Summary:
|
Reported
EBITDA: |
£3.4million (2022:
£40.0million) |
|
Adjusted
EBITDA: |
£2.6million (2022:
£39.4million) |
|
Profit before
tax |
£0.6million (2022:
£38.0million) |
|
Earnings per
share |
2.43p (2022:
164.96p) |
-
The decrease in group
earnings for the year mainly attributed to lower export sales, due
to the performance of Transnet, the South African state rail
provider and lower coal prices achievable by Sisonke Coal
Processing, the Group’s South African coal processing operation.
-
Earnings were further
impacted by difficult mining conditions and low mining production
at Black Wattle Colliery, the Group’s coal mining
asset.
-
Lower cost mining area
opened in the second quarter of 2023 at Black Wattle Colliery
resulting in a significant improvement in coal production and lower
mining costs.
-
Directors propose a total
year-end dividend per share of 4p (2022: 12p). This takes the total
dividends per share for the year to 7p (2022:
22p).
Executive Chairman,
Andrew Heller,
comments:
“2023 was a challenging
year for your company and its South African operations. However,
looking forward, we continue to see the benefits, both in terms of
mining cost and production, from the new mining area opened at
Black Wattle. In addition, we have seen a stabilisation of coal
prices in our markets and an improved performance from Transnet in
2024 to date. We remain confident in the Group’s ability to achieve
significant value from our South African operations. On behalf of
the Board and shareholders, I would like to thank all of our staff
for their hard work and dedication during the course of the
year”
For further information,
please call:
Andrew Heller or Garrett
Casey, Bisichi PLC 020 7415 5030
Bisichi PLC
(Company
Registration No.
00112155)
Annual Report
2023
A TRIBUTE
TO
CHRISTOPHER
JOLL
Director
2001-2024
It was with great sadness
that the Board of Bisichi announced the death of our senior
non-executive Director, Christopher
Joll, on 18th April 2024, at
the age of 75 years old.
Christopher was a director
of Bisichi for 23 years. As well as maintaining a keen eye on the
running of the company, Christopher was a very active participant
in Board meetings, always requesting forecasts and projections from
the Executive Directors. He was the most articulate member of the
Board, rewriting and improving anything that had been drafted. His
extremely wise counsel, integrity, communication skills and
enthusiasm for the company will be sorely
missed.
Christopher attended
Oxford University and spent seven years
in The Life Guards, including completing four tours of duty in
Northern Ireland. Christopher
built his career in financial PR which is where Bisichi first came
across him. He was also a British military historian, author of an
incredible fifteen books and manager of the British Military
Tournament. Christopher was the essence of an English gentleman and
board meetings will not be the same without
him.
Strategic
report
The Directors present
the Strategic Report of the company for the year ending
31 December 2023. 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
For the year ended
31 December 2023, your company made a
profit before interest, tax, depreciation and amortisation (EBITDA)
of £3.4million (2022: £40.0million) and an operating profit before
depreciation, fair value adjustments and exchange movements
(Adjusted EBITDA) of £2.6million (2022:
£39.4million).
2023 was a challenging year for your company and
its South African operations. The lower earnings for the Group,
compared to 2022, are mainly attributable to lower export sales,
due to the performance of Transnet, the South African state rail
provider, and lower prices for our coal sold by Sisonke Coal
Processing, the Group’s South African coal processing operation. In
addition, earnings were further impacted by difficult mining
conditions and low mining production at our coal mining asset,
Black Wattle Colliery.
During 2022, the Group
benefited from significantly higher prices of Free on Board (FOB)
coal from Richards Bay Coal Terminal (API4 price). However, during
2023, the weekly API4 price averaged US$120 compared to US$273 in 2022. In addition to the weaker
international coal price, constraints in transporting coal for
export on the South African rail network, which were beyond our
control, significantly impacted the Group’s export sales during the
period. Due to the lack of available rail capacity, the Group
exported 134,000 metric tonnes in 2023, compared to 262,000 metric
tonnes in 2022 and 320,000 in 2021. This, in turn, had a further
impact on earnings during the period, as coal allocated for export
was eventually sold into the domestic market at prices that were
significantly lower than the export price achievable by rail
through Richards Bay. Transnet, the South African state rail
operator, and the wider South African coal industry, are working
hard to collectively implement measures to increase rail capacity.
We are pleased to report that, in 2024 to date, we have seen an
improved performance in our railed coal export volumes compared to
2023. We remain optimistic that the measures, once fully
implemented, will have a significant positive impact on both the
export and domestic prices achievable for our
coal.
At Black Wattle, difficult
mining conditions impacted profitability during the period. For the
majority of 2023, geological issues reduced the production from our
opencast mining area as well as increasing related mining and
blasting costs. In order to mitigate these issues, the mine opened
a lower cost second mining area in the third quarter of 2023. Since
the commencement of this new mining area, we have seen a
significant improvement in mining production and lower operating
costs and we expect the improved performance at Black Wattle to
continue throughout 2024.
The low coal production
levels at Black Wattle in 2023 had a knock-on effect on overall
levels of coal processed at Sisonke Coal Processing. The Group sold
1.031million metric tonnes during the year compared to 1.287million
metric tonnes in 2022. The decrease in the Group’s mining revenue
during the period to £49.3million (2022: £95.1million) can mainly
be attributable to the lower prices achievable for our coal and the
lower overall quantity of coal sold, particularly into the export
market.
Looking forward into 2024,
we will continue to see the benefits, both in terms of mining cost
and production, from the new mining area at Black Wattle. In
addition, we have seen a stabilisation in coal prices in both the
export and domestic market and an improved performance by Transnet.
We remain confident in the Group’s ability to achieve significant
value from our South African
operations.
The Group recognises the
need for, and is committed to, the diversification of its future
business activities. The Group is continually looking at
alternative mining, commodity and renewable energy related
opportunities, as well as new opportunities to add to our existing
UK property and listed equity related investment portfolios. In the
interim, we continue to work closely with Vunani Mining, our BEE
partner in Black Wattle and Sisonke Coal processing, to ensure that
we are responsible stewards of our legacy coal operations 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.
During the period the
Group’s total non-current and current listed equity related
investments held at fair value through profit and loss increased to
£15.0million (2022: £13.5million). The Group achieved dividend
income from investments during the period of £0.56million (2022:
£0.59million) and a gain in value from investments of £0.8million
(2022: £1.0million). The Group’s listed equity related investment
portfolios comprise primarily of listed equities and listed equity
related funds involved or invested in extractive and energy related
business activities, including entities involved in the extraction
of commodities needed for the clean energy transition.
In the UK, we have seen
rental revenue from our retail property portfolio improve in 2023.
The Group billed revenue from our directly owned property portfolio
of £1.3million (2022: £1.11million) 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. As
previously reported, we obtained a resolution to grant planning
consent for 56 flats and four retail units at the end of 2020.
During 2023 the joint venture has been finalising detailed designs
for the project and working with contractors and designers to
improve building efficiency and maximise potential returns.
Currently, the joint venture is working toward developing the
project to completion. Detailed negotiations to finance
construction are underway with the intention of commencing work in
the second half of 2024.
Finally, in light of the
challenging year, your directors propose a final year-end dividend
of 4p (2022: 12p) per share. The final dividend proposed will be
payable on Friday 26 July 2024 to
shareholders registered at the close of business on 5 July 2024. This takes the total dividends per
share for the year to 7p (2022:
22p).
On behalf of the Board and
shareholders, I would like to thank all of our staff for their hard
work and dedication during the course of the
year.
Andrew
Heller
Executive Chairman & Managing
Director
22
April 2024
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, commodity and
renewable energy 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 related 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. The Group’s listed equity related investment portfolios
comprise primarily of listed equities and listed equity related
funds involved or invested in extractive and energy related
business activities, including entities involved in the extraction
of commodities needed for the clean energy transition.
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
2023 was a difficult year
in terms of performance for our South African coal mining and
processing operations. A lack of rail capacity for export and lower
international coal prices significantly impacted the profitability
of the Group. With more stability in the coal market going into
2024, management will be focussing on improving production levels
and keeping operating costs low.
Production and
operations
Geological issues in areas
mined at Black Wattle, our South African mining operation, had a
significant impact on production, particularly in the first half of
2023. The geological issues related to both the coal seams mined
and the overburden removed. This, in turn, impacted the rate of
extraction and overall cost per tonne of coal mined. In the third
quarter of 2023, management took the decision to transition both
our mining contractors to a new mining area. After overcoming
temporary water issues in the last quarter of 2023, mining of this
new area has steadily progressed going into 2024. Overall, the mine
achieved production of 807,000 metric tonnes (2022: 824,000 metric
tonnes) during the year. In 2024 to date, we have seen a
significant improvement in mining production and lower operating
costs compared to the previous mining area. We expect the improved
performance at Black Wattle to continue throughout
2024.
We continue to work
closely with Vunani Mining, our BEE partner in Black Wattle and
Sisonke Coal processing, to ensure that we are responsible stewards
of our legacy coal operations, which have a life of mine of six
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 stabilisation of
global energy markets in 2023, compared to 2022, had a significant
impact on 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
$120 in 2023 compared to $273 in 2022.
The lower prices,
offsetting a stronger US Dollar compared to the South African Rand,
resulted in the Group achieving an average Rand price of R1,357 per
tonne of export coal sold from the mine in 2023, compared to R3,770
in 2022. 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 continued to be limited by constraints in transporting coal
for export on the South African rail network, leading to a decrease
in exports volumes from our South African operations during the
year to 134,000 metric tonnes compared to 262,000 metric tonnes in
2022. Transnet, the South African state rail operator, and the
wider South African coal industry, are working hard to collectively
implement measures to increase rail capacity. Feedback to date on
the application of these measures has been promising and we are
pleased to report that, in 2024 to date, we have seen an improved
performance in our railed coal export volumes compared to
2023.
In light of the export
constraints, the Group supplied a higher proportion of coal into
the South African domestic market in 2023, compared to 2022, at
prices that were significantly lower than the export price
achievable by rail through Richards Bay. For the year, the Group
achieved an average domestic price of R938 per tonne coal sold
compared to R774 in 2022. The average price increase in the
domestic market in 2023, compared to 2022, was attributable to an
increase in higher quality coal, destined for the export market,
being sold domestically due to the lack of export rail capacity
available. Domestic sales volumes from our South African operations
decreased during the year to 0.90million metric tonnes (2022:
1.03million metric tonnes).
In 2023, the Group
achieved an average overall Rand price per tonne of coal sold of
R992 compared to R1,384 in 2022. The decrease in Group revenue in
2023 can mainly be attributed to the lower export coal prices
achieved and lower volumes of coal sold, particularly into the
export market. Further details on the financial performance of the
Group’s mining segment can be found in the Financial &
performance review on page 24 of this
report.
Looking forward to 2024,
we have seen coal prices remain stable in both our markets and we
remain optimistic about a continued improvement in the provision of
coal export rail capacity by
Transnet.
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
2023:
-
The Group’s South African
operations recorded 2 Lost time Injuries during 2023 (2022:
Two).
-
One case of Occupational
Diseases was recorded.
-
One claim for the
Compensation for Occupational Diseases was
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 are pleased to report that Black Wattle has achieved a
level 3 Broad Based Black Economic Empowerment (BBBEE) verification
certificate for 2024 and we continue to adhere and make progress in
terms of our Social and Labour Plan and our various Black Economic
Empowerment (“BEE”) initiatives. A fuller explanation of these can
be found in our Sustainable Development Report on page
7.
Prospects
Management would like to
thank all our South African employees and stakeholders for their
significant contribution to the Group’s performance in 2023. Going
forward, your management are optimistic that 2024 will be a
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
2023:
-
One case of Occupational
Diseases was recorded.
-
One claim for the
Compensation for Occupational Diseases was
submitted.
-
No machines operating at
Black Wattle exceeded the regulatory noise
level.
-
The Group’s South African
operations recorded 2 Lost Time Injuries during
2023.
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.
Looking forward into 2024,
Black Wattle intends to enhance the safety of our employees and
contractors onsite through the sourcing and procurement of a
Proximity Detection System (“PDS”) solution for the mine. The PDS
solution comprises a sensing device that detects the presence of
another person, vehicle or object and a sophisticated interface
that provides an audible and visual alarm. These systems warn both
the vehicle operator and the pedestrian of the imminent danger of a
potential collision.
The Group continues to
monitor and adhere to all of the South African government’s
guidelines and regulations including all updates and advice from
the National Department of Health and the Department of Minerals
Resources and Energy.
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).
-
Through engagements with
the Department of Education and STLM regarding the Local Economic
Development projects for the current SLP year cycle (2022-2026).
The department endorsed the Khulunolwazi School Project in late
2023. The project is currently in a planning phase for the
implementation of the project in various phases. At present,
drawing plans for the school are being finalised, which requires
approval from the local
municipality.
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. Thereafter the
vegetation is utilised in the making, bagging and sales of
charcoal.
-
A waste management project
at Uitkyk community, nearby to Black Wattle, involving the
collection and recycling of waste from their
community.
-
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;
-
training in environmental
waste management;
-
drivers licenses;
and
-
security officer
training
-
One HDSA female completed
her University studies in the 2023 academic
year.
-
Various upgrades were
initiated at the Evergreen School nearby to Black
Wattle.
Black Wattle continues to
support Care for Wild, a globally recognized local conservation
organization dedicated to preserving endangered species and
safeguarding the precious biodiversity of our planet. As the
largest orphaned rhino sanctuary in the world, Care for Wild
specialise in the rescue, rehabilitation, rewilding, and protection
of orphaned and injured rhinos. However, their mission extends far
beyond rhinos alone, they are deeply committed to the preservation
of endangered species that play vital roles in their ecosystems and
the conservation of biodiversity.
The Group recognizes the
critical importance of this goal in safeguarding biodiversity and
aspire to play a significant role in its realization through our
sponsorship of three Rhinos as well as various related community
gardening initiatives at the
sanctuary.
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. We are very
pleased to report that Black Wattle has a achieved a level 3 BBBEE
certificate for 2024. At present, 88 percent of the companies
utilised by Black Wattle for equipment and services are BBBEE
companies.
