Final Results

BISICHI MINING PLC Results for the year ended 31 December 2013 Financial summary: * Turnover: £35,105,000 (2012: £35,962,000) * EBITDA: £3,039,000 (2012: £4,684,000) Summary: * Strong performance at Black Wattle colliery in the first half was adversely impacted by short term mining problems in the second half * Agreement to purchase 2.3million tonnes of high quality Run of Mine coal from an adjacent opencast reserve * Physical demand for Black Wattle coal remains strong despite weak international coal prices * 266,000 metric tonnes (2012: 160,000 metric tonnes) exported via Richards Bay under the Quattro Programme * The UK retail portfolio continues to perform well with very low voids * Final Dividend proposed of 3p per share payable in cash in addition to the interim dividend of 1p per share Chairman, Sir Michael Heller, comments: "We expect Black Wattle to return to acceptable levels of profitability once wereturn to full production from our lower cost pits in the second half of 2014and, although we expect depressed coal prices to continue for the whole of theyear, we view the outturn for the year with cautious optimism." For further information, please call: Andrew Heller or Garrett Casey, Bisichi Mining PLC 020 7415 5030 Bisichi Mining PLC Annual Report 2013 Earnings before interest, tax, depreciation and amortisation(EBITDA) of £3.0million (£4.7million) Agreement to purchase 2.3million tonnes of high quality Run of Minecoal from nearby opencast reserve UK property portfolio continues to perform well with voids at the verylow level of 2.13% STRATEGIC REPORTCHAIRMAN'S STATEMENT In the year to 31 December 2013 your Company achieved earnings before interest,tax, depreciation and amortisation (EBITDA) of £3.0 million (2012: £4.7million). As we stated in the Interim Report, the year started well for your Company witha strong performance in the first six months at Black Wattle, our South Africancoal mining subsidiary. However, as we reported in the Interim ManagementStatement, in the final quarter of 2013 our open cast mining operations atBlack Wattle were severely impacted when one of our main production pits raninto unrecorded old underground workings. The prompt action taken by yourmanagement ensured that the mine recovered quickly from this incident, but theproduction lost from this area had to be made up by increased production fromone of our higher cost pits. Inevitably, this has had an adverse impact onprofitability. We expect the mine to return to acceptable levels ofprofitability in the second half of 2014 when we return to full production fromour lower cost pits. Looking forward, we are pleased to report that Black Wattle has concluded anagreement with Blue Nightingale Trading 817 (Pty) Ltd ("Blue Nightingale"), ablack owned and managed mining company, to purchase Run of Mine coal from anopencast reserve adjacent to our existing mine. This reserve consists ofapproximately 2.3 million tonnes of high quality coal with very low strippingratios. This is the second mining agreement we have concluded with BlueNightingale and we are very pleased to be involved with them in the developmentof another reserve. We are also pleased to report that Black Wattle continues to perform well underthe Quattro Programme which allows junior black-economic empowerment coalproducers direct access to the coal export market via Richards Bay CoalTerminal. During 2013 the mine railed 266,000 metric tonnes (2012: 160,000metric tonnes) through the programme. We would like to thank Vunani Limited, our black-economic empoweredshareholders at Black Wattle for managing and developing this opportunity. Despite the fact that coal markets have been affected by weak internationalcoal prices, the physical demand for our coal continues to remain strong inboth the domestic and export markets. Nevertheless we expect depressed coalprices to continue for the whole of 2014. Meanwhile, the Company's UK retail property portfolio, which underpins theGroup and which is actively managed by London & Associated Properties PLC,continues to perform well. Despite the regional location of our portfolio,voids across the portfolio were at the extraordinarily low level of 2.13%. Given all of the above but also taking into account the strength anddiversification of our business, your directors have decided to hold thedividend at the 2012 level and will recommend to you, our shareholders, a finaldividend of 3p (2012: 3p) payable on 1 August 2014 to shareholders registeredat the close of business on 4 July 2014 making the total for the year 4p. On behalf of the Board, I would like to thank all of our staff for their hardwork during the course of the year. Sir Michael HellerChairman 17 April 2014 STRATEGIC REPORTMining REVIEW The strong earnings and momentum achieved in the first half of the year atBlack Wattle, our South African coal mining operation, were hampered in thesecond half of the year when mining was affected at one of our main productionpits, where we mined into old underground workings which were never recorded onany historical mine plan. Looking forward to 2014, we expect to see the mine toreturn to acceptable levels of profitability by the second half of the year.With new reserves to develop and strong demand for our coal we remain highlyconfident on the prospects of our coal mining activities in South Africa. Production and operations Run of mine production from Black Wattle remained strong in 2013 with totalproduction for the year of 1.77million metric tonnes (2012: 1.87million metrictonnes). Despite the setbacks in the last quarter the mine continued to sourcecoal from various opencast pits ensuring a steady state of productionthroughout the year. As announced in the Chairman's Statement, we are very pleased to report thatBlack Wattle has concluded an agreement with Blue Nightingale, a South Africanblack owned and managed mining company, to purchase Run of Mine coal from anopencast reserve close to Black Wattle's existing opencast mine. This is thesecond agreement concluded between us and we are very pleased to be continuingour successful relationship. The new reserve consists of approximately2.3million tonnes of coal which can be sold either directly to local powerutilities or transported to Black Wattle where it will be washed and sold intoour existing domestic and export markets. At the end of last year we began relocating machinery to two of our profitableproduction pits. Looking forward into 2014, Black Wattle will plan to increaseproduction from these two areas as well as begin the development of the newreserve at Blue Nightingale. Main trends/markets International coal prices continued to weaken. At the beginning of 2013, theaverage weekly price of Free on Board (FOB) Coal from Richards Bay CoalTerminal (API4) was $89. By the end of the first half of the year the price hadweakened to under $75 where it remained range bound for most of the rest of theyear, a far cry from the prices achieved above $120 two years previously in2011. A depreciation in the South African Rand against the US Dollar has helpedoffset this decline but since the beginning of 2013 to date we have seen only amarginal increase in the Rand export coal price. Health, Safety & Environment (HSE) Black Wattle is committed to creating a safe and healthy working environmentfor its employees and the health and safety of our employees is of the utmostimportance. HSE performance in 2013: • No new cases of Occupational Diseases were recorded. • Zero claims for the Compensation for Occupational Diseases were submitted. • No machines operating at Black Wattle exceeded the regulatory noise level. • Black Wattle Colliery recorded one Lost time Injury during 2013. In addition to the required personnel appointments and assignment of directhealth and safety responsibilities on the mine, a system of HazardIdentification and Risk Assessments has been designed, implemented andmaintained at Black Wattle. Health and Safety training is conducted on an ongoing basis. We are pleased toreport all employees to date have received training in hazard identificationand risk assessment in their work areas. A medical surveillance system is also in place which provides management withinformation used in determining measures to eliminate, control and minimiseemployee health risks and hazards and all Occupational Health hazards aremonitored on an ongoing basis. Various systems to enhance the current HSE strategy have been introduced asfollows: • In order to improve hazard identification before the commencing of tasks,mini risk assessment booklets have been distributed to all mine employees andlong term contractors on the mine. • A Job Safety Analysis form has been introduced to ensure effectiveidentification of hazards in the workplace. • In order to improve the current reporting practice of incidents on the mine,initial reporting of incidents booklets were handed out to all employees andcontractors. • In order to capture and record investigation findings from incidents, anincident recording sheet was introduced to line management and contractors. • Black Wattle Colliery utilises ICAM (Incident cause analysis method). • Hazard Identification and Risk Assessment training was given to all levels ofemployees, line management, Heads of Departments, contractor representativesand contractor employees. • Ongoing training on conveyor belt operation is being conducted with allemployees involved with this discipline. Environment Management Programme Under the terms of the mine's Environmental Management Programme approved bythe Department of Mineral Resource ("DMR"), Black Wattle undertakes a host ofenvironmental protection activities to ensure that the approved EnvironmentalManagement Plan is fully implemented. In addition to these routine activities,Black Wattle regularly carries out environmental monitoring activities on andaround the mine, including evaluation of ground water quality, air quality,noise and lighting levels, ground vibrations, air blast monitoring, andassessment of visual impacts. Black Wattle is fully compliant with the regulatory requirements of theDepartment of Water Affairs and Forestry and has an approved and externallyaudited water use licence. Black Wattle Colliery has substantially improved its water management byerecting and upgrading all its pollution control dams in consultation with theDepartment of Water Affairs and Forestry. A performance assessment audit was conducted to verify compliance to ourEnvironmental Management Programme and no significant deviations were found. Black Wattle Colliery Social and Labour Plan (SLP) progress Black Wattle Colliery is committed to true transformation and empowerment aswell as poverty eradication within the surrounding and labour providingcommunities. Black Wattle is committed to providing opportunities for the sustainablesocio-economic development of its stakeholders, such as: • Employees and their families, through Skills Development, EducationDevelopment, Human Resource Development, Empowerment and ProgressionProgrammes. • Surrounding and labour sending communities, through Local EconomicDevelopment, Rural and Community Development, Housing and Living Condition,Enterprise Development and Procurement Programmes; and • Empowerment partners, through Broad-Based Black Economic Empowerment (BBBEE)and Joint Ventures with Historically Disadvantaged South African (HDSA) newmining entrants and enterprises. • The Company engages in ongoing consultation with its stakeholders to developstrong company-employee relationships, strong company-community relationshipsand strong company-HDSA enterprise relationships. The key focus areas in terms of the detailed SLP programmes were updated asfollows: • New implementation action plans, projects, targets and budgets wereestablished through regular workshops with all stakeholders. • A comprehensive desktop socio-economic assessment was undertaken on baselinedata of the Steve Tshwete Local Municipality (STLM) and Nkangala DistrictMunicipality (NDM). • The current Black Wattle Colliery Local Economic Development (LED) programmeswere upgraded, and new LED projects were selected in consultation with the keystakeholders from the STLM. • An appropriate forum was establishedon the mine and a process initiated forthe consultation, empowerment and participation of the employee representativesin the Black WattleColliery SLP process. • Black Wattle Colliery has concluded extensive work on various Agriculturalprojects as well as the E-Bag Recycling projects. The E-Bag Recycling projectaims to minimize the environmental impact of post-consumer PolyethyleneTerephthalate plastic (PET) on the South African landscape. The project wasawarded the PET Entrepreneur award for 2013 and the project was awarded a newbailing machine as part of the award. An additional piece of ground has beenidentified to extend the project to a different area within the Mhluzi Townshipnearby to Black Wattle. • Various upgrades were initiated at the Evergreen School nearby to BlackWattle including upgrades to the roof, classrooms and outer areas. Procurement In compliance with the Mining Charter and the Mineral and Petroleum ResourceDevelopment Act, Black Wattle has implemented a BBBEE-focussed procurementpolicy which strongly encourages our suppliers to establish and maintain BBBEEcredentials. At present, BBBEE companies provide approximately 80 percent ofBlack Wattle's equipment and services. We closely monitor our monthlyexpenditure and welcome potential BBBEE suppliers to compete for equipment andservice contracts at Black Wattle. Black Wattle also sells much of its coalproducts to empowered companies. Black Wattle Colliery is proud to announce that we are a level 5 BBBEEcontributor. Employment in South Africa As part of Black Wattle's commitment to the South African government MiningCharter, the Company seeks to: • Expand opportunities for historically disadvantaged South Africans (HDSAs),including women, to enter the mining and minerals industry and benefit from theextraction and processing of the country's resources; • Utilise the existing skills base for the empowerment of HDSAs; and • Expand the skills base of HDSAs in order to serve the community. In addition Black Wattle is committed to achieving the goals of the SouthAfrican Employment Equity Act and is pleased to report the following: • Black Wattle Colliery has exceeded the 10 percent women in management andcore mining target. • Black Wattle Colliery has achieved 18.5 percent women in core mining. • 94 percent of the women at Black Wattle Colliery are HDSA females. In terms of staff training some highlights for 2013 were: • 18 employees were trained in ABET (Accreditation Board for Engineering andTechnology) level one; • An additional 4 disabled women have started training on ABET level one andtwo; and • Plans have been put in place for 2014 for a further 11 employees to betrained on ABET level one, two or three and 1 employee will be trained on ABETlevel four. Prospects Management continue to remain confident in the ability to achieve significantvalue from our existing South African mining operations and in acquiring anddeveloping new coal reserves, in partnership with our BEE partners. As a result, I look forward to the coming year with confidence. Andrew HellerManaging Director 17 April 2014 STRATEGIC REPORTRISK & PERFORMANCE The directors present the Strategic Report of the Company for the year ending31 December 2013. The aim of the Strategic report is to provide shareholderswith the ability to assess how the Directors have performed their duty topromote the success of the Company for the collective benefit of shareholders. Business review The Chairman's Statement and the Mining Review which form part of the StrategicReport on the preceding pages 2 to 7 give a comprehensive and fair review ofthe group's activities during the past year and prospects for the forthcomingyear. Principal activity, strategy & business model The Company carries on business as a mining company and its principal activityis coal mining in South Africa. The Company's strategy is to create and deliverlong terms sustainable value to our stakeholders through our business modelwhich can be broken down into four key areas: • acquiring and securing additional coal reserves in South Africa • coal mining • coal washing • coal transportation and marketing In addition to the four key areas outlined above, we seek to balance the highrisk of our mining operations with a dependable cash flow from our UK propertyinvestment operations. The Company invests in retail property across the UK.The UK property portfolio is managed by London & Associated Properties PLCwhose responsibility is to actively manage the portfolio to improve rentalincome and thus enhance the value of the portfolio over time. Risk & uncertainties Coal price risk: The group's mining operational earnings are largely dependenton movements in the coal price. Coal washing: The group's mining operation's earnings are highly sensitive tocoal washing, therefore a stoppage or disruption to the process couldsignificantly impact earnings. However, there is scope to raise earningssubstantially if the yield from the washing process is improved evenmarginally. Mining risk: Attached to mining there are inherent health and safety risks. Anysuch safety incidents disrupt operations, and can slow or even stop production.The group has a comprehensive Health and Safety programme in place to mitigatethis. As with many mining operations, the reserve that is mined has the risk ofnot having the qualities and accessibility expected from geological andenvironmental analysis. Currency risk: The group's South African operations are sensitive to currencymovements, especially those between the South African Rand, US Dollar andBritish Pound. New reserves and mining permissions: The acquisition of additional reserves,permissions to mine and new mining opportunities in South Africa generally arecontingent on a number of factors outside of the group's control, e.g. approvalby the Department of Mineral Resources and the Department of Water Affairs andForestry. Regulatory risk: The group's South African operations are subject to thegovernment Mining Charter and scorecard which primarily seeks to: • Promote equitable access to South Africa's mineral resources for all peoplein South Africa; • Expand opportunities for historically disadvantaged South Africans (HDSAs),including women, to enter the mining and minerals industry and benefit from theextraction and processing of the country's resources; • Utilise the existing skills base for the empowerment of HDSAs; • Expand the skills base of HDSAs in order to serve the community; • Promote employment and the social and economic welfare of mining communitiesand areas supplying mining labour; and • Promote beneficiation of South Africa's mineral commodities beyond mining andprocessing, including the production of consumer goods. The group continues to make good progress towards meeting the Charterrequirements. However any regulatory changes to these, or failure to meetexisting targets, could adversely affect the mine's ability to retain itsmining rights in South Africa. Transport risk: At present the government owned Transnet Freight Rail (TFR) isthe sole rail freight provider for coal in South Africa. The group's SouthAfrican operations are therefore reliant on TFR for delivery of its exportquality coal directly or indirectly via the Southern African ports to its endcustomers. Power supply risk: The current utility provider for power supply in SouthAfrica is the government run Eskom. Eskom continues to undergo capacityproblems resulting in power cuts and lack of provision of power supply to newprojects. The group's mining operations have to date not been affected by powercuts. Flooding risk: The group's mining operations are susceptible to seasonalflooding which could disrupt production. Management monitors water levels on anongoing basis and various projects have been completed, including theconstruction of additional dams, to mitigate this risk. Environmental risk: The group's South African mining operations are required toadhere to local environmental regulations. Details of the groups EnvironmentManagement Programme are disclosed in the Mining Review on page 6. Health & Safety risk: The group's South African mining operations are requiredto adhere to local Health and Safety regulations. Details of the group's Healthand Safety Programme are disclosed in the Mining Review on page 5. Labour risk: The group's mining operations and coal washing plant facility arelabour intensive and unionised. Any labour disputes, strikes or wagenegotiations may disrupt production and impact earnings. Cashflow risk: We seek to balance the high risk of our mining operations with adependable cash flow from our UK property investment operations. Fluctuationsin