Annual Report • Dec 31, 2010
Annual Report
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Strong financial position at year end with £5.4million in cash
UK property portfolio continues to perform well
Benefits of investment made at Black Wattle in 2010 to be realised in years to come
Independent Auditor's report
Consolidated statement of comprehensive income
fully operat ional opencast mining
2010 has been a very challenging year for your Company and particularly for its direct coal mining subsidiary in South Africa, Black Wattle, which operated at a loss during 2010.
The reasons for the loss are as follows:
To overcome the effect of the strong SA Rand, we increased production by expanding our washing plant and buying in high quality coal. Our railway siding was also expanded and markets were found for this increased production. However, the shortage of railway trucks to deliver this coal to our customers meant that during the second half of the year we built up unacceptable levels of stock. In order to reduce these stock levels we had to stop buying in coal, which in turn had a material effect on our earnings. Despite this, the investments that we have made in 2010 in terms of mine expansion and new reserve acquisitions will reap substantial benefits in years to come.
At the 31 December 2010, Bisichi had very little net debt and cash balances of £5.4 million which can be used to expand Group activities.
By the second half of 2011 I believe that we will return to an acceptable level of profitability. The reasons for this are:
As previously announced, Vunani Limited has concluded the purchase of a 37.5% shareholding in Black Wattle. Vunani Limited is a leading, publicly listed, black-owned and managed company and we are very pleased that they have joined us as a partner in Black Wattle.
On the subject of health and safety, I am very pleased to report that Black Wattle had another very good year having made significant investment in this area over a number of years. A more detailed report on health and safety is included in the Mining Review.
Bisichi's UK property portfolio, managed by London and Associated Properties PLC, continues to perform well. It showed a small increase in external valuation at year end and – as in previous years when the mine has under-performed - the income from the property portfolio has underwritten many of our costs and so provided the company with a stable financial cushion. Voids in the portfolio have continued to remain low, even during the difficult retailing conditions that have been experienced over the last 18 months.
As recently announced, Michael Stevens, who held the position of Group Company Secretary for twenty five years, has retired. I would like to thank Michael on behalf of the Board, for his extremely valuable contribution during the years of substantial growth for the company and to wish Michael a very enjoyable retirement.
The Board paid an interim cash dividend of 1p during the year. The Directors recommend the payment of a final dividend of 3p (2009: 3p). The final dividend will be payable on 8 August 2011 to shareholders registered at the close of business on 1 July 2011. It will be proposed that shareholders are given the opportunity of electing to receive all or part of the final dividend in the form of fully paid ordinary shares rather than cash.
Although the company made a loss in 2010, the Board felt it was appropriate to maintain the dividend but to pay it in a form that will give shareholders the opportunity to either take cash or to take new shares and receive the benefit of the investment we have made in the mine during the year, which will be realised in years to come. Your directors, and London & Associated Properties PLC have agreed to elect to take their full entitlement in new shares in lieu of cash, representing over 51% of the ordinary share capital of the company.
On behalf of the Board I would like to thank all of our staff for their hard work during the course of the year.
Michael Heller Chairman
15 April 2011
We're committed to creating a safe and health y work environment
As noted in the Chairman's statement, the challenging environment experienced in the first half of 2010 by Black Wattle our direct mining subsidiary, continued into the second half of 2010. Although Black Wattle continued to mine opencast coal, buy-in coal was stopped and overall production was limited as a result of a shortage of railway trucks in the second half of the year. This together with the strong South African Rand and lower market prices had a material effect on Black Wattle's profitability.
As we continue into 2011, the effect of these factors has been mitigated by the significant improvement in market prices and the commencement of mining of higher quality opencast reserves.
Although production through the washing plant increased in 2010, with total run of mine production of 1.46 million metric tonnes for the year (2009: 1.26 million metric tonnes), overall monthly production through the washing plant decreased from 135,000 metric tonnes in the first eight months of 2010 to 94,000 metric tonnes in the last four months. As stated above, this decrease in production was a direct result of a shortage of railway trucks in the second half of the year.
As noted in our previous annual report, Black Wattle's remaining opencast permissions were granted in February 2010. This represented an important landmark in the mine's development and, going forward, gives Black Wattle the ability to mine strategically and more flexibly its remaining reserves.
In addition to its existing reserves, Black Wattle has concluded an agreement to purchase run of mine coal from an opencast reserve of coal contiguous to Black Wattle's existing opencast mine. The reserve, which is expected to make up approximately half of Black Wattle's overall monthly production is made up of high quality run of mine coal with a lower average stripping ratio and a higher yield than the reserves we mined in 2010.
We are pleased to report that mining of this reserve commenced at the end of last year and overall production is steadily being increased. Much of the new reserve comprises very low phosphorous coal, which we can sell at a premium into the domestic metallurgical industry and delivery of this coal is not reliant on the performance of the rail provider as the coal is supplied by road transport.
International coal prices remained relatively stable in 2010 in comparison to the extreme volatility seen in the international coal market in 2009. The average weekly price of Free on Board (FOB) Coal from Richards Bay Coal Terminal (API4) remained in a range of US\$85.00 to US\$95.00 per metric tonne for the most of 2010. However, over the same period, the South African Rand continued to appreciate by over 10% against the US Dollar. This is in addition to the 21% appreciation of the Rand experienced in 2009. In addition to the downturn in the Rand denominated international coal price, domestic prices continued to decrease in 2010 resulting in a reduction in prices in all our domestic steam coal markets.
Going forward into 2011, the international coal price has significantly improved with the price of FOB coal from Richards Bay Coal Terminal increasing to approximately US\$120 per metric tonne at the time of writing this report. In addition, the domestic price has increased over 12% from the prices we achieved in 2010. Our ability to diversify our product will allow us to sell to markets which give the highest return and we look forward to taking advantage of this as production from our new opencast reserve increases in 2011.
As noted in the Chairman's statement, we are very pleased to report that Vunani Limited has concluded the purchase of a 37.5% shareholding in Black Wattle. We are proud of our longstanding commitment to Black Economic Empowerment in South Africa and we see this transaction with Vunani as the first of many we will do together in South Africa. Vunani Limited is a publicly listed, black owned and managed company.
"The group is in a strong position to take advantage of the improvement in market prices"
Andrew Heller
Andrew Heller
Black Wattle is committed to creating a safe and healthy working environment for its employees and the health and safety of our employees is of the utmost importance. In addition to the required personnel appointments and assignment of direct health and safety responsibilities on the mine, a system of Hazard Identification and Risk Assessments has been designed, implemented and maintained at Black Wattle.
Health and Safety training is conducted on an ongoing basis. Supervisors and about 95 percent of 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:
HSE performance in 2010:
Environment Management Programme Under the terms of the mine's Environmental Management Programme approved by the Department of Mineral Resources ("DMR"), Black Wattle undertakes a host of environmental protection activities to ensure that the approved Environmental Management Plan is fully implemented. In addition to these routine activities, Black Wattle regularly carries out environmental monitoring activities on and around the mine, including evaluation of ground water quality, air quality, noise and lighting levels, ground vibrations, air blast monitoring, and assessment of visual impacts.
Black Wattle Colliery has improved its water management tremendously by erecting a new pollution control dam as well as upgrading existing dams in consultation with the Department of Water Affairs and Forestry.
Black Wattle Colliery is committed to true transformation and empowerment within the company 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 the company's stakeholders:
The key focus areas in terms of the detailed SLP programmes were updated as follows:
In compliance with the Mining Charter and the Mineral and Petroleum Resource Development Act, Black Wattle has implemented a BEE-focussed procurement policy which strongly encourages our suppliers to establish and maintain BEE credentials. At present, BEE companies provide approximately 52 percent of Black Wattle's equipment and services. We closely monitor our monthly expenditure and welcome potential BEE suppliers to compete for equipment and service contracts at Black Wattle. Black Wattle also sells much of its coal products to empowered companies as evidenced by our long term sales agreement with a BEE company for the purchase of our discard product which is then sold to Eskom, the national power utility.
Black Wattle is committed to achieving the goals of the Employment Equity Act and is pleased to report the following:
Black Wattle is a fully operational opencast mine with strong management, existing infrastructure and markets in place. Along with the expansion of the washing plant and upgrade of the railway siding, various cost cutting and operational programmes have been undertaken at Black Wattle in order to ensure maximum productivity; yield and profitability. As a result, the group is in a strong position to take advantage of the improvement in market prices and the increased production.
Going forward, I am confident that 2011 should be a successful year for our South African operations.
Andrew Heller Managing Director
15 April 2011
The Chairman's Statement and the Mining Review on the preceding pages 2 to 10 give a comprehensive review and assessment of the group's activities during the past year and prospects for the forthcoming year.
Coal price risk: The group's mining operational earnings are largely dependent on movements in the coal price. It does have the flexibility in terms of markets where it can sell its coal domestically (to local industrial consumers and the power industry) or to export to various international markets.
Coal washing: The group's mining operation's earnings are highly sensitive to coal washing, therefore a stoppage or disruption to the process could significantly impact earnings. However, there is scope to raise earnings substantially if the yield from the washing process is improved even marginally.
Mining risk: Attached to mining there are inherent health and safety risks. Any such safety incidents disrupt operations, and can slow or even stop production. The group has a comprehensive Health and Safety programme in place to mitigate this. There is scope to increase production by buying in coal to compensate for disruptions in production.
As with many mining operations, the reserve that is mined has the risk of not having the qualities expected from geological analysis.
Currency risk: The group's South African operations are sensitive to currency movements, especially those between the South African Rand, US Dollar and British Pound.
New reserves and mining permissions: The acquisition of additional reserves, permissions to mine and new mining opportunities in South Africa generally are contingent on a number of factors outside of the group's control, e.g. approval by the Department of Mineral Resources.
Regulatory risk: The group's South African operations are subject to the government Mining Charter and scorecard which primarily seeks to:
Expand the skills base of HDSA's in order to serve the community;
Promote employment and the social and economic welfare of mining communities and areas supplying mining labour; and
The group continues to make good progress towards meeting the Charter requirements. However any regulatory changes to these, or failure to meet existing targets, could adversely affect the mine's ability to retain its mining rights in South Africa.
Transport risk: At present the government owned Transnet Freight Rail (TFR) is the sole rail freight provider for coal in South Africa. The group's South African operations are therefore reliant on TFR for delivery of its export quality coal directly or indirectly via the Southern African ports to its end customers.
Power supply risk: The current utility provider for power supply in South Africa is the government run Eskom. Eskom has recently undergone capacity problems resulting in power cuts and lack of provision of power supply to new projects. The group's mining operations have to date not been affected by power cuts.
Flooding risk: The group's mining operations are susceptible to seasonal flooding which could disrupt production. Management monitors water levels on an ongoing basis and various projects have been completed, including the construction of additional dams, to mitigate this risk.
Environmental risk: The group's South African mining operations are required to adhere to local environmental regulations. Details of the groups Environment Management Programme is disclosed in the Mining review on page 9.
Health & Safety risk: The group's South African mining operations are required to adhere to local Health and Safety regulations. Details of the group's Health and Safety Programme is disclosed in the Mining Review on page 6.
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.
We seek to balance the high risk of our mining operations with a dependable cash flow from our UK property investment operations. Fluctuations in property values, which are reflected in the Consolidated Income Statement and Balance Sheet, are dependent on an annual valuation of commercial properties. A fall in UK commercial property can have a marked effect on the profitability and the net asset value of the group. However, due to the long term nature of the leases, the effect on cash flows from property investment activities will remain stable as long as tenants remain in operation.
The group seeks to expand its operations in South Africa through the acquisition of additional coal reserves.
The group's UK activities are principally property investment whereby we provide premises which are rented to retail businesses. We seek to provide those tenants with good quality premises from which they can operate in an efficient and environmentally sound manner.
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 continues to strengthen its asset base with strong cash generation from its South African mining operations backed by UK retail property.
The group signed new borrowing facilities in both its UK and South African operations.
In the UK, a term loan facility of £5million and an overdraft facility of £2million were signed in March 2010 with Royal Bank of Scotland. The term loan facility will expire in December 2012 and is secured against the group's UK retail property portfolio. The property portfolio was externally valued at 31 December 2010 and the value of UK investment properties attributable to the group at year end was £12.1million (2009: £11.9million).
In South Africa, a structured trade finance facility of R60million (South African Rand) was signed in March 2010 with Absa Bank Limited, a South African subsidiary of Barclays Bank PLC. This facility comprises of a R40million revolving loan to cover the working capital requirements of the group's South African operations, and a R20million loan facility to cover Guarantee requirements related to the group's South African mining operations. The R60million facility is renewed annually and is secured against inventory, debtors and cash that are held in the group's South African operations.
The group's cash and cash equivalents (excluding bank overdrafts) at year end were £5.4million (2009: £6.6million). The net assets of the group at year end were £18.3million (2009: £19.3million).
Further details on the group's financial position are stated in the Consolidated Balance Sheet on page 30.
The group's cashflow position remains strong. Cash and cash equivalents (including bank overdrafts) of the group at year end were £4.0million (2009: £5.1million).
Further details on the group's cashflow position are stated in the Consolidated Cashflow Statement on page 32. Cash and cash equivalents as per the Cashflow Statement comprise Cash and cash equivalents as presented in the balance sheet and bank overdrafts (secured).
The Key Performance Indicators for our South African mining activities are
The Key Performance Indicator for our UK property investment operations is the Net Property Valuation as shown in note 10.
Michael A Heller MA, FCA (Chairman)
*
Andrew R Heller MA, ACA (Managing Director)
Garrett Casey CA (SA) (Finance Director)
Robert Grobler Pr Cert Eng (Director of mining)
°= Christopher A Joll MA (Non-executive) Christopher Joll was appointed a Director on 1 February 2001. He holds a number of non-executive directorships of un-quoted companies. He is chairman of MJ2 Limited, a financial public relations consultancy.
John A Sibbald MA (Non-executive) John Sibbald has been a Director since 1988. After qualifying as a Chartered Accountant he spent over 20 years in stockbroking, specialising in mining and
international investment.
