2,193) 20,645 16,189 3,471 2021 £’000 2020 £’000 49,226 130 989 175 28,567 156 1,025 57 50,520 29,805 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: Direct property expense Bad debts Operating costs above include depreciation of £2,571,000 (2020: £2,193,000). 70 Bisichi PLC 2021 £’000 38,008 400 38,408 9,655 48,063 351 49 400 2020 £’000 24,645 342 24,987 8,122 33,109 272 70 342 Financial statements Notes to the financial statements 4. (LOSS)/GAIN ON REVALUATION OF INVESTMENT PROPERTIES The reconciliation of the investment (deficit)/surplus to the gain on revaluation of investment properties in the income statement is set out below: Investment deficit Gain/(Loss) on valuation movement in respect of head lease payments Loss on revaluation of investment properties 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 for other services: The audit of the company’s subsidiaries pursuant to legislation Audit related services Non-audit related services Decrease/(Increase) in value of Inventory 2021 £’000 255 (26) 229 2021 £’000 7,491 2,571 (121) 51 37 - - 2,105 2020 £’000 (1,313) 18 (1,295) 2020 £’000 5,890 2,193 39 84 26 4 2 (1,128) The directors consider the auditors were best placed to provide the above non-audit and audit related services which refer to regulatory matters. The audit committee reviews the nature and extent of non-audit services to ensure that independence is maintained. 6. DIRECTORS’ EMOLUMENTS Directors’ emoluments are shown in the Directors’ remuneration report on page 32 which is within the audited part of that report. 7. INTEREST PAYABLE On bank overdrafts and bank loans Unwinding of discount Lease liabilities Other interest payable Interest payable 2021 £’000 2020 £’000 554 - 29 216 799 547 - 26 68 641 Bisichi PLC 7171 Financial statements Notes to the financial statements 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 2021 £’000 2020 £’000 - 750 - 750 45 795 - 12 2 14 (1,416) (1,402) (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% (2020: 19%). The differences are explained below: Profit/ Loss on ordinary activities before taxation Tax on profit/ loss on ordinary activities at 19.00% (2020: 19.00%) Effects of: Expenses not deductible for tax purposes Capital gains\(losses) on disposal 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: Current tax Deferred tax Overseas tax included in above: Current tax Adjustment in respect of prior years Current tax Deferred tax 2,501 475 49 20 260 (9) - 795 - 152 152 750 - 750 (107) 643 (5,196) (987) 23 - (360) (80) 2 (1,402) - (312) (312) 12 2 14 (1,104) (1,090) 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 deferred tax rate used in the UK for the year of 25% (2020: 19%) and the corporation tax rate assessed in South Africa for the year of 28% (2020: 28%) being different from the corporation tax rate in the UK. 72 Bisichi PLC Financial statements Notes to the financial statements 9. SHAREHOLDER DIVIDENDS Dividends paid during the year relating to the prior period Dividends relating to the current period: Proposed dividend for 2021 Proposed special dividend for 2021 2021 Per share - 4p 2p 6p 2021 £’000 - 2020 Per share 1.00p 427 214 641 - - 2020 £’000 107 - - The dividends relating to the current period are not accounted for until they have been approved at the Annual General Meeting. 10. PROFIT/(LOSS) AND DILUTED PROFIT/(LOSS) PER SHARE Both the basic and diluted profit/(loss) per share calculations are based on a profit after tax of £1,491,000 (2020: loss of £3,354,000). The basic profit/(loss) per share has been calculated on a weighted average of 10,676,839 (2020: 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 (2020: 10,676,839) plus the dilutive potential ordinary shares arising from share options of 21,923 (2020: Nil) totalling 10,698,762 (2020: 10,676,839). 11. INVESTMENT PROPERTIES Valuation at 1 January 2021 Revaluation Valuation at 31 December 2021 Valuation at 1 January 2020 Revaluation Valuation at 31 December 2020 Historical cost At 31 December 2021 At 31 December 2020 Freehold £’000 Long Leasehold £’000 Head Lease £’000 7,875 355 8,230 9,020 (1,145) 7,875 5,851 5,851 2,395 (100) 2,295 2,545 (150) 2,395 728 728 201 (26) 175 183 18 201 - - Total £’000 10,471 229 10,700 11,748 (1,277) 10,471 6,579 6,579 Long leasehold properties are those for which the unexpired term at the balance sheet date is not less than 50 years. All investment properties are held for use in operating leases and all properties generated rental income during the period. Freehold and Long Leasehold properties were externally professionally valued at 31 December on an open market basis by: Carter Towler 2021 £’000 10,525 2020 £’000 10,270 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. Bisichi PLC 7373 Financial statements Notes to the financial statements 11. INVESTMENT PROPERTIES CONTINUED Valuations are performed annually and are performed consistently across all investment properties in the Group’s portfolio. At each reporting date appropriately qualified employees of the Group verify all significant inputs and review the computational outputs. Valuers submit their report to the Board on the outcome of each valuation round. Valuations take into account tenure, lease terms and structural condition. The inputs underlying the valuations include market rent or business profitability, likely incentives offered to tenants, forecast growth rates, yields, EBITDA, discount rates, construction costs including any specific site costs (for example section 106), professional fees, developer’s profit including contingencies, planning and construction timelines, lease regear costs, planning risk and sales prices based on known market transactions for similar properties to those being valued. Valuations are based on what is determined to be the highest and best use. When considering the highest and best use a valuer will consider, on a property by property basis, its actual and potential uses which are physically, legally and financially viable. Where the highest and best use differs from the existing use, the valuer will consider the cost and likelihood of achieving and implanting this change in arriving at its valuation. There are often restrictions on Freehold and Leasehold property which could have a material impact on the realisation of these assets. The