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 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 2023
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% |
2 |
3 |
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% |
2 |
3 |
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.
The Company notes the
diversity targets included in the Listing Rules,
being:
-
at least 40% of the
individuals on the Board are
women;
-
at least one of the
specified senior positions is held by a woman;
and
-
at least one individual on
the Board is from a minority ethnic
background.
At 31 December 2023 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. Should the Board look to appoint further directors
in the future, the Company will give due consideration to how it
may achieve the diversity targets while ensuring the appropriate
structure of the Board and mix of skills and expertise relevant to
the Company’s operations. As part of its recruitment processes, the
Company gives careful consideration to all potential applicants
however has a particular regard to those with knowledge and
experience of the mining and extractives sector and in particular
the South African market. This necessary focus narrows considerably
the pool of potential applicants and poses potential challenges in
both recruitment and meeting the diversity targets. The Company
will keep this under ongoing
review.
Given the Company’s
current organizational structure and limited headcount in the
United Kingdom, and its highly
regulated obligations in South
Africa under the Employment Equity Act, New Mining Charter,
SLP and BBBEE regulations in South
Africa, the Board considers that a formal diversity policy,
would not be practicable for the Company to develop over and above
its extensive policies and procedures already implemented in
South Africa. The Company and the
Board already integrates equality and diversity in all aspects of
the Company’s business and all decisions are made on merit and
without regard to protected characteristics. Where appropriate and
practicable for the Company, the Company considers and implements
positive actions to enable the Company to provide additional
support. This can include, for example, making adjustments to
assist staff and ensuring that, to the extent possible, all
relevant perspectives are included in decision making on an ongoing
basis. 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 Company will keep the
requirement for a formal diversity policy under review and will
give serious consideration to the adoption of a policy, tailored to
the nature of the Company’s business, its operations and resources
at the appropriate point.
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.
-
95 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), 5
senior managers (5 male and 2 from a minority ethnic or HDSA
Background) and 212 other employees (143 male and 118 from a
minority ethnic or HDSA Background, 69 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 2023 were:
-
One employee was trained
in ABET (Adult Basic Educational Training) on various
levels;
-
An additional eight
disabled HDSA women continued their training on ABET levels one to
four;
-
Four HDSA persons were
enrolled for apprenticeships in 2023 categorised as
follows:
-
One HDSA female
employee;
-
Two HDSA females from the
local community; and
-
One HDSA male from the
local community.
-
Two HDSA persons continued
their internships in 2023; these are categorised as
follows:
-
One HDSA female from the
local community continued her studies in Safety
Management.
-
One HDSA female from the
local community continued her studies as a Safety Officer
(COMSOQ1).
Further to the above, we
confirm that one HDSA Female
completed her bursary
studies in 2023, while two HDSA females continued their bursary
studies in
2023.
Highlights for 2023 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 second 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. |
|
Governance |
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
engaged 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. |
|
TCFD
Pillar |
TCFD
Recommended
Disclosure |
Bisichi
PLC |
| 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.
|
|
|
|
|
|
TCFD
Pillar |
TCFD
Recommended
Disclosure |
Bisichi
PLC |
|
Strategy |
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 continue to evaluate opportunities to reduce
these emissions taking into particular consideration the financial
viability and long term sustainability of the
projects. The Board has identified the need to mitigate GHG
emission in its mining process and rehabilitation activities at
Black Wattle. 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.
In addition to the above, Black Wattle has
been actively engaged with the Steve Tshwete Local Municipality
(“STLM”) to mitigate GHG emissions in its rehabilitation activities
by finding alternative uses for unrehabilitated mining voids on the
mine. Discussions are progressing to transfer certain
unrehabilitated mining voids to STLM in order for the areas to be
developed into a “Waste Eco Park”. The proposed development will
include the licensing and development of a proposed landfill for
waste disposal, recycling facilities, and a general waste
management facility. The proposed Waste Management Facility will be
a state-of-the-art treatment and resource beneficiation facility
inclusive of final disposal to landfill. Further environmental
screening studies are currently being undertaken by STLM. Any
significant developments will be reported to shareholders in due
course.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. |
|
TCFD
Pillar |
TCFD
Recommended
Disclosure |
Bisichi
PLC |
|
Strategy |
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. |
|
Risk Management |
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. |
|
Risk Management |
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. |
|
TCFD
Pillar |
TCFD
Recommended
Disclosure |
Bisichi
PLC |
|
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 80. 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. |
|
Metrics and Targets |
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. |
|
Metrics and Targets |
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 6 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 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 2023.
Any estimates included in
our totals are derived from actual data which have been
extrapolated to cover the full reporting periods. Our reporting
includes our energy use and emissions associated with our UK
office, which are minimal (1.2 tonnes of
CO2e).
|
The Group’s carbon
footprint: |
2023CO2e Tonnes |
2022
CO2e Tonnes |
|
Emissions
source: |
|
|
|
Emissions from the combustion of fuel or the
operation of any facility including fugitive emissions from
refrigerants use |
39,709 |
39,564 |
|
Emissions resulting from the purchase of
electricity, heat, steam or cooling by the company for its own use
(location based) |
7,601 |
12,267 |
|
Total gross
emissions |
47,310 |
51,831 |
|
Of which: |
|
|
|
UK |
1 |
3 |
|
South Africa |
47,309 |
51,828 |
|
Intensity: |
|
|
|
Tonnes of CO2 per £ sterling of
revenue |
0.0010 |
0.0005 |
|
Tonnes of CO2 per tonne of coal
produced |
0.0587 |
0.0629 |
|
|
kWh |
kWh |
|
Energy consumption used to calculate above
emissions |
90,218,230 |
87,292,816 |
|
Of which UK |
7,601 |
12,341 |
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 2022 and 2023. 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 2023
and 2022. 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. |
|
PRINCIPAL
RISK |
PERFORMANCE AND
MANAGEMENT OF THE RISK |
|
NEW RESERVES AND
MINING PERMISSIONS |
|
The life of the mine, acquisition of additional
reserves, permissions to mine (including ongoing and once-off
permissions) and new mining opportunities in South Africa generally
are contingent on a number of factors outside of the Group’s
control such as approval by the Department of Mineral Resources and
Energy, the Department of Water Affairs and Forestry and other
regulatory or state owned entities. In addition, the Group’s South African operations
are subject to the government Mining Charter with the New Mining
Charter 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 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. |
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
& diversity’ section on page 9 for further
details. |
|
PRINCIPAL
RISK |
PERFORMANCE AND
MANAGEMENT OF THE RISK |
|
SOCIO-ECONOMIC,
POLITICAL INSTABILITY & REGULATORY ENVIRONMENT
RISK |
|
|
The Group is exposed to a
wide range of political, economic, regulatory, social and tax
environments, particularly in South Africa. Regulation applicable
to resource companies can often be subject to adverse and
unexpected changes. Environmental, social, economic and tax
regulatory codes can be complex and uncertain in their application.
The Group may be impacted by adverse actions and decisions by
governments including operational delays, delays or loss of permits
or licenses to operate. Laws and regulations in the countries in
which we operate may change or be implemented in a manner that may
have a materially adverse effect on the Group. Our operations may
also be affected by political, economic and unemployment
instability, including terrorism, civil disorder, violent crime,
war and social unrest. |
The Group actively engages
with governments, regulators and other stakeholders within the
countries in which it operates. The Group endeavours to operate its
businesses according to high legal, ethical, social and human
rights standards and comply with all applicable environmental,
social and tax laws and regulations.The Group’s assets and
investments are diversified across various countries which reduces
the Group’s exposure to any particular country. The Board regularly
assesses the political and socio-economic environment and related
risks of the countries it operates and invests
in. |
|
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 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 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. |
Strategic
Report
Financial & performance
review
The movement in the
Group’s Adjusted EBITDA from £39.4million in 2022 to £2.6million in
2023 can mainly be attributed to the performance of the Group’s
South African operations. Lower volumes of coal sold, lower export
coal prices and a lower proportion of sales into the export market
at Sisonke Coal Processing had a significant impact on the Group’s
revenue in 2023.
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
indicator
|
The key performance indicators for the Group
are: |
2023
£’000 |
2022£’000 |
|
For the
Group: |
|
|
|
Operating profit before depreciation, fair value
adjustments and exchange movements (adjusted
EBITDA) |
2,647 |
39,363 |
|
EBITDA |
3,354 |
39,980 |
|
Profit before tax |
610 |
38,014 |
|
For our property
investment operations: |
|
|
|
Net property valuation |
10,610 |
10,465 |
|
Net property revenue |
1,268 |
1,108 |
|
For our mining
activities: |
|
|
|
Operating profit before depreciation, fair value
adjustments and exchange movements (adjusted
EBITDA) |
1,380 |
38,126 |
|
EBITDA |
1,222 |
37,856 |
|
|
Tonnes‘000 |
Tonnes‘000 |
|
Mining production |
807 |
824 |
|
Quantity of coal sold |
1,031 |
1,287 |
The key performance indicators of the Group
can be reconciled as follows: |
Mining£’000 |
Property£’000 |
Other£’000 |
2023£’000 |
|
Revenue |
47,424 |
1,268 |
561 |
49,253 |
|
Transport and loading
cost |
(2,812) |
- |
- |
(2,812) |
|
Mining and washing
costs |
(35,808) |
- |
- |
(35,808) |
|
Other operating costs excluding
depreciation |
(7,424) |
(557) |
(5) |
(7,987) |
|
Operating profit
before depreciation, fair value adjustments and exchange movements
(adjusted EBITDA) |
1,380 |
711 |
556 |
2,647 |
|
Exchange movements |
(158) |
- |
- |
(158) |
|
Fair value adjustments |
- |
145 |
- |
145 |
|
Gains on investments held at fair value through
profit and loss (FVPL) |
- |
- |
759 |
759 |
|
Operating profit excluding
depreciation |
1,222 |
856 |
1,315 |
3,393 |
|
Share of loss in joint
venture |
- |
(39) |
- |
(39) |
|
EBITDA |
1,222 |
817 |
1,315 |
3,354 |
|
Net interest movement |
(960) |
(291) |
- |
(1,251) |
|
Depreciation |
(1,493) |
- |
- |
(1,493) |
|
Profit before
tax |
(1,231) |
526 |
1,315 |
610 |
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 |
36,100 |
293 |
1,621 |
38,014 |
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 £3.4million (2022: £40.0million). The
movement compared to the prior year can mainly be attributed to the
decreased EBITDA from our mining activities of £1.2million (2022:
£37.9million). In addition, the Group’s fair value gain, related to
our UK property was £0.15million (2022: loss £0.1million) and gains
related to investments held at fair value through profit and loss
were £0.8million (2022:
£1.0million).
The Group reported a
profit before tax of £0.6million (2022: £38.0million) for the year
resulting in a decrease in taxation for the year to £0.3million
(2022: £11.9 million). This resulted in the Group achieving an
overall profit for the year after tax of £0.3million (2022:
£26.1million), of which £0.26million (2022: £17.6million) 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 |
|
|
2023R’000 |
2022R’000 |
2023£’000 |
2022£’000 |
|
Revenue |
1,087,690 |
1,886,276 |
47,422 |
93,413 |
|
Transport and loading
costs |
(64,497) |
(105,023) |
(2,812) |
(5,201) |
|
Mining and washing
costs |
(821,307) |
(767,490) |
(35,808) |
(38,008) |
|
Operating profit before other operating costs and
depreciation |
201,886 |
1,013,763 |
8,802 |
50,204 |
|
Other operating costs (excluding
depreciation) |
|
|
(7,422) |
(12,078) |
|
Operating profit
before depreciation, fair value adjustments and exchange movements
(adjusted EBITDA) |
|
|
1,380 |
38,126 |
|
Exchange movements |
|
|
(158) |
(270) |
|
EBITDA |
|
|
1,222 |
37,856 |
|
|
2023‘000 |
2022‘000 |
|
Mining production
in tonnes |
807 |
824 |
|
|
2023R |
2022R |
|
Net Revenue per
tonne of mining
production |
1,268 |
2,162 |
|
Mining and washing
costs per tonne of mining
production |
(1,018) |
(931) |
|
Operating profit
per tonne of mining production before other operating costs and
depreciation |
250 |
1,231 |
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 |
2023‘000 |
Domestic‘000 |
Export‘000 |
2022‘000 |
|
Quantity of coal
sold in tonnes |
897 |
134 |
1,031 |
1,025 |
262 |
1,287 |
|
|
DomesticR’000 |
ExportR’000 |
2023R’000 |
DomesticR’000 |
ExportR’000 |
2022R’000 |
|
Revenue |
843,218 |
244,472 |
1,087,690 |
795,132 |
1,091,144 |
1,886,276 |
|
|
R |
R |
R |
R |
R |
R |
|
Net Revenue per
tonne of coal sold |
938 |
1,357 |
992 |
774 |
3,770 |
1,384 |
|
Mining and washing
costs per tonne of coal
sold |
|
|
(797) |
|
|
(596) |
|
Operating profit
per tonne of coal sold before other operating costs and
depreciation |
|
196 |
|
|
788 |
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
decreased for the year from R1,384 per tonne of coal sold in 2022
to R992 in 2023, mainly attributable to the average price decreases
per tonne in the export market. This offset the average price
increases in the domestic market. The average price increases in
the domestic market were attributable to an increase in higher
quality coal, destined for the export market, being sold
domestically due to the lack of export rail capacity
available.
A decrease in mining
production from Black Wattle and a decrease in buy-in coal
processed during the year offset a decrease in coal inventories at
the end of the year resulting in the quantity of coal sold for the
year decreasing to 1.031million tonnes (2022: 1.287million
tonnes).
Overall, revenue from the
Group’s South African mining operations decreased during the year
to R1.088billion (2022: R1.886billion) mainly due to the lower coal
export prices achievable and a decrease in overall coal volumes
sold, particularly into the export market due to a lack of
available export rail
capacity.
Mining and washing costs
per tonne of coal sold during the year increased from R596 per
tonne in 2022 to R797 per tonne in 2023 mainly due to an increases
in mining costs per tonne from Black Wattle as outlined in the
Mining Review on page 5. This resulted in an increase in total
mining and washing costs for the Group to R821.3million (2022:
R767.4million).