3
Secretary & Registered office Heather A Curtis ACIS 30-35 Pall Mall London SW1Y 5LP
Black Wattle Colliery Directors Robert Corry (Chairman) Andrew Heller (Managing Director) Robert Grobler Ethan Dube Garrett Casey
Director of Property Mike J Dignan FRICS
PKF (UK) LLP
Principal bankers United Kingdom Barclays Bank PLC National Westminster Bank PLC South Africa
Absa Bank (SA) First National Bank (SA) Standard Bank (SA)
Registrars and transfer office Capita Registrars Northern House, Woodsome Park, Fenay Bridge Huddersfield, West Yorkshire
HD8 0LA
Tel: 0871 664 0300 (Calls cost 10p per minute plus network extras or +44 208 639 3399 for overseas callers)
Corporate solicitors United Kingdom Olswang LLP, London Pinsent Masons LLP,
London South Africa Routledge Modise in association with Eversheds, Johannesburg Tugendhaft Wapnick
Banchetti and Partners, Johannesburg Stockbrokers Numis Securities
www.capitaregistrars.com Email: [email protected]
No. 112155 (Incorporated in England and Wales)
www.bisichi.co.uk
E-mail [email protected]
Member of the nomination committee Senior independent director Member of audit, remuneration * = °
| 2010 £m |
2009 £m |
2008 £m |
2007 £m |
2006 £m |
|
|---|---|---|---|---|---|
| Consolidated income statement | |||||
| Revenue | 32,824 | 29,016 | 25,979 | 16,693 | 13,239 |
| Operating (loss)/profit | (1,705) | 4,892 | 2,616 | (191) | 2,362 |
| (Loss)/profit before tax | (1,813) | 5,003 | 2,117 | (459) | 2,172 |
| Trading (loss)/profit before tax | (2,209) | 4,698 | 6,031 | 2,302 | 273 |
| Revaluation profit/(loss) before tax | 396 | 305 | (3,914) | (2,761) | 1,899 |
| Consolidated balance sheet | |||||
| Investment properties | 12,110 | 11,865 | 11,773 | 14,725 | 17,270 |
| Fixed asset investments | 3,757 | 3,755 | 3,406 | 2,991 | 3,028 |
| 15,867 | 15,620 | 15,179 | 17,716 | 20,298 | |
| Current asset investments | 605 | 510 | 627 | 770 | 700 |
| 16,472 | 16,130 | 15,806 | 18,486 | 20,998 | |
| Other assets less liabilities | 1,482 | 3,170 | (160) | (3,127) | (5,668) |
| Consolidated shareholders funds | 17,954 | 19,300 | 15,646 | 15,359 | 15,330 |
| Net assets per ordinary share | 171.8p | 184.7p | 149.7p | 147.0p | 146.7pp |
| Dividend per share | 4.00p | 4.00p | 3.50p | 3.0p | 2.50p |
| 19 May 2011 | First interim management statement |
|---|---|
| 7 June 2011 | Annual General Meeting |
| 8 August 2011 | Payment of final dividend for 2010 (if approved) |
| Late August 2011 | Announcement of half-year results to 30 June 2011 |
| 18 November 2011 | Second interim management report |
| Late April 2012 | Announcement of results for the year ending 31 December 2011 |
The company continues its mining activities. Income for the year was derived from sales of coal from its South African operations. The company also has a property investment portfolio for which it receives rental income.
The results for the year and state of affairs of the group and the company at 31 December 2010 are shown on pages 29 to 55 and in the Mining Review and Business Review on pages 5 to 14. Future developments and prospects are also covered in the Mining Review. Over 99 per cent of staff are employed in the South African coal mining industry - employment matters and health and safety are dealt with in the Mining and Business Reviews.
The environmental issues of the group's South African coal mining operations are covered in the Mining Review and Business Review on pages 5 to 14.
The group's UK activities are principally property investment whereby premises are provided for rent to retail businesses.
The group seeks to provide those tenants with good quality premises from which they can operate in an efficient and environmentally friendly manner. Wherever possible, improvements, repairs and replacements are made in an environmentally efficient manner and waste re-cycling arrangements are in place at all the company's locations.
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 Mining Review 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.
An interim dividend for 2010 of 1p was paid on 4 February 2011 (Interim 2009: 1p). The directors recommend the payment of a final dividend for 2010 of 3p per ordinary share (2009: 3p) making a total dividend for 2010 of 4p (2009: 4p). Subject to shareholder approval, the total dividend per Ordinary Share for 2010 will be 4p per Ordinary Share. The final dividend will be payable on Monday 8 August 2011 to shareholders registered at the close of business on 1 July 2011.
The directors feel it is appropriate to maintain the dividend despite the loss made in 2010, but also wish to retain cash within the group to fund further investment. The directors therefore recommend that a scrip dividend alternative should be made available to shareholders which will give shareholders the ability to receive part or all of their final dividend in the form of new fully paid ordinary shares in the company rather than in cash. The retention of cash within the company for future investment is an important consideration. Both the directors and the Board of London & Associated Properties PLC have agreed to elect to take up their full entitlement to new shares which represents over 51% of the ordinary share capital of the company.
The scrip dividend is conditional on, amongst other things shareholders' approval at the AGM of the company to be held on 7 June 2011 of the granting of authority to the directors to allot and issue new ordinary shares in connection with the scrip dividend. The new issue of ordinary shares also requires shareholders to authorise the capitalisation out of sums standing to the credit of reserves to allow the new ordinary shares to be issued.
The investment property portfolio is stated at its open market value of £12,110,000, at 31 December 2010 (2009:£ 11,865,000) as valued by professional external valuers.
Note 21 to the financial statements sets out the risks in respect of financial instruments. The Board reviews and agrees overall treasury policies, delegating appropriate authority to the managing director. Financial instruments are used to manage the financial risks facing the group - speculative transactions are not permitted. Treasury operations are reported at each Board meeting and are subject to weekly internal reporting.
The directors of the company for the whole year were M A Heller, A R Heller, C A Joll, R J Grobler (a South African citizen), and J A Sibbald. Mr G J Casey was appointed to the board by the directors on 1 June 2010. A proposal for his election will be made at the AGM, which is recommended by the directors.
Brief details of the proposed new director are:
Garrett Casey trained and qualified as a Chartered Accountant (SA) in South Africa and was appointed Bisichi's Group Finance Manager on 1 April 2008. He will continue to be based at the group head office in London, making regular visits to the operating companies in South Africa.
The directors retiring by rotation are Mr C A Joll and Mr J A Sibbald who offer themselves for re-election. The board recommends their re-election. Brief details of the directors standing for re-election are:
Christopher Joll has been a director since 1 February 2001 and has a contract of service determinable at three months notice. He holds a number of non-executive directorships of un-quoted companies. He is chairman of MJ2 Limited, a financial public relations company, which provides services to the group.
John Sibbald has been a non-executive director since 1988. He is a retired chartered accountant. For most of his career he was employed in stockbroking in the City of London where he specialised in mining and international investment. He has a contract of service determinable at three months notice.
No director had any material interest in any contract or arrangement with the company during the year other than as shown in this report.
The interests of the directors in the shares of the company, including family and trustee holdings where appropriate, were as follows:
| Beneficial | Non-Beneficial | |||
|---|---|---|---|---|
| 31.12.2010 | 1.1.2010 | 31.12.2010 | 1.1.2010 | |
| M A Heller | 146,666 | 146,666 | 181,334 | 181,334 |
| A R Heller | 772,000 | 772,000 | - | - |
| C A Joll | - | 1,000 | - | - |
| J A Sibbald | - | - | - | - |
| R J Grobler | - | - | - | - |
| G J Casey | - | - | - | - |
There have not been any changes in the above shareholdings since 31 December 2010 and 15 April 2011.
Details of the options to subscribe for new ordinary shares of the company granted to the directors are contained under "Share option schemes" in the remuneration report on page 25.
The following have advised that they have an interest in 3 per cent or more of the issued share capital of the company as at 15 April 2011:
London & Associated Properties PLC - 4,355,752 shares representing 41.68 per cent of the issued capital. (M A Heller is a director and shareholder of London & Associated Properties PLC).
M A Heller - 328,000 shares representing 3.14 per cent of the issued capital.
A R Heller - 772,000 share representing 7.39 per cent of the issued capital.
Neil Kirton – 382,000 shares representing 3.65 per cent of the issued capital.
The directors in office at 31 December 2010 have confirmed that they are aware that there is no relevant audit information of which the auditors are 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.
The company has adopted the Guidance for Smaller Quoted Companies (SQC) published by the Quoted Companies Alliance. The Alliance provides guidance to SQC and their guidance covers the implementation of The UK Corporate Governance Code for SQC. The paragraphs below set out how the company has applied this guidance during the year. The company has complied with the Quoted Companies Alliance guidance throughout the year, except insofar that non-executive directors are not appointed for fixed terms (section A.7.2).
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 principals 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.
During the year the Board comprised the executive chairman, the managing director, one other executive director (appointed on 1 June 2010), and two non-executive directors. Their details appear on page 16. The Board is responsible to shareholders for the proper management of the group. A statement of directors' responsibilities in respect of the accounts is set out on page 27. The non-executive directors have a particular responsibility to ensure that the strategies proposed by the executive directors are fully considered. To enable the Board to discharge its duties, all directors have full and timely access to all relevant information and there is a procedure for all directors, in furtherance of their duties, to take independent professional advice, if necessary, at the expense of the group. The Board has a formal schedule of matters reserved to it and meets bi-monthly.
The Board is responsible for overall group strategy, approval of major capital expenditure projects and consideration of significant financing matters.
The following Board committees, which have written terms of reference, deal with specific aspects of the group's affairs:
• The nomination committee is chaired by Christopher Joll and comprises the non-executive directors and the executive chairman. The committee is responsible for proposing candidates for appointment to the Board, having regard to the balance and structure of the Board. In appropriate cases recruitment consultants are used to assist the process. Each director is subject to re-election at least every three years.
The audit committee also undertakes a formal assessment of the auditors' independence each year which includes:
The audit committee report is set out on page 26.
An analysis of the fees payable to the external audit firm in respect of both audit and non-audit services during the year is set out in Note 4 to the financial statements.
The performance of the Board as a whole and of its committees and the non-executive directors is assessed by the chairman and the managing director and is discussed with the senior independent director. Their recommendations are discussed at the nomination committee prior to proposals for re-election being recommended to the Board. The performance of executive directors is discussed and assessed by the remuneration committee. The senior independent director meets regularly with the chairman and both the executive and non-executive directors individually outside of formal meetings. The directors will take outside advice in reviewing performance but have not found this necessary to date.
The senior independent non-executive director is Christopher Joll. The other independent non-executive director is John Sibbald.
Christopher Joll has been a non-executive director for over ten years. As a consequence he does not fully meet the criteria for independence set out in the UK Corporate Governance Code (The Code).
John Sibbald has been a non-executive director of Bisichi for over twenty years - the maximum set out in The Code criteria for independence is nine years. For this reason he does not fully meet the criteria set out in The Code for independence.
The Board encourages Christopher Joll and John Sibbald to act independently. The criteria for independence on which they fail to meet The Code's criteria for independence, namely length of service and a connection with the company's public relations advisers, should not, and has not, resulted in their inability of failure to act independently. In the opinion of the Board, Christopher Joll and John Sibbald continue to fulfil their role as independent non-executive directors.
The independent directors regularly meet prior to Board meetings to discuss corporate governance issues.
The number of meetings during 2010 and attendance at regular Board meetings and Board committees was as follows:
| Meetings held | Meetings attended | ||
|---|---|---|---|
| M A Heller | Board | 5 | 5 |
| Nomination committee | 1 | 1 | |
| A R Heller | Board | 5 | 5 |
| Audit committee | 2 | 2 | |
| G J Casey | Board (since appointment on 1 June 2010) | 3 | 3 |
| R J Grobler | Board | 5 | 1 |
| C A Joll | Board | 5 | 5 |
| Audit committee | 2 | 2 | |
| Nomination committee | 1 | 1 | |
| Remuneration committee | 4 | 4 | |
| J A Sibbald | Board | 5 | 5 |
| Audit committee | 2 | 2 | |
| Nomination committee | 1 | 1 | |
| Remuneration committee | 4 | 2 | |
The audit committee had two meetings in 2010 with the external auditors present, prior to release of the 2009 annual results. Members of the committee discussed the 30 June 2010 half year results prior to their approval by the full Board. The nomination committee held one meeting during the year.
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:
During the period, the audit committee has reviewed the effectiveness of internal control as described above. The Board receives periodic reports from its committees.
There are no significant issues disclosed in the Annual Report for the year ended 31 December 2010 (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 is a matter of priority. Extensive information about the group and its activities is given in the Annual Report, which are 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.
The company agrees contract terms with suppliers when orders are placed. Payments to suppliers are made in accordance with those terms, provided that suppliers have complied with all relevant terms and conditions. Trade creditors outstanding at the year-end represented 3.1 days trade purchases (2009 – 12.4 days).
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 while 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 every three years or more frequently. 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 annual general meeting will be held at the Company's offices at 30-35 Pall Mall, London SW1Y 5LP on Tuesday 7 June 2011 at 11.00 a.m. Resolutions 1 to 8 and 9 to 11 will be proposed as ordinary resolutions. More than 50 per cent of shareholders' votes must be in favour for these resolutions to be passed. Resolutions 12 to 14 will be proposed as special resolutions. At least 75 per cent of shareholders' votes must be in favour for these 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.
On the recommendation of the remuneration committee, the board approved the grant of a share option on 31 August 2010 to the company's new finance director, Garrett Casey. The option was granted subject to authorisation by the members – this resolution, if approved, will give that authorisation. An option agreement relating to the grant of the option to subscribe for up to 80,000 ordinary shares of 10p each in the capital of the company at a price of £2.025p per share was conditionally
entered into between the company and Garrett Casey on 31 August 2010. A summary of the principal terms of the agreement is set out on in the explanatory notes to the AGM at pages 61 to 62 of this document.
Members are to be offered, in accordance with Article 155 of the company's Articles of Association the right to elect to receive all or part of the recommended final dividend in lieu of cash by way of a new issue of ordinary shares. In accordance with Article 155, an Ordinary Resolution is required form the shareholders in order to permit a Scrip Dividend. In order to enable the directors to effect the issue of new ordinary shares the shareholders are required to give the directors authority to issue and allot the new ordinary shares and permit the directors to capitalise out of such of the sums standing to the credit of reserves equal to the nominal value of the new ordinary shares of the company to be allotted pursuant to any elections made by the shareholders in accordance with their respective entitlements.
Paragraph 13.1.1 of Resolution 13 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 £348,384. This represents approximately 33.3 per cent of the ordinary share capital of the company in issue (excluding treasury shares) at 14 April 2011 (being the last practicable date prior to the publication of this Directors' Report). In line with recent guidance issued by the Association of British Insurers ('ABI') paragraph 13.1.2 of Resolution 13 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 £348,384, in connection with a rights issue. This amount represents approximately 33.3 per cent. of the ordinary share capital of the company in issue (excluding treasury shares) at 14 April 2011 (being the last practicable date prior to the publication of this Directors' Report). The directors' authority will expire at the conclusion of the next Annual General Meeting. 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 ABI.
A special resolution will be proposed at the Annual General Meeting in respect of this disapplication of pre-emption rights.
Shares allotted for cash must normally first be offered to shareholders in proportion to their existing shareholdings. The directors will, at the forthcoming Annual General Meeting of the company seek power to allot shares as if the pre-emption rights contained in Section 561 of the Companies Act 2006 did not apply up to a maximum of 10% of the company's issued share capital. The authority will expire at the earlier of the conclusion of the company's next annual general meeting and 15 months from the passing of Resolution 12.