most significant of these occur when planning permission or lease extension and renegotiation of use are required or when a credit facility is in place. These restrictions are factored in the property’s valuation by the external valuer. IFRS 13 sets out a valuation hierarchy for assets and liabilities measured at fair value as follows: Level 1: valuation based on inputs on quoted market prices in active markets Level 2: directly or from market prices or indirectly derived from market prices. valuation based on inputs other than quoted prices included within level 1 that maximise the use of observable data 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 Freehold – external valuation Valuation technique Key unobservable inputs Income capitalisation Estimated rental value per sq ft p.a Equivalent Yield Carrying/ fair value 2021 £’000 8,230 Carrying/ fair value 2020 £’000 Range (weighted average) 2021 Range (weighted average) 2020 7,875 £6 – £29 £6 – £27 (£21) 8.9% – 14.7% (£19) 9.4% – (11.2%) 16.7% Long leasehold – external valuation Income capitalisation Estimated rental 2,295 2,395 £9 – £9 value per sq ft p.a Equivalent yield (11.8%) £8 – £8 (£8) (£9) 9.8% – 9.8% 8.9% – 8.9% (9.8%) (8.9%) At 31 December 2021 10,525 10,270 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. 74 Bisichi PLC Financial statements Notes to the financial statements 11. INVESTMENT PROPERTIES CONTINUED The table below illustrates the impact of changes in key unobservable inputs on the carrying / fair value of the Group’s properties: Freehold – external valuation Long Leasehold – external valuation 12. MINING RESERVES, PLANT AND EQUIPMENT Cost at 1 January 2021 Exchange adjustment Additions Disposals Cost at 31 December 2021 Accumulated depreciation at 1 January 2021 Exchange adjustment Charge for the year Disposals Accumulated depreciation at 31 December 2021 Net book value at 31 December 2021 Cost at 1 January 2020 Exchange adjustment Additions Disposals Cost at 31 December 2020 Accumulated depreciation at 1 January 2020 Exchange adjustment Charge for the year Disposals Accumulated depreciation at 31 December 2020 Net book value at 31 December 2020 Estimated rental value 10% increase or decrease 2021 £’000 2020 £’000 Equivalent yield 25 basis point contrac- tion or expansion 2021 £’000 2020 £’000 823 / (823) 788 / (788) 203 / (193) 185 / (177) 230 / (230) 240 / (240) 60 / (57) 69 / (65) Mining equipment and develop- ment costs £’000 Mining reserves £’000 Motor vehicles £’000 Office equipment £’000 1,138 (41) - - 1,097 1,123 (41) 7 - 1,089 8 1,226 (88) - - 1,138 1,212 (89) - - 1,123 15 28,371 (1,059) 1,772 (21) 29,063 18,399 (710) 2,499 (21) 20,167 8,896 26,674 (1,733) 3,430 - 28,371 17,405 (1,136) 2,130 - 18,399 9,972 372 (11) 35 - 396 215 (7) 56 - 264 132 361 (25) 36 - 372 171 (10) 54 - 215 157 174 (4) 9 - 179 144 (3) 9 - 150 29 175 (6) 5 - 174 140 (5) 9 - 144 30 Total £’000 30,055 (1,115) 1,816 (21) 30,735 19,881 (761) 2,571 (21) 21,670 9,065 28,436 (1,852) 3,471 - 30,055 18,928 (1,240) 2,193 - 19,881 10,174 Bisichi PLC 7575 Financial statements Notes to the financial statements 12. MINING RESERVES, PLANT AND EQUIPMENT CONTINUED Included in the above line items are right-of-use assets over the following: Mining Equipment and develop- ment costs £’000 Motor vehicles £’000 263 - (6) (38) 219 52 248 (18) (19) 263 2021 Other £’000 1,746 701 1,630 (446) - 3,631 45 35 - (32) 48 29 36 - (20) 45 2020 Net investment in joint ventures assets £’000 1,342 - - - (87) 1,255 Total £’000 308 35 (6) (70) 267 81 284 (18) (39) 308 2020 Other £’000 287 201 1,359 (101) - 1,746 2021 Net investment in joint ventures assets £’000 1,255 - - - (125) 1,130 Net book value at 1 January 2021 Additions Exchange adjustment Depreciation Net book value at 31 December 2021 Net book value at 1 January 2020 Additions Exchange adjustment Depreciation Net book value at 31 December 2020 13. INVESTMENTS HELD AS NON-CURRENT ASSETS At 1 January Share of (loss)/gain in investment Additions Disposals Share of (loss)/gain in joint ventures Net assets at 31 December 76 Bisichi PLC Financial statements Notes to the financial statements 13. INVESTMENTS HELD AS NON-CURRENT ASSETS CONTINUED Other investments comprise of the following: Net book value of unquoted investments Net book and market value of readily realisable investments listed on stock exchanges in the United Kingdom Net book and market value of readily realisable investments listed on overseas stock exchanges 2021 £’000 - 1,564 2,067 3,631 2020 £’000 - 959 787 1,746 14. JOINT VENTURES Development Physics Limited The company owns a third of the issued share capital of Development Physics Limited, an unlisted property development company. At year end, the negative carrying value of the investment held by the Group was £3,000 (2020: £Nil). The remaining two thirds is held equally by London & Associated Properties PLC and Metroprop Real Estate Ltd. Development Physics Limited is incorporated in England and Wales and its registered address is 12 Little Portland Street, London, W1W8BJ. It has issued share capital of 99 (2020: 99) ordinary shares of £1 each. No dividends were received during the period. 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 £637,000 (2020: £670,000). 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 12 Little Portland Street, London, W1W8BJ. It has issued share capital of 500,000 (2020: 500,000) ordinary shares of £1 each. No dividends were received during the period. It holds a Santander bank loan of £1.164million secured against its investment property. The bank loan of £1.164million is secured by way of a first charge on specific freehold property at a value of £2.08 million. The interest cost of the loan is 2.75 per cent above the bank’s base rate. A refinancing of this loan is currently underway. The loan originally expired in October 2020 but has been extended to April 2022, and the lender has offered to extend this further if required. The company has agreed terms with a new lender to refinance this loan in full and are expecting to complete this shortly. 