Other operating costs
(excluding depreciation) of £7.4million (2022: £12.08million)
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 decrease during the
year can mainly be attributed to higher salaries and wages costs of
the Group in 2022 due to the financial performance 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 £39.4million in 2022 to
£2.6million in 2023 can mainly be attributed to the performance of
the Group’s South African mining and coal processing operations
outlined above. A further explanation of the mines operational
performance can be found in the Mining Review on page
5.
UK property
investment
Performance
The Group’s portfolio is
managed actively by London &
Associated Properties plc. Rental performance levels improved in
2023. Net property revenue (excluding joint ventures and service
charge income) across the portfolio increased during the year to
£1.26million (2022: £1.11million). The property portfolio was
externally valued at 31 December 2023
and the value of UK investment properties attributable to the Group
at year end increased marginally to £10.610million (2022:
£10.465million).
Joint venture
property investments
The Group holds a
£0.6million (2022: £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 £1.015million
(2022: £1.019million).
The Group continues to
hold a £0.4million (2022: £0.4million) 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 £4.4million (2022: £4.1million). The joint
venture has obtained planning consent for a residential development
of 56 flats and four retail units. During 2023 the joint venture
has been finalising detailed designs for the project and working
with contractors and designers to improve building efficiency and
maximise potential returns. Currently, the joint venture is in
detailed negotiations to finance construction of this development
and intend to commence work in the second half of 2024. 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. A planning
application submitted in 2023 for 44 flats and 4 town houses was
rejected in January 2023 despite
being recommended for approval by the planning officer. Our appeal,
although we won on design and construction matters, was ultimately
unsuccessful on a legal technicality and we are currently
considering whether to submit a new application. At year end, the
negative carrying value of the investment held by the Group was
£24,000 (2022: £14,000).
Overall, the Group
achieved net property revenue of £1.4million (2022: £1.2million)
for the year which includes the company’s share of net property
revenue from its investment in joint ventures of £113,000 (2022:
£108,000).
Other
Investments
During the year the
Group’s non-current investments held at fair value through profit
and loss increased from £12.6million in 2022 to £14.3million due to
net additions during the year of £0.8million (2022: £8.2million)
and gains from investments of £0.9million (2022: £0.7million). The
investments comprise of £6.8million (2022: £6.8million) of
investments listed on stock exchanges in the United Kingdom and £7.4million (2022:
£5.8million) of investments listed on overseas stock exchanges. The
Group’s listed investments continue to comprise primarily listed
equities involved in extractive and energy related business
activities, including entities involved in the extraction of
commodities needed for the clean energy
transition.
Cashflow
|
The following table summarises the main components
of the consolidated cashflow for the
year: |
Year
ended31
December2023£’000 |
Year ended31 December2022£’000 |
|
Cash flow
generated from operations before working capital and other
items |
2,647 |
39,768 |
|
Cash flow from
operating activities |
1,778 |
30,698 |
|
Cash flow from
investing activities |
(6,701) |
(16,584) |
|
Cash flow from
financing activities |
(2,874) |
(7,206) |
|
Net (decrease) /
increase in cash and cash
equivalents |
(7,797) |
6,908 |
|
Cash and cash equivalents at 1
January |
7,365 |
482 |
|
Exchange adjustment |
140 |
(25) |
|
Cash and cash
equivalents at 31
December |
(292) |
7,365 |
|
Cash and cash
equivalents at 31 December
comprise: |
|
|
|
Cash and cash equivalents as presented in the balance
sheet |
3,242 |
10,590 |
|
Bank overdrafts (secured) |
(3,534) |
(3,225) |
|
|
(292) |
7,365 |
Cash flow generated from
operating activities decreased compared to the prior year to
£1.8million (2022: £30.7million). This can mainly be attributed to
the decrease in operating profit during the year to £1.9million
(2022: £39.0million). The decrease in operating profit can mainly
be attributed to the weaker overall performance of the Group’s
South African coal mining and processing
operations.
Investing cashflows
primarily reflect the net acquisitions of listed equity investments
of £0.8million (2022: £8.1million) and capital expenditure during
the year of £5.9million (2022: £8.5million) 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 £18.8million (2022: £16.4 million) with capital
expenditure being offset by depreciation of £1.4million (2022:
£1.1milion) and exchange translation movements of £2.0million
(2022: £0.6million) for the year.
Cash outflows from
financing activities includes a net decrease in borrowings of
£0.5million (2022: increase £0.5million). In addition, dividends
were paid during the year to equity shareholders of £2.3million
(2022: £0.6million).
Overall, the Group’s cash
and cash equivalents decreased during the year by £7.8million
(2022: increase of £6.9million). The Group’s net balance of cash
and cash equivalents (including bank overdrafts) at year end was
negative £0.3million (2022:
£7.4million).
The Group has considerable
financial resources available at short notice including cash and
cash equivalents (excluding bank overdrafts) of £3.2million (2022:
£10.6 million) and listed investments of £15.0million (2022:
£13.5million) as at year end. The above financial resources
totalling £18.2million (2022:
£24.1million).
The net assets of the
Group reported as at year end were £33.6million (2022:
£35.6million) and total assets at £59.8million (2022:
£63.8million).
Liabilities decreased from
£28.2million to £26.2million during the year primarily due to an
decrease in trade and other payables from £13.3million to
£11.6million offsetting an increase in tax payable from £4.3million
to £5.2million.
Further details on the
Group’s cashflow and financial position are stated in the
Consolidated Cashflow Statement on page 69 and the Consolidated
Balance Sheet on page 66 and 67.
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 £3.9million. 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 £10.6million. The debt package has a five
year term and is repayable at the end of the term in December 2024. The Group intends to renew or
refinance the loan prior to the end of its term. 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
20;
•
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
35.
Future
prospects
In the first quarter of
the 2024, we have seen improved production from Black Wattle, our
coal mining operation. In our South African coal markets, coal
prices have stabilised and the availability of rail for export has
improved for the year to date in comparison to 2023. In light of
this, management will be focussing on sustaining 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, commodity and renewable energy 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 39.
Further information on the
outlook of the company can be found in both the Chairman’s
Statement on page 2 and the Mining Review on page 5 which form part
of the Strategic Report.
Signed on behalf of the
Board of Directors
Garrett
Casey
Finance
Director
22
April 2024
Governance
Management
team
*
Andrew R Heller MA, ACA
(Chairman & Managing Director)
Garrett Casey CA
(SA)
(Finance Director)
Robert Grobler Pr
Cert Eng
(Director of Mining)
O * John A
Sibbald BL
(Non-executive)
Jonh 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 over 20 years and has extensive experience in
investment management, in particular within the mining
sector.
John A Heller LLB, MBA (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
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.
00112155 (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
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)
Governance
Five year
summary
|
|
2023£’000 |
2022£’000 |
2021£’000 |
2020£’000 |
2019£’000 |
|
Consolidated
income statement items |
|
|
|
|
|
|
Revenue |
49,253 |
95,111 |
50,520 |
29,805 |
48,106 |
|
Operating profit
/(loss) |
1,900 |
38,976 |
3,403 |
(4,493) |
3,658 |
|
Profit/(Loss) before
tax |
610 |
38,014 |
2,501 |
(5,196) |
3,027 |
|
Trading profit /(loss) before
tax |
(255) |
37,127 |
1,559 |
(3,881) |
4,493 |
|
Revaluation and impairment profit /(loss) before
tax |
865 |
887 |
942 |
(1,315) |
(1,466) |
|
EBITDA |
3,354 |
39,980 |
5,849 |
(2,387) |
5,868 |
|
Operating profit before depreciation, fair value
adjustments and exchange movements (adjusted
EBITDA) |
2,647 |
39,363 |
5,028 |
(1,111) |
7,457 |
|
Consolidated
balance sheet items |
|
|
|
|
|
|
Investment properties |
10,610 |
10,465 |
10,525 |
10,270 |
11,565 |
|
Other non-current
investments |
15,260 |
13,631 |
4,761 |
3,001 |
1,629 |
|
|
25,870 |
24,096 |
15,286 |
13,271 |
13,194 |
|
Current Investments held at fair
value |
734 |
886 |
685 |
833 |
1,119 |
|
|
26,604 |
24,982 |
15,971 |
14,104 |
14,313 |
|
Other assets less liabilities less
non-controlling interests |
5,386 |
8,820 |
1,541 |
1,969 |
5,619 |
|
Total equity
attributable to equity
shareholders |
31,990 |
33,802 |
17,512 |
16,073 |
19,932 |
|
Net assets per
ordinary share
(attributable) |
299.6p |
316.6p |
164.0p |
150,5p |
186.7p |
|
Dividend per
share |
7.00p |
22.00p |
6.00p |
0p |
1.00p |
Financial
calendar
|
18 June
2024 |
Annual General Meeting |
|
Late August
2024 |
Announcement of half-year results
to 30 June 2024 |
|
Late April
2025 |
Announcement of results for year ending
31 December 2024 |
Governance
Directors’
report
The directors submit their
report together with the audited financial statements for the year
ended 31 December 2023.
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 an
equity investment portfolio, 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 2023 are shown on pages 64 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 recycling
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 2023 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 (2022: 4p) and a special dividend of 0p
(2022: 8p) per share for 2023. An interim dividend for 2023 of 3p
(Interim 2022: 10p) has been paid on 2
February 2024.
The total dividend per
ordinary share for 2023 will therefore be 7p (2022: 22p) per
ordinary share.
Investment properties and other
properties
The investment property
portfolio is stated at its open market value of £10,610,000 at
31 December 2023 (2022: £10,465,000)
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 £5,176,000 (2022:
£4,812,000).
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.
Following the year under
review, the Company made an investment into a fund in which
John Wong (an independent
non-executive director) is linked by virtue of his engagement as
the fund manager and having a material interest in the fund. In
accordance with the Companies Act 2006, the Company’s articles of
association and the Disclosure Guidance and Transparency Rules,
John Wong recused himself from
discussions relating to the proposed investment and the Board
resolved to impose certain conditions on John Wong given his interests including, but not
limited to, restricting the availability of information to
John Wong and to exclude him from
discussions and voting on matters relating to the investment and
its ongoing review in line with the Company’s treasury policies. In
accordance with the requirements of the Disclosure Guidance and
Transparency Rules, the Company released an announcement containing
the prescribed information on 3 April
2024.
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 (ceased to be
a director on 18 April 2024), R J
Grobler (a South African citizen), J A Sibbald , J Wong and J
Heller (appointed 29 March
2023).
Mr J Heller was appointed
as a non-executive director by the Board on 29 March 2023. Mr J Heller is the Chairman and
Managing Director of London &
Associated Properties PLC which holds a 41.6% stake in Bisichi. Mr
J Heller has extensive & valuable experience in property
investment and management.
The directors retiring by
rotation are Mr AR Heller, Mr RJ Grobler and Mr J Wong, each of
whom offer themselves for
re-election.
Mr A R Heller has been an
executive director of the company since 1998. He is a Chartered
Accountant and has been employed by the Group since 1994 under a
contract of employment determinable at three months’ notice. The
Board recommends the re-election of Mr AR
Heller.
Mr R J Grobler was
appointed as General Mine Manager by Black Wattle Colliery
(Proprietary) Ltd on 1 May 2000. He
was appointed to the Board of Bisichi PLC as Director of Mining on
22 August 2008. He has over 40 years’
experience in the South African coal mining industry. The board
recommends the re-election of RJ
Grobler.
Mr J Wong is a qualified
Chartered Accountant and a Chartered Financial Analyst with
extensive experience in the insurance and investment management
industries. As noted on page 34, Mr J Wong is linked to an
investment made by the Company and the Board has put in place
certain measures to restrict access to information and exclude Mr J
Wong from discussions and voting on matters relating to such
investments. As such, the Board considers that Mr J Wong remains
independent and, following the steps taken by the Board, can fulfil
his duties to the Company notwithstanding his outside interests.
The Board recommends the re-election of Mr J
Wong.
Other than noted above, 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 43 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 2023:
London & Associated Properties PLC –
4,432,618 shares representing 41.6 per cent. of the issued capital
(The Heller family is a shareholder of London & Associated Properties
PLC).
|
The Heller Family
– |
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 2023 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 53. 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:
-
In 2023, the nomination
committee comprised of two non-executive directors C A Joll
(Chairman) (ceased to be a director on 18
April 2024) 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. During 2023, the committee comprised of two
non-executive directors C A Joll (Chairman) ) (ceased to be a
director on 18 April 2024) and JA
Sibbald. The company’s executive chairman is normally invited to
attend meetings. The report on directors’ remuneration is set out
on pages 40 to 49.
-
In 2023, the audit
committee comprised of two non-executive directors C A Joll
(Chairman) (ceased to be a director on 18
April 2024) 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.
Where such directors were
not members of the relevant committee, meetings are also attended,
by invitation of the committee, by the Company’s executive chairman
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 50 and 51.
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 executive chairman 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
executive 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 during 2023 was Christopher Joll (ceased to
be a director on 18 April 2024). The
other two independent non-executive directors are John Sibbald
and John
Wong.
Christopher Joll was a
non-executive director of the company 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
continued to fulfil their role as independent non-executive
directors during the year. The Board considers that as a result of
the systems and controls the Company has put in place,
notwithstanding his outside business interests, including in
relation to certain funds in which the Company has invested,
John Wong remains
independent.
The independent directors
regularly meet prior to Board meetings to discuss
corporate governance issues.
Internal
control
The directors are
responsible for the Group’s system of internal control and review
of its effectiveness annually. The Board has designed the Group’s
system of internal control in order to provide the directors with
reasonable assurance that its assets are safeguarded, that
transactions are authorised and properly recorded and that material
errors and irregularities are either prevented or would be detected
within a timely period. However, no system of internal control can
eliminate the risk of failure to achieve business objectives or
provide absolute assurance against material misstatement or
loss.
The key elements of the
control system in operation are:
-
the Board meets regularly
with a formal schedule of matters reserved to it for decision and
has put in place an 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;
and
-
as required by the
Disclosure Guidance and Transparency Rules, the Company has in
place systems and controls to identify and classify related party
transactions and to ensure the Company complies with its
obligations in relation to such
transactions.
