Bisichi : Annual Report 2022

Bisichi PLC Annual Report 2022

A tribute to

Sir Michael Heller Kt MA

Chairman 1981-2023

It was with great sadness that the Board of Bisichi announced the death of its Chairman, Sir Michael Heller Kt MA (1936-2023) on the 30th January 2023.

Cambridge-educated Sir Michael qualified as an accountant, but became a businessman and philanthropist of considerable stature, whose achievements were recognised with a knighthood in 2013. Instrumental in the development of several companies, including Bisichi, Sir Michael's focussed direction and decision making, wise advice and moral compass, were pivotal to the Company's success and will be sorely missed. Meticulously watching cash flow, and ensuring that the Company always had regular income, was the cornerstone of Sir Michael's business strategy. To a very great degree, this explains why Bisichi has performed so well when so many of its peers no longer exist.

Fortunately, despite being unwell and in hospital, Sir Michael was able to appreciate the Company's success in 2022. In his typically humorous fashion, he took enormous pleasure in telling the nurses at his bedside how well the Company had done. The greatest legacy that the Board can give him is to continue the work that he so tirelessly put in to the development of the Company, and to continue its growth. Thank you Sir Michael for everything that you have done: the Company is greatly indebted to you.

Contents

STRATEGIC REPORT

2 Chairman's Statement

1. Principal activity, strategy & business model
2. Mining Review

7 Sustainable development

1. Principal risks & uncertainties

1. Financial & performance review

GOVERNANCE

1. Directors and advisors
2. Five year summary

1. Financial calendar
2. Directors' report

1. Statement of the Chairman
   of the remuneration committee
2. Annual remuneration report

1. Audit committee report

1. Valuers' certificates
2. Directors' responsibilities statement
3. Independent auditor's report

FINANCIAL STATEMENTS

1. Consolidated income statement
2. Consolidated statement of other comprehensive income
3. Consolidated balance sheet

1. Consolidated statement of changes in shareholders' equity
2. Consolidated cash flow statement
3. Group accounting policies

1. Notes to the financial statements

1. Company balance sheet
2. Company statement of changes in equity
3. Company accounting policies

Strategic report

The Directors present

the Strategic Report of the company for the year ending 31 December 2022. 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.

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Strategic Report

Chairman's Statement

I am very pleased to report to shareholders that for the year ended 31 December 2022, your company made a profit before interest, tax, depreciation and amortisation (EBITDA) of £40.0million (2021: £5.8million) and an operating profit before depreciation, fair value adjustments and exchange movements (Adjusted EBITDA) of £39.4million (2021: £5.0million). These strong earnings for the Group can be attributed to a strong performance from Sisonke Coal Processing, the Group's South African coal processing operation which benefited from significantly improved prices in all its markets.

During the year, a disconnect in global energy markets contributed to an increase in the weekly Free on Board (FOB) coal price from Richards Bay Coal Terminal (API4 price) from $125 per metric tonne at the end of 2021 to a peak of over $360 in August. Overall, the API4 price averaged $273 in 2022 compared to $125 in 2021. The higher export prices achievable for our coal along with higher domestic prices, particularly during the second half of the year, contributed significantly to the increase in Group revenue and profitability during the year. Revenues for the year would have been even better if we had not encountered constraints in transporting coal for export on the South African rail network, constraints which were beyond our control. For this reason, exports during the year decreased to 262,000 metric tonnes compared to 320,000 metric tonnes in 2021.

At Black Wattle, the Group's South African coal mining operation, our transition into new mining areas impacted adversely our coal production, particularly during the first half of the year. As previously reported, the transition into the new mining areas was completed in July last year and in the second half of the

year Black Wattle achieved improved production of 0.52million metric tonnes compared to 0.30million metric tonnes in the first half of the year. The mine achieved production of 0.82million metric tonnes in 2022 compared to 1.05million metric tonnes in 2021. The increases in our reserves, plant and equipment that are evident on the balance sheet are mainly attributable to the costs of completing the development of the new mining areas which will be mined throughout 2023.

Despite the lower coal production from Black Wattle, at Sisonke Coal Processing we were able maintain the levels of coal processed. During the year the Group sold 1.29million metric tonnes compared to 1.45million metric tonnes of coal in 2021. For the year, the Group reported £95.1million in revenue (2021: £50.5million) with the higher prices achievable for our coal offsetting the lower quantity of coal sold.

Looking forward into 2023, we have already seen coal prices in the export market come back down to similar levels last seen at the beginning of 2022. With the outlook for global energy demand less certain, your management will be focussing on improving production levels

at Black Wattle and keeping operating costs low. We continue to mitigate the uncertainties in transporting coal for export on the South African rail network by maintaining diversified sales through the domestic market.

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

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Strategic Report

In the UK, we have seen rental revenue from our retail property portfolio remain stable in 2022. The Group billed revenue from our directly owned property portfolio of £1.11million (2021: £1.12million) 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. A final decision on whether to sell the land or build out the flats has yet to be taken.

As previously announced, we are pleased to welcome John Heller to the Board of Bisichi PLC as a non-executive director. The appointment took effect on the 29 March 2023. John is the Chairman and Managing Director of London & Associated Properties PLC which holds a 41.6% stake in Bisichi and a Director of Intu Debenture PLC. John's valuable experience in property investment and management, makes him an excellent addition to the Board. John's knowledge and experience will enhance the Group's strategy of growing the company's existing and future spread of business interests and investments, and will help to offset the loss of our late Chairman, Sir Michael Heller.

Finally, in light of the strong results achieved for the year and the performance of our South African operations, the Directors propose a total year-end dividend per share of 12p (2021: 6p) made up a final dividend of 4p (2021: 4p) and a special dividend of 8p (2021: 2p). The final and special dividends proposed will be payable on Friday 28 July 2023 to shareholders registered at the close of business on 7 July 2023. This takes the total dividends per share for the year to 22p (2021: 6p).

On behalf of the Board, our late Chairman, 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

26 April 2023

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