TIDMCRES
RNS Number : 3006F
Coalfield Resources PLC
19 February 2015
Coalfield Resources Plc
Annual Report and Financial Statements 2014
For RNS purposes, page numbers have been omitted.
2014 Highlights
Coalfield Resources plc is a property investment holding
company. Its only significant investment is a 24.9% stake in
Harworth Estates Property Group Limited in which it takes an active
investment management role.
CfR key points:
-- Profit from continuing operations GBP3.5m (2013: GBP3.3m) --
Net assets of GBP58.7m (2013: GBP55.2m) -- Net assets per share of
9.7p (2013: 9.1p), reflecting our underlying investment in Harworth
Estates -- Heads of Terms agreed with Pension Protection Fund (PPF)
to acquire its 75.1% shareholding in Harworth Estates (Proposed
Acquisition) -- Plan for the departure of Jeremy Hague and
appointment of Michael Richardson as Finance Director
Harworth Estates key points:
-- Net assets increased to GBP249m (2013: GBP235m) on a property
portfolio value of GBP290m (2013: GBP277m) -- Waverley site further
land sales - seventh phase released, eight acres commercial
development including delivery of 52,000 sq ft pre-sale design and
build scheme -- Logistics North (near Bolton) - first two sales
completed (720,000 sq ft) on site with potential to deliver 4
million sq ft of high-quality employment space for distribution and
manufacturing businesses -- First phase residential sales at:
Prince of Wales site, first phase released following remediation
programme (planning for 700 plots); and Rossington, two sales
conditionally exchanged (165 plots) on this 1,200 plot scheme --
Potential residential and commercial schemes including: 1,100 plots
at Coalville and 325 plots at Gawber secured; seven residential
planning applications submitted with potential to secure a further
approx. 2,000 dwellings; and two commercial applications submitted
at Daw Mill colliery and Rockingham for 650,000 sq ft -- Debt
refinanced, in February 2015, on substantially improved terms
Harworth Estates is a leading investment property development
company which operates as a standalone business managing its
portfolio of some 27,000 acres of land across approximately 200
sites located throughout the Midlands and North of England.
Harworth Estates specialises in the regeneration of former
coalfield sites and other brownfield land into employment areas,
new residential properties and low carbon energy projects.
Chairman's Statement
I am pleased to report on the second full year of Coalfield
Resources plc following the disposal in December 2012 of the former
UK Coal plc's mining and property businesses (the 2012
Restructuring). Our shareholding in Harworth Estates, a specialist
developer of brownfield investment property, is our principal
source of value. This business continued to perform well in
2014.
We have worked as an active, minority investor, alongside both
the Industry Wide Mining Pension Schemes (Pension Schemes) and the
Pension Protection Fund (PPF). Our small team provides
boardleadership, financial, legal and governance services to
Harworth Estates on behalf of all investors. In August 2014, the
majority ownership of Harworth Estates transferred from the Pension
Schemes to the PPF.
We were delighted on 18 November 2014 to announce a non-binding
heads of terms to acquire the PPF's 75.1% stake in Harworth Estates
for a total consideration of approximately GBP150m. The
consideration will be a shareholding of between 25% and 29.9% in
the Company with the balance of the consideration payable in cash
from an expected firm placing and open offer to shareholders during
the first quarter of 2015. Re-establishing Harworth Estates within
a single corporate structure will be a material step in the
realisation of value from our brownfield property portfolio.
Context and history
In December 2012, the Board of UK Coal plc implemented a solvent
restructuring which separated the mining activities from the
brownfield property interests. The deficit of the pension funds -
of the order of GBP450m - and any claim on the Company was
addressed by granting a first claim on surplus cash flow from the
de-merged mining business to the Pension Schemes and by granting
them a 75.1% shareholding in Harworth Estates to whom the Pension
Schemes also provided GBP30m of funding. Coalfield Resources was
released from its liability for the pension deficit to the schemes.
Shareholders in Coalfield Resources secured an ongoing 24.9%
shareholding in Harworth Estates.
A residual minority stake in the de-merged mining business held
by CfR, together with a shareholder oversight role, were both
relinquished on a further mining restructuring in July 2013.
Coalfield Resources now has no remaining direct exposure to the
de-merged mining business, other than an indemnity in respect of
the small Blenkinsopp pension scheme, where the Company's liability
is also guaranteed by Harworth Estates.
Harworth Estates
Harworth Estates has performed well in its second year of
trading as an independent property development company. Net assets
increased to GBP249m (2013: GBP235m) on a property portfolio value
of GBP289.6m (2013: GBP276.7m). A return of GBP14.0m was delivered
on the opening net assets of GBP235m, with GBP15.7m from increases
in valuation at year end. Operating activities generated GBP0.7m,
with a further GBP8.0m of profit recognised on its asset sales (of
GBP29.4m) in the year. A GBP6.9m tax charge was recognised as a
deferred tax liability on valuation gains.
Results of Harworth Estates (audited)
GBPm
Profit from operations 0.7
Profit on disposals 8.0
Valuation increase 15.7
------------------------- ------
Profit from ordinary
business 24.4
Net interest (3.5)
Profit before tax 20.9
Tax charge (6.9)
Profit after tax 14.0
------------------------- ------
Harworth Estates has benefitted from improved confidence in the
housing market across the North and the Midlands. Highlights for
Harworth Estates during 2014 were:
-- Waverley site further land sales - seventh phase (81 plots)
released; 8 acres commercial development including delivery of
52,000 sq ft pre-sale design and build scheme -- Logistics North
(near Bolton) - first two sales completed (720,000 sq ft) on site
with potential to deliver 4 million sq ft of high-quality
employment space for distribution and manufacturing businesses --
First phase residential sales at: Prince of Wales site, 131 plots
following remediation programme (planning for 700 plots); and
Rossington, two sales conditionally exchanged (165 plots) on this
1,200 plot scheme -- Planning progress on both residential and
commercial schemes including: 1,100 plots at Coalville and 325
plots at Gawber secured; 7 residential planning applications
submitted with potential to secure a further approx. 2,000
dwellings; and 2 applications submitted at Daw Mill and Rockingham
for 650,000 sq ft of commercial space -- Taking over the former
Harworth colliery in a state ready for redevelopment, following the
successful acquisition in 2013 of the former Daw Mill colliery --
The company completed its first acquisition of a new non-mining
site, with its purchase of the former Skelton Grange power station
site in Leeds from RWE Npower.
In last year's financial statements we reminded shareholders
that Harworth Estates, as owner of most of the mining freeholds had
also provided certain bonding lines as a necessary condition of the
2012 Restructuring. The intention was that vacant possession would
revert to Harworth Estates following closure and restoration of the
mines, providing the opportunity for future redevelopment.
Given the historical issues in the deep mining business, the
negative outlook at the start of 2014 for coal prices and ongoing
operational difficulties within the UK coal industry, Harworth
Estates provided GBP9.1 million against a loan receivable and its
pension obligation to Coalfield Resources and GBP8.9 million
against certain property assets on the basis that these pieces of
land may have unfulfilled obligations if the mining business
tenants defaulted on their leases.These were reflected in the
Company's share of profits of associates and investment in
associates in its 2013 results. No change has been made to the
level provided last year. A dedicated director was appointed by
Harworth Estates in early 2014 solely to focus on managing mining
tenant issues. Good progress has been made towards a formal
re-assessment at the end of 2015 of the remaining exposure.
Strategy
CfR believes that Harworth Estates has significant opportunities
to create further value from its land portfolio of approximately
27,000 acres and specialist brownfield remediation and development
skills. The Board believes that its strength in the regions of in
Yorkshire, the North East and the East Midlands provides scope for
further growth as these regional economies strengthen.
In addition, we see the opportunity for Harworth Estates to
acquire other brownfield sites in related industries. The first
such acquisition has been Skelton Grange, the site of a former RWE
Npower power station in Leeds. This acquisition takes Harworth
Estates into the West Yorkshire market.
The Board has been acutely aware of the discount to NAV inherent
in CfR's share price which has ranged between 32% and 43% during
the year. The Board believes that this discount has reflected both
our minority ownership and the constraints of the particular
capital and ownership structure of Harworth Estates, both of which
would be removed if the Proposed Acquisition is successful. In 2013
the Board undertook to continue to make available the listed
Company as one of a number of options for a future efficient
financial structure of Harworth Estates, to ensure liquidity and
the ability to finance growth.
The Board set as a strategic objective for 2014 the
consolidation of the shareholding structure of Harworth Estates
into one vehicle, capable of raising additional development equity,
optimising value and efficiency and creating an ongoing
sustainable, specialist property business. Progress was limited
until the transfer of the majority shareholding to the PPF was
completed. We were delighted on 18 November 2014 to announce that
heads of terms had been agreed for the acquisition of the PPF
shareholding by CfR, with a continuing substantial shareholding for
the PPF, in the enlarged group.
Board
The Board of CfR consists of three non-executives, together with
a part-time Chairman and the Finance Director. The Chairman and the
Finance Director devote most of their available time to the
Harworth Estates business. During the year Geoff Mason returned to
the business on a part time basis as Company Secretary.
Prospective Board changes
On Completion of the Proposed Acquisition to acquire the PPF's
shareholding in Harworth Estates, the Board proposes to invite Owen
Michaelson, the Chief Executive and Michael Richardson the Finance
Director of Harworth Estates to join the Board together with Martyn
Bowes as a non-executive director nominated by the Pension
Protection Fund and Anthony Donnelly, as an independent
non-executive director. Both Martyn and Tony currently serve on the
Board of Harworth Estates.
At the meeting to approve the 2014 accounts, Jeremy Hague,
Finance Director of the Company since January 2013 offered to step
down and leave the Company with effect from 30 April 2015 to
facilitate the management changes. Michael Richardson will assume
the role of Finance Director of Coalfield Resources and, on
completion of the transaction, of the enlarged Group.
I would like to place on record our thanks to Jeremy for long
service with the Company, and predecessor businesses. Jeremy has
played a significant role in helping the Company navigate the
challenges of the last two years and to bring about the Proposed
Acquisition. He will leave with the best wishes of the Board for
the next stage of his career.
Outlook
We continue to see good interest in the property sector.
Harworth Estates is a beneficiary of this through the increased
demand and improved prices for commercial and residential land.
This can be seen in both the valuation gains achieved and also the
disposals made. The Board is confident of the ability of our
underlying asset, Harworth Estates, to deliver and grow shareholder
value from the redevelopment of the former coalfields and other
former industrial sites.
Jonson Cox
Chairman
18 February 2015
Strategic Report
The Directors present the Strategic Report for the year ended 31
December 2014. Some items which form part of the Strategic Report
such as, for example, a commentary on changes to the Group over the
year and its future prospects are included in the Strategic Report
by reference to other parts of this Annual Report including the
Chairman's Statement.
Objective
The objective of the Group is to manage its investment actively
and to deliver sustainable value to both of Harworth Estates'
shareholders.
Strategy
To ensure its investment in Harworth Estates delivers the value
inherent in its portfolio and has a capital structure which enables
it to exploit growth opportunities which will deliver sustainable
value to all shareholders.
Business model
To continue to manage its single investment and to use and
maintain its main market listing for the benefit of increasing
value in its investment in Harworth Estates.
Financial Review
2014 has been the Group's second full year of operational
trading following the 2012 Restructure of UK Coal plc. During the
year the Company has continued to solely focus on its investment in
Harworth Estates and how to realise and create value for its
shareholders which in turn delivers value to the shareholders of
the Company.
Income statement
The Board are pleased to report Harworth Estates has continued
to perform well and we have recorded a profit in the year of
GBP3.5m (2013: GBP3.1m) in respect of our 24.9% shareholding in
this associate. This result includes a GBP1.7m charge in respect of
Harworth Estates recognising a tax charge of GBP6.9m (2013: GBPnil)
for deferred tax (principally in respect of revaluation gains) in
its 2014 results. Previously the business had access to sufficient
losses to cover potential deferred tax.
The only revenue reported is from recharging management time and
running costs of the business to Harworth Estates, as provided for
under the amended Shareholder Agreement between the Company,
Harworth Estates and the Pension Protection Fund. A small operating
loss is reported in the year, mainly due to certain costs incurred
which are not rechargeable under the Shareholder Agreement. The
liability, as calculated under IAS 19, for the Blenkinsopp pension
scheme has decreased this year to GBP564k (2013: GBP683k), this is
despite the significant fall in recent months of corporate bond
yields, which are now at record lows in both real and nominal terms
but offset by the fact that most assets are in bonds and gilts
which performed well compared to other investments. Our indemnity
and security mean we recognise an equal asset, as we did last year,
and as such this does not impact our results. While we have the
indemnity and security from Harworth Estates, the ongoing
contributions in 2014 were met by UK Coal Production Limited as
primary obligor under the indemnity.
We received GBP10k of financing income in the year. This was in
respect of interest received from cash balances held.
This results in a profit attributable to shareholders of GBP3.5m
for 2014 (2013: GBP1.7m).
Balance sheet
Net assets have increased to GBP58.7m (2013: GBP55.2m). This is
mainly as a result of the increase in the value of our investment
in Harworth Estates which is now GBP56.9m (2013: GBP53.4m).
Trade payables and receivables reduced during the year by GBP24k
and GBP72k respectively.
Our cash balance at the end of 2014 was GBP1.5m (2013:
GBP1.4m).
Blenkinsopp pension scheme - asset and liability
As mentioned above we have recognised an asset of GBP564k (2013:
GBP683k) to offset the liability in respect of the Blenkinsopp
pension scheme. The IAS 19 valuation of the liability has reduced
during the year to GBP564k (2013: GBP683k). The valuation
methodology and general assumptions have remained consistent with
last year. Over the last few months of 2014 corporate bond yields
fell significantly, and yields were at record lows in both real and
nominal terms, which meant that discount rates for pensions
accounting were significantly lower than 2013, which placed a
higher value on liabilities. Whilst long term inflation
expectations are slightly lower than 2013 (which reduces
liabilities) this did not offset the increase in liabilities due to
lower discount rates. While equity markets have fallen most assets
in the scheme are in bonds or gilts which performed well during the
year and offset the higher liability values. This resulted in the
decreased IAS 19 liability recorded at the balance sheet date.
Harworth Insurance Company Limited (HICL)
The Company retains a 100% shareholding in a former insurance
business, HICL. This is classified as held for sale as there is a
put and call option over its shares. During July 2014 we completed
the sale of the insurance business assets and liabilities to Royal
Sun Alliance. Royal Sun Alliance effectively took the insurance
liabilities (circa GBP16m) of HICL in return for an equivalent
value in non-cash assets to cover this liability. The assets held
for sale are GBP5.1m (2013: GBP21.7m), the liabilities held for
sale are GBP0.5m (2013: GBP17.1m) and an amount in respect of
deferred income in trade and other payables of GBP4.6m (2013:
GBP4.6m). The only balance sheet assets held by HICL (and its
subsidiaries) is a single property asset, cash balances and
investments, and some working capital. As deferred income in the
Company equals the remaining net assets of the HICL business no
profit or loss will arise on the sale when the disposal completes.
With the sale of the insurance business assets and liabilities now
completed it is highly probable that the option will be exercised
in 2015.
The put and call option over the shares of HICL remains held by
the administrators of Ocanti No.1 Limited (formerly UK Coal Mine
Holdings Ltd). CfR is in discussion with the administrators of
Ocanti No.1 Limited regarding any appropriate further consideration
due to the Group from this sale, following the events of the
further Mining Group July 2013 Restructuring.
Cash flow
The cash balance was GBP1.5m at the year-end (2013: GBP1.4m).
The balance remains in line with last year end reflecting the
recharging to Harworth Estates of costs incurred, under the
shareholder agreement between CfR and the Pension Protection
Fund.
Net asset per share
31-Dec-14 28-Dec-13
GBPm Pence GBPm Pence
per per
share share
------------------------------ ------- ------- ------- -------
Harworth Estates Group
Investment properties 289.6 - 276.7 -
Other asset and liabilities (41.0) - (42.1) -
Net assets 248.6 - 234.6 -
------------------------------ ------- ------- ------- -------
Coalfield Resources
plc
24.9% share in Harworth
Estates Group 61.9 10.2 58.4 9.6
GBP5.0 million dividend
restriction (5.0) (0.8) (5.0) (0.8)
------------------------------ ------- ------- ------- -------
Carrying value of
investment 56.9 9.4 53.4 8.8
Other assets and liabilities 1.8 0.3 1.8 0.3
Net assets 58.7 9.7 55.2 9.1
------------------------------ ------- ------- ------- -------
Number of shares in
issue 605,456,480 605,456,480
------------------------------ ---------------- ----------------
Discount to net asset value
At the start of 2014 the shares were trading at 6.0p per share
which equated to a discount to the underlying net asset value of
34%. This discount fluctuated through the year. At the point of
suspension from trading on 18 November 2014, the share price was
5.4p, a discount of 43%.
Whilst the discount to net asset value represents an indicator
of potential impairment to the investment in Harworth Estates, the
Directors are confident that the carrying amount of the investment
does not exceed its recoverable amount and therefore no impairment
is required.
Taxation
There has been no corporation tax charged in the year (2013:
GBPnil). At 31 December 2014 the Group had neither any recognised
deferred tax assets nor deferred tax liabilities (2013: GBPnil)
(excluding any recognised in its investments in associates).