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.
Board and board committee
meetings
The number of meetings
during 2023 and attendance at regular Board meetings and Board
committees was as follows:
|
|
|
Meetings
held |
Meetings Attended |
|
Sir Michael Heller (ceased to be a director on 30
January 2023) |
BoardNomination committeeAudit committee |
1-1 |
--- |
|
A R Heller |
BoardAudit committee |
52 |
52 |
|
G J Casey |
BoardAudit committee |
52 |
52 |
|
R J Grobler |
Board |
5 |
1 |
|
C A Joll (ceased to be a director on 18 April
2024) |
Board Audit committeeNomination committeeRemuneration committee |
5211 |
3111 |
|
J A Sibbald |
BoardAudit committeeNomination committeeRemuneration committee |
5211 |
4211 |
|
J Wong |
Board |
5 |
4 |
|
J A Heller (appointed 29 March
2023) |
Board |
3 |
3 |
There were no significant
issues identified during the year ended 31
December 2023 (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 with the policy is
closely monitored.
Annual General
Meeting
The annual general meeting
of the company 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, 18 June 2024 at
11.00 a.m. Resolutions 1 to 9 will be
proposed as ordinary resolutions. More than 50 per cent. of
shareholders’ votes cast must be in favour for those resolutions to
be passed.
The directors consider
that all of the resolutions to be put to the meeting are in the
best interests of the company and its shareholders as a whole. The
Board recommends that shareholders vote in favour of all
resolutions.
Please note that the
following paragraph is a summary of resolution 9 to be proposed at
the Annual General Meeting and not the full text of the resolution.
You should therefore read this section in conjunction with the full
text of the resolutions contained in the notice of Annual General
Meeting.
Directors’ authority to allot shares (Resolution
9)
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 9.1.1 of resolution 9
would give the directors the authority to allot shares in the
company and grant rights to subscribe for, or convert any security
into, shares in the company up to an aggregate nominal value of
£355,894. This represents approximately 1/3 (one third) of the
ordinary share capital of the company in issue (excluding treasury
shares) at 22 April 2024 (being the
last practicable date prior to the publication of this Directors’
Report). Paragraph 9.1.2 of resolution 9 would give the directors
the authority to allot shares in the company and grant rights to
subscribe for, or convert any security into, shares in the company
up to a further aggregate nominal value of £355,894, in connection
with a pre-emptive rights issue. This amount represents
approximately 1/3 (one third) of the ordinary share capital of the
company in issue (excluding treasury shares) at 22 April 2024 (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 9 is £711,788. Resolution 9 complies with guidance
issued by the Investment Association
(IA).
The authority granted by
resolution 9 will expire on 31 August
2025 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 (2022:
£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.
Significant investments
have been made in opening new mining areas at Black Wattle Colliery
(Pty) Ltd and production in 2024 to date has improved. The
directors expect that coal market conditions for the Group’ will
remain at a stable and profitable level through 2024. The directors
therefore have a reasonable expectation that the mine will achieve
positive levels of cash generation for the Group in 2024. 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 overall interest cost of the loan is 4.00%
above the Bank of England base
rate. The debt package has a five year term and is repayable at the
end of the term in December 2024. The
Group intends to renew or refinance the loan prior to the end of
its term. All covenants on the loan were met during the year and in
the period since the year end. 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 or to repay the loan if the loan cannot be renewed or
refinanced by the end of its term.
Dragon Retail Properties
Limited (“Dragon”), the Group’s 50% owned joint venture, holds a
Santander bank loan of £0.95million 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 4.2 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 July 2024.
Santander have indicated that they are willing to provide a new
term loan and we expect to complete this in the near
future.
Detailed budget and cash
flow forecasts for the Group’s operations demonstrated that the
Group has sufficient resources to meet its liabilities as they fall
due for at least the next 12 months from the approval date of these
financial statements. 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
22
April 2024
Governance
Statement of the Chairman of the
remuneration committee
The remuneration committee
presents its report for the year ended 31
December 2023. 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 2024. During the year, in
light of the performance of the Group, the board determined to
award bonuses to certain executive directors of the
Group.
The second part is the
Remuneration Policy which details the remuneration policy for
Directors, and can be found at www.bisichi.co.uk. The current
remuneration policy was subject to a binding vote which was
approved by shareholders at the AGM in June 2023.The approval will
continue to apply for a 3 year period commencing from then. The
committee reviewed the existing policy and deemed that no changes
were necessary to the current arrangements. The remuneration
committee considered the overall performance of the group as well
as of each director in the year ended 31
December 2023 and remuneration including bonuses were
awarded in line with the performance conditions of the remuneration
policy.
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
12
April 2024
Governance
Annual remuneration
report
The following information
has been audited:
Single total figure of
remuneration for the year ended 31 December
2023:
|
|
Salaries and Fees
£’000 |
Benefits
£’000 |
Bonuses
£’000 |
Long Term Incentive Awards
£’000 |
Pension
£’000 |
Notional Value of
Vesting Share Options |
Total2023 £’000 |
Total Fixed
Remuneration£’000 |
Total Variable
Remuneration£’000 |
|
Executive
Directors |
|
|
|
|
|
|
|
|
|
|
Sir Michael Heller (ceased to be a director on 30
January 2023) |
17 |
- |
- |
- |
- |
- |
17 |
17 |
- |
|
A R Heller |
850 |
49 |
- |
- |
85 |
- |
984 |
984 |
- |
|
G J Casey |
300 |
17 |
75 |
- |
30 |
- |
422 |
347 |
75 |
|
R Grobler |
203 |
16 |
- |
- |
18 |
- |
237 |
237 |
- |
|
Non–Executive
Directors |
|
C A Joll* |
80 |
21 |
- |
- |
- |
- |
101 |
101 |
- |
|
J A Sibbald* |
3 |
3 |
- |
- |
- |
- |
6 |
6 |
- |
|
J Wong |
85 |
- |
- |
- |
- |
- |
85 |
85 |
- |
|
J Heller (appointed on 29 March
2023) |
- |
9 |
- |
- |
- |
- |
9 |
9 |
- |
|
Total |
1,538 |
115 |
75 |
- |
133 |
- |
1,861 |
1,786 |
75 |
*Members of the
remuneration committee for the year ended 31
December 2023
A R Heller has an
entitlement to an employer pension contribution of £85,000 for
2023. He has elected for this not to be paid at this
time.
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 |
Total2022£’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.
|
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 (ceased to be a director on 18 April
2024) |
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
Three (2022: Two)
directors have benefits under money purchase pension schemes.
Contributions in 2023 were £133,410 (2022: £37,869), see table
above. Under his contract of employment, A R Heller was entitled to
a regular employer contribution (currently £85,000 a year) but has
elected to defer the payment into his pension scheme. There are no
additional benefits payable to any director in the event of early
retirement.
Scheme interests awarded during the
year
During the year no share options were granted
under share option
schemes.
Share option
schemes
The company currently has
only one Unapproved Share Option Scheme which is not subject to HM
revenue and Customs (HMRC) approval. The 2012 scheme was approved
by the remuneration committee of the company on 28 September
2012.
|
Number of share
options
|
|
|
|
|
|
Option price* |
1 January2022 |
Options granted/(Surrendered)in 2022 |
31December 2022 |
Exercisable from |
Exercisable to |
|
The 2012
Scheme |
|
|
|
|
|
|
|
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.
Payments to past
directors
No payments were made to
past directors in the year ended 31 December
2023 (2022: £nil).
Payments for loss of
office
No payments for loss of
office were made in the year ended 31
December 2023 (2022: £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
|
|
|
31.12.2023 |
1.1.2023 |
31.12.2023 |
1.1.2023 |
|
Sir Michael Heller (ceased to be a director on 30
January 2023) |
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 |
- |
- |
- |
- |
|
J A Heller (appointed 29 March
2023) |
- |
- |
- |
- |
There are no requirements or guidelines for any
director to own shares in the
Company.
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
2023 was 127.5p (2022: 305p). During the year the share
price ranged between 100p and 310p.
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 2014 to 31 December
2023.
|
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*% |
|
2023 |
A R Heller |
850 |
0% |
N/A |
|
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 |
Bisichi PLC does not have
a Chief Executive so the table includes the equivalent information
for the Managing Director.
Percentage change in remuneration and Company
performance
The table below represents the change in
remuneration of the directors in comparison to company
performance:
|
|
Executive |
Non-executive |
Employee
remuneration on a full-time equivalent
basis: |
|
2023 |
Sir Michael
Heller£’000 |
A R
Heller£’000 |
G J
Casey£’000 |
R
Grobler£’000 |
C A
Joll£’000 |
J A
Sibbald£’000 |
J
Wong£’000 |
J
Heller£’000 |
Employees of the Company
4 |
|
|
Base
Salary |
(92%) |
72% |
55% |
(7%) |
54% |
0% |
55% |
N/A3 |
(20%) |
|
|
Benefits |
0% |
17% |
0% |
(6%) |
N/A1 |
0% |
0% |
N/A3 |
0% |
|
|
Bonuses |
(100%) |
(100%) |
(87%) |
(100%) |
0% |
0% |
0% |
N/A3 |
(94%) |
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
Base Salary |
141% |
0% |
5% |
6% |
30% |
0% |
10% |
N/A3 |
47% |
|
|
Benefits |
0% |
24% |
0% |
55% |
0% |
0% |
0% |
N/A3 |
0% |
|
|
Bonuses |
N/A1 |
175% |
188% |
102% |
0% |
0% |
0% |
N/A3 |
478% |
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
Base Salary |
0% |
0% |
20% |
6% |
0% |
0% |
0% |
N/A3 |
8% |
|
|
Benefits |
0% |
(39%) |
(10%) |
3% |
0% |
0% |
0% |
N/A3 |
(26%) |
|
|
Bonuses |
0% |
N/A1 |
N/A1 |
N/A1 |
0% |
0% |
0% |
N/A3 |
N/A1 |
|
|
2020 |
|
|
|
|
|
|
|
|
|
|
|
Base Salary |
0% |
0% |
3% |
(7%) |
5% |
0% |
N/A2 |
N/A3 |
1% |
|
|
Benefits |
0% |
40% |
18% |
(17%) |
0% |
0% |
N/A2 |
N/A3 |
33% |
|
|
Bonuses |
(100%) |
(100%) |
(100%) |
(100%) |
0% |
0% |
N/A2 |
N/A3 |
(100%) |
|
1 Bonus and benefit changes are
disclosed as not applicable if a bonus or benefit was awarded in
the current year and no bonus or benefit were awarded to the
director in the prior year.
2 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.
3 Mr J Heller was appointed as a
non-executive Director on 29 March
2023 so the annual change is not
applicable.
4 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:
|
|
2023£’000 |
2022£’000 |
|
Employee remuneration |
7,270 |
11,991 |
|
Distribution to shareholders (see note
below) |
747 |
2,348 |
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 6 June
2023. The policy took effect from the conclusion of the AGM
and will apply for 3 years unless changes are deemed necessary by
the remuneration committee. The company may not make a remuneration
payment or payment for loss of office to a person who is, is to be,
or has been a director of the company unless that payment is
consistent with the approved remuneration policy, or has otherwise
been approved by a resolution of members. During the year, there
were no deviations from the procedure for the implementation of the
remuneration policy as set out in the
policy.
Consideration by the directors of matters
relating to directors’
remuneration
The remuneration committee
considered the executive directors remuneration and the board
considered the non-executive directors remuneration in the year
ended 31 December 2023. 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 6 June 2023, there was an
advisory vote on the resolution to approve the remuneration report,
other than the part containing the remuneration policy. In
addition, on 6 June 2023 there was a
binding vote on the resolution to approve the current remuneration
policy. The results of which are detailed
below:
|
|
% of votes for |
% of votesagainst |
No of voteswithheld |
|
Resolution to approve the Remuneration Report (6
June 2023) |
75.13% |
24.87% |
- |
|
Resolution to approve the Remuneration Policy (6
June 2023) |
73.18% |
26.82% |
600,000 |
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 42 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 2023 AGM. The approved policy took effect
from 6 June 2023. 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 £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 2023 is shown in the table on page
41. |
|
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 42) 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 42). 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
for health
cover (see annual remuneration report
page 41) |
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 |
|
|
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.
Governance
Audit committee
report
The committee’s terms of
reference have been approved by the board and follow published
guidelines, which are available from the company secretary. The
audit committee comprised of two non-executive directors during the
year, 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,
executive chairman, 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
12
April 2024
Governance
Valuers’
certificates
To the directors of
Bisichi PLC
In accordance with your
instructions we have carried out a valuation of the freehold
property interests held as at 31 December
2023 by the company as detailed in our Valuation Report
dated 31 January
2024.
Having regard to the
foregoing, we are of the opinion that the open market value as at
31 December 2023 of the interests
owned by the company was £10,610,000 being made up as
follows:
|
|
£’000 |
|
Freehold |
8,395 |
|
Leasehold |
2,215 |
|
|
10,610 |
Leeds
31 January 2024 |
Carter
TowlerRegulated 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.
