Bisichi Plc - Final Results

BISICHI PLC

Results for the year ended 31 December 2023

Summary:

• The decrease in group earnings for the year mainly attributed to lower export sales, due to the performance of Transnet, the South African state rail provider and lower coal prices achievable by Sisonke Coal Processing, the Group’s South African coal processing operation.  

• Earnings were further impacted by difficult mining conditions and low mining production at Black Wattle Colliery, the Group’s coal mining asset.

• Lower cost mining area opened in the second quarter of 2023 at Black Wattle Colliery resulting in a significant improvement in coal production and lower mining costs.

• Directors propose a total year-end dividend per share of 4p (2022: 12p). This takes the total dividends per share for the year to 7p (2022: 22p).

Executive Chairman, Andrew Heller, comments:

“2023 was a challenging year for your company and its South African operations. However, looking forward, we continue to see the benefits, both in terms of mining cost and production, from the new mining area opened at Black Wattle. In addition, we have seen a stabilisation of coal prices in our markets and an improved performance from Transnet in 2024 to date. We remain confident in the Group’s ability to achieve significant value from our South African operations. On behalf of the Board and shareholders, I would like to thank all of our staff for their hard work and dedication during the course of the year”

For further information, please call:

Andrew Heller or Garrett Casey, Bisichi PLC 020 7415 5030

Bisichi PLC (Company Registration No. 00112155)
 

Annual Report 2023

A TRIBUTE TO

CHRISTOPHER JOLL

Director 2001-2024

It was with great sadness that the Board of Bisichi announced the death of our senior non-executive Director, Christopher Joll, on 18th April 2024, at the age of 75 years old.

Christopher was a director of Bisichi for 23 years. As well as maintaining a keen eye on the running of the company, Christopher was a very active participant in Board meetings, always requesting forecasts and projections from the Executive Directors. He was the most articulate member of the Board, rewriting and improving anything that had been drafted. His extremely wise counsel, integrity, communication skills and enthusiasm for the company will be sorely missed.

Christopher attended Oxford University and spent seven years in The Life Guards, including completing four tours of duty in Northern Ireland. Christopher built his career in financial PR which is where Bisichi first came across him. He was also a British military historian, author of an incredible fifteen books and manager of the British Military Tournament. Christopher was the essence of an English gentleman and board meetings will not be the same without him.

Strategic report

The Directors present the Strategic Report of the company for the year ending 31 December 2023. The aim of the Strategic Report is to provide shareholders with the ability to assess how the Directors have performed their duty to promote the success of the company for the collective benefit of shareholders.

Strategic report

Chairman’s Statement

For the year ended 31 December 2023, your company made a profit before interest, tax, depreciation and amortisation (EBITDA) of £3.4million (2022: £40.0million) and an operating profit before depreciation, fair value adjustments and exchange movements (Adjusted EBITDA) of £2.6million (2022: £39.4million).

2023 was a challenging year for your company and its South African operations. The lower earnings for the Group, compared to 2022, are mainly attributable to lower export sales, due to the performance of Transnet, the South African state rail provider, and lower prices for our coal sold by Sisonke Coal Processing, the Group’s South African coal processing operation. In addition, earnings were further impacted by difficult mining conditions and low mining production at our coal mining asset, Black Wattle Colliery.

During 2022, the Group benefited from significantly higher prices of Free on Board (FOB) coal from Richards Bay Coal Terminal (API4 price). However, during 2023, the weekly API4 price averaged US$120 compared to US$273 in 2022. In addition to the weaker international coal price, constraints in transporting coal for export on the South African rail network, which were beyond our control, significantly impacted the Group’s export sales during the period. Due to the lack of available rail capacity, the Group exported 134,000 metric tonnes in 2023, compared to 262,000 metric tonnes in 2022 and 320,000 in 2021. This, in turn, had a further impact on earnings during the period, as coal allocated for export was eventually sold into the domestic market at prices that were significantly lower than the export price achievable by rail through Richards Bay. Transnet, the South African state rail operator, and the wider South African coal industry, are working hard to collectively implement measures to increase rail capacity. We are pleased to report that, in 2024 to date, we have seen an improved performance in our railed coal export volumes compared to 2023. We remain optimistic that the measures, once fully implemented, will have a significant positive impact on both the export and domestic prices achievable for our coal.

At Black Wattle, difficult mining conditions impacted profitability during the period. For the majority of 2023, geological issues reduced the production from our opencast mining area as well as increasing related mining and blasting costs. In order to mitigate these issues, the mine opened a lower cost second mining area in the third quarter of 2023. Since the commencement of this new mining area, we have seen a significant improvement in mining production and lower operating costs and we expect the improved performance at Black Wattle to continue throughout 2024.

The low coal production levels at Black Wattle in 2023 had a knock-on effect on overall levels of coal processed at Sisonke Coal Processing. The Group sold 1.031million metric tonnes during the year compared to 1.287million metric tonnes in 2022. The decrease in the Group’s mining revenue during the period to £49.3million (2022: £95.1million) can mainly be attributable to the lower prices achievable for our coal and the lower overall quantity of coal sold, particularly into the export market.

Looking forward into 2024, we will continue to see the benefits, both in terms of mining cost and production, from the new mining area at Black Wattle. In addition, we have seen a stabilisation in coal prices in both the export and domestic market and an improved performance by Transnet. We remain confident in the Group’s ability to achieve significant value from our South African operations.

The Group recognises the need for, and is committed to, the diversification of its future business activities. The Group is continually looking at alternative mining, commodity and renewable energy related opportunities, as well as new opportunities to add to our existing UK property and listed equity related investment portfolios. In the interim, we continue to work closely with Vunani Mining, our BEE partner in Black Wattle and Sisonke Coal processing, to ensure that we are responsible stewards of our legacy coal operations taking into account the climate-related risks outlined in our climate report on page 11 and the impact these risks may have on all our stakeholders.

During the period the Group’s total non-current and current listed equity related investments held at fair value through profit and loss increased to £15.0million (2022: £13.5million). The Group achieved dividend income from investments during the period of £0.56million (2022: £0.59million) and a gain in value from investments of £0.8million (2022: £1.0million). The Group’s listed equity related investment portfolios comprise primarily of listed equities and listed equity related funds involved or invested in extractive and energy related business activities, including entities involved in the extraction of commodities needed for the clean energy transition.   

In the UK, we have seen rental revenue from our retail property portfolio improve in 2023. The Group billed revenue from our directly owned property portfolio of £1.3million (2022: £1.11million) during the year. The Group continues to hold its joint venture development investment in West Ealing, with London & Associated Properties PLC and Metroprop Real Estate Ltd. As previously reported, we obtained a resolution to grant planning consent for 56 flats and four retail units at the end of 2020. During 2023 the joint venture has been finalising detailed designs for the project and working with contractors and designers to improve building efficiency and maximise potential returns. Currently, the joint venture is working toward developing the project to completion. Detailed negotiations to finance construction are underway with the intention of commencing work in the second half of 2024.  

Finally, in light of the challenging year, your directors propose a final year-end dividend of 4p (2022: 12p) per share. The final dividend proposed will be payable on Friday 26 July 2024 to shareholders registered at the close of business on 5 July 2024. This takes the total dividends per share for the year to 7p (2022: 22p).

On behalf of the Board and shareholders, I would like to thank all of our staff for their hard work and dedication during the course of the year.

Andrew Heller
Executive Chairman & Managing Director

22 April 2024

Strategic Report

Principal activity, strategy & business model

The company carries on business as a mining company and its principal activity is coal mining and coal processing in South Africa. The company’s strategy is to create and deliver long term sustainable value to all our stakeholders through our business model which can be broken down into three key areas:

1 Acquisition & investment

The Group continues to oversee responsibly its existing mining and processing operations in South Africa as well as actively to seek and evaluate new alternative mining, commodity and renewable energy related opportunities. The Group aims to achieve this through new commercial arrangements.

In addition, we seek to balance the high risk of our mining operations with a dependable cash flow from our UK property investment operations and listed equity related investment portfolios. The company primarily invests in retail property across the UK as well as residential property development. The UK Retail property portfolio is managed by London & Associated Properties PLC whose responsibility is to actively manage the portfolio to improve rental income and thus enhance the value of the portfolio over time. The Group’s listed equity related investment portfolios comprise primarily of listed equities and listed equity related funds involved or invested in extractive and energy related business activities, including entities involved in the extraction of commodities needed for the clean energy transition.   

2 Production & sustainability

The Group strives to mine its remaining South African coal reserves in an economical and sustainable manner that delivers value to all our stakeholders.