Key performance indicators
The Key Performance Indicators remain in line with those stated
in last year's report and these are focused on our investment in
Harworth Estates. The Group does not control Harworth Estates but
is an active investor. While property metrics would be appropriate
for Harworth Estates, they are not appropriate for the Group whilst
it remains as a non-controlling investor.
The Key Performance Indicator for the Group is now the net asset
value of its investment in Harworth Estates. As stated in the
financial statements this is GBP56.9m as at 31 December 2014. The
net asset value is monitored by the Group on a regular basis
through its two Directors on the board of Harworth Estates. They
play an active part in the direction and strategy of Harworth
Estates and in assessing business performance.
Principal risks and uncertainties
The Group's performance, including the current or future value
of its assets, will depend on macro property market conditions that
affect its investment in Harworth Estates. The Group's two
Directors on the board of Harworth Estates monitor this investment
and ensure where possible that the business strategy of Harworth
Estates minimises these risks. The risks are principally:
Sales value risk
The sale of remediated brownfield land to house builders and
commercial developers is an important source of proceeds and the
gaining of residential and commercial planning consents is an
important source of valuation growth for Harworth Estates. Any
decline in general property market conditions including (i) the
market for residential and commercial land and/or residential and
commercial property not functioning properly; (ii) a decline in
market values; and/or (iii) a decline in the availability and/or an
increase in the cost of credit for residential and commercial
buyers, may have an adverse impact on the Harworth Estates results,
financial condition and/or prospects, which may then in turn have a
negative impact on the Group in terms of the value of its
investment in Harworth Estates. These risks are not controllable by
the Group.
Planning risk
Harworth Estates continued progress with its projects for future
delivery is dependent on the continued success of its applications
for planning permissions. Current or future planning applications
may not result in the desired outcome or may be granted on unduly
onerous terms. Failure to obtain such permissions may reduce the
speed Harworth Estates can implement its strategy and have an
adverse impact on its business, which may in turn have a negative
impact on the Group's investment in Harworth Estates.
Further, Harworth Estates development operations are contingent
upon the effective functioning of the planning system at both
regional and national level. Changes in law or policy affecting
planning, infrastructure, environment (including waste disposal)
and/or sustainability issues could adversely affect the timing or
costs associated with development opportunities. This could lead to
reduction in value or delays in delivering project values with an
adverse effect on Harworth Estates which may in turn have a
negative impact on the Group's investment in Harworth Estates.
Property valuation movements and liquidity
Properties, including those in which Harworth Estates has
invested, or may invest in the future, can be relatively illiquid
investments. This lack of liquidity may affect Harworth Estates
ability to realise its valuation gains, vary its portfolio or
dispose of, or liquidate part of its portfolio in a timely fashion
and/or at satisfactory prices. The valuation of property is subject
to uncertainty and cash generated on disposal may be different from
the value on Harworth Estates balance sheet. This may mean that the
value ascribed by Harworth Estates to its properties may not
reflect the value realised on sale. Valuations may fluctuate as a
result of factors such as changes in regulatory requirements and
applicable laws (including taxation and planning), political
conditions, the condition of financial markets, interest and
inflation fluctuations. Each of these factors may have an adverse
effect on Harworth Estates which may in turn have a negative impact
on the Group's investment in Harworth Estates.
Minority shareholding and single investment
The Group has only a 24.9% shareholding in Harworth Estates.
While it does maintain significant influence over Harworth Estates,
currently it does not have any control over this company. The
ownership and control of the remaining 75.1% shareholding is with
the Pension Protection Fund following the transfer of this
shareholding from the Trustees of the Industry Wide Mineworkers and
Industry Wide Coal Staff Pension Schemes in August 2014.
The Shareholder Agreement between the Company and the Pension
Protection Fund contains drag along rights pursuant to which the
Company may be required, by other holders of shares in Harworth
Estates ("the Drag Sellers") who propose to transfer a controlling
interest (as defined in the shareholders' agreement) to a third
party on bona fide arm's length terms, to sell all of its shares in
Harworth Estates to such third party on the same or equivalent
terms as those agreed between the Drag Sellers and the third party
purchaser.
Under the terms of the Shareholder Agreement and the Articles of
Association of Harworth Estates, if the Pension Protection Fund or
the Company wish to transfer any of their shares in Harworth
Estates to a third party purchaser, they must first grant the other
party a right of first offer before selling such shares to a third
party purchaser. If the Pension Protection Fund subsequently seek
to transfer a controlling interest in Harworth Estates to a third
party purchaser, the Company is also granted a right to match the
highest price submitted by a third party purchaser. As referred to
in the Chairman's Statement the Company is currently proposing to
acquire the 75.1% stake in Harworth Estates it does not currently
own. Should this transaction complete this risk will no longer
apply.
If the Company does not or cannot purchase the shares
representing a controlling interest in Harworth Estates pursuant to
its right of first offer or its matching right within the required
timescale and the Pension Protection Fund subsequently sell such a
controlling interest to a third party purchaser, the Pension
Protection Fund may insist that the Company also sells its entire
shareholding to such third party purchaser on the same terms as the
drag-along provisions summarised above.
Consequently, the drag provisions may not give the Company
sufficient time to maximise the value of its Harworth Estates
shareholding for shareholders. This would fundamentally alter its
key revenue stream from both dividends and recharged expenses.
Funding of the Company's on-going running costs
The on-going running costs and employee costs are met by
Harworth Estates under an agreement entered into as part of the
2012 Restructuring and varied as part of the Mining Group July 2013
Restructuring. This agreement covers the Company's cash costs based
on current expectations until 31 December 2016. From 1 January
2017, other than for the employment costs of the executive team
which are indemnified, subject to limits, indefinitely by Harworth
Estates, the Company will have to fund its other on-going running
costs from cash reserves or from dividends from Harworth
Estates.
Treasury policy and liquidity
The Group has no borrowings and has cash balances estimated to
be sufficient to cover forecast cash requirements. Details of
financial risks in respect of credit risk and liquidity risk are
set out in the relevant note to the accompanying financial
statements.
Going concern
The Directors have prepared cash flow statements and carefully
reviewed the Group's current financial resources, both cash at bank
and forecast income receipts, and the projected expenses of the
Group for the 12 months from the date of signing these financial
statements.
The key factors and principal risk that have been considered in
this regard are:
-- Income is in respect of management services supplied to
Harworth Estates which is covered by contractual agreements,
including an indemnity to cover employment costs and loans,
repayable from future dividends from Harworth Estates, to cover
other running costs. Harworth Estates continues to trade as a going
concern and the Company has two Directors on its board who are able
to monitor this position;
-- Costs are mainly in relation to management and those costs
associated with the administration of the Group including
maintaining its Stock Exchange listing. The Company in its present
form does not expect to increase staff numbers or activities such
that the cost base would increase, it also has the flexibility to
reduce the cost base should this be necessary;
-- The Group has a liability for the Blenkinsopp pension scheme;
current contribution rates are around GBP0.2m per annum. This
liability is currently paid by UK Coal Production Limited but the
Group also has a charge against certain assets owned by Harworth
Estates and an indemnity from Harworth Estates which would cover
this liability should UK Coal Production Limited cease to pay this
contribution; and
-- The current cash balance of the Company in relation to its
expected outgoings over the next 12 months.
On the basis of this review, including the key factors and
principal risks, the Directors are satisfied that the Group's
resources are adequate to continue in business for the foreseeable
future, and that, accordingly, it is appropriate to prepare the
Group's financial statements on a going concern basis.
Environmental and social issues
The Group manages a single investment in Harworth Estates. It
has only three employees and three non-executive Directors and no
operational business. The Group is run out of a leased serviced
office in Sheffield. As a consequence, it has no direct impact on
the environment or on the communities in which it carries on its
activities. As the Group only holds a minority stake in a single
investment, it does not have an investment policy which includes
socially responsible investment.
Directors and Key Staff
There have been no changes in Directors during the year or up to
the date of signing the financial statements.
Jonson Cox
Jonson was appointed as Chairman with effect from 15 November
2010. He was formerly Group Chief Executive of Anglian Water Group
from January 2004 until March 2010. For the same period he was
Chairman of Anglian Water Services Limited and Morrison plc. He was
a non-executive Director of Wincanton plc until May 2014. In
November 2012 he was appointed as non-executive Chairman of the
Water Services Regulation Authority (Ofwat).
Peter Hickson
Peter is the Senior Independent Director and was appointed as a
non-executive Director and Chairman of the Remuneration Committee
with effect from 1 July 2011. He is currently Chairman of
Communisis plc and Chairman of Chemring Group plc. He was Chairman
of Anglian Water Group from 2003 to 2009, and served as Finance
Director of Powergen plc between 1996 and 2002. He was a
non-executive Director of Kazakhmys plc from 2009 to 2011, Scottish
Power plc from 2006 to 2007, Marconi Corporation plc from 2004 to
2007 and RAC plc from 1994 to 2002. He was also Senior Independent
Director of London & Continental Railways Ltd between 2007 and
2011. He is a trustee and Board member of Orbis Charitable Trust,
the international sight saving charity, and a Fellow of the
Institute of Chartered Accountants.
Lisa Clement
Lisa is a Chartered Accountant and was appointed as a
non-executive Director and Chair of the Audit Committee with effect
from 15 December 2011. She was formerly Chief Financial Officer of
Sea Containers Limited, Managing Director of Capita Learning and
Development and has held senior divisional roles at Cendant Inc.
and BPP Holdings Plc. Lisa is a Director of Everything But The Cow
Limited.
Steven Underwood
Steven is Chief Executive of the Peel Group of companies, and
was appointed to the Board as a non-executive Director with effect
from 1 August 2010. He is also currently a non-executive Director
of Pinewood Shepperton PLC, and an alternate Director of Intu plc
(formerly Capital Shopping Centres Group plc).
Jeremy Hague
Jeremy is a Chartered Management Accountant and was appointed as
the Finance Director with effect from 1 January 2013 following the
2012 Restructuring. Jeremy joined the finance function of RJB
Mining plc, a predecessor of UK Coal and Coalfield Resources, in
May 1994 and has served in various capacities, most recently as the
Finance Director of the Harworth Estates business where he
continues to provide close support to that business as part of his
current role. Jeremy is a Director of Cloud Accountancy
Limited.
Geoff Mason
Geoff is Company Secretary and re-joined the Group in June 2014
following the departure of Theresa Casey. He had initially joined
the former group in July 2012 as part of the restructuring team,
and left following the further restructuring of the mining business
in 2013. Geoff Mason has been a Fellow of the Institute of
Chartered Secretaries since 1986 and previously has been Company
Secretary of Sema Group plc and Jarvis plc. Geoff is a Director of
Scratching Cat Limited which supplies his and other staff services
to the Company and third parties, providing consultancy and company
secretarial services. Scratching Cat Limited has other clients
which currently take the remainder of Geoff's time.
Currently, the Board comprises the Chairman, four Directors and
supported by the Company Secretary, five of whom are male and one
female. All Directors stand for re-election on a three year
rotation. The Board is committed to appointing the most suitable
candidates based on their knowledge, expertise and experience and
regardless of gender or other measures of diversity. It does not
have any set targets on diversity to report against.
The Finance Director has a service contract which may be
terminated by the Company on not more than six months' notice.
The Chairman has a service contract which provides for twelve
months' notice by the Company. The appointment of Peter Hickson, is
subject to six months' notice. For the other two non-executive
Directors the notice period is three months. There are no Directors
on fixed term contracts. There are no contractual clauses that give
any of the Directors an entitlement to compensation exceeding their
due payment in lieu of notice.
The Company has one further employee, our executive assistant,
Laura Heath.
It is the Group's policy to employ the highest calibre of
management and staff and encourage the highest standards of
personal integrity. Recruitment procedures are designed to identify
and reward high calibre individuals.
Ethical policy
The Group is committed to working with its employees, customers
and suppliers to promote responsible working and trading
practices.
Future prospects
The outlook for the Group is described in the Chairman's
Statement.
Additional information
Additional information on the Group as well as copies of
corporate documents and information on Board committees can be
found on its website www.coalfieldresources.com. Additional
information on Harworth Estates, can be found on their website
www.harworthestates.co.uk.
By order of the Board
Geoff Mason
Company Secretary
18 February 2015
Governance reports
Introduction
I am pleased to set out the Company's reporting on corporate
governance for the year. The governance reports include the
Corporate Governance Report, the Remuneration Report, the Audit
Committee Report and the Directors' Report. These reports explain
the governance policies followed by the Company and their
importance in relation to shareholders.
While the Company remains a standard listed company on the
London Stock Exchange, it complies with the Corporate Governance
Code save as disclosed in Corporate Governance report.
The Board is committed to ensuring it demonstrates high ethical
standards and maintains high standards of corporate governance to
deliver the future success of the Company over time.
The composition of the Board is an important matter and requires
that we maintain a balance of skills and experience to facilitate
the objectives of the Company. All Directors have both knowledge of
the Company and the environment, past and present, in which it
operates. All Directors are subject to re-election by shareholders
at intervals of no more than three years.
Jonson Cox
Chairman
18 February 2015
Corporate Governance Statement
The Company recognises the importance of, and is committed to,
high standards of Corporate Governance and the following sections
explain how both the Company and the Group has applied the main and
supporting principles set out in the UK Corporate Governance Code
("Code"), issued by the Financial Reporting Council in September
2012, a copy of which is publicly available at
www.frc.org.uk/corporate/ukcgcode.cfm. The Board confirms that the
Group has complied with the provisions set out in the Code
throughout the year ended 31 December 2014, except for the
following matters:
-- There is no Chief Executive as, being a holding company with
a single material investment, there is no need for a CEO role. Day
to day direction of the Company's business was undertaken by the
Chairman during the year.
-- The Audit Committee comprises of one independent
non-executive Director and one non-independent non-executive
Director.
The Board
The Company is headed by a Board of Directors, now made up of
the Chairman, Finance Director and three non-executive Directors,
two of whom are determined by the Board to be independent. The
Board recognises that Steven Underwood, who is a Director and
representative of Peel Holdings, which is the major shareholder in
the Company, is not independent. It is considered that his skills
and experience are relevant to the business and he contributes to
the realisation of the Group's strategy. Given the size and
complexity of the Company, the Board deems that the current balance
of independent and non-independent Board members is appropriate.
This will be kept under review.
The Company's principal focus is as an active investor in
Harworth Estates, which includes the provision of company
secretarial and governance support to the board and business of
Harworth Estates. The Board has determined that, at this time, no
Chief Executive Officer is required by the Company. This decision
will be kept under review.
The Chairman has overall leadership of the Company, with
responsibility for ensuring the development and implementation of
the Board's strategies and policies. He is also responsible for the
running of the Board including, but not limited to, ensuring that a
fixed schedule of matters is exclusively retained for the Board's
review and approval, and that a framework exists to allow the clear
and timely dissemination of relevant information to all Directors
for such review to occur. The Senior Independent Director is Peter
Hickson.
The Board of the Company is responsible for setting the Group's
objectives and policies and for the stewardship of the Group's
resources. The Board is responsible to the shareholders for the
overall management of the Company and its 24.9% investment in
Harworth Estates.
The Board considers that its non-executive Directors bring
judgement, knowledge and experience to the Board's deliberations.
They have no financial or contractual interests in the Group, other
than interests in ordinary shares as disclosed in the Directors'
interests in ordinary shares section of the Remuneration Report.
Non-executive Directors are offered the opportunity to attend
meetings with major shareholders and would attend them if requested
by major shareholders. All Directors have access to the advice and
services of the Company Secretary, who is responsible to the Board
for ensuring that Board procedures are complied with. The
appointment and removal of the Company Secretary are matters for
the Board as a whole. The Board has established a procedure under
which any Director, wishing to do so in furtherance of his/her
duties, may take independent advice at the Company's expense.
The Company maintains an appropriate level of directors' and
officers' insurance in respect of legal action against the
Directors. The interests of the Directors in the shares of the
Company are shown in the Directors' interests in Ordinary Shares
section of the Remuneration Report.
The Chairman and the Finance Director have service contracts,
which may be terminated by the Company on not more than twelve
months' notice; for non-executive Directors the notice period is
three months with the exception of Peter Hickson, Senior
Independent Director, whose appointment is subject to six months'
notice. There are no Directors on fixed term contracts. There are
no contractual clauses that give any of the Directors an
entitlement to compensation exceeding their due payment in lieu of
notice.
In accordance with the Articles of Association of the Company,
the appointment of non-executive Directors and any subsequent
re-appointment is subject to election or re-election by
shareholders at the Annual General Meeting.
Board performance
Performance evaluation
A meeting of the non-executive Directors, chaired by the Senior
Independent Director (without the Chairman), takes place at least
annually, to appraise the Chairman's performance.
The performance of the Board and its committees is considered
and reviewed by the Board throughout the financial year with
matters requiring attention identified and addressed. The Chairman
holds responsibility for the appraisal of the performance of the
non-executive Directors together with responsibility to conduct a
performance evaluation of executive Directors and key staff of the
Company. The performance review undertaken by the Board will in
future consider the diversity of the Board membership, recognising
the relative size of the Company and the Board and in particular
the different experience and approach brought to the Board by its
members.
Directors' development
All Directors receive an induction on joining the Company and
access to further training is made available. The Company provides
the necessary internal and external resources to enable Directors
to develop and update their knowledge and capabilities.
Committees of the Board
The Group's governance structure ensures that all decisions are
made by the most appropriate people, in such a way that the
decision making process itself does not unnecessarily delay
progress.
The Board delegated specific responsibilities to the Nomination,
Remuneration and Audit Committees, as described below. Each
committee has terms of reference that the whole Board has approved.