property values, which are reflected in the Consolidated Income Statementand Balance Sheet, are dependent on an annual valuation of commercialproperties. A fall in UK commercial property can have a marked effect on theprofitability and the net asset value of the group. However, due to the longterm nature of the leases, the effect on cash flows from property investmentactivities will remain stable as long as tenants remain in operation. Key Performance Indicators The Key Performance Indicators for the Group are: 2013 2012 £'000 £'000 For South African mining activities: Earnings before interest, tax, depreciation, and amortisation 2,268 4,520(EBITDA) For our UK property investment operations: Net property valuation 11,559 11,612 For the Group: Profit before tax 102 2,190 Earnings before interest, tax, depreciation, and amortisation 3,039 4,684(EBITDA) Financial position In the UK discussions are continuing with the Royal Bank of Scotland ("RBS") onthe renewal of the current UK banking facilities, being a £5million termfacility and a £1million overdraft. The bank has previously agreed to anextension, from its original expiry date of 31 December 2012, to 30th June2013. Whilst discussions are on-going, no further extension has been formalisedas the terms for a new facility are being negotiated. The directors considerthat with the asset security available, the level of facilities required shouldbe readily available and consider that a new loan will be agreed, either withRBS or an alternative provider, in the near future. The property portfolio was externally valued at 31 December 2013 and the valueof UK investment properties attributable to the group at year end was £11.6million (2012: £11.6million). In South Africa, an increase in the structured trade finance facility fromR60million (South African Rand) to R80million was signed by Black WattleColliery (pty) Limited ("Black Wattle") in October 2013 with Absa Bank Limited,a South African subsidiary of Barclays Bank PLC. The facility is renewedannually at 30 June and is secured against inventory, debtors and cash that areheld in the group's South African operations. This facility comprises of aR60million revolving loan to cover the working capital requirements of thegroup's South African operations, and a R20million loan facility to coverguarantee requirements related to the group's South African mining operations.Subsequent to year end Black Wattle breached one of the covenants of thefacility related to the accounting net asset value of the company. Managementhave been in discussions with the bank to rectify the breach and have no reasonto believe the breach will not be rectified or affect the ongoing use of thefacility or that the facility will not be renewed at the appropriate times. The group's cash and cash equivalents (excluding bank overdrafts) at year endwere £1.7million (2012: £1.8million). The net assets of the group at the yearend were £17.0million (2012: £17.8million). During 2012 the Company lent £2million to Dragon Retail Properties Limited, our joint venture company at6.875 per cent annual interest. This money is repayable on demand and notincluded in the groups cash and cash equivalents. The group has considerable financial resources available at short noticeincluding cash, held for trading investments and its £2m loan to Dragon RetailProperties Limited. Further details on the group's financial position are stated in theConsolidated Balance Sheet on page 46. Cashflow The Company at year end had a net amount owing of cash and cash equivalents(including bank overdrafts) of £1.3 million (2012: net positive balance of £0.7million). Details on the group's cashflow position are stated in theConsolidated Cashflow Statement on page 49. Cash and cash equivalents as perthe Cashflow Statement comprise Cash and cash equivalents as presented in thebalance sheet and bank overdrafts (secured). Environment The group's UK activities are principally property investment whereby weprovide premises which are rented to retail businesses. We seek to providethose tenants with good quality premises from which they can operate in anefficient and environmentally sound manner. Further information relating to the Company's position on the Environment andEnvironmental Management issues related to our South African operations can befound in The Mining Review which forms part of the Strategic Report on thepreceding pages 5 to 7. Employment Employment terms and conditions for our employees based at our UK office and atour South African mining operations are regulated by and are operated incompliance with all relevant prevailing national and local legislation.Employment terms and conditions provided to mining staff meet or exceed thenational average. Further information relating to the Company's position on Employment issues canbe found in The Mining Review which forms part of the Strategic Report on thepreceding pages 5 to 7. Green House Gas reporting We have reported on all of the emission sources required under the CompaniesAct 2006 (Strategic Report and Directors' Reports) Regulations. The group has employed the Operational Control boundary definition to outlineour carbon footprint boundary. Included within that boundary are Scope 1 & 2emissions from coal extraction and onsite mining processes for Black WattleColliery. We have not measured and reported on our Scope 3 emissions sources.Excluded from the footprint boundary are emission sources considered nonmaterial by the group, including refrigerant use onsite. We have used the GHG Protocol Corporate Accounting and Reporting Standard(revised edition) and a methodology adapted from the Intergovernmental Panel onClimate Change (2006) to calculate fugitive emissions from surface coal miningactivities. Further emission factors were used from UK Government's GHGConversion Factors for Company Reporting 2014. The Group's carbon footprint: 2013 CO2e Tonnes Emissions source: Scope 1 Combustion of fuel & operation of facilities 24,862 Scope 2 Emissions from coal mining activities 31,014 Scope 3 Electricity, heat, steam and cooling purchased for own use 9,947 Total 65,823 Intensity: Intensity 1 Tonnes of CO2 per pound sterling of revenue 0.00188 Intensity 2 Tonnes of CO2 per tonne of coal produced 0.0372 Social, community and human rights issues The Company believes that it is in the shareholders' interests to considersocial and human rights issues when conducting business activities both in theUK and South Africa. Further information relating to the Company's position onsocial and community issues can be found in the Mining Review which form partof the Strategic Report on the preceding pages 5 to 7. Directors, employees and gender representation At the year end the group had 6 directors(6 male, 0 female), 7 senior managers(6 male, 1 female) and 227 employees(174 male, 50 female). Future prospects The group seeks to expand its operations in South Africa through theacquisition of additional coal reserves. Further information on the outlook ofthe Company can be found in both the Chairman's Statement on page 2 and theMining Review on page 5 which form part of the Strategic Report. Signed on behalf of the Board of Directors Garrett CaseyFinance Director 17 April 2014 Management team 1 Sir Michael HellerChairmanBisichi Mining PLC 2 Andrew HellerManaging DirectorBisichi Mining PLC,Managing DirectorBlack Wattle Colliery 3 Robert CorryChairmanBlack Wattle Colliery 4 Christopher JollSenior Independent Director,Chairman Auditand RemunerationCommittees 5 Garrett CaseyFinance DirectorBisichi Mining PLC,DirectorBlack Wattle Colliery 6 Robert GroblerDirector of MiningBisichi Mining PLC,DirectorBlack Wattle Colliery 7 Ethan DubeDirectorBlack Wattle Colliery 8 Nico SerfonteinMine ManagerBlack Wattle Colliery Directors & advisors * Sir Michael HellerMA, FCA (Chairman) Andrew R HellerMA, ACA(Managing Director) Garrett CaseyCA (SA)(Finance Director) Robert GroblerPr Cert Eng(Director of mining) O+ Christopher A JollMA (Non-executive)Christopher Joll was appointed a Director on 1 February 2001.He has held a number of non-executive directorships of quoted and un-quotedcompanies and is currently senior partner of MJ2 Events LLP an event managementbusiness. O John A SibbaldBL (Non-executive)John Sibbald has been a Director since 1988. After qualifying as a CharteredAccountant he spent over 20 years in stockbroking, specialising in mining andinternational investment. Secretary & Registered officeHeather A Curtis ACIS24 Bruton PlaceLondon W1J 6NE Black Wattle CollieryDirectorsRobert Corry (Chairman)Andrew Heller (Managing Director)Ethan DubeRobert GroblerGarrett Casey Director of PropertyMike J Dignan FRICS Company RegistrationCompany registration No. 112155 (Incorporated in England and Wales) Websitewww.bisichi.co.uk [email protected] * Member of the nomination committee + Senior independent director O Member of the audit, nomination and remuneration committees. AuditorBDO LLP Principal bankersUnited KingdomBarclays Bank PLCNational Westminster Bank PLCInvestec PLC South AfricaABSA Bank (SA)First National Bank (SA)Standard Bank (SA) Corporate solicitorsUnited KingdomOlswang LLP, LondonMemery Crystal, LondonFladgate LLP, London South AfricaTugendhaft Wapnick Banchetti and Partners, JohannesburgHogan Lovells, JohannesburgBrandmullers Attorneys, Middelburg StockbrokersShore Capital & Corporate Ltd Registrars and transfer officeCapita Asset ServicesThe Registry34 Beckenham RoadBeckenhamKent, BR3 4TU Telephone 0871 664 0300(Calls cost 10p per minute + network extras) or+44 208 639 3399 for overseas callers www.capitaregistrars.comEmail: [email protected] governancefive year summary 2013 2012 2011 2010 2009 £'000 £'000 £'000 £'000 £'000 Consolidated income statement Revenue 35,105 35,962 29,909 32,824 29,016 Operating profit/ (loss) 123 2,568 (1,328) (1,705) 4,892 Profit/ (loss) before tax 102 2,190 (1,450) (1,813) 5,003 Trading Income 17 2,808 (1,210) (2,209) 4,698 Revaluation Income 85 (618) (240) 396 305 Profit before interest, taxation and 3,039 4,684 1,150 770 7,534depreciation Consolidated balance sheet Investment properties 11,559 11,612 12,068 12,110 11,865 Fixed asset investments 4,370 4,309 2,727 3,757 3,755 15,929 15,921 14,795 15,867 15,620 Current asset investments 822 787 2,515 605 510 16,751 16,708 17,310 16,472 16,130 Other assets less liabilities less (123) 607 (537) 1,482 3,170non-controlling interests Total equity attributable to equity 16,628 17,315 16,773 17,954 19,300shareholders Net assets per ordinary share 156.3p 164.0p 158.9p 171.8p 184.7p Dividend per share 4.00p 4.00p 4.00p 4.00p 4.00p governancefinancial calendar 11 June Annual General Meeting 18 November Second interim management2014 2014 statement 1 August Payment of final dividend Late April Announcement of results for2014 for 2013 (if approved) 2015 year ending 31 December 2014 Late Announcement of half-yearAugust results to 30 June 20142014 governancedirectors' report The directors submit their report together with the audited financialstatements for the year ended 31 December 2013. Activities and review of business The group continues its mining activities. Income for the year was derived fromsales of coal from its South African operations. The group also has a propertyinvestment portfolio for which it receives rental income. The results for the year and state of affairs of the group and the company at31 December 2013 are shown on pages 44 to 84 and in the Strategic Report onpages 2 to 14. Future developments and prospects are also covered in theStrategic Report. Over 99 per cent. of staff are employed in the South Africancoal mining industry - employment matters and health and safety are dealt within the Strategic Report. The management report referred to in the Director's responsibilities statementencompasses this Directors' Report and Strategic Report on pages 2 to 14. Corporate responsibility Environment The environmental issues of the group's South African coal mining operationsare covered in the Strategic Report on pages 5 to 14. The group's UK activities are principally property investment whereby premisesare provided for rent to retail businesses.The group seeks to provide those tenants with good quality premises from whichthey can operate in an efficient and environmentally friendly manner. Whereverpossible, improvements, repairs and replacements are made in an environmentallyefficient manner and waste re-cycling arrangements are in place at all thecompany's locations. Greenhouse Gas Emissions Details of the group's greenhouse gas emissions for the year ended 31 December2013 can be found on page 14 of the Strategic Report. Employment The group's policy is to attract staff and motivate employees by offeringcompetitive terms of employment. The group provides equal opportunities to allemployees and prospective employees including those who are disabled. TheStrategic Report gives details of the group's activities and policiesconcerning the employment, training, health and safety and community supportand social development concerning the group's employees in South Africa. Dividend policy An interim dividend for 2013 of 1p was paid on 1 February 2014 (Interim 2012:1p). The directors recommend the payment of a final dividend for 2013 of 4p perordinary share (2012: 3p) making a total dividend for 2013 of 4p (2012: 4p). Subject to shareholder approval, the total dividend per ordinary share for 2013will be 4p per ordinary share. The final dividend will be payable on Friday 1 August 2014 to shareholdersregistered at the close of business on 4 July 2014. Investment properties The investment property portfolio is stated at its open market value of £11,559,000, at 31 December 2013 (2012: £11,612,000) as valued by professionalexternal valuers. The open market value of the company's share of investmentproperties included within its investments in joint ventures is £3,599,000(2012: £3,336,000). Financial instruments Note 21 to the financial statements sets out the risks in respect of financialinstruments. The Board reviews and agrees overall treasury policies, delegatingappropriate authority to the managing director. Financial instruments are usedto manage the financial risks facing the group - speculative transactions arenot permitted. Treasury operations are reported at each Board meeting and aresubject to weekly internal reporting. Directors The directors of the company for the whole year were Sir Michael Heller, A RHeller, G J Casey, C A Joll, R J Grobler (a South African citizen), and J ASibbald. The director retiring by rotation is Mr G J Casey who offers himself forre-election. Mr G J Casey has been an executive director of the company since 2010. He is achartered accountant and has a contract of employment determinable at threemonths notice. The board recommends the re-election of G J Casey. No director had any material interest in any contract or arrangement with thecompany during the year other than as shown in this report. Directors' shareholdings The interests of the directors in the shares of the company, including familyand trustee holdings where appropriate, are shown on page 32 of the AnnualRemuneration Report. Substantial interests The following have advised that they have an interest in 3 per cent. or more ofthe issued share capital of the company as at 15 April 2014: London & Associated Properties PLC - 4,432,618 shares representing 41.52 percent. of the issued capital. (Sir Michael Heller is a director and shareholderof London & Associated Properties PLC). Sir Michael Heller - 330,117 shares representing 3.09 per cent. of the issued capital. A R Heller - 785,012 shares representing 7.35 per cent. of the issued capital. Cavendish Asset Management 1,569,110 shares representing 14.7 per cent. ofLimited - the issued share capital. James Hyslop - 341,126 shares representing 3.20 per cent. of the issued share capital. Disclosure of information to auditor The directors in office at 31 December 2013 have confirmed that they are awarethat there is no relevant audit information of which the auditor is unaware.Each of the directors has confirmed that they have taken all reasonable stepsthey ought to have taken as directors to make themselves aware of any relevantaudit information and to establish that it has been communicated to theauditor. Corporate governance The company has adopted the Corporate Governance Code for Small and Mid-SizeQuoted Companies (the QCA Code) published by the Quoted Companies Alliance. TheQCA Code provides governance guidance to small and mid-size quoted companies.The paragraphs below set out how the company has applied this guidance duringthe year. The company has complied with the QCA Code throughout the year. Principles of corporate governance The group's Board appreciates the value of good corporate governance not onlyin the areas of accountability and risk management, but also as a positivecontribution to business prosperity. The Board endeavours to apply corporategovernance principles in a sensible and pragmatic fashion having regard to thecircumstances of the group's business. The key objective is to enhance andprotect shareholder value. Board structure During the year the Board comprised the executive chairman, the managingdirector, two other executive directors and two non-executive directors. Theirdetails appear on page 19. The Board is responsible to shareholders for theproper management of the group. The Directors' responsibilities statement inrespect of the accounts is set out on page 42. The non-executive directors havea particular responsibility to ensure that the strategies proposed by theexecutive directors are fully considered. To enable the Board to discharge itsduties, all directors have full and timely access to all relevant informationand there is a procedure for all directors, in furtherance of their duties, totake independent professional advice, if necessary, at the expense of thegroup. The Board has a formal schedule of matters reserved to it and meetsbi-monthly. The Board is responsible for overall group strategy, approval of major capitalexpenditure projects and consideration of significant financing matters. The following Board committees, which have written terms of reference, dealwith specific aspects of the group's affairs: • The nomination committee is chaired by Christopher Joll and comprises thenon-executive directors and the executive chairman. The committee isresponsible for proposing candidates for appointment to the Board, havingregard to the balance and structure of the Board. In appropriate casesrecruitment consultants are used to assist the process. Each director issubject to re-election at least every three years. • The remuneration committee is responsible for making recommendations to theBoard on the company's framework of executive remuneration and its cost. Thecommittee determines the contractual terms, remuneration and other benefits foreach of the executive directors, including performance related bonus schemes,pension rights and compensation payments. The Board itself determines theremuneration of the non-executive directors. The committee comprises thenon-executive directors. It is chaired by Christopher Joll. The company'sexecutive chairman is normally invited to attend meetings. The report ondirectors' remuneration is set out on pages 30 to 34. • The audit committee comprises the two non-executive directors and is chairedby Christopher Joll. Its prime tasks are to review the scope of external audit,to receive regular reports from the company's auditor and to review thehalf-yearly and annual accounts before they are presented to the Board,focusing in particular on accounting policies and areas of management judgmentand estimation. The committee is responsible for monitoring the controls whichare in force to ensure the integrity of the information reported to theshareholders. The committee acts as a forum for discussion of internal controlissues and contributes to the Board's review of the effectiveness of thegroup's internal control and risk management systems and processes. Thecommittee also considers annually the need for an internal audit function. Itadvises the Board on the appointment of external auditors and on theirremuneration for both audit and non-audit work, and discusses the nature andscope of the audit with the external auditors. The committee, which meetsformally at least twice a year, provides a forum for reporting by the group'sexternal auditors. Meetings are also attended, by invitation, by the companychairman, managing director and finance director. The audit committee also undertakes a formal assessment of the auditors'independence each year which includes: • a review of non-audit services provided to the group and related fees; • discussion with the auditors of a written report detailing all relationshipswith the company and any other parties that could affect independence