3 Processing & marketing

The Group seeks to achieve value from its South African coal processing infrastructure through the washing, transportation and marketing of coal into both the domestic and export markets.

Strategic Report

Mining review

2023 was a difficult year in terms of performance for our South African coal mining and processing operations. A lack of rail capacity for export and lower international coal prices significantly impacted the profitability of the Group. With more stability in the coal market going into 2024, management will be focussing on improving production levels and keeping operating costs low.

Production and operations

Geological issues in areas mined at Black Wattle, our South African mining operation, had a significant impact on production, particularly in the first half of 2023. The geological issues related to both the coal seams mined and the overburden removed. This, in turn, impacted the rate of extraction and overall cost per tonne of coal mined. In the third quarter of 2023, management took the decision to transition both our mining contractors to a new mining area. After overcoming temporary water issues in the last quarter of 2023, mining of this new area has steadily progressed going into 2024. Overall, the mine achieved production of 807,000 metric tonnes (2022: 824,000 metric tonnes) during the year. In 2024 to date, we have seen a significant improvement in mining production and lower operating costs compared to the previous mining area. We expect the improved performance at Black Wattle to continue throughout 2024.

We continue to work closely with Vunani Mining, our BEE partner in Black Wattle and Sisonke Coal processing, to ensure that we are responsible stewards of our legacy coal operations, which have a life of mine of six years, taking into account the climate related risks outlined in our climate report on page 11 and the impact these risks may have on all our stakeholders.

Main trends/markets

The stabilisation of global energy markets in 2023, compared to 2022, had a significant impact on prices achievable for our coal over the year. In the international market the average weekly price of Free On Board (FOB) Coal from Richard Bay Coal Terminal (API4 price) averaged $120 in 2023 compared to $273 in 2022.

The lower prices, offsetting a stronger US Dollar compared to the South African Rand, resulted in the Group achieving an average Rand price of R1,357 per tonne of export coal sold from the mine in 2023, compared to R3,770 in 2022. The Group’s export sales are via Richards Bay Coal Terminal, primarily under the Quattro programme which allows junior black-economic empowerment coal producers direct access to the coal export market via the terminal. During the second half of the year exports continued to be limited by constraints in transporting coal for export on the South African rail network, leading to a decrease in exports volumes from our South African operations during the year to 134,000 metric tonnes compared to 262,000 metric tonnes in 2022. Transnet, the South African state rail operator, and the wider South African coal industry, are working hard to collectively implement measures to increase rail capacity. Feedback to date on the application of these measures has been promising and we are pleased to report that, in 2024 to date, we have seen an improved performance in our railed coal export volumes compared to 2023.

In light of the export constraints, the Group supplied a higher proportion of coal into the South African domestic market in 2023, compared to 2022, at prices that were significantly lower than the export price achievable by rail through Richards Bay. For the year, the Group achieved an average domestic price of R938 per tonne coal sold compared to R774 in 2022. The average price increase in the domestic market in 2023, compared to 2022, was attributable to an increase in higher quality coal, destined for the export market, being sold domestically due to the lack of export rail capacity available. Domestic sales volumes from our South African operations decreased during the year to 0.90million metric tonnes (2022: 1.03million metric tonnes).

In 2023, the Group achieved an average overall Rand price per tonne of coal sold of R992 compared to R1,384 in 2022. The decrease in Group revenue in 2023 can mainly be attributed to the lower export coal prices achieved and lower volumes of coal sold, particularly into the export market. Further details on the financial performance of the Group’s mining segment can be found in the Financial & performance review on page 24 of this report.

Looking forward to 2024, we have seen coal prices remain stable in both our markets and we remain optimistic about a continued improvement in the provision of coal export rail capacity by Transnet.

Sustainable development

The Group’s South African operations continue to strive to conduct business in a safe, environmentally and socially responsible manner. Some highlights of our Health, Safety and Environment performance in 2023:

• The Group’s South African operations recorded 2 Lost time Injuries during 2023 (2022: Two).
• One case of Occupational Diseases was recorded.
• One claim for the Compensation for Occupational Diseases was submitted.

In South Africa, the new government regulated Broad-Based Socio-Economic Empowerment Charter for the Mining and Minerals Industry, 2020 (New Mining Charter) came into force from March 2020. The New Mining Charter is a regulatory instrument that facilitates sustainable transformation, growth and development of the mining industry. The Group is committed to fully complying with the New Mining Charter and providing adequate resources to this area in order to ensure opportunities are expanded for historically disadvantaged South Africans (HDSAs) to enter the mining and minerals industry. In addition, we are pleased to report that Black Wattle has achieved a level 3 Broad Based Black Economic Empowerment (BBBEE) verification certificate for 2024 and we continue to adhere and make progress in terms of our Social and Labour Plan and our various Black Economic Empowerment (“BEE”) initiatives. A fuller explanation of these can be found in our Sustainable Development Report on page 7.

Prospects

Management would like to thank all our South African employees and stakeholders for their significant contribution to the Group’s performance in 2023. Going forward, your management are optimistic that 2024 will be a successful year for our South African operations.

Strategic Report

Sustainable development

The Group is fully committed to ensuring the sustainability of both our UK and South African operations and delivering long term value to all our stakeholders.

Social, community and human rights issues

The Group believes that it is in the shareholders’ interests to consider social and human rights issues when conducting business activities both in the UK and South Africa. Various policies and initiatives implemented by the Group that fall within these areas are discussed within this report.

Health, Safety & Environment (HSE)

The Group is committed to creating a safe and healthy working environment for its employees and the health and safety of our employees is of the utmost importance.

HSE performance in 2023:

• One case of Occupational Diseases was recorded.
• One claim for the Compensation for Occupational Diseases was submitted.
• No machines operating at Black Wattle exceeded the regulatory noise level.
• The Group’s South African operations recorded 2 Lost Time Injuries during 2023.

In addition to the required personnel appointments and assignment of direct health and safety responsibilities on the mine, a system of Hazard Identification and Risk Assessments has been designed, implemented and maintained at Black Wattle and at Sisonke Coal Processing. Health and Safety training is conducted on an ongoing basis. We are pleased to report all relevant employees to date have received training in hazard identification and risk assessment in their work areas.

A medical surveillance system is also in place which provides management with information used in determining measures to eliminate, control and minimise employee health risks and hazards and all occupational health hazards are monitored on an ongoing basis.

Various systems to enhance the current HSE strategy have been introduced as follows:

• In order to improve hazard identification before the commencing of tasks, mini risk assessment booklets have been distributed to all mine employees and long term contractors on the mine.
• Dover testing is conducted for all operators. Dover testing is a risk detection and accident reduction tool which identifies employees’ problematic areas in their fundamental skills in order to receive appropriate training.
• A Job Safety Analysis form is utilised to ensure effective identification of hazards in the workplace.
• In order to capture and record investigation findings from incidents, an incident recording sheet is utilised by line management and contractors.
• Black Wattle Colliery utilises ICAM (Incident Cause Analysis Method).
• On-going training on first aid is being conducted with all employees involved with this discipline.

Looking forward into 2024, Black Wattle intends to enhance the safety of our employees and contractors onsite through the sourcing and procurement of a Proximity Detection System (“PDS”) solution for the mine. The PDS solution comprises a sensing device that detects the presence of another person, vehicle or object and a sophisticated interface that provides an audible and visual alarm. These systems warn both the vehicle operator and the pedestrian of the imminent danger of a potential collision.

The Group continues to monitor and adhere to all of the South African government’s guidelines and regulations including all updates and advice from the National Department of Health and the Department of Minerals Resources and Energy.

Black Wattle Colliery Social and Labour Plan (SLP) and Community Projects

Black Wattle Colliery is committed to true transformation and empowerment as well as poverty eradication within the surrounding and labour providing communities.

Black Wattle is committed to providing opportunities for the sustainable socio-economic development of its stakeholders, such as:

• Employees and their families, through Skills Development, Education Development, Human Resource Development, Empowerment and Progression Programmes.
• Surrounding and labour sending communities, through Local Economic Development, Rural and Community Development, Enterprise Development and Procurement Programmes.
• Empowering partners, through Broad-Based Black Economic Empowerment (BBBEE) and Joint Ventures with Historically Disadvantaged South African (HDSA) new mining entrants and enterprises.
• The company engages in on going consultation with its stakeholders to develop strong company-employee relationships, strong company-community relationships and strong company-HDSA enterprise relationships.