Terms of reference reflect the current structure and nature of the
Group and its activities. The current terms of reference for the
Nomination, Remuneration and Audit Committees can be found on the
Company's website and are summarised below. Board and committee
papers are circulated in advance of each meeting so that all
Directors are fully briefed. Papers are supplemented by reports and
presentations to ensure that Board members are supplied in a timely
manner with the information they need.
Nomination Committee
The Nomination Committee leads the process for Board
appointments by making recommendations to the Board about filling
Board vacancies and appointing additional persons to the Board. The
Committee also considers and makes recommendations to the Board on
its composition, balance and membership and on the re-appointment
by shareholders of any Director under the retirement by rotation
provisions in the Company's Articles of Association. The
Committee's members are the Chairman and the independent
non-executive Directors (currently Peter Hickson and Lisa Clement).
Although the Chairman is also Chairman of the Committee, he will
not chair the Committee when it deals with the appointment of a
successor to the chairmanship. The Nomination Committee evaluates
the balance of skills, knowledge and experience on the Board and,
in the light of this evaluation, prepares a description of the
roles and capabilities required for a particular appointment. The
Nomination Committee considers succession planning for appointments
to the Board and to senior management positions so as to maintain
an appropriate balance of skills and experience both on the Board
and in the Company.
Remuneration Committee
The members of the Remuneration Committee are Peter Hickson
(Chairman) and Lisa Clement. The terms of reference of the
Remuneration Committee provide for it to determine and agree with
the Board a policy for the remuneration of the Company's executive
Directors and key managers. The remuneration of non-executive
Directors is a matter for the Chairman and the Finance Director. No
Director or manager may be involved in any decisions as to their
own remuneration.
Audit Committee
Lisa Clement chairs the Audit Committee. Steven Underwood, a
non-independent Director, is a member of the Audit Committee. Other
individuals such as the Chairman of the Board, the Finance Director
and other Directors are invited to attend committee meetings as and
when appropriate and necessary. The terms of reference of the Audit
Committee include consideration of matters relating to the
appointment of the Company's auditors and the independence of the
auditors, reviewing the integrity of the Company's annual and
interim reports, preliminary results announcements and any other
formal announcements relating to its financial performance. The
Committee also reviews the effectiveness of the Company's system of
internal control and compliance procedures. Further information on
the Audit Committee is given in the Report of the Audit Committee
which forms part of this report.
Attendance at Board meetings
Attendance by individual Directors at Board meetings (including
those convened and held as conference calls) and at Committees
during 2014 is shown in the table below. Attendance by
non-committee members at Committee meetings is not included.
Board Audit Remuneration Nomination
Possible Actual Possible Actual Possible Actual Possible Actual
Jonson Cox 10 10 n/a n/a n/a n/a 1 1
Lisa Clement 10 10 5 5 2 2 1 1
Peter Hickson 10 10 n/a n/a 2 2 1 1
Steven Underwood 10 10 5 5 n/a n/a n/a n/a
Jeremy Hague 10 10 n/a n/a n/a n/a n/a n/a
Internal controls
Review of processes and controls are regularly undertaken by the
management team. The Board reviewed the operation and effectiveness
of the system of internal controls during the year and assesses and
manages these key risks on an on-going basis. A key element of the
system of controls adopted by the Board is the employment of
third-parties to provide services to the Company, and the
establishment of clearly defined responsibilities and reporting
procedures between the Company and those third-parties.
These controls are supplemented by on-going dialogue between the
Board and the directors of Harworth Estates for monitoring risks
with its investment.
The principal controls of the Company are:
Cash management
Treasury actions of the Company are limited and controlled
jointly by the Finance Director, Chairman and Company Secretary who
are responsible for placing deposits, for arranging borrowings and
for making payments.
Insurance risk
The Company holds insurance cover for all employer liability and
public liability claims.
Disclosure and transparency rules
The Company voluntarily applies the UK Corporate Governance Code
and therefore prepares a Corporate Governance Report. Other
information required to be disclosed by the Disclosure and
Transparency Rules of the Financial Conduct Authority is included
in the Directors' Report and Remuneration Report.
Communication with shareholders
The Group maintains on-going dialogue with major shareholders
through regular presentations and meetings to outline the Company's
performance and objectives and also offers them the opportunity to
meet non-executive Directors. The Senior Independent Director is
available to all shareholders and the Chairman, Finance Director
and Company Secretary make themselves available as and when
required to address shareholder queries. Copies of shareholder
presentations and communications are available on the Company's
website.
Annual general meeting
The Board encourages shareholders to exercise their right to
vote at the Annual General Meeting. The notice calling the meeting
and related papers are sent to shareholders at least 20 working
days before the meeting and separate resolutions are proposed on
each substantially separate issue.
All shareholders are encouraged to attend and participate
through a question and answer session and individual Directors or,
where appropriate, the Chairman of the relevant committee, respond
to those questions directly. Shareholders have the opportunity to
talk informally to the Directors before and after the formal
proceedings. In the event that a significant percentage of
shareholders vote against any resolution at a general meeting of
the Company, the Chairman, Senior Independent Director and Company
Secretary will seek to engage with any such shareholders with a
view to addressing their concerns.
Proxy voting announcement
Rather than reading out proxy voting figures at general
meetings, printed summaries of all proxy voting on all resolutions
will be made available at the meeting and will also be posted on
the Company's website after the meeting.
Remuneration Report
*Denotes auditable element of the Remuneration Report
Introduction
On behalf of the Board and the Remuneration Committee, I am
pleased to present the Remuneration Report for the Company for the
year ended 31 December 2014. This report comprises (i) the
Directors' Remuneration Policy; and (ii) the Annual Report on
Remuneration. Together, they provide information which evidences
the link between the Company's strategy and performance and
remuneration. The reports have been prepared in accordance with the
Enterprise and Regulatory Reform Act 2013, the relevant
requirements of the Listing Rules and, except where otherwise
clearly explained, has complied with the provisions set out in The
UK Corporate Governance Code relating to remuneration matters.
The Remuneration Policy remains as approved at the 2014 Annual
General Meeting and as such only the Remuneration Report will be
submitted to shareholders for their approval at the Annual General
Meeting on 21 May 2015. The Remuneration Policy is also available
to view on the Company's website.
Remuneration Committee
Responsibility for reviewing Group remuneration strategy and
policy, recommending any changes and approving individual
remuneration packages for senior executives, the Chairman and the
Finance Director rests with the Remuneration Committee (the
"Committee"). The Committee consists of independent non-executive
Directors and meets on at least two occasions each year.
The members of the Committee throughout the year were and
continue to be:
-- Peter Hickson - Committee Chairman; and
-- Lisa Clement
The Committee may seek any information it requires from any
employee or Director, and all employees and Directors are required
to co-operate with any request made by the Committee. Jeremy Hague
(Finance Director), Geoff Mason (Company Secretary since June 2014)
and Theresa Casey (Company Secretary until June 2014), provided
information to the Committee during the year.
No Director participates in discussions relating to their own
remuneration. The Committee liaises with the Audit Committee where
appropriate. This includes confirmation of the Group's financial
performance to assist in determining whether performance targets
and measures have been achieved and to ensure that the structure
for incentive arrangements are appropriate from a risk
perspective.
The Committee has terms of reference, approved by the Board,
which are available from the Company Secretary and via the Group's
website.
During the year the Committee met on 2 occasions; Peter Hickson
and Lisa Clement attended all meetings.
Remuneration policy
The policy for the year under review as well as the current year
for the remuneration and incentivisation of the Chairman and the
Finance Director is as follows:
-- To ensure that individual rewards and incentives are aligned
with the performance of the Company and interests of
shareholders;
-- To ensure that performance-related elements of remuneration
constitute an appropriate proportion of an executive's remuneration
package; and
-- To maintain a competitive remuneration package which enables
the Company to attract, retain and motivate high calibre
executives.
The Committee reviews executive remuneration and implements
incentive arrangements to support the objective of rewarding those
individuals who deliver shareholder value. In developing these
arrangements the Committee and its advisers consider current best
and market practice. As noted in the Chairman's statement, the
Company has announced that it has agreed heads of terms with the
Pension Protection Fund for the acquisition of the remaining 75.1%
of Harworth Estates it does not already own. If this transaction
completes it is planned that new Directors will be appointed and
the terms and conditions of existing Directors will also be
reviewed with the inclusion of arrangements to enable the Company
to recover or withhold elements of variable pay should it become
appropriate to do so. These arrangements will be set out in the
Prospectus in due course.
A review of vesting and holding periods for future awards of
deferred remuneration will also be undertaken.
Details of the Chairman's remuneration are set out below. The
Finance Director's remuneration comprises a base salary, an annual
performance bonus, participation in a long term incentive plan or
arrangement, a car allowance plus fuel, pension contributions to a
defined contribution pension scheme or a pension allowance, life
assurance and health insurance. Bonus payments and benefits in kind
are not pensionable. An appropriate balance is maintained between
fixed remuneration and performance-related remuneration.
The following paragraphs explain the operation of the main
constituents of the remuneration policy.
Recruitment
In determining remuneration on recruitment, regard is had to the
level of fixed pay required to attract individuals of appropriate
calibre, using external comparators for roles of equivalent size
and complexity. Variable elements, such as annual bonus and long
term incentives are set with regard to the expected levels of
performance of the individual and their ability to contribute to
the overall performance of the Company. Contractual terms are
designed to attract, retain and motivate individuals of the quality
required to manage the Company.
Base salaries
Executive salaries are normally reviewed by the Remuneration
Committee on an annual basis. In determining salary levels for
executives the Committee has, principally, had regard to external
comparators for roles of equivalent size and complexity. Following
a review of executive salary levels, an increase of 2.5% was made
during the year ended 31 December 2014 to Jeremy Hague.
Annual bonus for Finance Director
The Finance Director participates in an annual bonus
arrangement. The Committee sets both the performance measures and
targets based on the Company's business priorities. These includes
a personal performance element (25% of total) and a financial
performance metric linked to the financial performance of the
Company's investment in Harworth Estates (75% of total). These
targets ensure that incentives are payable only for Company and
individual performance.
Long Term Incentive Plan ('LTIP')
The Company historically had a number of LTIP schemes with
potential to award shares in the Company to Directors and senior
managers. All awards under these schemes have now been granted and
made or lapsed. No awards were granted in the year.
Harworth Estates LTIP
As a shareholder, the Company was actively engaged in the
specification and approval of a bespoke LTIP plan for the CEO, and
senior management of Harworth Estates. The plan was designed by
remuneration consultants Kepler. As Harworth Estates is unlisted,
the plan was based on total absolute shareholder return over five
years, starting from January 2013, immediately following the
separation of Harworth Estates into a standalone company. Awards
were finalised early in 2014 following the preparation and approval
of a five year plan in 2013 and were set at a level corresponding
to the appropriate level compared to public listed benchmarks.
The composite metrics for performance are the growth in net
asset value, dividends paid and the reduction in net debt level.
Overall, the 'target' level of vesting will be met by an average
absolute shareholder return of approx. 12% per annum compound and
the 'stretch' level by a 16% per annum compound average return over
five years. There are provisions for a smaller entry level award
from 10% shareholder return and provisions for continuing awards
above 16%. This LTIP was adopted by the remuneration committee of
Harworth Estates however, the Committee believe that this LTIP is
designed to focus the remuneration policy of Harworth Estates
towards rewarding the long term success of the Company.
As the principal role of CfR's team is to drive value in
Harworth Estates, and as Jeremy Hague also fulfilled the finance
director role at Harworth Estates for part of the last two years,
the Board agreed that the provision of an LTIP opportunity for him
would be met by membership of the Harworth Estates LTIP. As such he
was awarded 75 units in the scheme. At a target level of
performance over the five years each unit would be worth GBP2,600,
and at 'stretch', each unit would be worth GBP5,000.
Jonson Cox does not benefit under this scheme, nor do any of the
non-executive Directors of the Company, or the non-executives
directors of Harworth Estates.
Shareholding guideline
A shareholding guideline applies for Directors and other
selected senior executives who have been awarded shares under any
CfR performance plan rewarded in CfR shares. Individuals are
required to retain no less than 50% of the net of tax value of the
shares until a holding equivalent to 100% of salary is attained
(50% of salary for other senior executives).
Other terms and conditions of service
Service contracts, including arrangements for early termination,
are considered carefully by the Committee. The Committee considers
that a notice period of no more than one year is appropriate. It is
the Company's policy not to enter into service contracts that
provide written notice of more than one year.
In respect of Jonson Cox, employment will continue until
terminated by the Company giving not less than twelve months'
written notice, or by Jonson Cox giving the Company not less than
six months' written notice. Jeremy Hague's contract shall continue
until either the individual or the Company terminates it by not
less than 6 months' notice in writing.
When calculating termination payments, the Committee takes into
account a variety of factors including individual and Group
performance, the obligation of the Director to mitigate his own
loss (for example by gaining new employment) and the best interests
of the Group. Should the Company terminate the contract of an
executive Director, compensation for loss of office is limited to
the amounts payable under these notice periods. There are no
special provisions for payments on a change of control. No
recruitment was undertaken during the year.
Chairman
Jonson Cox, Chairman, was recruited in November 2010 on a base
salary of GBP350,000 per annum on the basis he provided three days
per week to the then UK Coal plc. Following the December 2012
Restructuring, his time commitment was reduced by agreement to 2
days per week and his fee reduced to GBP250,000 per annum. As part
of his role, he also chairs the board of Harworth Estates and
provides active support and challenge to the Chief Executive and
executive directors at Harworth Estates. He did not participate in
any bonus or incentive plan in 2014.
Non-executive Directors
The Board aims to recruit non-executive Directors of a high
calibre with broad commercial and other relevant experience.
Non-executive Directors are appointed for an initial three year
period. The terms of their engagement are set out in a letter of
appointment. The initial appointment and any subsequent
re-appointment is subject to election or re-election by
shareholders at the Annual General Meeting. The letters of
appointment contain three months' notice periods, with the
exception of Peter Hickson, Senior Independent Director, whose
appointment is subject to six months' notice. Compensation for loss
of office is limited to the amounts payable under these notice
periods. The Board considers these notice periods appropriate given
the skills and expertise of the Directors.
Peter Hickson, Senior Independent Director, is paid a fee of
GBP65,000 per annum; this includes his responsibilities as Chairman
of the Remuneration Committee. Other non-executive Directors are
paid a basic fee of GBP40,000 per annum with an additional fee of
GBP6,000 per annum payable for chairing a committee.
Non-executive Directors are not eligible to participate in any
of the Company's share schemes, incentive schemes or pension
schemes.
Other employees
The Company has one employee who is not a Director. Pay is
commensurate with the role performed by the individual.
Application of remuneration policy
Individuals are recruited on a salary at the relevant market
rate for the position being filled, with reference to external
comparators and the demands, required qualifications and experience
of the role. Bonus levels are aligned with the strategy of the
Company to reward individual performance and Company
performance.
Shareholder views
At the 2014 Annual General Meeting held on the 27(th) May 2014
two resolutions were presented in respect of the Company's
remuneration report and policy. The votes cast are shown in the
table below:
as % as %
Votes of votes Votes of votes Votes
for cast against cast withheld
------------------------- ------------ ---------- ---------- ---------- ----------
Directors' Remuneration
Report 346,621,323 99.80% 703,026 0.20% 141,235
Directors' remuneration
policy 337,188,913 98.79% 4,128,753 1.21% 6,147,918
------------------------- ------------ ---------- ---------- ---------- ----------
Future policy table
In addition to the general policies described in this report
under the Remuneration Policy section, which applies to both
current and future policy, this table provides more specific
details.
Type of remuneration Detail of policy
--------------------- -------------------------------------------------------
Salary/fees Salaries are normally reviewed by the Remuneration
Committee on an annual basis. In determining
salary levels for executives the Committee has,
principally, had regard to external comparators
for roles of equivalent size and complexity.
Following a review of executive salary levels
a 2.5% increase was proposed for the Finance
Director for 2014, effective from 1 January.
Normally salary increases are only made annually
and are effective from 1 January. In addition
to a base fee non-executives receive an additional
fee of GBP6,000 per annum for chairing a committee.
--------------------- -------------------------------------------------------
Allowances Allowances are paid in lieu of providing a company
car. These payments reflect amounts offered
for equivalent comparator roles. These payments
are not pensionable.
--------------------- -------------------------------------------------------
Bonus Annual bonus levels and targets are set by the
Committee and reflect both personal and corporate
targets. The only Director who receives a bonus
is the Finance Director whose bonus level is
up to 50% of basic salary. Bonus is normally
paid in March of the following year. The Finance
Director participates in a long term bonus plan
(in addition to the annual bonus discussed above)
based on achieving increases in the net asset
value of the Company's investment in Harworth
Estates over a five year period ending December
2017. The scheme has a minimum increase target
of GBP140m at which level a payment of GBP45,000
would be payable. Below this level no bonus
would be payable. The target increase in value
is GBP169m and which level a payment of GBP195,000
would be payable. For performance above this
value there is a stretch increase of GBP250m
at which level a payment of GBP375,000 would
be payable. This long term bonus is not pensionable.
Early redemption in part may be taken (after
3 years) at a discounted value based on performance
at that date and the scheme also includes a
good leaver provision.
--------------------- -------------------------------------------------------
Benefits The Chairman and Finance Director receive payments
for car fuel used, life assurance and health
insurance.