Governance
Independent auditor report to the shareholders
of Bisichi Plc for the year ended 31
December 2023
Opinion
We have audited the
financial statements of Bisichi PLC (the ‘parent company’) and its
subsidiaries (the ‘Group’) for the year ended 31 December 2023 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 financial statements give a true and fair
view of the state of the Group’s and of the parent company's
affairs as at 31 December 2023 and of
the Group’s profit for the year then
ended;
-
the group financial statements have been
properly prepared in accordance with UK adopted international
accounting
standards;
-
the parent company financial statements have
been properly prepared in accordance with United Kingdom Generally
Accepted Accounting Practice;
and
-
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 significant
external factors including the impact of the war in Ukraine and the potential liquidity impact
such factors 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
39;
-
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
33;
-
Board’s confirmation that it has carried out a
robust assessment of the emerging and principal risks set out
on pages 20 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 |
£1,005,000 (2022:
£711,200) |
£816,700 (2022:
£710,000) |
|
Basis for determining
materiality |
~3% of net
assets |
~3% of net
assets |
|
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 based on the
net assets of the group is considered to be
appropriate. |
The company’s principal
activity is that of a holding company for the group and as such has
no direct trade. It does hold investments balances with
subsidiaries. Therefore a benchmark for materiality based on the
net assets of the company is considered to be
appropriate. |
|
Performance
materiality |
£703,500 (2022:
£533,400) |
£571,600 (2022:
£533,500) |
|
Basis for determining performance
materiality |
70% of
materiality |
70% of
materiality |
|
Rationale for performance materiality
applied |
On the basis of our risk
assessments, together with our assessment of the Group’s overall
control environment and the business being listed on the LSE, our
judgement was that performance materiality was 70% 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. |
On the basis of our risk
assessments, together with our assessment of the company’s overall
control environment and the company being listed on the LSE, our
judgement was that performance materiality was 70% 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. |
|
Triviality
threshold |
£50,200 (2022:
£35,560) |
£40,800 (2022:
£35,500) |
|
Basis for determining triviality
threshold |
5% of
materiality |
5% of
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
£571,600 and £19,600. 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 before
tax |
Group net
assets |
|
Totals at 31 December
2023: |
£49,452,801 |
£610,242 |
£33,594,091 |
|
Full statutory audit (Kreston Reeves and
BDO) |
£49,452,801
(100%) |
£595,457
(97.6%) |
£33,492,433
(99.7%) |
|
Limited
procedures |
£Nil |
£14,785
(2.4%) |
£101,658
(0.3%) |
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) |
|
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: £49,452,801 (2022:
£95,110,894) |
|
Significance and nature of
key riskRevenue 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 riskSales 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
CommitteeWe have no concerns over
the material accuracy of revenue recognised in the financial
statements. |
|
Valuation/impairment of investment properties:
£10,818,441 (2022:
£10,635,000) |
|
Significance and nature of
key riskInvestment 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 riskAppropriate 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
CommitteeWe have no concerns over
the material accuracy of investment property values recognised in
the financial statements. |
|
Valuation/impairment of mining reserves and
development: £18,722,439 (2022:
£16,177,515) |
|
Significance and nature of
key riskThe 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 riskThe 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
CommitteeWe 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 41 to 49 of the Annual Report
for the year ended 31 December 2023.
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 53), 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 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 3 years, covering the
years ended 31 December 2021 and
31 December
2023.
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: 23 April 2024
Financial
statements
Consolidated income
statement
for the year ended
31 December
2023
|
|
Notes |
2023Trading£’000 |
2023Revaluations
and
impairment£’000 |
2023Total£’000 |
2022Trading£’000 |
2022Revaluations and
impairment£’000 |
2022Total£’000 |
|
Group
revenue |
1 |
49,253 |
- |
49,253 |
95,111 |
- |
95,111 |
|
Operating costs |
3 |
(46,606) |
- |
(46,606) |
(55,748) |
- |
(55,748) |
|
Operating profit before depreciation, fair value
adjustments and exchange movements |
1 |
2,647 |
- |
2,647 |
39,363 |
- |
39,363 |
|
Depreciation |
1 |
(1,493) |
- |
(1,493) |
(1,093) |
- |
(1,093) |
|
Operating profit before fair value adjustments
and exchange movements |
1 |
1,154 |
- |
1,154 |
38,270 |
- |
38,270 |
|
Exchange losses |
|
(158) |
- |
(158) |
(270) |
- |
(270) |
|
Increase/(Decrease) in value of investment
properties |
4 |
- |
145 |
145 |
- |
(60) |
(60) |
|
Gain on investments held at fair
value |
|
- |
759 |
759 |
- |
1,036 |
1,036 |
|
Operating
profit |
1 |
996 |
904 |
1,900 |
38,000 |
976 |
38,976 |
|
Share of loss in joint
ventures |
14 |
(31) |
(8) |
(39) |
- |
(89) |
(89) |
|
Profit before
interest and taxation |
|
965 |
896 |
1,861 |
38,000 |
887 |
38,887 |
|
Interest receivable |
|
222 |
- |
222 |
174 |
- |
174 |
|
Interest payable |
7 |
(1,473) |
- |
(1,473) |
(1,047) |
- |
(1,047) |
|
Profit before
tax |
5 |
(286) |
896 |
610 |
37,127 |
887 |
38,014 |
|
Taxation |
8 |
(47) |
(253) |
(300) |
(11,878) |
(30) |
(11,908) |
|
Profit for the
year |
|
(333) |
643 |
310 |
25,249 |
857 |
26,106 |
Attributable
to: |
|
|
|
|
|
|
|
|
Equity holders of the
company |
|
(384) |
643 |
259 |
16,755 |
857 |
17,612 |
|
Non-controlling
interest |
27 |
51 |
- |
51 |
8,494 |
- |
8,494 |
|
Profit for the
year |
|
(333) |
643 |
310 |
25,249 |
857 |
26,106 |
|
Profit per share –
basic |
10 |
|
|
2.43p |
|
|
164.96p |
|
Profit per share –
diluted |
10 |
|
|
2.43p |
|
|
164.96p |
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
2023
|
|
2023£’000 |
2022£’000 |
|
Profit for the
year |
310 |
26,106 |
|
Other
comprehensive
income/(expense): |
|
|
|
Items that may be
subsequently recycled to the income
statement: |
|
|
|
Exchange differences on translation of foreign
operations |
(675) |
(43) |
|
Other
comprehensive income for the year net of
tax |
(675) |
(43) |
|
Total
comprehensive income for the year net of
tax |
(365) |
26,063 |
|
Attributable to: |
|
|
|
Equity shareholders |
(210) |
17,593 |
|
Non-controlling
interest |
(155) |
8,470 |
|
|
(365) |
26,063 |
Financial
statements
Consolidated balance
sheet
at 31 December 2023
|
|
Notes |
2023£’000 |
2022£’000 |
|
Assets |
|
|
|
|
Non-current
assets |
|
|
|
|
Investment properties |
11 |
10,818 |
10,635 |
|
Mining reserves, plant and
equipment |
12 |
18,896 |
16,377 |
| Investments in joint ventures accounted for using
equity method |
13 |
1,002 |
1,041 |
| Other investments at fair value through profit
and loss (“FVPL”) |
13 |
14,258 |
12,590 |
|
Deferred tax asset |
23 |
318 |
- |
|
Total non-current
assets |
|
45,292 |
40,643 |
|
Current
assets |
|
|
|
|
Inventories |
16 |
2,579 |
5,199 |
|
Trade and other
receivables |
17 |
7,934 |
6,437 |
|
Investments in listed securities held at
FVPL |
18 |
734 |
886 |
|
Cash and cash
equivalents |
|
3,242 |
10,590 |
|
Total current
assets |
|
14,489 |
23,112 |
|
Total
assets |
|
59,781 |
63,755 |
|
Liabilities |
|
|
|
|
Current
liabilities |
|
|
|
|
Borrowings |
20 |
(7,461) |
(3,795) |
|
Trade and other
payables |
19 |
(11,589) |
(13,282) |
|
Current tax liabilities |
|
(5,191) |
(4,256) |
|
Total current
liabilities |
|
(24,241) |
(21,333) |
|
Non-current
liabilities |
|
|
|
|
Borrowings |
20 |
(22) |
(3,930) |
|
Provision for
rehabilitation |
21 |
(1,614) |
(1,715) |
|
Lease liabilities |
31 |
(310) |
(344) |
|
Deferred tax
liabilities |
23 |
- |
(872) |
|
Total non-current
liabilities |
|
(1,946) |
(6,861) |
|
Total
liabilities |
|
(26,187) |
(28,194) |
|
Net
assets |
|
33,594 |
35,561 |
|
|
Notes |
2023£’000 |
2022£’000 |
|
Equity |
|
|
|
|
Share capital |
24 |
1,068 |
1,068 |
|
Share premium account |
|
258 |
258 |
|
Translation reserve |
|
(3,028) |
(2,559) |
|
Other reserves |
25 |
1,112 |
1,112 |
|
Retained earnings |
|
32,580 |
33,923 |
|
Total equity
attributable to equity
shareholders |
|
31,990 |
33,802 |
|
Non-controlling
interest |
27 |
1,604 |
1,759 |
|
Total
equity |
|
33,594 |
35,561 |
|
|
|
|
|
|
These financial statements
were approved and authorised for issue by the board of directors on
22 April 2024 and signed on its
behalf by:
A R
Heller
G J
Casey
Company Registration No. 00112155
Director
Director
Financial
statements
Consolidated statement of
changes in shareholders’ equity
for the year ended
31 December
2023
|
|
Sharecapital£’000 |
SharePremium£’000 |
Translationreserves£’000 |
Otherreserves£’000 |
Retainedearnings£’000 |
Total£’000 |
Non-controlling
interest£’000 |
Totalequity£’000 |
|
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
expense |
- |
- |
(19) |
- |
- |
(19) |
(24) |
(43) |
|
Total comprehensive expense 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 1
January 2023 |
1,068 |
258 |
(2,559) |
1,112 |
33,923 |
33,802 |
1,759 |
35,561 |
|
Profit for the year |
- |
- |
- |
- |
259 |
259 |
51 |
310 |
|
Other comprehensive
income |
- |
- |
(469) |
- |
- |
(469) |
(206) |
(675) |
|
Total comprehensive income for the
year |
- |
- |
(469) |
- |
259 |
(210) |
(155) |
(365) |
|
Dividend (note 9) |
- |
- |
- |
- |
(1,602) |
(1,602) |
- |
(1,602) |
|
Balance at 31
December 2023 |
1,068 |
258 |
(3,028) |
1,112 |
32,580 |
31,990 |
1,604 |
33,594 |
Financial
statements
Consolidated cash flow
statement
for the year ended
31 December
2023
|
|
Year
ended31
December2023£’000 |
Year ended31 December2022£’000 |
|
Cash flows from
operating activities |
|
|
|
Operating profit |
1,900 |
38,976 |
|
Adjustments for: |
|
|
|
Depreciation |
1,493 |
1,093 |
|
Unrealised loss/(gain) on investment
properties |
(145) |
60 |
|
Share based payment
expense |
- |
405 |
|
Gain on investments held at
FVPL |
(759) |
(1,036) |
|
Exchange adjustments |
158 |
270 |
|
Cash flow before
working capital |
2,647 |
39,768 |
|
Change in inventories |
2,046 |
(4,009) |
|
Change in trade and other
receivables |
(2,026) |
2,307 |
|
Change in trade and other
payables |
113 |
1,114 |
|
Cash generated
from operations |
2,780 |
39,180 |
|
Interest received |
222 |
175 |
|
Interest paid |
(1,361) |
(728) |
|
Income tax paid |
137 |
(7,929) |
|
Cash flow from
operating activities |
1,778 |
30,698 |
|
Cash flows from
investing activities |
|
|
|
Acquisition of reserves, property, motor
vehicles, plant and equipment |
(5,944) |
(8,480) |
|
Disposal of reserves, property, motor vehicles,
plant and equipment |
- |
20 |
|
Disposal / (Acquisition) of other
investments |
(757) |
(8,124) |
|
|
|
|
|
Cash flow from
investing activities |
(6,701) |
(16,584) |
|
Cash flows from
financing activities |
|
|
|
Borrowings drawn |
99 |
524 |
|
Borrowings and lease liabilities
repaid |
(624) |
(55) |
|
Equity dividends paid |
(2,349) |
(641) |
|
Minority dividends paid |
- |
(7,034) |
|
Cash flow from
financing activities |
(2,874) |
(7,206) |
|
Net
(decrease)/increase in cash and cash
equivalents |
(7,797) |
6,908 |
|
Cash and cash equivalents at 1
January |
7,365 |
482 |
|
Exchange adjustment |
140 |
(25) |
|
Cash and cash
equivalents at 31
December |
(292) |
7,365 |
|
Cash and cash equivalents at 31 December
comprise: |
|
|
|
Cash and cash equivalents as presented in the
balance sheet |
3,242 |
10,590 |
|
Bank overdrafts
(secured) |
(3,534) |
(3,225) |
|
|
(292) |
7,365 |
Financial
statements
Group accounting
policies
for the year ended
31 December
2023
General
information
Bisichi PLC (“the Company”) is a company
incorporated and domiciled in the UK. The policies have been
applied consistently to all years presented, unless stated.
The group's registered office and principal address can be found on
page 31
Basis of
accounting
The results for the year
ended 31 December 2023 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 50 and 51 of the Audit Committee Report. Key
judgements and estimates are disclosed below on page 73. 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
|
|
|
2023 |
2022 |
2023 |
2022 |
|
Year-end rate |
23.3014 |
20.5785 |
1.2732 |
1.2102 |
|
Annual average |
22.9364 |
20.1929 |
1.2389 |
1.2967 |
Basis of
measurement
The consolidated financial statements have
been prepared on a historical cost basis, except for the following
items (refer to individual accounting policies for
details):
-
Financial instruments – fair value through
profit and
loss
-
Investment
property
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.
Significant investments
have been made in opening new mining areas at Black Wattle Colliery
(Pty) Ltd and production in 2024 to date has improved. The
directors expect that coal market conditions for the Group’ will
remain at a stable and profitable level through 2024. The directors
therefore have a reasonable expectation that the mine will achieve
positive levels of cash generation for the Group in 2024. 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 overall interest cost of the loan is 4.00%
above the Bank of England base
rate. The debt package has a five year term and is repayable at the
end of the term in December 2024. The
Group intends to renew or refinance the loan prior to the end of
its term. All covenants on the loan were met during the year. 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 or to repay the loan if the loan cannot be
renewed or refinanced by the end of its
term.
Dragon Retail Properties
Limited (“Dragon”), the Group’s 50% owned joint venture, holds a
Santander bank loan of £0.95million 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 4.2 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 July 2024.
Santander have indicated that they are willing to provide a new
term loan and we expect to complete this in the near
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.
UK-adopted International Financial Reporting
Standards (adopted 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 2023. New standards and
interpretations that are relevant to the Group are summarised
below:
|
Standard |
Overview |
Impact |
|
Amendments to IAS 1 and
IFRS Practice Statement 2 – Making Materiality Judgements –
Disclosure of Accounting Policies |
The amendments to IAS 1
require an entity to disclose material accounting
policies. |
No significant
impact |
|
Amendments to IAS 8 –
Accounting Policies, Changes in Accounting Estimates and
Errors |
The amendments introduce a
definition for accounting estimates which is ‘monetary amounts in
financial statements that are subject to measurement uncertainty’.
Measurement uncertainty will arise when monetary amounts required
to apply an accounting policy cannot be observed directly. In such
cases, accounting estimates will need to be developed using
judgements and assumptions. |
No significant
impact |
|
Amendments to IAS 12 –
Income Taxes - Deferred Tax related to Assets and Liabilities
arising from a Single Transaction |
This amendment to IAS 12
Income Taxes introduces an exception to the “initial recognition
exemption” when the transaction gives rise to equal taxable and
deductible temporary differences. |
No significant
impact |
|
Amendments to IAS 12 –
Income Taxes - International Tax Reform – Pillar Two Model
Rules |
This amendment to IAS 12
Income Taxes introduces disclosures to help investors better
understand a company’s exposure to income taxes arising from the
reform, particularly before legislation implementing the rules is
in effect. |
No significant
impact |
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. New standards, amendments and interpretations
issued but not yet effective that are relevant to the Group are
summarised below:
|
Standard |
Overview |
Potential
Impact |
|
Amendments to IAS 1 -
Classification of Liabilities as Current or
Non-current |
Effective date: 1 January
2024 (early adoption permitted). The standard has been amended to
clarify that the classification of liabilities as current or
non-current should be based on rights that exist at the end of the
reporting period. |
No significant impact
expected |
|
Amendments to IAS 1 -
Non-current Liabilities with
Covenants |
Effective date: 1 January
2024 (early adoption permitted). The standard confirms that only
those covenants with which an entity must comply on or before the
end of the reporting period affect the classification of a
liability as current or
non-current. |
No significant impact
expected |
|
Amendments to IFRS 16-
Lease Liability in a Sale and
Leaseback |
Effective date: 1 January
2024 (early adoption permitted). The amendments address the
accounting that should be applied by a seller-lessee in a sale and
leaseback transaction when the leaseback contains variable lease
payments, that do not depend on an index or
rate. |
No significant impact
expected |
|
Amendments to IAS 7 and
IFRS 7 |
Effective date: 1 January
2024 (early adoption permitted). The amendments require an entity
to disclose information about its supplier finance arrangements to
enable users of financial statements to assess the effects of those
arrangements on the entity’s liabilities and cash flows and on the
entity’s exposure to liquidity
risk. |
No significant impact
expected |
|
Amendments to IAS 21 –
Lack of Exchangeability |
Effective date: 1 January
2025 (early adoption permitted). The amendments have been made to
clarify:
-
when a currency is
exchangeable into another currency;
and
-
how a company estimates a
spot rate when a currency lacks
exchangeability.
|
No significant impact
expected |
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, as disclosed in note 12, to have a 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 6 years. This life of mine is based on the Group’s
existing coal reserves including reserves acquired but subject to
regulatory approval. The Group continues to evaluate 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 2023 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 9% reduction in average
forecast coal prices or a 8% 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
2023, 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 and head
leases. 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 42 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.
Notes to the financial
statements
for the year ended
31 December
2023
1. SEGMENTAL
REPORTING
|
2023
|
|
Business
analysis |
Mining£’000 |
Property£’000 |
Other£’000 |
Total £’000 |
|
Significant revenue customer
A |
22,283 |
- |
- |
22,283 |
|
Significant revenue customer
B |
10,659 |
- |
- |
10,659 |
|
Significant revenue customer
C |
4,854 |
- |
- |
4,854 |
|
Other revenue |
9,628 |
1,268 |
561 |
11,457 |
|
Segment
revenue |
47,424 |
1,268 |
561 |
49,253 |
|
Operating profit before fair value adjustments
& exchange movements |
(113) |
711 |
556 |
1,154 |
|
Revaluation of investments & exchange
movements |
(158) |
145 |
759 |
746 |
|
Operating profit
and segment result |
(271) |
856 |
1,315 |
1,900 |
|
Segment
assets |
26,767 |
13,402 |
14,996 |
55,165 |
|
Unallocated
assets |
|
|
|
|
|
– Non-current assets |
|
|
|
54 |
|
– Cash & cash equivalents |
|
|
|
3,242 |
|
Total assets
excluding investment in joint ventures and assets held for
sale |
|
|
|
58,461 |
|
Segment liabilities |
(17,680) |
(709) |
3 |
(18,386) |
|
Borrowings |
(3,563) |
(3,920) |
- |
(7,483) |
|
Total
liabilities |
(21,243) |
(4,629) |
3 |
(24,869) |
|
Net
assets |
|
|
|
32,592 |
|
Non segmental
assets |
|
|
|
|
|
– Investment in joint ventures |
|
|
|
1,002 |
|
Net assets as per
balance sheet |
|
|
|
33,594 |
|
Geographic
analysis |
UnitedKingdom£’000 |
SouthAfrica£’000 |
Total£’000 |
|
Revenue |
1,829 |
47,424 |
49,253 |
|
Operating profit and segment
result |
411 |
1,489 |
1,900 |
|
Depreciation |
(34) |
(1,459) |
(1,493) |
|
Non-current assets excluding
investments |
10,873 |
18,842 |
29,715 |
|
Total net assets |
26,018 |
7,576 |
33,594 |
|
Capital expenditure |
35 |
5,909 |
5,944 |
|
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 |
UnitedKingdom£’000 |
SouthAfrica£’000 |
Total£’000 |
|
Revenue |
1,698 |
93,413 |
95,111 |
|
Operating 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 |
2.
REVENUE
|
|
2023£’000 |
2022 £’000 |
|
Revenue from contracts with
customers: |
|
|
|
Coal sales and
processing |
47,424 |
93,413 |
|
Service charges recoverable from
tenants |
181 |
98 |
|
Other: |
|
|
|
Rental income |
1,087 |
1,010 |
|
Other revenue |
561 |
590 |
|
Revenue |
49,253 |
95,111 |
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
|
|
2023£’000 |
2022 £’000 |
|
Mining |
38,620 |
43,209 |
|
Property |
339 |
269 |
|
Cost of sales |
38,959 |
43,478 |
|
Administration |
9,140 |
13,363 |
|
Operating
costs |
48,099 |
56,841 |
|
The direct property costs
are: |
|
|
|
Direct property expense |
305 |
250 |
|
Bad debts |
34 |
19 |
|
|
339 |
269 |
Operating costs above
include depreciation of £1,493,000 (2022:
£1,093,000).
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:
|
|
2023£’000 |
2022 £’000 |
|
Investment
surplus/(deficit) |
145 |
(60) |
|
Gain/(Loss) on valuation movement in respect of
head lease payments |
38 |
(5) |
|
Gain/(Loss) on
revaluation of investment
properties |
183 |
(65) |
5. PROFIT BEFORE
TAXATION
Profit before taxation is
arrived at after charging:
|
|
2023£’000 |
2022 £’000 |
|
Staff costs (see note
29) |
7,270 |
11,991 |
|
Depreciation |
1,493 |
1,093 |
|
Exchange loss |
(158) |
(270) |
|
Fees payable to the company’s auditor for the
audit of the company’s annual accounts |
55 |
50 |
|
Fees payable to the company’s auditor and its
associates for other services: |
|
|
|
The audit of the company’s subsidiaries pursuant to
legislation |
40 |
43 |
|
Inventories recognised as an
expense |
35,808 |
35,969 |
6. DIRECTORS’
EMOLUMENTS
Directors’ emoluments are
shown in the Directors’ remuneration report on page 41 which is
within the audited part of that
report.
7. INTEREST
PAYABLE
|
|
2023£’000 |
2022£’000 |
|
On bank overdrafts and bank
loans |
771 |
507 |
|
Unwinding of discount |
112 |
319 |
|
Lease liabilities |
27 |
25 |
|
Other interest payable |
563 |
196 |
|
Interest
payable |
1,473 |
1,047 |
8.
TAXATION
|
|
2023£’000 |
2022£’000 |
|
(a) Based on the
results for the year: |
|
|
|
Current tax - UK |
- |
- |
|
Current tax - Overseas |
1,318 |
11,520 |
|
Corporation tax - adjustment in respect of prior
year – UK |
- |
- |
|
Current tax |
1,318 |
11,520 |
|
Deferred tax |
(1,018) |
388 |
|
Total tax in
income statement charge |
300 |
11,908 |
(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 23.5% (2022:
19%).
The differences are
explained below:
|
Profit/ Loss on ordinary activities before
taxation |
610 |
38,014 |
|
Tax on profit/ loss on ordinary activities at
23.50% (2022: 19.00%) |
143 |
7,223 |
|
Effects of: |
|
|
|
Expenses not deductible for tax
purposes |
241 |
280 |
|
Non-taxable income |
(95) |
(83) |
|
Capital gains(losses) on
disposal |
- |
14 |
|
Differences in tax rates to UK Tax
rate |
(75) |
4,491 |
|
Other differences |
86 |
(17) |
|
Adjustment in respect of prior
years |
- |
- |
|
Total tax in
income statement
charge/(credit) |
300 |
11,908 |
(c) Analysis of United
Kingdom and overseas
tax:
United Kingdom tax included in
above:
|
Current tax |
- |
- |
|
Deferred tax |
(93) |
(937) |
|
|
(93) |
(937) |
|
Overseas tax included in
above: |
|
|
|
Current tax |
1,318 |
11,520 |
|
Adjustment in respect of prior
years |
- |
- |
|
Current tax |
1,318 |
11,520 |
|
Deferred tax |
(925) |
1,325 |
|
|
393 |
12,845 |
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% (2022: 25%) and the
corporation tax rate assessed in South
Africa for the year of 27% (2022: 28%) being different from
the corporation tax rate in the UK.
9. SHAREHOLDER
DIVIDENDS
|
|
2023 Per
share |
2023 £’000 |
2022Per share |
2022 £’000 |
|
Dividends paid during the year relating to the
prior period |
12p |
1,282 |
6.00p |
641 |
|
Dividends relating to the current
period: |
|
|
|
|
|
Interim dividend |
3.00p |
320 |
10p |
1,067 |
|
Proposed final dividend |
4.00p |
427 |
4p |
427 |
|
Proposed special
dividend |
0.00p |
- |
8p |
854 |
|
|
7.00p |
747 |
22p |
2,348 |
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 £1,602,000 (2022:
£1,708,000) comprise of dividends paid during the year relating to
the prior period of £1,282,000 (2022: £641,000) and the interim
dividend of £320,000 (£1,067,000). The final dividend for 2023 is
not accounted for until it has 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 £259,000 (2022:
£17,612,000). The basic profit/(loss) per share of 2.43p has been
calculated on a weighted average of 10,676,839 (2022: 10,676,839)
ordinary shares being in issue during the period. The diluted
profit per share of 2.43p has been calculated on the weighted
average number of shares in issue of 10,676,839 (2022: 10,676,839)
plus the dilutive potential ordinary shares arising from share
options of nil (2022: nil) totalling 10,676,839 (2022:
10,676,839).
11. INVESTMENT
PROPERTIES
|
|
Freehold £’000 |
Long Leasehold£’000 |
Head
Lease£’000 |
Total£’000 |
|
Valuation at 1 January
2023 |
8,270 |
2,195 |
170 |
10,635 |
|
Revaluation |
125 |
20 |
38 |
183 |
|
Valuation at 31
December 2023 |
8,395 |
2,215 |
208 |
10,818 |
|
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 |
|
Historical cost |
|
|
|
|
|
At 31 December
2023 |
5,851 |
728 |
- |
6,579 |
|
At 31 December 2022 |
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:
|
|
2023 £’000 |
2022£’000 |
|
Carter Towler |
10,610 |
10,465 |
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
value2023£’000 |
Carrying/fair value2022£’000 |
Range (weighted
average) 2023 |
Range (weighted average) 2022 |
|
Freehold – external
valuation |
Income
capitalisation |
Estimated rental value per sq ft p.a |
8,395 |
8,270 |
£4-£29(£21) |
£4 –
£29 (£21) |
|
|
|
Equivalent Yield |
|
|
8.8% -
13.5%(10.7%) |
8.9% –
15.8% (11.4%) |
|
Long leasehold – external
valuation |
Income
capitalisation |
Estimated rental value per sq ft p.a |
2,215 |
2,195 |
£9-£9(£9) |
£8 –
£8 (£8) |
|
|
|
Equivalent yield |
|
|
10.4% -
10.4%(10.4%) |
9.8% –
9.8% (9.8%) |
|
At 31
December |
|
|
10,610 |
10,465 |
|
|
|
|
|
|
|
|
|
|
|
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
v aluation. 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
|
|
|
2023£’000 |
2022£’000 |
2023£’000 |
2022£’000 |
|
Freehold – external
valuation |
840/(840) |
827 /
(827) |
215/(205) |
205 /
(195) |
|
Long Leasehold – external
valuation |
222/(222) |
220 /
(220) |
55/(52) |
57 /
(55) |
12. MINING
RESERVES, PLANT AND
EQUIPMENT
|
|
Miningreserves£’000 |
Miningequipment and development
costs£’000 |
Motorvehicles£’000 |
Officeequipment£’000 |
Total£’000 |
|
Cost at 1 January 2023 |
2,332 |
36,291 |
385 |
168 |
39,176 |
|
Exchange adjustment |
(273) |
(4,333) |
(33) |
(14) |
(4,653) |
|
Additions |
- |
5,903 |
27 |
14 |
5,944 |
|
Disposals |
- |
|
|
|
|
|
Cost at 31
December 2023 |
2,059 |
37,861 |
379 |
168 |
40,467 |
|
Accumulated depreciation at 1 January
2023 |
1,099 |
21,347 |
256 |
97 |
22,799 |
|
Exchange adjustment |
(174) |
(2,517) |
(20) |
(10) |
(2,721) |
|
Charge for the year |
|
1,443 |
28 |
22 |
1,493 |
|
Disposals |
- |
- |
- |
- |
- |
|
Accumulated
depreciation at 31 December
2023 |
925 |
20,273 |
264 |
109 |
21,571 |
|
Net book value at
31 December 2023 |
1,134 |
17,588 |
115 |
59 |
18,896 |
|
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 |
Included in the above line
items are right-of-use assets over the
following:
|
|
MiningEquipment and development costs
£’000 |
Motorvehicles£’000 |
Total£’000 |
|
Net book value at 1 January
2023 |
186 |
21 |
207 |
|
Additions |
1 |
- |
1 |
|
Exchange adjustment |
(24) |
- |
(24) |
|
Depreciation |
(35) |
(12) |
(47) |
|
Net book value at
31 December 2023 |
128 |
9 |
137 |
|
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 |
13.
INVESTMENTS HELD AS NON-CURRENT
ASSETS
|
|
2023Net
investment in
jointventuresassets£’000 |
2023Other £’000 |
2022Net
investment
in jointventuresassets£’000 |
2022Other£’000 |
|
At 1 January |
1,041 |
12,590 |
1,130 |
3,631 |
|
Gain in investment |
- |
856 |
- |
718 |
|
Additions |
- |
1,189 |
- |
9,758 |
|
Disposals |
- |
(377) |
- |
(1,517) |
|
Share of (loss) in joint
ventures |
(39) |
- |
(89) |
- |
|
Net assets at 31
December |
1,002 |
14,258 |
1,041 |
12,590 |
Other investments comprise
of the following:
|
|
2023£’000 |
2022 £’000 |
|
Net book value of unquoted
investments |
- |
- |
|
Net book and market value of readily realisable
investments listed on stock exchanges in the United
Kingdom |
6,843 |
6,782 |
|
Net book and market value of readily realisable
investments listed on overseas stock
exchanges |
7,415 |
5,808 |
|
|
14,258 |
12,590 |
Dividend income from investments held as
non-current assets was £501,000 (2022: £437,000) for the
year.
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 £24,000
(2022: £14,000). 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, W1W 8BJ. It has issued share capital
of 99 (2022: 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 £593,000 (2022:
£606,000). 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, W1W 8BJ.
It has issued share capital of 500,000 (2022: 500,000) ordinary
shares of £1 each. No dividends were received during the period. It
holds a Santander bank loan of £0.95million secured against its
investment property. The bank loan of £0.95million 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 4.2 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
July 2024. 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 £434,000 (2022:
£449,000). 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, W1W 8BJ.
It has issued share capital of 1,000,000 (2022: 1,000,000) ordinary
shares of £1 each. No dividends were received during the
period.
|
|
Development Physics£’000 |
Dragon£’000 |
West
Ealing£’000 |
2023£’000 |
Development Physics£’000 |
Dragon£’000 |
West
Ealing£’000 |
2022£’000 |
|
Turnover |
- |
168 |
65 |
233 |
- |
168 |
53 |
221 |
|
Profit and loss: |
|
|
|
|
|
|
|
|
|
(Loss)/Profit before depreciation, interest and
taxation |
(28) |
53 |
(32) |
(7) |
(33) |
(5) |
(71) |
(109) |
|
Depreciation and
amortisation |
- |
(2) |
- |
(2) |
- |
(3) |
- |
(3) |
|
(Loss)/Profit before interest and
taxation |
(28) |
51 |
(32) |
(9) |
(33) |
(8) |
(71) |
(112) |
|
Interest Income |
- |
- |
- |
- |
- |
- |
- |
- |
|
Interest expense |
- |
(79) |
(1) |
(80) |
- |
(51) |
(1) |
(52) |
|
(Loss)/Profit before
taxation |
(28) |
(28) |
(33) |
(89) |
(33) |
(59) |
(72) |
(164) |
|
Taxation |
- |
- |
- |
- |
- |
(2) |
(34) |
(36) |
|
(Loss)/Profit
after taxation |
(28) |
(28) |
(33) |
(89) |
(33) |
(61) |
(106) |
(200) |
|
Balance
sheet |
|
|
|
|
|
|
|
|
|
Non-current
assets |
- |
2,030 |
- |
2,030 |
- |
2,038 |
- |
2,038 |
|
Cash and cash
equivalents |
5 |
57 |
9 |
71 |
2 |
107 |
9 |
118 |
|
Property inventory |
483 |
- |
8,889 |
9,372 |
348 |
- |
8,112 |
8,460 |
|
Other current assets |
- |
112 |
64 |
176 |
2 |
269 |
47 |
318 |
|
Current borrowings |
- |
(950) |
(4,386) |
(5,336) |
- |
(1,143) |
(4,399) |
(5,542) |
|
Other current
liabilities |
(559) |
(64) |
(3,709) |
(4,332) |
(395) |
(59) |
(2,862) |
(3,316) |
|
Net current
assets |
(71) |
(845) |
867 |
(49) |
(43) |
(826) |
907 |
38 |
|
Non-current borrowings |
- |
- |
- |
- |
- |
- |
(9) |
(9) |
|
Other non-current
liabilities |
- |
- |
- |
- |
- |
- |
- |
- |
|
Net assets at 31
December |
(71) |
1,185 |
867 |
1,981 |
(43) |
1,212 |
898 |
2,067 |
|
Share of net
assets at 31 December |
(24) |
593 |
434 |
1,002 |
(14) |
606 |
449 |
1,041 |
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 ofincorporation |
|
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
|
|
2023£’000 |
2022£’000 |
|
Coal |
|
|
|
Washed |
1,949 |
4,758 |
|
Mining Production |
542 |
162 |
|
Work in progress |
85 |
221 |
|
Other |
3 |
58 |
|
|
2,579 |
5,199 |
The amount of inventories
recognised as an expense during the period was £35,808,000 (2022:
£35,969,000).
17. TRADE
AND OTHER RECEIVABLES
|
|
2023£’000 |
2022 £’000 |
|
Financial assets
falling due within one
year: |
|
|
|
Trade receivables |
4,180 |
4,067 |
|
Amount owed by joint
venture |
1,844 |
1,379 |
|
Other receivables |
1,727 |
860 |
|
Non-financial
instruments falling due within one
year: |
|
|
|
Prepayments and accrued
income |
183 |
131 |
|
|
7,934 |
6,437 |
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
£374,000 (2022: £89,000).
18.
INVESTMENTS IN LISTED SECURITIES HELD AT
FVPL
|
|
2023Other £’000 |
2022Other£’000 |
|
At 1
January |
886 |
685 |
|
(Loss)/Gain in
investments |
(97) |
318 |
|
Additions |
- |
449 |
|
Disposals |
(55) |
(566) |
|
Market value at 31
December |
734 |
886 |
|
|
2023£’000 |
2022 £’000 |
|
Market value of
listed Investments: |
|
|
|
Listed in Great Britain |
618 |
686 |
|
Listed outside Great
Britain |
116 |
200 |
|
|
734 |
886 |
|
Original cost of listed
investments |
760 |
846 |
|
Unrealised (deficit)/surplus of market value
versus cost |
(26) |
40 |
Dividend income from investments in listed
securities held at FVPL was £54,000 (2022: £147,000) for the
year.
19. TRADE
AND OTHER PAYABLES
|
|
2023£’000 |
2022 £’000 |
|
Trade payables |
8,673 |
8,519 |
|
Amounts owed to joint
ventures |
33 |
120 |
|
Lease liabilities (Note
31) |
63 |
54 |
|
Other payables |
1,949 |
2,000 |
|
Accruals |
649 |
2.366 |
|
Deferred Income |
222 |
223 |
|
|
11,589 |
13,282 |
20.
FINANCIAL LIABILITIES –
BORROWINGS
|
Current
|
Non-current
|
|
|
2023£’000 |
2022 £’000 |
2023£’000 |
2022 £’000 |
|
Bank overdraft
(secured) |
3,534 |
3,225 |
- |
- |
|
Bank loan (secured) |
3,927 |
570 |
22 |
3,930 |
|
|
7,461 |
3,795 |
22 |
3,930 |
|
|
2023£’000 |
2022 £’000 |
|
Bank overdraft and loan instalments by reference
to the balance sheet date: |
|
|
|
Within one year |
7,461 |
3,795 |
|
From one to two years |
22 |
3,906 |
|
From two to five years |
- |
24 |
|
|
7,483 |
7,725 |
|
Bank overdraft and loan analysis by
origin: |
|
|
|
United Kingdom |
3,920 |
3,880 |
|
Southern Africa |
3,563 |
3,845 |
|
|
7,483 |
7,725 |
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 £9,373,603 (2022: £11,482,554). All
banking covenants were either adhered to or waived by Absa Bank
Limited during the year.
In the UK, the Group holds
a £3.9million 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 £10,610,000 (2022: £10,465,000). No banking covenants
were breached by the Group during the year. The Group intends to
renew or refinance the loan prior to the end of its
term.
Dragon Retail Properties
Limited (“Dragon”), the Group’s 50% owned joint venture, holds a
Santander bank loan of £0.95million 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 4.2 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 July 2024.
Santander have indicated that they are willing to provide a new
term loan and we expect to complete this in the near
future.
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:
|
|
2023£’000 |
2022 £’000 |
|
Total bank loans and
overdraft |
7,483 |
7,725 |
|
Less cash and cash equivalents (excluding
overdraft) |
(3,242) |
(10,590) |
|
Net
debt |
4,241 |
(2,865) |
|
Total equity
attributable to shareholders of the
parent |
31,990 |
33,802 |
|
Gearing |
(13.3%) |
(8.5%) |
Analysis of the changes in
liabilities arising from financing
activities:
|
|
Bank
borrowings £’000 |
Bank
overdrafts£’000 |
Lease
liabilities£’000 |
2023£’000 |
Bank borrowings £’000 |
Bank overdrafts£’000 |
Lease liabilities£’000 |
2022£’000 |
|
Balance at 1 January |
4,499 |
3,225 |
398 |
8,122 |
3,983 |
2,536 |
454 |
6,973 |
|
Exchange adjustments |
(64) |
(388) |
(24) |
(476) |
(9) |
11 |
5 |
7 |
|
Cash movements excluding exchange
adjustments |
(486) |
697 |
(39) |
172 |
525 |
678 |
(56) |
1,147 |
|
Additions |
- |
- |
38 |
38 |
- |
- |
(5) |
(5) |
|
Balance at 31 December |
3,949 |
3,534 |
373 |
7,856 |
4,499 |
3,225 |
398 |
8,122 |
21.
PROVISION FOR
REHABILITATION
|
|
2023£’000 |
2022£’000 |
|
As at 1 January |
1,715 |
1,390 |
|
Exchange adjustment |
(213) |
6 |
|
Increase in provision |
- |
- |
|
Unwinding of discount |
112 |
319 |
|
As at 31 December |
1,614 |
1,715 |
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 Assetsmeasured atamortised cost£’000 |
Financial Liabilitiesmeasured atamortised cost£’000 |
Investments held at FVPL
£’000 |
2023£’000 |
Financial Assetsmeasured atamortised cost£’000 |
Financial Liabilitiesmeasured atamortised cost£’000 |
Investments held at FVPL
£’000 |
2022£’000 |
|
Cash and cash
equivalents |
3,242 |
- |
- |
3,242 |
10,590 |
- |
- |
10,590 |
|
Non-current other investments held at
FVPL |
- |
- |
14,258 |
14,258 |
- |
- |
12,590 |
12,590 |
|
Investments in listed securities held at
FVPL |
- |
- |
734 |
734 |
- |
- |
886 |
886 |
|
Trade and other
receivables |
7,571 |
- |
- |
7,571 |
6,306 |
- |
- |
6,306 |
|
Bank borrowings and
overdraft |
- |
(7,483) |
- |
(7,483) |
- |
(7,725) |
- |
(7,725) |
|
Lease Liabilities |
- |
(373) |
- |
(373) |
- |
(398) |
- |
(398) |
|
Other liabilities |
- |
(16,495) |
- |
(16,495) |
- |
(17,261) |
- |
(17,261) |
|
|
10,993 |
(24,351) |
14,992 |
1,634 |
16,896 |
(25,384) |
13,476 |
4,988 |
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 2022 fall under the same
category of financial instrument as
2023.
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 2023, 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 £56,000 (2022: £35,000). The
effect on equity of this change would be an equivalent decrease or
increase for the year of £56,000 (2022:
£35,000).
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 Sisonke Coal Processing (Pty)
Ltd.
The following table sets
out the maturity profile of contractual undiscounted cash flows of
financial liabilities as at 31
December:
|
|
2023£’000 |
2022 £’000 |
|
Within one year |
24,431 |
21,511 |
|
From one to two years |
62 |
4,259 |
|
From two to five years |
130 |
479 |
|
Beyond five years |
144 |
126 |
|
|
24,767 |
26,375 |
The following table sets
out the maturity profile of contractual undiscounted cash flows of
financial liabilities as at 31 December maturing within one
year:
|
|
2023£’000 |
2022£’000 |
|
Within one month |
7,512 |
15,635 |
|
From one to three
months |
11,255 |
4,150 |
|
From four to twelve
months |
5,664 |
1,726 |
|
|
24,431 |
21,511 |
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 £3.9million 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
Group intends to renew or refinance the loan prior to the end of
its term.
As a result of the above
agreed banking facilities, the Directors believe that the Group is
well placed to manage its liquidity
risk.
Credit
risk
The Group is mainly
exposed to credit risk on its cash and cash equivalents, trade and
other receivables and amounts owed by joint ventures as per the
balance sheet. The maximum exposure to credit risk is represented
by the carrying amount of each financial asset in the balance sheet
which at year end amounted to £10,993,000 (2022:
£16,896,000).
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
73% (2022: 84%) 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 £374,000 (2022: £89,000). As at year
end the amount of trade receivables held past due date less credit
loss allowances was £144,000 (2022: £159,000). To date, the amount
of trade receivables held past due date less credit loss allowances
that has not subsequently been settled is £19,000 (2022: £122,000).