The key focus areas in terms of the detailed SLP programmes were updated as follows:

• Implementation of new action plans, projects, targets and budgets were established through regular workshops with all stakeholders.
• A comprehensive desktop socio-economic assessment was undertaken on baseline data of the Steve Tshwete Local Municipality (STLM) and Nkangala District Municipality (NDM).
• Through engagements with the Department of Education and STLM regarding the Local Economic Development projects for the current SLP year cycle (2022-2026). The department endorsed the Khulunolwazi School Project in late 2023. The project is currently in a planning phase for the implementation of the project in various phases. At present, drawing plans for the school are being finalised, which requires approval from the local municipality.

Black Wattle has implemented various community initiatives including:

• A community training environmental project, where local community members are trained to safely cut and remove non-indigenous vegetation. Thereafter the vegetation is utilised in the making, bagging and sales of charcoal.
• A waste management project at Uitkyk community, nearby to Black Wattle, involving the collection and recycling of waste from their community.
• Certain community members have been identified for training in areas regarding mining and beneficiation. These areas include but are not limited to:
  • conveyor maintenance;
  • operation of mining machinery;
  • training in environmental waste management;
  • drivers licenses; and
  • security officer training
• One HDSA female completed her University studies in the 2023 academic year.
• Various upgrades were initiated at the Evergreen School nearby to Black Wattle.

Black Wattle continues to support Care for Wild, a globally recognized local conservation organization dedicated to preserving endangered species and safeguarding the precious biodiversity of our planet. As the largest orphaned rhino sanctuary in the world, Care for Wild specialise in the rescue, rehabilitation, rewilding, and protection of orphaned and injured rhinos. However, their mission extends far beyond rhinos alone, they are deeply committed to the preservation of endangered species that play vital roles in their ecosystems and the conservation of biodiversity.

The Group recognizes the critical importance of this goal in safeguarding biodiversity and aspire to play a significant role in its realization through our sponsorship of three Rhinos as well as various related community gardening initiatives at the sanctuary.

Environment & environment management programme

South Africa

Under the terms of the mine’s Environmental Management Programme approved by the Department of Mineral Resource and Energy (“DMRE”), Black Wattle undertakes a host of environmental protection activities to ensure that the approved Environmental Management Plan is fully implemented. In addition to these routine activities, Black Wattle regularly carries out environmental monitoring activities on and around the mine, including evaluation of ground water quality, air quality, noise and lighting levels, ground vibrations, air blast monitoring, and assessment of visual impacts. In addition to this Black Wattle also performs quarterly monitoring of all boreholes around the mine to ensure that no contaminated water filters through to the surrounding communities.

Black Wattle is fully compliant with the regulatory requirements of the Department of Water Affairs and Forestry and has an approved water use licence.

Black Wattle Colliery has substantially improved its water management by erecting and upgrading all its pollution control dams in consultation with the Department of Water Affairs and Forestry.

A performance assessment audit was conducted to verify compliance to our Environmental Management Programme and no significant deviations were found.

United Kingdom

The Group’s UK activities are principally retail property investment as well as residential property development whereby we provide or develop premises which are rented to retail businesses or sold on to end users. We seek to provide tenants and users in both these areas with good quality premises from which they can operate or reside in an environmentally sound manner.

Procurement

In compliance with the Mining Charter and the Mineral and Petroleum Resource Development Act, the Group’s South African operations has implemented a BBBEE-focussed procurement policy which strongly encourages our suppliers to establish and maintain BBBEE credentials. We are very pleased to report that Black Wattle has a achieved a level 3 BBBEE certificate for 2024. At present, 88 percent of the companies utilised by Black Wattle for equipment and services are BBBEE companies.

Mining Charter

In South Africa, the new government regulated Broad-Based Socio-Economic Empowerment Charter for the Mining and Minerals Industry, 2020 (New Mining Charter) came into force from March 2020. The New Mining Charter is a regulatory instrument that facilitates sustainable transformation, growth and development of the mining industry. The Group’s mining operation is expected to reach various levels of compliance to the New Mining Charter over a period of five years from March 2020. The Group is committed to providing adequate resources to this area in order to ensure full compliance to the New Mining Charter is achieved over the period. As part of Black Wattle’s commitment to the New Mining Charter, the company seeks to:

• Expand opportunities for historically disadvantaged South Africans (HDSAs), including women and youth, to enter the mining and minerals industry and benefit from the extraction and processing of the country’s resources;
• Utilise the existing skills base for the empowerment of HDSAs; and
• Expand the skills base of HDSAs in order to serve the community.

Employment & diversity

In the UK, the Board of Bisichi PLC at 31 December 2023 comprised of:

The above data has been collected through self-reporting by the Board members. Questions asked include gender identity or sex and ethnic background.

The Company notes the diversity targets included in the Listing Rules, being:

• at least 40% of the individuals on the Board are women;
• at least one of the specified senior positions is held by a woman; and
• at least one individual on the Board is from a minority ethnic background.

At 31 December 2023 the Company did not meet the target of at least 40% of the individuals on its board of directors are women and at least one of the senior positions on the Board are held by a women. Should the Board look to appoint further directors in the future, the Company will give due consideration to how it may achieve the diversity targets while ensuring the appropriate structure of the Board and mix of skills and expertise relevant to the Company’s operations. As part of its recruitment processes, the Company gives careful consideration to all potential applicants however has a particular regard to those with knowledge and experience of the mining and extractives sector and in particular the South African market. This necessary focus narrows considerably the pool of potential applicants and poses potential challenges in both recruitment and meeting the diversity targets. The Company will keep this under ongoing review.

Given the Company’s current organizational structure and limited headcount in the United Kingdom, and its highly regulated obligations in South Africa under the Employment Equity Act, New Mining Charter, SLP and BBBEE regulations in South Africa, the Board considers that a formal diversity policy, would not be practicable for the Company to develop over and above its extensive policies and procedures already implemented in South Africa. The Company and the Board already integrates equality and diversity in all aspects of the Company’s business and all decisions are made on merit and without regard to protected characteristics. Where appropriate and practicable for the Company, the Company considers and implements positive actions to enable the Company to provide additional support. This can include, for example, making adjustments to assist staff and ensuring that, to the extent possible, all relevant perspectives are included in decision making on an ongoing basis. The Group is committed to improving upon its gender and diversity targets at all employment levels within the Group through a required build-up of sufficient talent pools, training up of employees and targeted recruitment policies.

The Company will keep the requirement for a formal diversity policy under review and will give serious consideration to the adoption of a policy, tailored to the nature of the Company’s business, its operations and resources at the appropriate point.

The Group’s South African operations are committed to achieving the goals of the South African Employment Equity Act and is pleased to report the following:

• Black Wattle Colliery has exceeded the 10 percent women in management and core mining target.
• Black Wattle Colliery has achieved over 15 percent women in core mining.
• 95 percent of the women at Black Wattle Colliery are HDSA females.

In terms of directors, employees and gender representation, at the year end the Group had 9 directors (8 male and 2 from a minority ethnic or HDSA Background, 1 female from a minority ethnic or HDSA Background), 5 senior managers (5 male and 2 from a minority ethnic or HDSA Background) and 212 other employees (143 male and 118 from a minority ethnic or HDSA Background, 69 female and 66 from a minority ethnic or HDSA Background).

Black Wattle Colliery has successfully submitted their annual Employment Equity Report to the Department of Labour. In terms of staff training some highlights for 2023 were:

• One employee was trained in ABET (Adult Basic Educational Training) on various levels;
• An additional eight disabled HDSA women continued their training on ABET levels one to four;
• Four HDSA persons were enrolled for apprenticeships in 2023 categorised as follows:
  • One HDSA female employee;
  • Two HDSA females from the local community; and
  • One HDSA male from the local community.
• Two HDSA persons continued their internships in 2023; these are categorised as follows:
  • One HDSA female from the local community continued her studies in Safety Management.
  • One HDSA female from the local community continued her studies as a Safety Officer (COMSOQ1).

Further to the above, we confirm that one HDSA Female completed her bursary studies in 2023, while two HDSA females continued their bursary studies in 2023.

Highlights for 2023 for Sisonke Coal Processing:

• One employee was trained in ABET (Adult Basic Educational Training) on various levels

Employment terms and conditions for our employees based at our UK office and at our South African mining operations are regulated by and are operated in compliance with all relevant prevailing national and local legislation. Employment terms and conditions provided to mining staff meet or exceed the national average. The Group’s mining operations and coal washing plant facility are labour intensive and unionised. During the year no labour disputes, strikes or wage negotiations disrupted production or had a significant impact on earnings. The Group’s relations to date with labour representatives and labour related unions continue to remain strong.