--------------------- -------------------------------------------------------
Compensation The compensation payment policy remains as detailed
in this report under the "Other Terms and Conditions
of Service" section.
--------------------- -------------------------------------------------------
Pension Amounts in respect of pension contributions
are made either to a defined contribution plan
or paid as a cash supplement. Future pension
contribution levels are expected to be in line
with those currently paid.
--------------------- -------------------------------------------------------
Expenses Expenses are not classed as remuneration but
expenses for travel or other reasonable out-of-pocket
expenses incurred by the Directors in the performance
of their duties are reimbursed upon submission
of appropriate receipts.
--------------------- -------------------------------------------------------
Annual report on remuneration
Directors' service contracts and letters of appointment
Contract Unexpired Term Notice
Date (as at Dec 2014) Period
------------------------ --------- ------------------ ---------
Chairman
Jonson Cox 15.11.10 Rolling 1 year 1 year
Executive Director
Jeremy Hague 02.01.13 N/A 6 months
Non-Executive Directors
Peter Hickson 30.06.11 - 6 months
Lisa Clement 29.11.11 - 3 months
Steven Underwood 27.07.10 29 months 3 months
There are no liabilities in respect of Directors' service
contracts that require disclosure. Copies of Directors' service
contracts and agreements are available to shareholders for
inspection at the Company's registered office by application to the
Company Secretary.
Directors' emoluments for the year ended December 2014*
Salary Annual Benefits Total Total
/ Fees Allowances bonus in kind Pension 2014 2013
(1) (2)
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------------- -------- ----------- ------- --------- -------- ------- -------
Chairman
Jonson Cox 250 16 - 4 75 345 893 *
Executive Directors
Jeremy Hague 118 10 40 4 24 196 197
Non-Executive
Directors
Peter Hickson 65 - - - 65 65
Lisa Clement 46 - - - 46 46
Steven Underwood
(3) 40 - - - 40 40
--------------------- -------- ----------- ------- --------- -------- ------- -------
* 2013 includes GBP480,000 charged in 2013 accounts in respect
of historic UK Coal LTIP scheme
1. Jeremy Hague and Jonson Cox receive car allowances of
GBP10,000 and GBP16,000 per annum respectively, which is included
in Allowances above.
2. Benefits in kind comprise car fuel benefits, life assurance and health insurance.
3. Fees payable for the services provided by Steven Underwood
are paid to Peel Management Limited.
The emoluments of the highest paid Director is given in table
above. The Company made no direct payment to a money purchase
scheme and no share options were awarded or exercised during the
year in respect of the highest paid Director.
Chairman's remuneration for previous five years
There is currently no Group Chief Executive but the role of
Chairman is undertaken by Jonson Cox. The Chairman was appointed in
November 2010 with a brief to lead UK Coal plc through a
significant restructuring. He has had overall leadership of the
Board and Company of CfR plc since his appointment in November
2010. In respect of Harworth Estates, he leads the board and
provides guidance and challenge to the CEO and executive directors,
but does not have leadership of that company.
Dec 2014 Dec 2013* Dec 2012** Dec 2011 Dec 2010
GBP000 GBP000 GBP000 GBP000 GBP000
----------------------- --------- ---------- ----------- --------- ---------
Chairman 345 893 780 493 54
Group Chief Executive - - - - 905
----------------------- --------- ---------- ----------- --------- ---------
* Dec 2013 includes GBP480,000 charged
in 2013 accounts in respect of historic
UK Coal LTIP scheme
** includes value of supplementary
payments due to the restructuring
of UK Coal plc
Pension contributions*
The Chairman and Finance Director are entitled to receive an
annual pension contribution at the rate of 30% and 20% respectively
of base salary. Pension contributions on behalf of Directors were
as follows:
Pension Pension
Contributions Contributions
2014 2013
--------------
GBP000 GBP000
-------------- --------------- ---------------
Jonson Cox 75 81
Jeremy Hague 24 23
Total 99 104
--------------- --------------- ---------------
Illustrative example of application of remuneration policy
Chairman Executive Director
Jonson Cox Jeremy Hague
Total Total
pay pay
(exc (exc
bonus bonus
and and
LTIP) Bonus LTIP* Total LTIP) Bonus LTIP* Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------- ------- ------- ------- ------- ----------- -------- ------- ------- -------
Minimum 345 - - 345 Minimum 156 - - 156
In-line 345 - - 345 In-line 156 35 39 230
Maximum 345 - - 345 Maximum 156 59 75 290
* while LTIP payment is expected to be a lump sum paid post
2017 year end, the above table assumes an annualised amount.
Compensation payments
Theresa Casey left the Company in June 2014 and received a
payment of GBP40,000 in lieu of her six month notice period, with
the payments phased over a 4 month period.
Coalfield Resources - Total Shareholder Return Over Five Year
Period
For RNS purposes, the graph showing Total Shareholder Return
Over Five Year Period has been omitted.
The Company's Total Shareholder Return performance over the past
5 years is shown in the chart above. Performance is shown against
the FTSE Small Cap (ex-Investment Trust) index which is the most
appropriate comparator index. The chart shows the hypothetical
value of a GBP100 investment in Coalfield Resources Ordinary Shares
relative to the comparator index. The value of the hypothetical
holdings at the end of year five would be GBP11.57 and GBP189.24
respectively.
The chart includes the period prior to the 2012 Restructuring
when the Company (UK Coal plc to December 2012) owned 100% of both
a coal mining and property business. Since the 2012 Restructuring
after which the Company only owed a minority stake in Harworth
Estates, the value of the hypothetical holdings rebased to GBP100
at 10 December 2012 would be GBP97.41 and GBP144.27
respectively.
Directors' interests in ordinary shares*
The Directors' beneficial interests (including those of their
immediate family) in Ordinary Shares of the Company and its
subsidiaries at the end of the financial year were as set out
below. None of the Directors had an interest in shares of the
Company's subsidiaries during the year.
Beneficial Beneficial
interest interest
in Ordinary in Ordinary
Shares Shares
at at
Dec-14 Dec-13
No. of No. of
shares shares
------------------ ------------- -------------
Jonson Cox 7,204,050 7,204,050
Peter Hickson - -
Lisa Clement - -
Steven Underwood 62,738 62,738
Jeremy Hague 250,000 250,000
------------------ ------------- -------------
There have been no changes in Directors' interests in shares
between the end of the year and 18 February 2015.
The market value of the Company's Ordinary Shares during the
year ranged from 6.59 pence to 5.38 pence. Trading in the shares
was suspended on 18 November 2014 at 5.4 pence at the Company's
request on announcement of its proposed acquisition of the Pension
Protection Fund's holding in Harworth Estates Property Group
Limited. On 31 December 2014 the shares remained suspended from
trading.
External appointments
The Remuneration Committee recognises the importance of allowing
executive Directors to take non-executive director roles elsewhere.
Jonson Cox's contract with the Company is part-time. His other
business interests included a non-executive directorship of
Wincanton PLC (resigned May 2014) for which he received fees of
GBP18,750 in 2014.
This report has been approved by the Board for submission to
shareholders at the 2015 Annual General Meeting, and I have signed
it on behalf of the Board.
On behalf of the Board
Peter Hickson
Chairman
Remuneration Committee
18 February 2015
Report of the Audit Committee
As Chairman of the Company's Audit Committee (the "Committee"),
I am pleased to present the Committee's report to shareholders for
the year ended 31 December 2014 as required under the Companies Act
2006 and the UK Corporate Governance Code (the "Code").
The roles of the Committee
The principal roles of the Committee are to:
i. consider the appropriateness of the Group's accounting policies;
ii. to review and consider the effectiveness of the Company's
internal controls, financial controls and risk management;
iii. to review the Group's half-year and annual financial
statements before recommending them to the Board for approval;
iv. to review the auditors annual strategy report, their
independence and objectivity and agree their fees;
v. to oversee the selection process with regard to external
auditors, to consider the appointment and/or re--appointment of the
external auditors and make appropriate recommendations through the
Board to the shareholders to consider at the Annual General
Meeting; and
vi. to oversee the external audit process.
Under the Code, the Committee is now required to report on the
effectiveness of the external audit process and on any significant
issues and areas of audit risk in respect of the Group's annual
report and financial statements that were identified in the course
of the audit. Relations with the external auditors are managed
through a series of meetings and regular discussions and we ensure
a high quality audit by challenging the key areas of the external
auditors' work.
The Committee is also required to advise the Board as to whether
the Group's annual report, taken as a whole, is fair, balanced and
understandable, and provides shareholders with the information they
need to assess the Group's business model, strategy and
performance.
Composition and meetings of the Committee
The Committee members are Steven Underwood and me. The Board is
satisfied that we have recent and relevant financial experience but
recognise that Steven Underwood is not an independent non-executive
Director. The Chairman, Finance Director and the external auditors
are invited to attend meetings. The minutes of meetings of the
Committee are circulated to all Directors. Going forward the
Committee will meet at least twice a year to review the Group's
accounting and financial reporting practices, the work of external
auditors and compliance with policies, procedures and applicable
legislation.
The Committee also reviews the half year and annual financial
statements before submission to the Board. During the year under
review the Committee reviewed the scope, remit and effectiveness of
internal audit provision and the effectiveness of the Group's
internal control systems. It also reviewed "whistle-blowing"
arrangements by which employees of the Group may, in confidence,
raise concerns about possible financial or other improprieties.
Following the restructure and the consequent reduction in the size
and complexity of the Company's reporting and systems of control it
has been agreed that there is currently no need for an internal
audit or whistle-blowing arrangement within the Company. The terms
of reference of the Committee are available to shareholders on
request and are also available on the Company's website.
The external auditors
The auditors throughout 2014 have been PricewaterhouseCoopers
LLP, and fees payable are detailed below:
Audit services 2014 2013
GBP000 GBP000
Fees payable to the Company auditors for
the audit of the Parent Company and the
consolidated financial statements 30 30
Additional audit fees - 17
Fees payable to the Company auditors and
its associates for other services:
- The audit of the Company's subsidiaries
pursuant to legislation 15 40
- Audit related assurance services 54 14
- All other assurance related services - 78
- Tax advisory services 4 13
- Tax compliance services 15 17
- All other non-audit services - 127
118 336
------- -------
The Board recognises the importance of safeguarding auditor
objectivity and has taken the following steps to ensure that
auditor independence is not compromised:
-- The Committee reviews the audit appointment periodically;
-- It is Group policy that the external auditors will not, as a
general rule, provide consulting services to the Group. The
external auditors provide audit-related services such as regulatory
and statutory reporting as well as work relating to shareholder and
other circulars. In 2014 this included work in relation to the sale
of the insurance business of Harworth Insurance Company
Limited;
-- The external auditors may undertake due diligence reviews and
provide assistance on tax matters given their knowledge of the
Group's businesses. Such provision will however, be assessed on a
case by case basis so that the best placed adviser is retained. The
Committee monitors the application of the policy in this regard and
keeps the policy under review;
-- The Committee reviews on a regular basis all fees paid for
audit, and all other fees, with a view to assessing reasonableness
of fees, value of delivery, and any independent issues that may
have arisen or may potentially arise in the future; and
-- The independent auditors' report to the Directors and the
Committee confirming their independence in accordance with Auditing
Standards.
Significant issues considered in respect of the annual report
and financial statements
-- The carrying value of the Company's investment in Harworth
Estates. The significant judgements and issues within the financial
statements of Harworth Estates for the year ended 31 December 2014
have been discussed. Two Directors of the Company sit on the board
of Harworth Estates and receive regular and full updates on its
operational and financial progress. This, coupled with the comfort
taken from the full annual external valuation of Harworth Estates
property portfolio, which drives the value of the Company's
investment, gives reassurance as to the carrying value of the
investment. The Committee has also been made aware of the potential
impacts of an insolvency event in the deep mining and surface
mining businesses which currently have trading relationships with
Harworth Estates. Both of these independent mining businesses,
being UK Coal Production Limited and UKCSMRL, remain debtors of
Harworth Estates and lease a number of sites from Harworth Estates
for their operations. Harworth Estates has undertaken contingency
planning to protect and mitigate against the potential impact of a
further mining insolvency or closure. The Committee has been
informed of the nature of provision and impairments that Harworth
Estates made for this event in their 2013 balance sheet and also
discussions as to the adequacy of these as at 31 December 2014, and
having discussed these with the two Directors of the Company who
sit of the board of Harworth Estates are satisfied as to the nature
and quantum of these. The Committee has also considered the impact
of such an event on the financing of Harworth Estates and the
availability of funding to it, and again assurance from the two
Company Directors who sit on the board of Harworth Estates that
this had been properly considered in arriving at Harworth Estates'
going concern statement. Taking these factors into consideration
the potential impact is correctly reflected in the carrying value
of the Company's investment in Harworth Estates.
-- Going concern basis. This is discussed in the Strategic Report.
Conclusions in respect of annual report and financial
statements
The production and external audit of the Group's annual report
and financial statements involves a number of parties including, in
addition to the external auditor, the Finance Director, Company
Secretary, actuary and tax accountants. The Committee has reviewed
the controls which are in place to ensure the completeness and
accuracy of the Company's financial records. The Committee has also
noted the reviews that are undertaken during this process by the
various parties including the external auditor to ensure
consistency and balance in the presentation of the annual report
and financial statements.
As a result, the Committee has concluded that the annual report
for the year ended 31 December 2014, when taken as a whole, is
fair, balanced and understandable, and provides the information
necessary for shareholders to assess the Company's business model,
strategy and performance. The Committee has reported to the Board
and the Board's conclusions are set out in the Statement of
Directors' Responsibilities included in the Directors' Report which
forms part of this annual report.
Re-appointment of the external auditor
Having reviewed the services provided by the external auditor,
including any non-audit work provided to the Company, the Committee
is satisfied as to the independence of the external auditor. As
such it recommends their re-appointment at the forthcoming Annual
General Meeting. Details of non-audit fees paid to the external
auditor are as set out in this report.
Lisa Clement
Chairman
Audit Committee
18 February 2015
Directors' Report
The Directors submit their annual report together with the
audited consolidated financial statements of the Group for the year
ended 31 December 2014. The Directors serving during the year were
Jonson Cox, Lisa Clement, Jeremy Hague, Peter Hickson and Steven
Underwood. Their short biographies have been provided in the
Strategic Report.
Results and dividend
The net assets attributable to shareholders of the Group
increased to GBP58.7m over the financial year to 31 December 2014.
The Group's net asset value rose by 6% during the year. The results
for the Group are reviewed in the Chairman's Statement and the
Strategic Report and set out in the financial statements which
accompany this report.
No dividends have been received from the Group's investment
during 2014. Under Harworth Estates banking facilities, as at 31
December 2014, it is not permitted to pay dividends without the
express permission of its banks. In addition, the first GBP5m of
dividends which would otherwise be due to the Company will be paid
to the Pension Protection Fund. Cash generated from asset sales by
Harworth Estates is required under its facilities, as at 31
December 2014, to be used to make mandatory repayment of its loans,
however this term was waived in Q4 2014. Harworth Estates entered
into a new GBP65m 5 year bank facility (GBP60m revolving credit
facility and GBP5m bond facility) on 13 February 2015 with Royal
Bank of Scotland. This facility is non-amortising and allows
Harworth Estates to pay dividends, predominately, as long as
covenants are complied with. This facility will be used to repay in
full and cancel the existing Barclays and Lloyds facilities. The
new facility allows more financing flexibility to Harworth
Estates.
There was no interim dividend paid during the year (2013:
GBPnil). The Directors are not recommending the payment of a final
dividend in respect of the 2014 financial year (2013: GBPnil).
Future developments
The future development of the Company is discussed in the
Chairman's Statement.
Prospective Board Changes
As noted in the Chairman's Statement, the Company has announced
non-binding heads of terms with the Board of the Pension Protection
Fund to acquire their 75.1% stake in Harworth Estates.
On Completion of that transaction , the Board proposes that Owen
Michaelson, the Chief Executive and Michael Richardson the Finance
Director of Harworth Estates will join the Board together with
Martyn Bowes who will be a non-executive director nominated by the
Pension Protection Fund and Anthony Donnelly, as an independent
non-executive. Both are currently non-executive directors on the
board of Harworth Estates.
At the Board meeting to approve this document held on 18
February, Jeremy Hague, Finance Director of the Company since
January 2013, noting the roles to be taken in the enlarged group,
advised the meeting of his willingness to step down from the Board
and leave the Company with effect from 30 April 2015. Michael
Richardson will assume the role of Finance Director and, on
completion of the transaction, of the enlarged Group. Jeremy Hague
has a contract with six months' notice. Details of his termination
arrangements will be disclosed to the market in the normal way once
agreed.
Substantial shareholders
The Directors have been notified of the following substantial
shareholdings as at 31 December 2014:
Number % of issued
Company of shares share capital
--------------------------- ------------ ---------------
Goodweather Holdings Ltd* 196,468,940 32.45%
Invesco Perpetual 66,596,382 11.00%
Pelham Capital Management 51,753,120 8.55%
--------------------------- ------------ ---------------
* Member of Peel Holdings
Group Limited
Share capital, voting rights and transfer of shares
Details of the structure of the Group's share capital and
changes in the share capital during the year are disclosed in the
relevant note to the financial statements. The rights and
obligations attaching to the Group's Ordinary Shares are set out in
the Articles of Association, copies of which can be obtained from
Companies House in the UK or by writing to the Company Secretary.
In particular, subject to particular statutes and the Articles of
Association, shares may be issued with such rights or restrictions
as the Board may determine.