The Shareholder Rights Directive was implemented in the UK in August 2009. One of the requirements of the Directive is that all general meetings must be held on 21 clear days' notice unless shareholders agree to a shorter notice period. We are proposing a resolution at the AGM so that we are able to call general meetings (other than annual general meetings) on 14 clear days' notice.
Purchase of own Ordinary Shares (Resolution 14) The effect of Resolution 14 would be to renew the directors' current authority to make limited market purchases of the company's ordinary shares of 10 pence each. The power is limited to a maximum aggregate number of 1,045,150 ordinary shares (representing approximately 10 per cent of the company's issued share capital as at 14 April 2011 (being the latest practicable date prior to publication of this Directors' Report)). The minimum price (exclusive of expenses) which the company would be authorised to pay for each ordinary share would be 10 pence (the nominal value of each ordinary share). The maximum price (again exclusive of expenses) which the company would be authorised to pay for an ordinary share is an amount equal to the higher of (i) 105% of the average market price for an ordinary share for the five business days preceding any such purchase and (ii) the higher of the last independent trade for an ordinary share and the highest current independent bid for an ordinary share as derived from the trading venue where the purchase is carried out. The authority conferred by Resolution 14 will expire at the conclusion of the company's next Annual General Meeting to be held in 2012 or 15 months from the passing of the resolution, whichever is the earlier. Any purchases of ordinary shares would be made by means of market purchase through the London Stock Exchange. If granted, the authority would only be exercised if, in the opinion of the directors, to do so would result in an increase in earnings per share or net asset value per share and would be in the best interests of shareholders generally. In exercising the authority to purchase ordinary shares, the directors may treat the shares that have been bought back as either cancelled or held as treasury shares (shares held by the company itself). No dividends may be paid on shares which are held as treasury shares and no voting rights are attached to them.
As at 14 April 2011 (being the last practicable date prior to the publication of this Directors' Report) the total number of options to subscribe for new ordinary shares in the company as at 31 December 2010 was 718,000 shares representing 6.9% of the company's issued share capital as at 31 December 2010. Such number of options to subscribe for new ordinary shares would represent approximately 6.25% of the reduced issued share capital of the company assuming full use of the authority to make market purchases sought under Resolution 14.
No political or charitable donations were made during the year (2009:Nil).
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 and the Mining Review on pages 5 to 10. In addition Note 21 to the financial statements includes the group's treasury policy, interest rate risk, liquidity risk and hedging profile.
The group has considerable financial resources which, together with the long term leases with the majority of its tenants of its property portfolio. The directors have a reasonable expectation of improved market conditions in 2011 and a return to profitability for Black Wattle Colliery, its direct mining asset. As a consequence, the directors believe that the company is well placed to manage its business risks successfully despite the loss for the year.
The directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the annual financial statements.
PKF (UK) LLP has expressed its willingness to continue in office as auditors. A proposal will be made at the annual general meeting for its re-appointment, and for its remuneration to be determined by the directors.
Heather Curtis Secretary 30-35 Pall Mall London SW1Y 5LP 15 April 2011
The remuneration committee is a formally constituted committee and is comprised exclusively of non-executive directors.
The members of the committee are Christopher Joll (chairman) and John Sibbald.
The principal function of the remuneration committee is to determine, on behalf of the Board, the remuneration and other benefits of the executive directors and senior executives, including pensions, share options and service contracts. The company's policy is to ensure that the executive directors are rewarded competitively in relation to other companies in order to retain and motivate them. The emoluments of each executive director comprises basic salary, a bonus at the discretion of the remuneration committee, provision of a car, premiums paid in respect of individual defined contribution pension arrangements, health insurance premium and share options.
The remuneration committee receives updates on pay and employment conditions applying to other group employees. These are taken into consideration when setting executive
directors' remuneration consistent with the group's general aim of seeking to reward all employees fairly according to the nature of their role, their performance and market forces.
The remuneration of non-executive directors is determined by the board, and takes into account additional remuneration for services outside the scope of the ordinary duties of nonexecutive directors. No pension costs are incurred on behalf of non-executive directors and they do not participate in the share option schemes.
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 six months. All directors' contracts, as amended from time to time, have run from the date of appointment. Details of the directors standing for re-election are given under 'Directors' in the Directors' report. The policy of the committee is not to grant employment contracts or contracts of service in excess of six months and there are no provisions for termination payments. A summary of terms of service and employment is as follows:
| Start date of contract |
Unexpired term |
Notice period |
|
|---|---|---|---|
| Executive directors | |||
| M A Heller | November 1972 | Continuous | 6 months |
| A R Heller | January 1994 | Continuous | 3 months |
| G J Casey* | June 2010 | Continuous | 3 months |
| R J Grobler | April 2008 | Continuous | 3 months |
| Non-executive directors | |||
| C A Joll | February 2001 | Continuous | 3 months |
| J A Sibbald | October 1988 | Continuous | 3 months |
* G J Casey with effect from 1 June 2010
The following information has been audited:
| Directors' remuneration |
|---|
| Total | 690 | 263 | 72 | 1,025 | 52 | 1,077 | 1,407 |
|---|---|---|---|---|---|---|---|
| J A Sibbald | 2 22 |
- - |
3 3 |
5 25 |
- - |
5 25 |
5 25 |
| C A Joll | 20 | - | - | 20 | - | 20 | 20 |
| Non-executive directors | |||||||
| 668 | 263 | 69 | 1,000 | 52 | 1,052 | 1,382 | |
| T M Kearney † | - | - | - | - | - | - | 134 |
| R Grobler | 184 | 73 | 23 | 280 | 10 | 290 | 281 |
| G J Casey * | 59 | 40 | 8 | 107 | 12 | 119 | - |
| A R Heller | 350 | 150 | 38 | 538 | 30 | 568 | 817 |
| M A Heller | 75 | - | - | 75 | - | 75 | 150 |
| Executive directors | |||||||
| and fees £'000 |
Bonus £'000 |
Benefits £'000 |
pensions £'000 |
contributions £'000 |
2010 £'000 |
2009 £'000 |
|
| Directors' remuneration | Salaries | Total before |
Pension | Total | Total |
* G J Casey with effect from 1 June 2010
† T M Kearney resigned 31 July 2009
Three (2009: three) directors have benefits under money purchase pension schemes. Contributions in 2010 were £52,000 (2009: £49,000), see table above. Directors are not entitled to benefits under any bonus or incentive schemes apart from the share option schemes details of which are set out below. Bonuses are awarded by the remuneration committee when merited.
Performance bonuses were awarded by the remuneration committee to three executive directors during 2010 (2009:3).
The company has three "Unapproved" Share Option Schemes which are not subject to HM Revenue and Customs (HMRC) approval. The "First Scheme" was approved by shareholders on 15 June 1999. The "Second Scheme" was approved by shareholders on 23 June 2005, options having been provisionally granted under it on 23 September 2004, and the "2006 Scheme" was approved by shareholders on 29 June 2006. Shareholder approval will be sought for the grant of an option, the "2010 scheme" also not subject to HMRC approval, at the Annual General Meeting to be held on Tuesday 7 June 2011, the option having been conditionally granted on 31 August 2010. All available options under each of the Schemes have been granted.
| Directors' remuneration | Number of share options | ||||||
|---|---|---|---|---|---|---|---|
| Option price* |
1 January 2010 |
Options 2010 |
granted in 31 December 2010 |
Exercisable from |
Exercisable to |
||
| First Scheme | |||||||
| A R Heller | 34p | 233,000 | - | 233,000 | 30/9/2005 | 29/9/2012 | |
| Employee | 34p | 80,000 | - | 80,000 | 30/9/2005 | 29/9/2012 | |
| Second Scheme | |||||||
| A R Heller | 149p | 80,000 | - | 80,000 | 23/9/2007 | 22/9/2014 | |
| The 2006 Scheme | |||||||
| A R Heller | 237.5p | 275,000 | - | 275,000 | 4/10/2009 | 3/10/2016 | |
| Employee | 237.5p | 50,000 | - | 50,000 | 4/10/2009 | 3/10/2016 | |
| The 2010 Scheme | |||||||
| G J Casey | 202.5p | - | 80,000 | 80,000 | 31/08/2013 | 30/08/2020 |
The grant of the option to G J Casey on 31 August 2010 is conditional on shareholder approval at the Annual General Meeting to be held on Tuesday 7 June 2011 *Middle market price at date of grant
No consideration is payable for the grant of options under the Unapproved Share Option Scheme or for the option granted under the 2010 Scheme, if approved by members on 7 June 2011.The exercise of options under the Unapproved Share Option Schemes is subject to the satisfaction of objective performance conditions specified by the remuneration committee, which will conform to institutional shareholder guidelines and best practice provisions in force from time to time. The remuneration committee has not yet set these guidelines for the First Scheme and the 2006 Scheme. The performance conditions for the Second Scheme, agreed by members on 23 June 2005, requires growth in net assets over a three year period to exceed the growth in the retail price index by a scale of percentages. The performance conditions for the option granted under the 2010 Scheme, if approved by members on 7 June 2011, requires growth in group net assets over a three year period to exceed growth in the retail price index by a scale of percentages more information on this can be found in the explanatory notes to the AGM at pages 61 to 62 of this document.
The middle market price of Bisichi Mining PLC ordinary shares at 31 December 2010 was 200p (2009-175p). During the year the share price ranged between 171p and 204p.
The following information is unaudited:
The board's policy is to grant options to executive directors, managers and staff at appropriate times to provide them with an interest in the longer term development of the group.
The following graph illustrates the company's performance compared with a broad equity market index over a five year period. Performance is measured by total shareholder return. The directors have chosen the FTSE All Share - Total Return Index as a suitable index for this comparison as it gives an indication of performance against a large spread of quoted companies.
Chairman - remuneration committee 30-35 Pall Mall London SW1Y 5LP 15 April 2011
The committee's terms of reference have been approved by the board and follow published guidelines, which are available from the company secretary. The audit committee comprises the two non-executive directors, Christopher Joll (chairman), an experienced financial PR executive and John Sibbald, a retired chartered accountant.
The Audit Committee's prime tasks are to :
Review the scope of external audit, to receive regular reports from PKF (UK) LLP 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 the external auditor 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 auditor's independence each year which includes:
The committee meets prior to the annual audit with the external auditor to discuss the audit plan and again prior to the publication of the annual results. These meetings are attended by the external audit partner, managing director, director of finance and company secretary. Prior to bi-monthly board meetings the members of the committee meet on an informal basis to discuss any relevant matters which may have arisen. Additional formal meetings are held as necessary.
During the past year the committee:
PKF (UK) LLP held office throughout the year. In the United Kingdom the company is provided with extensive administration and accounting services by London & Associated Properties PLC which has its own audit committee and employs a separate firm of external auditors, Baker Tilly UK Audit LLP. In South Africa PKF (Jhb) Inc. is the external auditor to the South African companies, and the work of that firm is reviewed by PKF (UK) LLP.
Chairman - audit committee
30-35 Pall Mall London SW1Y 5LP 15 April 2011
In accordance with your instructions we have carried out a valuation of the freehold property interests held as at 31 December 2010 by the company as detailed in our Valuation Report dated 26 January 2011.
Having regard to the foregoing, we are of the opinion that the open market value as at 31 December 2010 of the interests owned by the Company was £9,110,000 being made up as follows:
| 26 January 2011 | Regulated by Royal Institution of Chartered Surveyors |
|---|---|
| Leeds | BNP Paribas Real Estate Advisory and Proprty Management UK Limited |
| 9,110 | |
| Freehold properties | 9,110 |
| £000 |
In accordance with your instructions we have carried out a valuation of the leasehold property interests held as at 31 December 2010 by the company as detailed in our Valuation Report dated 2 February 2011.
Having regard to the foregoing, we are of the opinion that the open market value as at 31 December 2010 of the interests owned by the Company was £3,000,000 being made up as follows:
| £000 | |
|---|---|
| Leasehold properties | 3,000 |
| 3,000 | |
| Leeds | Carter Towler LLP |
| 2 February 2011 | Chartered Surveyors |
The directors are responsible for preparing the directors' report, the directors' remuneration report and the financial statements in accordance with applicable law and regulations. They are also responsible for ensuring that the annual report includes information required by the Listing Rules of the Financial Services Authority.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors are required to prepare the group financial statements in accordance with International Financial Reporting Standards as adopted by the European Union and have elected to prepare the parent 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 company and the group and of the profit or loss of the group for that period. In preparing these financial statements the directors are required to:
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 the group and enable them to ensure that the group financial statements comply with the Companies Act 2006 and Article 4 of the IAS Regulation and the parent company financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the company's website. Legislation in the United Kingdom governing the preparation and dissemination of the financial statements and other information included in annual reports may differ from legislation in other jurisdictions.
The directors confirm, to the best of their knowledge:
The names and functions of all the directors are stated on page 16.
We have audited the financial statements of Bisichi Mining PLC for the year ended 31 December 2010 which comprise the consolidated income statement, the consolidated statement of comprehensive income, the consolidated and parent company balance sheets, the consolidated statement of changes in shareholders' equity, the consolidated cash flow statement and the related notes. The financial reporting framework that has been applied in the preparation of the group financial statements is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union. The financial accounting framework that has been applied in the preparation of the parent company financial statements is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).
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's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the group's and the parent company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the annual report and accounts to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.
In our opinion:
the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;
the parent company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
In our opinion:
Under the Companies Act 2006 we are required to report to you if, in our opinion:
Under the Listing Rules we are required to review:
for and on behalf of PKF (UK) LLP,
Statutory auditor London UK 15 April 2011
for the year ended 31 December 2010
| Notes | 2010 Trading £'000 |
2010 Revaluations £'000 |
2010 Total £'000 |
2009 £'000 |
|
|---|---|---|---|---|---|
| Group revenue Operating costs |
1 2 |
32,824 (34,864) |
- - |
32,824 (34,864) |
29,016 (24,616) |
| Operating (loss)/profit before fair value adjustments Increase in value of investment properties Gains on held for trading investments |
1 3 |
(2,040) - - |
- 245 90 |
(2,040) 245 90 |
4,400 67 425 |
| Operating (loss)/profit Share of profit in joint ventures |
1 13 |
(2,040) - |
335 61 |
(1,705) 61 |
4,892 101 |
| (Loss)/profit before interest and taxation Interest receivable Interest payable |
6 | (2,040) 174 (343) |
396 - - |
(1,644) 174 (343) |
4,993 226 (216) |
| (Loss)/profit before tax Taxation |
4 7 |
(2,209) 540 |
396 (13) |
(1,813) 527 |
5,003 (1,330) |
| (Loss)/profit for the year | (1,669) | 383 | (1,286) | 3,673 | |
| Attributable to: Equity holders of the company Non-controlling interest |
26 | (1,595) (74) |
383 - |
(1,212) (74) |
3,673 - |
| (Loss)/profit for the year | (1,669) | 383 | (1,286) | 3,673 | |
| (Loss)/earnings per share – basic | 9 | (15.26)p | 3.66p | (11.60)p | 35.14p |
| (Loss)/earnings per share – diluted | 9 | (15.26)p | 3.66p | (11.60)p | 34.35p |
Trading income reflects all the trading activity on mining and property operations. Revaluation income reflects the revaluation of investment properties and other assets within the group and any proportion of these amounts within Joint Ventures. The total column represents the consolidated income statement presented in accordance with IAS 1.
for the year ended 31 December 2010
| 2010 £'000 |
2009 £'000 |
|
|---|---|---|
| (Loss)/profit for the year | (1,286) | 3,673 |
| Other comprehensive income: | ||
| Exchange differences on translation of foreign operations | 747 | 530 |
| Taxation | - | - |
| Other comprehensive income for the year net of tax | (539) | 4,203 |
| Total comprehensive income for the year net of tax | (539) | 4,203 |
| Attributable to: | ||
| Equity shareholders | (459) | 4,203 |
| Non-controlling interest | (80) | - |
| (539) | 4,203 |
| Notes | 2010 £'000 |
2009 £'000 |
|
|---|---|---|---|
| Assets | |||
| Non-current assets | |||
| Value of investment properties | 10 | 12,110 | 11,865 |
| Fair value of head lease | 30 | 233 | 246 |
| 12,343 | 12,111 | ||
| Mining reserves, plant and equipment | 11 | 9,615 | 8,057 |
| Investments in joint ventures | 12 | 3,607 | 3,259 |
| Other investments | 12 | 150 | 496 |
| Total non-current assets | 25,715 | 23,923 | |
| Current assets | |||
| Inventories | 15 | 705 | 1,139 |
| Trade and other receivables | 16 | 4,719 | 2,060 |
| Corporation tax recoverable | 115 | 19 | |
| Held for trading investments | 17 | 605 | 510 |
| Cash and cash equivalents | 5,399 | 6,609 | |
| Total current assets | 11,543 | 10,337 | |
| Total assets | 37,258 | 34,260 | |
| Liabilities | |||
| Current liabilities | |||
| Borrowings | 19 | (1,759) | (4,593) |
| Trade and other payables | 18 | (7,865) | (5,571) |
| Current tax liabilities | (362) | (260) | |
| Total current liabilities | (9,986) | (10,424) | |
| Non-current liabilities | |||
| Borrowings | 19 | (5,326) | (533) |
| Provision for rehabilitation | 20 | (1,025) | (772) |
| Finance lease liabilities | 30 | (233) | (246) |
| Deferred tax liabilities | 22 | (2,340) | (2,985) |
| Total non-current liabilities | (8,924) | (4,536) | |
| Total liabilities | (18,910) | (14,960) | |
| Net assets | 18,348 | 19,300 | |
| Equity | |||
| Share capital | 23 | 1,045 | 1,045 |
| Translation reserve | 68 | (685) | |
| Other reserves | 24 | 485 | 480 |
| Retained earnings | 16,356 | 18,460 | |
| Total equity attributable to equity shareholders | 17,954 | 19,300 | |
| Non-controlling interest | 26 | 394 | - |
| Total equity | 18,348 | 19,300 |
These financial statements were approved and authorised for issue by the board of directors on 15 April 2011 and signed on its behalf by:
A R Heller G J Casey Director Director
Company Registration No. 112155
for the year ended 31 December 2010
| Non- | |||||||
|---|---|---|---|---|---|---|---|
| Share capital £000 |
Translation reserves £000 |
reserves £000 |
Other Retained earnings £000 |
Total £000 |
controlling interest £000 |
Total equity £000 |
|
| Balance at 1 January 2009 | 1,045 | (1,215) | 663 | 15,153 | 15,646 | - | 15,646 |
| Revaluation of investment properties | - | - | - | 67 | 67 | - | 67 |
| Other income statement movements | - | - | - | 3,606 | 3,606 | - | 3,606 |
| Profit for the year | - | - | - | 3,673 | 3,673 | - | 3,673 |
| Exchange adjustment | - | 530 | - | - | 530 | - | 530 |
| Total comprehensive income for the year | - | 530 | - | 3,673 | 4,203 | - | 4,203 |
| Dividend | - | - | - | (366) | (366) | - | (366) |
| Equity share options | - | - | (183) | - | (183) | - | (183) |
| Balance at 1 January 2010 | 1,045 | (685) | 480 | 18,460 | 19,300 | - | 19,300 |
| Revaluation of investment properties | - | - | - | 245 | 245 | - | 245 |
| Other income statement movements | - | - | - | (1,457) | (1,457) | (74) | (1,531) |
| Loss for the year | - | - | - | (1,212) | (1,212) | (74) | (1,286) |
| Exchange adjustment | - | 753 | - | - | 753 | (6) | 747 |
| Total comprehensive income for the year | - | 753 | - | (1,212) | (459) | (80) | (539) |
| Dividend | - | - | - | (418) | (418) | - | (418) |
| Equity share options | - | - | 5 | - | 5 | - | 5 |
| Disposal of shares in subsidiary | - | - | - | (474) | (474) | 474 | - |
| Balance at 31 December 2010 | 1,045 | 68 | 485 | 16,356 | 17,954 | 394 | 18,348 |
for the year ended 31 December 2010
| Year ended 31 December 2010 |
Year ended 31 December 2009 |
|
|---|---|---|
| £'000 | £'000 | |
| Cash flows from operating activities | ||
| Operating (loss)/profit | (1,705) | 4,892 |
| Adjustments for: | ||
| Depreciation | 2,414 | 2,541 |
| Share based payment expense | 5 | (183) |
| Gain on investments held for trading Unrealised gain on investment properties |
(90) (245) |
(425) (67) |
| Cash flow before working capital | 379 | 6,758 |
| Change in inventories | 434 | 258 |
| Change in trade and other receivables | (2,150) | 4,042 |
| Change in trade and other payables | 834 | (1,478) |
| Change in provisions | 253 | 201 |
| Acquisitions of held for trading investments | (6) | (75) |
| Proceeds from held for trading investments | - | 617 |
| Cash generated from operations | (256) | 10,323 |
| Interest received | 174 | 226 |
| Interest paid | (343) | (216) |
| Income tax paid | (112) | (2,359) |
| Cash flow from operating activities | (537) | 7,974 |
| Cash flows from investing activities | ||
| Acquisition of reserves, plant and equipment | (2,639) | (2,087) |
| Disposal/(acquisitions) of investments | 405 | (136) |
| Cash flow from investing activities | (2,234) | (2,223) |
| Cash flows from financing activities | ||
| Borrowings drawn | 2,300 | 406 |
| Borrowings repaid | (231) | (700) |
| Equity dividends paid | (418) | (366) |
| Cash flow from financing activities | 1,651 | (660) |
| Net (decrease)/increase in cash and cash equivalents | (1,120) | 5,091 |
| Cash and cash equivalents at 1 January | 5,077 | (116) |
| Exchange adjustment | 20 | 102 |
| Cash and cash equivalents at 31 December | 3,977 | 5,077 |
| Cash and cash equivalents at 31 December comprise: Cash and cash equivalents as presented in the balance sheet |
5,399 | 6,609 |
| Bank overdrafts (secured) | (1,422) | (1,532) |
| 3,977 | 5,077 |
The results for the year ended 31 December 2010 have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. 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 financial statements are prepared in accordance with International Financial Reporting Standards and Interpretations in force at the reporting date. These are prepared under the historic cost convention as modified by the revaluation of investment properties and available for sale investments.
During 2010 the following accounting standards and guidance were adopted by the group:
• IAS 27 (Revised): Consolidated and separate financial statements. The standard requires that transactions involving non-controlling interests, where no change in control occurs should be accounted for as equity transactions. Furthermore losses of the group, which are attributable to the owners of non-controlling interest, are attributed to these owners, even if this results in a deficit. The impact on the results for the year is the disclosure of a £74,000 loss for the year attributable to non-controlling interest.
During 2010 all other standards and interpretations that were mandatory for the accounting period and were required to be adopted by the group either had no material impact on the group's financial statements or were not relevant to the operations of the group.
The group has not adopted any standards or interpretations in advance of the required implementation dates. It is not expected that adoption of any standards or interpretations which have been issued by the International Accounting Standards Board but have not been adopted will have a material impact on the financial statements.
The directors consider their judgements and estimates surrounding the life of the mine and its reserves to have the most significant effect on the amounts recognised in the financial statements and to be the area where the financial statements are at most risk of a material adjustment due to estimation uncertainty.
In addition the directors note that other areas, in particular the valuation of the investment properties, are considered to be less judgemental due to the nature of the underlying properties and the use of external valuers.
The group accounts incorporate the accounts of Bisichi Mining Plc and all of its subsidiary undertakings, together with the group's share of the results of its joint ventures and associates. Non-controlling interests in subsidiaries are presented separately from the equity attributable to equity owners of the parent company. When changes in ownership in a subsidary do not result in a loss of control, the non-controlling shareholders' interest are initially measured at the non-controlling interests' proportionate share of the subsidaries net assets. Subsequent to this, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the noncontrolling interests' share of subsequent changes
in equity. Total comprehensive income is attributed to noncontrolling interests even if this results in the non-controlling interests having a deficit balance.
Revenue comprises sales of coal and property rental income. Revenue is recognised when delivery of the product or service has been made and when the customer has a legally binding obligation to settle under the terms of the contract and has assumed all significant risks and rewards of ownership.
Revenue is only recognised on individual sales when all of the significant risks and rewards of ownership have been transferred to a third party. In most instances revenue is recognised when the product is delivered to the location specified by the customer, which is typically when loaded into transport, where the customer pays the transportation costs.
Rental income is recognised in the group income statement on a straight-line basis over the term of the lease. This includes the effect of lease incentives.
Investment properties comprise freehold and long leasehold land and buildings. Investment properties are carried at fair value in accordance with IAS 40 'Investment Properties'. Properties are recognised as investment properties when held for longterm 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. Properties held for use in the business are not recognised as investment properties and are held at depreciated historical cost.
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.
The cost of property, plant and equipment comprises its purchase price and any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in accordance with agreed specifications. Freehold land is not depreciated. Other property, plant and equipment is stated at historical cost less accumulated depreciation.
The life of mine remaining as at year end is currently estimated at 5 years. A provision for rehabilitation of the mine is carried at fair value and is provided for over the life of mine. The provision includes the restoration of the underground, opencast and surface operations and is estimated to be utilised at the end of the life of mine of the group. The timing and final cost of the rehabilitation is uncertain and will depend on the duration of the mine life and the quantities of coal extracted from the reserves.
The purpose of mine development is to establish secure working conditions and infrastructure to allow the safe and efficient extraction of recoverable reserves. Depreciation on mine development is not charged until production commences or the assets are put to use. On commencement of full production, depreciation is charged over the life of the associated mine reserves on a straight-line basis.
Expenditure incurred prior to the commencement of working surface mine sites, net of any residual value and taking into account the likelihood of the site being mined, is capitalised within property, plant and equipment and charged to the income statement over the life of the recoverable reserves of the scheme.
The cost, less estimated residual value, of other property, plant and equipment is written off on a straight-line basis over the asset's expected useful life. Residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. Changes to the estimated residual values or useful lives are accounted for prospectively. 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 | The shorter of its useful life or the life of the mine |
|---|---|
| Mining reserves | Over the expected life of the reserves |
| Motor vehicles | 25-33 per cent per annum |
| Office equipment | 10-33 per cent per annum |
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. Details of the share options in issue are disclosed in the Directors Remuneration Report on page 25 under the heading Share option schemes which is within the audited part of this report.
The group operates a defined contribution pension scheme. The contributions payable to the scheme are expensed in the period to which they relate.
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 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 taken directly to reserves. 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 transaction date.
The group classifies financial instruments, or their component parts, on initial recognition as a financial asset, a financial liability or an equity instrument in accordance with the substance of the contractual arrangement.
Bank loans and overdrafts are included as financial liabilities on the group balance sheet at the amounts drawn on the particular facilities net of the unamortised cost of financing. Interest payable on those facilities is expensed as finance cost in the period to which it relates.
Finance lease liabilities arise for those investment properties held under a leasehold interest and accounted for as investment property. The liability is initially calculated as the present value of the minimum lease payments, reducing in subsequent reporting periods by the apportionment of payments to the lessor.
The group uses derivative financial instruments to manage the interest rate risk associated with the financing of the group's business. No trading in such financial instruments is undertaken. At each reporting date, these interest rate derivatives are recognised at fair value, being the estimated amount that the group would receive or pay to terminate the agreement at the balance sheet date, taking into account current interest rates and the current credit rating of the counterparties. The gain or loss at each fair value re-measurement is recognised immediately in the income statement.
Financial assets/liabilities held for trading or short-term gain are measured at fair value and movements in fair value are charged/ credited to the income statement in the period.
Trade receivables do not carry any interest and are stated at their nominal value as reduced by appropriate 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 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.
The groups other financial assets and liabilities not disclosed above are accounted for as shown below.
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.
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. Net realisable value is based on estimated selling price less all further costs to completion and all relevant marketing, selling and distribution costs.
Other investments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured are recognised at cost less any provision for 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. 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.
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 equity, in which case it is also dealt with in equity.
Dividends payable on the ordinary share capital are recognised as a liability in the period in which they are approved.
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.
For management reporting purposes, the group is organised into business segments distinguishable by economic activity. The group's only 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 an individual customer, which makes up 10 percent or more of the total revenue of the group, is separately disclosed within each segment.
for the year ended 31 December 2010
| 1. Segmental reporting | 2010 | ||||
|---|---|---|---|---|---|
| Mining | Property | Other | Total | ||
| Business analysis | £'000 | £'000 | £'000 | £'000 | |
| Significant revenue customer A | 11,265 | - | - | 11,265 | |
| Significant revenue customer B | 8,456 | - | - | 8,456 | |
| Significant revenue customer C | 3,398 | - | - | 3,398 | |
| Other revenue | 8,707 | 975 | 23 | 9,705 | |
| Segment revenue | 31,826 | 975 | 23 | 32,824 | |
| Operating (loss)/profit before fair value adjustments | (2,664) | 616 | 8 | (2,040) | |
| Revaluation of investments | - | 245 | 90 | 335 | |
| Operating (loss)/profit and segment result | (2,664) | 861 | 98 | (1,705) | |
| Segment assets | 15,061 | 12,557 | 606 | 28,224 | |
| Unallocated assets | |||||
| - Non-current assets | 28 | ||||
| - Cash & cash equivalents | 5,399 | ||||
| Total assets | 33,651 | ||||
| Segment liabilities | (7,769) | (2,473) | (15) | (10,257) | |
| Borrowings | (663) | (5,000) | - | (5,663) | |
| (8,432) | (7,473) | (15) | (15,920) | ||
| Unallocated liabilities | (2,990) | ||||
| Total liabilities | (18,910) | ||||
| Net assets | 14,741 | ||||
| Investment in joint ventures non segmental | 3,607 | ||||
| Net assets as per balance sheet | 18,348 | ||||
| United | South | ||||
| Kingdom | Africa | Other | Unallocated | Total | |
| Geographic analysis | £000 | £000 | £000 | £000 | £000 |
| Revenue | 998 | 31,826 | - | - | 32,824 |
| Operating profit/(loss) and segment result | 959 | (2,664) | - | - | (1,705) |
| Non-current assets excluding investments | 12,343 | 9,586 | - | 29 | 21,958 |
Total net assets 5,637 6,604 63 6,044 18,348 Capital expenditure 2 2,637 - - 2,639
| 1. Segmental reporting continued | 2009 | |||||
|---|---|---|---|---|---|---|
| Mining | Property | Other | Total | |||
| Business analysis | £'000 | £'000 | £'000 | £'000 | ||
| Significant revenue customer A | 10,524 | - | - | 10,524 | ||
| Significant revenue customer B | 6,991 | - | - | 6,991 | ||
| Significant revenue customer C | 3,747 | - | - | 3,747 | ||
| Other revenue | 6,544 | 1,005 | 205 | 7,754 | ||
| Segment revenue | 27,806 | 1,005 | 205 | 29,016 | ||
| Operating (loss)/profit before fair value adjustments | 3,873 | 621 | (94) | 4,400 | ||
| Revaluation of investments | - | 67 | 425 | 492 | ||
| Operating (loss)/profit and segment result | 3,873 | 688 | 331 | 4,892 | ||
| Segment assets | 11,587 | 12,236 | 509 | 24,332 | ||
| Unallocated assets - Non-current assets |
60 | |||||
| - Cash & cash equivalents | 6,609 | |||||
| Total assets | 31,001 | |||||
| Segment liabilities | (5,568) | (2,736) | (117) | (8,421) | ||
| Borrowings | (894) | (2,700) | - | (3,594) | ||
| (6,462) | (5,436) | (117) | (12,015) | |||
| Unallocated liabilities | (2,945) | |||||
| Total liabilities | (14,960) | |||||
| Net assets | 16,041 | |||||
| Investment in joint ventures non segmental | 3,259 | |||||
| Net assets as per balance sheet | 19,300 | |||||
| United Kingdom |
South Africa |
Other | Unallocated | Total | ||
| Geographic analysis | £000 | £000 | £000 | £000 | £000 | |
| Revenue | 1,210 | 27,806 | - | - | 29,016 | |
| Operating profit and segment result | 1,019 | 3,873 | - | - | 4,892 | |
| Non-current assets excluding investments | 12,111 | 7,997 | - | 60 | 20,168 | |
| Total net assets | 7,151 | 5,112 | 55 | 6,982 | 19,300 |
Capital expenditure 25 2,062 - - 2,087
| 2. Operating costs | 2010 £'000 |
2009 £'000 |
|---|---|---|
| Mining Property Share dealing |
26,979 120 - |
16,462 81 - |
| Cost of sales Administration |
27,099 7,765 |
16,543 8,073 |
| Operating costs | 34,864 | 24,616 |
| The direct property costs are: Ground rent Direct property expense Bad debts |
9 81 30 |
15 63 3 |
| 120 | 81 |
The reconciliation of the investment surplus to the gain on revaluation of investment properties in the income statement is set out below:
| 2010 £'000 |
2009 £'000 |
|
|---|---|---|
| Investment surplus | 258 | 55 |
| (Gain)/loss on valuation movement in respect of head lease payments | (13) | 12 |
| Gain/(loss) on revaluation of investment properties | 245 | 67 |
(Loss)/profit before taxation is arrived at after charging/(crediting):
| 2010 £'000 |
2009 £'000 |
|
|---|---|---|
| Staff costs (see note 28) | 6,036 | 6,661 |
| Depreciation | 2,414 | 2,541 |
| Exchange gain | (526) | (237) |
| Fees payable to the company's auditor for the audit of the company's annual accounts | 40 | 45 |
| Fees payable to the company's auditor and its associates for other services: | ||
| The audit of the company's subsidiaries, pursuant to legislation | 32 | 28 |
| Other services | 5 | 1 |
The directors consider the auditors were best placed to provide the above non-audit services.
The audit committee reviews the nature and extent of non-audit services to ensure that independence is maintained.
Directors' emoluments are shown in the Directors' remuneration report on pages 24 and 25 under the heading Director's remuneration which is within the audited part of this report.
| 6. Interest payable | 2010 £'000 |
2009 £'000 |
|---|---|---|
| On bank overdrafts and bank loans Other interest payable |
291 52 |
94 122 |
| Interest payable | 343 | 216 |
| 7. Taxation | 2010 £'000 |
2009 £'000 |
| (a) Based on the results for the year: | ||
| Corporation tax at 28% (2009: 28%) Adjustment in respect of prior years – UK |
352 6 |
1,203 - |
| Current tax Deferred tax – current year |
358 (885) |
1,203 127 |
| Total tax in income statement | (527) | 1,330 |
| (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 28% (2009: 28%) |
||
| The differences are explained below: | ||
| (Loss)/profit on ordinary activities before taxation Tax on profit on ordinary activities at 28% (2009: 28%) |
(1,813) (508) |
5,003 1,401 |
| Effects of: | ||
| Expenses not deductible for tax purposes Capital gains in excess of profit on disposal Other differences Adjustment to smaller companies rates Adjustment in respect of prior years |
84 13 (127) - 11 |
67 - (119) (19) - |
| Total tax | (527) | 1,330 |
| (c) Analysis of United Kingdom and Overseas tax | ||
| United Kingdom tax included in above: | ||
| Corporation tax Adjustment in respect of prior years |
300 6 |
- - |
| Current tax Deferred tax |
306 113 |
- 242 |
| 419 | 242 | |
| Overseas tax included in above: | ||
| Corporation tax | 52 | 1,203 |
| Current tax Deferred tax |
52 (998) |
1,203 (115) |
| (946) | 1,088 |
| 2010 Per share |
2010 £'000 |
2009 Per share |
2009 £'000 |
|
|---|---|---|---|---|
| Dividends paid during the year relating to the prior period | 4.00p | 418 | 3.50 p | 366 |
| Dividends to be paid: Interim dividend for 2010 paid on the 4 February 2011 Proposed final dividend for 2010 |
1.00p 3.00p |
105 313 |
1.00p 3.00p |
105 313 |
| 4.00p | 418 | 4.00p | 418 |
The dividends to be paid are not accounted for until they have been approved at the Annual General Meeting. The amount will be accounted for as an appropriation of retained earnings in the year ending 31 December 2011.
Both the basic and diluted (loss)/earnings per share calculations are based on a loss of £1,286,000 (2009: profit £3,673,000). The basic (loss)/earnings per share have been calculated on 10,451,506 (2009: 10,451,506) ordinary shares being in issue during the period. The diluted (loss)/earnings per share have been calculated on the number of shares in issue of 10,451,506 (2009: 10,451,506) plus the dilutive potential ordinary shares arising from share options of nil (2009: 241,313) totalling 10,451,506 (2009: 10,692,819).
Dilutive potential ordinary shares of 279,790 were excluded from the calculation of diluted ordinary shares in 2010 as there was no dilutive effect due to the loss for the year.
| Long | ||||
|---|---|---|---|---|
| Freehold | Leasehold | Total | ||
| £'000 | £'000 | £'000 | ||
| Valuation at 1 January 2010 | 8,865 | 3,000 | 11,865 | |
| Additions | - | - | - | |
| Revaluation | 245 | - | 245 | |
| Valuation at 31 December 2010 | 9,110 | 3,000 | 12,110 | |
| Valuation at 1 January 2009 | 8,673 | 3,100 | 11,773 | |
| Additions | 25 | - | 25 | |
| Revaluation | 167 | (100) | 67 | |
| Valuation at 31 December 2009 | 8,865 | 3,000 | 11,865 | |
| Historical cost | ||||
| At 31 December 2010 | 4,801 | 728 | 5,529 | |
| At 31 December 2009 | 4,801 | 728 | 5,529 |
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:
| 2010 £'000 |
2009 £'000 |
|
|---|---|---|
| BNP Paribas Real Estate Carter Towler LLP, Chartered Surveyors |
9,100 3,000 |
8,865 3,000 |
| 12,100 | 11,865 |
The valuations were carried out in accordance with the Statements of Asset Valuation and Guidance Notes published by The Royal Institution of Chartered Surveyors.
| 11. Mining reserves, plant and equipment | Mining Reserves |
Mining equipment |
Motor Vehicles |
Office equipment |
Total |
|---|---|---|---|---|---|
| £'000 | £'000 | £'000 | £'000 | £'000 | |
| Cost at 1 January 2010 | 1,911 | 12,581 | 387 | 119 | 14,998 |
| Exchange adjustment | 318 | 2,094 | 42 | 12 | 2,466 |
| Additions | - | 2,637 | - | 2 | 2,639 |
| Disposals | (17) | (2,372) | - | (5) | (2,394) |
| Cost at 31 December 2010 | 2,212 | 14,940 | 429 | 128 | 17,709 |
| Accumulated depreciation at 1 January 2010 | 1,407 | 5,195 | 271 | 68 | 6,941 |
| Exchange adjustment | 267 | 829 | 31 | 6 | 1,133 |
| Charge for the year | 111 | 2,245 | 43 | 15 | 2,414 |
| Disposals in year | (17) | (2,372) | - | (5) | (2,394) |
| Accumulated depreciation at 31 December 2010 | 1,768 | 5,897 | 345 | 84 | 8,094 |
| Net book value at 31 December 2010 | 444 | 9,043 | 84 | 44 | 9,615 |
| Cost at 1 January 2009 | 1,705 | 11,360 | 346 | 103 | 13,514 |
| Exchange adjustment | 225 | 1,500 | 23 | 7 | 1,755 |
| Additions | - | 2,000 | 50 | 12 | 2,062 |
| Disposals | (19) | (2,279) | (32) | (3) | (2,333) |
| Cost at 31 December 2009 | 1,911 | 12,581 | 387 | 119 | 14,998 |
| Accumulated depreciation at 1 January 2009 | 1,151 | 4,523 | 232 | 54 | 5,960 |
| Exchange adjustment | 156 | 593 | 21 | 3 | 773 |
| Charge for the year | 119 | 2,358 | 50 | 14 | 2,541 |
| Disposals in year | (19) | (2,279) | (32) | (3) | (2,333) |
| Accumulated depreciation at 31 December 2009 | 1,407 | 5,195 | 271 | 68 | 6,941 |
| Net book value at 31 December 2009 | 504 | 7,386 | 116 | 51 | 8,057 |
| 12. Investments held as non-current assets | 2010 | 2009 | ||
|---|---|---|---|---|
| Joint | Joint | |||
| Ventures | 2010 | Ventures | 2009 | |
| Assets | Other | Assets | Other | |
| £'000 | £'000 | £'000 | £'000 | |
| At 1 January | 2,343 | 779 | 2,363 | 617 |
| Disposals | - | (405) | - | - |
| Transfer | - | - | (121) | 137 |
| Exchange adjustment | - | 59 | - | 25 |
| Share of gain/(loss) in joint ventures | 61 | - | (101) | - |
| Net assets at 31 December | 2,404 | 433 | 2,343 | 779 |
| Loan to joint venture: | ||||
| At 1 January | 916 | - | 709 | - |
| Additions | 287 | - | 207 | - |
| At 31 December | 1,203 | - | 916 | - |
| At 31 December | 3,607 | 433 | 3,259 | 779 |
| Provision for diminution in value: | ||||
| At 1 January | - | (283) | - | (283) |
| Write down of investment | - | - | - | - |
| At 31 December | - | (283) | - | (283) |
| Net book value at 31 December | 3,607 | 150 | 3,259 | 496 |
| 12. Investments held as non-current assets continued | 2010 £'000 |
2009 £'000 |
|---|---|---|
| Included in other investments are: | ||
| Net book value of unquoted investments | 133 | 133 |
| Rehabilitation fund | - | 348 |
| Net book value of investments listed on overseas stock exchanges | 17 | 15 |
| 150 | 496 | |
| Market value of the overseas listed investments | 17 | 15 |
The company owns 50% of the issued share capital of Dragon Retail Properties Limited, an unlisted property investment company. The remaining 50% is held by London & Associated Properties PLC. Dragon Retail Properties Limited is incorporated in England and Wales. It has issued share capital of 500,000 (2009: 500,000) ordinary shares of £1 each.
The company owns 49% of the issued share capital of Ezimbokodweni Mining (pty) Limited, an unlisted prospective coal production company. The company is incorporated in South Africa. It has issued share capital of 100 (2009: 100) ordinary shares of ZAR1 each.
| Ezimbokodweni 49% |
Dragon 50% |
2010 | 2009 | |
|---|---|---|---|---|
| £'000 | £'000 | £'000 | £'000 | |
| Turnover | - | 103 | 103 | 101 |
| Profit and loss | ||||
| Profit before tax | - | 61 | 61 | 101 |
| Taxation | - | - | - | - |
| Profit after taxation | - | 61 | 61 | 101 |
| Balance sheet | ||||
| Non-current assets | 1,203 | 1,583 | 2,786 | 2,431 |
| Current assets | - | 1,339 | 1,339 | 1,311 |
| Current liabilities | (1,203) | (1,061) | (2,264) | (1,952) |
| Non-current liabilities | - | (140) | (140) | (130) |
| Share of net assets at 31 December | - | 1,721 | 1,721 | 1,660 |
The company owns the following ordinary share capital of the principal subsidiaries which are included within the consolidated financial statements:
| Activity | Percentage of share capital |
Country of incorporation |
|
|---|---|---|---|
| Mineral Products Limited | Share dealing | 100% | England and Wales |
| Black Wattle Colliery (pty) Limited | Coal mining | 62.5% | South Africa |
| Bisichi Coal Mining (pty) Limited | Coal mining | 100% | South Africa |
| Bisichi Mining (Exploration) Limited | Holding company | 100% | England and Wales |
| Ninghi Marketing Limited | Dormant | 90.1% | England and Wales |
Details on the non-controlling interest in subsidiaries are shown under note 26.
| 15. Inventories | 2010 | 2009 |
|---|---|---|
| £'000 | £'000 | |
| Coal | ||
| Washed | 540 | 1,048 |
| Run of mine | 122 | 57 |
| Other | 43 | 34 |
| 705 | 1,139 | |
| 16. Trade and other receivables | 2010 | 2009 |
| £'000 | £'000 | |
| Amounts falling due within one year: | ||
| Trade receivables | 3,791 | 1,875 |
| Other receivables | 112 | 98 |
| Prepayments and accrued income | 816 | 87 |
| 4,719 | 2,060 | |
| 17. Held for trading investments | ||
| 2010 £'000 |
2009 £'000 |
|
| Market value of Listed Investments: | ||
| Listed in Great Britain | 522 | 448 |
| Listed outside Great Britain | 83 | 62 |
| 605 | 510 | |
| Original cost of Listed Investments | 458 | 452 |
| Unrealised surplus of market value over cost | 147 | 58 |
| 18. Trade and other payables | ||
| 2010 £'000 |
2009 £'000 |
|
| Trade payables | 3,604 | 1,004 |
| Amounts owed to joint ventures | 1,205 | 1,165 |
| Other payables | 687 | 569 |
| Accruals and deferred income | 2,369 | 2,833 |
| 7,865 | 5,571 |
| Current | Non-current | |||
|---|---|---|---|---|
| 2010 | 2009 | 2010 | 2009 | |
| £'000 | £'000 | £'000 | £'000 | |
| Bank overdraft (secured) | 1,422 | 1,532 | - | - |
| Bank loan (secured) | 337 | 3,061 | 5,326 | 533 |
| 1,759 | 4,593 | 5,326 | 533 | |
| 2010 | 2009 | |||
| £'000 | £'000 | |||
| Bank overdraft and loan instalments by reference to the balance sheet date: | ||||
| Within one year | 1,759 | 4,593 | ||
| From one to two years | 5,326 | 533 | ||
| From two to five years | - | - | ||
| 7,085 | 5,126 | |||
| Bank overdraft and loan analysis by origin: | ||||
| United Kingdom | 5,000 | 2,700 | ||
| Southern Africa | 2,086 | 2,426 | ||
| 7,085 | 5,126 |
The United Kingdom bank loans and overdraft are secured by way of a first charge over the investment properties in the UK which are included in the financial statements at a value of £12,100,000. The South African bank loans are secured by way of a first charge over specific pieces of mining equipment and the debtors of the relevant company which holds the loan which are include in the financial statements at a value of £6,507,000.
Consistent with others in the mining and property industry, the group monitors its capital by its gearing levels. This is calculated as the net debt (loans less cash and cash equivalents) as a percentage of the equity. During 2010 this increased to 9.4% (2009: nil) which was calculated as follows:
| 2010 £'000 |
2009 £'000 |
|
|---|---|---|
| Total debt Less cash and cash equivalents |
7,085 (5,399) |
5,126 (6,609) |
| Net debt | 1,686 | (1,483) |
| Total equity | 17,954 | 19,300 |
| Gearing | 9.4% | - |
| 20. Provision for rehabilitation | 2010 £'000 |
2009 £'000 |
|---|---|---|
| As at 1 January Additions |
772 253 |
571 201 |
| As at 31 December | 1,025 | 772 |
The group enters into 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 groups 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 is the risk that the value of a financial instrument or cashflows associated with the instrument will fluctuate due to changes in market interest rates. Interest rate risk arises from interest bearing financial assets and liabilities that the group uses. Treasury activities take place under procedures and policies approved and monitored by the Board to minimise the financial risk faced by the group. Interest bearing assets comprise cash and cash equivalents which are considered to be short-term liquid assets and loans to joint ventures. Interest bearing borrowings comprise bank loans, bank overdrafts and variable rate finance lease obligations. The rates of interest vary based on LIBOR in the UK and PRIME in South Africa.
As at 31 December 2010, with other variables unchanged, a 1% increase or decrease in interest rates, on investments and borrowings whose interest rates are not fixed, would respectively decrease or increase the profit for the year by £27,000 (2009: £14,000). The effect on equity of this change would be an equivalent decrease or increase for the year of £27,000 (2009: £14,000).
The group's policy is to minimise refinancing risk. Efficient treasury management and strict credit control minimise the costs and risks associated with this policy which ensures that funds are available to meet commitments as they fall due. As at year end the group held borrowing facilities in the UK in Bisichi Mining Plc and in South Africa in Black Wattle Colliery (Pty) Ltd. The company was within its bank borrowing facilities and had not breached any of its covenants. New borrowings were signed in March 2010 in both the UK and South Africa. Further details are provided in borrowing facilities information later in this note. Trade and other payables are all due within one year.
The table below shows the currency profiles of cash and cash equivalents:
| 2010 £'000 |
2009 £'000 |
|
|---|---|---|
| Sterling South African Rand |
3,710 1,689 |
2,904 3,705 |
| 5,399 | 6,609 |
Cash and cash equivalents earn interest at rates based on LIBOR in Sterling and Prime in Rand.
The group is exposed to market price risk through interest rate and currency fluctuations and commodity price risk.
The group is exposed to credit risk on its cash and cash equivalents and trade and other receivables as per the balance sheet. At the balance sheet date there was no significant concentration of credit risk. 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 £9,302,000 (2009: £8,582,000).
Trade debtor's credit ratings are reviewed regularly. The group only deposits surplus cash with well-established financial institutions of high quality credit standing. As at year end the amount of material receivables held past due date was £nil (2009: £nil).
On 31 December 2010, cash at bank and in hand amounted to £5,399,000 (2009: £6,609,000) 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.
The group's financial assets and liabilities are as follows, representing both the fair value and the carrying value:
| Loans and receivables £'000 |
Financial Liabilities measured at amortised cost £'000 |
Assets at fair value through profit and loss £'000 |
2010 £'000 |
2009 £'000 |
|
|---|---|---|---|---|---|
| Cash and cash equivalents | 5,399 | - | - | 5,399 | 6,609 |
| Investments held for trading | - | - | 605 | 605 | 510 |
| Other Investments | - | - | 150 | 150 | 496 |
| Trade and other receivables | 3,903 | - | - | 3,903 | 1,973 |
| Bank Borrowings | - | (7,085) | - | (7,085) | (5,126) |
| Finance leases | - | (233) | - | (233) | (246) |
| Other Liabilities | - | (7,677) | - | (7,677) | (5,403) |
| 9,302 | (14,995) | 755 | (4,938) | (1,187) |
Investments held for trading 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. Other investments are held at cost. The directors are of the opinion that the difference in value between cost and fair value of other investments is not significant or material. The comparative figures for 2009 fall under the same category of financial instrument as 2010.
The group has signed new borrowing facilities in both its UK and South African operations.
In the UK, a term loan facility of £5million and an overdraft facility of £2million were signed by Bisichi Mining Plc in March 2010 with Royal Bank of Scotland. This facility will expire in December 2012 and is secured against the group's UK retail property portfolio.
In South Africa, a structured trade finance facility of R60million (South African Rand) was signed by Black Wattle Colliery (pty) Limited in March 2010 with Absa Bank Limited, a South African subsidiary of Barclays Bank PLC. The facility is renewed annually and is secured against inventory, debtors and cash that are held by Black Wattle Colliery (pty) Limited. This facility comprises of a R40million revolving loan to cover the working capital requirements of the group's South African operations, and a R20million loan facility to cover guarantee requirements related to the group's South African mining operations.
At 31 December 2010 the group was within its bank borrowing facilities and had not breached any of its covenants. Term loan repayments are as set out in Note 19. Details of other financial liabilities are shown in notes 18 and 19.
Commodity price risk is the risk that the group's future earnings will be adversely impacted by changes in the market of commodities. The group is exposed to commodity price risk as its future revenues will be derived based on a contract with a physical off-take partner at prices that will be determined by reference to market prices of coal at the delivery date. From time to time the group may manage its exposure to commodity price risk by entering into forward sales contracts with the goal of preserving future revenue streams.
All trading is undertaken in the local currencies. Funding is also in local currencies other than inter-company investments and loans and it is not the group's policy to obtain forward contracts to mitigate foreign exchange risk on these amounts.
As a result of the group's mining assets being held in South Africa and having a functional currency different than the presentation currency, the group balance sheet can be affected significantly by movements in the pounds sterling to the South African Rand. During 2009 and 2010 the group did not hedge its exposure of foreign investments held in foreign currencies. There is no significant impact on profit and loss from foreign currency movements associated with these South African subsidiary assets and liabilities as the effect of foreign currency gains or losses arising are recorded through the translation reserve.
The effect of a movement in foreign currencies on the income statement and equity of the group is shown in the sensitivity analysis below:
| Profit and loss | Equity 2009 2010 |
Equity 2009 |
||
|---|---|---|---|---|
| 2010 | ||||
| £'000 | £'000 | £'000 | £'000 | |
| If there were a 10% weakening of the South African Rand against | ||||
| Sterling with all other variables held constant - (decrease) | (136) | (185) | (573) | (598) |
| If there were a 10% strengthening of the South African Rand against | ||||
| Sterling with all other variables held constant – increase | 181 | 211 | 701 | 731 |
| 22. Deferred taxation | 2010 £'000 |
2009 £'000 |
||
| Balance at 1 January Recognised in income Exchange adjustment |
2,985 (885) 240 |
2,625 127 233 |
||
| 2,340 | 2,985 | |||
| The deferred tax balance comprises the following: Revaluation of properties Capital allowances Short-term timing differences |
1,229 552 559 2,340 |
1,216 1,969 (200) 2,985 |
||
| 23. Share capital | 2010 | 2009 | ||
| £'000 | £'000 | |||
| Authorised: 13,000,000 ordinary shares of 10p each Allotted and fully paid: 10,451,506 ordinary shares |
1,300 1,045 |
1,300 1,045 |
||
| 24. Other reserves | 2010 £'000 |
2009 £'000 |
||
| Equity share options Net premium on share capital in joint venture |
399 86 |
394 86 |
||
| 485 | 480 |
Details of the share option scheme are shown in the Directors' remuneration report on pages 24 and 25 under the heading Share option schemes which is within the audited part of this report. Further details of the share option schemes are set out below.
The Bisichi Mining PLC Unapproved Option Schemes:
| Year of grant | Subscription price per share |
Period within which options exercisable |
Number of share for which options outstanding at 31 December 2009 |
Number of share options issued/ (cancelled) during year |
Number of share for which options outstanding at 31 December 2010 |
|---|---|---|---|---|---|
| 2002 | 34.0p | Sep 2005 - Sep 2012 | 313,000 | - | 313,000 |
| 2004 | 149.0p | Sep 2007 - Sep 2014 | 80,000 | - | 80,000 |
| 2006 | 237.5p | Oct 2009 - Oct 2016 | 325,000 | - | 325,000 |
| 2010 | 202.5p | Aug 2013 - Aug 2020 | - | 80,000 | 80,000 |
The exercise of options under the Unapproved Share Option Schemes is subject to the satisfaction of objective performance conditions specified by the remuneration committee, which will conform to institutional shareholder guidelines and best practice provisions in force from time to time. The remuneration committee has not yet set these guidelines for the first scheme and the 2006 scheme. The performance conditions for the 2004 and 2010 scheme, agreed by members on 23 June 2005 and 31 August 2010 respectively, requires growth in net assets over a three year period to exceed the growth of the retail prices index by a scale of percentages.
The 2010 options were valued at £45,000 at date of grant using the Black-Scholes-Merton model with the following assumptions:
| Expected volatility | 62.80% |
|---|---|
| Expected life | 4.00 Years |
| Risk free rate | 1.44% |
| Expected dividends | 1.95% |
Expected volatility was determined by reference to the historical volatility of the share price over a period commensurate with the option's expected life. The expected life used in the model is based on the risk-averse balance likely to be required by the option holders.
| 2010 Number |
2010 Weighted average Exercise price |
2009 Number |
2009 Weighted average Exercise price |
|
|---|---|---|---|---|
| Outstanding at 1 January Granted / (cancelled) during year |
718,000 80,000 |
138.9p 202.5p |
1,113,000 (395,000) |
164.4p 210.6p |
| Outstanding at 31 December | 798,000 | 145.2p | 718,000 | 138.9p |
| Exercisable at 31 December | 718,000 | 138.9p | 718,000 | 138.9p |
| 26. Non-controlling Interest | 2010 £'000 |
2009 £'000 |
|---|---|---|
| As at 1 January | - | - |
| Issue of shares in subsidiary | 474 | - |
| Share of loss for the year | (74) | - |
| Exchange adjustment | (6) | - |
| As at 31 December | 394 | - |
The issue of shares in subsidiary relates to the disposal of a 37.5% shareholding in Black Wattle Colliery (pty) Ltd. The total issued share capital in Black Wattle Colliery (pty) Ltd has been increased from 136 shares to 1000 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 675 ordinary shares;
a subscription for 110 ordinary shares at par by Vunani Mining (pty) Ltd;
a subscription for 265 "A" shares at par by Vunani Mining (pty) Ltd
Bisichi Mining (Exploration) Limited is a wholly owned subsidiary of Bisichi Mining PLC incorporated in England and Wales.
Vunani Mining (pty) Ltd is a South African Black Economic Empowerment company and minority shareholder in Black Wattle Colliery (pty) Ltd.
The "A" shares will 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.
| At 31 December | During the year | |||
|---|---|---|---|---|
| Amounts owed to related party £000 |
Amounts owed by related party £000 |
Costs recharged (to) / by related party £000 |
Cash paid (to) / by related party £000 |
|
| Related party: | ||||
| London & Associated Properties PLC (note (a)) | 326 | - | 275 | (92) |
| Dragon Retail Properties Limited (note (b)) | 1,205 | - | (72) | 72 |
| Ezimbokodweni Mining (pty) Limited (note (c)) | - | (1,203) | (287) | - |
| As at 31 December 2010 | 1,531 | (1,203) | (84) | (20) |
| London & Associated Properties PLC (note (a)) | 143 | - | 300 | (304) |
| Dragon Retail Properties Limited (note (b)) | 1,205 | - | (40) | (265) |
| Ezimbokodweni Mining (pty) Limited (note (c)) | - | (916) | (208) | - |
| As at 31 December 2009 | 1,348 | (916) | 52 | (569) |
London & Associated Properties PLC is a substantial shareholder. Dragon Retail Properties Limited is a joint venture and is treated as a non-current asset investment. Ezimbokodweni Mining (pty) Limited is a joint venture and is treated as a non-current asset investment.
Property management, office premises, general management, accounting and administration services are provided for Bisichi Mining PLC and its UK subsidiaries.
Dragon Retail Properties Limited is owned equally by the company and London & Associated Properties PLC.
Ezimbokodweni Mining is a prospective coal production company based in South Africa.
Details of key management personnel compensation and interest in share options are shown in the Directors' Remuneration Report on pages 24 and 25 under the headings Directors remuneration, Pension schemes and incentives and Share option schemes which is within the audited part of this report.
| 28. Employees | 2010 Number |
2009 Number |
|---|---|---|
| The average weekly numbers of employees of the group during the year were as follows: | ||
| Production | 257 | 325 |
| Administration | 18 | 18 |
| 275 | 343 | |
| £'000 | £'000 | |
| Staff costs during the year were as follows: | ||
| Salaries | 5,666 | 6,462 |
| Social security costs | 111 | 129 |
| Pension costs | 254 | 253 |
| Share based payments | 5 | (183) |
| 6,036 | 6,661 | |
| 29. Capital commitments | 2010 | 2009 |
| £'000 | £'000 | |
| Commitments for capital expenditure approved but not contracted for at the year end | 146 | 604 |
| Share of commitment of capital expenditure in joint venture | 2,451 | 2,101 |
Present value of head leases on properties
| Minimum lease payments |
Present value of Minimum lease payments |
|||
|---|---|---|---|---|
| 2010 | 2009 | 2010 | 2009 | |
| £'000 | £'000 | £'000 | £'000 | |
| Within one year | 14 | 15 | 14 | 15 |
| Second to fifth year | 56 | 59 | 52 | 55 |
| After five years | 1,708 | 1,978 | 167 | 176 |
| Discounting adjustment | 1,778 | 2,052 | 233 | 246 |
| (1,545) | (1,806) | - | - | |
| Present value | 233 | 246 | 233 | 246 |
Finance lease liabilities are in respect of leased investment property. Many of the leases provide for contingent rents in addition to the rents above which are a proportion of rental income. Finance lease liabilities are effectively secured as the rights to the leased asset revert to the lessor in event of default.
The group leases out its investment properties under operating leases. The future aggregate minimum rentals receivable under noncancellable operating leases are as follows:
| 2010 | 2009 | |
|---|---|---|
| £'000 | £'000 | |
| Within one year | 805 | 727 |
| Second to fifth year | 2,707 | 2,384 |
| After five years | 10,650 | 9,910 |
| 14,162 | 13,021 |
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:
| 2010 £'000 |
2009 £'000 |
|
|---|---|---|
| Rail siding | 3 | - |
| Rehabilitation of mining land | 1,732 | 1,734 |
| Water & electricity | 90 | 78 |
| 2010 | 2009 | ||
|---|---|---|---|
| Notes | £'000 | £'000 | |
| Fixed assets | |||
| Tangible assets | 33 | 12,138 | 11,925 |
| Investment in joint ventures | 34 | 846 | 846 |
| Other investments | 34 | 1,013 | 1,030 |
| 13,997 | 13,801 | ||
| Current assets | |||
| Debtors | 35 | 2,794 | 654 |
| Bank balances | 4,841 | 3,960 | |
| 7,635 | 4,614 | ||
| Creditors - amounts falling due within one year | 36 | (2,508) | (5,139) |
| Net current assets/(liabilities) | 5,127 | (525) | |
| Total assets less current liabilities | 19,124 | 13,276 | |
| Creditors - amounts falling due within one year – medium term bank loan | 36 | (5,000) | - |
| Net assets | 14,124 | 13,276 | |
| Capital and reserves | |||
| Called up share capital | 23 | 1,045 | 1,045 |
| Revaluation reserve | 38 | 6,183 | 5,938 |
| Other reserves | 38 | 400 | 395 |
| Retained earnings | 38 | 6,496 | 5,898 |
| Shareholders' funds | 14,124 | 13,276 |
The company financial statements were approved and authorised for issue by the board of directors on 15 April 2011 and signed on its behalf by:
A R Heller G J Casey Director Director
Company Registration No. 112155
The following are the main accounting policies of the company:
The financial statements have been prepared under the historical cost convention, as modified by the revaluation of investment properties, and in accordance with applicable UK Generally Accepted Accounting Practice.
Dividends are credited to the profit and loss account when received.
Provision for depreciation on tangible fixed assets is made in equal annual instalments to write each item off over its useful life. The rates generally used are:
Motor vehicles 25 - 33 per cent Office equipment 10 - 33 per cent
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.
The investment property portfolio is included in the financial statements at open market valuation. An external professional valuation is carried out annually by professional external surveyors. Surpluses and deficits arising on valuations are taken direct to the revaluation reserve. No depreciation or amortisation is provided in respect of freehold and leasehold investment properties. The directors consider that this accounting policy, which is not in accordance with the Companies Act 2006, results in the accounts giving a true and fair view. Depreciation or amortisation is only one of many factors reflected in the valuation and the amount which might otherwise have been shown cannot be separately identified or quantified.
Investments of the company are stated in the balance sheet as fixed assets at cost less provisions for impairment.
Bank loans and overdrafts are included in creditors on the company balance sheet net of the unamortised cost of financing. Interest payable on those facilities is expensed as a finance cost in the period to which it relates.
The company uses derivative financial instruments to manage the interest rate risk associated with the financing of the group's business. No trading in such financial instruments is undertaken.
Debtors do not carry any interest and are stated at their nominal value as reduced by appropriate allowances for estimated recoverable amounts.
Creditors are not interest bearing and are stated at their nominal value.
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.
As required by FRS 19 "Deferred Tax", full provision is made for deferred tax arising from all timing differences between the recognition of gains and losses in the financial statements and recognition in the tax computation, except for those timing differences in respect of which the standard specifies that deferred tax should not be recognised. Deferred tax assets and liabilities are calculated at the tax rates expected to be effective at the time the timing differences are expected to reverse.
All leases are "Operating Leases" and the annual rentals are charged to the profit and loss account on a straight line basis over the lease term. Rent free periods or other incentives received for entering into a lease are accounted for over the period of the lease so as to spread the benefit received over the lease term.
The company makes contributions to a money purchase scheme and the costs are charged to the profit and loss account in the period to which they relate.
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 model or Black-Scholes-Merton model. Details of the share options in issue are disclosed in the Directors' Remuneration Report on pages 24 and 25 under the heading Share option schemes which is within the audited part of this report.
| The aggregate amount of dividends comprises: | 2010 £'000 |
2009 £'000 |
|---|---|---|
| Final dividends in respect of prior year but not recognised as liabilities in that year: | 418 | 366 |
The aggregate amount of dividends to be paid and not recognised as liabilities as at year end is £418,000 (2009: £418,000).
| 33. Tangible fixed assets | Investment properties | ||||
|---|---|---|---|---|---|
| Long | Motor | Office | |||
| Freehold | leasehold | vehicles | Equipment | Total | |
| £'000 | £'000 | £'000 | £'000 | £'000 | |
| Cost or valuation at 1 January 2010 | 8,865 | 3,000 | 137 | 49 | 12,051 |
| Additions | - | - | - | 2 | 2 |
| Disposals | - | - | - | - | - |
| Revaluation | 245 | - | - | - | 245 |
| Cost or valuation at 31 December 2010 | 9,110 | 3,000 | 137 | 51 | 12,298 |
| At valuation | 9,110 | 3,000 | - | - | 12,110 |
| At cost | - | - | 137 | 51 | 188 |
| 9,110 | 3,000 | 137 | 51 | 12,298 | |
| Accumulated depreciation | |||||
| at 1 January 2010 | - | - | 88 | 38 | 126 |
| Charge for the year | - | - | 29 | 5 | 34 |
| Disposals in year | - | - | - | - | - |
| Accumulated depreciation | |||||
| at 31 December 2010 | - | - | 117 | 43 | 160 |
| Net book value at 31 December 2010 | 9,110 | 3,000 | 20 | 8 | 12,138 |
| Net book value at 31 December 2009 | 8,865 | 3,000 | 49 | 11 | 11,925 |
Details of historical cost of investment properties are shown in note 10.
| 34. Investments | Joint | ||||
|---|---|---|---|---|---|
| ventures | Subsidiaries | Other | |||
| Shares | Shares | Loans | investments | Total | |
| £'000 | £'000 | £'000 | £'000 | £'000 | |
| Cost at 1 January 2010 | 846 | 111 | 1,580 | 300 | 1,991 |
| Invested during the year | - | 250 | - | - | 250 |
| Drawn in year | - | - | (267) | - | (267) |
| Cost at 31 December 2010 | 846 | 361 | 1,313 | 300 | 1,974 |
| Provision for impairment | |||||
| As at 1 January | - | - | (678) | (283) | (961) |
| Impaired during the year | - | - | - | - | - |
| As at 31 December 2010 | - | - | (678) | (283) | (961) |
| Net book value at 31 December 2010 | 846 | 361 | 635 | 17 | 1,013 |
| Net book value at 31 December 2009 | 846 | 111 | 902 | 17 | 1,030 |
Other investments comprise £17,000 (2009: £17,000) shares and £nil (2009: £nil) loans.
Investments in subsidiaries are detailed in note 14. 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.
| 2010 | 2009 | |
|---|---|---|
| £'000 | £'000 | |
| Amounts falling due within one year: | ||
| Amounts due from subsidiary undertakings | 2,578 | 527 |
| Other debtors | 110 | 96 |
| Prepayments and accrued income | 106 | 31 |
| 2,794 | 654 |
| 2010 | 2009 |
|---|---|
| £'000 | £'000 |
| Amounts falling due within one year: | |
| Bank loan (secured) - |
2,700 |
| Joint venture 1,205 |
1,165 |
| Current taxation 292 |
- |
| Other taxation and social security 48 |
60 |
| Other creditors 424 |
276 |
| Accruals and deferred income 539 |
938 |
| 2,508 | 5,139 |
| Amounts falling due in more than one year: | |
| Bank loan (secured) 5,000 |
- |
| Bank and other loan instalments by reference to the balance sheet date: | |
| Within one year - |
2,700 |
| From one to two years 5,000 |
- |
| From two to five years - |
- |
| 5,000 | 2,700 |
The bank loan of the company is secured by a charge over freehold and long leasehold properties.
No provision has been made for the approximate taxation liability at 28% (2009: 28%) of £1,229,000 (2009: £1,216,000) which would arise if the investment properties were sold at the stated valuation.
| Share Capital £'000 |
Revaluation reserve £'000 |
Other reserve £'000 |
earnings £'000 |
Retained Shareholders funds £'000 |
|
|---|---|---|---|---|---|
| Balance at 1 January 2010 | 1,045 | 5,938 | 395 | 5,898 | 13,276 |
| Dividend paid | - | - | - | (418) | (418) |
| Revaluation of investment property | - | 245 | - | - | 245 |
| Share options | - | - | 5 | - | 5 |
| Retained profit for the year | - | - | - | 1,016 | 1,016 |
| Balance at 31 December 2010 | 1,045 | 6,183 | 400 | 6,496 | 14,124 |
A profit and loss account for Bisichi Mining PLC has not been presented as permitted by Section 408(2) of the Companies Act 2006. The profit for the financial year, before dividends, was £1,016,000 (2009: £938,000).
Details of share capital are set out in note 23 and details of the share options are shown in the Directors' Remuneration Report on page 25 under the heading Share option schemes which is within the audited part of this report and note 25.
| At 31 December | During the year | ||
|---|---|---|---|
| Costs recharged | |||
| Amounts owed | (to) / by related | Cash paid (to) | |
| by related party | party | /by related party | |
| £000 | £000 | £000 | |
| Related party: | |||
| Black Wattle Colliery (pty) Ltd (note (a)) | (2,776) | (2,501) | - |
| Ninghi Marketing Limited (note (b)) | (102) | - | - |
| As at 31 December 2010 | (2,878) | (2,501) | - |
| Black Wattle Colliery (pty) Ltd (note (a)) | (739) | (1,443) | 6,373 |
| Ninghi Marketing Limited (note (b)) | (102) | - | - |
| As at 31 December 2009 | (841) | (1,443) | 6,373 |
Black Wattle Colliery (pty) Ltd is a coal mining company based in South Africa.
Ninghi Marketing Limited is a dormant coal marketing company incorporated in England & Wales.
In addition to the above, the company has issued a company guarantee of R17,000,000 (2009: nil) (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.
Under Financial Reporting Standard 8 Related Party Disclosures, 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 27 of the Group financial statements.
for the year ended 31 December 2010
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt as to the action you should take, you are recommended to seek your own financial advice from your stockbroker, bank manager, solicitor, accountant or other independent financial adviser duly authorised under the Financial Services and Markets Act 2000 immediately.
If you have sold or otherwise transferred all your ordinary shares in Bisichi Mining PLC please forward this document with the accompanying Form of Proxy, at once to the purchaser or transferee or the stockbroker, bank or other agent through whom the sale or transfer was effected for onward transmission to the purchaser or transferee.
To consider and, if thought fit, pass resolutions 1 to 8 as ordinary resolutions:
| 1 | To receive and adopt the Company's annual accounts for the year ended 31 December 2010 together with the directors' report and the auditors' report on those accounts |
(Resolution 1) |
|---|---|---|
| 2 | To approve the remuneration report for the year ended 31 December 2010. | (Resolution 2) |
| 3 | To declare and approve a final dividend of 3.0p per share. | (Resolution 3) |
| 4 | To appoint as a director Mr G J Casey. | (Resolution 4) |
| 5 | To re-elect as a director Mr C A Joll. | (Resolution 5) |
| 6 | To re-elect as a director Mr J A Sibbald. | (Resolution 6) |
| 7 | To re-appoint PKF (UK) LLP as auditors, to hold office from the conclusion of this meeting until the conclusion of the next annual general meeting. |
(Resolution 7) |
| 8 | To authorise the directors to determine the remuneration of the auditors. | (Resolution 8) |
To consider and, if thought fit, pass resolutions 9 to 11 as ordinary resolutions and resolutions 12 to 14 as special resolutions:
9 That:
the option agreement dated 31 August 2010 entered into between the Company (1) and Mr G J Casey (2) relating to the grant of an option to subscribe for up to 80,000 Ordinary Shares at a price of £2.025p per Ordinary Share, a summary of the principal terms of which is set out in the explanatory notes to the Annual General Meeting at pages 61 to 62 of this document and a copy of which agreement initialled by the Chairman for the purposes of identification only will be produced to the meeting, be and is hereby approved. (Resolution 9)
11.1.2.3 holders of other equity securities, if this is required by the rights of those securities or, if the directors but subject to such exclusions and other arrangements as the directors may consider necessary or appropriate in relation to fractional entitlements, record dates, treasury shares or any legal, regulatory or practical problems under the laws of any territory (including the requirements of any regulatory body or stock exchange) or any other matter;
11.2 such authorities shall expire (unless previously revoked by the Company) on the conclusion of the next Annual General Meeting of the Company and in each case the Company may, before such expiry, make an offer or agreement which would or might require shares to be allotted or Rights to be granted after the authority has expired and the directors may allot shares or grant Rights in pursuance of any such offer or agreement notwithstanding that this authority has expired; and
this power shall be limited:
30-35 Pall Mall By order of the board London SW1Y 5LP Heather Curtis 15 April 2011 Secretary Bisichi Mining PLC Registered in England and Wales - Number 112155
CREST members and, where applicable, their CREST sponsor or voting service provider should note that Euroclear UK & Ireland Limited does not make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed a voting service provider, to procure that his CREST sponsor or voting service provider takes) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsor or voting service provider are referred in particular to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.
The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001.
The Annual General Meeting will be held at the offices of Bisichi Mining PLC 30-35 Pall Mall
The nearest London Underground stations are Piccadilly Circus and Green Park.
The notes on the following pages give an explanation of the proposed resolutions.
Resolutions 1 to 8, and 9 to 11 are proposed as ordinary resolutions. This means that for each of those resolutions to be passed, more than half of the votes cast must be in favour of the resolution. Resolutions 12 to 14 are proposed as special resolutions. This means that for each of those resolutions to be passed, at least three-quarters of the votes cast must be in favour of the resolution.
The Directors will present their report and the audited accounts for the year ended 31 December 2010 together with the auditors' report thereon.
In accordance with the Directors' Remuneration Report Regulations 2002 (the "Regulations"), the Company is required to submit the directors' remuneration report for the year ended 31 December 2010 to a vote of the shareholders. In accordance with the Regulations, approval of the directors' remuneration report is proposed as an ordinary resolution.
Final dividends are approved by the shareholders of the Company but cannot be more than the amount recommended by the directors. The Directors are recommending a final dividend for the year ended 31 December 2010 of 3.0p pence per ordinary share due and payable on 8 August 2011 to the Shareholders on the register at close of business on 1 July 2011. This resolution seeks shareholders' approval of the proposed dividend.
The Combined Code on Corporate Governance recommends that all directors should be subject to election by shareholders at the first annual general meeting after their appointment. This year Garrett Casey was appointed Finance Director by the board on 1 June 2010. The biographical details of Garrett Casey can be found on page 18 of the annual report and accounts for the year ended 31 December 2010.
The Articles of Association of the Company require a proportion of the directors to retire at each annual general meeting of the Company. In addition, the Combined Code on Corporate Governance recommends that directors should submit themselves for re-election at least once every three years. This year two of the current directors, C A Joll and J A Sibbald, will retire and each offer themselves for re-election. Biographical details relating to each director can be found on page 16 of the Company's annual report and accounts for the year ended 31 December 2010 (the "Annual Report").
The Company is required to appoint auditors at each general meeting at which accounts are laid before shareholders, to hold office until the next such meeting. The resolution proposes that PKF (UK) LLP be re-appointed as auditors for the current year.
This resolution proposes that the directors be authorised to set the remuneration of the auditors.
This resolution is required to approve the conditional share option grant made pursuant to an option agreement conditionally entered into between the Company and Mr G J Casey on 31 August 2010 awarded by the Board on 31 August 2010 in recognition of Mr Casey's appointment to the Board of the Company as Finance Director on 1 June 2010.
The board have decided to recommend that members should be offered the right to elect to receive all or part of the recommended final dividend in new Ordinary Shares instead of cash (a scrip dividend). In order to enable the directors to effect this issue of new Ordinary Shares the shareholders are required to give the directors authority to issue and allot new shares and permit the directors to capitalise out of such sums standing to the credit of the reserves. This resolution meets the requirement of Article 155 for the sanction by an ordinary resolution of the members to permit a scrip dividend.
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. This authority shall expire (unless previously revoked by the company) on the conclusion of the next annual general meeting of the Company.
If the directors wish to allot any of the unissued shares of the Company for cash in accordance with resolution 11, the new shares must generally be offered first to shareholders in proportion to their existing shareholdings.
In certain circumstances, it may be in the interests of the Company for the directors to be able to allot some shares for cash without having to offer them first to existing shareholders. In line with normal practice, this resolution, which will be proposed as a special resolution, seeks approval to renew the current authority to exclude the statutory pre-emption rights for issues of shares having a maximum aggregate nominal value of up to £104,515, representing 10 per cent of the Company's issued share capital as at the date of this Notice.
In addition, there are legal, regulatory and practical reasons why it may not always be possible to issue new shares under a rights issue to some shareholders, particularly those resident overseas. To cater for this, the resolution also permits the directors to make appropriate exclusions or arrangements to deal with such difficulties.
The directors believe that obtaining this authority is in the best interests of shareholders as a whole and recommend that shareholders vote in favour of this resolution.
This resolution is required to reflect the implementation in August 2009 of the Shareholders' Rights Directive. The regulation implementing this Directive increased the notice period for general meetings of the Company to 21 days. In order to be able to call meetings (other than annual general meetings) on 14 clear days' notice, shareholders must have approved the calling of meetings on 14 days' notice. Resolution 13 seeks such approval. The approval will be effective until the Company's next annual general meeting, when it is intended that a similar resolution will be proposed. The Company will also need to meet the requirements for electronic voting under the Directive before it can call a general meeting on 14 days' notice.
In certain circumstances, as permitted by the Companies Act 2006, it may be advantageous for the Company to purchase its own ordinary shares and this resolution seeks authority from shareholders to empower the Directors to make limited on-market purchases. The resolution limits the authority to a maximum number of ordinary shares that may be acquired to 1,045,150 being 10 per cent of the Company's issued ordinary share capital as at the date of this Circular and sets the minimum and maximum prices that can be paid (exclusive of expenses). The authority conferred by this resolution will expire at the conclusion of the next annual general meeting of the Company or 15 months from the date of the passing of this resolution, whichever is the earlier.
The Directors have no present intention of exercising the authority to purchase the Company's ordinary shares but will keep the matter under review. Further, the Directors will only exercise this authority after taking into account the effects on earning per share and the benefit to shareholders generally.
Any shares purchases under this authority may either be cancelled or held as treasury shares (treasury shares may subsequently be cancelled, sold for cash or used to satisfy options issued to employees pursuant to the Company's share scheme). The authority sought by this resolution is intended to apply equally to ordinary shares which are to be held by the Company as treasury shares.
On 31 August 2010 the Company entered into a conditional option agreement (the "Option Agreement") with Garrett Casey (the "Optionholder").
Under the Option Agreement, Garrett Casey was granted an option to subscribe for up to 80,000 new ordinary shares of 10p each in the Company (the "Option").
The Option is not approved by HM Revenue and Customs. The Option is personal to the Optionholder and is not transferable (except as mentioned below in the event of the Optionholder's death). Benefits under the Option are not pensionable.
The effective date of grant of the Option is the date on which the Board resolved to grant the Option (31 August 2010).
The Option is conditional upon shareholder approval, by way of ordinary resolution no later than 30 June 2011. If the shareholders have not approved the Option by that date, it will lapse.
The Option cannot be exercised unless the growth in group net assets over the three year period ending 31 December 2012 exceeds the growth in the Retail Price Index over the same three year period by at least 6% (ie an average of 2% per annum) (the "Performance Condition"). This period was selected as it begins on the year end immediately prior to the date (31 August 2010) on which the Board resolved to grant the Option.
If an event occurs which would entitle the Optionholder to exercise his Option before 1 January 2013, this three year performance period will be shortened so as to end on the most recent year end or half year end prior to that event.
The Performance Condition may be amended by the Remuneration Committee if, by reason of events which have occurred since the Performance Condition was specified, the Remuneration Committee considers that amendments are required to produce a fairer or more appropriate measure of performance.
The Performance Condition cannot be re tested. If the Performance Condition is not met at the end of the relevant performance period, the Option will lapse. If the Option is exercised early, the Performance Condition continues to apply (but with a shorter performance period).
The price at which the Optionholder may acquire each ordinary share in the Company ("Share") on the exercise of the Option is £2.025 per Share. This price represents the closing mid market price of a Share on 30 August 2010, being the last dealing day before the date the Board resolved to grant the Option.
Subject to the satisfaction of the Performance Condition, the Option will normally be exercisable in whole or in part at any time on or after 31 August 2013 (the third anniversary of the date the Board resolved to grant the Option). The Option will (if it has not lapsed earlier in the circumstances mentioned below) lapse on 30 August 2020.
The Board may permit the Optionholder to exercise the Option before the date on which it is normally first exercisable if he is transferred to work in another country and he would otherwise be disadvantaged in relation to the Option under the tax or securities or exchange control laws of the country to which he is transferred.
The Option will lapse if the Optionholder:
In the event of a change of control of the Company or if a scheme of amalgamation or reconstruction is sanctioned under Sections 895(1) and 896(1) and (2) of the Companies Act 2006, Options will be exercisable within six months of the relevant event and then lapse. If any person becomes entitled to exercise rights of compulsory acquisition of Shares under Section 979 of the Companies Act 2006 and gives notice in writing of his intention to exercise those rights, Options will be exercisable within a period of one month from the date of such notice and then lapse. The Performance Condition will continue to apply to the Option if exercised in these circumstances and, if the Option becomes exercisable before 31 August 2013 in these circumstances, the Option shall only be exercisable pro rata to the time that has elapsed between 31 August 2010 and the date of the event by virtue of which the Option may be exercised.
If an order is made or a resolution is passed for the winding up of the Company, the Option will lapse, except in the case of a members voluntary winding up (other than for the purposes of amalgamation or reconstruction) in which event the Option may be exercised within six months of the commencement of the winding up. The Performance Condition will continue to apply to the Option if exercised in these circumstances.
In the event of any capitalisation or rights issue or any sub division, reduction, consolidation or other variation of the share capital of the Company, adjustments (certified by the auditors to be in their opinion fair and reasonable) may be made to the number or nominal amount of Shares which may be acquired on the exercise of the Option and/or the acquisition prices of such Shares.
The Company will keep available sufficient authorised but unissued Shares to permit the exercise of the Option and will use its best endeavours to procure that on issue, or as soon as reasonably practicable thereafter, all Shares issues on exercise of the Option shall be admitted to listing in the Official List of The London Stock Exchange.
Shares allotted on exercise of the Option will rank pari passu in all respects with the Shares for the time being in issue, except for any right attaching to such Shares by reference to a record date prior to the date of allotment.
On exercise of the Option, the Optionholder must reimburse all income tax and employee's (but not employer's) national insurance arising on such exercise.
The Remuneration Committee may amend the Option Agreement at any time with the consent of the Optionholder. Any amendment which is materially beneficial to the Optionholder will require the prior approval of the Company's shareholders in general meeting (except for minor amendments to benefit the administration of the Option Agreement, to take account of a change of legislation or to obtain or maintain favourable tax, exchange control or regulatory treatment for the Optionholder or for the Company or members of its group).
I/We the undersigned, being the holder(s) of ordinary shares of the company, hereby appoint the chairman of the meeting as my/our proxy or:
in respect of ordinary shares being my/our voting entitlement* to attend and vote for me/us on my/our behalf at the Annual General Meeting of the company to be held on Tuesday 7 June 2011 at 11.00 am at 30-35 Pall Mall, London SW1Y 5LP and at any adjournment thereof. I/We direct that my/our vote(s) be cast on the resolutions as indicated by an X in the appropriate spaces below. *
Please tick here if this proxy appointment is one of multiple appointments being made* *For the appointment of more than one proxy, please refer to Explanatory Note 2 below.
_________________________________________________________________________________
| Ordinary Resolutions | For | Against | Vote Withheld |
|---|---|---|---|
| 1 To receive and adopt the company's annual accounts for the year ended 31 December 2010 together with the directors' report and the auditors' report on those accounts. |
|||
| 2 To approve the remuneration report for the year ended 31 December 2010. | |||
| 3 To declare and approve a final dividend of 3.0p per share. | |||
| 4 To appoint as a director Mr G J Casey. | |||
| 5 To re-elect as a director Mr C A Joll. | |||
| 6 To re-elect as a director Mr J A Sibbald. | |||
| 7 To re-appoint PKF(UK) LLP as auditors. | |||
| 8 To authorise the directors to determine the remuneration of the auditors. | |||
| Special Business: | |||
| Ordinary Resolutions | |||
| 9 To approve the Option Agreement entered into between the Company and Mr G J Casey | |||
| 10 To authorise a scrip dividend | |||
| 11 To approve the directors' authority to allow securities | |||
| Special Resolutions | |||
| 12 To empower the directors to disapply statutory pre-emption rights. | |||
| 13 To authorise the calling of general meetings of the Company on 14 clear days' notice. | |||
| 14 To authorise the Company to make market purchases of its ordinary shares. | |||
| Full Name (block capitals please) | |||
| Address | |||
| Postcode | |||
| Signed this day of 2011 (Signature) |
Notes:
1 Every holder has the right to appoint some other person(s) of their choice, who need not be a shareholder as their proxy to exercise all or any of their rights, to attend, speak and vote on their behalf at the meeting. If you wish to appoint a person other than the chairman, please insert the name of your chosen proxy holder in the space provided (see above). If the proxy is being appointed in relation to less than your full voting entitlement, please enter in the box next to the proxy holder's name (see above) the number of shares in relation to which they are authorised to act as your proxy. If left blank your proxy will be deemed to be authorised in respect of your full voting entitlement (or if this proxy form has been issued in respect of a designated account for a shareholder, the full voting entitlement for that designated account).
4 Please indicate with an X how you wish your votes to be cast. Any alterations made to this form should be initialled.
5 The "vote withheld" option is provided to enable you to abstain on any particular resolution. However it should be noted that a "vote withheld" is not a vote in law and will not be counted in any calculation of the proportion of the votes "for" and "against" a resolution.
6 Unless otherwise instructed the proxy will abstain or vote as he/she thinks fit. On any motion to amend any resolution, to propose a new resolution, to adjourn the meeting or any other motion put to the meeting the proxy will act at his/her discretion.
7 If the appointor is a corporation this proxy should be executed under the common seal of such corporation or signed on its behalf by an attorney or officer duly authorised. In the case of an individual this proxy should be signed by the appointor or his attorney.
8 To be valid, this form of proxy, together with the power of attorney or other authority, if any, under which it is signed (or a notarially certified copy of such power or authority) must be deposited at: PXS, 34 Beckenham Road, Beckenham, Kent, United Kingdom BR3 4TU not later than 48 hours before the time fixed for the meeting, or if the meeting is adjourned not later than 48 hours before the time fixed for the adjourned meeting.
Proxies may be delivered to PXS by hand at the above address during normal business hours.
Postage by Shareholders outside the UK: Shareholders with addresses outside the UK should post the Form of Proxy in a stamped envelope to: PXS, 34 Beckenham Road, Beckenham, Kent, United Kingdom BR3 4TU 9 In the case of joint registered holders the signature of any holder is sufficient but the vote of the senior holder who tenders a vote shall be accepted to the exclusion of the other joint holders. For this purpose seniority shall be determined by the order in which the names stand in the register of members.
12 In accordance with Regulation 41 of the Uncertificated Securities Regulations 2001, only those shareholders entered in the register of members of the Company as at 6.00 p.m. on 3 June 2011, or if the meeting is adjourned in the register of members at 6.00 p.m. on the second day prior to the day of any adjourned meeting, shall be entitled to attend or vote at the meeting in respect of the number of shares registered in their name at that time. Changes to entries in the register of members after 6.00 p.m. on 3 June 2011 or, if the meeting is adjourned, in the register of members after 6.00 p.m. on the second day prior to the day of the adjourned meeting shall be disregarded in determining the rights of any person to attend, speak or vote at the meeting or at any such adjournment.
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Bisichi Mining 30-35 Pall Mall London SW1Y 5LP email: [email protected]
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