Anti-slavery and human trafficking

The Group is committed to the prevention of the use of forced labour and has a zero tolerance policy for human trafficking and slavery. The Group’s policies and initiatives in this area can be found within the Group’s Anti-slavery and human trafficking statement found on the Group’s website at www.bisichi.co.uk.

Climate Change reporting

The Group recognises that climate change represents one of the most significant challenges facing the world today and supports the goals of the Paris Agreement and the UN Framework Convention on Climate Change.

Our aim is to:

• minimize our contribution to greenhouse gas emissions;
• to consider and plan for the physical and transitional risks of climate change on our operations; and
• to work with stakeholders, including local government and communities, to mitigate the impact of climate-related challenges.

Task Force on Climate-related Financial Disclosures

Bisichi is committed to managing the impact of its operations on the planet and the impact of climate change on its operations, particularly to ensure continued operational and financial resilience in a changing world and marketplace. Bisichi understands the importance of these matters to its investors, partners, and regulatory authorities and, as required by the Listing Rules, has adopted the Task Force on Climate-related Disclosure’s framework for communicating climate related financial risks.

The Group’s primary operations are coal mining and processing in South Africa. Hydrocarbons are a key source of energy and heat for the foreseeable future and the Company’s operations have contributed to meeting market demand for coal, particularly in South Africa. However, the Group’s operations form part of a wider energy and natural resources market which is in the process of transitioning, in conjunction with the published government, national and supra-national policies, to net-zero.

In the current year, the Group has aligned its climate disclosures in this Strategic Report to the four Task force on Climate-related Financial Disclosures (“TCFD”) recommendations and the 11 recommended disclosures as outlined below. This is the second year the Group has published a report in line with the TCFD Recommendations and the Group has endeavoured to make disclosures consistent with the TCFD recommended disclosures taking into consideration the short to medium term life of its South African coal operation and the size and complexity of the Group as a whole. The Group continues to develop and enhance its infrastructure, strategies, structures, resources and tools to manage the risks and opportunities presented by climate change and to ensure its ongoing climate change reporting disclosure is fully consistent in all areas with the TCFD recommended disclosures.

Green House Gas reporting

We have reported on all of the emission sources required under the Companies Act 2006 (Strategic Report and Directors’ Reports) Regulations.

The data detailed in these tables represent emissions and energy use for which Bisichi PLC is responsible. To calculate our emissions, we have used the main requirements of the Greenhouse Gas Protocol Corporate Standard and a methodology adapted from the Intergovernmental Panel on Climate Change (2019), along with the UK Government GHG Conversion Factors for Company Reporting 2023.

Any estimates included in our totals are derived from actual data which have been extrapolated to cover the full reporting periods. Our reporting includes our energy use and emissions associated with our UK office, which are minimal (1.2 tonnes of CO2e).

Principal risks & uncertainties

Strategic Report

Financial & performance review

The movement in the Group’s Adjusted EBITDA from £39.4million in 2022 to £2.6million in 2023 can mainly be attributed to the performance of the Group’s South African operations. Lower volumes of coal sold, lower export coal prices and a lower proportion of sales into the export market at Sisonke Coal Processing had a significant impact on the Group’s revenue in 2023.

EBITDA, adjusted EBITDA and mining production are used as key performance indicators for the Group and its mining activities as the Group has a strategic focus on the long term development of its existing mining reserves and the acquisition of additional mining reserves in order to realise shareholder value. Mining production can be defined as the coal quantity in metric tonnes extracted from our reserves during the period and held by the mine before any processing through the washing plant. Whilst profit/(loss) before tax is considered as one of the key overall performance indicators of the Group, the profitability of the Group and the Group’s mining activities can be impacted by the volatile and capital intensive nature of the mining sector. Accordingly, EBITDA and adjusted EBITDA are primarily used as key performance indicators as they are indicative of the value associated with the Group’s mining assets expected to be realised over the long term life of the Group’s mining reserves. In addition, for the Group’s property investment operations, the net property valuation and net property revenue are utilised as key performance indicators as the Group’s substantial property portfolio reduces the risk profile for shareholders by providing stable cash generative UK assets and access to capital appreciation. Certain key performance indicators below are not Generally Accepted Accounting Practice measures and are not intended as a substitute for those measures, and may or may not be the same as those used by other companies.

Key performance indicator

Adjusted EBITDA is used as a key indicator of the operating trading performance of the Group and its operating segments representing operating profit before the impact of depreciation, fair value adjustments, gains/(losses) on disposal of other investments and foreign exchange movements. The Group’s operating segments include its South African mining operations and UK property. The performance of these two operating segments are discussed in more detail below.

The Group achieved an EBITDA for the year of £3.4million (2022: £40.0million). The movement compared to the prior year can mainly be attributed to the decreased EBITDA from our mining activities of £1.2million (2022: £37.9million). In addition, the Group’s fair value gain, related to our UK property was £0.15million (2022: loss £0.1million) and gains related to investments held at fair value through profit and loss were £0.8million (2022: £1.0million).

The Group reported a profit before tax of £0.6million (2022: £38.0million) for the year resulting in a decrease in taxation for the year to £0.3million (2022: £11.9 million). This resulted in the Group achieving an overall profit for the year after tax of £0.3million (2022: £26.1million), of which £0.26million (2022: £17.6million) was attributable to equity holders of the company.

South African mining operations

Performance

The key performance indicators of the Group’s South African mining operations are presented in South African Rand and UK Sterling as follows:

Net Revenue per tonne of mining production can be defined as the revenue price achieved per metric tonne of mining production less transportation and loading costs.

A breakdown of the quantity of coal sold and revenue of the Group’s South African mining operations are presented in metric tonnes and South African Rand as follows:

The quantity of coal sold can be defined as the quantity of coal sold in metric tonnes by the Group in any given period. Net Revenue per tonne of coal sold can be defined as the revenue price achieved less transportation and loading costs per metric tonne of coal sold.

Total net revenue per tonne of coal sold for the Group’s mining and processing operations decreased for the year from R1,384 per tonne of coal sold in 2022 to R992 in 2023, mainly attributable to the average price decreases per tonne in the export market. This offset the average price increases in the domestic market. The average price increases in the domestic market were attributable to an increase in higher quality coal, destined for the export market, being sold domestically due to the lack of export rail capacity available.

A decrease in mining production from Black Wattle and a decrease in buy-in coal processed during the year offset a decrease in coal inventories at the end of the year resulting in the quantity of coal sold for the year decreasing to 1.031million tonnes (2022: 1.287million tonnes).

Overall, revenue from the Group’s South African mining operations decreased during the year to R1.088billion (2022: R1.886billion) mainly due to the lower coal export prices achievable and a decrease in overall coal volumes sold, particularly into the export market due to a lack of available export rail capacity. 

Mining and washing costs per tonne of coal sold during the year increased from R596 per tonne in 2022 to R797 per tonne in 2023 mainly due to an increases in mining costs per tonne from Black Wattle as outlined in the Mining Review on page 5. This resulted in an increase in total mining and washing costs for the Group to R821.3million (2022: R767.4million).

Other operating costs (excluding depreciation) of £7.4million (2022: £12.08million) include general administrative costs and administrative salaries and wages related to our South African mining operations that are incurred both in South Africa and in the UK. These costs are not significantly impacted by movements in mining production and coal processing. The decrease during the year can mainly be attributed to higher salaries and wages costs of the Group in 2022 due to the financial performance in the same period. Overall costs in South Africa were in line with management’s expectations and local inflation.

In summary, the movement in the Group’s Adjusted EBITDA from £39.4million in 2022 to £2.6million in 2023 can mainly be attributed to the performance of the Group’s South African mining and coal processing operations outlined above. A further explanation of the mines operational performance can be found in the Mining Review on page 5.

UK property investment

Performance

The Group’s portfolio is managed actively by London & Associated Properties plc. Rental performance levels improved in 2023. Net property revenue (excluding joint ventures and service charge income) across the portfolio increased during the year to £1.26million (2022: £1.11million). The property portfolio was externally valued at 31 December 2023 and the value of UK investment properties attributable to the Group at year end increased marginally to £10.610million (2022: £10.465million).

Joint venture property investments

The Group holds a £0.6million (2022: £0.6million) joint venture investment in Dragon Retail Properties Limited, a UK property investment company. The open market value of the company’s share of investment properties included within its joint venture investment in Dragon Retail Properties decreased marginally during the year to £1.015million (2022: £1.019million).