Shareholders are entitled to attend, speak and vote at general
meetings of the Company, to appoint one or more proxies and, if
they are corporations, to appoint corporate representatives. On a
show of hands at a general meeting every holder of Ordinary Shares
present in person shall have one vote and every proxy present who
has been duly appointed by a member entitled to vote on the
resolution has one vote and on a poll, every member present in
person or by proxy, shall have one vote for every Ordinary Share
held. Further details regarding voting, including deadlines for
voting, at the Annual General Meeting can be found in the notes to
the Notice of the Annual General Meeting.
No person is, unless the Board decides otherwise, entitled to
attend or vote either personally or by proxy at a general meeting
or to exercise any other shareholder rights if he or any person
with an interest in shares has been sent a notice under section 793
of the Companies Act 2006 and has failed to supply the Company with
the requisite information within the prescribed period.
Shareholders may receive a dividend and on a liquidation may
share in the assets of the Company. The Company has one class of
Ordinary Shares which carry equal voting rights and no contractual
right to receive payment.
The instrument of transfer of a certificated share may be in any
usual form or in any other form which the Board may approve.
The Board may refuse to register any instrument of transfer of a
certificated share which is not fully paid, provided that the
refusal does not prevent dealings in shares in the Company from
taking place on an open and proper basis. The Board may also refuse
to register a transfer of certificated share unless the instrument
of transfer: (i) is lodged, duly stamped (if stampable), at the
registered office of the Company or any other place decided by the
Board accompanied by the certificate for the share to which it
relates and such other evidence as the Board may reasonably require
to show the right of the transferor to make the transfer; (ii) is
in respect of only one class of shares; and (iii) is in favour of
not more than four transferees. Transfers of uncertificated shares
must be carried out using the relevant system and the Board can
refuse to register a transfer of an uncertificated share in
accordance with the regulations governing the operation of the
relevant system and with UK legislation. Restrictions may also be
imposed on certain Company employees who are required to seek
approval from the Company before dealing in shares in accordance
with the requirements of the Listing Rules of the United Kingdom
Listing Authority.
There are no other limitations on the holding of Ordinary Shares
in the Company and the Company is not aware of any agreements
between holders of securities that may result in restrictions on
the transfer of securities or on voting rights.
Details of major shareholdings are shown in the table above.
Details of employee share schemes can be found in the section
headed Long Term Incentive Plan ('LTIP') in the Remuneration
Report.
Mandatory carbon reporting
In its current state the Group has no operations and holds a
single investment. As such the Group does not have greenhouse gas
emissions to report from its operations, and it does not have
responsibility for any other emissions producing entities as
defined under the Companies Act 2006 (Strategic Report and
Directors' Reports) Regulations 2013.
Financial Risk Management
Financial risk management is disclosed in note 20 of the
financial statements.
Statement of Directors' responsibilities
The Directors are responsible for preparing the annual report,
the Directors' Remuneration Report and the financial statements in
accordance with applicable law and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
have prepared the Group and Company financial statements in
accordance with International Financial Reporting Standards (IFRSs)
as adopted by the European Union. Under company law the Directors
must not approve the financial statements unless they are satisfied
that they give a true and fair view of the state of affairs of the
Group and the Company and of the profit or loss of the Group for
that period. In preparing these financial statements, the Directors
are required to:
-- Select suitable accounting policies and then apply them consistently;
-- Make judgements and accounting estimates that are reasonable and prudent;
-- State whether applicable IFRSs as adopted by the European
Union have been followed, subject to any material departures
disclosed and explained in the financial statements; and
-- Prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and the Group and enable them to
ensure that the financial statements and the Directors'
Remuneration Report comply with the Companies Act 2006 and, as
regards the Group financial statements, Article 4 of the IAS
Regulation. They are also responsible for safeguarding the assets
of the Company and the Group and hence for taking reasonable steps
for the prevention and detection of fraud and other
irregularities.
The Directors are responsible for the maintenance and integrity
of the Company's website. Legislation in the United Kingdom
governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
Directors' confirmation statement
Each of the Directors, whose names and functions are detailed in
the Company information and advisers section, confirm that to the
best of their knowledge:
-- The Group financial statements, which have been prepared in
accordance with IFRSs as adopted by the European Union, give a true
and fair view of the assets, liabilities, financial position and
profit of the Group; and
-- The Management Report, which comprises the Chairman's
Statement, Strategic Report (including risk factors) and the
financial instruments note included in the financial statements
includes a fair review of the development and performance of the
business and position of the Company and the Group, together with
the principal risks and uncertainties that they face.
Each Director confirms that at the date of approval of this
report that so far as they are aware, there is no relevant audit
information of which the Group's auditor is unaware and that they
have taken all steps they ought to have taken as a Director in
order to make themselves aware of any relevant audit information
and to establish that the Group's auditor is aware of that
information.
Having taken advice from the Audit Committee, the Directors
consider that the annual report and financial statements taken as a
whole, is fair, balanced and understandable, and provides the
information necessary for shareholders to assess the Group's
performance, business model and strategy. The Directors have
reached these conclusions through a process which is described in
the Report of the Audit Committee.
Independent auditors
PricewaterhouseCoopers LLP has indicated its willingness to
continue in office. In accordance with Section 489 of the Companies
Act 2006, resolutions will be proposed at the forthcoming Annual
General Meeting to re-appoint PricewaterhouseCoopers LLP as
independent auditor, and to authorise the Directors to determine
the auditor's remuneration for the ensuing year.
Financial statements
These financial statements have been prepared under
International Financial Reporting Standards as adopted by the
European Union for groups of companies.
Annual general meeting
The Annual general Meeting of the Company will be held at 1.00pm
on 21 May 2015 at AMP Technology Centre, Advance Manufacturing
Park, Brunel Way, Rotherham S60 5WG to conduct the ordinary
business of the Annual General Meeting and as special business to
consider disapplication of pre-emption rights, authority to
purchase own shares; and the authority to hold general meetings at
short notice. The detailed information of the resolutions will be
contained in the separate notice of meeting which will be
despatched to shareholders with the printed version of this report
and published on the company's web site (www.cfrplc.com).
Corporate governance
Information on the corporate governance of the Company is given
in the Corporate Governance Statement which forms part of this
Directors' Report.
By order of the Board
Geoff Mason
Company Secretary
18 February 2015
Independent auditors' report to the members of Coalfield
Resources plc
Report on the financial statements
Our opinion
In our opinion:
Coalfield Resources plc's group financial statements and company
financial statements (the "financial statements") give a true and
fair view of the state of the group's and of the company's affairs
as at 31 December 2014 and of the group's profit and the group's
and the company's cash flows for the year then ended;
the group financial statements have been properly prepared in
accordance with International Financial Reporting Standards
("IFRSs") as adopted by the European Union;
the company financial statements have been properly prepared in
accordance with International Financial Reporting Standards
("IFRSs") as adopted by the European Union and as applied in
accordance with the provisions of the Companies Act 2006; and
the financial statements have been prepared in accordance with
the requirements of the Companies Act 2006 and, as regards the
group financial statements, Article 4 of the IAS Regulation.
What we have audited
Coalfield Resources plc's financial statements comprise:
the Statement of Financial Position as at 31 December 2014;
the Consolidated Income Statement and the Consolidated Statement
of Comprehensive Income for the year then ended;
the Statements of Cash Flows for the year then ended;
the Consolidated Statement of Changes in Equity and the Company
Statement of Changes in Equity for the year then ended; and
the notes to the financial statements, which include a summary
of significant accounting policies and other explanatory
information.
Certain required disclosures have been presented elsewhere in
the Annual Report and Financial Statements 2014 (the "Annual
Report"), rather than in the notes to the financial statements.
These are cross-referenced from the financial statements and are
identified as audited.
The financial reporting framework that has been applied in the
preparation of the financial statements is applicable law and IFRSs
as adopted by the European Union and, as regards the company
financial statements, as applied in accordance with the provisions
of the Companies Act 2006.
Our audit approach
Overview
Overall group materiality: GBP0.6 million which represents 1% of total assets less assets
held for sale.
===============================================================================================
Our audit centred on the valuation of the Group's investment in Harworth Estates Property
Group Limited, which is the most substantial part of the group's business.
===============================================================================================
Valuation of the investment in Harworth Estates Property Group Limited.
===============================================================================================
The scope of our audit and our areas of focus
We conducted our audit in accordance with International
Standards on Auditing (UK and Ireland) ("ISAs (UK &
Ireland)").
We designed our audit by determining materiality and assessing
the risks of material misstatement in the financial statements. In
particular, we looked at where the directors made subjective
judgements, for example in respect of significant accounting
estimates that involved making assumptions and considering future
events that are inherently uncertain. As in all of our audits, we
also addressed the risk of management override of internal
controls, including evaluating whether there was evidence of bias
by the directors that represented a risk of material misstatement
due to fraud.
The risks of material misstatement that had the greatest effect
on our audit, including the allocation of our resources and effort,
are identified as "areas of focus" in the table below. We have also
set out how we tailored our audit to address these specific areas
in order to provide an opinion on the financial statements as a
whole, and any comments we make on the results of our procedures
should be read in this contexts. This is not a complete list of all
risks identified by our audit.
Area of focus How our audit addressed the area of focus
========================================================== ==========================================================
Valuation of the investment in Harworth Estates Property The Senior Statutory Auditor for Coalfield Resources plc
Group Limited is also the Senior Statutory Auditor
We focused on this area because the carrying amount of the for Harworth Estates Property Group Limited. Therefore,
Group's associate investment, Harworth our audit of the valuation of the
Estates Property Group Limited, is a significant balance underlying investment properties in the course of our
in the context of the Group balance audit of Harworth Estates Property Group
sheet. Limited addressed the area of focus identified.
The valuation of the investment, in both the consolidated In considering the net asset position of Harworth Estates
and the company's financial statements Property Group Limited, the most
is predominantly driven by the valuation of the significant balance is the investment property portfolio.
associate's underlying investment property In respect of investment properties
portfolio, which is inherently volatile and subjective due we read the third party property valuation reports
to fluctuations in the investment obtained by the Directors and considered
property market and the judgements taken in determining if the overall approach and methodology adopted were
fair value, such as expected gross appropriate given the nature of the properties
sale proceeds and rental yields. being valued and whether they were in line with market
In addition the valuation of the investment is impacted by practice. We also considered the extent
non-investment property balances, to which the approach and methodology were consistent with
in particular the completeness of liabilities. prior years.
For a sample of properties representing 70% of the value
of the property portfolio, we discussed
the valuation approach on a property by property basis
directly with the third party valuer.
We considered the specific assumptions used by the valuer
for each property, including the
expected gross sale proceeds and rental yields, and
considered whether these were consistent
with market evidence and, where relevant, actual sale
proceeds on properties disposed of during
the year. For properties where further investment property
spend is forecast to be incurred,
we obtained management estimates for the costs to be
incurred and for a sample of costs agreed
to supporting documentation, such as tenders or
agreements, to check the accuracy of the forecast
costs.
We found the methodologies used by the third party valuers
to be consistent across the portfolio
of properties and with prior years. We also found that the
assumptions used were within the
range typically used for similar valuations.
The audit procedures performed in respect of
non-investment property balances included consideration
of the completeness of liabilities by performing testing
on a sample of post year end invoices
and payments to confirm liabilities had been appropriately
recorded.
Our testing did not identify any matters to indicate that
the valuation of the investment
may be materially misstated.
========================================================== ==========================================================
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed
enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the
group, the accounting processes and controls, and the industry in
which the group operates.
The Company has a 24.9% investment in Harworth Estates Property
Group Limited, a property business which is accounted for as an
associate, and a 100% interest in Harworth Insurance Company
Limited, which is classified as 'held for sale' in the balance
sheet. The remaining Group entities perform the head office
function.
The most substantial part of the Group's balance sheet and
operating result relate to its investment in Harworth Estates
Property Group Limited, comprising 95% of total assets less assets
held for sale and 100% of profit before tax. Our audit scope
therefore focussed on the audit of Harworth Estates Property Group
Limited and how the Company's share of this entity had been
recorded in the Group financial statements. This is also explained
further in the area of focus above.
Materiality
The scope of our audit was influenced by our application of
materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations,
helped us to determine the scope of our audit and the nature,
timing and extent of our audit procedures and to evaluate the
effect of misstatements, both individually and on the financial
statements as a whole.
Based on our professional judgement, we determined materiality
for the financial statements as a whole as follows:
Overall group materiality GBP0.6 million (2013: GBP0.5 million).
=============================== =====================================================================================
How we determined it Consistent with 2013 - 1% of total assets less assets held for sale.
=============================== =====================================================================================
Rationale for benchmark applied We have applied this benchmark, a generally accepted auditing practice in the audit
of investment
companies, as we believe this to be the measure most commonly used by the
shareholders in
measuring performance.
=============================== =====================================================================================
We agreed with the Audit Committee that we would report to them
misstatements identified during our audit above GBP30,000 (2013:
GBP25,000) as well as misstatements below that amount that, in our
view, warranted reporting for qualitative reasons.
Going concern
The directors have voluntarily complied with Listing Rule
9.8.6(R)(3) of the Financial Conduct Authority and provided a
statement in relation to going concern, set out on pages 12 and 13,
required for companies with a premium listing on the London Stock
Exchange.
The directors have requested that we review the statement on
going concern as if the company were a premium listed company. We
have nothing to report having performed our review.
As noted in the directors' statement, the directors have
concluded that it is appropriate to prepare the financial
statements using the going concern basis of accounting. The going
concern basis presumes that the group and company have adequate
resources to remain in operation, and that the directors intend
them to do so, for at least one year from the date the financial
statements were signed. As part of our audit we have concluded that
the directors' use of the going concern basis is appropriate.
However, because not all future events or conditions can be
predicted, these statements are not a guarantee as to the group's
and company's ability to continue as a going concern.
Other required reporting
Consistency of other information
Companies Act 2006 opinion
In our opinion, the information given in the Strategic Report and the Directors' Report for
the financial year for which the financial statements are prepared is consistent with the
financial statements.
ISAs (UK & Ireland) reporting
======================================================================================================================
The directors have chosen to voluntarily comply with the UK Corporate Governance Code ("the
Code") as if the company were a premium listed company. Under ISAs (UK & Ireland) we are required
to report to you if, in our opinion:
======================================================================================================================
Information in the Annual Report is: We have no exceptions to report arising from this
materially inconsistent with the information responsibility.
in the audited financial statements; or
apparently materially incorrect based on, or
materially inconsistent with, our knowledge
of
the group and company acquired in the course
of performing our audit; or
otherwise misleading.
========================================================== ==========================================================
the statement given by the directors on page 38 in We have no exceptions to report arising from this
accordance with provision C.1.1 of the responsibility.
Code, that they consider the Annual Report taken as
a whole to be fair, balanced and understandable
and provides the information necessary for members
to assess the group's and company's performance,
business model and strategy is materially
inconsistent with our knowledge of the group and
company acquired in the course of performing our
audit.
========================================================== ==========================================================
the section of the Annual Report on page 32, as We have no exceptions to report arising from this
required by provision C.3.8 of the Code, describing responsibility.
the work of the Audit Committee does not
appropriately address matters communicated by us
to the Audit Committee.
========================================================== ==========================================================
Adequacy of accounting records and information and explanations
received
Under the Companies Act 2006 we are required to report to you
if, in our opinion:
we have not received all the information and explanations we
require for our audit; or
adequate accounting records have not been kept by the company,
or returns adequate for our audit have not been received from
branches not visited by us; or
the company financial statements and the part of the Directors'
Remuneration Report to be audited are not in agreement with the
accounting records and returns.
We have no exceptions to report arising from this
responsibility.
Directors' remuneration
Directors' remuneration report - Companies Act 2006 opinion
In our opinion, the part of the Directors' Remuneration Report
to be audited has been properly prepared in accordance with the
Companies Act 2006.
Other Companies Act 2006 reporting
Under the Companies Act 2006 we are required to report to you
if, in our opinion, certain disclosures of directors' remuneration
specified by law are not made. We have no exceptions to report
arising from this responsibility.
Other voluntary reporting
Matters on which we have agreed to report by exception
Corporate governance statement
The company prepares a corporate governance statement in
accordance with the Disclosure Rules and Transparency Rules of the
Financial Conduct Authority and has chosen voluntarily to comply
with the UK Corporate Governance Code. The directors have requested
that we review the parts of the Corporate Governance Statement
relating to the company's compliance with the ten provisions of the
UK Corporate Governance Code specified for auditor review by the
Listing Rules of the Financial Conduct Authority as if the company
were a premium listed company. We have nothing to report having
performed our review.
Responsibilities for the financial statements and the audit
Our responsibilities and those of the directors
As explained more fully in the Directors' Responsibilities
Statement set out on page 37, the directors are responsible for the
preparation of the financial statements and for being satisfied
that they give a true and fair view.
Our responsibility is to audit and express an opinion on the
financial statements in accordance with applicable law and ISAs (UK
& Ireland). Those standards require us to comply with the
Auditing Practices Board's Ethical Standards for Auditors.
This report, including the opinions, has been prepared for and
only for the company's members as a body in accordance with Chapter
3 of Part 16 of the Companies Act 2006 and for no other purpose. We
do not, in giving these opinions, accept or assume responsibility
for any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
What an audit of financial statements involves
An audit involves obtaining evidence about the amounts and
disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free from
material misstatement, whether caused by fraud or error. This
includes an assessment of:
whether the accounting policies are appropriate to the group's
and the company's circumstances and have been consistently applied
and adequately disclosed;
the reasonableness of significant accounting estimates made by
the directors; and
the overall presentation of the financial statements.