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 £496,000 (2020: £585,000). The remaining 50% is held by London & Associated Properties PLC. West Ealing Projects Limited is incorporated in England and Wales and its registered address is 12 Little Portland Street, London, W1W8BJ. It has issued share capital of 1,000,000 (2020: 1,000,000) ordinary shares of £1 each. No dividends were received during the period. Bisichi PLC 7777 Financial statements Notes to the financial statements 14. JOINT VENTURES CONTINUED Development Physics £’000 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 Other current liabilities Net current assets Non-current borrowings Other non-current liabilities Net assets at 31 December Share of net assets at 31 December - (10) - (10) - - (10) - (10) - - 232 27 (269) (10) - - (10) (3) Dragon £’000 168 West Ealing £’000 58 2021 £’000 226 Dragon £’000 143 West Ealing £’000 192 2020 £’000 335 (32) (3) (35) - (31) (66) - (66) 2,091 27 - 374 (53) 348 (1,165) - 1,274 637 (215) (257) (280) - (215) - (1) (216) 38 (178) - 5 7,494 70 (6,549) 1,020 (28) - 992 496 (3) (260) - (32) (292) 38 (254) 2,091 32 7,726 471 (6,871) 1,358 (1,193) - 2,256 1,130 (10) (290) - (28) (318) 44 (274) 2,146 12 - 460 (92) 380 (1,186) - 1,340 670 100 - 100 - - 100 - 100 - 27 7,056 103 (5,962) 1,224 (54) - 1,170 585 (180) (10) (190) - (28) (218) 44 (174) 2,146 39 7,056 563 (6,054) 1,604 (1,240) - 2,510 1,255 78 Bisichi 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: Activity Percentage of share capital Registered address Country of incorporation Directly held: Mineral Products Limited Share dealing 100% Bisichi (Properties) Limited Property 100% Bisichi Northampton Limited Property 100% Bisichi Trustee Limited Property 100% Urban First (Northampton) Limited Property 100% Bisichi Mining (Exploration) Limited Ninghi Marketing Limited Bisichi Mining Management Services Limited Holding company Dormant 100% 90.1% Dormant 100% Bisichi Coal Mining (Pty) Limited Coal mining 100% 12 Little Portland Street, London, W1W8BJ 12 Little Portland Street, London, W1W8BJ 12 Little Portland Street, London, W1W8BJ 12 Little Portland Street, London, W1W8BJ 12 Little Portland Street, London, W1W8BJ 12 Little Portland Street, London, W1W8BJ 12 Little Portland Street, London, W1W8BJ 12 Little Portland Street, London, W1W8BJ England and Wales England and Wales England and Wales England and Wales England and Wales England and Wales England and Wales England and Wales Samora Machel Street, Bethal Road, Middelburg, Mpumalanga, 1050 South Africa Indirectly held: Black Wattle Colliery (Pty) Limited Coal mining 62.5% Samora Machel Street, Bethal Road, Middelburg, Mpumalanga, 1050 South Africa Sisonke Coal Processing (Pty) Limited Coal processing 62.5% Samora Machel Street, Bethal Road, Middelburg, Mpumalanga, 1050 South Africa Black Wattle Klipfontein (Pty) Limited Coal mining 62.5% Samora Machel Street, Bethal Road, South Africa Amandla Ehtu Mineral Resource Development (Pty) Limited Dormant 70% Middelburg, Mpumalanga, 1050 Samora Machel Street, Bethal Road, Middelburg, Mpumalanga, 1050 South Africa Details on the non-controlling interest in subsidiaries are shown under note 27. Bisichi PLC 7979 Financial statements Notes to the financial statements 16. INVENTORIES Coal Washed Mining Production Work in progress Other 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 2021 £’000 1,185 59 - 9 2020 £’000 2,924 394 111 16 1,253 3,445 2021 £’000 6,328 1,067 984 247 8,626 2020 £’000 5,155 952 680 171 6,958 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 £140,000 (2020: £91,000). 18. INVESTMENTS IN LISTED SECURITIES HELD AT FVPL 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 80 Bisichi PLC 2021 £’000 478 207 685 846 (161) 2020 £’000 567 266 833 1,098 (265) Financial statements Notes to the financial statements 19. TRADE AND OTHER PAYABLES Trade payables Amounts owed to joint ventures Lease liabilities (Note 31) Other payables Accruals Deferred Income 2021 £’000 7,171 156 65 2,281 844 226 2020 £’000 7,168 156 81 1,839 1,374 238 10,743 10,856 20. FINANCIAL LIABILITIES – BORROWINGS Current Non-current Bank overdraft (secured) Bank loan (secured) 2021 £’000 2,536 130 2,666 2020 £’000 4,846 264 5,110 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 2021 £’000 - 3,853 3,853 2021 £’000 2,666 11 3,842 6,519 3,839 2,680 6,519 2020 £’000 - 3,943 3,943 2020 £’000 5,110 128 3,815 9,053 3,799 5,254 9,053 In South Africa, an R85million trade facility is held with Absa Bank Limited by Sisonke Coal Processing (Pty) Limited (“Sisonke Coal Processing”) in order to cover the working capital requirements of the Group’s South African operations. The interest cost of the loan is at the South African prime lending rate plus 3.8% The facility is renewable annually each January, is repayable on demand and is secured by way of a first charge over specific pieces of mining equipment, inventory and the debtors of the relevant company which holds the loan which are included in the financial statements at a value of £8,843,219. All banking covenants were either adhered to or waived by Absa Bank Limited during the year. In the UK, the Group holds a £3.96million term loan facility with Julian Hodge Bank Limited. The loan is secured against the Group’s UK retail property portfolio. The debt package has a five year term and is repayable at the end of the term in December 2024. In the last quarter of 2021 the base interest rate on the loan changed from LIBOR to the Bank of England base rate. The overall interest cost of the loan is 4.00% above the Bank of England base rate. The loan is secured by way of a first charge over the investment properties in the UK which are included in the financial statements at a value of £10,525,000. No banking covenants were breached by the Group during the year. Bisichi PLC 8181 Financial statements Notes to the financial statements 20. FINANCIAL LIABILITIES – BORROWINGS CONTINUED 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: 2021 £’000 6,519 (3,018) 3,501 17,512 20.0% Bank borrowings £’000 Bank overdrafts £’000 Lease liabilities £’000 4,402 4,842 (56) (139) (330) 334 2021 £’000 9,561 (154) (2,443) 9 - - 6,973 4,207 4,846 262 (18) (39) 303 508 2021 £’000 1,442 (52) - - 2020 £’000 9,053 (3,768) 5,285 16,073 32.9% 2020 £’000 9,506 (404) 156 303 9,561 2020 £’000 1,554 (112) - - 1,390 1,442 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: Bank borrowings £’000 Bank overdrafts £’000 Lease liabilities £’000 Balance at 1 January Exchange adjustments Cash movements excluding