The Group continues to hold a £0.4million (2022: £0.4million) 50% joint venture investment in West Ealing Projects Limited, a UK unlisted property development company. West Ealing Projects Limited’s only asset is a property development in West Ealing, London. The carrying value of the Group’s share of the trading property inventory included within this development is valued at £4.4million (2022: £4.1million). The joint venture has obtained planning consent for a residential development of 56 flats and four retail units. During 2023 the joint venture has been finalising detailed designs for the project and working with contractors and designers to improve building efficiency and maximise potential returns. Currently, the joint venture is in detailed negotiations to finance construction of this development and intend to commence work in the second half of 2024. We look forward to updating shareholders further in due course.

The Group continues to hold a one third joint venture investment in Development Physics Limited, a UK unlisted property development company. The remaining two thirds is held equally by London & Associated Properties PLC and Metroprop Real Estate Ltd. The company was set up with the purpose of delivering a residential development of 44 flats and 4 town houses in Purley, London. Development Physics acquired a series of options on the site and registered for planning permission for its development. A planning application submitted in 2023 for 44 flats and 4 town houses was rejected in January 2023 despite being recommended for approval by the planning officer. Our appeal, although we won on design and construction matters, was ultimately unsuccessful on a legal technicality and we are currently considering whether to submit a new application. At year end, the negative carrying value of the investment held by the Group was £24,000 (2022: £14,000).

Overall, the Group achieved net property revenue of £1.4million (2022: £1.2million) for the year which includes the company’s share of net property revenue from its investment in joint ventures of £113,000 (2022: £108,000).

Other Investments

During the year the Group’s non-current investments held at fair value through profit and loss increased from £12.6million in 2022 to £14.3million due to net additions during the year of £0.8million (2022: £8.2million) and gains from investments of £0.9million (2022: £0.7million). The investments comprise of £6.8million (2022: £6.8million) of investments listed on stock exchanges in the United Kingdom and £7.4million (2022: £5.8million) of investments listed on overseas stock exchanges. The Group’s listed investments continue to comprise primarily listed equities involved in extractive and energy related business activities, including entities involved in the extraction of commodities needed for the clean energy transition. 

Cashflow

Cash flow generated from operating activities decreased compared to the prior year to £1.8million (2022: £30.7million). This can mainly be attributed to the decrease in operating profit during the year to £1.9million (2022: £39.0million). The decrease in operating profit can mainly be attributed to the weaker overall performance of the Group’s South African coal mining and processing operations.

Investing cashflows primarily reflect the net acquisitions of listed equity investments of £0.8million (2022: £8.1million) and capital expenditure during the year of £5.9million (2022: £8.5million) which can mainly be attributable to mine development costs at Black Wattle. As at year end the Group’s mining reserves, plant and equipment had a carrying value of £18.8million (2022: £16.4 million) with capital expenditure being offset by depreciation of £1.4million (2022: £1.1milion) and exchange translation movements of £2.0million (2022: £0.6million) for the year.

Cash outflows from financing activities includes a net decrease in borrowings of £0.5million (2022: increase £0.5million). In addition, dividends were paid during the year to equity shareholders of £2.3million (2022: £0.6million).

Overall, the Group’s cash and cash equivalents decreased during the year by £7.8million (2022: increase of £6.9million). The Group’s net balance of cash and cash equivalents (including bank overdrafts) at year end was negative £0.3million (2022: £7.4million).

The Group has considerable financial resources available at short notice including cash and cash equivalents (excluding bank overdrafts) of £3.2million (2022: £10.6 million) and listed investments of £15.0million (2022: £13.5million) as at year end. The above financial resources totalling £18.2million (2022: £24.1million).

The net assets of the Group reported as at year end were £33.6million (2022: £35.6million) and total assets at £59.8million (2022: £63.8million).

Liabilities decreased from £28.2million to £26.2million during the year primarily due to an decrease in trade and other payables from £13.3million to £11.6million offsetting an increase in tax payable from £4.3million to £5.2million.

Further details on the Group’s cashflow and financial position are stated in the Consolidated Cashflow Statement on page 69 and the Consolidated Balance Sheet on page 66 and 67.

Loans

South Africa

The Group has a structured trade finance facility with Absa Bank Limited for R85million held by Sisonke Coal Processing (Pty) Limited, a 100% subsidiary of Black Wattle Colliery (Pty) Limited. This facility comprises of an R85million revolving facility to cover the working capital requirements of the Group’s South African operations. The facility is renewable annually and is secured against inventory, debtors and cash that are held in the Group’s South African operations.

United Kingdom

The Group holds a 5 year term facility of £3.9m with Julian Hodge Bank Limited at an initial LTV of 40%. The loan is secured against the company’s UK retail property portfolio. The amount repayable on the loan at year end was £3.9million. The overall interest cost of the loan is 4.00% above the Bank of England base rate. The loan is secured by way of a first charge over the investment properties in the UK which are included in the financial statements at a value of £10.6million. The debt package has a five year term and is repayable at the end of the term in December 2024. The Group intends to renew or refinance the loan prior to the end of its term. No banking covenants were breached by the Group during the year.

Statement regarding Section 172 of the UK Companies Act

Section 172 of the UK Companies Act requires the Board to report on how the directors have had regard to the matters outlined below in performing their duties. The Board consider the Group’s customers, employees, local communities, suppliers and shareholders as key stakeholders of the Group. During the year, the Directors consider that they have acted in a way, and have made decision that would, most likely promote the success of the Group for the benefit of its members as a whole as outlined in the matters below:

•     The likely consequences of any decision in the long term: see Principal activity, strategy & business model on page 4 and Principal Risks and Uncertainties on page 20;

•     The interests of the Group’s employees; ethics and compliance; fostering of the Company’s business relationships with suppliers, customers and others; and the impact of the Group’s operations on the community and environment: see Sustainability report on page 7;

•     The need to act fairly between members of the Company: see the Corporate Governance section on page 35.

Future prospects

In the first quarter of the 2024, we have seen improved production from Black Wattle, our coal mining operation. In our South African coal markets, coal prices have stabilised and the availability of rail for export has improved for the year to date in comparison to 2023. In light of this, management will be focussing on sustaining production levels, maintaining a diversified sales market and keeping operating costs low.

The Group continues to seek and evaluate opportunities to transition into alternative mining, commodity and renewable energy related opportunities through new commercial arrangements.

In the UK, management is looking forward to progressing its property development opportunities in West Ealing and Development Physics as well as seeking other opportunities to expand upon on its property and equity investment portfolios. This is in line with the Group’s overall strategy of balancing the high risk of our mining operations with a dependable cash flow and capital appreciation from our UK property investment operations and equity investments.

To date, the Group’s financial position has remained strong and at present, the Group has adequate financial resources to ensure the Group remains viable for the foreseeable future and that liabilities are met. A full going concern and viability assessment can be found in the Directors report on page 39.

Further information on the outlook of the company can be found in both the Chairman’s Statement on page 2 and the Mining Review on page 5 which form part of the Strategic Report.

Signed on behalf of the Board of Directors

Garrett Casey

Finance Director

22 April 2024

Governance

Management team

*     Andrew R Heller MA, ACA
(Chairman & Managing Director)

      Garrett Casey CA (SA)
(Finance Director)

      Robert Grobler Pr Cert Eng
(Director of Mining)

O * John A Sibbald BL

      (Non-executive)

      Jonh Sibbald has been a Director since 1988. After qualifying as a Chartered Accountant he spent over 20 years in stockbroking, specialising in mining and international investment.

      John Wong ACA, CFA
(Non-executive)

      John Wong was appointed a Director on 15 October 2020. After training as a Chartered accountant he has worked in the fund management industry for over 20 years and has extensive experience in investment management, in particular within the mining sector.

      John A Heller LLB, MBA (Appointed 29 March 2023)

      (Non-executive)

      John Heller was appointed a Director on 29 March 2023. John Heller is the Chairman and Chief Executive of London & Associated Properties PLC which holds a 41.6% stake in Bisichi. John Heller has extensive knowledge and experience in property investment and management.

*     Member of the nomination committee

O   Member of the audit, nomination and remuneration committees.