We primarily focus our work in these areas by assessing the
directors' judgements against available evidence, forming our own
judgements, and evaluating the disclosures in the financial
statements.
We test and examine information, using sampling and other
auditing techniques, to the extent we consider necessary to provide
a reasonable basis for us to draw conclusions. We obtain audit
evidence through testing the effectiveness of controls, substantive
procedures or a combination of both.
In addition, we read all the financial and non-financial
information in the Annual Report to identify material
inconsistencies with the audited financial statements and to
identify any information that is apparently materially incorrect
based on, or materially inconsistent with, the knowledge acquired
by us in the course of performing the audit. If we become aware of
any apparent material misstatements or inconsistencies we consider
the implications for our report.
Ian Marsden (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Leeds
19 February 2015
Consolidated Income Statement
for the year ended 31 December 2014
Year ended Year ended
31 December 28 December
2014 2013
Continuing operations Note GBP000 GBP000
------------------------------------------- ----- ----------------------- -----------------
Revenue 1,458 1,535
Cost of sales - -
------------------------------------------- ----- ----------------------- -----------------
Gross profit 1,458 1,535
Other operating income and expenses
Excluding exceptional items
Administrative expenses (1,653) (1,971)
Other operating income 196 189
Exceptional item -
Recognition of Blenkinsopp pension
asset 12 - 683
------------------------------------------- ----- ----------------------- -----------------
Other operating income and expenses
after exceptional item (1,457) (1,099)
Operating profit 3 1 436
Finance income 6 10 6
Finance costs 6 - (258)
Share of profit of associate 13 3,454 3,148
Profit before tax 3,465 3,332
Tax credit 8 - -
Profit for the year from continuing
operations 3,465 3,332
Discontinued operations
Loss for the year from discontinued
operations (attributable to the owners
of the parent) 2 - (1,589)
Profit for the financial year 3,465 1,743
------------------------------------------- ----- ----------------------- -----------------
Profit/(loss) per share from continuing
and discontinued operations attributable
to owners of the parent during the
year
Basic and diluted earnings/(loss)
per share pence pence
From continuing operations 11 0.6 0.6
From discontinued operations 11 0.0 (0.3)
------------------------------------------- ----- ----------------------- -----------------
Basic and diluted earnings/(loss)
per share 11 0.6 0.3
------------------------------------------- ----- ----------------------- -----------------
The notes on pages 49 to 79 are an integral part of the
consolidated financial statements
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2014
Year ended Year ended
31 December 28 December
2014 2013
Note GBP000 GBP000
Profit for the financial year from
continuing operations 3,465 3,332
Other comprehensive income - items that
will not be reclassified to profit or
loss:
Remeasurements of post retirement
benefits 21 (8) (104)
Total other comprehensive expense
(continuing operations) (8) (104)
-------------------------------------------------- ----- --------------------- -----------------
Total comprehensive income for the
financial year (continuing operations) 3,457 3,228
-------------------------------------------------- ----- --------------------- -----------------
Loss for the year from discontinued
operations - (1,589)
Total comprehensive expense for the financial
year (discontinued operations) - (1,589)
------------------------------------------------ ----- --------------------- -----------------
Total comprehensive income for the
financial year 3,457 1,639
-------------------------------------------------- ----- --------------------- -----------------
The notes on pages 49 to 79 are an integral part of the
consolidated financial statements.
Consolidated Statement of Changes in Equity
for the year ended 31 December 2014
Called
up Share
share premium Other Retained Total
capital account reserves earnings equity
Note GBP000 GBP000 GBP000 GBP000 GBP000
Balance at January 2013 2,993 30,756 257 13,923 47,929
Profit for the
financial year
to December 2013 - - - 1,743 1,743
Other comprehensive
income:
Remeasurement of post
retirement
benefits 21 - - - (104) (104)
Total comprehensive
profit for
the year ended
December 2013 - - - 1,639 1,639
Transactions with
owners:
Shares issued in
Rights Issue 23 2,993 2,993 - - 5,986
Costs relating to
Rights Issue 23 - (838) - - (838)
Shares issued under
LTIP 22 69 - - (69) -
Accrual for long term
incentive
plan liabilities 22 - - - 480 480
3,062 2,155 - 411 5,628
------------------------ ------ --------------- ------------- ---------------- ------------------- -------------
Balance at December
2013 6,055 32,911 257 15,973 55,196
------------------------ ------ --------------- ------------- ---------------- ------------------- -------------
Profit for the
financial year
to December 2014 - - - 3,465 3,465
Other comprehensive
income:
Remeasurement of post
retirement
benefits 21 - - - (8) (8)
Total comprehensive
profit for
the year ended
December 2014 - - - 3,457 3,457
Balance at December
2014 6,055 32,911 257 19,430 58,653
------------------------ ------ --------------- ------------- ---------------- ------------------- -------------
Company Statement of Changes in Equity
for the year ended 31 December 2014
Called
up Share
share premium Other Retained Total
capital account reserves earnings equity
Note GBP000 GBP000 GBP000 GBP000 GBP000
------------------- ----- ---------------- --------------- --------------- ------------------ ------------------
Balance at January
2013 2,993 30,756 257 12,462 46,468
Loss for the
financial year to
December 2013 - - - (1,401) (1,401)
Other
comprehensive
income:
Change in value
of investment
in associate * 3,148 3,148
Remeasurements of
post retirement
benefits 21 - - - (104) (104)
Transactions with
owners:
Shares issued in
Rights Issue 23 2,993 2,993 - - 5,986
Costs relating to
Rights Issue 23 - (838) - - (838)
Shares issued
under LTIP 22 69 - - (69) -
Accrual for long
term incentive
plan liabilities 22 - - - 480 480
Balance at
December 2013 6,055 32,911 257 14,516 53,739
------------------- ----- ---------------- --------------- --------------- ------------------ ------------------
Profit for the
financial year
to December 2014 - - - 16 16
Other
comprehensive
income:
Change in value
of investment
in associate 3,454 3,454
Remeasurements of
post retirement
benefits 21 - - - (8) (8)
Balance at
December 2014 6,055 32,911 257 17,978 57,201
------------------- ----- ---------------- --------------- --------------- ------------------ ------------------
* change in the fair value of associate is shown within Other
comprehensive income to reflect the accounting treatment within
the Company\'s financial statements (see note 13).
Statement of Financial Position
as at 31 December 2014
Group Group Company Company
As at As at As at As at
31 December 28 December 31 December 28 December
2014 2013 2014 2013
Note GBP000 GBP000 GBP000 GBP000
---------------------- ----- ---------------------- --------------------- --------------------- ----------------------
ASSETS
Non-current assets
Blenkinsopp pension
asset 12 564 683 564 683
Investment in
subsidiaries 13 - - 3,374 3,374
Investment in
associates 13 56,890 53,436 56,890 53,436
57,454 54,119 60,828 57,493
---------------------- ----- ---------------------- --------------------- --------------------- ----------------------
Current assets
Trade and other
receivables 14 659 682 532 550
Cash and cash
equivalents 16 1,489 1,428 1,489 1,428
Assets classified as
held
for sale 15 5,119 21,702 - -
7,267 23,812 2,021 1,978
---------------------- ----- ---------------------- --------------------- --------------------- ----------------------
Total assets 64,721 77,931 62,849 59,471
---------------------- ----- ---------------------- --------------------- --------------------- ----------------------
LIABILITIES
Current liabilities
Trade and other
payables 18 (5,035) (5,000) (5,084) (5,049)
Liabilities
classified
as held for sale 15 (469) (17,052) - -
(5,504) (22,052) (5,084) (5,049)
---------------------- ----- ---------------------- --------------------- --------------------- ----------------------
Net current
assets/(liabilities) 1,763 1,760 (3,063) (3,071)
---------------------- ----- ---------------------- --------------------- --------------------- ----------------------
Non-current
liabilities
Retirement benefit
obligations 21 (564) (683) (564) (683)
(564) (683) (564) (683)
---------------------- ----- ---------------------- --------------------- --------------------- ----------------------
Total liabilities (6,068) (22,735) (5,648) (5,732)
---------------------- ----- ---------------------- --------------------- --------------------- ----------------------
Net assets 58,653 55,196 57,201 53,739
---------------------- ----- ---------------------- --------------------- --------------------- ----------------------
EQUITY
Capital and reserves
Called up share
capital 22 6,055 6,055 6,055 6,055
Share premium account 23 32,911 32,911 32,911 32,911
Capital redemption
reserve 24 257 257 257 257
Retained earnings 19,430 15,973 17,978 14,516
Total equity 58,653 55,196 57,201 53,739
---------------------- ----- ---------------------- --------------------- --------------------- ----------------------
The financial statements on pages 44 to 79 were approved by the
Board of Directors on 18 February 2015 and were signed on its
behalf by:
Jonson Cox Jeremy Hague Company Registered Number 2649340
Chairman Finance Director
Statement of Cash
Flows
for the year ended
31 December * Restated
2014 Group Group Company Company
Year ended Year ended Year ended Year ended
31 December 28 December 31 December 28 December
2014 2013 2014 2013
Note GBP000 GBP000 GBP000 GBP000
--------------------- ----- ---------------------- -------------------- ---------------------- --------------------
Cash flows from
operating activities
Profit/(loss) for
the financial
year 3,465 1,743 16 (1,401)
Net interest
receivable (10) 252 (14) 248
Net charge for
share-based
remuneration - 480 - 480
Share of post-tax
profit from
associate (3,454) (3,148) - -
Decrease in
provisions - (546) - (546)
Recognition of
Blenkinsopp pension
asset - (683) - (683)
Pension
contributions (in
excess
of)/below charge (7) (141) (7) (141)
Tax charge 8 - - - -
Operating cash
outflows before
movements in
working capital (6) (2,043) (5) (2,043)
Decrease in
receivables 23 3,221 23 3,357
Increase/(decrease)
in payables 34 (4,697) 29 (4,833)
Cash generated
from/(used in)
operations 51 (3,519) 47 (3,519)
Loan arrangement
fees paid - (193) - (193)
Interest paid - (65) - (65)
Cash used by
discontinued
operations 2 (120) (7,966) - -
Cash generated
from/(used in)
operating
activities (69) (11,743) 47 (3,777)
--------------------- ----- ---------------------- -------------------- ---------------------- --------------------
Cash flows from
investing activities
Interest received 10 6 14 6
Cash generated from
discontinued
operations 2 1,275 8,105 - -
Cash generated from
investing
activities 1,285 8,111 14 6
--------------------- ----- ---------------------- -------------------- ---------------------- --------------------
Cash flows from
financing activities
Net proceeds from
issue of ordinary
shares - 5,148 - 5,148
Proceeds from bank
loans 17 - 2,990 - 2,990
Repayment of bank
loans 17 - (2,990) - (2,990)
Cash used by
discontinued
operations 2 (3,278) - - -
Cash generated from
financing
activities (3,278) 5,148 - 5,148
--------------------- ----- ---------------------- -------------------- ---------------------- --------------------
Increase in cash (2,062) 1,516 61 1,377
--------------------- ----- ---------------------- -------------------- ---------------------- --------------------
At January
Cash 1,428 51 1,428 51
Cash and cash
equivalents
classified
as held for sale 2,963 2,824 - -
4,391 2,875 1,428 51
--------------------- ----- ---------------------- -------------------- ---------------------- --------------------
Increase in cash 61 1,377 61 1,377
(Decrease)/increase
in cash and
cash equivalents
classified as
held for sale (2,123) 139 - -
(2,062) 1,516 61 1,377
--------------------- ----- ---------------------- -------------------- ---------------------- --------------------
At December
Cash 1,489 1,428 1,489 1,428
Cash and cash
equivalents
classified
as held for sale 840 2,963 - -
Cash and cash
equivalents 16 2,329 4,391 1,489 1,428
--------------------- ----- ---------------------- -------------------- ---------------------- --------------------
* 2013 Group cash flow has been restated to include the cash
flows of the discontinued operations and to show the restated split
between Cash and cash equivalents (see also note 16) and Available
for sale financial assets (see also note 15).
Notes to Financial Statements
for the year ended 31 December 2014
1. ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of
these consolidated financial statements are set out below. These
policies have been consistently applied to all the years presented,
unless otherwise stated.
Basis of preparation
These consolidated financial statements have been prepared in
accordance with European Union ("EU") Endorsed International
Financial Reporting Standards ("IFRSs"), IFRIC interpretations and
those parts of the Companies Act 2006 applicable to companies
reporting under IFRS. The consolidated financial statements have
been prepared under the historical cost convention, as modified by
the revaluation of investment properties and financial assets and
financial liabilities (including derivative instruments) at fair
value through profit or loss.
Financial Statements within the Group have been made up to the
last day in December (prior years were last Saturday in December).
For 2014, trading is shown for the year ended on 31 December 2014
(2013: year ended 28 December 2013).
Where a major line of business has been disposed of, or has been
classified as held-for-sale, the business activity has been treated
as a discontinued operation.
General information
The Company is a public limited company, which is listed on the
London Stock Exchange and incorporated and domiciled in the UK. The
address of its registered office is: Coalfield Resources plc,
Sheffield Business Centre, Europa Link, Sheffield, S9 1XZ.
Going concern
These financial statements are prepared on the basis that the
Group is a going concern. In forming its opinion as to going
concern, the Board prepares cash flow forecasts based upon its
assumptions as to income streams and costs required to fulfil its
objectives. The resulting cash flows are then compared to cash
resources and available funding; both committed funding and funding
which the Board reasonably expects to be available to the Group in
a timeframe such that it meets any shortfall in the expected cash
flows.
The key factors that have been considered in this regard relate
to the funding of the on-going running costs of the Group:
-- Revenue is predominately generated under the Shareholders'
Agreement with the Pension Protection Fund and Harworth Estates
which provides for the running costs of the Group to be met by
Harworth Estates by way of indemnity until 31 December 2014, and
also for Harworth Estates to indemnify the Group for the employment
costs of its executive team up to certain capped amounts for an
open ended period.
-- For the calendar years 2015 and 2016, the Shareholders'
Agreement provides that the Group may request loans from Harworth
Estates to fund the Group's running costs. If such loans are
advanced, dividends payable by Harworth Estates to the Group equal
to an amount of such loans shall be directed to the Pension
Protection Fund so such cash will not be received by the Group. The
employment cost of the Group's executive team will continue to be
met under the agreement with Harworth Estates.
The Company shows a net current liability of GBP3,063,000 (2013:
GBP3,071,000) at 31 December 2014. Included in trade and other
payables is an amount of GBP4,650,000 representing deferred income
on an option to sell Harworth Insurance Company Limited, as
disclosed in note 15. This is a non-cash item. For the reasons
stated above the Board reasonably expects funds to be available to
the Company in a timeframe such that it meets any shortfall in
expected cash flows.
1. ACCOUNTING POLICIES continued
Changes in accounting policy and disclosures
(a) New and amended standards adopted by the Group
The following standards have been adopted by the Group for the
first time for the financial year beginning on or after 1 January
2014, none of which have a material impact on the Group:
Amendment to IAS 32, 'Financial instruments: Presentation' on
offsetting financial assets and financial liabilities. This
amendment clarifies that the right of set-off must not be
contingent on a future event. It must also be legally enforceable
for all counter-parties in the normal course of business, as well
as in the event of default, insolvency or bankruptcy. The amendment
also considers settlement mechanisms. The amendment did not have a
significant effect on the Group financial statements.
Amendments to IAS 36, 'Impairment of assets', on the recoverable
amount disclosures for non-financial assets. This amendment removed
certain disclosures of the recoverable amount of CGUs which had
been included in IAS 36 by the issue of IFRS 13.
Amendment to IAS 39, 'Financial instruments: Recognition and
measurement' on the novation of derivatives and the continuation of
hedge accounting. This amendment considers legislative changes to
'over-the-counter' derivatives and the establishment of central
counter-parties. Under IAS 39 novation of derivatives to central
counter-parties would result in discontinuance of hedge accounting.
The amendment provides relief from discontinuing hedge accounting
when novation of a hedging instrument meets specified criteria. The
Group has applied the amendment and there has been no significant
impact on the Group financial statements as a result.
Other standards, amendments and interpretations which are
effective for the financial year beginning on 1 January 2014 are
not material to the Group.
(b) New standards and interpretations not yet adopted
A number of new standards and amendments to standards and
interpretations are effective for annual years beginning after 1
January 2015, and have not been applied in preparing these
consolidated financial statements. None of these is expected to
have a significant effect on the consolidated financial statements
of the Group, except the following set out below:
IFRS 9, 'Financial instruments', addresses the classification,
measurement and recognition of financial assets and financial
liabilities. The complete version of IFRS 9 was issued in July
2014. It replaces the guidance in IAS 39 that relates to the
classification and measurement of financial instruments. IFRS 9
retains but simplifies the mixed measurement model and establishes
three primary measurement categories for financial assets:
amortised cost, fair value through OCI and fair value through
P&L. The basis of classification depends on the entity's
business model and the contractual cash flow characteristics of the
financial asset. Investments in equity instruments are required to
be measured at fair value through profit or loss with the
irrevocable option at inception to present changes in fair value in
OCI not recycling. There is now a new expected credit losses model
that replaces the incurred loss impairment model used in IAS 39.
For financial liabilities there were no changes to classification
and measurement except for the recognition of changes in own credit
risk in other comprehensive income, for liabilities designated at
fair value through profit or loss. IFRS 9 relaxes the requirements
for hedge effectiveness by replacing the bright line hedge
effectiveness tests. It requires an economic relationship between
the hedged item and hedging instrument and for the 'hedged ratio'
to be the same as the one management actually use for risk
management purposes. Contemporaneous documentation is still
required but is different to that currently prepared under IAS 39.
The standard is effective for accounting periods beginning on or
after 1 January 2018. Early adoption is permitted subject to EU
endorsement. The Group is yet to assess IFRS 9's full impact.
IFRS 15, 'Revenue from contracts with customers' deals with
revenue recognition and establishes principles for reporting useful
information to users of financial statements about the nature,
amount, timing and uncertainty of revenue and cash flows arising
from an entity's contracts with customers. Revenue is recognised
when a customer obtains control of a good or service and thus has
the ability to direct the use and obtain the benefits from the good
or service. The standard replaces IAS 18 'Revenue' and IAS 11
'Construction contracts' and related interpretations. The standard
is effective for annual periods beginning on or after 1 January
2017 and earlier application is permitted subject to EU
endorsement. The Group is assessing the impact of IFRS 15.
IFRIC 21, 'Levies', sets out the accounting for an obligation to
pay a levy if that liability is within the scope of IAS 37
'Provisions'. The interpretation addresses what the obligating
event is that gives rise to pay a levy and when a liability should
be recognised. The Group is not currently subjected to significant
levies so the impact on the Group is not material.
1. ACCOUNTING POLICIES continued
Accounting Policies
Accounting policies that are applicable are shown below:
Consolidation
The consolidated financial statements incorporate the financial
statements of Coalfield Resources plc ('the Company') and its
subsidiaries, together 'the Group'.
Subsidiaries are entities that are controlled by another entity.
An investor controls an investee when it is exposed, or has rights,
to variable returns from its involvement with the investee and has
the ability to affect those returns through its power over the
investee. Control is presumed to exist where the Group owns more
than half of the voting rights, unless in exceptional circumstances
where it can be demonstrated that ownership does not constitute
control. The consolidated financial statements include all the
assets, liabilities, revenues, expenses and cash flows of the
parent and its subsidiaries, after eliminating intercompany
balances and transactions. The results of subsidiaries sold or
acquired are included in the consolidated income statement up to,
or from, the date control passes.
The Group uses the purchase method of accounting to consolidate
subsidiaries. On acquisition, the identifiable assets, liabilities
and contingent liabilities being acquired are measured at their
fair values at the date of acquisition. Accounting policies are
changed where necessary to bring them into line with those adopted
by the Group.
When the Group ceases to have control, any retained interest in
the entity is re-measured to its fair value at the date when
control is lost, with the change in carrying amount recognised in
profit or loss. The fair value is the initial carrying amount for
the purposes of subsequently accounting for the retained interest
as an associate, joint venture or financial asset.
Non-current assets (or disposal groups) are classified as assets
held for sale when their carrying amount is to be recovered
principally through a sale transaction and a sale is highly
probable. They are stated at the lower of carrying amount and fair
value less costs to sell.
Associates are those entities over which the Group has
significant influence but not control, generally accompanying a
shareholding of between 20 per cent and 50 per cent of the voting
rights. Investments in associates are accounted for using the
equity method of accounting. Under the equity method, the
investment is originally measured at cost, and the carrying amount
is increased or decreased to recognise the investors' share of the
profit or loss of the investee after the date of acquisition. The
Group's investment in associates includes goodwill identified on
acquisition. The Group's share of post-acquisition profit or loss
is recognised in the income statement, and its share of
post-acquisition movements in other comprehensive income is
recognised in other comprehensive income with a corresponding
adjustment to the carrying amount of the investment.
Where the Group holds more than 20 per cent of the voting power
of an entity, but the directors can demonstrate that the Group does
not have significant influence over that entity, the investment is
classified as available for sale.
Where the directors have agreed to the sale of a business prior
to the balance sheet date, but the completion date for the
transaction is after the balance sheet date, the assets and
liabilities of that business are presented as held for sale.
Investments
Investments held by the Company in subsidiary undertakings are
carried at cost less impairments to write them down to their
recoverable amount. An impairment to the carrying value of
investments is made if there is an indication at the balance sheet
date that the carrying value is not recoverable.
Investments in associates held by the Company are accounted for
as financial assets, classified as available for sale financial
assets, and therefore, accounted for at fair value through other
comprehensive income.
Revenue
Revenue from continuing operations arises from management
services invoiced at the end of each month the service is provided
to related parties.
1. ACCOUNTING POLICIES continued
Borrowings
Borrowings are recognised initially at fair value, net of
transaction costs incurred. Borrowings are subsequently stated at
amortised cost; any difference between the proceeds (net of
transaction costs) and the redemption value is recognised in the
consolidated income statement over the period of the borrowings
using the effective interest method.
Cash and cash equivalents
In the preparation of the Group's and Company's cash flow
statements, cash and cash equivalents represent short term liquid
investments which are readily realisable. Cash which is subject to
restrictions, being held to match certain liabilities, is included
in cash and cash equivalents in the consolidated balance sheet.
Cash and cash equivalents per the cash flow statement also includes
cash and cash equivalents presented as part of a disposal group
classified as held for sale.
Employee benefits
Pension obligations
The Group contributes to defined contribution schemes for its
current employees. The cost of this is charged to the consolidated
income statement as incurred.
Following completion of the 2012 Restructuring, the Company
continues to have certain residual liabilities in respect of the
Blenkinsopp Section of the Industry Wide Mineworkers' Pension
Scheme (which has an IAS 19 (revised) deficit of GBP564,000 at 31
December 2014) and which is indemnified by UK Coal Production
Limited and is further indemnified up to a cap of GBP3,100,000 by
Harworth Estates Mines Property Limited should UK Coal Production
fails to meet its obligations. In addition the Group retains capped
charges over certain operating deep mines land against this
liability which are limited to an aggregate limit of
GBP3,100,000.
The assets of the Scheme are held separately from those of the
Group, being funds administered by Trustees of the Scheme. A
qualified actuary assesses the cost of current service and revalues
the scheme annually under the provisions of IAS 19 (revised) using
the Projected Unit Credit Method. A full valuation for funding
purposes is carried out by the Scheme's actuaries triennially. The
Group accounts for pensions and similar benefits under IAS 19
(revised) 'Employee benefits'. In respect of defined benefit plans,
obligations are measured at discounted present value and plan
assets are recorded at fair value. Certain additional benefits may
become payable dependent upon the funding levels of the Scheme
being at "sustainable levels". These liabilities are only provided
if it is reasonably certain that the Scheme's funding, investment
policy and growth assumptions mean that it is likely that the
Scheme Actuary will be in a position, at a future date, to certify
that the Scheme is at a "sustainable" level of funding. Service
costs are charged systematically over the service lives of
employees and financing costs are recognised in the periods in
which they arise. Actuarial gains and losses are recognised in the
Consolidated Statement of Comprehensive Income.
Due to the likelihood that the Blenkinsopp pension liability
will be reimbursed by a third party a non-current asset is
recognised in the consolidated balance sheet equal to the IAS 19
(revised) liability and any change in value of this asset is taken
to the consolidated income statement.
Share-based payments
The fair value of share plans is recognised as an expense in the
consolidated income statement over the expected vesting period of
the grant. The fair value of share plans is determined at the date
of grant taking into account any market based vesting conditions
attached to the award. Non-market based vesting conditions (e.g.
earnings per share targets) are taken into account in estimating
the number of awards likely to vest. The estimate of the number of
awards likely to vest is reviewed regularly and the expense charged
adjusted accordingly. The fair value of employee share option plans
is calculated using the generally accepted Black-Scholes simulation
model.
The proceeds received net of any directly attributable
transaction costs, are credited to share capital (nominal value)
and share premium (any increment) when the options are
exercised.
1. ACCOUNTING POLICIES continued
Tax
Current tax
The charge or credit for current tax is based on the results for
the year adjusted for items that are either not subject to taxation
or for expenditure which cannot be deducted in computing the tax
charge or credit. The tax charge or credit is calculated using
taxation rates that have been enacted or substantively enacted at
the balance sheet date.
Deferred tax
Deferred tax is recognised using the balance sheet liability
method on temporary differences between the carrying amounts of
assets and liabilities in the financial statements and the
corresponding tax basis used in the computation of taxable profit.
Deferred tax is recognised in respect of all taxable temporary
differences, with certain limited exceptions:
- deferred tax is not provided on the initial recognition of an
asset or liability in a transaction that does not affect accounting
profit or taxable profit and is not a business combination; and
- deferred tax assets are only recognised if it is probable that
there will be sufficient profits from which the future reversal of
the underlying temporary differences can be deducted. In deciding
whether future reversal is probable, the directors review the
Group's forecasts and make an estimate of the aggregate deferred
tax asset that should be recognised. This aggregate deferred tax
asset is then allocated into the different categories of deferred
tax.
Deferred tax is calculated at the tax rates that are expected to
apply in the periods in which temporary differences reverse, based
on tax rates and laws enacted or substantively enacted at the
balance sheet date. Deferred tax is charged or credited to the
consolidated income statement, except where it applies to items
credited or charged to equity, in which case the deferred tax is
also dealt with in equity.
Share capital
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares or options are
shown in equity as a deduction, net of tax, from the proceeds.
Dividend distribution
Dividend distribution to the Company's shareholders is
recognised in the financial statements in the year in which the
dividends are paid (in the case of interim dividends) or approved
by the Company's shareholders (in the case of final dividends).
Segment reporting
The Group has only one operating activity that of an investment
holding company, and consequently no segmental analysis has been
presented in respect of the Group's continuing operations.
Exceptional items
Items that are both material and non-recurring and whose
significance is sufficient to warrant separate disclosure and
identification within the consolidated financial statements are
referred to as exceptional items and disclosed within their
relevant income statement category. Exceptional items relating to
restructuring and discontinued operations are shown within note 2,
"Restructuring and Discontinued Operations". Items that may give
rise to classification as exceptional items include, but are not
limited to, significant and material restructuring closures and
reorganisation programmes, asset impairments, and profits or losses
on the disposal of businesses.
Exceptional items are divided into non-trading and trading
exceptional items, depending upon the impact of the event giving
rise to the cost or income on the ongoing trading operations and
the nature of the costs or income involved. Non-trading exceptional
items include costs and income arising from closure,
rationalisation and business disposals.
Profit or loss on disposal
Where a major line of business or subsidiary undertaking is
sold, profit or loss on disposal is calculated by deducting the net
carrying value of assets disposed of from the net proceeds (being
the purchase consideration less costs of disposal), and is
recognised in the income statement within profit or loss from
discontinued operations.
1. ACCOUNTING POLICIES continued
Financial instruments and derivatives
a. Financial assets
Financial assets are classified as financial assets at fair
value through profit or loss, loans and receivables, held-to-
maturity financial assets and available-for-sale financial assets,
as appropriate. The Group determines the classification of its
financial assets at initial recognition. When financial assets are
recognised initially, they are measured at fair value, plus, in the
case of investments not at fair value through profit or loss,
directly attributable transaction costs.
Financial assets are de-recognised only when the contractual
rights to the cash flows from the financial asset expire or the
Group transfers substantially all risks and rewards of
ownership.
The Group's financial assets consist of loans and
receivables.
Financial assets recognised in the consolidated balances sheet
as trade and other receivables are classified as loans and
receivables. They are recognised initially at fair value and
subsequently measured at amortised cost less provision for
impairment.
Cash and cash equivalents are also classified as loans and
receivables. They are subsequently measured at amortised cost. Cash
and cash equivalents includes cash in hand, deposits held at call
with banks and other short- term highly liquid investments with
original maturities of three months or less.
b. Financial liabilities
Liabilities within the scope of IAS 39 are classified as
financial liabilities at fair value through profit or loss or other
liabilities, as appropriate.
A financial liability is de-recognised when the obligation under
the liability is discharged or cancelled or expires.
All loans and borrowings are classified as other liabilities.
Initial recognition is at fair value less directly attributable
transaction costs. After initial recognition, interest-bearing
loans and borrowings are subsequently measured at amortised cost
using the effective interest method.
Financial liabilities included in trade and other payables are
recognised initially at fair value and subsequently at amortised
cost. The fair value of a non-interest bearing liability is its
discounted repayment amount. If the due date of the liability is
less than one year, discounting is omitted.
Trade receivables
Trade receivables are recognised initially at fair value and are
subsequently measured at amortised cost using the effective
interest method, less provisions for impairment. A provision for
impairment of trade receivables is established when there is
objective evidence that the Group or Company will not be able to
collect all amounts due. Indicators of impairment would include
financial difficulties of the customer, likelihood of the
customer's insolvency, default in payment or a significant
deterioration in credit worthiness. Any impairment is recognised in
the consolidated income statement within 'administrative expenses'.
When a trade receivable is uncollectible, it is written off against
the allowance account.
Subsequent recoveries of amounts previously written off are
credited against 'administrative expenses' in the consolidated
income statement.
Trade payables
Trade payables are obligations to pay for goods and services
that have been acquired in the ordinary course of business from
suppliers. Trade payables are classified as current if payment is
due within one year or less. If not, they are presented as
non-current liabilities. Trade payables are recognised initially at
fair value and subsequently measured at amortised cost using the
effective interest method.
Judgements in applying accounting policies and key sources of
estimation uncertainty
Many of the amounts included in the financial statements involve
the use of judgement and/or estimation. These judgements and
estimates are based on management's best knowledge of the relevant
facts and circumstances, having regard to previous experience, but
actual results may differ from the amounts included in the
financial statements. Information about such judgements and
estimation is contained in the accounting policies and/or the notes
to the financial statements, and the key areas summarised
below.
1. ACCOUNTING POLICIES continued
Judgements in applying accounting policies and key sources of
estimation uncertainty continued
Areas of judgement and sources of estimation uncertainty that
have the most significant effect on the amounts recognised in the
financial statements are:
Carrying value of investment in Harworth Estates Property Group
Limited (the Property business) as an associate
The Group accounts for its 24.9 per cent investment in Harworth
Estates Property Group Limited as an associate and values its
investment based on its share of net assets, subject to a reduction
in the carrying value of GBP5,000,000 to reflect the fact that the
first GBP5,000,000 of shareholders' dividend income, which would
otherwise be due to the Group, will be paid to the Pension
Protection Fund. The carrying value of the investment in Harworth
Estates Property Group Limited is linked to the underlying value of
the property assets within that company, and so any reduction in
property values will lead to a fall in the carrying value of the
investment in the Group's financial statements.
Classification of investments in Harworth Estates Property Group
Limited
The Group has used its judgement in classifying its investment
in Harworth Estates Property Group Limited as an associate. Further
details are given in note 13 (Investments).
Estimation of post retirement benefit obligations
Retirement benefits represent obligations that will be settled
in the future and require assumptions to project benefit
obligations and fair values of plan assets. Retirement benefit
accounting is intended to reflect the recognition of future benefit
costs over the employee's approximate service period, based on the
terms of the plans and the investment and funding decisions made by
the Group. These are subject to actuarial estimates of, amongst
other items, rate of return on investments, rate of price
inflation, the cost of funding future liabilities and post
retirement life expectancy. Details of the significant estimates
used are set out in note 21.
Recognition of the Blenkinsopp Pension asset
Following the 2012 Restructuring the Group's only defined
benefit pension liability was for the Blenkinsopp Section of the
Industry-Wide Mineworkers Pension Scheme (the Blenkinsopp scheme).
Indemnities and guarantees in favour of the Group with third
parties, agreed at that time and subsequently, result in the
likelihood that the pension obligations falling under the
Blenkinsopp scheme will be met by those third parties. The Group
has therefore recognised a pension asset equal to the pension
obligation. Further details are set out in note 12.
2. RESTRUCTURING AND DISCONTINUED OPERATIONS
a) Restructuring of the Company's Business ("2012 Restructuring")
Summary
On 10 December 2012 the Company announced that it had
restructured into two separate businesses comprising the Mining
Division (under a newly incorporated company UK Coal Mine Holdings
Limited, now called Ocanti No1 Limited - In
Administration,("UKCMHL")) and the Property Division (under a newly
incorporated company Harworth Estates Property Group Limited
("Harworth Estates")). Control of the Mining Division passed to a
newly established Employee Benefit Trust ("EBT") which held shares
representing 67 per cent of the voting, and 10 per cent of the
economic rights in UKCMHL for the benefit of current and future
employees of the Mining Division. The Company retained 90 per cent
of the economic, and 33 per cent of the voting, rights in Mine
Holdings, but the Company's and EBT's shareholding both ranked
behind the debt to the UK Coal Mining Limited ("UKCML") section of
each of the Industry-Wide Coal Staff Superannuation Scheme and the
Industry-Wide Mineworkers' Pension Scheme ("Pension Funds").
The Company owned 24.9 per cent of Harworth Estates, with 75.1
per cent having passed to the Pension Funds in return for a
GBP30,000,000 cash contribution by the Pension Funds into Harworth
Estates and their agreement to defer deficit contributions for 2012
and 2013 representing approximately GBP40,000,000 of support to the
Mining Division.
Separation of the Company's Business
The Company's pension funding deficit was isolated as a
liability of the Mining Division and ring-fenced from the Property
Division's assets and liabilities. Save for finance lease debt of
approximately GBP7,000,000, a GBP10,000,000 loan that was provided
by
Harworth Estates to provide the Mining Division with additional
working capital headroom (to be secured by second ranking security
over certain freehold deep mines) and security granted over a cash
account in respect of the property and cash backed bonding
facility, the Mining Division was left free of bank debt and bank
security and with an amended pension deficit repayment schedule.
