BISICHI MINING PLC ANNUAL REPORT 2017

Financial statements
Group accounting policies
for the year ended 31 December 2017
Basis of accounting
The results for the year ended 31 December
2017 have been prepared in accordance with
International Financial Reporting Standards
(IFRS) as adopted by the European Union and
with those parts of the Companies Act 2006
applicable to companies reporting under IFRS.
In applying the group’s accounting policies and
assessing areas of judgment and estimation
materiality is applied as detailed on page 44
of the Audit Committee Report. The principal
accounting policies are described below:
The group financial statements are presented
in £ sterling and all values are rounded to the
nearest thousand pounds (£000) except when
otherwise stated.
The functional currency for each entity in the
group, and for joint arrangements and associates,
is the currency of the country in which the entity
has been incorporated. Details of which country
each entity has been incorporated can be
found in Note 14 for subsidiaries and Note 13
for joint arrangements and associates.
The exchange rates used in the accounts were as follows:
£1 Sterling: Rand £1 Sterling: Dollar
2017 2016 2017 2016
Year-end rate 16.6686 16.9472 1.35028 1.23321
Annual average 17.1540 19.9269 1.29174 1.35477
Going concern
The group has prepared cash flow forecasts
which demonstrate that the group has sufficient
resources to meet its liabilities as they fall due
for at least the next 12 months.
In South Africa, a structured trade finance
facility for R100million is held by Black Wattle
Colliery (Pty) Limited (“Black Wattle”) with Absa
Bank Limited, a South African subsidiary of
Barclays Bank PLC. The facility is renewable
annually at 30 June 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. This facility
comprises of a R80million revolving facility to
cover the working capital requirements of the
group’s South African operations, and a
R20million loan facility to cover guarantee
requirements related to the group’s South
African mining operations.
The directors expect that that the coal market
conditions experienced by Black Wattle Colliery,
its direct mining asset, in the second half of
2017 and the first quarter of 2018 will be similar
going into the remainder of 2018. The directors
therefore have a reasonable expectation that
the mine will achieve positive levels of cash
generation for the group in 2018. As a
consequence, the directors believe that the
group is well placed to manage its South
African business risks successfully.
In the UK, a £6 million term loan facility
repayable in December 2019 is held with
Santander Bank PLC. The loan is secured
against the company’s UK retail property
portfolio. The amount repayable on the loan at
year end was £5.9million (2016: £5.9million).
The debt package has a five year term and is
repayable at the end of the term. The interest
cost of the loan is 2.35% above LIBOR.
If required, the group has sufficient financial
resources available at short notice including
cash, available-for-sale investments and its £2m
loan to Dragon Retail Properties Limited which
is repayable on demand. In addition its
investment property assets benefit from long
term leases with the majority of its tenants.
As a result of the banking facilities held as well
as the acceptable levels of profitability and cash
generation the group’s South African operations
is expected to achieve for 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.
60 Bisichi Mining PLC