Other directors and advisors

Secretary and registered office

Garrett Casey CA (SA)
12 Little Portland Street
London W1W8BJ 

Black Wattle Colliery and Sisonke Coal Processing Directors

Andrew Heller (Managing Director)
Ethan Dube
Robert Grobler
Garrett Casey
Millicent Zvarayi   

Company Registration

Company registration No. 00112155 (Incorporated in England and Wales)

Website

www.bisichi.co.uk

E-mail

admin@bisichi.co.uk

Auditor

Kreston Reeves LLP, London

Principal bankers

United Kingdom
Julian Hodge Bank Limited

Santander UK PLC
Investec PLC         

South Africa
ABSA Bank (SA)
First National Bank (SA)       

Corporate solicitors

United Kingdom
Ashfords LLP, London

Fladgate LLP, London

Olswang LLP, London

Wake Smith Solicitors Limited, Sheffield

South Africa
Beech Veltman Inc, Johannesburg

Brandmullers Attorneys, Middelburg

Cliffe Decker Hofmeyer, Johannesburg

Herbert Smith Freehills, Johannesburg

Natalie Napier Inc, Johannesburg

Tugendhaft Wapnick Banchetti and Partners, Johannesburg

Stockbrokers

Shore Capital Stockbrokers Limited

Registrars and transfer office

Link Group
Central Square
29 Wellington Street
Leeds
LS1 4DL

UK telephone:
0371 664 0300

International telephone:
+44 (0) 371 664 0300

Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. The helpline is open between 8.00 a.m. – 5.30 p.m., Monday to Friday excluding public holidays in England and Wales.

Website:
https://www.linkgroup.eu

Email: shareholderenquiries@linkgroup.co.uk

Company registration number: 341829 (England and Wales)

Governance

Five year summary

Financial calendar

Governance

Directors’ report

The directors submit their report together with the audited financial statements for the year ended 31 December 2023.

Review of business, future developments and post balance sheet events

The Group continues its mining activities. Income for the year was derived from sales of coal from its South African operations. The Group also has an equity investment portfolio, a property investment portfolio for which it receives rental income and joint venture investments in two UK residential property developments.

The results for the year and state of affairs of the Group and the company at 31 December 2023 are shown on pages 64 to 113 and in the Strategic Report on pages 2 to 30. Future developments and prospects are also covered in the Strategic Report and further details of any post balance sheet events can be found in note 32 to the financial statements. Over 98 per cent of staff are employed in the South African coal mining industry – employment matters and health and safety are dealt with in the Strategic Report.

The management report referred to in the Director’s responsibilities statement encompasses this Directors’ Report and Strategic Report on pages 2 to 30.

Corporate responsibility

Environment

The environmental considerations of the Group’s South African coal mining operations are covered in the Strategic Report on pages 2 to 30.

The Group’s UK activities are principally property investment whereby premises are provided for rent to retail businesses and a joint venture investment in a UK residential property development in West Ealing.

The Group seeks to provide those tenants with good quality premises from which they can operate in an efficient and environmentally friendly manner. Wherever possible, improvements, repairs and replacements are made in an environmentally efficient manner and waste recycling arrangements are in place at all the company’s locations.

Climate Change Reporting and Greenhouse Gas Emissions

The Group’s climate change report and details on its greenhouse gas emissions for the year ended 31 December 2023 can be found on page 11 of the Strategic Report.

Employment

The Group’s policy is to attract staff and motivate employees by offering competitive terms of employment. The Group provides equal opportunities to all employees and prospective employees including those who are disabled. The Strategic Report gives details of the Group’s activities and policies concerning the employment, training, health and safety and community support and social development concerning the Group’s employees in South Africa.

Dividend policy        

As outlined in the Strategic report on page 3 the directors are proposing the payment of a final dividend of 4p (2022: 4p) and a special dividend of 0p (2022: 8p) per share for 2023. An interim dividend for 2023 of 3p (Interim 2022: 10p) has been paid on 2 February 2024.

The total dividend per ordinary share for 2023 will therefore be 7p (2022: 22p) per ordinary share.

Investment properties and other properties

The investment property portfolio is stated at its open market value of £10,610,000 at 31 December 2023 (2022: £10,465,000) as valued by professional external valuers. The open market value of the company’s share of investment properties and development property inventory held at cost included within its investments in joint ventures is £5,176,000 (2022: £4,812,000).

Financial instruments

Note 22 to the financial statements sets out the risks in respect of financial instruments. The Board reviews and agrees overall treasury policies, delegating appropriate authority to the managing director. Treasury operations are reported at each Board meeting and are subject to weekly internal reporting.

Following the year under review, the Company made an investment into a fund in which John Wong (an independent non-executive director) is linked by virtue of his engagement as the fund manager and having a material interest in the fund. In accordance with the Companies Act 2006, the Company’s articles of association and the Disclosure Guidance and Transparency Rules, John Wong recused himself from discussions relating to the proposed investment and the Board resolved to impose certain conditions on John Wong given his interests including, but not limited to, restricting the availability of information to John Wong and to exclude him from discussions and voting on matters relating to the investment and its ongoing review in line with the Company’s treasury policies. In accordance with the requirements of the Disclosure Guidance and Transparency Rules, the Company released an announcement containing the prescribed information on 3 April 2024.

Directors

The directors of the company for the year were Sir Michael Heller (ceased to be a director on 30 January 2023), A R Heller, G J Casey, C A Joll (ceased to be a director on 18 April 2024), R J Grobler (a South African citizen), J A Sibbald , J Wong and J Heller (appointed 29 March 2023).

Mr J Heller was appointed as a non-executive director by the Board on 29 March 2023. Mr J Heller is the Chairman and Managing Director of London & Associated Properties PLC which holds a 41.6% stake in Bisichi. Mr J Heller has extensive & valuable experience in property investment and management.

The directors retiring by rotation are Mr AR Heller, Mr RJ Grobler and Mr J Wong, each of whom offer themselves for re-election.

Mr A R Heller has been an executive director of the company since 1998. He is a Chartered Accountant and has been employed by the Group since 1994 under a contract of employment determinable at three months’ notice. The Board recommends the re-election of Mr AR Heller.

Mr R J Grobler was appointed as General Mine Manager by Black Wattle Colliery (Proprietary) Ltd on 1 May 2000. He was appointed to the Board of Bisichi PLC as Director of Mining on 22 August 2008. He has over 40 years’ experience in the South African coal mining industry. The board recommends the re-election of RJ Grobler.

Mr J Wong is a qualified Chartered Accountant and a Chartered Financial Analyst with extensive experience in the insurance and investment management industries. As noted on page 34, Mr J Wong is linked to an investment made by the Company and the Board has put in place certain measures to restrict access to information and exclude Mr J Wong from discussions and voting on matters relating to such investments. As such, the Board considers that Mr J Wong remains independent and, following the steps taken by the Board, can fulfil his duties to the Company notwithstanding his outside interests. The Board recommends the re-election of Mr J Wong.

Other than noted above, no director had any material interest in any contract or arrangement with the company during the year other than as shown in this report.

Directors’ shareholdings

The interests of the directors in the shares of the company, including family and trustee holdings where appropriate, are shown on page 43 of the Annual Remuneration Report.

Substantial interests

The following have advised that they have an interest in 3 per cent. or more of the issued share capital of the company as at 31 December 2023:

London & Associated Properties PLC – 4,432,618 shares representing 41.6 per cent. of the issued capital (The Heller family is a shareholder of London & Associated Properties PLC).

Disclosure of information to auditor         

The directors in office at the date of approval of the financial statements have confirmed that as far as they are aware that there is no relevant audit information of which the auditor is unaware. Each of the directors has confirmed that they have taken all reasonable steps they ought to have taken as directors to make themselves aware of any relevant audit information and to establish that it has been communicated to the auditor.

Indemnities and insurance

The Articles of Association and Constitution of the company provide for them to indemnify, to the extent permitted by law, directors and officers (excluding the Auditor) of the companies, including officers of subsidiaries, and associated companies against liabilities arising from the conduct of the Group’s business. The indemnities are qualifying third-party indemnity provisions for the purposes of the UK Companies Act 2006 and each of these qualifying third-party indemnities was in force during the course of the financial year ended 31 December 2023 and as at the date of this Directors’ report. No amount has been paid under any of these indemnities during the year.

The Group has purchased directors’ and officers’ insurance during the year. In broad terms, the insurance cover indemnifies individual directors and officers against certain personal legal liability and legal defence costs for claims arising out of actions taken in connection with Group business.

Corporate Governance

The Board acknowledges the importance of good corporate governance. The paragraphs below set out how the company has applied this guidance during the year.

Principles of corporate governance

The Group’s Board appreciates the value of good corporate governance not only in the areas of accountability and risk management, but also as a positive contribution to business prosperity. The Board endeavours to apply corporate governance principles in a sensible and pragmatic fashion having regard to the circumstances of the Group’s business. The key objective is to enhance and protect shareholder value.