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 2023, cash at bank and in hand
amounted to £3,242,000 (2022: £10,590,000) 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 2023 and 2022 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 2023, 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 £280,000 (2022:
£121,000). 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 £466,000 (2022: £201,000). 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:
|
|
2023£’000 |
2022 £’000 |
|
Sterling |
1,570 |
7,779 |
|
South African Rand |
1,109 |
2,238 |
|
US Dollar |
563 |
573 |
|
|
3,242 |
10,590 |
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:
|
2023: |
Sterling£’000 |
South
AfricanRands
£’000 |
|
Sterling |
12,082 |
- |
|
South African Rand |
40 |
(12,583) |
|
US Dollar |
2,095 |
- |
|
|
14,217 |
(12,583) |
|
2022: |
Sterling£’000 |
South
AfricanRands
£’000 |
|
Sterling |
14,715 |
- |
|
South African Rand |
45 |
(11,743) |
|
US Dollar |
1,971 |
- |
|
|
16,731 |
(11,743) |
23. DEFERRED
TAXATION
|
|
2023
£’000 |
2022
£’000 |
|
As at 1 January |
872 |
506 |
|
Recognised in income |
(1,018) |
388 |
|
Exchange adjustment |
(172) |
(22) |
|
As at 31 December |
(318) |
872 |
|
The deferred tax balance comprises the
following: |
|
|
|
Revaluations |
924 |
671 |
|
Capital allowances |
4,562 |
3,855 |
|
Short term timing
difference |
(846) |
(813) |
|
Unredeemed capital
deductions |
(2,665) |
(1,439) |
|
Losses and other
deductions |
(2,293) |
(1,402) |
|
|
(318) |
872 |
Refer to note 8 for
details of deferred tax recognised in income in the current year.
Tax rates of 25% (2022: 25%) in the UK and 27% (2022: 27%) in
South Africa were utilised to
calculate year end deferred tax
balances.
24. SHARE
CAPITAL
|
|
2023£’000 |
2022 £’000 |
|
Authorised: 13,000,000 ordinary shares of 10p
each |
1,300 |
1,300 |
Allotted and fully
paid:
|
|
2023Number
of ordinaryshares |
2022Number of ordinaryshares |
2023£’000 |
2022£’000 |
|
At 1 January and outstanding at 31
December |
10,676,839 |
10,676,839 |
1,068 |
1,068 |
25. OTHER
RESERVES
|
|
2023£’000 |
2022£’000 |
|
Equity share options |
1,026 |
1,026 |
|
Net investment premium on share capital in joint
venture |
86 |
86 |
|
|
1,112 |
1,112 |
26. SHARE
BASED PAYMENTS
Details of the share
option scheme are shown in the Directors’ remuneration report on
page 42 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 |
Subscriptionprice
per share |
Period
within which
optionsexercisable |
Number of sharefor which optionsoutstanding at31 December 2022 |
Number of share options lapsed/surrendered/awardedduring year |
Number of share for
which optionsoutstanding
at31 December
2023 |
|
2022 |
352.0p |
Sep 2022 – Sep
2032 |
760,000 |
- |
760,000 |
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%
|
|
2023Number |
2023Weightedaverageexercise
price |
2022Number |
2022Weightedaverageexercise price |
|
Outstanding at 1
January |
760,000 |
352.00p |
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 |
760,000 |
352.00p |
|
Exercisable at 31
December |
760,000 |
352.00p |
760,000 |
352.00p |
27.
NON-CONTROLLING INTEREST
|
|
2023£’000 |
2022£’000 |
|
As at 1 January |
1,759 |
323 |
|
Issue of shares in
subsidiary |
- |
1 |
|
Share of profit/(loss) for the
year |
51 |
8,494 |
|
Dividends paid |
- |
(7,034) |
|
Exchange adjustment |
(206) |
(25) |
|
As at 31 December |
1,604 |
1,759 |
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.
|
|
2023£’000 |
2022£’000 |
|
Revenue |
47,423 |
93,356 |
|
Expenses |
(47,275) |
(63,289) |
|
Profit/(loss) for
the year |
148 |
30,067 |
|
Other comprehensive
Income |
- |
- |
|
Total
comprehensive income for the
year |
148 |
30,067 |
|
Balance sheet |
|
|
|
Non-current assets |
18,843 |
16,325 |
|
Current assets |
9,033 |
11,752 |
|
Current liabilities |
(20,451) |
(18,873) |
|
Non-current liabilities |
(2,262) |
(3,522) |
|
Net assets at 31
December |
5,163 |
5,682 |
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 owedto related party£’000 |
Amounts owedby related party£’000 |
Costs recharged(to)/by relatedparty£’000 |
Cash paid (to)/by relatedparty£’000 |
|
Related
party: |
|
|
|
|
|
London & Associated Properties PLC (note
(a)) |
- |
- |
200 |
(200) |
|
West Ealing Projects Limited (note
(b)) |
- |
(1,618) |
- |
(381) |
|
Dragon Retail Properties Limited (note
(c)) |
33 |
- |
(36) |
(51) |
|
Development Physics Limited (note
(d)) |
- |
(226) |
- |
(84) |
|
As at 31 December
2023 |
33 |
(1,844) |
164 |
(716) |
|
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) |
(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 41 and 42 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 £326,000 (2022: £580,000).
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 (2022:
£41,000) and no repayment (2022: £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 £40,000 (2022: £44,000) and an investment in Vunani
Capital Partners (Pty) Ltd of £70,000 (2022: £189,000). Both are
related parties to Vunani Mining (Pty) Ltd and are classified as
non-current available for sale
investments.
29.
EMPLOYEES
|
|
2023£’000 |
2022£’000 |
|
Staff costs during the year were as
follows: |
|
|
|
Salaries |
6,495 |
8,891 |
|
Social security costs |
326 |
580 |
|
Pension costs |
449 |
300 |
|
Share based payments |
- |
2,220 |
|
|
7,270 |
11,991 |
|
|
2023 |
2022 |
|
The average weekly numbers of employees of the
Group during the year were as follows: |
|
|
|
Production |
209 |
213 |
|
Administration |
15 |
15 |
|
|
224 |
228 |
30. CAPITAL
COMMITMENTS
|
|
2023£’000 |
2022 £’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 2023 is as
follows:
|
|
Mining Equipment & Development
costs£’000 |
Motor
Vehicles£’000 |
Head Lease
Property£’000 |
2023£’000 |
2022£’000 |
|
Within one year |
41 |
9 |
13 |
62 |
71 |
|
Second to fifth year |
136 |
- |
52 |
188 |
210 |
|
After five years |
9 |
- |
1,564 |
1,573 |
1,341 |
|
|
186 |
9 |
1,629 |
1,824 |
1,622 |
|
Discounting adjustment |
(30) |
- |
(1,421) |
(1,451) |
(1,222) |
|
Present value |
156 |
9 |
208 |
373 |
400 |
The present value of
minimum lease payments at 31 December 2023 is as
follows:
|
|
Mining Equipment & Development
costs£’000 |
Motor Vehicles£’000 |
Head Lease
Property£’000 |
2023£’000 |
2022£’000 |
|
Within one year (Note
19) |
41 |
9 |
13 |
54 |
54 |
|
Second to fifth year |
110 |
- |
41 |
157 |
170 |
|
After five years |
5 |
- |
154 |
163 |
176 |
|
Present value |
156 |
9 |
208 |
373 |
400 |
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 125 years (2022: 126 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 105 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:
|
|
2023£’000 |
2022£’000 |
|
Within one year |
959 |
973 |
|
Second year |
854 |
875 |
|
Third year |
756 |
801 |
|
Fourth year |
674 |
716 |
|
Fifth year |
624 |
645 |
|
After five years |
9,327 |
9,530 |
|
|
13,194 |
13,540 |
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:
|
|
2023£’000 |
2022£’000 |
|
Rail siding |
43 |
49 |
|
Rehabilitation of mining
land |
1,614 |
1,715 |
|
Water & electricity |
41 |
47 |
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 22 April 2024, the Group has been
advised that it has a strong legal case, that it has complied fully
with the legislation and, therefore, no economic outflow is
expected to occur. Because of the nature and complexity of the
dispute, the possible financial effect of a negative decision
cannot be measured reliably. Accordingly, no provision has been
booked at the year end. At this stage, the Group believes that the
dispute will be resolved in its
favour.
Bisichi
PLC
Company balance
sheet
at 31 December
2023
|
|
Notes |
2023£’000 |
2022£’000 |
|
Fixed
assets |
|
|
|
|
Tangible assets |
35 |
99 |
98 |
|
Investment in joint
ventures |
36 |
665 |
665 |
|
Other investments |
36 |
20,614 |
18,946 |
|
|
|
21,378 |
19,709 |
|
Current
assets |
|
|
|
|
Debtors – amounts due within one
year |
37 |
3,820 |
2,754 |
|
Debtors – amounts due in more than one
year |
37 |
1,280 |
1,159 |
|
Bank balances |
|
1,651 |
7,928 |
|
|
|
6,751 |
11,841 |
|
Creditors – amounts falling due within one
year |
38 |
(782) |
(2,514) |
|
Net current
assets |
|
5,969 |
9,327 |
|
Total assets less
current liabilities |
|
27,347 |
29,036 |
|
Creditors – amounts falling in more than one
year |
38 |
- |
(9) |
|
Net
assets |
|
27,347 |
29,027 |
|
Capital and
reserves |
|
|
|
|
Called up share capital |
24 |
1,068 |
1,068 |
|
Share premium account |
|
258 |
258 |
|
Other reserves |
|
1,027 |
1,027 |
|
Retained earnings |
33 |
24,994 |
26,674 |
|
Shareholders’
funds |
|
27,347 |
29,027 |
The loss for the financial
year, before dividends payable, was £78,000 (2022: profit of
£15,415,000)
The company financial
statements were approved and authorised for issue by the board of
directors on 22 April 2024 and signed on its behalf
by:
A R
Heller
G J
Casey
Company Registration No. 00112155
Director
Director
Company statement
of changes in equity
for the year ended 31
December 2023
|
|
Share capital£’000 |
Share premium£’000 |
Otherreserve£’000 |
Retainedearnings£’000 |
Shareholdersfunds£’000 |
|
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 1
January 2023 |
1,068 |
258 |
1,027 |
26,674 |
29,027 |
|
Dividends paid |
- |
- |
- |
(1,602) |
(1,602) |
|
Profit and total comprehensive income for the
year |
- |
- |
- |
(78) |
(78) |
|
Balance at 31
December 2023 |
1,068 |
258 |
1,027 |
24,994 |
27,347 |
Company accounting
policies
for the year ended 31
December 2023
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
70.
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
76.
Deferred
taxation
Details on the Group’s
accounting policy for deferred taxation can be found on page
78.
Leased assets and
liabilities
Details on the Group’s
accounting policy for leased assets and liabilities can be found on
page 77.
Pensions
Details on the Group’s
accounting policy for pensions can be found on page
76.
Share based
remuneration
Details on the Group’s
accounting policy for share based remuneration can be found on page
76. Details of the share options in issue are disclosed in the
directors’ remuneration report on page 42 under the heading share
option schemes which is within the audited part of this
report.
33. PROFIT
& LOSS ACCOUNT
A separate profit and loss
account for Bisichi PLC has not been presented as permitted by
Section 408(2) of the Companies Act 2006. The loss for the
financial year, before dividends paid, was £78,000 (2022: profit:
£15,415,000)
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 42 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 |
Officeequipment£’000 |
Total£’000 |
|
Cost at 1 January 2023 |
45 |
104 |
44 |
193 |
|
Additions |
- |
27 |
8 |
35 |
|
Cost at 31
December 2023 |
45 |
131 |
52 |
228 |
|
Accumulated depreciation at 1 January
2023 |
- |
83 |
12 |
95 |
|
Charge for the year |
- |
17 |
17 |
34 |
|
Accumulated
depreciation at 31 December
2023 |
- |
100 |
29 |
129 |
|
Net book value at
31 December 2023 |
45 |
31 |
23 |
99 |
|
Net book value at 31 December
2022 |
45 |
21 |
32 |
98 |
Leasehold property
consists of a single unit with a long leasehold tenant. The term
remaining on the lease is 36 years. Included in Motor Vehicles is a
right-of-use asset with a net book value of
£9,000.
36.
INVESTMENTS
|
|
Joint venturesshares£’000 |
Shares in subsidiaries£’000 |
Other investments£’000 |
Total£’000 |
|
Net book value at 1 January
2023 |
665 |
6,356 |
12,590 |
18,946 |
|
Invested during the
year |
- |
- |
1,189 |
1,189 |
|
Repayment |
- |
- |
(377) |
(377) |
|
Gain in investments |
- |
- |
856 |
856 |
|
Net book value at
31 December 2023 |
665 |
6,356 |
14,258 |
20,614 |
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 £14,258,000 (2022: £12,590,000) shares in listed
companies.
37.
DEBTORS
|
|
2023£’000 |
2022 £’000 |
|
Amounts due within
one year: |
|
|
|
Amounts due from subsidiary
undertakings |
1,664 |
1,079 |
|
Other debtors |
188 |
237 |
|
Joint venture |
1,844 |
1,379 |
|
Prepayments and accrued
income |
124 |
59 |
|
|
3,820 |
2,754 |
|
Amounts due in
more than one year: |
|
|
|
Deferred taxation |
1,280 |
1,159 |
|
|
1,280 |
1,159 |
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
|
|
2023£’000 |
2022£’000 |
|
Amounts falling
due within one year: |
|
|
|
Amounts due to subsidiary
undertakings |
63 |
15 |
|
Joint venture |
33 |
120 |
|
Other taxation and social
security |
76 |
64 |
|
Other creditors |
104 |
71 |
|
Lease Liabilities |
9 |
11 |
|
Accruals and deferred
income |
497 |
2,233 |
|
|
782 |
2,514 |
|
Amounts falling
due in more than one
year: |
|
|
|
Lease Liabilities |
- |
9 |
Lease liabilities comprise
of leases on Motor vehicles with remaining leases of less than 1
year. 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 owedby 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)) |
(995) |
(850) |
- |
|
Ninghi Marketing Limited (note
(b)) |
(102) |
- |
- |
|
As at 31 December
2023 |
(1,097) |
(850) |
- |
|
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 |
(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 (2022:
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
|
|
2023£’000 |
2022£’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 |
1,350 |
3,264 |
| Social security costs |
326 |
580 |
| Pension costs |
125 |
21 |
|
Share based payments |
- |
2,220 |
|
|
1,801 |
6,085 |