or theperception of independence; • a review of the auditors' own procedures for ensuring the independence of theaudit firm and partners and staff involved in the audit, including the regularrotation of the audit partner; and • obtaining written confirmation from the auditors that, in their professionaljudgement, they are independent. The audit committee report is set out on page 40. An analysis of the fees payable to the external audit firm in respect of bothaudit and non-audit services during the year is set out in Note 4 to thefinancial statements. Performance evaluation - board, board committees and directors The performance of the board as a whole and of its committees and thenon-executive directors is assessed by the chairman and the managing directorand is discussed with the senior independent director. Their recommendationsare discussed at the nomination committee prior to proposals for re-electionbeing recommended to the Board. The performance of executive directors isdiscussed and assessed by the remuneration committee. The senior independentdirector meets regularly with the chairman and both the executive andnon-executive directors individually outside of formal meetings. The directorswill take outside advice in reviewing performance but have not found thisnecessary to date. Independent directors The senior independent non-executive director is Christopher Joll. The otherindependent non-executive director is John Sibbald. Christopher Joll has been a non-executive director for over ten years and JohnSibbald has been a non-executive director for over twenty years. The Boardencourages Christopher Joll and John Sibbald to act independently. The boardconsiders that their length of service and connection with the company's publicrelations advisers, does not, and has not, resulted in their inability orfailure to act independently. In the opinion of the Board, Christopher Joll andJohn Sibbald continue to fulfil their role as independent non-executivedirectors. The independent directors regularly meet prior to Board meetings to discusscorporate governance issues. Board and board committee meetings The number of meetings during 2013 and attendance at regular Board meetings andBoard committees was as follows: Meetings held Meetings Attended Sir Michael Heller Board 5 5 Nomination committee 1 1 A R Heller Board 5 5 Audit committee 2 2 G J Casey Board 5 4 Audit committee 2 2 R J Grobler Board 5 2 C A Joll Board 5 5 Audit committee 2 2 Nomination committee 1 1 Remuneration committee 1 1 J A Sibbald Board 5 5 Audit committee 2 2 Nomination committee 1 1 Remuneration committee 1 1 Internal control The directors are responsible for the group's system of internal control andreview of its effectiveness annually. The Board has designed the group's systemof internal control in order to provide the directors with reasonable assurancethat its assets are safeguarded, that transactions are authorised and properlyrecorded and that material errors and irregularities are either prevented orwould be detected within a timely period. However, no system of internalcontrol can eliminate the risk of failure to achieve business objectives orprovide absolute assurance against material misstatement or loss. The key elements of the control system in operation are: • The Board meets regularly with a formal schedule of matters reserved to itfor decision and has put in place an organisational structure with clearlydefined lines of responsibility and with appropriate delegation of authority; • There are established procedures for planning, approval and monitoring ofcapital expenditure and information systems for monitoring the group'sfinancial performance against approved budgets and forecasts; • UK property and financial operations are closely monitored by members of theBoard and senior managers to enable them to assess risk and address theadequacy of measures in place for its monitoring and control. The South Africanoperations are closely supervised by the UK based executives through daily,weekly and monthly reports from the directors and senior officers in SouthAfrica. This is supplemented by monthly visits by the UK based finance directorto the South African operations which include checking the integrity ofinformation supplied to the UK. The directors are guided by the internalcontrol guidance for directors issued by the Institute of Chartered Accountantsin England and Wales. During the period, the audit committee has reviewed the effectiveness ofinternal control as described above. The Board receives periodic reports fromits committees. There are no significant issues disclosed in the Annual Report for the yearended 31 December 2013 (and up to the date of approval of the report)concerning material internal control issues. The directors confirm that theBoard has reviewed the effectiveness of the system of internal control asdescribed during the period. Communication with shareholders Communication with shareholders is a matter of priority. Extensive informationabout the group and its activities is given in the Annual Report, which is madeavailable to shareholders. Further information is available on the company'swebsite, www.bisichi.co.uk. There is a regular dialogue with institutionalinvestors. Enquiries from individuals on matters relating to theirshareholdings and the business of the group are dealt with informatively andpromptly. Takeover directive The company has one class of share capital, ordinary shares. Each ordinaryshare carries one vote. All the ordinary shares rank pari passu. There are nosecurities issued in the company which carry special rights with regard tocontrol of the company. The identity of all substantial direct or indirectholders of securities in the company and the size and nature of their holdingsis shown under the "Substantial interests" section of this report above. A relationship agreement dated 15 September 2005 (the "Relationship Agreement")was entered into between the company and London & Associated Properties PLC("LAP") in regard to the arrangements between them whilst LAP is a controllingshareholder of the company. The Relationship Agreement includes a provisionunder which LAP has agreed to exercise the voting rights attached to theordinary shares in the company owned by LAP to ensure the independence of theBoard of directors of the company. Other than the restrictions contained in the Relationship Agreement, there areno restrictions on voting rights or on the transfer of ordinary shares in thecompany. The rules governing the appointment and replacement of directors,alteration of the articles of association of the company and the powers of thecompany's directors accord with usual English company law provisions. Eachdirector is re-elected at least every three years. The company is not party toany significant agreements that take effect, alter or terminate upon a changeof control of the company following a takeover bid. The company is not aware ofany agreements between holders of its ordinary shares that may result inrestrictions on the transfer of its ordinary shares or on voting rights. There are no agreements between the company and its directors or employeesproviding for compensation for loss of office or employment that occurs becauseof a takeover bid. The Bribery Act 2010 The Bribery Act 2010 came into force on 1 July 2011, and the Board took theopportunity to implement a new Anti-Bribery Policy. All directors and staffcontinue to complete an e-learning training course on a bi-annual basis. Thecompany is committed to acting ethically, fairly and with integrity in all itsendeavours and compliance of the code is closely monitored. Annual General Meeting The annual general meeting of the company ("Annual General Meeting") will beheld at 24 Bruton Place, London W1J 6NE Wednesday, 11 June 2014 at 11.00 a.m.Resolutions 1 to 8 will be proposed as ordinary resolutions. More than 50 percent. of shareholders' votes cast must be in favour for those resolutions to bepassed. Resolutions 9 to 11 will be proposed as special resolutions. At least75 per cent. of shareholders' votes cast must be in favour for thoseresolutions to be passed. The directors consider that all of the resolutions to be put to the meeting arein the best interests of the company and its shareholders as a whole. The Boardrecommends that shareholders vote in favour of all resolutions. Please note that the following paragraphs are only summaries of certainresolutions to be proposed at the Annual General Meeting and not the full textof the resolutions. You should therefore read this section in conjunction withthe full text of the resolutions contained in the notice of Annual GeneralMeeting. Directors' authority to allot shares (Resolution 8) In certain circumstances it is important for the company to be able to allotshares up to a maximum amount without needing to seek shareholder approvalevery time an allotment is required. Paragraph 8.1.1 of Resolution 8 would givethe directors the authority to allot shares in the company and grant rights tosubscribe for, or convert any security into, shares in the company up to anaggregate nominal value of £355,894. This represents approximately 1/3 (onethird) of the ordinary share capital of the company in issue (excludingtreasury shares) at 15 April 2014 (being the last practicable date prior to thepublication of this Directors' Report). Paragraph 8.1.2 of Resolution 8 wouldgive the directors the authority to allot shares in the company and grantrights to subscribe for, or convert any security into, shares in the company upto a further aggregate nominal value of £355,894, in connection with apre-emptive rights issue. This amount represents approximately 1/3 (one third)of the ordinary share capital of the company in issue (excluding treasuryshares) at 15 April 2014 (being the last practicable date prior to thepublication of this Directors' Report). Therefore, the maximum nominal value of shares or rights to subscribe for, orconvert any security into, shares which may be allotted or granted underresolution 8 is £711,788. Resolution 8 complies with guidance issued by the Association of BritishInsurers (ABI). The authority granted by resolution 8 will expire on 31 August 2015 or, ifearlier, the conclusion of the next annual general meeting of the company. Thedirectors have no present intention to make use of this authority. However, ifthey do exercise the authority, the directors intend to follow emerging bestpractice as regards its use as recommended by the ABI. Disapplication of pre-emption rights (Resolution 9) A special resolution will be proposed at the Annual General Meeting in respectof the disapplication of pre-emption rights. Shares allotted for cash must normally first be offered to shareholders inproportion to their existing shareholdings. The directors will, at theforthcoming Annual General Meeting seek power to allot equity securities (asdefined by section 560 of the Companies Act 2006) or sell treasury shares forcash as if the pre-emption rights contained in Section 561 of the Companies Act2006 did not apply: (a) in relation to pre-emptive offers and offers to holders of other equitysecurities if required by the rights of those securities or as the directorsotherwise consider necessary, up to a maximum nominal amount of £355,894 whichrepresents approximately 1/3 (one third) of the ordinary share capital of thecompany in issue (excluding treasury shares) and, in relation to rights issuesonly, up to a maximum additional amount of £355,894 which representsapproximately 1/3 (one third) of the ordinary share capital of the company inissue (excluding treasury shares), in each case as at 15 April 2014 (being thelast practicable date prior to the publication of this Directors' Report); and (b) in any other case, up to a maximum nominal amount of £106,768 whichrepresents approximately 10 per cent. of the ordinary share capital of thecompany in issue (excluding treasury shares) as at 15 April 2014 (being thelast practicable date prior to the publication of this Directors' Report). In compliance with the guidelines issued by the Pre-emption Group, thedirectors will ensure that, other than in relation to a rights issue, no morethan 7.5 per cent. of the issued ordinary shares (excluding treasury shares)will be allotted for cash on a non pre-emptive basis over a rolling three yearperiod unless shareholders have been notified and consulted in advance. The power in resolution 9 will expire when the authority given by resolution 8is revoked or expires. The directors have no present intention to make use of this authority. Notice of General Meetings (Resolution 10) Resolution 10 will be proposed to allow the company to call general meetings(other than an Annual General Meeting) on 14 clear days' notice. A resolutionin the same terms was passed at the Annual General Meeting in 2013. The noticeperiod required by the Companies Act 2006 for general meetings of the companyis 21 days unless shareholders approve a shorter notice period, which cannothowever be less than 14 clear days. Annual General Meetings must always be heldon at least 21 clear days' notice. It is intended that the flexibility offeredby this resolution will only be used for time-sensitive, non-routine businessand where merited in the interests of shareholders as a whole. The approvalwill be effective until the Company's next Annual General Meeting, when it isintended that a similar resolution will be proposed. In order to be able tocall a general meeting on less than 21 clear days' notice, the company mustmake a means of electronic voting available to all shareholders for thatmeeting. Purchase of own Ordinary Shares (Resolution 11) The effect of resolution 11 would be to renew the directors' current authorityto make limited market purchases of the company's ordinary shares of 10 penceeach. The power is limited to a maximum aggregate number of 1,067,683 ordinaryshares (representing approximately 10 per cent. of the company's issued sharecapital as at 15 April 2014 (being the last practicable date prior topublication of this Directors' Report)). The minimum price (exclusive ofexpenses) which the company would be authorised to pay for each ordinary sharewould 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 foran ordinary share is an amount equal to 105 per cent. of the average marketprice for an ordinary share for the five business days preceding any suchpurchase. The authority conferred by resolution 11 will expire at the conclusion of thecompany's next annual general meeting or 15 months from the passing of theresolution, whichever is the earlier. Any purchases of ordinary shares would bemade 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, todo so would result in an increase in earnings per share or net asset value pershare and would be in the best interests of shareholders generally. Inexercising the authority to purchase ordinary shares, the directors may treatthe shares that have been bought back as either cancelled or held as treasuryshares (shares held by the company itself). No dividends may be paid on shareswhich are held as treasury shares and no voting rights are attached to them. As at 15 April 2014 (being the last practicable date prior to the publicationof this Directors' Report) the total number of options to subscribe for newordinary shares in the company was 678,000 shares representing 6.35 per cent.of the company's issued share capital (excluding treasury shares) as at thatdate. Such number of options to subscribe for new ordinary shares wouldrepresent approximately 7.06 per cent. of the reduced issued share capital ofthe company (excluding treasury shares) assuming full use of the authority tomake market purchases sought under resolution 11. Donations No political or charitable donations were made during the year (2012:Nil). Going concern The group's business activities, together with the factors likely to affect itsfuture development are set out in the Chairman's Statement on the precedingpage 2, the Mining Review on pages 5 to 7 and its financial position is set outon page 13 of the Strategic Report. In addition Note 21 to the financialstatements includes the group's treasury policy, interest rate risk, liquidityrisk and hedging profile. The group has considerable financial resources available at short noticeincluding cash, held for trading investments and its £2m loan to Dragon RetailProperties Limited which is repayable on demand. In addition its investmentproperty assets benefit from long term leases with the majority of its tenants.Black Wattle Colliery, its direct mining asset, experienced a reduction inprofitability in the second half of 2013 due to operational issues related totheir mining activates. The directors expect that these operational issues willbe fully overcome by the second half of 2014 and that the market conditionsexperiencedin 2013 will be similar going into 2014.The directors therefore have a reasonable expectation that the mine will returnto acceptable levels of profitability in the second half of 2014. As aconsequence, the directors believe that the group is well placed to manage itsbusiness risks successfully. In October 2013, an increase in the structured trade finance facility fromR60million (South African Rand) to R80million was signed by Black WattleColliery (pty) Limited ("Black Wattle") with Absa Bank Limited, a South Africansubsidiary of Barclays Bank PLC. The facility is renewed annually at 30 Juneand is secured against inventory, debtors and cash that are held in the group'sSouth African operations. This facility comprises of a R60million revolvingloan to cover the working capital requirements of the group's South Africanoperations, and a R20million loan facility to cover guarantee requirementsrelated to the group's South African mining operations. Subsequent to year endBlack Wattle breached one of the covenants of the facility related to theaccounting net asset value of the company. Management have been in discussionswith the bank to rectify the breach and have no reason to believe the breachwill not be rectified or affect the ongoing use of the facility, or that thefacility will not be renewed again at the appropriate times.The group is working with the Royal Bankof Scotland ("RBS") on the renewal of the current UK banking facilities, beinga £5million term facility and a £1million overdraft. The bank has previouslyagreed to an extension, from its original expiry date of 31 December 2012, to30th June 2013. Whilst discussions are on-going, no further extension has beenformalised as the terms for a new facility are being negotiated. The directorsconsider that with the asset security available, the level of facilitiesrequired should be readily available and consider that a new loan will beagreed, either with RBS or an alternative provider, in the near future. As aresult, the Directors believe that the company will have adequate resources tocontinue in operational existence for the foreseeable future and that thecompany is well placed to manage its business risks. Thus they continue toadopt the going concern basis of accounting in preparing the annual financialstatements. By order of the board Heather CurtisSecretary 24 Bruton PlaceLondon W1J 6NE 17 April 2014 governanceStatement of the Chairman of the remuneration committee The remuneration committee presents its report for the year ended 31 December2013, which this year is presented in two parts in accordance with the newregulations. The first part, is the Annual Remuneration Report which details remunerationawarded to directors and non-executive directors during the year. Theshareholders will be asked to approve the Annual Remuneration Report as anordinary resolution (as in previous years) at the AGM in June 2014. The second part, is the Remuneration Policy Report which details theremuneration policy for directors. This policy is subject to a binding vote byshareholders at the AGM in 2014, and if approved will apply for a 3 year periodcommencing 11 June 2014. The policy is very much in line with the previouspolicy although the level of disclosure has increased in accordance with thenew regulations. The remuneration committee reviewed the existing policy anddeemed no changes necessary to the current arrangements. Both of the above reports have been prepared in accordance with The Large andMedium-sized Companies and Groups (Accounts and Reports) (Amendment)Regulations 2013. The Company's auditors, BDO LLP are required by law to audit certaindisclosures and where disclosures have been audited they are indicated as such. Christopher JollChairman - remuneration committee 24 Bruton PlaceLondon W1J 6NE 17 April 2014 governanceAnnual Remuneration Report The following information has been audited: Single total figure of remuneration for the year ended 31 December 2013 Salaries Bonuses Benefits Pension Total Notional Total before