Board structure

The Board currently comprises the joint executive chairman and managing director, two other executive directors and four non-executive directors. Their details appear on page 31. The Board is responsible to shareholders for the proper management of the Group. The Directors’ responsibilities statement in respect of the accounts is set out on page 53. The non-executive directors have a particular responsibility to ensure that the strategies proposed by the executive directors are fully considered.

To enable the Board to discharge its duties, all directors have full and timely access to all relevant information and there is a procedure for all directors, in furtherance of their duties, to take independent professional advice, if necessary, at the expense of the Group. The Board has a formal schedule of matters reserved to it and meets bi-monthly.

The Board is responsible for overall Group strategy, approval of major capital expenditure projects and consideration of significant financing matters.

The following Board committees, which have written terms of reference, deal with specific aspects of the Group’s affairs:

• In 2023, the nomination committee comprised of two non-executive directors C A Joll (Chairman) (ceased to be a director on 18 April 2024) and JA Sibbald as well as the executive chairman. The committee is responsible for proposing candidates for appointment to the Board, having regard to the balance and structure of the Board. In appropriate cases recruitment consultants are used to assist the process. Each director is subject to re-election at least every three years.
• The remuneration committee is responsible for making recommendations to the Board on the company’s framework of executive remuneration and its cost. The committee determines the contractual terms, remuneration and other benefits for each of the executive directors, including performance related bonus schemes, pension rights and compensation payments. The Board itself determines the remuneration of the non-executive directors. During 2023, the committee comprised of two non-executive directors C A Joll (Chairman) ) (ceased to be a director on 18 April 2024) and JA Sibbald. The company’s executive chairman is normally invited to attend meetings. The report on directors’ remuneration is set out on pages 40 to 49.
• In 2023, the audit committee comprised of two non-executive directors C A Joll (Chairman) (ceased to be a director on 18 April 2024) and JA Sibbald. Its prime tasks are to review the scope of external audit, to receive regular reports from the company’s auditor and to review the half-yearly and annual accounts before they are presented to the Board, focusing in particular on accounting policies and areas of management judgment and estimation. The committee is responsible for monitoring the controls which are in force to ensure the integrity of the information reported to the shareholders. The committee acts as a forum for discussion of internal control issues and contributes to the Board’s review of the effectiveness of the Group’s internal control and risk management systems and processes. The committee also considers annually the need for an internal audit function. It advises the Board on the appointment of external auditors and on their remuneration for both audit and non-audit work, and discusses the nature and scope of the audit with the external auditors. The committee, which meets formally at least twice a year, provides a forum for reporting by the Group’s external auditors.

Where such directors were not members of the relevant committee, meetings are also attended, by invitation of the committee, by the Company’s executive chairman and finance director.

The audit committee also undertakes a formal assessment of the auditors’ independence each year which includes:

• a review of non-audit services provided to the Group and related fees;
• discussion with the auditors of a written report detailing consideration of any matters that could affect independence or the perception of independence;
• a review of the auditors’ own procedures for ensuring the independence of the audit firm and partners and staff involved in the audit, including the regular rotation of the audit partner; and
• obtaining written confirmation from the auditors that, in their professional judgement, they are independent.

The audit committee report is set out on page 50 and 51.

Performance evaluation – board, board committees and directors

The performance of the board as a whole and of its committees and the non-executive directors is assessed by the executive chairman and is discussed with the senior independent director. Their recommendations are discussed at the nomination committee prior to proposals for re-election being recommended to the Board. The performance of executive directors is discussed and assessed by the remuneration committee. The senior independent director meets regularly with the executive chairman and both the executive and non-executive directors individually outside of formal meetings. The directors will take outside advice in reviewing performance but have not found this necessary to date.

Independent directors

The senior independent non-executive director during 2023 was Christopher Joll (ceased to be a director on 18 April 2024). The other two independent non-executive directors are John Sibbald and John Wong.

Christopher Joll was a non-executive director of the company for over twenty years, John Sibbald has been a non-executive director for over thirty years and John Wong was appointed to the Board on 15 October 2020. The Board encourages the non-executive directors to act independently. The Board considers that their length of service does not, and has not, resulted in their inability or failure to act independently. In the opinion of the Board, Christopher Joll and John Sibbald continued to fulfil their role as independent non-executive directors during the year. The Board considers that as a result of the systems and controls the Company has put in place, notwithstanding his outside business interests, including in relation to certain funds in which the Company has invested, John Wong remains independent.

The independent directors regularly meet prior to Board meetings to discuss corporate governance issues.

Internal control

The directors are responsible for the Group’s system of internal control and review of its effectiveness annually. The Board has designed the Group’s system of internal control in order to provide the directors with reasonable assurance that its assets are safeguarded, that transactions are authorised and properly recorded and that material errors and irregularities are either prevented or would be detected within a timely period. However, no system of internal control can eliminate the risk of failure to achieve business objectives or provide absolute assurance against material misstatement or loss.

The key elements of the control system in operation are:

• the Board meets regularly with a formal schedule of matters reserved to it for decision and has put in place an organisational structure with clearly defined lines of responsibility and with appropriate delegation of authority;
• there are established procedures for planning, approval and monitoring of capital expenditure and information systems for monitoring the Group’s financial performance against approved budgets and forecasts;
• UK property and financial operations are closely monitored by members of the Board and senior managers to enable them to assess risk and address the adequacy of measures in place for its monitoring and control. The South African operations are closely supervised by the UK based executives through daily, weekly and monthly reports from the directors and senior officers in South Africa. This is supplemented by regular visits by the UK based finance director to the South African operations which include checking the integrity of information supplied to the UK; and
• as required by the Disclosure Guidance and Transparency Rules, the Company has in place systems and controls to identify and classify related party transactions and to ensure the Company complies with its obligations in relation to such transactions.

The directors are guided by the internal control guidance for directors issued by the Institute of Chartered Accountants in England and Wales. During the period, the audit committee has reviewed the effectiveness of internal control as described above. The Board receives periodic reports from its committees.

Board and board committee meetings

The number of meetings during 2023 and attendance at regular Board meetings and Board committees was as follows:

There were no significant issues identified during the year ended 31 December 2023 (and up to the date of approval of the report) concerning material internal control issues. The directors confirm that the Board has reviewed the effectiveness of the system of internal control as described during the period.

Communication with shareholders

Communication with shareholders is a matter of priority. Extensive information about the Group and its activities is given in the Annual Report, which is made available to shareholders. Further information is available on the company’s website, www.bisichi.co.uk. There is a regular dialogue with institutional investors. Enquiries from individuals on matters relating to their shareholdings and the business of the Group are dealt with informatively and promptly.

Takeover directive

The company has one class of share capital, ordinary shares. Each ordinary share carries one vote. All the ordinary shares rank pari passu. There are no securities issued in the company which carry special rights with regard to control of the company. The identity of all substantial direct or indirect holders of securities in the company and the size and nature of their holdings is shown under the “Substantial interests” section of this report above.

A relationship agreement dated 15 September 2005 (the “Relationship Agreement”) was entered into between the company and London & Associated Properties PLC (“LAP”) in regard to the arrangements between them whilst LAP is a controlling shareholder of the company. The Relationship Agreement includes a provision under which LAP has agreed to exercise the voting rights attached to the ordinary shares in the company owned by LAP to ensure the independence of the Board of directors of the company.

Other than the restrictions contained in the Relationship Agreement, there are no restrictions on voting rights or on the transfer of ordinary shares in the company. The rules governing the appointment and replacement of directors, alteration of the articles of association of the company and the powers of the company’s directors accord with usual English company law provisions. Each director is re-elected at least every three years. The company is not party to any significant agreements that take effect, alter or terminate upon a change of control of the company following a takeover bid. The company is not aware of any agreements between holders of its ordinary shares that may result in restrictions on the transfer of its ordinary shares or on voting rights.

There are no agreements between the company and its directors or employees providing for compensation for loss of office or employment that occurs because of a takeover bid.

The Bribery Act 2010

The Bribery Act 2010 came into force on 1 July 2011, and the Board took the opportunity to implement a new Anti-Bribery Policy. The company is committed to acting ethically, fairly and with integrity in all its endeavours and compliance with the policy is closely monitored.