exchange adjustments Additions 4,207 (10) (214) 4,846 (138) (2,172) - - Balance at 31 December 3,983 2,536 508 (6) (57) 9 454 21. PROVISION FOR REHABILITATION As at 1 January Exchange adjustment Increase in provision Unwinding of discount As at 31 December 82 Bisichi PLC Financial statements Notes to the financial statements 22. FINANCIAL INSTRUMENTS Total financial assets and liabilities The Group’s financial assets and liabilities are as follows, representing both the fair value and the carrying value: Financial Assets measured at amortised cost £’000 Financial Liabilities measured at amortised cost £’000 Cash and cash equivalents 3,018 Non-current other investments held at FVPL Investments in listed securities held at FVPL - - Trade and other receivables 8,379 - - - - Bank borrowings and overdraft Lease Liabilities Other liabilities - - - 11,397 (6,519) (454) (11,178) (18,151) Investments held at FVPL £’000 - 3,631 2021 £’000 3,018 3,631 685 685 - - - - 4,316 8,379 (6,519) (454) (11,178) (2,438) Financial Assets measured at amortised cost £’000 3,768 - - 6,787 Financial Liabilities measured at amortised cost £’000 - - - - - - - (9,053) (508) (10,746) Investments held at FVPL £’000 - 1,746 2020 £’000 3,768 1,746 833 833 - - - - 6,787 (9,053) (508) (10,746) 10,555 (20,307) 2,579 (7,173) Investments in listed securities held at fair value through profit and loss fall under level 1 of the fair value hierarchy into which fair value measurements are recognised in accordance with the levels set out in IFRS 7. The comparative figures for 2020 fall under the same category of financial instrument as 2021. The carrying amount of short term (less than 12 months) trade receivable and other liabilities approximate their fair values. The fair value of non-current borrowings in note 20 approximates its carrying value and was determined under level 2 of the fair value hierarchy and is estimated by discounting the future contractual cash flows at the current market interest rates for UK borrowings and for the South African overdraft facility. The fair value of the lease liabilities in note 31 approximates its carrying value and was determined under level 2 of the fair value hierarchy and is estimated by discounting the future contractual cash flows at the current market interest rates. Treasury policy Although no derivative transactions were entered into during the current and prior year, the Group may use derivative transactions such as interest rate swaps and forward exchange contracts as necessary in order to help manage the financial risks arising from the Group’s activities. The main risks arising from the Group’s financing structure are interest rate risk, liquidity risk, market risk, credit risk, currency risk and commodity price risk. There have been no changes during the year of the main risks arising from the Group’s finance structure. The policies for managing each of these risks and the principal effects of these policies on the results are summarised below. Interest rate risk Interest rate risk is the risk that the value of a financial instrument or cashflows associated with the instrument will fluctuate due to changes in market interest rates. Interest rate risk arises from interest bearing financial assets and liabilities that the Group uses. Treasury activities take place under procedures and policies approved and monitored by the Board to minimise the financial risk faced by the Group. Interest bearing assets comprise cash and cash equivalents which are considered to be short-term liquid assets and loans to joint ventures. Bisichi PLC 8383 Financial statements Notes to the financial statements 22. FINANCIAL INSTRUMENTS CONTINUED Interest bearing borrowings comprise bank loans, bank overdrafts and variable rate finance lease obligations. The rates of interest vary based on Bank of England in the UK and PRIME in South Africa. As at 31 December 2021, 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 £80,000 (2020: £37,000). The effect on equity of this change would be an equivalent decrease or increase for the year of £80,000 (2020: £37,000). Liquidity risk The Group’s policy is to minimise refinancing risk. Efficient treasury management and strict credit control minimise the costs and risks associated with this policy which ensures that funds are available to meet commitments as they fall due. As at year end the Group held borrowing facilities in the UK in Bisichi PLC and in South Africa in Black Wattle Colliery (Pty) Ltd. The following table sets out the maturity profile of contractual undiscounted cash flows of financial liabilities as at 31 December: Within one year From one to two years From two to five years Beyond five years 2021 £’000 14,122 238 4,391 129 2020 £’000 16,174 371 4,268 232 18,880 21,045 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 2021 £’000 11,509 1,699 914 14,122 2020 £’000 13,088 2,106 980 16,174 In South Africa, an R85million trade facility is held with Absa Bank Limited by Sisonke Coal Processing (Pty) Limited (“Sisonke Coal Processing”) in order to cover the working capital requirements of the Group’s South African operations. The interest cost of the loan is at the South African prime lending rate plus 3.8% The facility is renewable annually each January, is repayable on demand and is secured against inventory, debtors and cash that are held by Sisonke Coal Processing (Pty) Limited. The facility is included in cash and cash equivalents within the cashflow statement. In the UK, the Group holds a £3.96million term loan facility with Julian Hodge Bank Limited. The loan is secured against the Group’s UK retail property portfolio. The debt package has a five year term and is repayable at the end of the term in December 2024. In the last quarter of 2021 the base interest rate on the loan changed from LIBOR to the Bank of England base rate. The overall interest cost of the loan is 4.00% above the Bank of England base rate. As a result of the above agreed banking facilities, the Directors believe that the Group is well placed to manage its liquidity risk. 84 Bisichi PLC Financial statements Notes to the financial statements 22. FINANCIAL INSTRUMENTS CONTINUED 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 £11,397,000 (2020: £10,555,000). 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 53% (2020: 68%) 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 £140,000 (2020: £91,000). As at year end the amount of trade receivables held past due date less credit loss allowances was £201,000 (2020: £282,000). To date, the amount of trade receivables held past due date less credit loss allowances that has not subsequently been settled is £106,000 (2020: £155,000). 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 2021, cash at bank and in hand amounted to £3,018,000 (2020: £3,768,000) 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 2021 and 2020 the Group did not hedge its exposure of foreign investments held in foreign currencies. The principal currency risk to which the Group is exposed in regard to inter-company balances is the exchange rate between Pounds sterling and South African Rand. It arises as a result of the retranslation of Rand denominated inter-company trade receivable balances held within the UK which are payable by South African Rand functional currency subsidiaries. Based on the Group’s net financial assets and liabilities as at 31 December 2021, 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 £218,000 (2020: £360,000). 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 £364,000 (2020: £601,000). The 25% sensitivity has been determined based on the average historic volatility of the exchange rate. The table below shows the currency profiles of cash and cash equivalents: Sterling South African Rand US Dollar 2021 £’000 1,397 1,017 604 3,018 2020 £’000 1,641 809 1,318 3,768 Cash and cash equivalents earn interest at rates based on Bank of England rates in Sterling and Prime in Rand. Bisichi PLC 8585 Financial statements Notes to the financial statements 22. FINANCIAL INSTRUMENTS CONTINUED The tables below shows the currency profiles of net monetary assets and liabilities by functional currency of the Group: 2021: Sterling South African Rand US Dollar 2020: 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: Revaluations Capital allowances Short term timing difference Unredeemed capital deductions Losses and other deductions Sterling £’000 1,123 65 1,462 2,650 Sterling £’000 (70) 39 1,736 1,705 2021 £’000 474 45 (13) 506 641 2,253 (832) (1,057) (499) 506 South African Rands £’000 - (5,088) - (5,088) South African Rands £’000 - (8,878) - (8,878) 2020 £’000 2,071 (1,416) (181) 474 299 2,478 (692) (645) (966) 474 Refer to note 8 for details of deferred tax recognised in income in the current year. Tax rates of 25% (2020: 19%) in the UK and 28% (2020: 28%) in South Africa were utilised to calculate year end deferred tax balances. 86 Bisichi PLC 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 2021 Number of ordinary shares 2020 Number of ordinary shares 10,676,839 10,676,839 2021 £’000 1,300 2020 £’000 1,300 2021 £’000 1,068 2021 £’000 621 86 707 2020 £’000 1,068 2020 £’000 621 86 707 26. SHARE BASED PAYMENTS Details of the share option scheme are shown in the Directors’ remuneration report on page 33 under the heading Share option schemes which is within the audited part of this report. Further details of the share option schemes are set out below. The Bisichi PLC Unapproved Option Schemes: Subscription price per share Period within which options exercisable Number of share for which options outstanding at 31 December 2020 Number of share options lapsed/surrendered /awarded during year Number of share for which options outstanding at 31 December 2021 87.0p 73.50p Sep 2015 – Sep 2025 Feb 2018 – Feb 2028 300,000 380,000 - - 300,000 380,000 Year of grant 2015 2018 There are no performance or service conditions attached to 2015 and 2018 options which are outstanding at 31 December 2021. Bisichi PLC 8787 Financial statements Notes to the financial statements 26. SHARE BASED PAYMENTS CONTINUED 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 paid Exchange adjustment As at 31 December 2021 Weighted average exercise price 79.46p - - 2021 Number 680,000 - - 2020 Number 680,000 - - 680,000 680,000 79.46p 79.46p 680,000 680,000 2021 £’000 116 215 - (8) 323 2020 Weighted average exercise price 79.46p - - 79.46p 79.46p 2020 £’000 625 (440) - (69) 116 The non-controlling interest comprises of a 37.5% interest in Black Wattle Colliery (Pty) Ltd and its wholly owned subsidiary Sisonke Coal Processing (Pty) Ltd. Black Wattle Colliery (Pty) Ltd is a coal mining company and Sisonke Coal Processing (Pty) Ltd is a coal processing company both incorporated in South Africa. Summarised financial information reflecting 100% of the underlying consolidated relevant figures of Black Wattle Colliery (Pty) Ltd’s and its wholly owned subsidiary Sisonke Coal Processing (Pty) Ltd is set out below. 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 88 Bisichi PLC 2021 £’000 49,225 (47,787) 1,438 - 1,438 9,019 9,329 (14,287) (1,904) 2,157 2020 £’000 28,555 (31,498) (2,943) - (2,943) 10,130 9,781 (16,915) (2,224) 772 Financial statements Notes to the financial statements 27. NON-CONTROLLING INTEREST CONTINUED The non-controlling interest originates from the disposal of a 37.5% shareholding in Black Wattle Colliery (Pty) Ltd in 2010 when the total issued share capital in Black Wattle Colliery (Pty) Ltd was increased from 136 shares to 1,000 shares at par of R1 (South African Rand) through the following shares issue: - a subscription for 489 ordinary shares at par by Bisichi Mining (Exploration) Limited increasing the number of shares held from 136 ordinary shares to a total of 625 ordinary shares; - a subscription for 110 ordinary shares at par by Vunani Mining (Pty) Ltd; - a subscription for 265 “A” shares at par by Vunani Mining (Pty) Ltd Bisichi Mining (Exploration) Limited is a wholly owned subsidiary of Bisichi PLC incorporated in England and Wales. Vunani Mining (Pty) Ltd is a South African Black Economic Empowerment company and minority shareholder in Black Wattle Colliery (Pty) Ltd. The “A” shares rank pari passu with the ordinary shares save that they will have no dividend rights until such time as the dividends paid by Black Wattle Colliery (Pty) Ltd on the ordinary shares subsequent to 30 October 2008 will equate to R832,075,000. A non-controlling interest of 15% in Black Wattle Colliery (Pty) Ltd is recognised for all profits distributable to the 110 ordinary shares held by Vunani Mining (Pty) Ltd from the date of issue of the shares (18 October 2010). An additional non-controlling interest will be recognised for all profits distributable to the 265 “A” shares held by Vunani Mining (Pty) Ltd after such time as the profits available for distribution, in Black Wattle Colliery (Pty) Ltd, before any payment of dividends after 30 October 2008, exceeds R832,075,000. On 12 April 2022 the total issued share capital in Black Wattle Colliery (Pty) Ltd was increased further from 1000 shares to 1002 shares at par of R1 through the following share issue: a subscription of 1 “B” Share at par by Bisichi Mining (Exploration Limited); a subscription of 1 “B” Share at par by Vunani Mining (Pty) Ltd The “B” shares rank pari passu with the ordinary shares save that they have sole rights to the distributable profits attributable to certain mining reserves held by Black Wattle Colliery (Pty) Ltd. A non-controlling interest is recognised for all profits distributable to the “B” shares held by Vunani Mining (Pty) Ltd from the date of issue of the shares (12 April 2022). Bisichi PLC 8989 Financial statements Notes to the financial statements 28. RELATED PARTY TRANSACTIONS Related party: London & Associated Properties PLC (note (a)) West Ealing Projects Limited (note (b)) Dragon Retail Properties Limited (note (c)) Development Physics Limited (note (d)) As at 31 December 2021 London & Associated Properties PLC (note (a)) West Ealing Projects Limited (note (b)) Dragon Retail Properties Limited (note (c)) As at 31 December 2020 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 41 - 156 - 197 43 - 156 199 - (998) - (67) (1,065) - (952) - (952) 200 - (36) - 164 200 - (36) 164 (192) (158) 44 (67) (373) (190) (112) 44 (258) (a) London & Associated Properties PLC – London & Associated Properties PLC (“LAP”) is a substantial shareholder and parent company of Bisichi PLC. Property management, office premises, general management, accounting and administration services are provided for Bisichi PLC and its UK subsidiaries. Bisichi PLC continues to operate as a fully independent company and currently LAP owns only 41.52% of the issued ordinary share capital. However, LAP is deemed under IFRS 10 to have effective control of Bisichi PLC for accounting purposes. (b) West Ealing Projects Limited – West Ealing Projects Limited (“West Ealing”) is an unlisted property company incorporated in England and Wales. West Ealing is owned equally by the company and London & Associated Properties PLC and is accounted as a joint venture and treated as a non-current asset investment. (c) Dragon Retail Properties Limited – (“Dragon”) is owned equally by the company and London & Associated Properties PLC. Dragon is accounted as a joint venture and is treated as a non-current asset investment. (d) Development Physics Limited – Development Physics Limited (“DP”) is an unlisted property company incorporated in England and Wales. DP is owned equally by the company, London & Associated Properties PLC and Metroprop Real Estate Ltd and is accounted as a joint venture and treated as a non-current asset investment. Key management personnel comprise of the directors of the company who have the authority and responsibility for planning, directing, and controlling the activities of the company. Details of key management personnel compensation and interest in share options are shown in the Directors’ Remuneration Report on pages 32 and 33 under the headings Directors’ remuneration, Pension schemes and incentives and Share option schemes which is within the audited part of this report. The total employers’ national insurance paid in relation to the remuneration of key management was £189,000 (2020: £97,000). 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 (2020: £41,000) and no repayment (2020: £nil) was made during the year. 90 Bisichi PLC Financial statements Notes to the financial statements 28. RELATED PARTY TRANSACTIONS CONTINUED The non-controlling interest to Vunani Mining (Pty) Ltd is shown in note 27. In addition, the Group holds an investment in Vunani Limited with a fair value of £45,000 (2020: £38,000) and an investment in Vunani Capital Partners (Pty) Ltd of £38,000 (2020: £nil). Both are related parties to Vunani Mining (Pty) Ltd and are classified as non-current available for sale investments. 29. EMPLOYEES Staff costs during the year were as follows: Salaries Social security costs Pension costs Share based payments The average weekly numbers of employees of the Group during the year were as follows: Production Administration 30. CAPITAL COMMITMENTS Commitments for capital expenditure approved and contracted for at the year end 2021 £’000 6,995 189 307 - 7,491 2021 214 15 229 2021 £’000 - 2020 £’000 5,512 97 281 - 5,890 2020 221 15 236 2020 £’000 485 Bisichi PLC 9191 Financial statements Notes to the financial statements 31. LEASE LIABILITIES AND FUTURE PROPERTY LEASE RENTALS The lease liabilities are secured by the related underlying assets. The undiscounted maturity analysis of lease payments at 31 December 2021 is as follows: Within one year Second to fifth year After five years Discounting adjustment Present value Mining Equipment & Development costs £’000 Motor Vehi- cles £’000 Head Lease Prop- erty £’000 42 161 91 294 (62) 232 28 21 - 49 (2) 47 13 44 1,336 1,393 (1,218) 175 The present value of minimum lease payments at 31 December 2021 is as follows: Within one year (Note 19) Second to fifth year After five years Present value Mining Equipment & Development costs £’000 Motor Vehi- cles £’000 Head Lease Prop- erty £’000 27 205 - 232 27 20 - 47 11 35 129 175 2021 £’000 83 226 1,427 1,736 (1,282) 454 2021 £’000 65 260 129 454 2020 £’000 84 236 1,680 2,000 (1,492) 508 2020 £’000 81 195 232 508 With the exception of short-term leases and leases of low-value underlying assets, each lease is reflected on the balance sheet as a right-of-use asset and a lease liability. The Group classifies its right-of-use assets in a consistent manner to its property, plant and equipment. Lease liabilities due within one year are classified within trade and other payables in the balance sheet. The Group has one lease for mining equipment in South Africa and one lease for motor vehicles in the United Kingdom. Both leases have terms of less than 5 years are either non-cancellable or may only be cancelled by incurring a substantive termination fee. Lease payments for mining equipment are subject to changes in consumer price inflation in South Africa. The Group has one lease contract for an investment property. The remaining term for the leased investment property is 127 years (2020: 128 years). The annual rent payable is the higher of £7,500 or 6.25% of the revenue derived from the leased assets. The Group has entered into rental leases on its investment property portfolio consisting mainly of commercial properties. These leases have terms of between 1 and 106 years. All leases include a clause to enable upward revision of the rental charge on an annual basis according to prevailing market conditions. 92 Bisichi PLC Financial statements Notes to the financial statements 31. LEASE LIABILITIES AND FUTURE PROPERTY LEASE RENTALS CONTINUED The future aggregate minimum rentals receivable under non-cancellable operating leases are as follows: Within one year Second year Third year Fourth year Fifth year After five years 2021 £’000 948 830 776 710 634 9,956 13,854 2020 £’000 814 711 590 536 471 9,562 12,684 32. CONTINGENT LIABILITIES AND POST BALANCE SHEET EVENTS Bank Guarantees Bank guarantees have been issued by the bankers of Black Wattle Colliery (Pty) Limited on behalf of the company to third parties. The guarantees are secured against the assets of the company and have been issued in respect of the following: Rail siding Rehabilitation of mining land Water & electricity 2021 £’000 48 1,700 46 2020 £’000 50 1,441 48 Contingent tax liability The interpretation of laws and regulations in South Africa where the Group operates can be complex and can lead to challenges from or disputes with regulatory authorities. Such situations often take significant time to resolve. Where there is a dispute and where a reliable estimate of the potential liability cannot be made, or where the Group, based on legal advice, considers that it is improbable that there will be an outflow of economic resources, no provision is recognised. Black Wattle Colliery (Pty) Ltd is currently involved in a tax dispute in South Africa related to VAT. The dispute arose during the year ended 31 December 2020 and is related to events which occurred prior to the years ended 31 December 2020. As at 13 April 2022, the Group has been advised that it has a strong legal case, that it has complied fully with the legislation and, therefore, no economic outflow is expected to occur. Because of the nature and complexity of the dispute, the possible financial effect of a negative decision cannot be measured reliably. Accordingly, no provision has been booked at the year end. At this stage, the Group believes that the dispute will be resolved in its favour. Bisichi PLC 9393 Financial statements Company balance sheet at 31 December 2021 Fixed assets Tangible assets Investment in joint ventures Other investments Current assets Debtors – amounts due within one year Debtors – amounts due in more than one year Bank balances Creditors – amounts falling due within one year Net current assets Total assets less current liabilities Creditors – amounts falling in more than one year 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 37 38 38 24 33 2021 £’000 93 665 9,987 10,745 3,636 220 788 4,644 (454) 4,190 14,935 (20) 14,915 1,068 258 - 622 12,967 14,915 2020 £’000 90 665 8,102 8,857 4,782 248 1,810 6,840 (563) 6,277 15,134 (16) 15,118 1,068 258 - 622 13,170 15,118 The loss for the financial year, before dividends, was £203,000 (2020: profit £83,000) The company financial statements were approved and authorised for issue by the board of directors on 13 April 2022 and signed on its behalf by: A R Heller Director G J Casey Director 94 Bisichi PLC Company Registration No. 112155 Financial statements Company statement of changes in equity for the year ended 31 December 2021 Balance at 1 January 2020 Dividend paid Profit and total comprehensive income for the year Balance at 1 January 2021 Dividend paid Profit and total comprehensive income for the year Balance at 31 December 2021 Share capital £’000 1,068 - - 1,068 - - 1,068 Share premium £’000 258 - - 258 - - 258 Other reserve £’000 622 Retained earnings £’000 Shareholders funds £’000 13,194 15,142 - - 622 - - 622 (107) 83 13,170 - (203) 12,967 (107) 83 15,118 - (203) 14,915 Bisichi PLC 9595 Notes to the financial statements Financial statements Company accounting policies for the year ended 31 December 2021 The following are the main accounting policies of the company: • • the disclosure of the remuneration of key management personnel; and Basis of preparation The financial statements have been prepared in accordance with Financial Reporting Standard 100 Application of Financial Reporting Requirements and Financial Reporting Standard 101 Reduced Disclosure Framework. The principal accounting policies adopted in the preparation of the financial statements are set out below. The financial statements have been prepared on a historical cost basis, except for the revaluation of leasehold property and certain financial instruments. Going concern Details on the Group’s adoption of the going concern basis of accounting in preparing the annual financial statements can be found on page 60. Disclosure exemptions adopted In preparing these financial statements the company has taken advantage of all disclosure exemptions conferred by FRS 101 as well as disclosure exemptions conferred by IFRS 2, 7, 13 and 16. Therefore these financial statements do not include: • • certain comparative information as otherwise required by IFRS; • • certain disclosures regarding the company’s capital; • • a statement of cash flows; • • the effect of future accounting standards not yet adopted; 96 Bisichi PLC • • disclosure of related party transactions with the company’s wholly owned subsidiaries. In addition, and in accordance with FRS 101, further disclosure exemptions have been adopted because equivalent disclosures are included in the company’s Consolidated Financial Statements. Dividends received Dividends are credited to the profit and loss account when received. Depreciation Provision for depreciation on tangible fixed assets is made in equal annual instalments to write each item off over its useful life. The rates generally used are: Office equipment 10 – 33 percent Joint ventures Investments in joint ventures, being those entities over whose activities the Group has joint control as established by contractual agreement, are included at cost, less impairment. Other Investments Investments of the company in subsidiaries are stated in the balance sheet as fixed assets at cost less provisions for impairment. Other investments comprising of shares in listed companies are classified at fair value through profit and loss. Foreign currencies Monetary assets and liabilities expressed in foreign currencies have been translated at the rates of exchange ruling at the balance sheet date. All exchange differences are taken to the profit and loss account. Financial instruments Details on the Group’s accounting policy for financial instruments can be found on page 65. Deferred taxation Details on the Group’s accounting policy for deferred taxation can be found on page 67. Leased assets and liabilities Details on the Group’s accounting policy for leased assets and liabilities can be found on page 66. Pensions Details on the Group’s accounting policy for pensions can be found on page 65. Share based remuneration Details on the Group’s accounting policy for share based remuneration can be found on page 65. Details of the share options in issue are disclosed in the directors’ remuneration report on page 33 under the heading share option schemes which is within the audited part of this report. Financial statements Notes to the financial statements 33. PROFIT & LOSS ACCOUNT A separate profit and loss account for Bisichi PLC has not been presented as permitted by Section 408(2) of the Companies Act 2006. The loss for the financial year, before dividends paid, was £203,000 (2020: profit: £83,000) Details of share capital are set out in note 24 of the Group financial statements and details of the share options are shown in the Directors’ Remuneration Report on page 33 under the heading Share option schemes which is within the audited part of this report and note 26 of the Group financial statements. 34. DIVIDENDS Details on dividends can be found in note 9 in the Group financial statements. 35. TANGIBLE FIXED ASSETS Cost at 1 January 2021 Additions Cost at 31 December 2021 Accumulated depreciation at 1 January 2021 Charge for the year Accumulated depreciation at 31 December 2021 Net book value at 31 December 2021 Net book value at 31 December 2020 Leasehold Property £’000 Motor Vehicles £’000 Office equipment £’000 45 - 45 - - - 45 45 69 35 104 24 32 56 48 45 70 - 70 70 - 70 - - Total £’000 184 35 219 94 32 126 93 90 Leasehold property consists of a single unit with a long leasehold tenant. The term remaining on the lease is 38 years. Motor Vehicles comprise wholly of Right of Use leased assets. 36. INVESTMENTS Net book value at 1 January 2021 Invested during the year Repayment Unrealised surplus/deficit over cost Net book value at 31 December 2021 Joint ventures shares £’000 Shares in subsidiaries £’000 Other investments £’000 665 6,356 - - - - - - 665 6,356 1,746 1,630 (446) 701 3,631 Total £’000 8,102 1,630 (446) 701 9,987 Investments in subsidiaries are detailed in note 15. In the opinion of the directors the aggregate value of the investment in subsidiaries is not less than the amount shown in these financial statements. Other investments comprise of £3,631,000 (2020: £1,746,000) shares in listed companies. Bisichi PLC 9797 Financial statements Notes to the financial statements 37. DEBTORS Amounts due within one year: Amounts due from subsidiary undertakings Other debtors Joint venture Prepayments and accrued income Amounts due in more than one year: Deferred taxation 2021 £’000 2020 £’000 2,421 94 1,065 56 3,636 220 220 3,709 85 952 36 4,782 248 248 Amounts due within one year are held at amortised cost. The Group applies a simplified approach to measure the loss allowance for trade receivables using the lifetime expected loss provision. The Group applies a general approach on all other receivables. The general approach recognises lifetime expected credit losses when there has been a significant increase in credit risk since initial recognition. The company has reviewed and assessed the underlying performance and resources of its counterparties including its subsidiary undertakings and joint ventures. 38. CREDITORS Amounts falling due within one year: Joint venture Other taxation and social security Other creditors Lease Liabilities Accruals and deferred income Amounts falling due in more than one year: Lease Liabilities 2021 £’000 2020 £’000 156 64 164 26 44 454 20 156 63 188 29 127 563 16 Lease liabilities comprise of leases on Motor vehicles with remaining leases of 1-3 years. With the exception of short-term leases and leases of low-value underlying assets, each lease is reflected on the balance sheet as a right-of-use asset and a lease liability. 98 Bisichi PLC Financial statements Notes to the financial statements 39. RELATED PARTY TRANSACTIONS At 31 December Related party: Black Wattle Colliery (Pty) Ltd (note (a)) Ninghi Marketing Limited (note (b)) As at 31 December 2021 Black Wattle Colliery (Pty) Ltd (note (a)) Ninghi Marketing Limited (note (b)) As at 31 December 2020 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 (637) (102) (739) (1,331) (102) (1,433) (923) - (923) (958) - (958) 1,617 - 1,617 - - - (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 (2020: R20,061,917) (South African Rand) to the bankers of Black Wattle Colliery (Pty) Ltd in order to cover bank guarantees issued to third parties in respect of the rehabilitation of mining land. A provision of £102,000 has been raised against the amount owing by Ninghi Marketing Limited in prior years as the company is dormant. In 2012 a loan was made to one of the directors, Mr A R Heller, for £116,000. Further details on the loan can be found in Note 28 of the Group financial statements. Under FRS 101, the company has taken advantage of the exemption from disclosing transactions with other wholly owned Group companies. Details of other related party transactions are given in note 28 of the Group financial statements. 41. EMPLOYEES 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 2021 £’000 2020 £’000 5 1,426 189 31 - 1,646 5 758 97 28 - 883 Bisichi PLC 9999 

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