value and Fees 2013 Share of options vesting Share options Executive Directors Sir Michael Heller 75 - - - 75 - 75 A R Heller 450 103 31 30 614 - 614 G J Casey 119 75 10 16 220 - 220 R Grobler 142 50 22 7 221 - 221 786 228 63 53 1,130 - 1,130 Non-Executive Directors C A Joll* 25 - - - 25 - 25 J A Sibbald* 2 - 3 - 5 - 5 27 - 3 - 30 - 30 Total 813 228 66 53 1,160 - 1,160 *Members of the remuneration committee for the year ended 31 December 2013 Single total figure of remuneration for the year ended 31 December 2012 Salaries Bonuses Benefits Pension Total Notional Total before value and Fees 2012 Share of options vesting Share options Executive Directors Sir Michael Heller 75 - - - 75 - 75 A R Heller 350 150 14 30 544 177 721 G J Casey 109 75 9 15 208 - 208 R Grobler 162 - 26 8 196 - 196 696 225 49 53 1,023 177 1,200 Non-Executive Directors C A Joll* 25 - - - 25 - 25 J A Sibbald* 2 - 3 - 5 - 5 27 - 3 - 30 - 30 Total 723 225 52 53 1,053 177 1,230 *Members of the remuneration committee for the year ended 31 December 2012 Summary of directors' terms Date of Unexpired Notice contract term period Executive directors Sir Michael Heller November Continuous 6 months 1972 A R Heller January Continuous 3 months 1994 G J Casey June 2010 Continuous 3 months R J Grobler April Continuous 3 months 2008 Non-executive directors C A Joll February Continuous 3 months 2001 J A Sibbald October Continuous 3 months 1988 Pension schemes and incentives Three (2012: three) directors have benefits under money purchase pensionschemes. Contributions in 2013 were £53,000 (2012: £53,000), see table above. Scheme interests awarded during the year No scheme options were awarded during the year ended 31 December 2013. Share option schemes The Company currently has four "Unapproved" Share Option Schemes which are notsubject to HM Revenue and Customs (HMRC) approval. The "Second Scheme" wasapproved by shareholders on 23 June 2005, options having been provisionallygranted under it on 23 September 2004. The "2006 Scheme" was approved byshareholders on 29 June 2006, and the "2010 Scheme" was approved byshareholders on 7 June 2011. The "2012 Scheme" was approved by the remunerationcommittee of the Company on 28 September 2012 in replacement of a scheme whichwas adopted on 15 June 1999 (the "First Scheme"). Existing options overordinary shares granted under the First Scheme lapsed on 29 September 2012.Replacement options could not be granted under the First Scheme as the periodfor new grants under the scheme had expired. Accordingly, the remunerationcommittee approved the adoption by the Company of the 2012 Scheme with similarrules to the First Scheme. All available options under each of the Schemes havebeen granted. Number of share options Option 1 Options 31 Exercisable Exercisable January price* granted December from to 2013 in 2013 2013 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 2012 Scheme A R Heller 34p 233,000 - 233,000 01/10/2012 30/09/2022 *Middle market price at date of grant No consideration is payable for the grant of options under the Unapproved ShareOption Schemes. Performance conditions: The exercise of options under the Unapproved Share Option Schemes, for certainoption issues, is subject to the satisfaction of objective performanceconditions specified by the remuneration committee, which will conform toinstitutional shareholder guidelines and best practice provisions in force fromtime to time. The performance conditions for Second Scheme and the 2010 scheme,agreed by members on 23 June 2005 and 31 August 2010 respectively, requiresgrowth in net assets over a three year period to exceed the growth in theretail price index by a scale of percentages. There are no performanceconditions attached to the other schemes. Payments to past directors No payments were made to past directors in the year ended 31 December 2013. Payments for loss of office No payments for loss of office were made in the year ended 31 December 2013. Statement of directors' shareholding and share interest Directors' interests The interests of the directors in the shares of the Company, including familyand trustee holdings where appropriate, were as follows: Beneficial Non-beneficial 31.12.2013 1.1.2013 31.12.2013 1.1.2013 Sir Michael Heller 148,783 148,783 181,334 181,334 A R Heller 785,012 785,012 - - C A Joll - - - - J A Sibbald - - - - R J Grobler - - - - G J Casey - - - - The following information is unaudited: The following graph illustrates the Company's performance compared with a broadequity market index over a five year period. Performance is measured by totalshareholder return. The directors have chosen the FTSE All Share Mining indexas a suitable index for this comparison as it gives an indication ofperformance against a spread of quoted companies in the same sector. The middle market price of Bisichi Mining PLC ordinary shares at 31 December2013 was 109.75p (2012-110p). During the year the share price ranged between95p and 126.5p. Remuneration of the Managing Director over the last five years The table below demonstrates the remuneration of the holder of the office ofManaging Director for the last five years for the period from 1 January 2009 to31 December 2013. Year Managing Managing Director Annual bonus payout Long-term incentive Director Single total figure against maximum vesting rates against of opportunity* maximum opportunity* remuneration % % £'000 2013 A R Heller 614 N/A N/A 2012 A R Heller 544 N/A N/A 2011 A R Heller 626 N/A N/A 2010 A R Heller 568 N/A N/A 2009 A R Heller 817 N/A N/A Bisichi Mining plc does not have a Chief Executive so the table includes theequivalent information for the Managing Director. \* There were no formal criteria or conditions to apply in determining the amountof bonus payable or the number of shares to be issued. Percentage change in remuneration of director undertaking role of ManagingDirector Managing Director UK based employees £'000 £'000 2013 2012 % change 2013 2012 % change Base salary 450 350 28.6% 194 184 5.4% Benefits 31 14 121.4% 10 9 11.1% Bonuses 103 150 (31.3%) 75 75 0% Bisichi Mining plc does not have a Chief Executive so the table includes theequivalent information for the Managing Director. The comparator group chosen is all UK based employees as the remunerationcommittee believe this provides the most accurate comparison of underlyingincreases based on similar annual bonus performances utilised by the group. Relative importance of spend on pay The total expenditure of the Group on remuneration to all employees (see Notes28 and 32 to the financial statements) is shown below: 2013 2012 £'000 £'000 Employee remuneration 5,850 6,000 Distribution to shareholders 425 422 Statement of implementation of remuneration policy in the following year If the policy is approved at the AGM in June 2014 it is intended that theremuneration policy take effect from 11 June 2014. The vote on the remunerationpolicy is binding in nature. The Company may not then make a remunerationpayment or payment for loss of office to a person who is, is to be, or has beena director of the Company unless that payment is consistent with the approvedremuneration policy, or has otherwise been approved by a resolution of members. Consideration by the directors of matters relating to directors' remuneration The remuneration committee considered the executive directors remuneration andthe board considered the non-executive directors remuneration in the year ended31 December 2013. No increases were awarded and no external advice was taken inreaching this decision. Shareholder voting At the Annual General Meeting on 5 June 2013, there was an advisory vote on theresolution to approve the Remuneration Report the result of which is detailedbelow: % of votes % of votes No of votes for against withheld Resolution to approve the Remuneration Report 99.10% 0.68% 1,384,750 governanceRemuneration Policy Introduction The remuneration policy below is the Group's policy on directors' remuneration,which will be proposed for a binding vote at the 2014 AGM. If approved it isintended that the policy take effect from 11 June 2014. In setting the policy, the Remuneration Committee has taken the following intoaccount: • The need to attract, retain and motivate individuals of a calibre who willensure successful leadership and management of the Company • The Group's general aim of seeking to reward all employees fairly accordingto the nature of their role and their performance • Remuneration packages offered by similar companies within the same sector • The need to align the interests of shareholders as a whole with the long-termgrowth of the Group • The need to be flexible and adjust with operational changes throughout theterm of this policy The remuneration of non-executive directors is determined by the board, andtakes into account additional remuneration for services outside the scope ofthe ordinary duties of non-executive directors. Future policy table Element Purpose Policy Operation Opportunity and performance conditions Executive directors Base To recognise: Considered by Reviewed annually There is nosalary remuneration prescribed maximum Skills committee on Paid monthly in salary appointment cash or maximum rate of Responsibility increase Set at a level Accountability considered No specific appropriate to performance Experience attract, retain conditions are motivate and attached to base Value reward the right salaries individuals. Pension To provide Company The contribution Company contribution competitive contribution payable by the offered at up to 10% retirement offered at up to Company is of base salary as benefits 10% of base salary included in the part of overall as part of overall director's remuneration package remuneration contract of package employment. No specific performance Paid into money conditions are purchase schemes attached to pension contributions Benefits To provide a Contractual The committee The costs associated competitive benefits can retains the with benefits benefits include but are discretion to offered are closely package not limited to: approve changes controlled and in contractual reviewed on an Car or car benefits in annual basis allowance exceptional circumstances or No specific Group health cover where factors performance conditions are Death in service outside the attached to cover control of the contractual benefits Group lead to Permanent health increased costs The value of insurance (e.g. medical benefits for each inflation) director for the year ended 31 December 2013 is shown in the table on page 30 Annual To reward and In assessing the The remuneration The current maximumBonus incentivise performance of the committee bonus opportunity executive team, determines the will not exceed 200% and in particular level of bonus on of base salary in to determine an annual basis any one year, but whether bonuses applying such the remuneration are merited the performance committee reserves remuneration conditions and the power to award committee takes performance up to 300% in an into account the measures as it exceptional year overall considers performance of the appropriate Performance business. conditions will be assessed on an Bonuses are annual basis. The generally offered performance measures in cash applied may be financial, non-financial, corporate, divisional or individual and in such proportion as the remuneration committee considers appropriate Share To provide Granted under Offered at Entitlement to shareOptions executive existing schemes appropriate times options is not directors with (see page 31) by the subject to any a long-term remuneration performance interest in committee conditions the company Share options will be offered by the remuneration committee as appropriate. There are no maximum levels for share options offered. Non-executive directors Base To recognise: Considered by the Reviewed annually There is nosalary board on prescribed maximum Skills appointment salary or maximum rate of increase. No Experience Set at a level specific performance considered conditions are Value appropriate to attached to base attract, retain salaries and motivate the individual. Experience and time required for the role are considered on appointment Pension No pension offered Benefits No benefits The committee The costs associated offered except to retains the with the benefit one non-executive discretion to offered is closely director who is approve changes controlled and eligible for in contractual reviewed on an health cover (see benefits in annual basis annual exceptional remuneration circumstances or No specific report page 30) where factors performance outside the conditions are attached to control of the contractual benefits Group lead to increased costs (e.g. medical inflation) Share Non-executiveOptions directors do not participate in the share option schemes Notes to the future policy table The remuneration committee consider the performance measures outlined in thetable above to be appropriate measures of performance and that the KPI's chosenalign the interests of the directors and shareholders. For details of remuneration of other Company employees please see page 39. Remuneration scenarios An indication of the possible level of remuneration that would be received byeach Executive Director in the year commencing 11 June 2014 in accordance withthe directors' remuneration policy is shown below. Sir Michael Heller G J Casey A R Heller R J Grobler Assumptions Minimum Consists of base salary, benefits and pension. Base salary, benefits and pension for 2014 are assumed at the levels includedin the single total figure remuneration table for the year ended 31 December2013 on page 30. On target Based on the average percentage bonus awarded to the individual in the threeyears ending on 31 December 2013. As outlined in the policy table above, theremuneration committee has discretion to award bonuses of up to 200% of basesalary in any one year (up to 300% in an exceptional year). Base salary, benefits and pension for 2014 are assumed at the levels includedin the single total figure remuneration table for the year ended 31 December2013 on page 30. Maximum Based on maximum remuneration receivable of 300% of base salary awarded asbonus in an exceptional year. Base salary, benefits and pension for 2014 are assumed at the levels includedin the single total figure remuneration table for the year ended 31 December2013 on page 30. Approach to recruitment remuneration All appointments to the board are made on merit. The components of a newdirectors remuneration package (who is recruited within the life of theapproved remuneration policy) would comprise base salary, pension, benefits,annual bonus and opportunity to be granted share options as outlined above andapproach to such appointments are detailed with in the future policy tableabove. The Company will pay such levels of remuneration to new directors thatwould enable the Company to attract appropriately skilled and experiencedindividuals that is not in the opinion of the remuneration committee excessive. Service contracts All executive directors have full-time contracts of employment with theCompany. Non-executive directors have contracts of service. No director has acontract of employment or contract of service with the Company, its jointventure or associated companies with a fixed term which exceeds twelve months.Directors notice periods (see page 31 of the annual remuneration report) areset in line with market practice and of a length considered sufficient toensure an effective handover of duties should a director leave the company. All directors' contracts as amended from time to time, have run from the dateof appointment. Service contracts are kept at the registered office. Policy on payment for loss of office There are no contractual provisions agreed prior to 27 June 2012 that couldimpact on a termination payment. Termination payments will be calculated inaccordance with the existing contract of employment or service contract. It isthe policy of the remuneration committee to issue employment contracts toexecutive directors with normal commercial terms and without extended terms ofnotice which could give rise to extraordinary termination payments. Consideration of employment conditions elsewhere in the Group In setting this policy for directors' remuneration the remuneration committeehas been mindful of the Company's objective to reward all employees fairlyaccording to their role, performance and market forces. In setting the policyfor Directors' remuneration the remuneration committee has considered the payand employment conditions of the other employees within the Group. No formalconsultation has been undertaken with employees in drawing up the policy. Theremuneration committee has not used formal comparison measures. Consideration of shareholder views No shareholder views have been taken into account when formulating this policy.In accordance with the new regulations, an ordinary resolution for approval ofthis policy will be put to shareholders at the AGM in June 2014. governanceAudit committee report The committee's terms of reference have been approved by the board and followpublished guidelines, which are available from the company secretary. The auditcommittee comprises the two non-executive directors, Christopher Joll(chairman), an experienced financial PR executive and John Sibbald, a retiredchartered accountant. The Audit Committee's prime tasks are to: Review the scope of external audit, to receive regular reports from the auditorand to review the half-yearly and annual accounts before they are presented tothe board, focusing in particular on accounting policies and areas ofmanagement judgment and estimation; Monitor the controls which are in force to ensure the integrity of theinformation reported to the shareholders; Assess key risks and to act as a forum for discussion of risk issues andcontribute to the board's review of the effectiveness of the group's riskmanagement control and processes; Act as a forum for discussion of internal control issues and contribute to theboard's review of the effectiveness of the group's internal control and riskmanagement systems and processes; Consider each year the need for an internal audit function; Advise the board on the appointment of external auditors and rotation of theaudit partner every five years, and on their remuneration for both audit andnon-audit work, and discuss the nature and scope of their audit work; Participate in the selection of a new external audit partner and agree theappointment when required; Undertake a formal assessment of the auditors' independence each year whichincludes: • a review of non-audit services provided to the group and related fees; • discussion with the auditors of a written report detailing all relationshipswith the company and any other parties that could affect independence or theperception of independence; • a review of the auditors' own procedures for ensuring the independence of theaudit firm and partners and staff involved in the audit, including the regularrotation of the audit partner; and • obtaining written confirmation from the auditors that, in their professionaljudgement, they are independent. Meetings The committee meets prior to the annual audit with the external auditors todiscuss the audit plan and again prior to the publication of the annualresults. These meetings are attended by the external audit partner, managingdirector, director of finance and company secretary. Prior to bi-monthly boardmeetings the members of the committee meet on an informal basis to discuss anyrelevant matters which may have arisen. Additional formal meetings are held asnecessary. During the past year the committee: • Met with the external auditors, and discussed their report to the AuditCommittee; • Approved the publication of annual and half-year financial results; • Considered and approved the annual review of internal controls; • Decided that due to the size and nature of operation there was not a currentneed for an internal audit function; • Agreed the independence of the auditors and approved their fees for bothaudit and not-audit services as set out in note 4 to the financial statements. External Auditors BDO LLP held office throughout the year. In the United Kingdom the company isprovided with extensive administration and accounting services by London &Associated Properties PLC which has its own audit committee and employs aseparate firm of external auditors, Baker Tilly UK Audit LLP. In South AfricaGrant Thornton (Jhb) Inc. acts as the external auditor to the South Africancompanies, and the work of that firm was reviewed by BDO LLP for the purpose ofthe group audit. Christopher JollChairman - audit committee 24 Bruton PlaceLondon W1J 6NE17 April 2014 governanceVALUERS' CERTIFICATES To the directors of Bisichi Mining PLC In accordance with your instructions we have carried out a valuation of thefreehold property interests held as at 31 December 2013 by the company asdetailed in our Valuation Report dated 14 February 2014. Having regard to the foregoing, we are of the opinion that the open marketvalue as at 31 December 2013 of the interests owned by the Company was £11,559,000 being made up as follows: £000 Freehold 9,035 Leasehold 2,524 11,559 Leeds Woolhouse Real Estate14 February 2014 Regulated by Royal Institute of Chartered Surveyors governanceDIRECTORS' RESPONSIBILITIES STATEMENT The directors are responsible for preparing the annual report and the financialstatements in accordance with applicable law and regulations. Company law requires the directors to prepare financial statements for eachfinancial year. Under that law the directors are required to prepare the groupfinancial in accordance with International Financial Reporting Standards asadopted by the European Union and have elected to prepare the company financialstatements in accordance with United Kingdom Generally Accepted AccountingPractice (United Kingdom Accounting Standards and applicable law). Undercompany law the directors must not approve the financial statements unless theyare satisfied that they give a true and fair view of the state of affairs ofthe group and company and of the profit or loss for the group for that period. In preparing these financial statements, the directors are required to: • select suitable accounting policies and then apply them consistently; • make judgements and accounting estimates that are reasonable and prudent; • state whether they have been prepared in accordance with IFRSs as adopted bythe European Union subject to any material departures disclosed and explainedin the financial statements; • state with regard to the parent company financial statements, whereapplicable UK accounting standards have been followed, subject to any materialdepartures disclosed and explained in the financial statements; • prepare the financial statements on the going concern basis unless it isinappropriate to presume that the company and the group will continue inbusiness; • prepare a strategic report, director's report and director's remunerationreport which comply with the requirements of the Companies Act 2006. The directors are responsible for keeping adequate accounting records that aresufficient to show and explain the company's transactions and disclose withreasonable accuracy at any time the financial position of the company andenable them to ensure that the financial statements comply with the CompaniesAct 2006 and, as regards the group financial statements, Article 4 of the IASRegulation. They are also responsible for safeguarding the assets of thecompany and hence for taking reasonable steps for the prevention and detectionof fraud and other irregularities. Website publication The directors are responsible for ensuring the annual report and the financialstatements are made available on a website. Financial statements are publishedon the company's website in accordance with legislation in the United Kingdomgoverning the preparation and dissemination of financial statements, which mayvary from legislation in other jurisdictions. The maintenance and integrity ofthe company's website is the responsibility of the directors. The directors'responsibility also extends to the ongoing integrity of the financialstatements contained therein. Directors' responsibilities pursuant to DTR4 The directors confirm to the best of their knowledge: • The group financial statements have been prepared in accordance withInternational Financial Reporting Standards (IFRSs) as adopted by the EuropeanUnion and Article 4 of the IAS Regulation and give a true and fair view of theassets, liabilities, financial position and profit and loss of the group. • The annual report includes a fair review of the development and performanceof the business and the financial position of the group and the parent company,together with a description or the principal risks and uncertainties that theyface. governanceIndependent auditor's report To the members of Bisichi Mining PLC We have audited the financial statements of Bisichi Mining PLC for the yearended 31 December 2013 which comprise the consolidated income statement, theconsolidated statement of comprehensive income, the consolidated balance sheet,the consolidated statement of changes in shareholders' equity, the consolidatedcash flow statement, the company balance sheet and the related notes. Thefinancial reporting framework that has been applied in the preparation of thegroup financial statements is applicable law and International FinancialReporting Standards (IFRSs) as adopted by the European Union. The financialreporting framework that has been applied in preparation of the parent companyfinancial 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 accordancewith Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has beenundertaken so that we might state to the company's members those matters we arerequired to state to them in an auditor's report and for no other purpose. Tothe fullest extent permitted by law, we do not accept or assume responsibilityto anyone other than the company and the company's members as a body, for ouraudit work, for this report, or for the opinions we have formed. Respective responsibilities of directors and auditors As explained more fully in the statement of directors' responsibilities, thedirectors are responsible for the preparation of the financial statements andfor being satisfied that they give a true and fair view. Our responsibility isto audit and express an opinion on the financial statements in accordance withapplicable law and International Standards on Auditing (UK and Ireland). Thosestandards require us to comply with the Financial Reporting Council's (FRC's)Ethical Standards for Auditors. Scope of the audit of the financial statements A description of the scope of an audit of financial statements is provided onthe FRC's website at www.frc.org.uk/auditscopeukprivate. Opinion on financial statements In our opinion: • the financial statements give a true and fair view of the state of thegroup's and the parent company's affairs as at 31 December 2013 and of thegroup's profit for the year then ended; • the group financial statements have been properly prepared in accordance withIFRSs as adopted by the European Union; • the parent company financial statements have been properly prepared inaccordance with United Kingdom Generally Accepted Accounting Practice; and • the financial statements have been prepared in accordance with therequirements of the Companies Act 2006; and, as regards the group financialstatements, Article 4 of the IAS Regulation. Opinion on other matters prescribed by the Companies Act 2006 In our opinion: • the part of the directors' remuneration report to be audited has beenproperly prepared in accordance with the Companies Act 2006; and • the information given in the strategic report and directors' report for thefinancial year for which the financial statements are prepared is consistentwith the financial statements. Matters on which we are required to report by exception We have nothing to report in respect of the following: Under the Companies Act 2006 we are required to report to you if, in ouropinion: • adequate accounting records have not been kept by the parent company, orreturns adequate for our audit have not been received from branches not visitedby us; or • the parent company financial statements and the part of the directors'remuneration report to be audited are not in agreement with the accountingrecords and returns; or • certain disclosures of directors' remuneration specified by law are not made;or • we have not received all the information and explanations we require for ouraudit. Andrew Huddleston(senior statutory auditor)For and on behalf of BDO LLP, statutory auditor London, United Kingdom17 April 2014 BDO LLP is a limited liability partnership registered in England and Wales(with registered number OC305127). Consolidated income statement for the year ended 31 December 2013 Notes 2013 2013 2013 2012 2012 2012 Trading Revaluations Total Trading Revaluations Total £'000 £'000 £'000 £'000 £'000 £'000 Group revenue 1 35,105 - 35,105 35,962 - 35,962 Operating costs 2 (31,271) - (31,271) (30,367) - (30,367) Operating profit before 3,834 - 3,834 5,595 - 5,595depreciation, fairvalue adjustments andexchange movements Depreciation 2 (2,817) - (2,817) (2,253) - (2,253) Operating profit/(loss) 1 1,017 - 1,017 3,342 - 3,342before fair valueadjustments andexchange movements Exchange losses (880) - (880) (357) - (357) Decrease in value of 3 - (53) (53) - (456) (456)investment properties Decrease in value of - (1) (1)other investments Gains on held for - 40 40 - 39 39trading investments Operating profit/(loss) 1 137 (14) 123 2,985 (417) 2,568 Share of profit/(loss) 13 - 99 99 64 (201) (137)in joint ventures Profit/(Loss) before 137 85 222 3,049 (618) 2,431interest and taxation Interest receivable 326 - 326 281 - 281 Interest payable 6 (446) - (446) (522) - (522) Profit/(Loss) before 4 17 85 102 2,808 (618) 2,190tax Taxation 7 98 164 262 (842) 192 (650) Profit/(Loss) for the 115 249 364 1,966 (426) 1,540year Attributable to: Equity holders of the 106 249 355 1,721 (426) 1,295company Non-controlling 26 9 - 9 245 - 245interest Profit/(Loss) for the 115 249 364 1,966 (426) 1,540year Profit/(Loss) per share 9 1.00p 2.35p 3.35p 16.30p (4.03)p 12.27p- basic Profit/(Loss) per share 9 0.99p 2.31p 3.30p 16.05p (3.97)p 12.08p- diluted Trading income reflects all the trading activity on mining and propertyoperations. Revaluation Income reflects the revaluation of investmentproperties and other assets within the group and any proportion of theseamounts within Joint Ventures. The total column represents the consolidatedincome statement presented in accordance with IAS 1. Consolidated statement of comprehensive income for the year ended 31 December 2013 2013 2012 £'000 £'000 Profit for the year 364 1,540 Other comprehensive income: Items that may be subsequently recycled to the income statement: Exchange differences on translation of foreign operations (858) (391) Taxation - - Other comprehensive income for the year net of tax (858) (391) Total comprehensive income for the year net of tax (494) 1,149 Attributable to: Equity shareholders (409) 936 Non-controlling interest (85) 213 (494) 1,149 consolidated balance sheet at 31 December 2013 Notes 2013 2012 £'000 £'000 Assets Non-current assets Value of investment properties 10 11,559 11,612 Fair value of head lease 30 196 202 Investment properties 11,755 11,814 Mining reserves, plant and equipment 11 7,096 8,638 Investments in joint ventures accounted for using equity 12 3,235 3,061method Loan to joint venture 12 984 1,117 Other investments 12 151 131 Total non-current assets 23,221 24,761 Current assets Inventories 15 1,756 1,876 Trade and other receivables 16 8,659 7,604 Corporation tax recoverable 36 49 Held for trading investments 17 822 787 Cash and cash equivalents 1,707 1,802 Total current assets 12,980 12,118 Total assets 36,201 36,879 Notes 2013 2012 £'000 £'000 Liabilities Current liabilities Borrowings 19 (8,042) (6,186) Trade and other payables 18 (8,080) (9,218) Current tax liabilities (2) (2) Total current liabilities (16,124) (15,406) Non-current liabilities Borrowings 19 (118) (86) Provision for rehabilitation 20 (874) (989) Finance lease liabilities 30 (196) (202) Deferred tax liabilities 22 (1,902) (2,437) Total non-current liabilities (3,090) (3,714) Total liabilities (19,214) (19,120) Net assets 16,987 17,759 Equity Share capital 23 1,064 1,056 Share premium account 249 169 Translation reserve (1,569) (805) Other reserves 24 587 528 Retained earnings 16,297 16,367 Total equity attributable to equity shareholders 16,628 17,315 Non-controlling interest 26 359 444 Total equity 16,987 17,759 These financial statements were approved and authorised for issue by the boardof directors on 17 April 2014 and signed on its behalf by: A R Heller G J Casey Company Registration No. 112155Director Director Consolidated statement of changes in shareholders' equity for the year ended 31 December 2013 Share Share Translation Other Retained Total Non- Total capital Premium reserves reserves earnings £'000 controlling equity £'000 £'000 £'000 £'000 £'000 interest £'000 £'000 Balance at 1 January 1,056 169 (446) 500 15,494 16,773 231 17,0042012 Revaluation of - - - - (456) (456) - (456)investment properties Other income - - - - 1,751 1,751 245 1,996statement movements Loss for the year - - - - 1,295 1,295 245 1,540 Exchange adjustment - - (359) - - (359) (32) (391) Total comprehensive - - (359) - 1,295 936 213 1,149income for the year Dividend - - - - (422) (422) - (422) Equity share options - - - 28 - 28 - 28 Balance at 1 January 1,056 169 (805) 528 16,367 17,315 444 17,7592013 Revaluation of - - - - (53) (53) - (53)investment properties Other income - - - - 408 408 9 417statement movements Profit for the year - - - - 355 355 9 364 Exchange adjustment - - (764) - - (764) (94) (858) Total comprehensive - - (764) - 355 (409) (85) (494)income for the year Dividend (note 8) - - - - (425) (425) - (425) Share issues 8 80 - - 88 - - 88 Equity share options - - - 59 - 59 - 59 Balance at 31 1,064 249 (1,569) 587 16,297 16,628 359 16,987December 2013 consolidated cash flow statement for the year ended 31 December 2013 Year Year ended ended 31 31 December December 2013 2012 £'000 £'000 Cash flows from operating activities Operating profit/(loss) 123 2,568 Adjustments for: Depreciation 2,817 2,253 Share based payment expense 120 28 (Gain) on investment held for trading (40) (39) Unrealised loss on investment properties 53 456 Unrealised loss on other investments 1 - Share of profit of joint venture - 64 Cash flow before working capital 3,074 5,330 Change in inventories 120 (670) Change in trade and other receivables (2,320) (2,057) Change in trade and other payables 433 1,149 Change in provisions 15 6 Acquisitions of held for trading investments - (18) Cash generated from operations 1,322 3,740 Interest received 326 281 Interest paid (357) (411) Income tax received 11 83 Cash flow from operating activities 1,302 3,693 Cash flows from investing activities Acquisition of reserves, plant and equipment (3,060) (3,681) Proceeds from sale of investment properties, reserves, plant and equipment - - Disposal/(acquisitions) of investments (102) 16 Cash flow from investing activities (3,162) (3,665) Year Year ended ended 31 31 December December 2013 2012 £'000 £'000 Cash flows from financing activities Borrowings drawn 39 86 Borrowings repaid (96) (214) Equity dividends paid (425) (422) Net proceeds from issue of ordinary shares 27 - Cash flow from financing activities (455) (550) Net decrease in cash and cash equivalents (2,315) (522) Cash and cash equivalents at 1 January 718 1,114 Exchange adjustment 275 126 Cash and cash equivalents at 31 December (1,322) 718 Cash and cash equivalents at 31 December comprise: Cash and cash equivalents as presented in the balance sheet 1,707 1,802 Bank overdrafts (secured) (3,029) (1,084) (1,322) 718 group accounting policies for the year ended 31 December 2013 Basis of accounting The results for the year ended 31 December 2013 have been prepared inaccordance with International Financial Reporting Standards (IFRS) as adoptedby the European Union and with those parts of the Companies Act 2006 applicableto companies reporting under IFRS. The principal accounting policies aredescribed below: The group financial statements are presented in £ sterling and all values arerounded to the nearest thousand pounds (£000) except when otherwise stated. Going concern The group has considerable financial resources available at short noticeincluding cash, held for trading investments and its £2m loan to Dragon RetailProperties Limited which is repayable on demand. In addition its investmentproperty assets benefit from long term leases with the majority of its tenants.Black Wattle Colliery, its direct mining asset, experienced a reduction inprofitability in the second half of 2013 due to operational issues related totheir mining activates. The directors expect that these operational issues willbe fully overcome by the second half of 2014 and that the market conditionsexperiencedin 2013 will be similar going into 2014. The directors therefore have areasonable expectation that the mine will return to acceptable levels ofprofitability in the second half of 2014. As a consequence, the directorsbelieve that the group is well placed to manage its business riskssuccessfully. In October 2013, an increase in the structured trade finance facility fromR60million (South African Rand) to R80million was signed by Black WattleColliery (pty) Limited ("Black Wattle") with Absa Bank Limited, a South Africansubsidiary of Barclays Bank PLC. The facility is renewed annually at 30 Juneand is secured against inventory, debtors and cash that are held in the group'sSouth African operations. This facility comprises of a R60million revolvingloan to cover the working capital requirements of the group's South Africanoperations, and a R20million loan facility to cover guarantee requirementsrelated to the group's South African mining operations. Subsequent to year endBlack Wattle breached one of the covenants of the facility related to theaccounting net asset value of the company. Management have been in discussionswith the bank to rectify the breach and have no reason to believe the breachwill not be rectified or affect the ongoing use of the facility, or that thefacility will not be renewed again at the appropriate times. The group is working with the Royal Bank of Scotland ("RBS") on the renewal ofthe current UK banking facilities, being a £5million term facility and a £1million overdraft. The bank has previously agreed to an extension, from itsoriginal expiry date of 31 December 2012, to 30th June 2013. Whilst discussionsare on-going, no further extension has been formalised as the terms for a newfacility are being negotiated. The directors consider that with the assetsecurity available, the level of facilities required should be readilyavailable and consider that a new loan will be agreed, either with RBS or analternative provider, in the near future. As a result, the Directors believe that the company will have adequateresources to continue in operational existence for the foreseeable future andthat the company is well placed to manage its business risks. Thus theycontinue to adopt the going concern basis of accounting in preparing the annualfinancial statements. International Financial Reporting Standards (IFRS) The financial statements are prepared in accordance with InternationalFinancial Reporting Standards and Interpretations in force at the reportingdate. These are prepared under the historic cost basis as modified by therevaluation of investment properties and held for trading investments. During 2013 the following accounting standards and guidance were adopted by thegroup: • IAS 1 Presentation of Financial Statements: Presentation of items of OtherComprehensive Income • IFRS 13 Fair Value Measurement • IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine. The accounting treatment detailed in the above standards have not resulted in achange of the Group's accounting policy and had no impact on the group'sfinancial position or performance. IFRS 13 Fair Value Measurement:IFRS 13 establishes a single source of guidance for fair value measurements andtheir disclosures when fair value is required or permitted. IFRS 13 definesfair value as the price that would be received to sell an asset or paid totransfer a liability in an orderly transaction in the principal (mostadvantageous) market at the measurement date under current market conditions.Fair value under IFRS 13 is an `exit price' regardless of whether that price isdirectly observable or estimated using another valuation technique. Theapplication of IFRS 13 has not materially impacted the fair value measurementsof the group. Additional disclosures where required, are provided in theindividual notes relating to the assets and liabilities whose fair values weredetermined. All other standards and interpretations that were mandatory for the accountingperiod and were required to be adopted by the group either had no materialimpact on the group's financial statements or were not relevant to theoperations of the group. The group has not adopted any standards or interpretations in advance of therequired implementation dates. The following new or revised standards that areapplicable to the group were issued but not yet effective: • IFRS 9 - Financial Instruments • Amendment to IAS 32 • IFRS 10 Consolidated financial statements • IFRS 11 Joint Arrangements • IFRS 12 Disclosure of Interests in Other Entities It is not expected that adoption of any standards or interpretations which havebeen issued by the International Accounting Standards Board but have not beenadopted will have a material impact on the financial statements. Key judgements and estimates The directors consider their judgements and estimates surrounding the life ofthe mine and its reserves to have the most significant effect on the amountsrecognised in the financial statements and to be the area where the financialstatements are at most risk of a material adjustment due to estimationuncertainty. Areas where key estimates and judgements are considered to have asignificant effect on the amounts recognised in the financial statementsinclude: Depreciation, amortisation of mineral rights, mining development costs andplant & equipment The annual depreciation/amortisation charge to operations, can fluctuate frominitial estimates. This could generally result when there are significantchanges in any of the factors or assumptions used in estimating mineralreserves and resources which in turn affects the life of mine or the expectedlife of reserves. Estimates of proven and probable reserves and resources areprepared by suitable qualified experts. Assessments of depreciation/amortisation rates against the estimated reserve and resource base areperformed regularly. Provision for mining rehabilitation including restoration and de-commissioningcosts A provision for future rehabilitation including restoration anddecommissioning costs requires estimates and assumptions to be made around therelevant regulatory framework, the timing, extent and costs of therehabilitation activities and of the risk adjusted discount rates used todetermine the present value of the future cash outflows. The provisionsincluding the estimates and assumptions contained therein are reviewedregularly by management. Impairment Property, plant and equipment are reviewed for impairment wheneverevents or changes in circumstances indicate that the carrying value may not befully recoverable. Future cash flow estimates are discounted using assetspecific discount rates and are based on expectations about future operations,primarily comprising estimates about production and sales volumes, commodityprices, reserves and resources, operating, rehabilitation and restoration costsand capital expenditures. Changes in such estimates could impact recoverablevalues of these assets. Estimates are reviewed regularly by management. Fair value measurements of investment properties An assessment of the fair value of assets and liabilities, in particularinvestment properties, is required to be performed. In such instances, fairvalue measurements are estimated based on the amounts for which the assets andliabilities could be exchanged at the relevant transaction date or reportingperiod end. To the extent possible, the assumptions and inputs used take intoaccount externally verifiable inputs. However, such information is by naturesubject to uncertainty. The directors note that the fair value measurement ofthe investment properties, can be considered to be less judgemental whereexternal valuers have been used and as a result of the nature of the underlyingassets. Basis of consolidation The group accounts incorporate the accounts of Bisichi Mining Plc and all ofits subsidiary undertakings, together with the group's share of the results ofits joint ventures. Non-controlling interests in subsidiaries are presentedseparately from the equity attributable to equity owners of the parent company.When changes in ownership in a subsidiary do not result in a loss of control,the non-controlling shareholders' interests are initially measured at thenon-controlling interests' proportionate share of the subsidiaries net assets.Subsequent to this, the carrying amount of non-controlling interests is theamount of those interests at initial recognition plus the non-controllinginterests' share of subsequent changes in equity. Total comprehensive income isattributed to non-controlling interests evenif this results in the non-controlling interests having a deficit balance. Revenue Revenue comprises sales of coal and property rental income. Revenue isrecognised when delivery of the product or service has been made and when thecustomer has a legally binding obligation to settle under the terms of thecontract and has assumed all significant risks and rewards of ownership. Revenue is only recognised on individual sales of coal when all of thesignificant risks and rewards of ownership have been transferred to a thirdparty. In most instances revenue is recognised when the product is delivered tothe location specified by the customer, which is typically when loaded intotransport, where the customer pays the transportation costs. Rental income which excludes services charges recoverable from tenants, isrecognised in the group income statement on a straight-line basis over the termof the lease. This includes the effect of lease incentives. Investment properties Investment properties comprise freehold and long leasehold land and buildings.Investment properties are carried at fair value in accordance with IAS 40`Investment Properties'. Properties are recognised as investment propertieswhen held for long-term rental yields, and after consideration has been givento a number of factors including length of lease, quality of tenant andcovenant, value of lease, management intention for future use of property,planning consents and percentage of property leased. Investment properties arerevalued annually by professional external surveyors and included in thebalance sheet at their fair value. Gains or losses arising from changes in thefair values of assets are recognised in the consolidated income statement inthe period to which they relate. In accordance with IAS 40, investmentproperties are not depreciated. Properties held for use in the business are notrecognised as investment properties and are held at depreciated historicalcost. The fair value of the head leases is the net present value of the current headrent payable on leasehold properties until the expiry of the lease. Mining reserves, plant and equipment The cost of property, plant and equipment comprises its purchase price and anycosts directly attributable to bringing the asset to the location and conditionnecessary for it to be capable of operating in accordance with agreedspecifications. Freehold land is not depreciated. Other property, plant andequipment is stated at historical cost less accumulated depreciation. Provisions Provisions are recognised when the group has a present obligation as a resultof a past event which it is probable will result in an outflow of economicbenefits that can be reliably estimated. A provision for rehabilitation of the mine is carried at present value and isprovided for over the life of mine. The provision includes the restoration ofthe underground, opencast, surface operations and de-commissioning of plant andequipment and is estimated to be utilised at the end of the life of mine of thegroup. The timing and final cost of the rehabilitation is uncertain and willdepend on the duration of the mine life and the quantities of coal extractedfrom the reserves. Mine reserves and development cost The purpose of mine development is to establish secure working conditions andinfrastructure to allow the safe and efficient extraction of recoverablereserves. Depreciation on mine development is not charged until productioncommences or the assets are put to use. On commencement of full production,depreciation is charged over the life of the associated mine reserves on astraight-line basis. Surface mine development Expenditure incurred prior to the commencement of working surface mine sites,net of any residual value and taking into account the likelihood of the sitebeing mined, is capitalised within property, plant and equipment and charged tothe income statement over the life of the recoverable reserves of the scheme. Other assets and depreciation The cost, less estimated residual value, of other property, plant and equipmentis 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, ateach balance sheet date. Changes to the estimated residual values or usefullives are accounted for prospectively. Heavy surface mining and other plant andequipment 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 using the units of production basis Motor vehicles 25-33 per cent per annum Office equipment 10-33 per cent per annum Employee benefits Share based remuneration The company operates a share option scheme. The fair value of the share optionscheme is determined at the date of grant. This fair value is then expensed ona straight-line basis over the vesting period, based on an estimate of thenumber of shares that will eventually vest. The fair value of options grantedis calculated using a binomial or Black-Scholes-Merton model. Details of theshare options in issue are disclosed in the Directors' Remuneration Report onpage 31 under the heading Share option schemes which is within the audited partof that report. Pensions The group operates a defined contribution pension scheme. The contributionspayable to the scheme are expensed in the period to which they relate. Foreign currencies Monetary assets and liabilities are translated at year end exchange rates andthe resulting exchange rate differences are included in the consolidated incomestatement within the results of operating activities if arising from tradingactivities and within finance cost/income if arising from financing. For consolidation purposes, income and expense items are included in theconsolidated income statement at average rates, and assets and liabilities aretranslated at year end exchange rates. Translation differences arising onconsolidation are recognised in other comprehensive income. Where foreignoperations are disposed of, the cumulative exchange differences of that foreignoperation are recognised in the consolidated income statement when the gain orloss on disposal is recognised. Transactions in foreign currencies are translated at the exchange rate rulingon transaction date. Financial instruments The group classifies financial instruments, or their component parts, oninitial recognition as a financial asset, a financial liability or an equityinstrument in accordance with the substance of the contractual arrangement. Bank loans and overdrafts Bank loans and overdrafts are included as financial liabilities on the groupbalance sheet at the amounts drawn on the particular facilities net of theunamortised cost of financing. Interest payable on those facilities is expensedas finance cost in the period to which it relates. Finance lease liabilities Finance lease liabilities arise for those investment properties held under aleasehold interest and accounted for as investment property. The liability isinitially calculated as the present value of the minimum lease payments,reducing in subsequent reporting periods by the apportionment of payments tothe lessor. Interest rate derivatives The group uses derivative financial instruments to manage the interest raterisk associated with the financing of the group's business. No trading in suchfinancial instruments is undertaken. At each reporting date, these interestrate derivatives are recognised at fair value, being the estimated amount thatthe group would receive or pay to terminate the agreement at the balance sheetdate, taking into account current interest rates and the current credit ratingof the counterparties. The gain or loss at each fair value re-measurement isrecognised immediately in the income statement. Held for trading investments Financial assets/liabilities held for trading or short-term gain are measuredat fair value and movements in fair value are charged/credited to the incomestatement in the period. Trade receivables Trade receivables do not carry any interest and are stated at their nominalvalue as reduced by appropriate allowances for estimated recoverable amounts asthe interest that would be recognised from discounting future cash paymentsover the short payment period is not considered to be material. Trade payables Trade payables are not interest bearing and are stated at their nominal value,as the interest that would be recognised from discounting future cash paymentsover the short payment period is not considered to be material. Other financial assets and liabilities The groups other financial assets and liabilities not disclosed above areaccounted for at amortised cost. Joint ventures Investments in joint ventures, being those entities over whose activities thegroup has joint control, as established by contractual agreement, are includedat cost together with the group's share of post-acquisition reserves, on anequity basis. Inventories Inventories are stated at the lower of cost and net realisable value. Costincludes materials, direct labour and overheads relevant to the stage ofproduction. Net realisable value is based on estimated selling price less allfurther costs to completion and all relevant marketing, selling anddistribution costs. Other investments Other investments that do not have a quoted market price in an active marketand whose fair value cannot be reliably measured are recognised at cost lessany provision for impairment. Impairment Whenever events or changes in circumstance indicate that the carrying amount ofan asset may not be recoverable an asset is reviewed for impairment. An asset'scarrying value is written down to its estimated recoverable amount (being thehigher of the fair value less cost to sell and value in use) if that is lessthan the asset's carrying amount. Deferred tax Deferred tax is the tax expected to be payable or recoverable on differencesbetween the carrying amounts of assets and liabilities in the financialstatements and the corresponding tax bases used in the tax computations, and isaccounted for using the balance sheet liability method. Deferred taxliabilities are generally recognised for all taxable temporary differences anddeferred tax assets are recognised to the extent that it is probable thattaxable profits will be available against which deductible temporarydifferences can be utilised. In respect of the deferred tax on the revaluationsurplus, this is calculated on the basis of the chargeable gains that wouldcrystallise on the sale of the investment portfolio as at the reporting date.The calculation takes account of indexation on the historical cost of theproperties and any available capital losses. Deferred tax is calculated at the tax rates that are expected to apply in theperiod when the liability is settled or the asset is realised. Deferred tax ischarged or credited in the group income statement, except when it relates toitems charged or credited directly to other comprehensive income, in which caseit is also dealt with in other comprehensive income. Dividends Dividends payable on the ordinary share capital are recognised as a liabilityin the period in which they are approved. Cash and cash equivalents Cash comprises cash in hand and on-demand deposits. Cash and cash equivalentscomprises short-term, highly liquid investments that are readily convertible toknown amounts of cash and which are subject to an insignificant risk of changesin value and original maturities of three months or less. The cash and cashequivalents shown in the cashflow statement are stated net of bank overdrafts. Segmental reporting For management reporting purposes, the group is organised into businesssegments distinguishable by economic activity. The group's only businesssegments are mining activities and investment properties. These businesssegments are subject to risks and returns that are different from those ofother business segments and are the primary basis on which the group reportsits segment information. This is consistent with the way the group is managedand with the format of the group's internal financial reporting. Significantrevenue from transactions with any individual customer, which makes up 10percent or more of the total revenue of the group, is separately disclosedwithin each segment. notes to the financial statements for the year ended 31 December 2013 1. Segmental reporting 2. 2013 Business analysis Mining Property Other Total £'000 £'000 £'000 £'000 Significant revenue 12,981 - - 12,981customer A Significant revenue 7,448 - - 7,448customer B Significant revenue 6,829 - - 6,829customer C Other revenue 6,859 953 35 7,847 Segment revenue 34,117 953 35 35,105 Operating profit 335 649 33 1,017before fair valueadjustments & exchange movements Revaluation of (880) (53) 39 (894)investments &exchange movements Operating profit/ (545) 596 72 123(loss) and segmentresult Segment assets 15,849 11,557 2,823 30,229 Unallocated assets - Non-current 46assets - Cash & cash 1,707equivalents Total assets 31,982excludinginvestment in jointventures Segment liabilities (8,816) (1,010) (22) (9,848) Borrowings (33) (5,098) - (5,131) (8,849) (6,108) (22) (14,979) Unallocated (4,235)liabilities Total liabilities (19,214) Net assets 12,768 Investment in joint 4,219ventures nonsegmental Net assets as per 16,987balance sheet Geographic analysis United South Other Unallocated Total Kingdom Africa £'000 £'000 £'000 £'000 £'000 Revenue 988 34,117 - - 35,105 Operating profit/(loss) and segment 668 (545) - - 123result Non-current assets excluding investments 11,765 7,050 - 36 18,851 Total net assets 5,969 7,248 43 3,726 16,987 Capital expenditure 48 3,012 - - 3,060 2012 Business analysis Mining Property Other Total £'000 £'000 £'000 £'000 Significant revenue customer A 10,510 - - 10,510 Significant revenue customer B 6,120 - - 6,120 Significant revenue customer C 3,110 - - 3,110 Other Revenue 15,212 957 53 16,222 Segment revenue 34,952 957 53 35,962 Operating profit/(loss) before fair value 2,630 666 46 3,342adjustments & exchange movements Revaluation of investments & exchange movements (357) (456) 39 (774) Operating profit/(loss) and segment result 2,273 210 85 2,568 Segment assets 15,789 12,322 2,786 30,897 Unallocated assets - Non-current assets 2 - Cash & cash equivalents 1,802 Total assets excluding investment in joint 32,701ventures Segment liabilities (9,416) (2,159) (1,271) (12,846) Borrowings (102) (5,086) - (5,188) (9,518) (7,245) (66) (16,829) Unallocated liabilities (1,086) Total liabilities (19,120) Net assets 13,581 Investment in joint ventures non segmental 4,178 Net assets as per balance sheet 17,759 Geographic analysis United South Other Unallocated Total Kingdom Africa £'000 £'000 £'000 £'000 £'000 Revenue 1,010 34,952 - - 35,962 Operating profit and segment result 295 2,273 - - 2,568 Non-current assets excluding investments 11,814 8,638 - - 20,452 Total net assets 5,857 6,170 43 5,689 17,759 Capital expenditure 1 3,680 - - 3,681 2. Operating costs 2013 2012 £'000 £'000 Mining 26,158 25,390 Property 192 135 Cost of sales 26,350 25,525 Administration 7,738 7,095 Operating costs 34,088 32,620 The direct property costs are: Ground rent 5 9 Direct property expense 116 86 Bad debts 71 40 192 135 Operating costs above include depreciation of £2,817,000 (2012: £2,253,000). 3. Loss on revaluation and sale of investment properties The reconciliation of the investment deficit to the loss on revaluation ofinvestment properties in the income statement is set out below: 2013 2012 £'000 £'000 Investment deficit (47) (476) Loss on valuation movement in respect of head lease payments (6) 20 Loss on revaluation of investment properties (53) (456) 4. Profit/(Loss) before taxation Profit/(Loss) before taxation is arrived at after charging: 2013 2012 £'000 £'000 Staff costs (see note 28) 5,850 6,000 Depreciation 2,817 2,253 Exchange loss 880 357 Fees payable to the company's auditor for the audit of the 35 33company's annual accounts Fees payable to the company's auditor and its associates forother services: The audit of the company's subsidiaries, pursuant to legislation - 31 Corporate finance - 17 Other services 1 5 The directors consider the auditors were best placed to provide the abovenon-audit services.The audit committee reviews the nature and extent of non-audit services toensure that independence is maintained. 5. Directors' emoluments Directors' emoluments are shown in the Directors' remuneration report on pages30 and 31 under the heading Directors' remuneration which is within the auditedpart of that report. 6. Interest payable 2013 2012 £'000 £'000 On bank overdrafts and bank loans 323 352 Unwinding of discount 89 111 Other interest payable 34 59 Interest payable 446 522 7. Taxation 2013 2012 £'000 £'000 (a) Based on the results for the year: Corporation tax - 7 Current tax - 7 Deferred tax - current year (213) 643 Deferred tax - adjustment in respect of prior year (49) - Total tax in income statement (262) 650 (b) Factors affecting tax charge for the year: The corporation tax assessed for the year is different from that at thestandard rate of corporation tax in the United Kingdom of 23.5% (2012: 24.5%) The differences are explained below: Profit on ordinary activities before taxation 102 2,190 Tax on profit on ordinary activities at 23.5% (2012: 24.5%) 24 537 Effects of: Expenses not deductible for tax purposes 6 25 Adjustment to tax rate (101) - Other differences (142) 88 Adjustment in respect of prior years (49) - Total tax (262) 650 financial statements notes to the financial statements continued (c) Analysis of United Kingdom and overseas tax United Kingdom tax included in above: 2013 2012 £'000 £'000 Corporation tax - 2 Adjustment in respect of prior years - - Current tax - 2 Deferred tax (271) (101) (271) (99) Overseas tax included in above: Corporation tax - 5 Adjustment in respect of prior years - - Current tax - 5 Deferred tax 9 744 9 749 8. Dividends paid 2013 2013 2012 2012 Per £'000 Per £'000 share share Dividends paid during the year relating to the 4.00p 425 4.00p 422prior period Dividends to be paid: Interim dividend for 2013 paid on 31 January 2014 1.00p 106 1.00p 105 Proposed final dividend for 2013 3.00p 319 3.00p 317 4.00p 425 4.00p 422 The dividends to be paid are not accounted for until they have been approved atthe Annual General Meeting. The amount will be accounted for as anappropriation of retained earnings in the year ending 31 December 2014. 9. Profit/(Loss) and diluted profit/(loss) per share Both the basic and diluted profit/(loss) per share calculations are based on aprofit of £355,000 (2012: £1,295,000). The basic profit/(loss) per share hasbeen calculated on a weighted average of 10,596,839(2012: 10,556,839) ordinaryshares being in issue during the period. The diluted profit/(loss) per sharehas been calculated on the weighted average number of shares in issue of10,596,839 (2012: 10,556,839) plus the dilutive potential ordinary sharesarising from share options of 160,982 (2012: 165,722) totalling 10,757,821(2011: 10,722,561). 10. Investment properties Freehold Long Total £'000 Leasehold £'000 £'000 Valuation at 1 January 2013 8,889 2,723 11,612 Revaluation 146 (199) (53) Valuation at 31 December 2013 9,035 2,524 11,559 Valuation at 1 January 2012 9,118 2,950 12,068 Revaluation (229) (227) (456) Valuation at 31 December 2012 8,889 2,723 11,612 Historical cost At 31 December 2013 4,801 728 5,529 At 31 December 2012 4,801 728 5,529 Long leasehold properties are those for which the unexpired term at the balancesheet date is not less than 50 years.All investment properties are held for use in operating leases and allproperties generated rental income during the period. Freehold and Long Leasehold properties were externally professionally valued at31 December on an open market basis by: 2013 £'000 Woodhouse Real Estate 11,559 The valuations were carried out in accordance with the Statements of AssetValuation and Guidance Notes published by The Royal Institution of CharteredSurveyors. Each year external valuers are appointed by the Executive Directors on behalfof the Board. The valuers are selected based upon their knowledge, independenceand reputation for valuing assets as those held by the group. Valuations are performed annually and are performed consistently across allinvestment properties in the group's portfolio. At each reporting dateappropriately qualified employees of the group verify all significant inputsand review the computational outputs. Valuers submit their report to the Boardon the outcome of each valuation round. Valuations take into account tenure, lease terms and structural condition. Theinputs underlying the valuations include market rent or business profitability,likely incentives offered to tenants, forecast growth rates, yields, EBITDA,discount rates, construction costs including any specific site costs (forexample section 106), professional fees, developer's profit includingcontingencies, planning and construction timelines, lease regear costs,planning risk and sales prices based on known market transactions for similarproperties to those being valued. Valuations are based on what is determined to be the highest and best use. Whenconsidering the highest and best use a valuer will consider, on a property byproperty basis, its actual and potential uses which are physically, legally andfinancially viable. Where the highest and best use differs from the existinguse, the valuer will consider the cost and likelihood of achieving andimplanting this change in arriving at its valuation. There are often restrictions on Freehold and Leasehold property which couldhave a material impact on the realisation of these assets. The most significantof these occur when planning permission or lease extension and renegotiation ofuse are required or when a credit facility is in place. These restrictions arefactored in the property's valuation by the external valuer. IFRS 13 sets out a valuation hierarchy for assets and liabilities measured atfair value as follows: Level 1: valuation based on inputs on quoted market prices in active markets Level 2: valuation based on inputs other than quoted prices included withinlevel 1 that maximise the use of observable data directly or from market pricesor indirectly derived from market prices. Level 3: where one or more inputs to valuations are not based on observablemarket data The inter-relationship between key unobservable inputs and the groups'properties is detailed in the table below: Class of property Level 3 Carrying Valuation Key Range / technique unobservable inputs (weighted fair value average) 2013 2013 £'000 Freehold - external 9,035 Income Estimated £6valuation capitalisation rental value (£6) Per sq ft p.a 7.1% Equivalent Yield (7.1%) Long leasehold - external 2,524 Income Estimated £7- £25valuation capitalisation rental value (£12) Per sq ft p.a 7.9% - Equivalent 10.5% yield (10.3%) At 31 December 2013 11,559 There are interrelationships between all these inputs as they are determined bymarket conditions. The existence of an increase in more than one input would beto magnify the input on the valuation. The impact on the valuation will bemitigated by the interrelationship of two inputs in opposite directions, forexample, an increase in rent may be offset by an increase in yield. The table below illustrates the impact of changes in key unobservable inputs onthe carrying / fair value of the Group's properties: Estimated Equivalent rental value yield 10% increase or 25 basis point decrease contraction £'000 or expansion £'000 Freehold - external valuation 180 / (180) 88 / (91) Long Leasehold - external valuation 597 / (594) 298 / (302) 11. Mining reserves, plant and equipment Mining Mining Motor Office Total reserves equipment vehicles equipment £'000 £'000 £'000 £'000 £'000 Cost at 1 January 2013 1,651 16,835 159 112 18,757 Exchange adjustment (341) (3,479) (21) (12) (3,853) Additions - 2,972 76 12 3,060 Disposals - - (49) - (49) Cost at 31 December 2013 1,310 16,328 165 112 17,915 Accumulated depreciation at 1 January 2012 1,438 8,462 129 90 10,119 Exchange adjustment (296) (1,749) (15) (8) (2,068) Charge for the year 42 2,757 12 6 2,817 Disposals - - (49) - (49) Accumulated depreciation at 31 1,184 9,470 77 88 10,819December 2013 Net book value at 31 December 2013 126 6,858 88 24 7,096 Cost at 1 January 2012 1,815 14,467 170 115 16,567 Exchange adjustment (164) (1,310) (11) (6) (1,491) Additions - 3,678 - 3 3,681 Disposals - - - - - Cost at 31 December 2012 1,651 16,835 159 112 18,757 Accumulated depreciation at 1 January 1,523 6,905 127 86 8,6412012 Exchange adjustment (138) (626) (7) (4) (775) Charge for the year 53 2,183 9 8 2,253 Disposals in year - - - - - Accumulated depreciation at 31 1,438 8,462 129 90 10,119December 2012 Net book value at 31 December 2012 213 8,373 30 22 8,638 12. Investments held as non-current assets 2013 2013 2012 2012 Joint Other Joint Other ventures £'000 ventures £'000 assets assets £'000 £'000 At 1 January 3,061 131 2,579 431 Transfers - - 619 (298) Additions 75 26 - - Exchange adjustment - (1) - (2) Share of gain/(loss) in joint ventures 99 - (137) - Net assets at 31 December 3,235 156 3,061 131 Loan to joint venture: At 1 January 1,117 - - - Exchange adjustments (242) - (100) - Additions 109 - 114 - Transfers - - 1,103 - At 31 December 984 - 1,117 - At 31 December 4,219 156 4,178 131 Provision for diminution in value: At 1 January - - - (283) Transfer - (4) - 283 Write down of investment - (1) - - At 31 December - (5) - - Net book value at 31 December 4,219 151 4,178 131 2013 2012 £'000 £'000 Net book value of unquoted investments 126 124 Net book and market value of investments listed on overseas stock 25 7exchanges 151 131 13. Joint ventures The company owns 50% of the issued share capital of Dragon Retail PropertiesLimited, an unlisted property investment company. The remaining 50% is held byLondon & Associated Properties PLC. Dragon Retail Properties Limited isincorporated in England and Wales. It has issued share capital of 500,000(2012: 500,000) ordinary shares of £1 each. The company owns 12.5% of the units of Langney Shopping Centre Unit Trust, anunlisted property unit trust incorporatedin Jersey. 12.5% of the units in the trust are held by London & AssociatedProperties PLC and 75% are held by Columbus UK GP limited,a partner acting on behalf of Columbus UK Real Estate Fund. The company owns 49% of the issued share capital of Ezimbokodweni Mining (pty)Limited, an unlisted coal production company. The company is incorporated inSouth Africa. It has issued share capital of 100 (2012: 100) ordinary shares ofZAR1 each. Langney Dragon Ezimbokodweni 2013 2012 12.5% 50% 49% £'000 £'000 £'000 £'000 £'000 Turnover 165 104 - 269 192 Profit and loss (Loss)/Profit before tax (45) 161 - 116 (135) Taxation - (17) - (17) (2) (Loss)/Profit after taxation (45) 144 - 99 (137) Balance sheet Non-current assets 2,043 1,564 981 4,588 4,450 Current assets 242 1,809 3 2,054 1,904 Current liabilities (88) (681) (984) (1,753) (2,691) Non-current liabilities (1,385) (952) - (2,337) (1,284) Share of net assets at 31 December 812 1,740 - 2,552 2,379 14. Subsidiary companies The company owns the following ordinary share capital of the principalsubsidiaries which are included within the consolidated financial statements: Activity Percentage Country of of incorporation share capital Mineral Products Limited Share 100% England and dealing Wales Black Wattle Colliery (pty) Limited Coal 62.5% South Africa mining Bisichi Coal Mining (pty) Limited Coal 100% South Africa mining Bisichi Mining (Exploration) Limited Holding 100% England and company Wales Ninghi Marketing Limited Dormant 90.1% England and Wales Details on the non-controlling interest in subsidiaries are shown under note26. 15. Inventories 2013 2012 £'000 £'000 Coal Washed 481 1,165 Run of mine 754 365 Work in progress 487 290 Other 34 56 1,756 1,876 16. Trade and other receivables 2013 2012 £'000 £'000 Amounts falling due within one year: Trade receivables 5,658 5,270 Amount owed by joint venture 2,232 2,000 Other receivables 511 134 Prepayments and accrued income 258 200 8,659 7,604 17. Held for trading investments 2013 2012 £'000 £'000 Market value of Listed Investments: Listed in Great Britain 778 731 Listed outside Great Britain 44 56 822 787 Original cost of Listed Investments 737 749 Unrealised surplus of market value over cost 85 38 18. Trade and other payables 2013 2012 £'000 £'000 Trade payables Amounts owed to joint ventures 4,214 4,824 Other payables 1,205 1,205 Accruals and deferred income 704 545 1,957 2,644 8,080 9,218 19. Financial liabilities - borrowings Current Non-current 2013 2012 2013 2012 £'000 £'000 £'000 £'000 Bank overdraft (secured) 3,029 1,084 - - Bank loan (secured) 5,013 5,102 118 86 8,042 6,186 118 86 Bank overdraft and loan instalments by reference tothe balance sheet date: Within one year 8,042 6,186 From one to two years 14 - From two to five years 104 86 8,160 6,272 Bank overdraft and loan analysis by origin: United Kingdom 5,366 5,145 Southern Africa 2,794 1,127 8,160 6,272 The United Kingdom bank loans and overdraft are secured by way of a firstcharge over the investment properties in the UK which are included in thefinancial statements at a value of £11,559,000. The South African bank loansare secured by way of a first charge over specific pieces of mining equipment,inventory and the debtors of the relevant company which holds the loan whichare included in the financial statements at a value of £8,075,000. Consistent with others in the mining and property industry, the group monitorsits capital by its gearing levels. This is calculated as the net debt (loansless cash and cash equivalents) as a percentage of the equity. At year end thegearing of the group was 38.8% (2011: 25.8%) which was calculated as follows: 2013 2012 £'000 £'000 Total debt 8,160 6,272 Less cash and cash equivalents (1,707) (1,802) Net debt 6,453 4,470 Total equity 16,628 17,315 Gearing 38.8% 25.8% 20. Provision for rehabilitation 2013 2012 £'000 £'000 As at 1 January 989 965 Exchange adjustment (204) (87) Unwinding of discount 89 111 As at 31 December 874 989 21. Financial instruments Treasury policy Although no derivative transactions were entered into during the year, thegroup may use derivative transactions such as interest rate swaps and forwardexchange contracts as necessary in order to help manage the financial risksarising from the group's activities. The main risks arising from the group'sfinancing structure are interest rate risk, liquidity risk, market risk, creditrisk, currency risk and commodity price risk. There have been no changes duringthe year of the main risks arising from the group's finance structure. Thepolicies for managing each of these risks and the principal effects of thesepolicies on the results are summarised below. Interest rate risk Interest rate risk is the risk that the value of a financial instrument orcashflows associated with the instrument will fluctuate due to changes inmarket interest rates. Interest rate risk arises from interest bearingfinancial assets and liabilities that the group uses. Treasury activities takeplace under procedures and policies approved and monitored by the Board tominimise the financial risk faced by the group. Interest bearing assetscomprise cash and cash equivalents which are considered to be short-term liquidassets and loans to joint ventures. Interest bearing borrowings comprise bankloans, bank overdrafts and variable rate finance lease obligations. The ratesof interest vary based on LIBOR in the UK and PRIME in South Africa. As at 31 December 2013, with other variables unchanged, a 1% increase ordecrease in interest rates, on investments and borrowings whose interest ratesare not fixed, would respectively decrease or increase the loss for the year by£18,000 (2012: £19,000). The effect on equity of this change would be anequivalent decrease or increase for the year of £18,000 (2011: £19,000). Liquidity risk The group's policy is to minimise refinancing risk. Efficient treasurymanagement and strict credit control minimise the costs and risks associatedwith this policy which ensures that funds are available to meet commitments asthey fall due. As at year end the group held borrowing facilities in the UK inBisichi Mining Plc and in South Africa in Black Wattle Colliery (Pty) Ltd. The following table sets out the maturity profile of the financial liabilitiesas at 31 December: 2013 2012 £'000 £'000 Within one year 15,956 15,239 From one to two years 38 13 From two to five years 129 123 Beyond five years 134 139 16,257 15,514 The following table sets out the maturity profile of the financial liabilitiesas at 31 December maturing within one year: 2013 £'000 Within one month 10,207 From one to three months 1,998 From four to twelve months 3,751 15,956 In South Africa, an increase in the structured trade finance facility fromR60million (South African Rand) to R80million was signed by Black WattleColliery (pty) Limited in October 2013 with Absa Bank Limited, a South Africansubsidiary of Barclays Bank PLC. The facility is renewed annually at 30 Juneand is secured against inventory, debtors and cash that are held by BlackWattle Colliery (pty) Limited. This facility comprises of a R60millionrevolving loan to cover the working capital requirements of the group's SouthAfrican operations, and a R20million loan facility to cover guaranteerequirements related to the group's South African mining operations. Subsequentto year end Black Wattle breached one of the covenants of the facility relatedto the accounting net asset value of the company. Management have been indiscussions with the bank to rectify the breach and have no reason to believethe breach will not be rectified or affect the ongoing use of the facility, orthat the facility will not be renewed again at the appropriate times. In the UK the group is working with Royal Bank of Scotland on the renewal ofthe current banking facilities being a £5million term facility and a £1millionoverdraft. The bank has previously agreed to an extension, from its originalexpiry date of 31 December 2012, to 30 June 2013. Whilst discussions areon-going, no further extension has been formalised as the terms for a newfacility are being negotiated. The directors consider that with the assetsecurity available, the level of facilities required should be readilyavailable and consider that a new loan will be agreed, either with RBS or analternative provider, in the near future. This facility is secured against thegroup's UK retail property portfolio. At 31 December 2013 the group was withinits bank borrowing facilities and had not breached any of its covenants. Credit risk The group is exposed to credit risk on its cash and cash equivalents, trade andother receivables and amounts owed by joint ventures as per the balance sheet.The maximum exposure to credit risk is represented by the carrying amount ofeach financial asset in the balance sheet which at year end amounted to £11,092,000 (2012: £10,323,000). The group's credit risk is primarilyattributable to its trade receivables. The group had amounts due from itssignificant revenue customers at the year end that represented 81% of the tradereceivables balance. These amounts have been subsequently settled. Trade debtor's credit ratings are reviewed regularly. The group only depositssurplus cash with well-established financial institutions of high qualitycredit standing. As at year end the amount of trade receivables held past duedate was £137,000 (2012: £147,000). To date, the amount of trade receivablesheld past due date that has not subsequently been settled is £118,000 (2012: £nil). Management have no reason to believe that this amount will not besettled. Financial assets maturity On 31 December 2013, cash at bank and in hand amounted to £1,707,000 (2012: £1,802,000) which is invested in short term bank deposits maturing within oneyear bearing interest at the bank's variable rates. Cash and cash equivalentsall have a maturity of less than 3 months. Total financial assets and liabilities The group's financial assets and liabilities are as follows, representing boththe fair value and the carrying value: Loans and Financial Assets 2013 2012 at fair receivables Liabilities £'000 £'000 value £'000 measured at through amortised profit cost and loss £'000 £'000 Cash and cash equivalents 1,707 - - 1,707 1,802 Investments held for trading - - 822 822 787 Other investments - - 151 151 131 Trade and other receivables 9,385 - - 9,385 8,521 Bank borrowings - (8,160) - (8,160) (6,272) Finance leases - (196) - (196) (202) Other liabilities - (7,901) - (7,901) (9,040) 11,092 (16,257) 973 (4,192) (4,273) Investments held for trading fall under level 1 of the fair value hierarchyinto which fair value measurements are recognised in accordance with the levelsset out in IFRS 7. Other investments are held at cost. The directors are of theopinion that the difference in value between cost and fair value of otherinvestments is not significant or material. The comparative figures for 2012fall under the same category of financial instrument as 2013. Commodity price risk Commodity price risk is the risk that the group's future earnings will beadversely impacted by changes in the market of commodities. The group isexposed to commodity price risk as its future revenues will be derived based ona contract with a physical off-take partner at prices that will be determinedby reference to market prices of coal at the delivery date. From time to time the group may manage its exposure to commodity price risk byentering into forward sales contracts with the goal of preserving futurerevenue streams. Foreign exchange risk All trading is undertaken in the local currencies. Funding is also in localcurrencies other than inter-company investments and loans and it is not thegroup's policy to obtain forward contracts to mitigate foreign exchange risk onthese amounts. During 2013 and 2012 the group did not hedge its exposure offoreign investments held in foreign currencies. The table below shows the currency profiles of cash and cash equivalents: 2013 2012 £'000 £'000 Sterling 139 131 South African Rand 1,426 1,527 US Dollar 142 144 1,707 1,802 Cash and cash equivalents earn interest at rates based on LIBOR in Sterling andPrime in Rand. The tables below shows the currency profiles of net monetary assets andliabilities by functional currency of the group: 2013: Sterling South African £'000 Rands £'000 Sterling (4,082) - South African Rand 768 (1,065) US Dollar 187 - (3,127) (1,065) 2012: Sterling South African £'000 Rands £'000 Sterling (4,187) - South African Rand 1,054 (1,296) US Dollar 157 - (2,976) (1,296) The directors consider there to be no significant risk from exchange ratemovements of foreign currencies against the functional currencies of thereporting companies within the group. As such no sensitivity analysis isprepared. 22. Deferred taxation 2013 2012 £'000 £'000 Balance at 1 January 2,437 1,881 Recognised in income (262) 643 Exchange adjustment (273) (87) 1,902 2,437 The deferred tax balance comprises the following: Revaluation of properties 713 895 Capital allowances 1,183 1,312 Short-term differences 6 230 1,902 2,437 23. Share capital 2013 2012 £'000 £'000 Authorised: 13,000,000 ordinary shares of 10p each 1,300 1,300 Allotted and fully paid: 2013 2012 2013 2012 Number of Number of £'000 £'000 ordinary ordinary shares shares At 1 January 10,556,839 10,556,839 1,056 1,056 Shares issued during the year 80,000 - 8,000 - Outstanding at 31 December 10,636,839 10,556,839 1,064 1,056 24. Other reserves 2013 2012 £'000 £'000 Equity share options 501 442 Net premium on share capital in joint venture 86 86 587 528 25. Share based payments Details of the share option scheme are shown in the Directors' remunerationreport on pages 30 and 31 under the heading Share option schemes which iswithin the audited part of this report. Further details of the share optionschemes are set out below. The Bisichi Mining PLC Unapproved Option Schemes: Year of Subscription Period within Number of Number of Number ofgrant share share price per which options share share for which options for which exercisable options options issued/ outstanding at exercised/ outstanding at 31 December (cancelled) 31 December 2012 2013 during year 2004 149.0p Sep 2007 - Sep 80,000 - 80,000 2014 2006 237.5p Oct 2009 - Oct 325,000 - 325,000 2016 2010 202.5p Aug 2013 - Aug 80,000 - 80,000 2020 2012 34.0p Oct 2012 - Sep 233,000 - 233,000 2022 The exercise of options under the Unapproved Share Option Schemes, for certainoption issues, is subject to the satisfaction of objective performanceconditions specified by the remuneration committee, which will conform toinstitutional shareholder guidelines and best practice provisions in force fromtime to time. The performance conditions for the 2004 and 2010 scheme, agreedby members on 23 June 2005 and 31 August 2010 respectively, requires growth innet assets over a three year period to exceed the growth of the retail pricesindex by a scale of percentages. There are no performance conditions attachedto the other schemes. The 2012 options were valued at £212,000 at date of grant using theBlack-Scholes-Merton model with the following assumptions: Expected volatility 38.83%Expected life 4.00 YearsRisk free rate 0.50%Expected dividends 3.48% Expected volatility was determined by reference to the historical volatility ofthe share price over a period commensurate with the option's expected life. Theexpected life used in the model is based on the risk-averse balance likely tobe required by the option holders. 2013 2013 2012 2012 Number Weighted Number Weighted average average exercise exercise price price Outstanding at 1 January 718,000 157.7p 798,000 145.2p Granted during year - - 233,000 34.0p Cancelled during the year - - (233,000) 34.0p Exercised during the year - - (80,000) 34.0p Outstanding at 31 December 718,000 157.7p 718,000 157.6p Exercisable at 31 December 718,000 157.7p 638,000 152.0p 26. Non-controlling interest 2013 2012 £'000 £'000 As at 1 January 444 231 Share of profit for the year 9 245 Exchange adjustment (94) (32) As at 31 December 359 444 The non-controlling interest relates to the disposal of a 37.5% shareholding inBlack Wattle Colliery (pty) Ltd in 2010. The total issued share capital inBlack Wattle Colliery (pty) Ltd was increased from 136 shares to 1,000 sharesat 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 atotal 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 BisichiMining PLC incorporated in England and Wales. Vunani Mining (pty) Ltd is a South African Black Economic Empowerment companyand minority shareholder in Black Wattle Colliery (pty) Ltd. The "A" shares rank pari passu with the ordinary shares save that they willhave no dividend rights until such time as the dividends paid by Black WattleColliery (pty) Ltd on the ordinary shares subsequent to 30 October 2008 willequate to R832,075,000. A non-controlling interest of 15% in Black Wattle Colliery (pty) Ltd isrecognised for all profits distributable to the 110 ordinary shares held byVunani Mining (pty) Ltd from the date of issue of the shares (18 October 2010).An additional non-controlling interest will be recognised for all profitsdistributable to the 265 "A" shares held by Vunani Mining (pty) Ltd after suchtime as the profits available for distribution, in Black Wattle Colliery (pty)Ltd, before any payment of dividends after 30 October 2008, exceedsR832,075,000. 27. Related party transactions At 31 December During the year Amounts Amounts Costs Cash paid owed owed recharged (to)/by to by (to)/by related related related related party party party party £'000 £'000 £'000 £'000 Related party: London & Associated Properties PLC (note (a)) - - 138 (144) Langney Shopping Centre Unit Trust (note (b)) - (232) - (217) Dragon Retail Properties Limited (note (c)) 1,205 (2,000) (180) 180 Ezimbokodweni Mining (pty) Limited (note (d)) - (984) (109) - As at 31 December 2013 1,205 (3,216) (151) (319) London & Associated Properties PLC (note (a)) 6 - 172 (533) Langney Shopping Centre Unit Trust (note (b)) - (15) - 64 Dragon Retail Properties Limited (note (c)) 1,205 (2,000) (145) (1,855) Ezimbokodweni Mining (pty) Limited (note (d)) - (1,117) (14) - As at 31 December 2012 1,211 (3,132) 13 (2,324) London & Associated Properties PLC is a substantial shareholder. LangneyShopping Centre Unit Trust and Dragon Retail Properties Limited are jointventures and are treated as non-current asset investments. Ezimbokodweni Mining(pty) Limited is a joint venture and is treated as a non-current assetinvestment. (a) London & Associated Properties PLC - Property management, office premises,general management, accounting and administration services are provided forBisichi Mining PLC and its UK subsidiaries. (b) Langney Shopping Centre Unit Trust - Langney Shopping Centre Unit Trust isan unlisted property unit trust incorporated in Jersey. (c) Dragon Retail Properties Limited - ("Dragon") is owned equally by thecompany and London & Associated Properties PLC. During 2012 the company lent £2million to Dragon at 6.875 per cent annual interest. (d) Ezimbokodweni Mining (pty) Limited - Ezimbokodweni Mining is a prospectivecoal production company based in South Africa. Details of key management personnel compensation and interest in share optionsare shown in the Directors' Remuneration Report on pages 30 and 31 under theheadings Directors' remuneration, Pension schemes and incentives and Shareoption schemes which is within the audited part of this report. The totalemployers' national insurance paid in relation to the remuneration of keymanagement was £111,000 (2012: 108,000). In 2012 a loan was made to one of thedirectors, Mr A R Heller, for £116,000. 28. Employees 2013 2012 £'000 £'000 The average weekly numbers of employees of the group during theyear were as follows: Production 220 218 Administration 20 19 240 237 £'000 £'000 Staff costs during the year were as follows: Salaries 5,395 5,607 Social security costs 115 129 Pension costs 220 236 Share based payments 120 28 5,850 6,000 29. Capital commitments 2013 2012 £'000 £'000 Commitments for capital expenditure approved but not contracted 402 507for at the year end Share of commitment of capital expenditure in joint venture 1,451 1,829 30. Head lease commitments and future property lease rentals Present value of head Leases on properties Minimum lease Present value of payments minimum lease payments 2013 2012 2013 2012 £'000 £'000 £'000 £'000 Within one year 12 13 12 13 Second to fifth year 49 50 45 47 After five years 1,589 1,527 139 142 1,650 1,590 196 202 Discounting adjustment (1,454) (1,388) - - Present value 196 202 196 202 Finance lease liabilities are in respect of leased investment property. Many ofthe leases provide for contingent rents in addition to the rents above whichare a proportion of rental income. Finance lease liabilities are effectivelysecured as the rights to the leased asset revert to the lessor in event ofdefault. The group leases out its investment properties under operating leases. Thefuture aggregate minimum rentals receivable under non-cancellable operatingleases are as follows: 2013 2012 £'000 £'000 Within one year 859 847 Second to fifth year 3,195 2,718 After five years 9,879 10,332 13,933 13,897 31. Contingent liabilities 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 securedagainst the assets of the company and have been issued in respect of thefollowing: 2013 2012 £'000 £'000 Rail siding 62 78 Rehabilitation of mining land 1,153 1,454 Water & electricity 54 68 Company balance sheet at 31 December 2013 Notes 2013 2012 £'000 £'000 Fixed assets Tangible assets 33 11,605 11,614 Investment in joint ventures 34 1,810 1,734 Other investments 34 1,714 1,686 Debtors - amounts due in more than one year 35 1,313 1,055 16,442 16,089 Current assets Debtors - amounts due within one year 35 3,082 3,436 Bank balances 799 1,136 3,881 4,572 Creditors - amounts falling due within one year 36 (7,425) (7,287) Net current liabilities (3,554) (2,715) Total assets less current liabilities 12,898 13,374 Creditors - amounts falling due in more than one year - 36 (90) (86)medium term bank loan Provision for liabilities and charges 37 - (40) Net assets 12,808 13,248 Capital and reserves Called up share capital 23 1,064 1,056 Share premium account 38 249 169 Revaluation reserve 38 5,632 5,685 Other reserves 38 503 443 Retained earnings 38 5,360 5,895 Shareholders' funds 12,808 13,248 The company financial statements were approved and authorised for issue by theboard of directors on 17 April 2014 and signed on its behalf by: A R Heller G J Casey Company Registration No. 112155Director Director company accounting policies for the year ended 31 December 2013 The following are the main accounting policies of the company: Accounting convention The financial statements have been prepared under the historical costconvention, as modified by the revaluation of investment properties, and inaccordance with applicable UK Generally Accepted Accounting Practice. Dividends received Dividends are credited to the profit and loss account when received. Depreciation Provision for depreciation on tangible fixed assets is made in equal annualinstalments to write each item off over its useful life. The rates generallyused are: Motor vehicles 25 - 33 per centOffice equipment 10 - 33 per cent Foreign currencies Monetary assets and liabilities expressed in foreign currencies have beentranslated at the rates of exchange ruling at the balance sheet date. Allexchange differences are taken to the profit and loss account. Investment properties The investment property portfolio is included in the financial statements atopen market valuation. An external professional valuation is carried outannually by professional external surveyors. Surpluses and deficits arising onvaluations are taken direct to the revaluation reserve. No depreciation oramortisation is provided in respect of freehold and leasehold investmentproperties. The directors consider that this accounting policy, which is not inaccordance with the Companies Act 2006, results in the accounts giving a trueand fair view. Depreciation or amortisation is only one of many factorsreflected in the valuation and the amount which might otherwise have been showncannot be separately identified or quantified. Investments Investments of the company are stated in the balance sheet as fixed assets atcost less provisions for impairment. Financial instruments Bank loans and overdrafts Bank loans and overdrafts are included in creditors on the company balancesheet net of the unamortised cost of financing. Interest payable on those facilities is expensed as a finance cost in theperiod to which it relates. Interest rate derivatives The company uses derivative financial instruments to manage the interest raterisk associated with the financing of the group's business. No trading in suchfinancial instruments is undertaken. Debtors Amounts due from subsidiary undertakings are held at present value where theinterest that would be recognised from discounting future cash payments isconsidered to be material. Other debtors do not carry interest and are statedat their nominal value as reduced by appropriate allowances for estimatedrecoverable amounts. Creditors Creditors are not interest bearing and are stated at their nominal value. Joint ventures Investments in joint ventures, being those entities over whose activities thegroup has joint control as established by contractual agreement, are includedat cost, less impairment. Deferred taxation As required by FRS 19 "Deferred Tax", full provision is made for deferred taxarising from all timing differences between the recognition of gains and lossesin the financial statements and recognition in the tax computation, except forthose timing differences in respect of which the standard specifies thatdeferred tax should not be recognised. Deferred tax assets and liabilities arecalculated at the tax rates expected to be effective at the time the timingdifferences are expected to reverse. Leased assets and obligations All leases are "Operating Leases" and the annual rentals are charged to theprofit and loss account on a straight line basis over the lease term. Rent freeperiods or other incentives received for entering into a lease are accountedfor over the period of the lease so as to spread the benefit received over thelease term. Pensions The company makes contributions to a money purchase scheme and the costs arecharged to the profit and loss account in the period to which they relate. Share based remuneration The company operates a share option scheme. The fair value of the share optionscheme is determined at the date of grant. This fair value is then expensed ona straight-line basis over the vesting period, based on an estimate of thenumber of shares that will eventually vest. The fair value of options grantedis calculated using a binomial model or Black-Scholes-Merton model. Details ofthe share options in issue are disclosed in the Directors' Remuneration Reporton pages 30 and 31 under the heading Share option schemes which is within theaudited part of this report. 32. Dividends The aggregate amount of dividends comprises: 2013 2012 £'000 £'000 Final dividends in respect of prior year but not recognised as 425 422liabilities in that year: The aggregate amount of dividends to be paid and not recognised as liabilitiesas at year end is £425,000 (2012: £422,000). 33. Tangible fixed assets Investment properties Freehold Long Motor Office Total £'000 leasehold vehicles equipment £'000 £'000 £'000 £'000 Cost or valuation at 1 January 2013 8,889 2,723 48 53 11,713 Additions - - 38 10 48 Disposals - - (49) - (49) Revaluation 146 (199) - - (53) Cost or valuation at 31 December 2013 9,035 2,524 37 63 11,659 At valuation 9,035 2,524 - - 11,559 At cost - - 37 63 100 9,035 2,524 37 63 11,659 Accumulated depreciation at 1 January - - 48 51 992013 Charge for the year - - 2 2 4 Disposals - - (49) - (49) Accumulated depreciation at 31 December - - 1 53 542013 Net book value at 31 December 2013 9,035 2,524 36 10 11,605 Net book value at 31 December 2012 8,889 2,723 - 2 11,614 Details of historical cost of investment properties are shown in note 10. 34. Investments Joint Shares Loans Other Total ventures £'000 £'000 investments £'000 shares £'000 £'000 Cost at 1 January 2013 1,734 361 1,325 - 1,686 Invested during year 76 - 3 26 29 Cost at 31 December 2013 1,810 361 1,328 - 1,715 Provision for impairment As at 1 January - - - - - Transfer - - - (1) (1) As at 31 December 2013 - - - (1) (1) Net book value at 31 December 2013 1,810 361 1,328 25 1,714 Net book value at 31 December 2012 1,734 361 1,325 - 1,686 Other investments comprise £25,000 (2012: £nil) shares. Investments in subsidiaries are detailed in note 14. In the opinion of thedirectors the aggregate value of the investment in subsidiaries is not lessthan the amount shown in these financial statements. 35. Debtors 2013 2012 £'000 £'000 Amounts due within one year: Amounts due from subsidiary undertakings 295 928 Trade receivables 163 181 Other debtors 135 128 Joint venture 2,232 2,000 Prepayments and accrued income 257 199 3,082 3,436 Amounts due in more than one year: Amounts due from subsidiary undertakings 1,295 1,055 Deferred taxation 18 - 1,313 1,055 36. Creditors 2013 2012 £'000 £'000 Amounts falling due within one year: Bank overdraft (secured) 269 59 Bank loan (secured) 5,007 5,000 Joint venture 1,205 1,205 Current taxation 2 2 Other taxation and social security 95 86 Other creditors 323 233 Accruals and deferred income 524 702 7,425 7,287 Amounts falling due in more than one year: Bank loan (secured) 90 86 2013 2012 £'000 £'000 Bank and other loan instalments by reference to the balance sheetdate: Within one year 5,007 5,000 From one to two years 7 - From two to five years 83 86 5,097 5,086 The bank loan of the company is secured by a charge over freehold and longleasehold properties. 37. Provisions for liabilities 2013 2012 £'000 £'000 Deferred taxation Balance at 1 January 40 - Provision - 40 Transfer (40) - - 40 No provision has been made for the approximate taxation liability at 23.5%(2012: 24.5%) of £713,000 (2012: £895,000) which would arise if the investmentproperties were sold at the stated valuation. 38. Share capital & reserves Share Share Revaluation Other Retained Shareholders capital premium reserve reserve earnings funds £'000 £'000 £'000 £'000 £'000 £'000 Balance at 1 January 2013 1,056 169 5,685 443 5,895 13,248 Dividend paid - - - - (425) (425) Revaluation of investment - - (53) - - (53)property Share options 8 80 - 60 - 148 Retained loss for the year - - - - (110) (110) Balance at 31 December 2013 1,064 249 5,632 503 5,360 12,808 A profit and loss account for Bisichi Mining PLC has not been presented aspermitted by Section 408(2) of the Companies Act 2006. The loss for thefinancial year, before dividends, was £110,000 (2012: Profit: £164,000) Details of share capital are set out in note 23 and details of the shareoptions are shown in the Directors' Remuneration Report on page 31 under theheading Share option schemes which is within the audited part of this reportand note 25. 39. Related party transactions At 31 During the year December Amounts Costs Cash owed paid recharged by / (to)/ related by party accrued related £'000 (to) / by party related party £'000 £'000 Related party: Black Wattle Colliery (pty) Ltd (note (a)) (2,514) (1,264) 1,177 Ninghi Marketing Limited (note (b)) (102) - - As at 31 December 2013 (2,616) (1,264) (1,177) Black Wattle Colliery (pty) Ltd (note (a)) (2,921) (1,396) 1,398 Ninghi Marketing Limited (note (b)) (102) - - As at 31 December 2012 (3,023) (1,396) 1,398 (a) Black Wattle Colliery (pty) Ltd - Black Wattle Colliery (pty) Ltd is a coalmining company based in South Africa. (b) Ninghi Marketing Limited - Ninghi Marketing Limited is a dormant coalmarketing company incorporated in England & Wales. In addition to the above, the company has issued a company guarantee ofR17,000,000 (2012: R17,000,000) (South African Rand) to the bankers of BlackWattle Colliery (pty) Ltd in order to cover bank guarantees issued to thirdparties in respect of the rehabilitation of mining land. A provision of £102,000 has been raised against the amount owing by NinghiMarketing Limited as the company is dormant. In 2012 a loan was made to one of the directors, Mr A R Heller, for £116,000.Interest is repayable on the loan at a rate of 6.14%. There is no fixedrepayment date and no repayments were made during the year. Under Financial Reporting Standard 8 Related Party Disclosures, the company hastaken advantage of the exemption from disclosing transactions with other whollyowned group companies. Details of other related party transactions are given in note 27 of the Groupfinancial statements.