Annual General Meeting

The annual general meeting of the company The annual general meeting of the company (“Annual General Meeting”) will be held at Meeting Room 2, 12 Charles II Street, St James, London SW1Y 4QU on Tuesday, 18 June 2024 at 11.00 a.m. Resolutions 1 to 9 will be proposed as ordinary resolutions. More than 50 per cent. of shareholders’ votes cast must be in favour for those resolutions to be passed.

The directors consider that all of the resolutions to be put to the meeting are in the best interests of the company and its shareholders as a whole. The Board recommends that shareholders vote in favour of all resolutions.

Please note that the following paragraph is a summary of resolution 9 to be proposed at the Annual General Meeting and not the full text of the resolution. You should therefore read this section in conjunction with the full text of the resolutions contained in the notice of Annual General Meeting.

Directors’ authority to allot shares (Resolution 9)

In certain circumstances it is important for the company to be able to allot shares up to a maximum amount without needing to seek shareholder approval every time an allotment is required. Paragraph 9.1.1 of resolution 9 would give the directors the authority to allot shares in the company and grant rights to subscribe for, or convert any security into, shares in the company up to an aggregate nominal value of £355,894. This represents approximately 1/3 (one third) of the ordinary share capital of the company in issue (excluding treasury shares) at 22 April 2024 (being the last practicable date prior to the publication of this Directors’ Report). Paragraph 9.1.2 of resolution 9 would give the directors the authority to allot shares in the company and grant rights to subscribe for, or convert any security into, shares in the company up to a further aggregate nominal value of £355,894, in connection with a pre-emptive rights issue. This amount represents approximately 1/3 (one third) of the ordinary share capital of the company in issue (excluding treasury shares) at 22 April 2024 (being the last practicable date prior to the publication of this Directors’ Report).

Therefore, the maximum nominal value of shares or rights to subscribe for, or convert any security into, shares which may be allotted or granted under resolution 9 is £711,788. Resolution 9 complies with guidance issued by the Investment Association (IA).

The authority granted by resolution 9 will expire on 31 August 2025 or, if earlier, the conclusion of the next annual general meeting of the company. The directors have no present intention to make use of this authority. However, if they do exercise the authority, the directors intend to follow emerging best practice as regards its use as recommended by the IA.

Donations

No political donations were made during the year (2022: £nil).

Going concern

The Group’s business activities, together with the factors likely to affect its future development are set out in the Chairman’s Statement on the preceding page 2, the Mining Review on pages 5 to 6 and its financial position is set out on page 24 of the Strategic Report. In addition Note 22 to the financial statements includes the Group’s treasury policy, interest rate risk, liquidity risk, foreign exchange risks and credit risk.

In South Africa, a structured trade finance facility with Absa Bank Limited for R85million is held by Sisonke Coal Processing (Pty) Limited, a 100% subsidiary of Black Wattle Colliery (Pty) Limited. This facility comprises of a R85million revolving facility to cover the working capital requirements of the Group’s South African operations. The facility is renewable annually and is secured against inventory, debtors and cash that are held in the Group’s South African operations. The Directors do not foresee any reason why the facility will not continue to be renewed at the next renewal date, in line with prior periods and based on their banking relationships.

Significant investments have been made in opening new mining areas at Black Wattle Colliery (Pty) Ltd and production in 2024 to date has improved. The directors expect that coal market conditions for the Group’ will remain at a stable and profitable level through 2024. The directors therefore have a reasonable expectation that the mine will achieve positive levels of cash generation for the Group in 2024. As a consequence, the directors believe that the Group is well placed to manage its South African business risks successfully.

In the UK, forecasts demonstrate that the Group has sufficient resources to meet its liabilities as they fall due for at least the next 12 months, from the approval of the financial statements, including those related to the Group’s UK Loan facility outlined below.

The Group holds a 5 year term facility of £3.9m with Julian Hodge Bank Limited at an initial LTV of 40%. The loan is secured against the company’s UK retail property portfolio. The amount repayable on the loan at year end was £3.9million. The overall interest cost of the loan is 4.00% above the Bank of England base rate. The debt package has a five year term and is repayable at the end of the term in December 2024. The Group intends to renew or refinance the loan prior to the end of its term. All covenants on the loan were met during the year and in the period since the year end. The directors have a reasonable expectation that the Group has adequate financial resources at short notice, including cash and listed equity investments, to ensure the existing facility’s covenants are met on an ongoing basis or to repay the loan if the loan cannot be renewed or refinanced by the end of its term.

Dragon Retail Properties Limited (“Dragon”), the Group’s 50% owned joint venture, holds a Santander bank loan of £0.95million secured against its investment property, see note 14. The bank loan is secured by way of a first charge on specific freehold property at a value of £2.03 million. The interest cost of the loan is 4.2 per cent above the bank’s base rate. A refinancing of this loan is currently underway. The loan originally expired in September 2020, but has been extended to July 2024. Santander have indicated that they are willing to provide a new term loan and we expect to complete this in the near future.

Detailed budget and cash flow forecasts for the Group’s operations demonstrated that the Group has sufficient resources to meet its liabilities as they fall due for at least the next 12 months from the approval date of these financial statements. As a result of the banking facilities held as well as the acceptable levels of cash expected to be held by the Group over the next 12 months, the Directors believe that the Group has adequate resources to continue in operational existence for the foreseeable future and that the Group is well placed to manage its business risks. Thus they continue to adopt the going concern basis of accounting in preparing the annual financial statements.

By order of the board

G.J Casey
Secretary

12 Little Portland Street        
London W1W8BJ 

22 April 2024

Governance

Statement of the Chairman of the remuneration committee

The remuneration committee presents its report for the year ended 31 December 2023. The report is presented in two parts in accordance with the remuneration regulations.

The first part is the Annual Remuneration Report which details remuneration awarded to Directors and non-executive Directors during the year. The shareholders will be asked to approve the Annual Remuneration Report as an ordinary resolution (as in previous years) at the AGM in June 2024. During the year, in light of the performance of the Group, the board determined to award bonuses to certain executive directors of the Group.

The second part is the Remuneration Policy which details the remuneration policy for Directors, and can be found at www.bisichi.co.uk. The current remuneration policy was subject to a binding vote which was approved by shareholders at the AGM in June 2023.The approval will continue to apply for a 3 year period commencing from then. The committee reviewed the existing policy and deemed that no changes were necessary to the current arrangements. The remuneration committee considered the overall performance of the group as well as of each director in the year ended 31 December 2023 and remuneration including bonuses were awarded in line with the performance conditions of the remuneration policy.

Both of the above reports have been prepared in accordance with The Large & Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013.

The company’s auditors, Kreston Reeves LLP are required by law to audit certain disclosures and where disclosures have been audited they are indicated as such.

Christopher Joll

Chairman – remuneration committee

12 Little Portland Street

London W1W8BJ

12 April 2024

Governance

Annual remuneration report

The following information has been audited:

Single total figure of remuneration for the year ended 31 December 2023:

*Members of the remuneration committee for the year ended 31 December 2023

A R Heller has an entitlement to an employer pension contribution of £85,000 for 2023. He has elected for this not to be paid at this time.

Single total figure of remuneration for the year ended 31 December 2022:

*Members of the remuneration committee for the year ended 31 December 2022

The notional value of vesting share options are based on the value of the share options at grant. The awards are not subject to performance in line with the scheme terms.

Pension schemes and incentives  

Three (2022: Two) directors have benefits under money purchase pension schemes. Contributions in 2023 were £133,410 (2022: £37,869), see table above. Under his contract of employment, A R Heller was entitled to a regular employer contribution (currently £85,000 a year) but has elected to defer the payment into his pension scheme. There are no additional benefits payable to any director in the event of early retirement.

Scheme interests awarded during the year

During the year no share options were granted under share option schemes.

Share option schemes

The company currently has only one Unapproved Share Option Scheme which is not subject to HM revenue and Customs (HMRC) approval. The 2012 scheme was approved by the remuneration committee of the company on 28 September 2012.

*Middle market price at date of grant

No consideration is payable for the grant of options under the 2012 Unapproved Share Option Scheme. There are no performance or service conditions attached to the 2012 Unapproved Share Option scheme. No part of the award was attributable to share price appreciation and no discretion has been exercised as a result of share price appreciation or depreciation. During the year, there were no changes to the exercise price or exercise period for the options.

Payments to past directors

No payments were made to past directors in the year ended 31 December 2023 (2022: £nil).

Payments for loss of office

No payments for loss of office were made in the year ended 31 December 2023 (2022: £nil).

Statement of Directors’ shareholding and share interest

Directors’ interests

The interests of the directors in the shares of the company, including family and trustee holdings where appropriate, were as follows: