BISICHI PLC
Results for the
year ended 31 December 2022
Summary:
| Reported EBITDA: |
£40.0million (2021:
£5.8million) |
| Adjusted EBITDA: |
£39.4million (2021:
£5.0million) |
· The substantial increase in group earnings and cash
generation during the year can be attributed to a very strong
performance from the Group’s South African coal processing
operations.
· Group revenue improved significantly in 2022 despite
limitations in coal exports from South
Africa during the second half of the year.
· Andrew Heller appointed Executive Chairman following the
death of Sir Michael Heller on
30th January 2023.
· In light of the strong results achieved for the year and
the performance of the South African operations, the Directors
propose a total year-end dividend per share of 12p (2021: 6p) made
up a final dividend of 4p (2021: 4p) and a special dividend of 8p
(2021: 2p). This takes the total dividends per share for the year
to 22p (2021: 6p).
Chairman, Andrew Heller,
comments:
“I am very pleased to report to shareholders our results for the
year ended 31 December 2022. The
increase in group earnings and cash generation during the year can
be attributed to a strong performance from our South African coal
processing operations. On behalf of the Board, our late Chairman,
and shareholders, I would like to thank all of our staff for their
hard work and dedication during the course of the year”
For further information, please call:
Andrew Heller or Garrett Casey, Bisichi PLC 020 7415 5030
BISICHI PLC
ANNUAL REPORT 2022
A TRIBUTE TO
SIR MICHAEL HELLER
Kt MA
Chairman
1981-2023
It was with great sadness that the Board of Bisichi announced
the death of its Chairman, Sir Michael Heller Kt MA (1936-2023) on
the 30th January 2023.
Cambridge-educated Sir Michael qualified as an accountant, but
became a businessman and philanthropist of considerable stature,
whose achievements were recognised with a knighthood in 2013.
Instrumental in the development of several companies, including
Bisichi, Sir Michael’s focussed direction and decision making, wise
advice and moral compass, were pivotal to the Company’s success and
will be sorely missed. Meticulously watching cash flow, and
ensuring that the Company always had regular income, was the
cornerstone of Sir Michael’s business strategy. To a very great
degree, this explains why Bisichi has performed so well when so
many of its peers no longer exist. Fortunately, despite being
unwell and in hospital, Sir Michael was able to appreciate the
Company’s success in 2022. In his typically humorous fashion, he
took enormous pleasure in telling the nurses at his bedside how
well the Company had done. The greatest legacy that the Board can
give him is to continue the work that he so tirelessly put in to
the development of the Company, and to continue its growth. Thank
you Sir Michael for everything that you have done: the Company is
greatly indebted to you.
Strategic report
Strategic report
The Directors present the Strategic Report of the company for the
year ending 31 December 2022. The aim
of the Strategic Report is to provide shareholders with the ability
to assess how the Directors have performed their duty to promote
the success of the company for the collective benefit of
shareholders.
STRATEGIC REPORT
Chairman’s Statement
I am very pleased to report to shareholders that for the year
ended 31 December 2022, your company
made a profit before interest, tax, depreciation and amortisation
(EBITDA) of £40.0million (2021: £5.8million) and an operating
profit before depreciation, fair value adjustments and exchange
movements (Adjusted EBITDA) of £39.4million (2021: £5.0million).
These strong earnings for the Group can be attributed to a strong
performance from Sisonke Coal Processing, the Group’s South African
coal processing operation which benefited from significantly
improved prices in all its markets.
During the year, a disconnect in global energy markets
contributed to an increase in the weekly Free on Board (FOB) coal
price from Richards Bay Coal Terminal (API4 price) from
$125 per metric tonne at the end of
2021 to a peak of over $360 in
August. Overall, the API4 price averaged $273 in 2022 compared to $125 in 2021. The higher export prices achievable
for our coal along with higher domestic prices, particularly during
the second half of the year, contributed significantly to the
increase in Group revenue and profitability during the year.
Revenues for the year would have been even better if we had not
encountered constraints in transporting coal for export on the
South African rail network, constraints which were beyond our
control. For this reason, exports during the year decreased to
262,000 metric tonnes compared to 320,000 metric tonnes in
2021.
At Black Wattle, the Group’s South African coal mining
operation, our transition into new mining areas impacted adversely
our coal production, particularly during the first half of the
year. As previously reported, the transition into the new mining
areas was completed in July last year and in the second half of the
year Black Wattle achieved improved production of 0.52million
metric tonnes compared to 0.30million metric tonnes in the first
half of the year. The mine achieved production of 0.82million
metric tonnes in 2022 compared to 1.05million metric tonnes in
2021. The increases in our reserves, plant and equipment that are
evident on the balance sheet are mainly attributable to the costs
of completing the development of the new mining areas which will be
mined throughout 2023.
Despite the lower coal production from Black Wattle, at Sisonke
Coal Processing we were able maintain the levels of coal processed.
During the year the Group sold 1.29million metric tonnes compared
to 1.45million metric tonnes of coal in 2021. For the year, the
Group reported £95.1million in revenue (2021: £50.5million) with
the higher prices achievable for our coal offsetting the lower
quantity of coal sold.
Looking forward into 2023, we have already seen coal prices in
the export market come back down to similar levels last seen at the
beginning of 2022. With the outlook for global energy demand less
certain, your management will be focussing on improving production
levels at Black Wattle and keeping operating costs low. We continue
to mitigate the uncertainties in transporting coal for export on
the South African rail network by maintaining diversified sales
through the domestic market.
We are pleased to include in our annual report this year our new
climate change report on page 11. The Group recognises that climate
change represents one of the most significant challenges facing the
world today and supports the goals of the Paris Agreement and the
UN Framework Convention on Climate Change. The Group recognises the
need, and is committed to, diversifying its future business
activities into areas outside of coal. The Group is continually
looking at alternative independent mining and renewable energy
related opportunities, as well as new opportunities to add to our
existing UK property and listed equity investment portfolios. In
the interim, we continue to work closely with Vunani Mining, our
BEE partner in Black Wattle and Sisonke Coal processing, in being
responsible stewards of our legacy coal operations taking into
account the climate-related risks outlined in our climate report
and the impact these risks may have on all our stakeholders.
In the UK, we have seen rental revenue from our retail property
portfolio remain stable in 2022. The Group billed revenue from our
directly owned property portfolio of £1.11million (2021:
£1.12million) during the year. The Group continues to hold its
joint venture development investment in West Ealing, with
London & Associated Properties
PLC and Metroprop Real Estate Ltd. A final decision on whether to
sell the land or build out the flats has yet to be taken.
As previously announced, we are pleased to welcome John Heller to the Board of Bisichi PLC as a
non-executive director. The appointment took effect on the
29 March 2023. John is the Chairman
and Managing Director of London
& Associated Properties PLC which holds a 41.6% stake in
Bisichi and a Director of Intu Debenture PLC. John’s valuable
experience in property investment and management, makes him an
excellent addition to the Board. John’s knowledge and experience
will enhance the Group’s strategy of growing the company’s existing
and future spread of business interests and investments, and will
help to offset the loss of our late Chairman, Sir Michael Heller.
Finally, in light of the strong results achieved for the year
and the performance of our South African operations, the Directors
propose a total year-end dividend per share of 12p (2021: 6p) made
up a final dividend of 4p (2021: 4p) and a special dividend of 8p
(2021: 2p). The final and special dividends proposed will be
payable on Friday 28 July 2023 to
shareholders registered at the close of business on 7 July 2023. This takes the total dividends per
share for the year to 22p (2021: 6p).
On behalf of the Board, our late Chairman, and shareholders, I
would like to thank all of our staff for their hard work and
dedication during the course of the year
Andrew Heller
Executive Chairman & Managing Director
26 April 2023
STRATEGIC REPORT
Principal activity, strategy &
business model
The company carries on business as a mining company and its
principal activity is coal mining and coal processing in
South Africa. The company’s
strategy is to create and deliver long term sustainable value to
all our stakeholders through our business model which can be broken
down into three key areas:
1 Acquisition & investment
The Group continues to oversee responsibly its existing
mining and processing operations in South
Africa as well as actively to seek and evaluate new
alternative mining related opportunities. The Group aims to achieve
this through new commercial arrangements.
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.
2 Production & sustainability
The Group strives to mine its remaining South African coal
reserves in an economical and sustainable manner that delivers
value to all our stakeholders.
3 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.
STRATEGIC REPORT
Mining Review
Despite mining and logistical challenges, 2022 was an
unprecedented year in terms of performance for our South African
coal mining and processing operations. Higher coal prices
contributing strongly to the profitability of the Group. With more
uncertainty in the coal market going into 2023, management will be
focussing on improving production levels and keeping operating
costs low.
Production and operations
The transition to new mining areas at Black Wattle, our South
African mining operation, impacted production in 2022, particularly
in the first half of the year. For the year, the mine achieved
production of 0.82million metric tonnes compared to 1.05million
metric tonnes in 2021. Looking forward, both our mining contractors
have fully transitioned into the new mining area where mining
conditions are expected to improve steadily over the course of
2023. In addition, management will be focussing on keeping
operating costs low in light of global inflationary pressures that
started to impact our operations during the course of 2022.
We continue to work closely with Vunani Mining, our BEE partner
in Black Wattle and Sisonke Coal processing, in being responsible
stewards of our legacy coal operations, which have a life of mine
of seven years, taking into account the climate related risks
outlined in our climate report on page 11 and the impact these
risks may have on all our stakeholders.
Main trends/markets
The disconnect in global energy markets in 2022 had a
significant impact on demand and prices achievable for our coal
over the year. In the international market the average weekly price
of Free On Board (FOB) Coal from Richard Bay Coal Terminal (API4
price) averaged $273 in 2022 compared
to $125 in 2021.
The higher prices, along with a stronger US Dollar compared to
the South African Rand, resulted in the Group achieving an average
Rand price of R3,770 per tonne of export coal sold from the mine in
2022 compared to R1,129 in 2021. 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.
During the second half of the year exports were limited by
constraints in transporting coal for export on the South African
rail network, exports volumes from our South African operations
decreased during the year to 262,000 metric tonnes compared to
320,000 metric tonnes in 2021.
In light of the export constraints, the Group continued to
supply the majority of its coal to the South African domestic
market in 2022. The strong demand in the international market
contributed to higher domestic prices achievable for our coal,
particularly in the second half of the year. For the year, the
Group achieved an average domestic price of R774 per tonne coal
sold compared to R470 in 2021. Domestic sales volumes from our
South African operations decreased slightly during the year to
1.03million metric tonnes (2021: 1.13million metric tonnes) mainly
due to a build of coal stocks at year end.
In 2022, the Group achieved an average Rand price per tonne of
coal sold of R1,384 compared to R616 in 2021. The higher coal
prices contributed to the increase in Group revenue during the year
offsetting lower sales volumes.
Looking forward into 2023, in the first quarter we have seen
API4 prices average $145 and
uncertainties remain, particularly with regard to the outlook for
the international coal price as well as the impact of continued
constraints in transporting coal for export on the South African
rail network. In light of this, management will be focussing in
2023 on improving production levels, maintaining a diversified
sales market, and keeping operating costs low.
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 2022:
• The Group’s South African operations recorded 2 Lost time
Injuries during 2022 (2021: Two).
• 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.
During the year the Group continued with its various employee
and community related bursary and training initiatives. One of the
key highlights for the year was the successful completion by
Takalani Sandani, Mine Manager of Black Colliery, in his bursary
studies. On behalf of the Group, the Board congratulates Takalani
in obtaining his Masters of Business Administration from the Gordon
Institute of Business Science, an affiliate of the University of
Pretoria.
Takalani Sandani at his
Graduation
Prospects
Management would like to thank all our South African employees
and stakeholders for their significant contribution to the Group’s
performance in 2022. Going forward, your management are optimistic
that 2023 will be another successful year for our South African
operations.
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 2022:
• 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 2 Lost time
Injuries during 2022.
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.
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.
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 was completed.
• 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 2023, making interlocking blocks for building
homes
• One HDSA Male completed his University studies in the
2022 academic year.
• Two HDSA females completed their University studies in
the 2022 academic year.
• Two local community HDSA members were enrolled for the
new academic year.
Environment & Environment
Management Programme
South
Africa
Under the terms of the mine’s Environmental Management Programme
approved by the Department of Mineral Resource and Energy (“DMRE”),
Black Wattle undertakes a host of environmental protection
activities to ensure that the approved Environmental Management
Plan is fully implemented. In addition to these routine activities,
Black Wattle regularly carries out environmental monitoring
activities on and around the mine, including evaluation of ground
water quality, air quality, noise and lighting levels, ground
vibrations, air blast monitoring, and assessment of visual impacts.
In addition to this Black Wattle also performs quarterly monitoring
of all boreholes around the mine to ensure that no contaminated
water filters through to the surrounding communities.
Black Wattle is fully compliant with the regulatory requirements
of the Department of Water Affairs and Forestry and has an approved
water use licence.
Black Wattle Colliery has substantially improved its water
management by erecting and upgrading all its pollution control dams
in consultation with the Department of Water Affairs and
Forestry.
A performance assessment audit was conducted to verify
compliance to our Environmental Management Programme and no
significant deviations were found.
United
Kingdom
The Group’s UK activities are principally retail property
investment as well as residential property development whereby we
provide or develop premises which are rented to retail businesses
or sold on to end users. We seek to provide tenants and users in
both these areas with good quality premises from which they can
operate or reside in an environmentally sound manner.
Procurement
In compliance with the Mining Charter and the Mineral and
Petroleum Resource Development Act, the Group’s South African
operations has implemented a BBBEE-focussed procurement policy
which strongly encourages our suppliers to establish and maintain
BBBEE credentials. At present, BBBEE companies provide
approximately 90 percent of Black Wattle’s equipment
and services.
Mining Charter
In South Africa, the new
government regulated Broad-Based Socio-Economic Empowerment Charter
for the Mining and Minerals Industry, 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 & Diversity
In the UK, the Board of Bisichi PLC at 31
December 2022 comprised of:
|
Number of board members |
Percentage of the board |
Number of senior positions on the board |
Number in executive management |
Percentage of Executive management |
| Men |
7 |
100% |
3 |
4 |
100% |
| Women |
0 |
0% |
0 |
0 |
0% |
| Not specified/prefer
not to say |
0 |
0% |
0 |
0 |
0% |
|
Number of board members |
Percentage of the board |
Number of senior positions on the board |
Number in executive management |
Percentage of Executive management |
| White British or other
White (including minority white groups) |
6 |
86% |
3 |
4 |
100% |
| Mixed/Multiple Ethnic
Groups |
0 |
0% |
0 |
0 |
0% |
| Asian/Asian
British |
1 |
14% |
0 |
0 |
0% |
|
Black/African/Caribbean/Black British |
0 |
0% |
0 |
0 |
0% |
| Other ethnic group,
including Arab |
0 |
0% |
0 |
0 |
0% |
The above data has been collected through self-reporting by the
Board members. Questions asked include gender identity or sex and
ethnic background.
At 31 December 2022 the Company
did not meet the target of at least 40% of the individuals on its
board of directors are women and at least one of the senior
positions on the Board are held by a women. The Group is committed
to improving upon its gender and diversity targets at all
employment levels within the Group through a required build-up of
sufficient talent pools, training up of employees and targeted
recruitment policies. 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.
In terms of directors, employees and gender representation, at
the year end the Group had 9 directors (8 male and 2 from a
minority ethnic or HDSA Background, 1 female from a minority ethnic
or HDSA Background), 6 senior managers (5 male and 2 from a
minority ethnic or HDSA Background, 1 female from a minority ethnic
or HDSA Background) and 228 employees (158 male and 134 from a
minority ethnic or HDSA Background, 70 female and 66 from a
minority ethnic or HDSA Background).
Black Wattle Colliery has successfully submitted their annual
Employment Equity Report to the Department of Labour. In terms of
staff training some highlights for 2022
were:
• 1 employee was trained in ABET (Adult Basic Educational
Training) on various levels;
• An additional 8 disabled HDSA women continued their
training on ABET levels one to four.
• Four HDSA persons were enrolled for apprenticeships in
2022; these are categorised as follows:
• One HDSA female employee was enrolled for her
apprenticeship.
• Two HDSA females and one HDSA male from the local
community were enrolled for their apprenticeships.
• Further to the above, we confirm that one HDSA Male
completed his bursary studies in 2022, while two HDSA females
continued their bursary studies in 2022.
• Two HDSA females were allocated new Bursaries for
2022.
Highlights for 2022 for Sisonke Coal Processing:
· One employee was trained in ABET (Adult Basic Educational
Training) on various levels
Employment terms and conditions for our employees based at our
UK office and at our South African mining operations are regulated
by and are operated in compliance with all relevant prevailing
national and local legislation. Employment terms and conditions
provided to mining staff meet or exceed the national average. The
Group’s mining operations and coal washing plant facility are
labour intensive and unionised. During the year no labour disputes,
strikes or wage negotiations disrupted production or had a
significant impact on earnings. The Group’s relations to date with
labour representatives and labour related unions continue to remain
strong.
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.
Climate Change reporting
The Group recognises that climate change represents one of the
most significant challenges facing the world today and supports the
goals of the Paris Agreement and the UN Framework Convention on
Climate Change.
Our aim is to:
- minimize our contribution to greenhouse gas emissions;
- to consider and plan for the physical and transitional risks
of climate change on our operations; and
- to work with stakeholders, including local government and
communities, to mitigate the impact of climate-related
challenges.
Task Force on Climate-related
Financial Disclosures
Bisichi is committed to managing the impact of its operations on
the planet and the impact of climate change on its operations,
particularly to ensure continued operational and financial
resilience in a changing world and marketplace. Bisichi understands
the importance of these matters to its investors, partners, and
regulatory authorities and, as required by the Listing Rules, has
adopted the Task Force on Climate-related Disclosure’s framework
for communicating climate related financial risks.
The Group’s primary operations are coal mining and processing in
South Africa. Hydrocarbons are a
key source of energy and heat for the foreseeable future and the
Company’s operations have contributed to meeting market demand for
coal, particularly in South Africa. However, the Group’s
operations form part of a wider energy and natural resources market
which is in the process of transitioning, in conjunction with the
published government, national and supra-national policies, to
net-zero.
In the current year, the Group has aligned its climate
disclosures in this Strategic Report to the four Task force on
Climate-related Financial Disclosures (“TCFD”) recommendations and
the 11 recommended disclosures as outlined below. This is the first
year the Group has published a report in line with the TCFD
Recommendations and the Group has endeavoured to make disclosures
consistent with the TCFD recommended disclosures taking into
consideration the short to medium term life of its South African
coal operation and the size and complexity of the Group as a whole.
The Group continues to develop and enhance its infrastructure,
strategies, structures, resources and tools to manage the risks and
opportunities presented by climate change and to ensure its ongoing
climate change reporting disclosure is fully consistent in all
areas with the TCFD recommended disclosures.
| TCFD Pillar |
TCFD Recommended
Disclosure |
Bisichi PLC |
|
Governance |
Board’s oversight of
climate risk and opportunities. |
The Board
has ultimate responsibility for the monitoring and development of
the Group’s approach to climate risk and opportunities.
In light of the size of the Group, ESG matters are considered
as part of the Group’s regular board meetings and at other
appropriate points during the year.
The Board has developed and implemented a Climate Change Policy and
monitor the content, effectiveness and implementation of this
Policy on a regular basis.
The Group’s Climate Change Policy can be found on the Group’s
website at www.bisichi.co.uk.
Short, medium and long term strategic decisions, including those on
capital allocation and portfolio management, are considered by
Group management who make recommendations to the Board. Climate
related issues and policy are included as significant factors for
consideration in the decision making process, both in the
management recommendation and in the Board’s consideration of the
relevant issue.
On-going climate related issues are integrated into the Group’s
business risk management process and reporting thereof to the Board
and Audit Committee.
The Group has regard to best practice in its area of operations,
its health and safety and environmental obligations and seeks to
ensure high standards of business conduct in its operations. It
will review compliance with the TCFD Recommendations on an ongoing
basis, and report on its performance on a yearly basis. |
| Management’s role in assessing and
managing climate-related risks and opportunities. |
Responsibility for the
application of this Policy rests with, but is not limited to, all
employees and contractors engaged in relevant activities under the
Group’s operational control. The Group’s managers are responsible
for promoting and ensuring compliance with this Policy and any
related individual site-level policies and practices.
At our South African operations, management have commenced
engagement with key stakeholders in order to ensure awareness of
our climate change policy as well as the potential impact of
climate change on our environment and operations. We continue our
collaboration with our contractors on GHG Emission Reporting, and
we are actively looking for opportunities to partner with our
stakeholders to drive the uptake of carbon neutral solutions.
For material strategic or financial decisions, the Group may
consider procuring expert advice from third party consultants on
the impact in the short, medium and long term of the decision, and
ensure that such information is fully considered as part of the
evaluation of the relevant matter. |
| Strategy |
Climate-related
risks
and opportunities the Group has identified over the short, medium,
and long run. |
The Group considers the
current life of mine of its South African operations to fall within
a short to medium term horizon. Within this horizon, climate change
transition risks may impact our South African coal mining and
processing operations. Risks include:
- coal price and demand volatility;
- availability and cost of financing and third party services
such as insurance;
- delays or restrictions to regulatory approvals;
- early retirement of our coal processing and mining
operations; and
- Carbon pricing and taxes, that may create additional costs
through the value chain.
The Group have assessed physical climate risk profiles produced by
the World Bank, particularly in relation to our South African
operations. The Group considers the physical risks of variations in
climate over the current life of mine of our South African
operations to be mainly limited to an increased risk of seasonal
flooding that may impact the operating efficiency, costs and
revenues of our mining and processing operations.
In a longer term horizon, and in a scenario where the useful life
of our South African operations is extended, the above short to
medium term transitional risks are expected to continue to apply.
In addition, in a scenario, such as the International Energy
Association’s (“IEA”) Pathway to Net Zero by 2050 (“NZE 2050”),
where climate policies are effectively implemented that support a
transformation to net zero emissions by 2050 and limiting the rise
of global temperatures to 1.5°C by the end of the century, policies
will lead to significant coal demand decline over the longer term.
This in turn will impact the carrying value and long term viability
of our South African coal operations as well as the stakeholders
and communities reliant on our operations. Extreme weather events,
over the long term in South Africa, such as floods, and droughts,
as well as changes in rainfall patterns, temperature, and storm
frequency will also affect the operating efficiency, costs and
revenues of our mining and processing operations, supply chains and
impact the communities living close to our operations.
Clean coal research and technology initiatives such as carbon
capture may result in opportunities to increase the useful life of
our South African coal mining and processing operations. In
addition, the clean energy transition provides opportunities for
the Group to diversify its business activities and equity
investment portfolio into renewable and extractive industries that
will benefit from and are critical to the transition to a clean
energy system
The main sources of scope 1 & 2 Green House Gas (GHG) emissions
for the Group have been associated with our South African coal
mining and processing operations, namely due to fuel combustion and
electricity usage. Improvements in the cost competitiveness of
lower emission sources of energy provide opportunities to lower
overall operating costs at our operations as well as reduce overall
GHG Emissions.
In the UK we have identified the following material physical and
transitional risks related to our UK Retail portfolio:
- Long term physical risk through changes in climate, flood
risk and extreme weather; and
- Short-term transition risk from emerging regulation related
to energy performance (“EPC”) and enhanced disclosures. |
| Impact of climate-related risks and
opportunities on businesses, strategy, and financial planning. |
Management have
incorporated and regularly review the following strategies and
procedures in relation to it South African coal operations:
• Review of the impact of climate change and the global
transition to clean energy, particularly in relation to the current
life of mine of the Group’s coal operations;
• Regular research and analysis of the coal market demand
outlook;
• Regular research and analysis on the outlook of the South
African coal mining industry and climate change regulation
including mining regulation, energy procurement and licensing, and
carbon taxing;
• Regular communication with financial service providers and
suppliers on any future changes to availability and cost of
services;
• Regular research and analysis on the progress of clean coal
technology and related regulatory initiatives; and
• Regular dialogue and seeking collaboration with governments
and local communities and other stakeholders on climate
change-related challenges.
The Board has identified the need to mitigate GHG emission heavy
sources of electricity usage at our coal washing plant. Management
are currently in the process of evaluating opportunities to reduce
these emissions taking into particular consideration the financial
viability and long term sustainability of the projects.
The below areas have been identified where GHG emissions can be
further reduced through:
• Minimising land clearance for new project facilities;
• Adoption of mitigation strategies for preserving integrity of
environment;
• Minimising tree felling;
• The use of modern, energy and fuel efficient equipment;
• The inclusion of the impact of GHG emissions as an evaluation
criteria in the selection of mining contractors, suppliers and
equipment. Particular consideration will be given to the choice of
vehicles used for the mine fleet, employee transportation and the
haulage fleet. Where possible energy and fuel efficiency will be a
factor in the selection of vehicles as this will not only reduce
GHG emissions but also reduce operating costs. In addition to the
efficiency of the fleet itself, opportunities will be sought for
improving the use of the vehicles.
• Scheduling of excavation and haulage activities to optimise
activities and avoid double handling, where this is operationally
practical; and
• The upgrading of energy-intensive machinery over time will be
used to improve efficiency and reduce CO2 emissions compared to
machinery that has been removed.
Further energy efficiency opportunities will also be
investigated.
Potential water scarcity has increased management focus on
opportunities to increase the usage efficiency of our existing
water supply and water recycling systems. The introduction of a
closed loop filter press system for coal fines in 2019 and
additional other work concluded or planned on our water recycling
systems at our coal processing facility will result in a lowering
of our overall cost of water and the environmental footprint of our
operations. Increased risks of flooding have been incorporated at
planning stage in new opencast mining areas that have been
opened.
Transition and physical risks related to climate change are
regularly discussed at Board level, particularly those related to
the long term viability of the Group’s South African coal
operations and the future allocation of capital. The Board
regularly considers the need for coal as an energy source both
globally and in South Africa over the life of mine of our
operations and in its long term planning. The Board is committed to
responsible stewardship of our legacy South African coal assets
taking into account the impact climate change related risks may
have on all our local stakeholders. We recognise the need to
collaborate with government, employees and communities, to ensure a
just transition for our stakeholders through the transition to a
low carbon economy.
The Board regularly evaluates and continues to seek opportunities
to diversify its business activities and equity investment
portfolio, particularly into renewable and extractive industries
that predominantly mine commodities identified by the IEA as
critical in the transition to a clean energy system. Any
significant developments will be reported to shareholders in due
course.
The Board continue to monitor and regularly review adherence by the
Group to changes to UK EPC. The Group have incorporated the ongoing
impact of EPC regulatory standards into its decision making
process. |
| Resilience of strategy, taking into
consideration different climate-related scenarios, including a 2°C
or lower scenario. |
Management have
incorporated climate scenarios into our strategic operational
planning and review process. We have assessed the resilience
of our coal operations compared to the IEA’s NZE2050 Scenario,
which sets out what additional measures would be required over the
next ten years to put the world as a whole on track for net zero
emissions by mid-century. The Scenario indicates a significant coal
demand decline over the longer term impacting the potential
commercial longevity of the Group’s South African operations. In
addition we have assessed physical climate risk profiles for our
South African operations obtained via the World Bank Group’s
Climate Change Knowledge Portal. The outcomes of scenario testing
and physical climate profiling have been incorporated into the long
term strategic planning and decision making processes of the
Group.
Over the short to medium term, considering the potential impact of
transitional climate risks on the Group’s South African operations,
the Group’s climate strategy and policy is regularly scrutinised by
senior management and the Board in regard to any changes in coal
demand outlook and climate regulatory policy that may impact our
operations over the current life of mine. A recent example being
the Just Energy Transition Investment Plan (“JET IP”) announced by
the South African Government for 2023-2027.
The Board encourages senior and local management to assess
principal and emerging climate-related risks on a regular basis.
Risks identified are to be reported to and discussed at Board level
and incorporated into the strategy and planning of the Group. |
| Risk Management |
Processes for identifying and
assessing climate related risks. |
The Group’s risk
management processes are developed, implemented and reviewed by the
Board, who retain ultimate responsibility for them.
In addition to the Group’s management of its principal risks and
uncertainties, climate change impacts are mainly considered from
two environmental perspectives, the impact of our South African
coal mining and processing operations on the climate and the effect
of global climate change on our operations and stakeholders.
Heavy sources of GHG emissions have been identified from our annual
Greenhouse Gas emissions recording and reporting.
The Board and Senior management remain in regular communication
with local regulatory bodies, climate research providers, coal
market analysts, suppliers, and services providers to ensure
climate related risks and changes in regulatory policy are
identified and assessed on a regular basis. Senior and local
management in South Africa are encouraged by the Board to identify
local climate related risks and changes in regulatory policy that
may impact our South African coal operations.
Management continually engage with governments and local
communities and other stakeholders on climate change-related
challenges impacting the local area and the South African coal
industry at large. |
| Processes for managing
climate-related risks. |
The Board and Senior
management co-ordinate the Group’s analysis and planning of the
effects of climate change on our business. The Board regularly
discusses the impact of any risks identified through the
organisation, particularly in relation to material matters that may
impact the viability of the Group’s coal operations. The Board
regularly reviews and analyses coal market and outlook research,
particularly in relation to targets set out in local climate policy
such as JET IP and global climate scenarios such as NZE 2050.
The mitigation of GHG emissions and identification of climate
related risks has been integrated into our corporate policy,
project and procurement evaluation criteria at our South African
operations to ensure it is consistently applied and managed.
The Group continuously monitors and reports key performance
indications relating to environmental matters, including the
location of CO2 emissions, their levels and intensity.
On an ongoing basis, the Group assesses the impact of carbon
pricing, climate regulation and taxation on going concern
assumptions, the Group’s current and future strategy and
operations. |
Processes for
identifying, assessing, and managing
climate-related risks are integrated into the overall
risk management. |
New or evolving climate
change risks identified by both senior and local management are to
be reported to and discussed at Board level and incorporated into
the strategy, planning and climate policy of the Group.
Where possible, plans to mitigate the effect of climate change on
our operations and our local communities will be integrated into
the mines regulatory environmental management and social and labour
plans. |
| Metrics and Targets |
Metrics used by the Group to assess
climate related risks and opportunities in line with its strategy
and risk management process. |
A financial
segmentation of the Group’s South African coal mining and
processing assets that are impacted by the climate related risks
and opportunities outlined above can be found on page 82.
The Group recognises that its ability to reduce overall carbon
emissions is constrained at present by the main segment of it
business activities, being coal mining and processing in South
Africa. The Group has, however, sought to appropriately target its
emission reduction strategy to the elements of its operations where
a meaningful reduction in greenhouse gas emissions can be effected,
and this will be reflected in the targets set by the Group in due
course.
The Group measures and report our CO2 emissions across the Group
including a breakdown of UK and South African coal operations. See
below for disclosure of emissions during the year. |
| Scope 1, Scope 2 and, if
appropriate, Scope 3 greenhouse gas (GHG) emissions, and the
related risks. |
The Group is committed
to measuring and reporting our scope 1 and 2 greenhouse gas
emissions, see below for disclosure of emissions during the
year.
Scope 3 emissions are not currently measured given the size and
life of mine of the Group’s South African coal operations and the
uncertainty and impracticality in accurately measuring such
emissions throughout the value chain. The Group will continue to
assess the above approach as part of its continued review of
compliance with the TCFD Recommendations and taking into account
any material changes in future business activities. |
| Targets used by the Group to manage
climate-related risks and opportunities and performance against
targets. |
Over 99% of the Group’s
GHG Emissions relate to our South African coal operations which has
a current life of mine of 7 years.
In the short term, the Group’s continues to evaluate areas where
GHG emissions can be further reduced, particularly scope 2
emissions related to the heavy sources of electricity usage at our
coal washing plant. Once the Group has identified the scope of
further potential reductions, their time, capital cost and
practicability of implementation, short term targets for the Group
will be reassessed.
Over the long term, as part of the Group’s business strategy, the
Board continues to evaluate opportunities to diversify its business
activities. In turn, targets related to GHG emissions will be
re-evaluated in line with any future changes in the Group’s planned
operating activities. |
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 Bisichi Mining plc 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 2022.
Any estimates included in our totals are derived from actual
data which have been extrapolated to cover the full reporting
periods. Our reporting includes our energy use and emissions
associated with our UK office, which are minimal (2.5 tonnes of
CO2e).
| The Group’s carbon
footprint: |
2022
CO2e
Tonnes |
2021
CO2e
Tonnes |
| Emissions source: |
|
|
| Emissions from the combustion of
fuel or the operation of any facility including fugitive emissions
from refrigerants use |
39,564 |
41,960 |
| Emissions resulting from the
purchase of electricity, heat, steam or cooling by the company for
its own use (location based) |
12,267 |
12,040 |
| Total gross emissions |
51,831 |
54,000 |
| Of which: |
|
|
| UK |
3 |
2 |
| South Africa |
51,828 |
53,998 |
| Intensity: |
|
|
| Tonnes of CO2 per £ sterling of
revenue |
0.0005 |
0.0011 |
| Tonnes of CO2 per tonne of coal
produced |
0.0629 |
0.0516 |
|
kWh |
kWh |
| Energy consumption used to calculate
above emissions |
87,292,816 |
83,079,614 |
| Of which UK |
12,341 |
10,186 |
Principal risks
& uncertainties
| PRINCIPAL RISK |
PERFORMANCE AND MANAGEMENT OF THE
RISK |
COAL PRICE AND
VOLUME 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, disconnections in global energy markets and
global economic volatility 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 climate related risks
such as 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 2021 and 2022.
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 of volatility in
global energy markets, economic volatility and climate change
related risks may have on the Group’s mining operations and future
investment decisions as outlined in the Group’s climate change
reporting on page 11. |
MINING RISK
As with many mining operations, the reserve that is mined has the
risk of not having the qualities and accessibility expected from
geological and environmental analysis. This can have a negative
impact on revenue and earnings as the quality and quantity of coal
mined and sold by our mining operations may be lower than
expected. |
This risk is managed by engaging independent geological experts,
referred to in the industry as the “Competent Person”, to determine
the estimated reserves and their technical and commercial
feasibility for extraction. In addition, management engage
Competent Persons to assist management in the production of
detailed life of mine plans as well as in the monitoring of actual
mining results versus expected performance and management’s
response to variances. The Group continued to engage an independent
Competent Person in the current year. Refer to page 5 for details
of mining performance. |
CURRENCY RISK
The Group’s operations are sensitive to currency movements,
especially those between the South African Rand, US Dollar and
British Pound. These movements can have a negative impact on the
Group’s mining operations revenue as noted above, as well as
operational earnings.
The Group is exposed to currency risk in regard to the Sterling
value of inter-company trading balances with its South African
operations. It arises as a result of the retranslation of Rand
denominated inter-company trade receivable balances into Sterling
that are held within the UK and which are payable by South African
Rand functional currency subsidiaries.
The Group is exposed to currency risk in regard to the
retranslation of the Group’s South African functional currency net
assets to the Sterling reporting functional currency of the Group.
A weakening of the South African Rand against Sterling can have a
negative impact on the financial position and net asset values
reported by the Group. |
Export sales within the Group’s South African operations are
derived from a US Dollar-denominated export coal price. A weakening
of the US Dollar can have a negative impact on the South African
Rand prices achievable for coal sold by the Group’s South African
mining operations. This in turn can have a negative impact on the
Group’s mining operations revenue as well as operational earnings
as the Group’s mining operating costs are Rand denominated. In
order to mitigate this, the Group may enter into forward sales
contracts in local currencies with the goal of preserving future
revenue streams. The Group has not entered into any such contracts
in 2022 and 2021.
Although it is not the Group’s policy to obtain forward contracts
to mitigate foreign exchange risk on inter-company trading balances
or on the retranslation of the Group’s South African functional
currency net assets, management regularly review the requirement to
do so in light of any increased risk of future volatility.
Refer to the ‘Financial Review’ for details of significant currency
movement impacts in the year. |
NEW
RESERVES AND MINING PERMISSIONS
The life of the mine, acquisition of additional reserves,
permissions to mine (including ongoing and once-off permissions)
and new mining opportunities in South Africa generally are
contingent on a number of factors outside of the Group’s control
such as approval by the Department of Mineral Resources and Energy,
the Department of Water Affairs and Forestry and other regulatory
or state owned entities.
In addition, the Group’s South African operations are subject to
the government Mining Charter with the New Mining Charter which
came 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. |
POWER
SUPPLY RISK
The current utility provider for power supply in South Africa is
the government run Eskom. Eskom continues to undergo capacity
problems resulting in power cuts and lack of provision of power
supply to new projects. Any power cuts or lack of provision of
power supply to the Group’s mining operations may disrupt mining
production and impact on earnings. |
The Group’s mining operations have to date not been affected by
power cuts. However the Group manages this risk through regular
monitoring of Eskom’s performance and ongoing ability to meet power
requirements. In addition, the Group continues to assess the
ability to utilise diesel generators as an alternative means of
securing power in the event of power outages. |
FLOODING RISK
The Group’s mining operations are susceptible to seasonal flooding
which could disrupt mining production and impact on earnings. |
Management monitors water levels on an ongoing basis and various
projects have been completed, including the construction of
additional dams, to minimise the impact of this risk as far as
possible. |
ENVIRONMENTAL
RISK
The Group’s South African mining operations are required to adhere
to local environmental regulations. Any failure to adhere to local
environmental regulations, could adversely affect the mine’s
ability to mine under its mining right in South Africa. |
In line with all South African mining companies, the management of
this risk is based on compliance with the Environment Management
Plan. In order to ensure compliance, the Group strives to provide
adequate resources to this area including the employment of
personnel and the utilisation of third party consultants competent
in regulatory compliance related to environmental management.
To date, Black Wattle is fully compliant with the regulatory
requirements of the Department of Water Affairs and Forestry and
has an approved water use licence. Further details of the Group’s
Environment Management Programme are disclosed in the Sustainable
development report on page 7. |
HEALTH & SAFETY
RISK
Attached to mining there are inherent health and safety risks. Any
such safety incidents disrupt operations, and can slow or even stop
production. In addition, the Group’s South African mining
operations are required to adhere to local Health and Safety
regulations as well as enhanced health and Safety measures related
to Covid-19. |
The Group has a comprehensive Health and Safety programme in place
to mitigate this risk. Management strive to create an environment
where Health and safety of our employees is of the utmost
importance. Our Health & Safety programme provides clear
guidance on the standards our mining operation is expected to
achieve. In addition, management receive regular updates on how our
mining operations are performing. Further details of the Group’s
Health and Safety Programme are disclosed in the Sustainable
Development report on page 7. |
CLIMATE CHANGE
RISK
Climate change is a material issue that can affect our South
African coal business through:
- changes in carbon pricing, taxes, and coal mining regulation;
- extreme climatic events;
- access to capital and services and allocation thereof; and
- reduced demand and prices for coal. |
Transition and physical risks related to climate change are
regularly discussed and acted upon at Board and management levels,
particularly those related to the viability of the Group’s South
African coal operations and the future allocation of capital.
Further details of the Group’s performance and management of
climate change related risk is set out in the Group’s climate
change report on page 11. |
LABOUR RISK
The Group’s mining operations and coal washing plant facility are
labour intensive and unionised. Any labour disputes, strikes or
wage negotiations may disrupt production and impact earnings. |
In order to mitigate this risk, the Group strives to ensure open
and transparent dialogue with employees across all levels. In
addition, appropriate channels of communication are provided to all
employment unions at Black Wattle to ensure effective and early
engagement on employment matters, in particular wage negotiations
and disputes.
Refer to the ‘Employment’ section on page 9 for further
details. |
CASHFLOW
RISK
Commodity price risk, currency volatility and the uncertainties
inherent in mining may result in favourable or unfavourable
cashflows. |
In order to mitigate this, we seek to balance the high risk of our
mining operations with a dependable cash flow from our UK property
investment operations which are actively managed by London &
Associated Properties PLC 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 24 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 economic performance of the United Kingdom, including the
potential final impact of the United Kingdom leaving the European
Union (“Brexit”), counter inflationary regulatory measures, as well
as the current economic performance and trends of the UK retail
market, may impact the level of rental income, yields and
associated property valuations of the Group’s UK property assets
including its investments in Joint Ventures.
|
The Group utilises the services of London & Associated
Properties PLC whose responsibility is to actively manage the
portfolio to improve rental income and thus enhance the value of
the portfolio over time. In addition, management regularly monitor
banking covenants and other loan agreement obligations as well as
the performance of our property assets in relation to the overall
market over time.
Management continues to monitor and evaluate the impact of Brexit ,
counter inflationary regulatory measures 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 28 for details of the property portfolio
performance. |
Financial & performance review
The movement in the Group’s Adjusted EBITDA from £5.0million in
2021 to £39.4million in 2022 can mainly be attributed to higher
prices achievable for our coal from the Group’s South African
operations. This offset the higher operating costs and lower coal
sale volumes in 2022.
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: |
2022
£’000 |
2021
£’000 |
| For the Group: |
|
|
| Operating profit before depreciation, fair value
adjustments and exchange movements (adjusted EBITDA) |
39,363 |
5,028 |
| EBITDA |
39,980 |
5,849 |
| Profit before tax |
38,014 |
2,501 |
| For our property investment
operations: |
|
|
| Net property valuation |
10,465 |
10,525 |
| Net property revenue |
1,108 |
1,119 |
| For our mining activities: |
|
|
| Operating profit before depreciation, fair value
adjustments and exchange movements (adjusted EBITDA) |
38,126 |
4,266 |
| EBITDA |
37,856 |
4,145 |
|
Tonnes
‘000 |
Tonnes
‘000 |
| Mining production |
824 |
1,046 |
| Quantity of coal sold |
1,287 |
1,447 |
The key performance indicators of the Group
can be reconciled as follows: |
Mining
£’000 |
Property
£’000 |
Other
£’000 |
2022
£’000 |
| Revenue |
93,413 |
1,108 |
590 |
95,111 |
| Transport and loading cost |
(5,201) |
- |
- |
(5,201) |
| Mining and washing costs |
(38,008) |
- |
- |
(38,008) |
| Other operating costs excluding depreciation |
(12,078) |
(456) |
(5) |
(12,539) |
| Operating profit before depreciation, fair
value adjustments and exchange movements (adjusted EBITDA) |
38,126 |
652 |
585 |
39,363 |
| Exchange movements |
(270) |
- |
- |
(270) |
| Fair value adjustments |
- |
(60) |
- |
(60) |
| Gains on investments held at fair value through
profit and loss (FVPL) |
- |
- |
1,036 |
1,036 |
| Operating profit excluding depreciation |
37,856 |
592 |
1,621 |
40,069 |
| Share of loss in joint venture |
- |
(89) |
- |
(89) |
| EBITDA |
37,856 |
503 |
1,621 |
39,980 |
| Net interest movement |
(663) |
(210) |
- |
(873) |
| Depreciation |
(1,093) |
- |
- |
(1,093) |
| Profit before tax |
|
|
|
38,014 |
The key performance indicators of the Group
can be reconciled as follows: |
Mining
£’000 |
Property
£’000 |
Other
£’000 |
2021
£’000 |
| Revenue |
49,226 |
1,119 |
175 |
50,520 |
| Transport and loading cost |
(5,569) |
- |
- |
(5,569) |
| Mining and washing costs |
(32,438) |
- |
- |
(32,438) |
| Other operating costs excluding depreciation |
(6,953) |
(527) |
(5) |
(7,485) |
| Operating profit before depreciation, fair
value adjustments and exchange movements (adjusted EBITDA) |
4,266 |
592 |
170 |
5,028 |
| Exchange movements |
(121) |
- |
- |
(121) |
| Fair value adjustments |
- |
255 |
- |
255 |
| Gains on investments held at fair value through
profit and loss (FVPL) |
- |
- |
812 |
812 |
| Operating profit excluding depreciation |
4,145 |
847 |
982 |
5,974 |
| Share of loss in joint venture |
- |
(125) |
- |
(125) |
| EBITDA |
4,145 |
722 |
982 |
5,849 |
| Net interest movement |
|
|
|
(777) |
| Depreciation |
|
|
|
(2,571) |
| Profit before tax |
|
|
|
2,501 |
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 £40.0million (2021:
£5.8million). The movement compared to the prior year can mainly be
attributed to the EBITDA from our mining activities of £37.9million
(2021: £4.1million). In addition, the Group’s fair value loss,
related to our UK property was £0.1million (2021: gain £0.3million)
and gains related to investments held at fair value through profit
and loss were £1.0million (2021: £0.8million).
The Group reported a profit before tax of £38.0million (2021:
£2.5million) for the year resulting in an increase in taxation for
the year to £11.9million (2021: £0.8 million). This resulted in the
Group achieving an overall profit for the year after tax of
£26.1million (2021: £1.7million), of which £17.6million (2021:
£1.5million) was attributable to equity holders of the company.
South African mining operations
Performance
The key performance indicators of the Group’s South African mining
operations are presented in South African Rand and UK
Sterling as follows: |
South African Rand |
UK Sterling |
2022
R’000 |
2021
R’000 |
2022
£’000 |
2021
£’000 |
| Revenue |
1,886,276 |
1,004,444 |
93,413 |
49,226 |
| Transport and loading costs |
(105,023) |
(113,641) |
(5,201) |
(5,569) |
| Mining and washing costs |
(767,490) |
(661,929) |
(38,008) |
(32,438) |
| Operating profit before other operating costs and
depreciation |
1,013,763 |
228,874 |
50,204 |
11,219 |
| Other operating costs (excluding
depreciation) |
|
|
(12,078) |
(6,953) |
| Operating profit before depreciation, fair
value adjustments and exchange movements (adjusted EBITDA) |
|
|
38,126 |
4,266 |
| Exchange movements |
|
|
(270) |
(121) |
| EBITDA |
|
|
37,856 |
4,145 |
|
|
|
|
2022
‘000 |
2021
‘000 |
| Mining production in tonnes |
824 |
1,046 |
|
2022
R |
2021
R |
| Net Revenue per tonne of mining
production |
2,162 |
852 |
| Mining and washing costs per
tonne of mining production |
(931) |
(633) |
| Operating profit per tonne of
mining production before other operating costs and
depreciation |
1,231 |
219 |
Net Revenue per tonne of mining production can be defined as the
revenue price achieved per metric tonne of mining production less
transportation and loading costs.
A breakdown of the quantity of coal sold and revenue of the
Group’s South African mining operations are presented in metric
tonnes and South African Rand as follows:
|
Domestic
‘000 |
Export
‘000 |
2022
‘000 |
Domestic
‘000 |
Export
‘000 |
2021
‘000 |
| Quantity of coal sold in tonnes |
1,025 |
262 |
1,287 |
1,127 |
320 |
1,447 |
|
Domestic
R’000 |
Export
R’000 |
2022
R’000 |
Domestic
R’000 |
Export
R’000 |
2021
R’000 |
| Revenue |
795,132 |
1,091,144 |
1,886,276 |
530,905 |
473,539 |
1004,444 |
|
R |
R |
R |
R |
R |
R |
| Net Revenue per tonne of coal
sold |
774 |
3,770 |
1,384 |
470 |
1,129 |
616 |
| Mining and washing costs per
tonne of coal sold |
|
|
(596) |
|
|
(457) |
| Operating profit per tonne of
coal sold before other operating costs and depreciation |
|
|
788 |
|
|
158 |
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 R616 per
tonne of coal sold in 2021 to R1,384 in 2022, attributable to the
average price increases achieved in both the export and domestic
market. A decrease in mining production from Black Wattle and an
increase in coal inventories at the end of the year offset an
increase in buy-in coal processed during the year resulting in the
quantity of coal sold for the year decreasing to 1.287million
tonnes (2021: 1.447million tonnes). Overall, revenue from the
Group’s South African mining operations increased during the year
to R1.886billion compared to revenue of R1.005billion in 2021 with
the increase in revenue per tonne of coal sold offsetting the lower
coal sales volumes, particularly in the export market.
Mining and washing costs per tonne of coal sold during the year
increased from R457 per tonne in 2021 to R596 per tonne in 2022
mainly due to increases in buy-in coal costs and mining costs per
tonne from Black Wattle. This resulted in an increase in total
mining and washing costs for the Group to R767.4million (2021:
R661.9million).
Other operating costs (excluding depreciation) of £12.08million
(2021: £6.95million) include general administrative costs and
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 higher salaries and wages costs attributable to the
improved financial performance of the Group in the same period.
Overall costs in South Africa were
in line with management’s expectations and local inflation.
In summary, the movement in the Group’s Adjusted EBITDA from
£5.0million in 2021 to £39.4million in 2022 can mainly be
attributed to higher prices achievable from the Group’s South
African coal processing operations. This offset the higher mining,
washing and operating costs and lower coal sales volumes incurred
in 2022. A further explanation of the mines operational performance
can be found in the Mining Review on page 5.
Non-controlling interest Black
Wattle
As previously reported, 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, extends the life of mine of Black Wattle to seven 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.
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 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 102.
UK property investment
Performance
The Group’s portfolio is managed actively by London & Associated Properties plc. Rental
performance was marginally below levels achieved in 2022. Net
property revenue (excluding joint ventures and service charge
income) across the portfolio decreased during the year to
£1.108million (2021: £1.119million). The property portfolio was
externally valued at 31 December 2022
and the value of UK investment properties attributable to the Group
at year end decreased marginally to £10.465million (2021:
£10.525million).
Joint venture property investments
The Group holds a £0.6million (2021: £0.6million) 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
£1.019million (2021: £1.040million).
The Group continues to hold a £0.4million (2021: £0.5million)
50% joint venture investment in West Ealing Projects Limited, a UK
unlisted property development company. West Ealing Projects
Limited’s only asset is a property development in West Ealing,
London. The carrying value of the
Group’s share of the trading property inventory included within
this development is valued at £4.1million (2021: £3.7million). The
joint venture has obtained planning consent for a residential
development of 56 flats. During 2022 the joint venture explored the
possibility of a consented land sale but did not receive
sufficiently attractive offers during a period of extreme building
costs inflation to persuade the venture to sell. A final decision
on whether to sell the land or build out the flats has yet to be
taken and we look forward to updating shareholders further in due
course.
The Group continues to hold a one third joint venture investment
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
registered for planning permission for its development. The
planning application submitted in 2022 was rejected in January 2023 despite being recommended for
approval by the planning officer. The joint venture has appealed
this decision and we will update shareholders on progress in due
course. At year end, the negative carrying value of the investment
held by the Group was £14,000 (2021: £3,000).
Overall, the Group achieved net property revenue of £1.2million
(2021: £1.2million) for the year which includes the company’s share
of net property revenue from its investment in joint ventures of
£108,000 (2021: £88,000).
Other Investments
During the year the Group’s non-current investments held at fair
value through profit and loss increased from £3.6million in 2021 to
£12.6million due to net additions during the year of £8.2million
(2021: £1.2million) and gains from investments of £0.7million
(2021: £0.7million). The investments comprise of £6.8million (2021:
£1.56million) of investments listed on stock exchanges in the
United Kingdom and £5.8million
(2021: £2.07million) of investments listed on overseas stock
exchanges. The Group’s listed investments are primarily in entities
involved in extractive and energy related (including renewable
energy) business activities.
Cashflow & financial position
| The following table summarises the
main components of the consolidated cashflow for the year: |
Year ended
31 December
2022
£’000 |
Year ended
31 December
2021
£’000 |
| Cash flow generated from operations before
working capital and other items |
39,768 |
5,028 |
| Cash flow from operating activities |
30,698 |
4,432 |
| Cash flow from investing activities |
(16,584) |
(2,706) |
| Cash flow from financing activities |
(7,206) |
(271) |
| Net (decrease) / increase in cash and cash
equivalents |
6,908 |
1,455 |
| Cash and cash equivalents at 1 January |
482 |
(1,078) |
| Exchange adjustment |
(25) |
105 |
| Cash and cash equivalents at 31
December |
7,365 |
482 |
| Cash and cash equivalents at 31 December
comprise: |
|
|
| Cash and cash equivalents as presented in
the balance sheet |
10,590 |
3,018 |
| Bank overdrafts (secured) |
(3,225) |
(2,536) |
|
7,365 |
482 |
Cash flow generated from operating activities increased compared
to the prior year to £30.7million (2021: £4.4million). This can
mainly be attributed to the increase in operating profit during the
year of £39.0million (2021: £3.4million) net of taxes paid of
£7.9million (2021: refund of £0.2million) and an increase in
inventories of £4.0million (2021: decrease £2.1million). The
operating profit can mainly be attributed to the improved coal
revenue per tonne achieved during the year.
Investing cashflows primarily reflect the net acquisitions of
listed equity investments of £8.1million (2021: £0.9million) and
capital expenditure during the year of £8.5million (2021:
£1.8million) which can mainly be attributable to mine development
costs at Black Wattle. As at year end the Group’s mining reserves,
plant and equipment had a carrying value of £16.4million (2021:
£9.0 million) with capital expenditure being offset by depreciation
of £1.1million (2021: £2.5milion) and exchange translation
movements of £0.6million (2021: £0.4million) for the year.
Cash outflows from financing activities includes a net increase
in borrowings of £0.5million (2021: decrease £0.3million). In
addition, dividends were paid during the year to equity
shareholders of £0.6million (2021: £Nil) and to minority
shareholders of £7.0million (2021: £Nil).
Overall, the Group’s cash and cash equivalents increased during
the year by £6.9million (2021: £1.5million). The Group’s net
balance of cash and cash equivalents (including bank overdrafts) at
year end was £7.4million (2021: £0.5million).
The Group has considerable financial resources available at
short notice including cash and cash equivalents (excluding bank
overdrafts) of £10.6million (2021: £3.0 million) and listed
investments of £13.5million (2021: £4.3million) as at year end. The
above financial resources totalling £24.1million (2021:
£7.3million).
The net assets of the Group reported as at year end were
£35.6million (2021: £17.8million) and total assets at £63.8million
(2021: £38.1million).
Liabilities increased from £20.3million to £28.2million during
the year primarily due to an increase in trade and other payables
from £10.7million to £13.3million as well as an increase in tax
payable from £0.7million to £4.3million.
Further details on the Group’s cashflow and financial position
are stated in the Consolidated Cashflow Statement on page73 and the
Consolidated Balance Sheet on page 70 and 71.
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 and is secured
against inventory, debtors and cash that are held in the Group’s
South African operations.
United
Kingdom
The Group holds a 5 year term facility of £3.9m with Julian
Hodge Bank Limited at an initial LTV of 40%. The loan is secured
against the company’s UK retail property portfolio. The amount
repayable on the loan at year end was £3.8million. The debt package
has a five year term and is repayable at the end of the term in
December 2024. The 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.
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 19;
- 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 34.
Future prospects
In the first quarter of the 2023, we have seen the API4 price
average $145 and 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. In
light of this, management will be focussing on improving production
levels, maintaining a diversified sales market and keeping
operating costs low.
The Group continues to seek and evaluate opportunities to
transition into alternative mining related opportunities through
new commercial arrangements.
In the UK, management is looking forward to progressing its
property development opportunities in West Ealing and Development
Physics as well as seeking other opportunities to expand upon on
its property and equity investment portfolios. 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 38.
Further information on the outlook of the company can be found
in both the Chairman’s Statement on page 2 and the Mining Review on
page 5 which form part of the Strategic Report.
Signed on behalf of the Board of Directors
Garrett Casey
Finance Director
26 April 2023
Governance
Governance
Management team
Bisichi PLC
* Andrew R Heller
MA, ACA
(Chairman & 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)
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.
John A Heller (Appointed 29 March
2023)
(Non-executive)
John Heller was appointed a
Director on 29 March 2023.
John Heller is the Chairman and
Chief Executive of London &
Associated Properties PLC which holds a 41.6% stake in
Bisichi. John Heller has extensive
knowledge and experience in property investment and management.
* Member of the nomination committee
+ Senior independent director
O Member of the audit, nomination
and remuneration committees.
Other directors and advisors
Secretary and registered office
Garrett Casey CA (SA)
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
10th Floor, Central Square
29 Wellington Street
Leeds
LS1 4DL
UK telephone: 0371 664 0300
International telephone: +44 (0) 371 664 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 8.00
a.m. – 5.30 p.m., Monday to
Friday excluding public holidays in England and Wales.
Website: https://www.linkgroup.eu
Email: shareholderenquiries@linkgroup.co.uk
Company registration number: 341829 (England and Wales)
Five year summary
|
2022
£’000 |
2021
£’000 |
2020
£’000 |
2019
£’000 |
2018
£’000 |
| Consolidated income statement
items |
|
|
|
|
|
| Revenue |
95,111 |
50,520 |
29,805 |
48,106 |
49,945 |
| Operating profit /(loss) |
38,976 |
3,403 |
(4,493) |
3,658 |
6,526 |
| Profit/(Loss) before tax |
38,014 |
2,501 |
(5,196) |
3,027 |
5,959 |
| Trading profit /(loss) before
tax |
37,127 |
1,559 |
(3,881) |
4,493 |
6,397 |
| Revaluation and impairment profit
/(loss) before tax |
887 |
942 |
(1,315) |
(1,466) |
(438) |
| EBITDA |
39,980 |
5,849 |
(2,387) |
5,868 |
8,587 |
| Operating profit before
depreciation, fair value adjustments and exchange movements
(adjusted EBITDA) |
39,363 |
5,028 |
(1,111) |
7,457 |
9,088 |
| Consolidated balance sheet
items |
|
|
|
|
|
| Investment properties |
10,465 |
10,525 |
10,270 |
11,565 |
13,045 |
| Other non-current investments |
13,631 |
4,761 |
3,001 |
1,629 |
1,357 |
|
24,096 |
15,286 |
13,271 |
13,194 |
14,402 |
| Current Investments held at fair
value |
886 |
685 |
833 |
1,119 |
887 |
|
24,982 |
15,971 |
14,104 |
14,313 |
15,289 |
| Other assets less liabilities less
non-controlling interests |
8,820 |
1,541 |
1,969 |
5,619 |
4,280 |
| Total equity attributable to
equity shareholders |
33,802 |
17,512 |
16,073 |
19,932 |
19,569 |
| Net assets per ordinary share
(attributable) |
316.6p |
164.0p |
150,5p |
186.7p |
183.3p |
| Dividend per share |
22.00p |
6.00p |
0p |
1.00p |
6.00p |
Financial calendar
| 06 June 2023 |
Annual General Meeting |
| Late August 2023 |
Announcement of half-year results
to 30 June 2023 |
| Late April 2024 |
Announcement of results for year ending
31 December 2023 |
Governance
Directors’ report
The directors submit their report together with the audited
financial statements for the year ended 31 December 2022.
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 joint venture investments in two UK
residential property developments.
The results for the year and state of affairs of the Group and
the company at 31 December 2022 are
shown on pages 68 to 113 and in the Strategic Report on pages 2 to
30. 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 30.
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 30.
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
in West Ealing.
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.
Climate Change Reporting and
Greenhouse Gas Emissions
The Group’s climate change report and details on its greenhouse
gas emissions for the year ended 31 December
2022 can be found on page 11 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 3 the directors are
proposing the payment of a final dividend of 4p (2021: 4p) and a
special dividend of 8p (2021: 2p) per share for 2022. An interim
dividend for 2022 of 10p (Interim 2021: 0p) has been paid on
3 February 2023.
The total dividend per ordinary share for 2022 will therefore be
22p (2021: 6p) per ordinary share.
Investment properties and other
properties
The investment property portfolio is stated at its open market
value of £10,465,000 at 31 December
2022 (2021: £10,525,000) 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 £4,812,000 (2021:
£4,787,000).
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 (ceased to be a director on
30 January 2023) , A R Heller, G J
Casey, C A Joll, R J Grobler (a South African citizen), J A Sibbald
and J Wong.
Mr J Heller was appointed as a non-executive director by the
Board on 29 March 2023 and offers
himself for re-election. Mr J Heller is the Chairman and Managing
Director of London &
Associated Properties PLC which holds a 41.6% stake in Bisichi with
extensive & valuable experience in property investment and
management. The board recommends the re-election of Mr J
Heller.
The director retiring by rotation is Mr GJ Casey who offers
himself for re-election.
Mr GJ Casey has been an executive director of the company since
2010. He is chartered accountant and has a contract of employment
determinable at three months’ notice. The board recommends the
re-election of Mr GJ Casey.
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 42 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
31 December 2022:
London & Associated
Properties PLC – 4,432,618 shares representing 41.52 per cent. of
the issued capital. (Sir Michael
Heller (Estate) is a shareholder of London & Associated Properties PLC).
| Sir Michael Heller (Estate)
– |
330,117 shares representing 3.09 per
cent. of the issued capital. |
| A R Heller – |
785,012 shares representing 7.35 per
cent. of the issued capital. |
| Stonehage Fleming Investment
Management Ltd – |
1,916,154 shares representing 17.95
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 2022 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
The Board currently comprises the joint executive chairman and
managing director, two other executive directors and four
non-executive directors. Their details appear on page 31.
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 57. The non-executive
directors have a particular responsibility to ensure that the
strategies proposed by the executive directors are fully
considered. To enable the Board to discharge its duties, all
directors have full and timely access to all relevant information
and there is a procedure for all directors, in furtherance of
their duties, to take independent professional advice, if
necessary, at the expense of the Group. The Board has a formal
schedule of matters reserved to it and meets bi-monthly.
The Board is responsible for overall Group strategy, approval of
major capital expenditure projects and consideration of significant
financing matters.
The following Board committees, which have written terms of
reference, deal with specific aspects of the Group’s affairs:
• The nomination committee comprises of two non-executive
directors C A Joll (Chairman) and JA Sibbald as well as the
executive chairman. The committee is responsible for proposing
candidates for appointment to the Board, having regard to the
balance and structure of the Board. In appropriate cases
recruitment consultants are used to assist the process. Each
director is subject to re-election at least every three years.
• The remuneration committee is responsible for making
recommendations to the Board on the company’s framework of
executive remuneration and its cost. The committee determines the
contractual terms, remuneration and other benefits for each of the
executive directors, including performance related bonus schemes,
pension rights and compensation payments. The Board itself
determines the remuneration of the non-executive directors. The
committee comprises of two non-executive directors C A Joll
(Chairman) and JA Sibbald. The company’s executive chairman is
normally invited to attend meetings. The report on directors’
remuneration is set out on pages 39 to 53.
• 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
executive 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 54.
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/managing director and is discussed with the senior
independent director. Their recommendations are discussed at the
nomination committee prior to proposals for re-election being
recommended to the Board. The performance of executive directors is
discussed and assessed by the remuneration committee. The senior
independent director meets regularly with the chairman and both the
executive and non-executive directors individually outside of
formal meetings. The directors will take outside advice in
reviewing performance but have not found this necessary to
date.
Independent directors
The senior independent non-executive director is Christopher
Joll. The other two independent non-executive directors are
John Sibbald and John Wong.
Christopher Joll has been a non-executive director for over
twenty years, John Sibbald has been
a non-executive director for over thirty years and John Wong was appointed to the Board on
15 October 2020. The Board encourages
the non-executive directors to act independently. The board
considers that their length of service does not, and has not,
resulted in their inability or failure to act independently. In the
opinion of the Board, Christopher Joll and John Sibbald
continue to fulfil their role as independent non-executive
directors.
The independent directors regularly meet prior to Board
meetings to discuss corporate governance issues.
Board and board committee meetings
The number of meetings during 2022 and attendance at regular
Board meetings and Board committees was as follows:
|
|
Meetings
held |
Meetings Attended |
| Sir Michael Heller |
Board
Nomination committee
Audit committee |
5
1
2 |
4
1
2 |
| A R Heller |
Board
Audit committee |
5
2 |
5
2 |
| G J Casey |
Board
Audit committee |
5
2 |
5
2 |
| R J Grobler |
Board |
5 |
1 |
C A Joll
|
Board
Audit committee
Nomination committee
Remuneration committee |
5
2
1
2 |
5
2
1
2 |
J A Sibbald
|
Board
Audit committee
Nomination committee
Remuneration committee |
5
2
1
2 |
2
0
1
1 |
| J Wong |
Board |
5 |
5 |
Internal control
The directors are responsible for the Group’s system of internal
control and review of its effectiveness annually. The Board has
designed the Group’s system of internal control in order to provide
the directors with reasonable assurance that its assets are
safeguarded, that transactions are authorised and properly recorded
and that material errors and irregularities are either prevented or
would be detected within a timely period. However, no system of
internal control can eliminate the risk of failure to achieve
business objectives or provide absolute assurance against material
misstatement or loss.
The key elements of the control system in operation are:
• the Board meets regularly with a formal schedule of
matters reserved to it for decision and has put in place an
organisational structure with clearly defined lines of
responsibility and with appropriate delegation of authority;
• there are established procedures for planning, approval
and monitoring of capital expenditure and information systems for
monitoring the Group’s financial performance against approved
budgets and forecasts;
• UK property and financial operations are closely
monitored by members of the Board and senior managers to enable
them to assess risk and address the adequacy of measures in place
for its monitoring and control. The South African operations are
closely supervised by the UK based executives through daily, weekly
and monthly reports from the directors and senior officers in
South Africa. This is supplemented
by regular visits by the UK based finance director to the South
African operations which include checking the integrity of
information supplied to the UK. The directors are guided by the
internal control guidance for directors issued by the Institute of
Chartered Accountants in England
and Wales.
During the period, the audit committee has reviewed the
effectiveness of internal control as described above. The Board
receives periodic reports from its committees.
There were no significant issues identified during the year
ended 31 December 2022 (and up to the
date of approval of the report) concerning material internal
control issues. The directors confirm that the Board has reviewed
the effectiveness of the system of internal control as described
during the period.
Communication with shareholders
Communication with shareholders is a matter of priority.
Extensive information about the Group and its activities is given
in the Annual Report, which is made available to shareholders.
Further information is available on the company’s website,
www.bisichi.co.uk. There is a regular dialogue with institutional
investors. Enquiries from individuals on matters relating to their
shareholdings and the business of the Group are dealt with
informatively and promptly.
Takeover directive
The company has one class of share capital, ordinary shares.
Each ordinary share carries one vote. All the ordinary shares rank
pari passu. There are no securities issued in the company which
carry special rights with regard to control of the company. The
identity of all substantial direct or indirect holders of
securities in the company and the size and nature of their holdings
is shown under the “Substantial interests” section of this report
above.
A relationship agreement dated 15
September 2005 (the “Relationship Agreement”) was entered
into between the company and London & Associated Properties PLC (“LAP”)
in regard to the arrangements between them whilst LAP is a
controlling shareholder of the company. The Relationship Agreement
includes a provision under which LAP has agreed to exercise the
voting rights attached to the ordinary shares in the company
owned by LAP to ensure the independence of the Board of directors
of the company.
Other than the restrictions contained in the Relationship
Agreement, there are no restrictions on voting rights or on the
transfer of ordinary shares in the company. The rules governing the
appointment and replacement of directors, alteration of the
articles of association of the company and the powers of the
company’s directors accord with usual English company law
provisions. Each director is re-elected at least every three years.
The company is not party to any significant agreements that take
effect, alter or terminate upon a change of control of the company
following a takeover bid. The company is not aware of any
agreements between holders of its ordinary shares that may result
in restrictions on the transfer of its ordinary shares or on voting
rights.
There are no agreements between the company and its directors or
employees providing for compensation for loss of office or
employment that occurs because of a takeover bid.
The Bribery Act 2010
The Bribery Act 2010 came into force on 1
July 2011, and the Board took the opportunity to implement a
new Anti-Bribery Policy. The company is committed to acting
ethically, fairly and with integrity in all its endeavours and
compliance of the code is closely monitored.
Annual General Meeting
The annual general meeting of the company (“Annual General
Meeting”) will be held at Meeting Room 2, 12 Charles II Street, St
James, London SW1Y 4QU on Tuesday,
6 June 2023 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 26 April
2023 (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 26 April 2023 (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 10 will expire on
31 August 2024 or, if earlier, the
conclusion of the next annual general meeting of the company. The
directors have no present intention to make use of this authority.
However, if they do exercise the authority, the directors intend to
follow emerging best practice as regards its use as recommended by
the IA.
Donations
No political donations were made during the year (2021:
£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 24 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 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 coal market conditions for the Group’
will remain at a stable and profitable level through 2023. The
directors therefore have a reasonable expectation that the mine
will achieve positive levels of cash generation for the Group in
2023. 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. 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 £1.143million
secured against its investment property, see note 14. The bank loan
is secured by way of a first charge on specific freehold property
at a value of £2.03 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 September 2020, but has been extended to
October 2023. Santander have
indicated that they are willing to provide a new term loan and we
expect to complete this in the near future.
In 2022 a disconnect in global energy markets resulted in higher
global energy prices. Although the volatility in global energy
markets in 2023 is uncertain, the Directors at present do not
foresee 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.
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
26 April 2023
Governance
Statement of the Chairman
of the remuneration committee
The remuneration committee presents its report for the year
ended 31 December 2022. The report is
presented in two parts in accordance with the remuneration
regulations.
The first part is the Annual Remuneration Report which details
remuneration awarded to Directors and non-executive Directors
during the year. The shareholders will be asked to approve the
Annual Remuneration Report as an ordinary resolution (as in
previous years) at the AGM in June
2023. During the year, in light of the performance of the
Group, the board determined to award bonuses and share options to
certain executive directors of the Group. In addition, on
1st September 2022 the
Company bought out 680,000 options over ordinary shares outstanding
which were exercisable. As an alternative to the exercise of the
options, the Company cancelled the share options for a
consideration avoiding the need for the Company to allot shares,
for shares to be sold in the market to meet the tax liabilities
arising from the exercise and therefore the potential impact to the
Company’s share price and on shareholders.
The current remuneration policy, which details the remuneration
policy for directors, can be found at www.bisichi.co.uk. The
current remuneration policy was subject to a binding vote which was
approved by shareholders at the AGM in July
2020. A further resolution amending the policy was approved
by shareholders at a general meeting of the Company held on
16 June 2022. The resolution
authorises the directors of the Company to enter into agreements to
cancel and surrender options over Ordinary Shares. The approvals
will continue to apply for a 3 year period up to the AGM on
6 June 2023. The remuneration
committee considered the overall performance of the group as well
as of each director in the year ended 31
December 2022 and remuneration including bonuses were
awarded in line with the performance conditions of the remuneration
policy.
The second part, is the new remuneration policy report which can
be found on page 48. The new remuneration policy is largely in line
with the previous policy and is subject to a binding vote which
will be proposed to shareholders at the AGM on 6 June 2023. Once approved, the approval of the
new policy will apply for a 3 year period effective from the
conclusion of the AGM on 6 June
2023.
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
26 April 2023
Governance
Annual remuneration report
The following information has been audited:
Single total figure of remuneration for the year ended
31 December 2022:
|
Salaries
and Fees
£’000 |
Benefits
£’000 |
Bonuses
£’000 |
Long Term Incentive Awards
£’000 |
Pension
£’000 |
Notional Value of
Vesting Share Options |
Total
2022
£’000 |
Total
Fixed Remuneration
£’000 |
Total
Variable Remuneration
£’000 |
| Executive Directors |
|
|
|
|
|
|
|
|
|
| Sir Michael Heller |
200 |
- |
580 |
- |
- |
- |
780 |
200 |
580 |
| A R Heller |
495 |
42 |
1,100 |
- |
- |
273 |
1,910 |
537 |
1,373 |
| G J Casey |
194 |
17 |
575 |
- |
19 |
273 |
1,078 |
230 |
848 |
| R Grobler |
218 |
17 |
356 |
- |
19 |
- |
610 |
254 |
356 |
| Non–Executive Directors |
|
|
|
|
|
|
|
|
|
| C A Joll* |
52 |
- |
- |
- |
- |
- |
52 |
52 |
- |
| J A Sibbald* |
3 |
3 |
- |
- |
- |
- |
6 |
6 |
- |
| J Wong |
55 |
- |
- |
- |
- |
- |
55 |
55 |
- |
| Total |
1,217 |
79 |
2,611 |
- |
38 |
546 |
4,491 |
1,334 |
3,157 |
*Members of the remuneration committee for the year ended
31 December 2022
The notional value of vesting share options are based on the
value of the share options at grant. The awards are not subject to
performance in line with the scheme terms.
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 |
Total
2021
£’000 |
Total
Fixed Remuneration
£’000 |
Total
Variable Remuneration
£’000 |
| Executive Directors |
|
|
|
|
|
|
|
|
| Sir Michael Heller |
83 |
- |
- |
- |
- |
83 |
83 |
- |
| A R Heller |
495 |
34 |
400 |
- |
- |
929 |
529 |
400 |
| G J Casey |
185 |
17 |
200 |
- |
19 |
421 |
221 |
200 |
| R Grobler |
205 |
11 |
176 |
- |
17 |
409 |
233 |
176 |
| Non–Executive Directors |
|
|
|
|
|
|
|
|
| C A Joll* |
40 |
- |
- |
- |
- |
40 |
40 |
- |
| J A Sibbald* |
3 |
3 |
- |
- |
- |
6 |
6 |
- |
| J Wong |
50 |
- |
- |
- |
- |
50 |
50 |
- |
| Total |
1,061 |
65 |
776 |
- |
36 |
1,938 |
1,162 |
776 |
*Members of the remuneration committee for the year ended
31 December 2021
| Summary of directors’
terms |
Date of
contract |
Unexpired term |
Notice period |
| Executive
directors |
|
|
|
| A R Heller |
January
1994 |
Continuous |
3
months |
| G J Casey |
June
2010 |
Continuous |
3
months |
| R J Grobler |
April
2008 |
Continuous |
3 months |
| Non-executive
directors |
|
|
|
| C A Joll |
February
2001 |
Continuous |
3
months |
| J A Sibbald |
October
1988 |
Continuous |
3 months |
| J Wong |
October
2020 |
Continuous |
3 months |
| J Heller |
March
2023 |
Continuous |
3 months |
Pension schemes and incentives
Two (2021: Two) directors have benefits under money purchase
pension schemes. Contributions in 2022 were £37,869 (2021:
£35,177), 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 the company granted options over ordinary shares
in the Company of 10 pence (the
“Options”) to the following directors of the Company, under the
Company’s Unapproved Executive Share Option Scheme 2012 (“the
Scheme”), as set out below:
• Andrew Heller: 380,000 options
granted on 1 September 2022 at an
exercise price of £3.52 per share
• Garrett Casey: 380,000 options
granted on 1 September 2022 at an
exercise price of £3.52 per share
The exercise price of 352 pence
per share was based on the midmarket closing price of the Company’s
shares on 31 August 2022, the date
prior to the grant. The above Options are subject to the terms and
conditions set out in the rules of the Scheme, and subject to the
memorandum and articles of association of the Company. Further
details of the Scheme are outlined below under Share option
schemes. The above options were valued at £547,200 at date of grant
using the Black-Scholes-Merton model. These Options are exercisable
at any time during the next 10 years from the dates of grant stated
above. No consideration has been paid for the granting of these
Options.
Share option schemes
The company currently has only one Unapproved Share Option
Scheme which is not subject to HM revenue and Customs (HMRC)
approval. The 2012 scheme was approved by the remuneration
committee of the company on 28 September
2012.
|
Number of share options |
|
|
|
|
|
Option
price* |
1 January
2022 |
Options
granted/
(Surrendered)
in
2022 |
31
December
2022 |
Exercisable
from |
Exercisable
to |
| The 2012 Scheme |
|
|
|
|
|
|
| A R Heller |
87.01p |
150,000 |
(150,000) |
- |
18/09/2015 |
17/09/2025 |
| A R Heller |
73.50p |
150,000 |
(150,000) |
- |
06/02/2018 |
06/02/2028 |
| G J Casey |
87.01p |
150,000 |
(150,000) |
- |
18/09/2015 |
17/09/2025 |
| G J Casey |
73.50p |
230,000 |
(230,000) |
- |
06/02/2018 |
06/02/2028 |
| A R Heller |
352.00p |
- |
380,000 |
380,000 |
01/09/2022 |
31/08/2032 |
| G J Casey |
352.00p |
- |
380,000 |
380,000 |
01/09/2022 |
31/08/2032 |
|
|
|
|
|
|
|
|
*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. On 1st September
2022, the Company entered into an agreement with
Andrew Heller and Garrett Casey to cancel the options granted in
2015 and 2018 under the Scheme. The Company paid each director a
cash payment in consideration for cancelling the options. The cash
payment was calculated by reference to the closing midmarket share
price on 31 August 2022 less the
relevant exercise price. The aggregate consideration paid by the
Company to effect the cancellations was £1,853,270.
Payments to past directors
No payments were made to past directors in the year ended
31 December 2022 (2021: £nil).
Payments for loss of office
No payments for loss of office were made in the year ended
31 December 2022 (2021: £nil).
Statement of Directors’ shareholding
and share interest
Directors’ interests
The interests of the directors in the shares of the company,
including family and trustee holdings where appropriate, were as
follows:
|
Beneficial |
Non-beneficial |
|
31.12.2022 |
1.1.2022 |
31.12.2022 |
1.1.2022 |
| Sir Michael Heller |
148,783 |
148,783 |
181,334 |
181,334 |
| A R Heller |
785,012 |
785,012 |
- |
- |
| R J Grobler |
- |
- |
- |
- |
| G J Casey |
40,000 |
40,000 |
- |
- |
| C A Joll |
- |
- |
- |
- |
| J A Sibbald |
- |
- |
- |
- |
| J Wong |
- |
- |
- |
- |
There are no requirements or guidelines for any director to own
shares in the Company.
The following section is
unaudited.
The following graph illustrates the company’s performance
compared with a broad equity market index over a ten year period.
Performance is measured by total shareholder return. The directors
have chosen the FTSE All Share Mining index as a suitable index for
this comparison as it gives an indication of performance against a
spread of quoted companies in the same sector.
The middle market price of Bisichi PLC ordinary shares at
31 December 2022 was 305p (2021:
60p). During the year the share price ranged between 81p and
375p.
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 2013 to 31
December 2022.
| Year |
Managing
Director |
Managing Director
Single total figure of
remuneration
£’000 |
Annual
bonus
payout
against
maximum
opportunity*
% |
Long-term incentive
vesting rates against
maximum opportunity*
% |
| 2022 |
A R Heller |
1,637 |
74% |
N/A |
| 2021 |
A R Heller |
929 |
27% |
N/A |
| 2020 |
A R Heller |
551 |
0% |
N/A |
| 2019 |
A R Heller |
1,035 |
34% |
N/A |
| 2018 |
A R Heller |
1,073 |
34% |
N/A |
| 2017 |
A R Heller |
898 |
25% |
N/A |
| 2016 |
A R Heller |
850 |
22% |
N/A |
| 2015 |
A R Heller |
912 |
22% |
N/A |
| 2014 |
A R Heller |
862 |
22% |
N/A |
| 2013 |
A R Heller |
614 |
N/A |
N/A |
Bisichi PLC does not have a Chief Executive so the table
includes the equivalent information for the Managing Director.
*There were no formal criteria or conditions to apply in
determining the amount of bonus payable or the number of shares to
be issued prior to 2014.
Percentage change in remuneration and
Company performance
| Director |
Base Salary
2022 |
Benefits
2022 |
Bonuses
2022 |
Base Salary
2021 |
Benefits
2021 |
Bonuses
2021 |
Base Salary
2020 |
Benefits
2020 |
Bonuses
2020 |
| Executive: |
| Sir Michael Heller 1 |
141% |
0% |
N/A |
0% |
0% |
0% |
0% |
0% |
(100%) |
| A R Heller 2 |
0% |
24% |
175% |
0% |
(39%) |
N/A |
0% |
40% |
(100%) |
| G J Casey 2 |
5% |
0% |
188% |
20% |
(10% |
N/A |
3% |
18% |
(100%) |
| R Grobler 2 |
6% |
55% |
102% |
6% |
3% |
N/A |
(7%) |
(17%) |
(100%) |
|
Non-Executive: |
| C A Joll |
30% |
0% |
0% |
0% |
0% |
0% |
5% |
0% |
0% |
| J A Sibbald |
0% |
0% |
0% |
0% |
0% |
0% |
0% |
0% |
0% |
| J Wong 3 |
10% |
0% |
0% |
0% |
0% |
0% |
N/A |
N/A |
N/A |
| J Heller 4 |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A |
| Employee
remuneration on a full-time equivalent basis: |
| Employees of the Company
5 |
47% |
0% |
478% |
8% |
(26%) |
N/A |
1% |
33% |
(100%) |
1 Bonus changes for 2022 for Sir Michael Heller
are disclosed as not applicable as no bonus was awarded to the
director in 2021.
2 Bonus changes for 2021 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.
3 Mr J Wong was appointed as a non-executive Director
on 15 October 2020 so the annual
change is not applicable for 2020 and was apportioned for 2021.
4 Mr J Heller was appointed as a non-executive
Director on 29 March 2023 so the
annual change is not applicable.
5 The comparator group chosen is all UK based
employees as the remuneration committee believe this provides the
most accurate comparison of underlying increases based on similar
annual bonus performances utilised by the Group.
Relative importance of spend on
pay
The total expenditure of the Group on remuneration to all
employees (see Notes 29 and 9 to the financial statements) is shown
below:
|
2022
£’000 |
2021
£’000 |
| Employee remuneration |
11,991 |
7,491 |
| Distribution to shareholders (see
note below) |
2,348 |
641 |
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 a resolution amending the policy was approved by
shareholders at a general meeting of the Company held on
16 June 2022. The resolution
authorises the directors of the Company to enter into agreements to
cancel and surrender options over Ordinary Shares. 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
2022. 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 16 June
2022, 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. In addition, a further resolution
amending the policy was approved by shareholders at a general
meeting of the Company held on 16 June
2022. The resolution authorises the directors of the Company
to enter into agreements to cancel and surrender options over
Ordinary Shares. The results of the votes above are detailed
below:
|
% of votes
for |
% of votes
against |
No of votes
withheld |
| Resolution to approve the
Remuneration Report (16 June 2022) |
73.85% |
26.15% |
7,174 |
| Resolution to approve the
Remuneration Policy (9 July 2020) |
69.87% |
30.13% |
- |
| Resolution to authorises the
directors of the Company to enter into agreements to cancel and
surrender options over Ordinary Shares. (16 June 2022) |
100% |
0% |
- |
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 41 of the annual remuneration report) are set in
line with market practice and of a length considered sufficient to
ensure an effective handover of duties should a director leave the
company.
All directors’ contracts as amended from time to time, have run
from the date of appointment. Service contracts are kept at the
registered office.
Remuneration policy table
The remuneration policy table below is an extract of the Group’s
current remuneration policy on directors’ remuneration, which was
approved by a binding vote at the 2020 AGM. The approved
policy took effect from 9 July 2020. A copy of the full policy
can be found at www.bisichi.co.uk.
| Element |
Purpose |
Policy |
Operation |
Opportunity and performance
conditions |
| Executive directors |
Base salary
|
To recognise:
Skills
Responsibility
Accountability
Experience
Value |
Considered by
remuneration committee on appointment.
Set at a level considered appropriate to attract, retain motivate
and reward the right individuals. |
Reviewed
annually
Paid monthly in cash
|
No individual director
will be awarded a base salary in excess of £700,000 per annum.
No specific performance conditions are attached to base
salaries. |
Pension
|
To provide competitive retirement
benefits |
Company contribution offered at up
to 10% of base salary as part of overall remuneration package. |
The
contribution payable by the company is included in the
director’s contract of employment.
Paid into money purchase schemes |
Company contribution
offered at up to 10% of base salary as part of overall remuneration
package.
No specific performance conditions are attached to pension
contributions. |
Benefits
|
To provide a competitive benefits
package
|
Contractual benefits
can include but are not limited to:
Car or car allowance
Group health cover
Death in service cover
Permanent health insurance
|
The committee retains
absolute discretion to approve changes in contractual benefits in
exceptional circumstances or where factors outside the control of
the Group lead to increased costs (e.g. medical inflation) |
The costs associated
with benefits offered are closely controlled and reviewed on an
annual basis.
No director will receive benefits of a value in excess of 30% of
his base salary.
No specific performance conditions are attached to contractual
benefits.
The value of benefits for each director for the year ended 31
December 2022 is shown in the table on page 40. |
Annual Bonus
|
To reward and incentivise
|
In assessing the
performance of the executive team, and in particular to determine
whether bonuses are merited the remuneration committee takes into
account the overall performance of the business.
Bonuses are generally offered in cash
|
The
remuneration committee determines the level of bonus on an annual
basis applying such performance conditions and performance measures
as it considers appropriate
|
The current maximum
bonus opportunity will not exceed 200% of base salary in any one
year, but the remuneration committee reserves the power to award up
to 300% in an exceptional year.
There is no formal framework by which the company assesses
performance and performance conditions and measures will be
assessed on an annual basis by the remuneration committee. In
determining the level of the bonus, the remuneration committee will
take into account internal and external factors and circumstances
that occur during the year under review. The performance measures
applied may be financial, non-financial, corporate, divisional or
individual and in such proportion as the remuneration committee
considers appropriate to the prevailing circumstances. The company
does not consider, given the company’s size, nature and stage of
operations that a formal framework is required. |
Share Options
|
To provide executive directors with a
long-term interest in the company
|
Granted under existing
schemes (see page 41)
|
Offered at
appropriate times by the remuneration committee
|
Entitlement to share
options is not subject to any specific performance conditions.
Share options will be offered by the remuneration committee as
appropriate taking into account the factors considered above in the
decision making process in determining remuneration policy.
The aggregate number of shares over which options may be granted
under all of the company’s option schemes (including any options
and awards granted under the company’s employee share plans) in any
period of ten years, will not exceed, at the time of grant, 10% of
the ordinary share capital of the company from time to time. In
determining the limits no account shall be taken of any shares
where the right to acquire the shares has been released, lapsed or
has otherwise become incapable of exercise.
The company currently has one Share Option Scheme (see page
41).
For the 2012 scheme the remuneration committee has the ability to
impose performance criteria in respect of any new share options
granted, however there is no requirement to do so. There are no
performance conditions attached to the options already issued under
the 2012 scheme, the options vest on issue and there are no minimum
hold periods for the resulting shares issued on exercise of the
option.
|
| Non-executive directors |
Base salary
|
To recognise:
Skills
Experience
Value
|
Considered
by the board on appointment.
Set at a level considered appropriate to attract, retain and
motivate the individual.
Experience and time required for the role are considered on
appointment.
|
Reviewed annually
|
No individual director
will be awarded a base salary in excess of £60,000 per annum.
No specific performance conditions are attached to base
salaries.
|
| Pension |
|
No pension offered |
|
|
Benefits
|
|
No benefits
offered except
to one non-executive director who is eligible for health
cover (see annual remuneration report
page 40)
|
The committee retains
the discretion to approve changes in contractual benefits in
exceptional circumstances or where factors outside the control of
the Group lead to increased costs (e.g. medical inflation) |
The costs associated
with the benefit offered is closely controlled and reviewed on an
annual basis.
No director will receive benefits of a value in excess of 30% of
his base salary.
No specific performance conditions are attached to contractual
benefits. |
Share Options
|
|
Non-executive directors do not participate in the share option
schemes |
|
|
|
|
|
|
|
|
In order to ensure that shareholders have sufficient clarity
over director remuneration levels, the company has, where possible,
specified a maximum that may be paid to a director in respect of
each component of remuneration. The remuneration committee consider
the performance measures outlined in the table above to be
appropriate measures of performance and that the KPI’s chosen align
the interests of the directors and shareholders.
In addition to above, during the year a resolution amending the
policy was approved by shareholders at a general meeting of the
Company held on 16 June 2022. The
resolution authorises the directors of the Company to enter into
agreements to cancel and surrender options over Ordinary
Shares.
Details of remuneration of other company employees can be found
in Note 29 to the financial statements.
Remuneration policy
The remuneration policy below is the group’s new remuneration
policy on directors’ remuneration, which will be proposed for a
binding vote at the 2023 AGM. If approved it is intended that the
policy take effect from the conclusion of the AGM on 6 June 2023, and will apply to remuneration
determined on or after that date. The previously determined
remuneration (determined under the company’s remuneration policy
approved at the 2020 AGM) will continue to apply until that time.
In the absence of approval of the new remuneration policy at the
2023 AGM the previous policy shall continue to apply.
The remuneration of the Company’s executive directors is
determined by the remuneration committee. In the decision making
process for the determination, review and implementation of the
company’s remuneration policy, the remuneration committee has taken
the following into account:
• The need to attract, retain and motivate individuals of
a calibre who will ensure successful leadership and management of
the company
• The group’s general aim of seeking to reward all
employees fairly according to the nature of their role and their
performance
• Remuneration packages offered by similar companies
within the same sector
• The need to align the interests of shareholders as a
whole with the long-term growth of the group
• The need to align the determination, review and
implementation of the company’s remuneration policy with the long
term strategy and success of the business.
• The need to be flexible and adjust with operational changes
throughout the term of this policy
• The need to ensure a link between remuneration and the
long term success of the group; and
• The need to consider factors beyond the control of
management in determining final outcomes.
The remuneration of non-executive directors is determined by the
board, and takes into account additional remuneration for services
outside the scope of the ordinary duties of non-executive
directors.
In determining the remuneration for each executive director, the
remuneration committee has, and in the determination of the fees
payable to non-executive directors, the Board has, had regard to
potential conflicts of interest in the decision making process, and
has sought to mitigate these as far as is possible given the
company’s size, nature and stage of operations.
The remuneration policy contains no significant revisions
compared with the previous policy other than rates which have been
amended after taking into consideration inflation and the increase
in size of the Group.
Future Policy Table
The below new remuneration policy table is subject to approval
by shareholders at the 2023 AGM:
| Element |
Purpose |
Policy |
Operation |
Opportunity and performance
conditions |
| Executive directors |
Base salary
|
To recognise:
Skills
Responsibility
Accountability
Experience
Value |
Considered by
remuneration committee on appointment.
Set at a level considered appropriate to attract, retain motivate
and reward the right individuals. |
Reviewed
annually
Paid monthly in cash
|
No individual director
will be awarded a base salary in excess of £1,200,000 per
annum.
No specific performance conditions are attached to base
salaries. |
Pension
|
To provide competitive retirement
benefits |
Company contribution offered at up
to 10% of base salary as part of overall remuneration package. |
The
contribution payable by the company is included in the
director’s contract of employment.
Paid into money purchase schemes |
Company contribution
offered at up to 10% of base salary as part of overall remuneration
package.
No specific performance conditions are attached to pension
contributions. |
Benefits
|
To provide a competitive benefits
package
|
Contractual benefits
can include but are not limited to:
Car or car allowance
Group health cover
Death in service cover
Permanent health insurance
|
The committee retains
absolute discretion to approve changes in contractual benefits in
exceptional circumstances or where factors outside the control of
the Group lead to increased costs (e.g. medical inflation) |
The costs associated
with benefits offered are closely controlled and reviewed on an
annual basis.
No director will receive benefits of a value in excess of 30% of
his base salary.
No specific performance conditions are attached to contractual
benefits.
The value of benefits for each director for the year ended 31
December 2022 is shown in the table on page 40. |
Annual Bonus
|
To reward and incentivise
|
In assessing the
performance of the executive team, and in particular to determine
whether bonuses are merited the remuneration committee takes into
account the overall performance of the business.
Bonuses are generally offered in cash
|
The
remuneration committee determines the level of bonus on an annual
basis applying such performance conditions and performance measures
as it considers appropriate
|
The current maximum
bonus opportunity will not exceed 200% of base salary in any one
year, but the remuneration committee reserves the power to award up
to 300% in an exceptional year.
There is no formal framework by which the company assesses
performance and performance conditions and measures will be
assessed on an annual basis by the remuneration committee. In
determining the level of the bonus, the remuneration committee will
take into account internal and external factors and circumstances
that occur during the year under review. The performance measures
applied may be financial, non-financial, corporate, divisional or
individual and in such proportion as the remuneration committee
considers appropriate to the prevailing circumstances. The company
does not consider, given the company’s size, nature and stage of
operations that a formal framework is required. |
Share Options
|
To provide executive directors with a
long-term interest in the company
|
Granted under existing
schemes (see page 41) and new schemes
|
Offered at
appropriate times by the remuneration committee
|
Entitlement to share
options is not subject to any specific performance conditions.
Share options will be offered by the remuneration committee as
appropriate taking into account the factors considered above in the
decision making process in determining remuneration policy.
The aggregate number of shares over which options may be granted
under all of the company’s option schemes (including any options
and awards granted under the company’s employee share plans) in any
period of ten years, will not exceed, at the time of grant, 10% of
the ordinary share capital of the company from time to time. In
determining the limits no account shall be taken of any shares
where the right to acquire the shares has been released,
surrendered, lapsed or has otherwise become incapable of
exercise.
The company currently has one Share Option Scheme (see page
41).
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.
The Board is authorised under this policy to enter into agreements
with holders of options over ordinary shares in the capital of the
Company to cancel or surrender the Options in consideration of the
payment by the Company to the holder of the Option of cash up to a
maximum of the difference between the exercise price of the Option
and the closing market price on the business day immediately prior
to the day on which the Company enters into that agreement with the
relevant holder of the Options. |
| Non-executive directors |
Base salary
|
To recognise:
Skills
Experience
Value
|
Considered
by the board on appointment.
Set at a level considered appropriate to attract, retain and
motivate the individual.
Experience and time required for the role are considered on
appointment.
|
Reviewed annually
|
No individual director
will be awarded a base salary in excess of £125,000 per annum.
No specific performance conditions are attached to base
salaries.
|
| Pension |
|
No pension offered |
|
|
Benefits
|
|
No benefits
offered except
to one non-executive director who is eligible for health
cover (see annual remuneration report
page 40)
|
The committee retains
the discretion to approve changes in contractual benefits in
exceptional circumstances or where factors outside the control of
the Group lead to increased costs (e.g. medical inflation) |
The costs associated
with the benefit offered is closely controlled and reviewed on an
annual basis.
No director will receive benefits of a value in excess of 30% of
his base salary or £10,000 whichever is the higher.
No specific performance conditions are attached to contractual
benefits. |
Share Options
|
|
Non-executive directors do not participate in the share option
schemes |
|
|
|
|
|
|
|
|
Notes to the future policy table
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. Any differences in the types of
remuneration available for directors and other employees reflect
common practice and market norms. The bonus targets for general
employees of the Group are more focused on annual targets that
further the company’s interests. The maximum bonus opportunity for
employees and directors alike is based on the seniority and
responsibility of the role undertaken.
Remuneration scenarios
An indication of the possible level of remuneration that would
be received by each current Executive Director in the year
commencing 1 January 2023 in
accordance with the directors’ remuneration policy is shown
below.
All performance targets relate to one financial year, and
therefore there are no targets which would be impacted by share
price appreciation.
A Heller:
G.Casey:
R Grobler:
Assumptions
Minimum
Consists of base salary, benefits and pension. Base salary,
benefits and pension for 2023 are assumed at the levels included in
the single total figure remuneration table for the year ended
31 December 2022 on page 40.
On target
Based on the average percentage bonus awarded to the individual
in the three years ending on 31 December
2022. As outlined in the policy table above, the
remuneration committee has discretion to award bonuses of up to
200% of base salary in any one year (up to 300% in an exceptional
year). Base salary, benefits and pension for 2023 are assumed at
the levels included in the single total figure remuneration table
for the year ended 31 December 2022
on page 40.
Maximum
Based on maximum remuneration receivable of 300% of base salary
awarded as bonus in an exceptional year. Base salary, benefits and
pension for 2023 are assumed at the levels included in the single
total figure remuneration table for the year ended 31 December 2022 on page 40.
Approach to recruitment
remuneration
All appointments to the board are made on merit. The components
of a new director’s remuneration package (who is recruited within
the life of the approved remuneration policy) would comprise base
salary, pension, benefits, annual bonus and opportunity to be
granted share options as outlined above and the company’s approach
to such appointments are detailed with in the future policy table
above. The company will pay such levels of remuneration to new
directors that would enable the company to attract appropriately
skilled and experienced individuals that is not in the opinion of
the remuneration committee excessive. The company has no
pre-determined policy for buyouts of previous awards, and each case
will be determined on merit, having regard to all relevant
circumstances at the time.
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 41 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.
Policy on payment for loss of
office
There are no contractual provisions agreed prior to 27 June 2012 that could impact on a termination
payment. Termination payments will be calculated in accordance with
the existing contract of employment or service contract. It is the
policy of the remuneration committee to issue employment contracts
to executive directors with normal commercial terms and without
extended terms of notice which could give rise to extraordinary
termination payments. The board retains the discretion to make
additional (ex-gratia) payments on termination should it be
appropriate in all the circumstances.
Consideration of employment conditions
elsewhere in the Group
In setting this policy for directors’ remuneration the
remuneration committee has been mindful of the company’s objective
to reward all employees fairly according to their role, performance
and market forces. In setting the policy for Directors’
remuneration the remuneration committee has considered the pay and
employment conditions of the other employees within the group. No
formal consultation has been undertaken with employees in drawing
up the policy. The remuneration committee has not used formal
comparison measures.
Consideration of shareholder views
No shareholder views have been taken into account when
formulating this policy. In accordance with the new regulations, an
ordinary resolution for approval of this policy will be put to
shareholders at the AGM in June
2023.
Audit committee report
The committee’s terms of reference have been approved by the
board and follow published guidelines, which are available from the
company secretary. The audit committee comprises the two
non-executive directors, Christopher Joll (chairman), an
experienced financial PR executive and John
Sibbald, a retired chartered accountant.
The Audit Committee’s prime tasks are to:
• review the scope of external audit, to receive regular
reports from the auditor and to review the half-yearly and annual
accounts before they are presented to the board, focusing in
particular on accounting policies and areas of management judgment
and estimation;
• monitor the controls which are in force to ensure the
integrity of the information reported to the shareholders;
• assess key risks and to act as a forum for discussion of
risk issues and contribute to the board’s review of the
effectiveness of the Group’s risk management control and
processes;
• act as a forum for discussion of internal control issues
and contribute to the board’s review of the effectiveness of the
Group’s internal control and risk management systems and
processes;
• consider each year the need for an internal audit
function;
• advise the board on the appointment of external auditors
and rotation of the audit partner every five years, and on their
remuneration for both audit and non-audit work, and discuss the
nature and scope of their audit work;
• participate in the selection of a new external audit
partner and agree the appointment when required;
• undertake a formal assessment of the auditors’
independence each year which includes:
~ a review of non-audit services provided to the
Group and related fees;
~ discussion with the auditors of a written report
detailing all relationships with the company and any other parties
that could affect independence or the perception of
independence;
~ a review of the auditors’ own procedures for
ensuring the independence of the audit firm and partners and staff
involved in the audit, including the regular rotation of the audit
partner; and
~ obtaining written confirmation from the auditors
that, in their professional judgement, they are independent.
Meetings
The committee meets prior to the annual audit with the external
auditors to discuss the audit plan and again prior to the
publication of the annual results. These meetings are attended by
the external audit partner, managing director, director of finance
and company secretary. Prior to bi-monthly board meetings the
members of the committee meet on an informal basis to discuss any
relevant matters which may have arisen. Additional formal meetings
are held as necessary.
During the past year the committee:
• met with the external auditors, and discussed their
reports to the Audit Committee;
• approved the publication of annual and half-year
financial results;
• considered and approved the annual review of internal
controls;
• decided that due to the size and nature of operation
there was not a current need for an internal audit function;
• agreed the independence of the auditors and approved
their fees for both audit related and non-audit services as set out
in note 5 to the financial statements.
Financial reporting
As part of its role, the Audit Committee assessed the audit
findings that were considered most significant to the financial
statements, including those areas requiring significant judgment
and/or estimation. When assessing the identified financial
reporting matters, the committee assessed quantitative materiality
primarily by reference to profit before tax. The Board also gave
consideration to:
• the carrying value of the Group’s total assets, given
that the Group operates a principally asset based business;
• the value of revenues generated by the Group, given the
importance of 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.
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 £700,000 to £800,000 to be
material.
External Auditors
Kreston Reeves LLP 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 team of external
auditors from Kreston Reeves 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
26 April 2023
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 2022 by the company as
detailed in our Valuation Report dated 20
February 2023.
Having regard to the foregoing, we are of the opinion that the
open market value as at 31 December
2022 of the interests owned by the company was £10,465,000
being made up as follows:
|
£’000 |
| Freehold |
8,270 |
| Leasehold |
2,195 |
|
10,465 |
Leeds
20 February 2023 |
Carter Towler
Regulated by Royal Institute of Chartered Surveyors |
Directors’ responsibilities
statement
The directors are responsible for preparing the annual report
and the financial statements in accordance with applicable law and
regulations.
Company law requires the directors to prepare financial
statements for each financial year. Under that law the directors
are required to prepare the Group financial statements in
accordance with 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, international accounting
standards. 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.
Independent Auditor report to the
shareholders of Bisichi Plc for the year ended 31 December 2022
Opinion
We have audited the financial statements of Bisichi PLC (the
‘parent company’) and its subsidiaries (the ‘Group’) for the year
ended 31 December 2022 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).
In our opinion, the financial statements:
· 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
· the financial statements have been prepared in
accordance with the requirements of the Companies Act 2006.
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.
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.
· 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.
· 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.
· 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 38;
· 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 38;
· Board’s confirmation that it has carried out a robust
assessment of the emerging and principal risks set out on
pages 19 to 23;
· The section of the Annual Report that describes the
review of effectiveness of risk management and internal control
systems set out on page 36 and
· The section describing the work of the Risk and Audit
Committee set out on page 35.
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.
Our application of materiality
|
Group financial
statements |
Parent company
financial statements |
| Materiality |
£711,200 (2021: £359,600) |
£710,000 (2021: £359,500) |
| Basis for determining
materiality |
2% of net assets |
Capped below group materiality |
| Rationale for
benchmark applied |
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 |
£533,400 (2021:
£269,700) |
£532,500 (2021:
£269,600) |
| Basis for
determining performance materiality |
75% of
materiality |
Capped below group
materiality |
| Rationale for
performance materiality applied |
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 |
£35,560 (2021:
£17,980) |
£35,500 (2021:
£17,980) |
| 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 £234,500 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 lower risk
UK-registered trading subsidiaries, 4% of those subsidiary’s net
assets were used. Performance materiality was set in the range of
70-80% of each individual materiality.
Coverage overview
|
Group
revenue |
Group
profit/(loss) before tax |
Group net
assets |
| Totals at 31 December
2022: |
£95,110,894 |
£38,013,787 |
£35,560,822 |
| Full statutory audit (Kreston
Reeves and BDO) |
£95,111,894
(100%) |
£37,924,360
(99.8%) |
£35,285,511
(99.2%) |
| Limited procedures |
£Nil |
£89,427
(0.2%) |
£275,311
(0.8%) |
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 |
Level of
assurance |
| Bisichi
PLC |
Full
statutory audit (Kreston Reeves) |
| Mineral Products
Limited |
Full statutory audit
(Kreston Reeves) |
| Bisichi (Properties)
Limited |
Full statutory audit
(Kreston Reeves) |
| Bisichi Northampton
Limited |
Full statutory audit
(Kreston Reeves) |
| Bisichi Mining
(Exploration) Limited |
Full statutory audit
(Kreston Reeves) |
| Black Wattle Colliery
(Pty) Limited |
Full statutory audit
(BDO) |
| Sisonke Coal
Processing (Pty) Limited |
Full statutory audit
(BDO) |
| Black Wattle
Klipfontein (Pty) Limited |
Full statutory audit
(BDO) |
| Bisichi Coal Mining
(Pty) Limited |
Full statutory audit
(BDO) |
| All other group
undertakings |
Limited assurance
(Kreston Reeves) |
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: £95,110,894 (2021: £50,520,000) |
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. |
| Valuation/impairment
of investment properties: £10,635,000 (2021: £10,700,000) |
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.
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. |
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.
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: £16,177,000 (2021:
£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.
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. |
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.
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. |
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 40 to 53 of the Annual
Report for the year ended 31 December
2022. 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.
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 57), 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 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. 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 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.
· Performing integrity testing to verify the legitimacy
of banking records obtained from management.
· 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.
As part of an audit in accordance with ISAs (UK), we exercise
professional judgment and maintain professional scepticism
throughout the audit. We also:
· Identify and assess the risks of material 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 report. However,
future events or conditions may cause the Group or the parent
company to cease to continue as a going concern.
· Evaluate the overall presentation, 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 reappointed by the audit committee in the year to audit
the financial statements. Our total uninterrupted period of
engagement is 2 years, covering the years ended 31 December 2021 and 31
December 2022.
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.
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: 27 April 2023
Bisichi PLC
Financial statements
68 Consolidated income statement
69 Consolidated statement of other
comprehensive income
70 Consolidated balance sheet
72 Consolidated statement of changes
in shareholders’ equity
73 Consolidated cash flow statement
74 Group accounting policies
82 Notes to the financial statements
108 Company balance sheet
109 Company statement of changes in equity
110 Company accounting policies
Consolidated income statement
for the year ended 31 December
2022
|
Notes |
2022
Trading
£’000 |
2022
Revaluations
and
impairment
£’000 |
2022
Total
£’000 |
2021
Trading
£’000 |
2021
Revaluations and
impairment
£’000 |
2021
Total
£’000 |
| Group revenue |
2 |
95,111 |
- |
95,111 |
50,520 |
- |
50,520 |
| Operating costs |
3 |
(55,748) |
- |
(55,748) |
(45,492) |
- |
(45,492) |
| Operating profit before
depreciation, fair value adjustments and exchange movements |
|
39,363 |
- |
39,363 |
5,028 |
- |
5,028 |
| Depreciation |
3 |
(1,093) |
- |
(1,093) |
(2,571) |
- |
(2,571) |
| Operating profit before fair value
adjustments and exchange movements |
1 |
38,270 |
- |
38,270 |
2,457 |
- |
2,457 |
| Exchange losses |
|
(270) |
- |
(270) |
(121) |
- |
(121) |
| (Decrease)/ Increase in value of
investment properties |
4 |
- |
(60) |
(60) |
- |
255 |
255 |
| Gain on investments held at fair
value |
|
- |
1,036 |
1,036 |
- |
812 |
812 |
| Operating profit |
1 |
38,000 |
976 |
38,976 |
2,336 |
1,067 |
3,403 |
| Share of loss in joint ventures |
13 |
- |
(89) |
(89) |
- |
(125) |
(125) |
| Profit before interest and
taxation |
|
38,000 |
887 |
38,887 |
2,336 |
942 |
3,278 |
| Interest receivable |
|
174 |
- |
174 |
22 |
- |
22 |
| Interest payable |
7 |
(1,047) |
- |
(1,047) |
(799) |
- |
(799) |
| Profit before tax |
5 |
37,127 |
887 |
38,014 |
1,559 |
942 |
2,501 |
| Taxation |
8 |
(11,878) |
(30) |
(11,908) |
(453) |
(342) |
(795) |
| Profit for the
year |
|
25,249 |
857 |
26,106 |
1,106 |
600 |
1,706 |
Attributable to: |
|
|
|
|
|
|
|
| Equity holders of the company |
|
16,755 |
857 |
17,612 |
891 |
600 |
1,491 |
| Non-controlling interest |
27 |
8,494 |
- |
8,494 |
215 |
- |
215 |
| Profit for the year |
|
25,249 |
857 |
26,106 |
1,106 |
600 |
1,706 |
| Profit per share – basic |
10 |
|
|
164.96p |
|
|
13.96p |
| Profit per share – diluted |
10 |
|
|
164.96p |
|
|
13.94p |
Trading gains and losses reflect all the trading activity on
mining and property operations and realised gains. Revaluation
gains and losses reflects the revaluation of investment properties
and other assets within the Group and any proportion of unrealised
gains and losses within Joint Ventures. The total column represents
the consolidated income statement presented in accordance with IAS
1.
Financial statements
Consolidated statement of other
comprehensive income
for the year ended 31 December
2022
|
2022
£’000 |
2021
£’000 |
| Profit for the year |
26,106 |
1,706 |
| Other comprehensive
income/(expense): |
|
|
| Items that may be subsequently
recycled to the income statement: |
|
|
| Exchange differences on translation
of foreign operations |
(43) |
(60) |
| Other comprehensive income for
the year net of tax |
(43) |
(60) |
| Total comprehensive income for
the year net of tax |
26,063 |
1,646 |
| Attributable to: |
|
|
| Equity shareholders |
17,593 |
1,439 |
| Non-controlling interest |
8,470 |
207 |
|
26,063 |
1,646 |
Financial statements
Consolidated balance sheet
at 31 December 2022
|
Notes |
2022
£’000 |
2021
£’000 |
| Assets |
|
|
|
| Non-current assets |
|
|
|
| Investment properties |
11 |
10,635 |
10,700 |
| Mining reserves, plant and equipment |
12 |
16,377 |
9,065 |
| Investments in joint ventures accounted for using
equity method |
13 |
1,041 |
1,130 |
| Other investments at fair value through profit and
loss (“FVPL”) |
13 |
12,590 |
3,631 |
| Total non-current assets |
|
40,643 |
24,526 |
| Current assets |
|
|
|
| Inventories |
16 |
5,199 |
1,253 |
| Trade and other receivables |
17 |
6,437 |
8,626 |
| Investments in listed securities held at FVPL |
18 |
886 |
685 |
| Cash and cash equivalents |
|
10,590 |
3,018 |
| Total current assets |
|
23,112 |
13,582 |
| Total assets |
|
63,755 |
38,108 |
| Liabilities |
|
|
|
| Current liabilities |
|
|
|
| Borrowings |
20 |
(3,795) |
(2,666) |
| Trade and other payables |
19 |
(13,282) |
(10,743) |
| Current tax liabilities |
|
(4,256) |
(726) |
| Total current
liabilities |
|
(21,333) |
(14,135) |
| Non-current liabilities |
|
|
|
| Borrowings |
20 |
(3,930) |
(3,853) |
| Provision for
rehabilitation |
21 |
(1,715) |
(1,390) |
| Lease
liabilities |
31 |
(344) |
(389) |
| Deferred tax liabilities |
23 |
(872) |
(506) |
| Total non-current
liabilities |
|
(6,861) |
(6,138) |
| Total liabilities |
|
(28,194) |
(20,273) |
| Net assets |
|
35,561 |
17,835 |
| Equity |
|
|
|
| Share capital |
24 |
1,068 |
1,068 |
| Share premium account |
|
258 |
258 |
| Translation reserve |
|
(2,559) |
(2,540) |
| Other reserves |
25 |
1,112 |
707 |
| Retained earnings |
|
33,923 |
18,019 |
| Total equity attributable to
equity shareholders |
|
33,802 |
17,512 |
| Non-controlling interest |
27 |
1,759 |
323 |
| Total equity |
|
35,561 |
17,835 |
These financial statements were approved and authorised for
issue by the board of directors on 26 April
2023 and signed on its behalf by:
A R Heller G J Casey Company
Registration No. 112155
Director Director
Financial statements
Consolidated statement of changes
in shareholders’ equity
for the year ended 31 December
2022
|
Share
capital
£’000 |
Share
Premium
£’000 |
Translation
reserves
£’000 |
Other
reserves
£’000 |
Retained
earnings
£’000 |
Total
£’000 |
Non-
controlling
interest
£’000 |
Total
equity
£’000 |
| Balance at 1 January
2021 |
1,068 |
258 |
(2,488) |
707 |
16,528 |
16,073 |
116 |
16,189 |
| Profit for the year |
- |
- |
- |
- |
1,491 |
1,491 |
215 |
1,706 |
| Other comprehensive expense |
- |
- |
(52) |
- |
- |
(52) |
(8) |
(60) |
| Total comprehensive expense for the
year |
- |
- |
(52) |
- |
1,491 |
1,439 |
207 |
1,646 |
| Dividend (note 9) |
- |
- |
- |
- |
- |
- |
- |
- |
| Balance at 1 January
2022 |
1,068 |
258 |
(2,540) |
707 |
18,019 |
17,512 |
323 |
17,835 |
| Profit for the
year |
- |
- |
- |
- |
17,612 |
17,612 |
8,494 |
26,106 |
| Other comprehensive
income |
- |
- |
(19) |
- |
- |
(19) |
(24) |
(43) |
| Total comprehensive
income for the year |
- |
- |
(19) |
- |
17,612 |
17,593 |
8,470 |
26,063 |
| Dividend (note 9) |
- |
- |
- |
- |
(1,708) |
(1,708) |
(7,034) |
(8,742) |
| Share options
cancelled |
- |
- |
- |
(142) |
- |
(142) |
- |
(142) |
| Share options
issued |
- |
- |
- |
547 |
- |
547 |
- |
547 |
| Balance at 31
December 2022 |
1,068 |
258 |
(2,559) |
1,112 |
33,923 |
33,802 |
1,759 |
35,561 |
Consolidated cash flow statement
for the year ended 31 December
2022
|
Year ended
31 December
2022
£’000 |
Year ended
31 December
2021
£’000 |
| Cash flows from operating activities |
|
|
| Operating profit |
38,976 |
3,403 |
| Adjustments for: |
|
|
| Depreciation |
1,093 |
2,571 |
| Unrealised loss/(gain) on investment
properties |
60 |
(255) |
| Share based payment
expense |
405 |
- |
| Gain on investments held at FVPL |
(1,036) |
(812) |
| Exchange adjustments |
270 |
121 |
| Cash flow before working capital |
39,768 |
5,028 |
| Change in inventories |
(4,009) |
2,105 |
| Change in trade and other receivables |
2,307 |
(1,900) |
| Change in trade and other payables |
1,114 |
192 |
| Cash generated from operations |
39,180 |
5,425 |
| Interest received |
175 |
22 |
| Interest paid |
(728) |
(799) |
| Income tax paid |
(7,929) |
(216) |
| Cash flow from operating activities |
30,698 |
4,432 |
| Cash flows from investing activities |
|
|
| Acquisition of reserves, property, motor vehicles,
plant and equipment |
(8,480) |
(1,781) |
| Disposal of reserves, property, motor vehicles,
plant and equipment |
20 |
- |
| Disposal of other investments |
2,083 |
705 |
| Acquisition of other investments |
(10,207) |
(1,630) |
| Cash flow from investing activities |
(16,584) |
(2,706) |
| Cash flows from financing activities |
|
|
| Borrowings drawn |
524 |
46 |
| Borrowings and lease liabilities repaid |
(55) |
(317) |
| Equity dividends paid |
(641) |
- |
| Minority dividends paid |
(7,034) |
- |
| Cash flow from financing activities |
(7,206) |
(271) |
| Net increase in cash and cash
equivalents |
6,908 |
1,455 |
| Cash and cash equivalents at 1 January |
482 |
(1,078) |
| Exchange adjustment |
(25) |
105 |
| Cash and cash equivalents at 31
December |
7,365 |
482 |
| Cash and cash equivalents at 31 December
comprise: |
|
|
| Cash and cash equivalents as presented in
the balance sheet |
10,590 |
3,018 |
| Bank overdrafts (secured) |
(3,225) |
(2,536) |
|
7,365 |
482 |
Financial statements
Group accounting policies
for the year ended 31 December
2022
Basis of accounting
The results for the year ended 31
December 2022 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 55 of the Audit
Committee Report. The principal accounting policies are described
below:
The Group financial statements are presented in £ sterling
and all values are rounded to the nearest thousand pounds (£000)
except when otherwise stated.
The functional currency for each entity in the Group, and for
joint arrangements and associates, is the currency of the country
in which the entity has been incorporated. Details of which country
each entity has been incorporated can be found in note 15 for
subsidiaries and note 14 for joint arrangements and associates.
The exchange rates used in the accounts were as follows:
|
£1 Sterling:
Rand |
£1
Sterling: Dollar |
|
2022 |
2021 |
2022 |
2021 |
| Year-end rate |
20.5785 |
20.7672 |
1.2102 |
1.3706 |
| Annual average |
20.1929 |
20.4060 |
1.2967 |
1.3685 |
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 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 coal market conditions for the Group’
will remain at a stable and profitable level through 2023. The
directors therefore have a reasonable expectation that the mine
will achieve positive levels of cash generation for the Group in
2023. 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. 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 £1.143million
secured against its investment property, see note 14. The bank loan
is secured by way of a first charge on specific freehold property
at a value of £2.03 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 September 2020, but has been extended to
October 2023. Santander have
indicated that they are willing to provide a new term loan and we
expect to complete this in the near future.
In 2022 a disconnect in global energy markets resulted in higher
global energy prices. Although the volatility in global energy
markets in 2023 is uncertain, the Directors at present do not
foresee 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
2022.
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 7 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 and evaluates new opportunities to extend the life of its
existing mining and processing 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, coal demand outlook and yield.
Depreciation, amortisation of mineral
rights, mining development costs and plant & equipment
The annual depreciation/amortisation charge is dependent on
estimates, including coal reserves and the related life of mine,
expected development expenditure for probable reserves, the
allocation of certain assets to relevant ore reserves and estimates
of residual values of the processing plant. The charge can
fluctuate when there are significant changes in any of the factors
or assumptions used, such as estimating mineral reserves which in
turn affects the life of mine or the expected life of reserves.
Estimates of proven and probable reserves are prepared by an
independent Competent Person. Assessments of
depreciation/amortisation rates against the estimated reserve base
are performed regularly. Details of the depreciation/amortisation
charge can be found in note 12.
Provision for mining rehabilitation
including restoration and de-commissioning costs
A provision for future rehabilitation including restoration and
decommissioning costs requires estimates and assumptions to be made
around the relevant regulatory framework, the timing, extent and
costs of the rehabilitation activities and of the risk free rates
used to determine the present value of the future cash outflows.
The provisions, including the estimates and assumptions contained
therein, are reviewed regularly by management. The Group annually
engages an independent expert to assess the cost of restoration and
final decommissioning as part of management’s assessment of the
provision. Details of the provision for mining rehabilitation can
be found in note 21.
Impairment
Property, plant and equipment representing the Group’s mining
assets in South Africa are
reviewed for impairment when there are indicators of impairment.
The impairment test is performed using the approved Life of Mine
plan and those future cash flow estimates are discounted using
asset specific discount rates and are based on expectations about
future operations. The impairment test requires estimates about
production and sales volumes, commodity prices, proven and probable
reserves (as assessed by the Competent Person), operating costs and
capital expenditures necessary to extract reserves in the approved
Life of Mine plan. Changes in such estimates could impact
recoverable values of these assets. Details of the carrying value
of property, plant and equipment can be found in note 12.
The impairment test indicated significant headroom as at
31 December 2022 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 28%
reduction in average forecast coal prices or a 31% 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 2022, the costs capitalised within
the development based on a director’s appraisal for the property
estimated the net realisable value at a surplus over the cost for
the development. The directors have reviewed the underlying inputs
and key assumptions made in the appraisal and consider them
adequate. However, such information is by nature subject to
uncertainty. The cost of the development property is set out in
note 14.
Basis of consolidation
The Group accounts incorporate the accounts of Bisichi PLC and
all of its subsidiary undertakings, together with the Group’s share
of the results of its joint ventures. Non-controlling interests in
subsidiaries are presented separately from the equity attributable
to equity owners of the parent company. On acquisition of a
non-wholly owned subsidiary, the non-controlling shareholders’
interests are initially measured at the non-controlling interests’
proportionate share of the fair value of the subsidiaries net
assets. Thereafter, the carrying amount of non-controlling
interests is the amount of those interests at initial recognition
plus the non-controlling interests’ share of subsequent changes in
equity. For subsequent changes in ownership in a subsidiary that do
not result in a loss of control, the consideration paid or received
is recognised entirely in equity.
The definition of control assumes the simultaneous fulfilment of
the following three criteria:
• The parent company holds decision-making power over the
relevant activities of the investee,
• The parent company has rights to variable returns from
the investee, and
• The parent company can use its decision-making power to
affect the variable returns.
Investees are analysed for their relevant activities and
variable returns, and the link between the variable returns and the
extent to which their relevant activities could be influenced in
order to ensure the definition is correctly applied.
Revenue
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.
The purpose of mine development is to establish secure working
conditions and infrastructure to allow the safe and efficient
extraction of recoverable reserves. Depreciation on mine
development costs is not charged until production commences or the
assets are put to use. On commencement of full commercial
production, depreciation is charged over the life of the associated
mine reserves extractable using the asset on a unit of production
basis. The unit of production calculation is based on tonnes mined
as a ratio to proven and probable reserves and also includes future
forecast capital expenditure. The cost recognised includes the
recognition of any decommissioning assets related to mine
development.
Post production stripping
In surface mining operations, the Group may find it necessary to
remove waste materials to gain access to coal reserves prior to and
after production commences. Prior to production commencing,
stripping costs are capitalised until the point where the
overburden has been removed and access to the coal seam commences.
Subsequent to production, waste stripping continues as part of
extraction process as a mining production activity. There are two
benefits accruing to the Group from stripping activity during the
production phase: extraction of coal that can be used to produce
inventory and improved access to further quantities of material
that will be mined in future periods. Economic coal extracted is
accounted for as inventory. The production stripping costs relating
to improved access to further quantities in future periods are
capitalised as a stripping activity asset, if and only if, all of
the following are met:
• it is probable that the future economic benefit
associated with the stripping activity will flow to the Group;
• the Group can identify the component of the ore body for
which access has been improved; and
• the costs relating to the stripping activity associated
with that component or components can be measured reliably.
In determining the relevant component of the coal reserve for
which access is improved, the Group componentises its mine into
geographically distinct sections or phases to which the stripping
activities being undertaken within that component are allocated.
Such phases are determined based on assessment of factors such as
geology and mine planning.
The Group depreciates deferred costs capitalised as stripping
assets on a unit of production method, with reference the tons
mined and reserve of the relevant ore body component or phase. The
cost is recognised within Mine development costs within the balance
sheet.
Other assets and depreciation
The cost, less estimated residual value, of other property,
plant and equipment is written off on a straight-line basis over
the asset’s expected useful life. This includes the washing plant
and other key surface infrastructure. Residual values and useful
lives are reviewed, and adjusted if appropriate, at each balance
sheet date. Changes to the estimated residual values or useful
lives are accounted for prospectively. Heavy surface mining and
other plant and equipment is depreciated at varying rates depending
upon its expected usage.
The depreciation rates generally applied are:
| Mining equipment |
5 – 10 per cent per annum of the earlier of its
useful life or the life of the mine |
Motor
vehicles |
25 – 33 per cent per annum |
| Office equipment |
10 – 33 per cent per annum |
Provisions and contingent
liabilities
Provisions are recognised when the Group has a present
obligation as a result of a past event which it is probable will
result in an outflow of economic benefits that can be reliably
estimated.
A provision for rehabilitation of the mine is initially recorded
at present value and the discounting effect is unwound over time as
a finance cost. Changes to the provision as a result of changes in
estimates are recorded as an increase / decrease in the provision
and associated decommissioning asset. The decommissioning asset is
depreciated in line with the Group’s depreciation policy over the
life of mine. The provision includes the restoration of the
underground, opencast, surface operations and de-commissioning of
plant and equipment. The timing and final cost of the
rehabilitation is uncertain and will depend on the duration of the
mine life and the quantities of coal extracted from the
reserves.
Management exercises judgment in measuring the Group’s exposures
to contingent liabilities through assessing the likelihood that a
potential claim or liability will arise and where possible in
quantifying the possible range of financial outcomes. Where there
is a dispute and where a reliable estimate of the potential
liability cannot be made, or where the Group, based on legal
advice, considers that it is improbable that there will be an
outflow of economic resources, no provision is recognised.
Employee benefits
Share based remuneration
The company operates a share option scheme. The fair value of
the share option scheme is determined at the date of grant. This
fair value is then expensed on a straight-line basis over the
vesting period, based on an estimate of the number of shares that
will eventually vest. The fair value of options granted is
calculated using a binomial or Black-Scholes-Merton model. Payments
made to employees on the cancellation or settlement of options
granted are accounted for as the repurchase of an equity interest,
i.e. as a deduction from equity. Details of the share options in
issue are disclosed in the Directors’ Remuneration Report on page
41 under the heading Share option schemes which is within the
audited part of that report.
Pensions
The Group operates a defined contribution pension scheme. The
contributions payable to the scheme are expensed in the period to
which they relate.
Foreign currencies
Monetary assets and liabilities are translated at year end
exchange rates and the resulting exchange rate differences are
included in the consolidated income statement within the results of
operating activities if arising from trading activities, including
inter-company trading balances and within finance cost/income if
arising from financing.
For consolidation purposes, income and expense items are
included in the consolidated income statement at average rates, and
assets and liabilities are translated at year end exchange rates.
Translation differences arising on consolidation are recognised in
other comprehensive income. Foreign exchange differences on
intercompany loans are recorded in other comprehensive income when
the loans are not considered as trading balances and are not
expected to be repaid in the foreseeable future. Where foreign
operations are disposed of, the cumulative exchange differences of
that foreign operation are recognised in the consolidated income
statement when the gain or loss on disposal is recognised.
Transactions in foreign currencies are translated at the
exchange rate ruling on the transaction date.
Financial instruments
Financial assets and financial liabilities are recognised in the
Group’s consolidated statement of financial position when the Group
becomes a party to the contractual provisions of the
instrument.
Financial assets
Financial assets are classified as either financial assets at
amortised cost, at fair value through other comprehensive income
(“FVTOCI”) or at fair value through profit or loss (“FVPL”)
depending upon the business model for managing the financial assets
and the nature of the contractual cash flow characteristics of the
financial asset.
A loss allowance for expected credit losses is determined for
all financial assets, other than those at FVPL, at the end of each
reporting period. The Group applies a simplified approach to
measure the credit loss allowance for trade receivables using the
lifetime expected credit loss provision. The lifetime expected
credit loss is evaluated for each trade receivable taking into
account payment history, payments made subsequent to year end and
prior to reporting, past default experience and the impact of any
other relevant and current observable data. The Group applies a
general approach on all other receivables classified as financial
assets. The general approach recognises lifetime expected credit
losses when there has been a significant increase in credit risk
since initial recognition.
The Group derecognises a financial asset when the contractual
rights to the cash flows from the asset expire, or when it
transfers the financial asset and substantially all the risks and
rewards of ownership of the asset to another party. The Group
derecognises financial liabilities when the Group’s obligations are
discharged, cancelled or have expired.
Bank loans and overdrafts
Bank loans and overdrafts are included as financial liabilities
on the Group balance sheet at the amounts drawn on the particular
facilities net of the unamortised cost of financing. Interest
payable on those facilities is expensed as finance cost in the
period to which it relates.
Lease liabilities
For any new contracts entered into the Group considers whether a
contract is, or contains a lease. A lease is defined as ‘a
contract, or part of a contract, that conveys the right to use an
asset (the underlying asset) for a period of time in exchange for
consideration’. To apply this definition the Group assesses whether
the contract contains an identified asset and has the right to
obtain substantially all of the economic benefits from use of the
identified asset throughout the period of use.
At lease commencement date, the Group recognises a right-of-use
asset and a lease liability on the balance sheet.
Right-of-use assets, excluding property head leases, have been
included in property, plant and equipment and are measured at cost,
which is made up of the initial measurement of the lease liability
and any initial direct costs incurred by the Group. The Group
depreciates the right-of-use assets on a straight-line basis from
the lease commencement date to the earlier of the end of the useful
life of the right-of-use asset or the end of the lease term.
At the commencement date, the Group measures the lease liability
at the present value of the lease payments unpaid at that date,
discounted using the interest rate implicit in the lease if that
rate is readily available or the Group’s incremental borrowing
rate. Liabilities relating to short term leases are included within
trade and other payables.
Lease payments included in the measurement of the lease
liability are made up of fixed payments and variable payments based
on an index or rate, initially measured using the index or rate at
the commencement date. Subsequent to initial measurement, the
liability will be reduced for payments made and increased for
interest. It is re-measured to reflect any reassessment or
modification. When the lease liability is re-measured, the
corresponding adjustment is reflected in the right-of-use asset, or
profit and loss if the right-of-use asset is already reduced to
zero.
Lease liabilities that arise for investment properties held
under a leasehold interest and accounted for as investment property
are initially calculated as the present value of the minimum lease
payments, reducing in subsequent reporting periods by the
apportionment of payments to the lessor.
The Group has elected to account for short-term leases and
leases of low-value assets using the practical expedients available
in IFRS 16. Instead of recognising a right-of-use asset and lease
liability, the payments in relation to these are recognised as an
expense in profit or loss on a straight-line basis over the lease
term.
Investments
Current financial asset investments and other investments
classified as non-current (“The investments”) comprise of shares in
listed companies. The investments are measured at fair value. Any
changes in fair value are recognised in the profit or loss account
and accumulated in retained earnings.
Trade receivables
Trade receivables are accounted for at amortised cost. Trade
receivables do not carry any interest and are stated at their
nominal value as reduced by appropriate expected credit loss
allowances for estimated recoverable amounts as the interest that
would be recognised from discounting future cash payments over the
short payment period is not considered to be material.
Trade payables
Trade payables cost are not interest bearing and are stated at
their nominal value, as the interest that would be recognised from
discounting future cash payments over the short payment period is
not considered to be material.
Other financial assets and
liabilities
The Group’s other financial assets and liabilities not disclosed
above are accounted for at amortised cost.
Joint ventures
Investments in joint ventures, being those entities over whose
activities the Group has joint control, as established by
contractual agreement, are included at cost together with the
Group’s share of post-acquisition reserves, on an equity basis.
Dividends received are credited against the investment. Joint
control is the contractually agreed sharing of control over an
arrangement, which exists only when decisions about relevant
strategic and/or key operating decisions require unanimous consent
of the parties sharing control. Control over the arrangement is
assessed by the Group in accordance with the definition of control
under IFRS 10. Loans to joint ventures are classified as
non-current assets when they are not expected to be received in the
normal working capital cycle. Trading receivables and payables to
joint ventures are classified as current assets and
liabilities.
Inventories
Inventories are stated at the lower of cost and net realisable
value. Cost includes materials, direct labour and overheads
relevant to the stage of production. Cost is determined using the
weighted average method. Net realisable value is based on estimated
selling price less all further costs of completion and all relevant
marketing, selling and distribution costs.
Impairment
Whenever events or changes in circumstance indicate that the
carrying amount of an asset may not be recoverable an asset is
reviewed for impairment. This includes mining reserves, plant and
equipment and net investments in joint ventures. A review involves
determining whether the carrying amounts are in excess of their
recoverable amounts. An asset’s recoverable amount is determined as
the higher of its fair value less costs of disposal and its value
in use. Such reviews are undertaken on an asset-by-asset basis,
except where assets do not generate cash flows independent of other
assets, in which case the review is undertaken on a cash generating
unit basis.
If the carrying amount of an asset exceeds its recoverable
amount an asset’s carrying value is written down to its estimated
recoverable amount (being the higher of the fair value less cost to
sell and value in use) if that is less than the asset’s carrying
amount. Any change in carrying value is recognised in the
comprehensive income statement.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax bases used in
the tax computations, and is accounted for using the balance sheet
liability method. Deferred tax liabilities are generally recognised
for all taxable temporary differences and deferred tax assets are
recognised to the extent that it is probable that taxable profits
will be available against which deductible temporary differences
can be utilised. In respect of the deferred tax on the revaluation
surplus, this is calculated on the basis of the chargeable gains
that would crystallise on the sale of the investment portfolio as
at the reporting date. The calculation takes account of indexation
on the historical cost of the properties and any available capital
losses.
Deferred tax is calculated at the tax rates that are expected to
apply in the period when the liability is settled or the asset is
realised. Deferred tax is charged or credited in the Group income
statement, except when it relates to items charged or credited
directly to other comprehensive income, in which case it is also
dealt with in other comprehensive income.
Dividends
Dividends payable on the ordinary share capital are recognised
as a liability in the period in which they are approved.
Cash and cash equivalents
Cash comprises cash in hand and on-demand deposits. Cash and
cash equivalents comprises short-term, highly liquid investments
that are readily convertible to known amounts of cash and which are
subject to an insignificant risk of changes in value and original
maturities of three months or less. The cash and cash equivalents
shown in the cashflow statement are stated net of bank overdrafts
that are repayable on demand as per IAS 7. This includes the
structured trade finance facility held in South Africa as detailed in note 22. These
facilities are considered to form an integral part of the treasury
management of the Group and can fluctuate from positive to negative
balances during the period.
Segmental reporting
For management reporting purposes, the Group is organised into
business segments distinguishable by economic activity. The Group’s
material business segments are mining activities and investment
properties. These business segments are subject to risks and
returns that are different from those of other business segments
and are the primary basis on which the Group reports its segment
information. This is consistent with the way the Group is managed
and with the format of the Group’s internal financial reporting.
Significant revenue from transactions with any individual customer,
which makes up 10 percent or more of the total revenue of the
Group, is separately disclosed within each segment. All coal
exports are sales to coal traders at Richard Bay’s terminal in
South Africa with the risks and
rewards passing to the coal trader at the terminal. Whilst the coal
traders will ultimately sell the coal on the international markets
the Company has no visibility over the ultimate destination of the
coal. Accordingly, the export sales are recorded as South African
revenue.
Financial statements
Notes to the financial statements
for the year ended 31 December
2022
1. SEGMENTAL REPORTING
|
2022 |
| Business analysis |
Mining
£’000 |
Property
£’000 |
Other
£’000 |
Total
£’000 |
| Significant revenue customer A |
57,381 |
- |
- |
57,381 |
| Significant revenue customer B |
29,934 |
- |
- |
29,934 |
| Significant revenue customer C |
2,167 |
- |
- |
2,167 |
| Other revenue |
3,931 |
1,108 |
590 |
5,629 |
| Segment revenue |
93,413 |
1,108 |
590 |
95,111 |
| Operating profit before fair value
adjustments & exchange movements |
37,033 |
652 |
585 |
38,270 |
| Revaluation of investments &
exchange movements |
(270) |
(60) |
1,036 |
706 |
| Operating profit and segment
result |
36,763 |
592 |
1,621 |
38,976 |
| Segment assets |
25,911 |
12,682 |
13,478 |
52,071 |
| Unallocated assets |
|
|
|
|
| – Non-current assets |
|
|
|
53 |
| – Cash & cash
equivalents |
|
|
|
10,590 |
| Total assets excluding investment
in joint ventures and assets held for sale |
|
|
|
62,714 |
| Segment liabilities |
(17,928) |
(2,536) |
(5) |
(20,469) |
| Borrowings |
(3,845) |
(3,880) |
- |
(7,725) |
| Total liabilities |
(21,773) |
(6,416) |
(5) |
(28,194) |
| Net assets |
|
|
|
34,520 |
| Non segmental assets |
|
|
|
|
| – Investment in joint
ventures |
|
|
|
1,041 |
| Net assets as per balance
sheet |
|
|
|
35,561 |
| Geographic analysis |
United
Kingdom
£’000 |
South
Africa
£’000 |
Total
£’000 |
| Revenue |
1,698 |
93,413 |
95,111 |
| Operating (loss)/profit and segment result |
(3,696) |
42,672 |
38,976 |
| Depreciation |
(41) |
(1,052) |
(1,093) |
| Non-current assets excluding investments |
10,688 |
16,324 |
27,012 |
| Total net assets |
28,285 |
7,276 |
35,561 |
| Capital expenditure |
46 |
8,434 |
8,480 |
|
2021 |
| Business analysis |
Mining
£’000 |
Property
£’000 |
Other
£’000 |
Total
£’000 |
| Significant revenue customer A |
23,206 |
- |
- |
23,206 |
| Significant revenue customer B |
12,656 |
- |
- |
12,656 |
| Significant revenue customer C |
6,169 |
- |
- |
6,169 |
| Other revenue |
7,195 |
1,119 |
175 |
8,489 |
| Segment revenue |
49,226 |
1,119 |
175 |
50,520 |
| Operating profit before fair value
adjustments & exchange movements |
1,695 |
592 |
170 |
2,457 |
| Revaluation of investments &
exchange movements |
(121) |
255 |
812 |
946 |
| Operating profit and segment
result |
1,574 |
847 |
982 |
3,403 |
| Segment assets |
17,350 |
12,242 |
4,319 |
33,911 |
| Unallocated assets |
|
|
|
|
| – Non-current assets |
|
|
|
48 |
| – Cash & cash
equivalents |
|
|
|
3,018 |
| Total assets excluding investment
in joint ventures and assets held for sale |
|
|
|
36,977 |
| Segment liabilities |
(12,227) |
(1,522) |
(5) |
(13,754) |
| Borrowings |
(2,680) |
(3,839) |
- |
(6,519) |
| Total liabilities |
(14,907) |
(5,361) |
(5) |
(20,273) |
| Net assets |
|
|
|
16,704 |
| Non segmental assets |
|
|
|
|
| – Investment in joint
ventures |
|
|
|
1,131 |
| Net assets as per balance
sheet |
|
|
|
17,835 |
| Geographic analysis |
United
Kingdom
£’000 |
South
Africa
£’000 |
Total
£’000 |
| Revenue |
1,294 |
49,222 |
50,516 |
| Operating profit and segment result |
687 |
2,716 |
3,403 |
| Depreciation |
(32) |
(2,539) |
(2,571) |
| Non-current assets excluding investments |
10,748 |
9,018 |
19,766 |
| Total net assets |
14,400 |
3,435 |
17,835 |
| Capital expenditure |
35 |
1,781 |
1,816 |
2. REVENUE
|
2022
£’000 |
2021
£’000 |
| Revenue from contracts with customers: |
|
|
| Coal sales and processing |
93,413 |
49,226 |
| Service charges recoverable from tenants |
98 |
130 |
| Other: |
|
|
| Rental income |
1,010 |
989 |
| Other revenue |
590 |
175 |
| Revenue |
95,111 |
50,520 |
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
|
2022
£’000 |
2021
£’000 |
| Mining |
43,209 |
38,008 |
| Property |
269 |
400 |
| Cost of sales |
43,478 |
38,408 |
| Administration |
13,363 |
9,655 |
| Operating costs |
56,841 |
48,063 |
| The direct property costs are: |
|
|
| Direct property expense |
250 |
351 |
| Bad debts |
19 |
49 |
|
269 |
400 |
Operating costs above include depreciation of £1,093,000 (2021:
£2,571,000).
4. (LOSS)/GAIN ON REVALUATION OF
INVESTMENT PROPERTIES
The reconciliation of the investment (deficit)/surplus to the
gain on revaluation of investment properties in the income
statement is set out below:
|
2022
£’000 |
2021
£’000 |
| Investment (deficit)/surplus |
(60) |
255 |
| Loss on valuation movement in respect of head
lease payments |
(5) |
(26) |
| (Loss)/Gain on revaluation of investment
properties |
(65) |
229 |
5. PROFIT BEFORE TAXATION
Profit before taxation is arrived at after charging:
|
2022
£’000 |
2021
£’000 |
| Staff costs (see note 29) |
11,991 |
7,491 |
| Depreciation |
1,093 |
2,571 |
| Exchange loss |
(270) |
(121) |
| Fees payable to the company’s auditor for the
audit of the company’s annual accounts |
50 |
51 |
| Fees payable to the company’s auditor and its
associates for other services: |
|
|
| The audit of the company’s subsidiaries
pursuant to legislation |
43 |
37 |
| Audit related services |
- |
- |
| Non-audit related services |
- |
- |
| (Increase)/Decrease in value of
Inventory |
(4,009) |
2,105 |
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 40 which is within the audited part of that
report.
7. INTEREST PAYABLE
|
2022
£’000 |
2021
£’000 |
| On bank overdrafts and bank loans |
507 |
554 |
| Unwinding of discount |
319 |
- |
| Lease liabilities |
25 |
29 |
| Other interest payable |
196 |
216 |
| Interest payable |
1,047 |
799 |
8. TAXATION
|
2022
£’000 |
2021
£’000 |
|
|
|
| (a) Based on the results for the year: |
|
|
| Current tax - UK |
- |
- |
| Current tax - Overseas |
11,520 |
750 |
| Corporation tax - adjustment in respect of prior
year – UK |
- |
- |
| Current tax |
11,520 |
750 |
| Deferred tax |
388 |
45 |
| Total tax in income statement charge |
11,908 |
795 |
(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% (2021: 19%).
The differences are explained below:
| Profit/ Loss on ordinary activities
before taxation |
38,014 |
2,501 |
| Tax on profit/ loss on ordinary
activities at 19.00% (2021: 19.00%) |
7,223 |
475 |
| Effects of: |
|
|
| Expenses not deductible for tax
purposes |
280 |
49 |
| Capital gains(losses) on
disposal |
14 |
20 |
| Differences in tax rates to UK Tax
rate |
4,491 |
260 |
| Other differences |
(100) |
(9) |
| Adjustment in respect of prior
years |
- |
- |
| Total tax in income statement
(credit) / charge |
11,908 |
795 |
(c) Analysis of United Kingdom and overseas tax:
United Kingdom tax included in
above:
| Current tax |
- |
- |
| Deferred tax |
(937) |
152 |
|
(937) |
152 |
| Overseas tax included
in above: |
|
|
| Current tax |
11,520 |
750 |
| Adjustment in respect
of prior years |
- |
- |
| Current tax |
11,520 |
750 |
| Deferred tax |
1,325 |
(107) |
|
12,845 |
643 |
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% (2021: 25%) and the corporation tax rate assessed in
South Africa for the year of 28%
(2021: 28%) being different from the corporation tax rate in the
UK.
9. SHAREHOLDER DIVIDENDS
|
2022
Per share |
2022
£’000 |
2021
Per share |
2021
£’000 |
| Dividends paid during the year relating to the
prior period |
6p |
641 |
- |
- |
| Dividends relating to the current period: |
|
|
|
|
| Interim dividend |
10p |
1,067 |
- |
- |
| Proposed final dividend |
4p |
427 |
4p |
427 |
| Proposed special dividend |
8p |
854 |
2p |
214 |
|
22p |
2,348 |
6p |
641 |
The interim dividend for 2022 was approved by the Board on
30th August 2022, paid on
3rd February 2023 and
accounted for as payable as at 31 December
2022. The total dividends to shareholders accounted during
the year of £1,708,000 (2021: £Nil) comprise of dividends paid
during the year relating to the prior period of £641,000 (2021:
£Nil) and the interim dividend of £1,067,000 (£Nil). The final and
special dividends for 2022 are not accounted for until they have
been approved at the Annual General Meeting.
10. PROFIT AND DILUTED PROFIT PER SHARE
Both the basic and diluted profit per share calculations are
based on a profit after tax attributable to equity holders of the
company of £17,612,000 (2021: £1,491,000). The basic profit/(loss)
per share has been calculated on a weighted average of 10,676,839
(2021: 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 (2021:
10,676,839) plus the dilutive potential ordinary shares arising
from share options of nil (2021: 21,923) totalling 10,676,839
(2021: 10,698,762).
11. INVESTMENT PROPERTIES
|
Freehold
£’000 |
Long
Leasehold
£’000 |
Head
Lease
£’000 |
Total
£’000 |
| Valuation at 1 January 2022 |
8,230 |
2,295 |
175 |
10,700 |
| Revaluation |
40 |
(100) |
(5) |
(65) |
| Valuation at 31 December
2022 |
8,270 |
2,195 |
170 |
10,635 |
| Valuation at 1 January 2021 |
7,875 |
2,395 |
201 |
10,471 |
| Revaluation |
355 |
(100) |
(26) |
229 |
| Valuation at 31 December
2021 |
8,230 |
2,295 |
175 |
10,700 |
| Historical cost |
|
|
|
|
| At 31 December 2022 |
5,851 |
728 |
- |
6,579 |
| At 31 December 2021 |
5,851 |
728 |
- |
6,579 |
Long leasehold properties are those for which the unexpired term
at the balance sheet date is not less than 50 years. All investment
properties are held for use in operating leases and all properties
generated rental income during the period.
Freehold and Long Leasehold properties were externally
professionally valued at 31 December on an open market basis
by:
|
2022
£’000 |
2021
£’000 |
| Carter Towler |
10,465 |
10,525 |
The valuations were carried out in accordance with the
Statements of Asset Valuation and Guidance Notes published by The
Royal Institution of Chartered Surveyors.
Each year external valuers are appointed by the Executive
Directors on behalf of the Board. The valuers are selected based
upon their knowledge, independence and reputation for valuing
assets such as those held by the Group.
Valuations are performed annually and are performed consistently
across all investment properties in the Group’s portfolio. At each
reporting date appropriately qualified employees of the Group
verify all significant inputs and review the computational outputs.
Valuers submit their report to the Board on the outcome of each
valuation round.
Valuations take into account tenure, lease terms and structural
condition. The inputs underlying the valuations include market rent
or business profitability, likely incentives offered to tenants,
forecast growth rates, yields, EBITDA, discount rates, construction
costs including any specific site costs (for example section 106),
professional fees, developer’s profit including contingencies,
planning and construction timelines, lease regear costs, planning
risk and sales prices based on known market transactions for
similar properties to those being valued.
Valuations are based on what is determined to be the highest and
best use. When considering the highest and best use a valuer will
consider, on a property by property basis, its actual and potential
uses which are physically, legally and financially viable. Where
the highest and best use differs from the existing use, the valuer
will consider the cost and likelihood of achieving and implanting
this change in arriving at its valuation.
There are often restrictions on Freehold and Leasehold property
which could have a material impact on the realisation of these
assets. The most significant of these occur when planning
permission or lease extension and renegotiation of use are required
or when a credit facility is in place. These restrictions are
factored in the property’s valuation by the external valuer.
IFRS 13 sets out a valuation hierarchy for assets and
liabilities measured at fair value as follows:
Level 1: valuation based on inputs on quoted market prices
in active markets
Level 2: valuation based on inputs other than quoted
prices included within level 1 that maximise the use of observable
data directly or from market prices or indirectly derived from
market prices.
Level 3: where one or more significant inputs to
valuations are not based on observable market data
The inter-relationship between key
unobservable inputs and the Groups’ properties is detailed in the
table below:
| Class of property Level 3 |
Valuation technique |
Key
unobservable inputs |
Carrying/
fair value
2022
£’000 |
Carrying/
fair value
2021
£’000 |
Range
(weighted
average)
2022 |
Range
(weighted
average)
2021 |
| Freehold – external valuation |
Income capitalisation |
Estimated rental
value per sq ft p.a |
8,270 |
8,230 |
£4 – £29
(£21) |
£6 – £29
(£21) |
|
|
Equivalent Yield |
|
|
8.9% – 15.8%
(11.4%) |
8.9% – 14.7%
(11.2%) |
| Long leasehold – external valuation |
Income capitalisation |
Estimated rental
value per sq ft p.a |
2,195 |
2,295 |
£8 – £8
(£8) |
£9 – £9
(£9) |
|
|
Equivalent yield |
|
|
9.8% – 9.8%
(9.8%) |
9.8% – 9.8%
(9.8%) |
| At 31 December 2022 |
|
|
10,465 |
10,525 |
|
|
There are interrelationships between all these inputs as they
are determined by market conditions. The existence of an increase
in more than one input would be to magnify the input on the
valuation. The impact on the valuation will be mitigated by the
interrelationship of two inputs in opposite directions, for
example, an increase in rent may be offset by an increase in
yield.
The table below illustrates the impact of changes in key
unobservable inputs on the carrying / fair value of the Group’s
properties:
|
Estimated
rental
value 10% increase
or decrease |
Equivalent
yield
25 basis point contraction or expansion |
|
2022
£’000 |
2021
£’000 |
2022
£’000 |
2021
£’000 |
| Freehold – external valuation |
827 / (827) |
823 / (823) |
205 / (195) |
203 / (193) |
| Long Leasehold – external valuation |
220 / (220) |
230 / (230) |
57 / (55) |
60 / (57) |
12. MINING RESERVES, PLANT AND EQUIPMENT
|
Mining
reserves
£’000 |
Mining
equipment and development costs
£’000 |
Motor
vehicles
£’000 |
Office
equipment
£’000 |
Total
£’000 |
| Cost at 1 January 2022 |
1,097 |
29,063 |
396 |
179 |
30,735 |
| Exchange adjustment |
(13) |
134 |
3 |
1 |
125 |
| Additions |
1,248 |
7,117 |
55 |
60 |
8,480 |
| Disposals |
- |
(23) |
(69) |
(72) |
(164) |
| Cost at 31 December 2022 |
2,332 |
36,291 |
385 |
168 |
39,176 |
| Accumulated depreciation at 1 January 2022 |
1,089 |
20,167 |
264 |
150 |
21,670 |
| Exchange adjustment |
10 |
166 |
3 |
1 |
180 |
| Charge for the year |
- |
1,037 |
38 |
18 |
1,093 |
| Disposals |
- |
(23) |
(49) |
(72) |
(144) |
| Accumulated depreciation at 31 December
2022 |
1,099 |
21,347 |
256 |
97 |
22,799 |
| Net book value at 31 December 2022 |
1,233 |
14,944 |
129 |
71 |
16,377 |
| Cost at 1 January 2021 |
1,138 |
28,371 |
372 |
174 |
30,055 |
| Exchange adjustment |
(41) |
(1,059) |
(11) |
(4) |
(1,115) |
| Additions |
- |
1,772 |
35 |
9 |
1,816 |
| Disposals |
- |
(21) |
- |
- |
(21) |
| Cost at 31 December 2021 |
1,097 |
29,063 |
396 |
179 |
30,735 |
| Accumulated depreciation at 1 January 2021 |
1,123 |
18,399 |
215 |
144 |
19,881 |
| Exchange adjustment |
(41) |
(710) |
(7) |
(3) |
(761) |
| Charge for the year |
7 |
2,499 |
56 |
9 |
2,571 |
| Disposals |
- |
(21) |
- |
- |
(21) |
| Accumulated depreciation at 31 December
2021 |
1,089 |
20,167 |
264 |
150 |
21,670 |
| Net book value at 31 December 2021 |
8 |
8,896 |
132 |
29 |
9,065 |
Included in the above line items are right-of-use assets over
the following:
|
Mining
Equipment and development costs
£’000 |
Motor
vehicles
£’000 |
Total
£’000 |
| Net book value at 1 January
2022 |
219 |
48 |
267 |
| Additions |
- |
- |
- |
| Exchange adjustment |
5 |
- |
5 |
| Depreciation |
(38) |
(27) |
(65) |
| Net book value at 31 December
2022 |
186 |
21 |
207 |
| Net book value at 1 January
2021 |
263 |
45 |
308 |
| Additions |
- |
35 |
35 |
| Exchange adjustment |
(6) |
- |
(6) |
| Depreciation |
(38) |
(32) |
(70) |
| Net book value at 31 December
2021 |
219 |
48 |
267 |
13. INVESTMENTS HELD AS NON-CURRENT
ASSETS
|
2022
Net investment in joint
ventures
assets
£’000 |
2022
Other
£’000 |
2021
Net investment
in joint
ventures
assets
£’000 |
2021
Other
£’000 |
| At 1 January |
1,130 |
3,631 |
1,255 |
1,746 |
| Gain in investment |
- |
718 |
- |
701 |
| Additions |
- |
9,758 |
- |
1,630 |
| Disposals |
- |
(1,517) |
- |
(446) |
| Share of (loss)/gain in joint ventures |
(89) |
- |
(125) |
- |
| Net assets at 31 December |
1,041 |
12,590 |
1,130 |
3,631 |
| Other investments comprise of the following: |
|
|
|
2022
£’000 |
2021
£’000 |
| Net book value of unquoted investments |
- |
- |
| Net book and market value of readily realisable
investments listed on stock exchanges in the United Kingdom |
6,782 |
1,564 |
| Net book and market value of readily realisable
investments listed on overseas stock exchanges |
5,808 |
2,067 |
|
12,590 |
3,631 |
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 £14,000 (2021: £3,000). 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 (2021: 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 £606,000 (2021: £637,000). 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 (2021: 500,000) ordinary
shares of £1 each. No dividends were received during the period. It
holds a Santander bank loan of £1.143million secured against its
investment property. The bank loan of £1.143million is secured by
way of a first charge on specific freehold property at a value of
£2.038 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 September 2020, but has been extended to
October 2023. Santander have
indicated that they are willing to provide a new term loan and we
expect to complete this in the near future.
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
£449,000 (2021: £496,000). 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 (2021: 1,000,000) ordinary
shares of £1 each. No dividends were received during the
period.
|
Development
Physics
£’000 |
Dragon
£’000 |
West Ealing
£’000 |
2022
£’000 |
Development
Physics
£’000 |
Dragon
£’000 |
West
Ealing
£’000 |
2021
£’000 |
| Turnover |
- |
168 |
53 |
221 |
- |
168 |
58 |
226 |
| Profit and loss: |
|
|
|
|
|
|
|
|
| (Loss)/Profit before
depreciation, interest and taxation |
(33) |
(5) |
(71) |
(109) |
(10) |
(32) |
(215) |
(257) |
| Depreciation and
amortisation |
- |
(3) |
- |
(3) |
- |
(3) |
- |
(3) |
| (Loss)/Profit before
interest and taxation |
(33) |
(8) |
(71) |
(112) |
(10) |
(35) |
(215) |
(260) |
| Interest Income |
- |
- |
- |
- |
- |
- |
- |
- |
| Interest expense |
- |
(51) |
(1) |
(52) |
- |
(31) |
(1) |
(32) |
| (Loss)/Profit before
taxation |
(33) |
(59) |
(72) |
(164) |
(10) |
(66) |
(216) |
(292) |
| Taxation |
- |
(2) |
(34) |
(36) |
- |
- |
38 |
38 |
| (Loss)/Profit after
taxation |
(33) |
(61) |
(106) |
(200) |
(10) |
(66) |
(178) |
(254) |
| Balance
sheet |
|
|
|
|
|
|
|
|
| Non-current
assets |
- |
2,038 |
- |
2,038 |
- |
2,091 |
- |
2,091 |
| Cash and cash
equivalents |
2 |
107 |
9 |
118 |
- |
27 |
5 |
32 |
| Property
inventory |
348 |
- |
8,112 |
8,460 |
232 |
- |
7,494 |
7,726 |
| Other current
assets |
2 |
269 |
47 |
318 |
27 |
374 |
70 |
471 |
| Current
borrowings |
- |
(1,143) |
(4,399) |
(5,542) |
|
|
|
|
| Other current
liabilities |
(395) |
(59) |
(2,862) |
(3,316) |
(269) |
(53) |
(6,549) |
(6,871) |
| Net current
assets |
(43) |
(826) |
907 |
38 |
(10) |
348 |
1,020 |
1,358 |
| Non-current
borrowings |
- |
- |
(9) |
(9) |
- |
(1,165) |
(28) |
(1,193) |
| Other non-current
liabilities |
- |
- |
- |
- |
- |
- |
- |
- |
| Net assets at 31
December |
(43) |
1,212 |
898 |
2,067 |
(10) |
1,274 |
992 |
2,256 |
| Share of net assets
at 31 December |
(14) |
606 |
449 |
1,041 |
(3) |
637 |
496 |
1,130 |
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% |
12 Little Portland Street, London, W1W8BJ |
England and Wales |
| Bisichi (Properties) Limited |
Property |
100% |
12 Little Portland Street, London, W1W8BJ |
England and Wales |
| Bisichi Northampton Limited |
Property |
100% |
12 Little Portland Street, London, W1W8BJ |
England and Wales |
| Bisichi Trustee Limited |
Property |
100% |
12 Little Portland Street, London, W1W8BJ |
England and Wales |
| Urban First (Northampton) Limited |
Property |
100% |
12 Little Portland Street, London, W1W8BJ |
England and Wales |
| Bisichi Mining (Exploration) Limited |
Holding company |
100% |
12 Little Portland Street, London, W1W8BJ |
England and Wales |
| Ninghi Marketing Limited |
Dormant |
90.1% |
12 Little Portland Street, London, W1W8BJ |
England and Wales |
| Bisichi Mining Management
Services Limited |
Dormant |
100% |
12 Little Portland Street, London, W1W8BJ |
England and Wales |
| Bisichi Coal Mining (Pty) Limited |
Coal mining |
100% |
Samora Machel Street, Bethal Road, Middelburg,
Mpumalanga, 1050 |
South Africa |
| Indirectly held: |
|
|
|
|
| Black Wattle Colliery (Pty) Limited |
Coal mining |
62.5% |
Samora Machel Street, Bethal Road, Middelburg,
Mpumalanga, 1050 |
South Africa |
|
|
|
|
|
| Sisonke Coal Processing (Pty) Limited |
Coal processing |
62.5% |
Samora Machel Street, Bethal Road, Middelburg,
Mpumalanga, 1050 |
South Africa |
| Black Wattle Klipfontein (Pty) Limited |
Coal mining |
62.5% |
Samora Machel Street, Bethal
Road,
Middelburg, Mpumalanga, 1050 |
South Africa |
| Amandla Ehtu Mineral Resource
Development (Pty) Limited |
Dormant |
70% |
Samora Machel Street, Bethal
Road,
Middelburg, Mpumalanga, 1050 |
South Africa |
Details on the non-controlling interest in subsidiaries are
shown under note 27.
16. INVENTORIES
|
2022
£’000 |
2021
£’000 |
| Coal |
|
|
| Washed |
4,758 |
1,185 |
| Mining Production |
162 |
59 |
| Work in progress |
221 |
- |
| Other |
58 |
9 |
|
5,199 |
1,253 |
The amount of inventories recognised as an expense during the
period was £35,969,000 (2021: £32,912,000).
17. TRADE AND OTHER RECEIVABLES
|
2022
£’000 |
2021
£’000 |
| Financial assets falling due
within one year: |
|
|
| Trade receivables |
4,067 |
6,328 |
| Amount owed by joint
venture |
1,379 |
1,067 |
| Other receivables |
860 |
984 |
| Non-financial instruments falling
due within one year: |
|
|
| Prepayments and accrued
income |
131 |
247 |
|
6,437 |
8,626 |
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 £89,000 (2021:
£140,000).
18. INVESTMENTS IN LISTED SECURITIES HELD AT
FVPL
|
2022
Other
£’000 |
2021
Other
£’000 |
| At 1 January |
685 |
833 |
| Gain in investments |
318 |
110 |
| Additions |
449 |
- |
| Disposals |
(566) |
(258) |
| Market value at 31
December |
886 |
685 |
|
2022
£’000 |
2021
£’000 |
| Market value of listed
Investments: |
|
|
| Listed in Great Britain |
686 |
478 |
| Listed outside Great Britain |
200 |
207 |
|
886 |
685 |
| Original cost of listed
investments |
846 |
846 |
| Unrealised surplus / deficit of
market value versus cost |
40 |
(161) |
19. TRADE AND OTHER PAYABLES
|
2022
£’000 |
2021
£’000 |
| Trade payables |
8,519 |
7,171 |
| Amounts owed to joint ventures |
120 |
156 |
| Lease liabilities (Note 31) |
54 |
65 |
| Other payables |
2,000 |
2,281 |
| Accruals |
2.366 |
844 |
| Deferred Income |
223 |
226 |
|
13,282 |
10,743 |
20. FINANCIAL LIABILITIES – BORROWINGS
|
Current |
Non-current |
|
2022
£’000 |
2021
£’000 |
2022
£’000 |
2021
£’000 |
| Bank overdraft (secured) |
3,225 |
2,536 |
- |
- |
| Bank loan (secured) |
570 |
130 |
3,930 |
3,853 |
|
3,795 |
2,666 |
3,930 |
3,853 |
|
2022
£’000 |
2021
£’000 |
| Bank overdraft and loan instalments
by reference to the balance sheet date: |
|
|
| Within one year |
3,795 |
2,666 |
| From one to two years |
3,906 |
11 |
| From two to five years |
24 |
3,842 |
|
7,725 |
6,519 |
| Bank overdraft and loan analysis by
origin: |
|
|
| United Kingdom |
3,880 |
3,839 |
| Southern Africa |
3,845 |
2,680 |
|
7,725 |
6,519 |
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, is
repayable on demand and is secured by way of a first charge over
specific pieces of mining equipment, inventory and the debtors of
the relevant company which holds the loan which are included in the
financial statements at a value of £11,482,554 (2021: £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. 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 £10,465,000
(2021: £10,525,000). No banking covenants were breached by the
Group during the year.
Consistent with others in the mining and property industry, the
Group monitors its capital by its gearing levels. This is
calculated as the total bank loans and overdraft less remaining
cash and cash equivalents as a percentage of equity. At year end
the gearing of the Group was calculated as follows:
|
2022
£’000 |
2021
£’000 |
| Total bank loans and overdraft |
7,725 |
6,519 |
| Less cash and cash equivalents
(excluding overdraft) |
(10,590) |
(3,018) |
| Net debt |
(2,865) |
3,501 |
| Total equity attributable to
shareholders of the parent |
33,802 |
17,512 |
| Gearing |
(8.5%) |
20.0% |
Analysis of the changes in liabilities arising from financing
activities:
|
Bank borrowings
£’000 |
Bank overdrafts
£’000 |
Lease liabilities
£’000 |
2022
£’000 |
Bank
borrowings
£’000 |
Bank
overdrafts
£’000 |
Lease
liabilities
£’000 |
2021
£’000 |
| Balance at 1
January |
3,983 |
2,536 |
454 |
6,973 |
4,207 |
4,846 |
508 |
9,561 |
| Exchange
adjustments |
(9) |
11 |
5 |
7 |
(10) |
(138) |
(6) |
(154) |
| Cash movements
excluding exchange adjustments |
525 |
678 |
(56) |
1,147 |
(214) |
(2,172) |
(57) |
(2,443) |
| Additions |
- |
- |
(5) |
(5) |
- |
- |
9 |
9 |
| Balance at 31
December |
4,499 |
3,225 |
398 |
8,122 |
3,983 |
2,536 |
454 |
6,973 |
21. PROVISION FOR REHABILITATION
|
2022
£’000 |
2021
£’000 |
| As at 1 January |
1,390 |
1,442 |
| Exchange adjustment |
6 |
(52) |
| Increase in provision |
- |
- |
| Unwinding of discount |
319 |
- |
| As at 31 December |
1,715 |
1,390 |
22. FINANCIAL INSTRUMENTS
Total financial assets and
liabilities
The Group’s financial assets and liabilities are as follows,
representing both the fair value and the carrying value:
|
Financial Assets
measured at
amortised cost
£’000 |
Financial Liabilities
measured at
amortised cost
£’000 |
Investments held at FVPL £’000 |
2022
£’000 |
Financial Assets
measured at
amortised cost
£’000 |
Financial Liabilities
measured at
amortised cost
£’000 |
Investments held at FVPL £’000 |
2021
£’000 |
| Cash and cash equivalents |
10,590 |
- |
- |
10,590 |
3,018 |
- |
- |
3,018 |
| Non-current other investments held
at FVPL |
- |
- |
12,590 |
12,590 |
- |
- |
3,631 |
3,631 |
| Investments in listed securities
held at FVPL |
- |
- |
886 |
886 |
- |
- |
685 |
685 |
| Trade and other receivables |
6,306 |
- |
- |
6,306 |
8,379 |
- |
- |
8,379 |
| Bank borrowings and overdraft |
- |
(7,725) |
- |
(7,725) |
- |
(6,519) |
- |
(6,519) |
| Lease Liabilities |
- |
(398) |
- |
(398) |
- |
(454) |
- |
(454) |
| Other liabilities |
- |
(17,261) |
- |
(17,261) |
- |
(11,178) |
- |
(11,178) |
|
16,896 |
(25,384) |
13,476 |
4,988 |
11,397 |
(18,151) |
4,316 |
(2,438) |
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 2021 fall
under the same category of financial instrument as 2022.
The carrying amount of short term (less than 12 months) trade
receivable and other liabilities approximate their fair values. The
fair value of non-current borrowings in note 20 approximates its
carrying value and was determined under level 2 of the fair value
hierarchy and is estimated by discounting the future contractual
cash flows at the current market interest rates for UK borrowings
and for the South African overdraft facility. The fair value of the
lease liabilities in note 31 approximates its carrying value and
was determined under level 2 of the fair value hierarchy and is
estimated by discounting the future contractual cash flows at the
current market interest rates.
Treasury policy
Although no derivative transactions were entered into during the
current and prior year, the Group may use derivative transactions
such as interest rate swaps and forward exchange contracts as
necessary in order to help manage the financial risks arising from
the Group’s activities. The main risks arising from the Group’s
financing structure are interest rate risk, liquidity risk, market
risk, credit risk, currency risk and commodity price risk. There
have been no changes during the year of the main risks arising from
the Group’s finance structure. The policies for managing each of
these risks and the principal effects of these policies on the
results are summarised below.
Interest rate risk
Interest rate risk is the risk that the value of a financial
instrument or cashflows associated with the instrument will
fluctuate due to changes in market interest rates. Interest rate
risk arises from interest bearing financial assets and liabilities
that the Group uses. Treasury activities take place under
procedures and policies approved and monitored by the Board to
minimise the financial risk faced by the Group. Interest bearing
assets comprise cash and cash equivalents which are considered to
be short-term liquid assets and loans to joint ventures.
Interest bearing borrowings comprise bank loans, bank overdrafts
and variable rate finance lease obligations. The rates of interest
vary based on Bank of England in
the UK and PRIME in South
Africa.
As at 31 December 2022, 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 £35,000
(2021: £80,000). The effect on equity of this change would be an
equivalent decrease or increase for the year of £35,000 (2021:
£80,000).
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:
|
2022
£’000 |
2021
£’000 |
| Within one year |
21,511 |
14,122 |
| From one to two years |
4,259 |
238 |
| From two to five years |
479 |
4,391 |
| Beyond five years |
126 |
129 |
|
26,375 |
18,880 |
The following table sets out the maturity profile of contractual
undiscounted cash flows of financial liabilities as at 31 December
maturing within one year:
|
2022
£’000 |
2021
£’000 |
| Within one month |
15,635 |
11,509 |
| From one to three months |
4,150 |
1,699 |
| From four to twelve months |
1,726 |
914 |
|
21,511 |
14,122 |
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, is
repayable on demand and is secured against inventory, debtors and
cash that are held by Sisonke Coal Processing (Pty) Limited. The
facility is included in cash and cash equivalents within the
cashflow statement.
In the UK, the Group holds a £3.96million term loan facility
with Julian Hodge Bank Limited. The loan is secured against the
Group’s UK retail property portfolio. The debt package has a five
year term and is repayable at the end of the term in December 2024. The 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.
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 £16,896,000
(2021: £11,397,000).
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 84% (2021: 53%) 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 £89,000
(2021: £140,000). As at year end the amount of trade receivables
held past due date less credit loss allowances was £159,000 (2021:
£201,000). To date, the amount of trade receivables held past due
date less credit loss allowances that has not subsequently been
settled is £122,000 (2021: £106,000). 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 2022, cash at bank
and in hand amounted to £10,712,000 (2021: £3,018,000) 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 2022 and 2021 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 2022, 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 £121,000 (2021: £218,000). 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
£201,000 (2021: £364,000). 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:
|
2022
£’000 |
2021
£’000 |
| Sterling |
7,779 |
1,397 |
| South African Rand |
2,238 |
1,017 |
| US Dollar |
573 |
604 |
|
10,590 |
3,018 |
Cash and cash equivalents earn interest at rates based on Bank
of England rates in Sterling and
Prime in Rand.
The tables below shows the currency profiles of net monetary
assets and liabilities by functional currency of the Group:
| 2022: |
Sterling
£’000 |
South
African
Rands
£’000 |
| Sterling |
14,715 |
- |
| South African Rand |
45 |
(11,743) |
| US Dollar |
1,971 |
- |
|
16,731 |
(11,743) |
| 2021: |
Sterling
£’000 |
South
African
Rands
£’000 |
| Sterling |
1,123 |
- |
| South African Rand |
65 |
(5,088) |
| US Dollar |
1,462 |
- |
|
2,650 |
(5,088) |
23. DEFERRED TAXATION
|
2022
£’000 |
2021
£’000 |
| As at 1 January |
506 |
474 |
| Recognised in income |
388 |
45 |
| Exchange adjustment |
(22) |
(13) |
| As at 31 December |
872 |
506 |
| The deferred tax balance comprises the
following: |
|
|
| Revaluations |
671 |
641 |
| Capital allowances |
3,855 |
2,253 |
| Short term timing difference |
(813) |
(832) |
| Unredeemed capital deductions |
(1,439) |
(1,057) |
| Losses and other deductions |
(1,402) |
(499) |
|
872 |
506 |
Refer to note 8 for details of deferred tax recognised in income
in the current year. Tax rates of 25% (2021: 25%) in the UK and 27%
(2021: 28%) in South Africa were
utilised to calculate year end deferred tax balances.
24. SHARE CAPITAL
|
2022
£’000 |
2021
£’000 |
| Authorised: 13,000,000 ordinary shares of 10p
each |
1,300 |
1,300 |
Allotted and fully paid:
|
2022
Number of
ordinary
shares |
2021
Number of
ordinary
shares |
2022
£’000 |
2021
£’000 |
| At 1 January and outstanding at 31 December |
10,676,839 |
10,676,839 |
1,068 |
1,068 |
25. OTHER RESERVES
|
2022
£’000 |
2021
£’000 |
| Equity share options |
1,026 |
621 |
| Net investment premium on share capital in joint
venture |
86 |
86 |
|
1,112 |
707 |
26. SHARE BASED PAYMENTS
Details of the share option scheme are shown in the Directors’
remuneration report on page 41 under the heading Share option
schemes which is within the audited part of this report. Further
details of the share option schemes are set out below.
The Bisichi PLC Unapproved Option Schemes:
| Year of grant |
Subscription
price per share |
Period
within
which options
exercisable |
Number of share
for which options
outstanding at
31 December 2021 |
Number of
share options
lapsed/surrendered
/awarded
during year |
Number of share for which
options
outstanding at
31 December 2022 |
| 2015 |
87.0p |
Sep 2015 – Sep
2025 |
300,000 |
(300,000) |
- |
| 2018 |
73.50p |
Feb 2018 – Feb
2028 |
380,000 |
(380,000) |
- |
| 2022 |
352.0p |
Sep 2022 – Sep
2032 |
- |
760,000 |
760,000 |
On 1 September 2022, the company
entered into an agreement with A Heller and G. Casey to cancel the
300,000 options which were granted in 2015 and 380,000 options
which were granted in 2018. The aggregate consideration paid by the
group to effect the cancellation was £1,853,270. On 1 September 2022 the company granted additional
options to the following directors of the company:
- A. Heller 380,000 options at an exercise price of 352.0p
per share.
- G. Casey 380,000 options at an exercise price of 352.0p
per share.
The options vest on date of grant and are exercisable within a
period of 10 years from date of grant. There are no performance or
service conditions attached to the 2022 options which are
outstanding at 31 December 2022. The
above options were valued at £547,200 at date of grant using the
Black-Scholes-Merton model with the following assumptions:
Expected volatility 54.18% (Based on historic
volatility)
Expected life 4 years
Risk free rate 1.58%
Expected dividends 6.90%
|
2022
Number |
2022
Weighted
average
exercise price |
2021
Number |
2021
Weighted
average
exercise price |
| Outstanding at 1 January |
680,000 |
79.46p |
680,000 |
79.46p |
| Lapsed/Surrendered/cancelled during the year |
(680,000) |
79.46p |
- |
- |
| Issued during the year |
760,000 |
352.00p |
- |
- |
| Outstanding at 31 December |
760,000 |
352.00p |
680,000 |
79.46p |
| Exercisable at 31 December |
760,000 |
352.00p |
680,000 |
79.46p |
27. NON-CONTROLLING INTEREST
|
2022
£’000 |
2021
£’000 |
| As at 1 January |
323 |
116 |
| Issue of shares in subsidiary |
1 |
- |
| Share of profit/(loss) for the year |
8,494 |
215 |
| Dividends paid |
(7,034) |
- |
| Exchange adjustment |
(25) |
(8) |
| As at 31 December |
1,759 |
323 |
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.
|
2022
£’000 |
2021
£’000 |
| Revenue |
93,356 |
49,225 |
| Expenses |
(63,289) |
(47,787) |
| Profit/(loss) for the year |
30,067 |
1,438 |
| Other comprehensive Income |
- |
- |
| Total comprehensive income for the
year |
30,067 |
1,438 |
| Balance sheet |
|
|
| Non-current assets |
16,325 |
9,019 |
| Current assets |
11,752 |
9,329 |
| Current liabilities |
(18,873) |
(14,287) |
| Non-current liabilities |
(3,522) |
(1,904) |
| Net assets at 31 December |
5,682 |
2,157 |
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
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
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.
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).
28. RELATED PARTY TRANSACTIONS
|
At 31
December |
During the
year |
|
Amounts
owed
to related
party
£’000 |
Amounts
owed
by related
party
£’000 |
Costs
recharged
(to)/by
related
party
£’000 |
Cash paid
(to)/by
related
party
£’000 |
| Related party: |
|
|
|
|
| London & Associated Properties PLC (note
(a)) |
- |
- |
200 |
(241) |
| West Ealing Projects Limited (note (b)) |
- |
(1,237) |
- |
(239) |
| Dragon Retail Properties Limited (note (c)) |
120 |
- |
(36) |
- |
| Development Physics Limited (note (d)) |
- |
(142) |
- |
(75) |
| As at 31 December 2022 |
120 |
(1,379) |
164 |
(555) |
| London & Associated Properties PLC (note
(a)) |
41 |
- |
200 |
(192) |
| West Ealing Projects Limited (note (b)) |
- |
(998) |
- |
(158) |
| Dragon Retail Properties Limited (note (c)) |
156 |
- |
(36) |
44 |
| Development Physics Limited (note (d)) |
- |
(67) |
- |
(67) |
| As at 31 December 2021 |
197 |
(1,065) |
164 |
(373) |
(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 40
and 41 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 £580,000
(2021: £189,000). 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 (2021: £41,000) and no repayment (2021: £nil) was made
during the year.
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 £44,000 (2021: £45,000) and an
investment in Vunani Capital Partners (Pty) Ltd of £189,000 (2021:
£38,000). Both are related parties to Vunani Mining (Pty) Ltd and
are classified as non-current available for sale investments.
29. EMPLOYEES
|
2022
£’000 |
2021
£’000 |
| Staff costs during the year were as follows: |
|
|
| Salaries |
8,891 |
6,995 |
| Social security costs |
580 |
189 |
| Pension costs |
300 |
307 |
| Share based payments |
2,220 |
- |
|
11,991 |
7,491 |
|
2022 |
2021 |
| The average weekly numbers of employees of the
Group during the year were as follows: |
|
|
| Production |
213 |
214 |
| Administration |
15 |
15 |
|
228 |
229 |
30. CAPITAL COMMITMENTS
|
2022
£’000 |
2021
£’000 |
| Commitments for capital expenditure approved and
contracted for at the year end |
- |
- |
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 2022 is as follows:
|
Mining Equipment & Development
costs
£’000 |
Motor Vehicles
£’000 |
Head
Lease Property
£’000 |
2022
£’000 |
2021
£’000 |
| Within one year |
45 |
12 |
14 |
71 |
83 |
| Second to fifth year |
158 |
9 |
43 |
210 |
226 |
| After five years |
53 |
- |
1,288 |
1,341 |
1,427 |
|
256 |
21 |
1,345 |
1,622 |
1,736 |
| Discounting adjustment |
(47) |
(1) |
(1,174) |
(1,222) |
(1,282) |
| Present value |
209 |
20 |
171 |
400 |
454 |
The present value of minimum lease payments at 31 December 2022 is as follows:
|
Mining Equipment & Development
costs
£’000 |
Motor Vehicles
£’000 |
Head
Lease Property
£’000 |
2022
£’000 |
2021
£’000 |
| Within one year (Note 19) |
32 |
11 |
11 |
54 |
65 |
| Second to fifth year |
127 |
9 |
34 |
170 |
260 |
| After five years |
50 |
- |
126 |
176 |
129 |
| Present value |
209 |
20 |
171 |
400 |
454 |
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 126 years
(2021: 127 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.
The future aggregate minimum rentals receivable under
non-cancellable operating leases are as follows:
|
2022
£’000 |
2021
£’000 |
| Within one year |
973 |
948 |
| Second year |
875 |
830 |
| Third year |
801 |
776 |
| Fourth year |
716 |
710 |
| Fifth year |
645 |
634 |
| After five years |
9,530 |
9,956 |
|
13,540 |
13,854 |
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:
|
2022
£’000 |
2021
£’000 |
| Rail siding |
49 |
48 |
| Rehabilitation of mining land |
1,715 |
1,700 |
| Water & electricity |
47 |
46 |
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 26 April
2023, the Group has been advised that it has a strong legal
case, that it has complied fully with the legislation and,
therefore, no economic outflow is expected to occur. Because of the
nature and complexity of the dispute, the possible financial effect
of a negative decision cannot be measured reliably. Accordingly, no
provision has been booked at the year end. At this stage, the Group
believes that the dispute will be resolved in its favour.
Company balance sheet
at 31 December 2022
|
Notes |
2022
£’000 |
2021
£’000 |
| Fixed assets |
|
|
|
| Tangible assets |
35 |
98 |
93 |
| Investment in joint ventures |
36 |
665 |
665 |
| Other investments |
36 |
18,946 |
9,987 |
|
|
19,709 |
10,745 |
| Current assets |
|
|
|
| Debtors – amounts due within one year |
37 |
2,754 |
3,636 |
| Debtors – amounts due in more than one year |
37 |
1,159 |
220 |
| Bank balances |
|
7,928 |
788 |
|
|
11,841 |
4,644 |
| Creditors – amounts falling due within one
year |
38 |
(2,514) |
(454) |
| Net current assets |
|
9,327 |
4,190 |
| Total assets less current liabilities |
|
29,036 |
14,935 |
| Creditors – amounts falling in more than one
year |
38 |
(9) |
(20) |
| Net assets |
|
29,027 |
14,915 |
| Capital and reserves |
|
|
|
| Called up share capital |
24 |
1,068 |
1,068 |
| Share premium account |
|
258 |
258 |
| Other reserves |
|
1,027 |
622 |
| Retained earnings |
33 |
26,674 |
12,967 |
| Shareholders’ funds |
|
29,027 |
14,915 |
The profit for the financial year, before dividends payable, was
£15,415,000 (2021: loss of £203,000)
The company financial statements were approved and authorised
for issue by the board of directors on 26
April 2023 and signed on its behalf by:
A R Heller G J
Casey Company Registration No. 112155
Director Director
Company statement of changes in
equity
for the year ended 31 December
2022
|
Share
capital
£’000 |
Share
premium
£’000 |
Other
reserve
£’000 |
Retained
earnings
£’000 |
Shareholders
funds
£’000 |
| Balance at 1 January 2021 |
1,068 |
258 |
622 |
13,170 |
15,118 |
| Dividends paid |
- |
- |
- |
- |
- |
| Profit and total comprehensive
income for the year |
- |
- |
- |
(203) |
(203) |
| Balance at 1 January
2022 |
1,068 |
258 |
622 |
12,967 |
14,915 |
| Dividends paid |
- |
- |
- |
(1,708) |
(1,708) |
| Share options cancelled |
- |
- |
(142) |
- |
(142) |
| Share options issued |
- |
- |
547 |
- |
547 |
| Profit and total comprehensive
income for the year |
- |
- |
- |
15,415 |
15,415 |
| Balance at 31 December
2022 |
1,068 |
258 |
1,027 |
26,674 |
29,027 |
Company accounting policies
for the year ended 31 December
2022
The following are the main accounting policies of the
company:
Basis of preparation
The financial statements have been prepared in accordance with
Financial Reporting Standard 100 Application of Financial Reporting
Requirements and Financial Reporting Standard 101 Reduced
Disclosure Framework. The principal accounting policies adopted in
the preparation of the financial statements are set out below.
The financial statements have been prepared on a historical cost
basis, except for the revaluation of leasehold property and certain
financial instruments.
Going concern
Details on the Group’s adoption of the going concern basis of
accounting in preparing the annual financial statements can be
found on page 74.
Disclosure exemptions adopted
In preparing these financial statements the company has taken
advantage of all disclosure exemptions conferred by FRS 101 as well
as disclosure exemptions conferred by IFRS 2, 7, 13 and 16.
Therefore these financial statements do not include:
• certain comparative information as otherwise required by
IFRS;
• certain disclosures regarding the company’s capital;
• a statement of cash flows;
• the effect of future accounting standards not yet
adopted;
• the disclosure of the remuneration of key management
personnel; and
• disclosure of related party transactions with the
company’s wholly owned subsidiaries.
In addition, and in accordance with FRS 101, further disclosure
exemptions have been adopted because equivalent disclosures are
included in the company’s Consolidated Financial Statements.
Dividends received
Dividends are credited to the profit and loss account when
received.
Depreciation
Provision for depreciation on tangible fixed assets is made in
equal annual instalments to write each item off over its useful
life. The rates generally used are:
Office equipment 10 – 33 percent
Joint ventures
Investments in joint ventures, being those entities over whose
activities the Group has joint control as established by
contractual agreement, are included at cost, less impairment.
Other Investments
Investments of the company in subsidiaries are stated in the
balance sheet as fixed assets at cost less provisions for
impairment.
Other investments comprising of shares in listed companies are
classified at fair value through profit and loss.
Foreign currencies
Monetary assets and liabilities expressed in foreign currencies
have been translated at the rates of exchange ruling at the balance
sheet date. All exchange differences are taken to the profit and
loss account.
Financial instruments
Details on the Group’s accounting policy for financial
instruments can be found on page 79.
Deferred taxation
Details on the Group’s accounting policy for deferred taxation
can be found on page 81.
Leased assets and liabilities
Details on the Group’s accounting policy for leased assets and
liabilities can be found on page 80.
Pensions
Details on the Group’s accounting policy for pensions can be
found on page 79.
Share based remuneration
Details on the Group’s accounting policy for share based
remuneration can be found on page 79. Details of the share options
in issue are disclosed in the directors’ remuneration report on
page 41 under the heading share option schemes which is within the
audited part of this report.
33. PROFIT & LOSS ACCOUNT
A separate profit and loss account for Bisichi PLC has not been
presented as permitted by Section 408(2) of the Companies Act 2006.
The profit for the financial year, before dividends paid, was
£15,415,000 (2021: loss: £203,000)
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 41 under the heading
Share option schemes which is within the audited part of this
report and note 26 of the Group financial statements.
34. DIVIDENDS
Details on dividends can be found in note 9 in the Group
financial statements.
35. TANGIBLE FIXED ASSETS
|
Leasehold
Property
£’000 |
Motor
Vehicles
£’000 |
Office
equipment
£’000 |
Total
£’000 |
| Cost at 1 January 2022 |
45 |
104 |
70 |
219 |
| Additions |
- |
- |
46 |
46 |
| Disposals |
- |
- |
(72) |
(72) |
| Cost at 31 December 2022 |
45 |
104 |
44 |
193 |
| Accumulated depreciation at 1 January 2022 |
- |
56 |
70 |
126 |
| Charge for the year |
- |
27 |
14 |
41 |
| Disposals |
- |
- |
(72) |
(72) |
| Accumulated depreciation at 31 December
2022 |
- |
83 |
12 |
95 |
| Net book value at 31 December 2022 |
45 |
21 |
32 |
98 |
| Net book value at 31 December 2021 |
45 |
48 |
- |
93 |
Leasehold property consists of a single unit with a long
leasehold tenant. The term remaining on the lease is 37 years.
Motor Vehicles comprise wholly of Right of Use leased assets.
36. INVESTMENTS
|
Joint
ventures
shares
£’000 |
Shares in
subsidiaries
£’000 |
Other
investments
£’000 |
Total
£’000 |
| Net book value at 1 January
2022 |
665 |
6,356 |
3,631 |
9,987 |
| Invested during the year |
- |
- |
9,758 |
9,758 |
| Repayment |
- |
- |
(1,517) |
(1,517) |
| Gain in investments |
- |
- |
718 |
718 |
| Net book value at 31 December
2022 |
665 |
6,356 |
12,590 |
18,946 |
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 £12,590,000 (2021: £3,631,000)
shares in listed companies.
37. DEBTORS
|
2022
£’000 |
2021
£’000 |
| Amounts due within one
year: |
|
|
| Amounts due from subsidiary undertakings |
1,079 |
2,421 |
| Other debtors |
237 |
94 |
| Joint venture |
1,379 |
1,065 |
| Prepayments and accrued income |
59 |
56 |
|
2,754 |
3,636 |
| Amounts due in more than one year: |
|
|
| Deferred taxation |
1,159 |
220 |
|
1,159 |
220 |
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
|
2022
£’000 |
2021
£’000 |
| Amounts falling due within one
year: |
|
|
| Amounts due to subsidiary undertakings |
15 |
- |
| Joint venture |
120 |
156 |
| Other taxation and social security |
64 |
64 |
| Other creditors |
71 |
164 |
| Lease Liabilities |
11 |
26 |
| Accruals and deferred income |
2,233 |
44 |
|
2,514 |
454 |
| Amounts falling due in more than
one year: |
|
|
| Lease Liabilities |
9 |
20 |
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.
39. RELATED PARTY TRANSACTIONS
|
At 31
December |
During the
year |
| At 31 December |
Amounts owed
by related party
£’000 |
Costs
recharged /
accrued (to)/ by related party
£’000 |
Cash paid (to)/ by
related party
£’000 |
| Related party: |
|
|
|
| Black Wattle Colliery (Pty) Ltd (note (a)) |
(145) |
(972) |
1,464 |
| Ninghi Marketing Limited (note (b)) |
(102) |
- |
- |
| As at 31 December 2022 |
(247) |
(972) |
1,464 |
| Black Wattle Colliery (Pty) Ltd (note (a)) |
(637) |
(923) |
1,617 |
| Ninghi Marketing Limited (note (b)) |
(102) |
- |
- |
| As at 31 December 2021 |
(739) |
(923) |
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 (2021: 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.
40. EMPLOYEES
|
2022
£’000 |
2021
£’000 |
| The average weekly numbers of
employees of the company during the year were as follows: |
|
|
| Directors & administration |
5 |
5 |
| Staff costs during the year were as
follows: |
|
|
| Salaries |
3,264 |
1,426 |
| Social security costs |
580 |
189 |
| Pension costs |
21 |
31 |
| Share based payments |
2,220 |
- |
|
6,085 |
1,646 |