This was expected to create a more stable platform, more likely to
release the value in the Mining Division.
2. RESTRUCTURING AND DISCONTINUED OPERATIONS continued
a) Restructuring of the Company's Business ("2012 Restructuring") continued
As part of the 2012 Restructuring, the Pension Trustees no
longer had a claim on the assets of the Property Division and lost
the benefit of statutory parent company guarantees from the
Company, UK Coal Holdings Limited, Harworth Group Limited and
Harworth Power Limited. Following the 2012 Restructuring, the UK
Coal Operations Limited, now called Ocanti Opco Limited - In
Liquidation, ("UKCOL") section of each of the Industry-Wide Coal
Staff Superannuation Scheme and the Industry-Wide Mineworkers'
Pension Scheme ("Mining" Sections) had the benefit of a statutory
parent company guarantee only from companies in the Mining
Division.
Property Division
As part of the plan to address the pension deficit, the Pension
Trustees received a direct stake of 75.1 per cent in the Property
Division (through a shareholding in Harworth Estates) in
consideration for a GBP30,000,000 cash contribution and agreement
to defer deficit contributions for 2012 and 2013 representing
approximately GBP40,000,000 of support to the Mining Division.
The cash contribution was intended to ensure that the property
operations had adequate funding to enable the release of the latent
undeveloped value in the property portfolio. The Company is
entitled to the benefit of the remaining 24.9 per cent. This stake
no longer guarantees the pension liability. In addition, the first
GBP5,000,000 of shareholders' dividend income which would otherwise
be due to the Company will be paid to the Pension Trustees (now
Pension Protection Fund following their acquisition of the 75.1%
stake formerly held by the Pension Trustees).
Mining Division
The legal structure necessary to facilitate the ring-fencing of
the Company's pension deficit from the Property Division required
that the Company retained less than one third of the voting power
at any general shareholders meeting of the holding company of the
Mining Division, UKCMHL. Consequently 67 per cent of the voting
rights in UKCMHL and 10 per cent of its economic rights were
transferred to the EBT for nominal consideration. The remaining 33
per cent of the voting rights in UKCMHL and 90 per cent of its
economic rights were held by the Company until the Mining Group
July 2013 Restructuring (see d).
Pension Scheme Changes
The Company operated several different pension schemes. The two
main schemes are Pension Funds. The 2012 Restructuring had a
significant impact on the Pension Funds by amending the Mining
Division's statutory funding plans so that only the Mining Division
is liable to fund the Company's defined benefit pension
liabilities.
The pension aspects of the 2012 Restructuring involved a "bulk
transfer", on a without consent basis, of all of the assets and
liabilities of the Pension Funds (including deferred and pensioner
liabilities) to the Mining Sections. The principal employer (and
only participating employer) in the Mining Sections was UKCOL.
UKCML's liability in respect of the Pension Funds was reduced to
zero as a result of this "bulk transfer", which, as a consequence,
also reduced the Company's liability in respect of its guarantee
relating to the Pension Funds to zero.
The Mining Division remained liable to the Company in respect of
the Blenkinsopp Section of the Industry-Wide Mineworkers' Pension
Scheme (secured over certain deep mine sites owned by UKCOL).
The Company
Following completion of the 2012 Restructuring, the Company
continued to have certain residual liabilities in respect of the
Mining Division. These included the Blenkinsopp Section (which had
an IAS 19 deficit of GBP720,000 at 28 December 2012 and which was
secured by first ranking security over certain deep mine sites
owned by UKCOL), certain guarantees in respect of liabilities in
certain mining leases of approximately GBP4,000,000 at completion
of the 2012 Restructuring (which fell away during 2013) and costs
and expenses incurred prior to the 2012 Restructuring.
Treatment of Mining and Property activities in the financial
statements
In accounting for the 2012 Restructuring, the transfer of the
Mining and Property activities of the Group to UKCMHL and Harworth
Estates was treated as a disposal. The subsequent acquisition of
24.9 per cent of Harworth Estates by the Company was accounted for
as an acquisition of an associated undertaking, and of the
Company's interest in UKCMHL as an available for sale investment
for the reasons outlined in note 15.
2. RESTRUCTURING AND DISCONTINUED OPERATIONS continued
b) Harworth Insurance Company Limited ('HICL')
On 7 December 2012 the Company granted a put and call option to
UKCMHL to acquire the entire issued share capital of HICL, and
UKCMHL granted the Company a put option to require UKCMHL to
acquire HICL. The consideration for the call option was
GBP4,650,000. Exercise of the call option is conditional on
obtaining Prudential Regulatory Authority (PRA) and Financial
Conduct Authority (FCA) consent or the parties agreeing that such
consent is no longer legally required. Before consent from the FCA
and PRA could be obtained the underlying insurance business had to
be sold. This sale process took longer than expected and was not
completed until July 2014 when the insurance business of HICL was
sold to Royal Sun Alliance. Following this sale there now only
remains the residual cash and a single property. Since the call
option had not been exercised at the year end, the assets and
liabilities relating to HICL have been presented as held for sale.
With the sales of the insurance business competed it is highly
probable that the option will be exercised during 2015.
c) Mining Group July 2013 Restructuring
The fire at Daw Mill colliery in February 2013 which led to its
subsequent closure resulted in the mining business being unable to
fully honour its agreements with the Company with regard to funding
on-going running costs and paying the 2012 Restructuring fees which
arose from the 2012 Restructuring completed on 10 December 2012 and
which is further described in note 2.
This consequently led to a number of changes to the 2012
Restructuring agreements and further finance being sought by the
Company as described below.
Whilst the anticipated 2012 Restructuring fees had been provided
in the results to 28 December 2013 there remained at May 2013
approximately GBP3,600,000 of 2012 Restructuring fees to be paid,
which together with potential liabilities of approximately
GBP900,000 should the mining business fail to pay these liabilities
led the Company to seek a bank facility.
The new facility was agreed with Lloyds Bank on 31 May 2013 for
GBP5,000,000. The facility allowed the Company to pay 2012
Restructuring fees up to GBP3,600,000, pay, if required, the
GBP900,000 of potential liabilities and pay the fees and interest
relating to the facility.
The bank facility was agreed with Lloyds Bank on the
understanding that the Company would repay the facility by raising
funds from an equity fundraising. A Rights Issue announced on 7
August 2013 to raise approximately a net GBP5,000,000 was approved
by shareholders on 27 August 2013. The facility was repaid in
September 2013.
On 9 July 2013 UKCMHL and UKCOL went into administration and
UKCOL subsequently creditors voluntary liquidation ("Mining Group
July 2013 Restructuring"). The Company has written off its GBP1
investment in the mining business and the balance outstanding from
UKCMHL and UKCOL of GBP1,017,000 relating to on-going and 2012
Restructuring costs which had been invoiced to them but not
settled. To be consistent with the accounting treatment in 2012 the
GBP1,017,000 write off has been charged to discontinued operations
(note 2).
The deed of indemnity in respect of the Blenkinsopp pension
scheme was novated from UKCOL to UK Coal Production Limited, a
member of the new mining group. In addition Harworth Estates Mines
Property Limited, a subsidiary of HEPGL, have provided a guarantee
to the Company, capped at GBP3,100,000 should UK Coal Production
Limited fail to meet its obligations.
The put and call option over the shares of Harworth Insurance
Company Limited remains in force but is now held by the
administrators of UKCMHL.
The Mining Group July 2013 Restructuring also ended the
Company's participation in the Shareholder Committee which provided
advice and governance to UKCMHL and was very active in supporting
UKCMHL in 2013 following the fire at Daw Mill.
In light of the difficulties of the mining business a revised
agreement was sought with HEPGL to amend HEPGL's funding
arrangements with the Company. The revised agreement provides for
HEPGL to fund, subject to certain limits and restrictions, the
Company's on-going running costs up to 31 December 2016. Up to 31
December 2014 this is by way of indemnity and for 2015 and 2016 by
way of loan. In addition HEPGL have indemnified, subject to certain
limitations, the employment costs of the Company's executive
management team without limit in time.
2. RESTRUCTURING AND DISCONTINUED OPERATIONS continued
d) Discontinued operations and profit on disposal
The combined cash flows of the discontinued operations (included
assets held for sale) noted above were as follows:
* Restated * Restated
2014 2013 2012
Group GBP000 GBP000 GBP000
----------------------------------------- -------- ----------- -----------
Operating cash flows (120) (9,555) 36,610
Investing cash flows 1,275 8,105 (50,440)
Financing cash flows (3,278) - (8,205)
Total cash flows (2,123) (1,450) (22,035)
------------------------------------------- -------- ----------- -----------
* 2013 cash flow has been restated to
include the cash flows of the Held for
sale asset
* 2012 is restated to exclude the Net receipt from
insurance and subsidence security funds from investing
cash flows
Analysis of discontinued operations
are as follows:
Discontinued operations 2013
Mining
GBP000
----------------------------------------- -------- ----------- -----------
Expenses (1,589)
Operating loss from discontinued
operations (1,589)
Tax -
-------- -----------
Loss after tax from discontinued
operations (1,589)
------------------------------------------- -------- ----------- -----------
The Mining Group July 2013 Restructuring led to a write off of
the balance outstanding of GBP1,017,000 due from UKCMHL and UKCOL
relating to on-going and 2012 Restructuring costs which had been
invoiced to them but not settled. In addition, as UKCOL are unable
to honour the indemnity to pay 2012 Restructuring costs, a further
provision of GBP572,000 was required in 2013 in addition to that
provided within discontinued operations in the results to 29
December 2012.
To be consistent with the accounting treatment in 2012 the
GBP1,589,000 was charged to discontinued operations in 2013.
3 OPERATING PROFIT
Year ended Year ended
December December
Note 2014 2013
GBP000 GBP000
------------------------------------- ----- --------------- -------------
Operating profit before tax is
stated after charging:
Staff costs - continuing operations 5 963 1,306
--------------------------------------- ----- --------------- -------------
4 OTHER OPERATING INCOME AND EXPENSES
Year ended Year ended
December December
2014 2013
GBP000 GBP000
------------------------------------- ------------- -------------
Administrative expenses (1,653) (1,971)
Other operating income 196 189
Other operating income and expenses (1,457) (1,782)
---------------------------------------- ------------- -------------
Other operating income represents the third party contributions
to, and re-measurement of, the Blenkinsopp Scheme.
5 EMPLOYEE INFORMATION
The monthly average number of persons (including Executive
Directors) employed by the Group during the year was:
Group
Year
Year ended ended
December December
2014 2013
Number Number
------- ------------------ ----------------
Other 3 4
Total 3 4
----------- ------------------ ----------------
Total staff costs for continuing activities were:
Group
Year ended Year ended
December December
2014 2013
Staff costs (including the Board of
Directors) - continuing activities
only GBP000 GBP000
------------------------------------- ------------------- ---------------
Wages and salaries 848 899
Social security costs 85 173
Other pension costs 30 30
Share-based payments - 480
963 1,582
------------------------------------- ------------------- ---------------
Termination costs of GBP546,000 were provided in 2012 of which
only GBP270,000 was paid in 2013. The remaining provision of
GBP276,000 was credited to the Consolidated Income Statement in
2013.
Detailed information relating to directors' remuneration and
their interests in share options is indicated by an * in the
Directors' Remuneration Reports and forms part of these financial
statements. The only other key management staff cost was
GBP114,000.
6. FINANCE INCOME AND COSTS
Year ended Year ended
December December
2014 2013
GBP000 GBP000
----------------------------- --------------- ----------------
Interest income
- Cash at bank and deposits 10 6
Finance income 10 6
------------------------------- --------------- ----------------
Interest expense
- Bank borrowings - (59)
- Facility fees - (193)
Finance expense - (252)
------------------------------- --------------- ----------------
7. AUDITORS' REMUNERATION
During the year the Group obtained the following services from
its auditors, PricewaterhouseCoopers LLP, at costs as detailed
below:
Year ended Year ended
December December
2014 2013
GBP000 GBP000
------------------------------------------- ---------------- ---------------
Audit services
Fees payable to the Company auditors for
the audit of the parent Company and the
consolidated financial statements
- Audit fee 30 30
- Additional audit fees - 17
Fees payable to the Company auditors and
its associates for other services:-
- The audit of the Company's subsidiaries
pursuant to legislation 15 40
- Audit related assurance services 54 14
- All other assurance related services - 78
- Tax advisory services 4 13
- Tax compliance services 15 17
- All other non-audit services - 127
118 336
------------------------------------------- ---------------- ---------------
From time to time, the Group employs PricewaterhouseCoopers LLP
on assignments additional to their statutory audit duties where
their expertise and experience with the Group are important. They
are awarded assignments on a competitive basis. The Audit Committee
reviews non-audit assignments quarterly, and approves all
assignments above a predetermined cost threshold.
8. TAX
Year ended Year ended
December December
2014 2013
Analysis of tax charge in the
year GBP000 GBP000
------------------------------ --------------- --------------
Corporation tax - -
Deferred tax - -
Tax charge - -
------------------------------ --------------- --------------
The tax for the year is different to the standard rate of
corporation tax in the UK of 21.5% (2013: 23.25%). The differences
are explained below:
Year ended Year ended
December December
2014 2013
GBP000 GBP000
-------------------------------------------- ------------------- -----------------
Profit before tax on continuing operations 3,465 3,332
------------------------------------------------ ------------------- -----------------
Profit before tax multiplied by rate
of corporation tax in the UK of 21.5%
(2013: 23.25%) 745 775
Effects of:
Share of associated company profit
not taxable (742) (732)
Expenses not deducted for tax purposes 4 160
Deferred tax not recognised (7) (203)
Total tax charge - -
------------------------------------------------ ------------------- -----------------
8. TAX continued
Deferred tax
Deferred tax is calculated in full on temporary differences
under the liability method using a tax rate of 20% (2013: 20%). A
reduction in the UK corporation tax rate from 23% to 21% (effective
from 1 April 2014), and further reductions to 20% (effective from 1
April 2015) were enacted as part of the Finance Act 2014. The
potential deferred tax assets are therefore shown at 20%.
Deferred tax assets and liabilities are offset when there is a
legally enforced right to offset current tax assets against current
tax liabilities and when the deferred taxes relate to the same
fiscal authority. The Group had neither deferred tax assets nor
deferred tax liabilities at December 2014 or 2013.
Deferred tax assets have not been recognised owing to the
uncertainty as to their recoverability. If these deferred tax
assets were recognised, the total asset would be GBP2,345,000
(2013: GBP2,351,000) as set out below:
As at As at As at As at
December December December December
2014 2014 2013 2013
Total Total Total Total
amount potential amount potential
recognised asset recognised asset
GBP000 GBP000 GBP000 GBP000
------------------------ ------------------ --------------- ----------------- ----------------
Tax losses - 2,345 - 2,351
Net deferred tax asset - 2,345 - 2,351
--------------------------- --------------- --------------- ----------------- ----------------
The Company has no recognised deferred tax in 2014 (2013: none),
but has a potential deferred tax asset of GBP2,345,000 in respect
of unused tax losses.
9. PROFIT/(LOSS) FOR THE FINANCIAL YEAR FOR THE PARENT ENTITY
As permitted by section 408 of the Companies Act 2006, the
Company's income statement and statement of comprehensive income
have not been included separately in these financial statements.
The profit for the financial year was GBP16,000 (2013: loss of
GBP1,401,000).
10. DIVIDENDS
No dividends have been paid or proposed in relation to 2014 or
2013.
11. PROFIT PER SHARE
Profit/(loss) per share has been calculated by dividing the
profit/(loss) attributable to ordinary shareholders by the weighted
average number of shares in issue and ranking for dividend during
the year.
There is no dilutive effect of share options potentially
issuable under the Group's employee share option plans.
Year ended Year ended
December December
2014 2013
GBP000 GBP000
------------------------------------------------ ------------------------ -----------------------
Profit from continuing operations attributable
to owners of the parent 3,465 3,332
Loss from discontinued operations attributable
to owners of the parent - (1,589)
---------------------------------------------------- ------------------------ -----------------------
Profit for the year 3,465 1,743
---------------------------------------------------- ------------------------ -----------------------
Weighted average number of shares used
for basic earnings per share calculation 605,456,480 507,705,496
Dilutive effect of share options - -
Weighted average number of shares used
for diluted earnings per share calculation 605,456,480 507,705,496
---------------------------------------------------- ------------------------ -----------------------
Basic and diluted profit per share
(pence) 0.6 0.3
---------------------------------------------------- ------------------------ -----------------------
The weighted average number of shares for 2013 include the
adjustments necessary to reflect the Rights Issue undertaken in
2013.
12. BLENKINSOPP PENSION ASSET
Following the 2012 Restructuring the Group's only defined
benefit pension liability was for the Blenkinsopp Section of the
Industry-Wide Mineworkers Pension Scheme. The liability of the
Group to make contributions was indemnified by UKCOL. UKCOL went
into Creditors Voluntary Liquidation following the Mining Group
July 2013 Restructuring but as part of this restructuring the
indemnity was novated to a new company, UK Coal Production
Limited.
Additionally Harworth Estates Mines Property Limited (HEMPL) has
indemnified the Company up to an amount of GBP3,100,000 should UK
Coal Production Limited fail to pay its obligations under its
indemnity. HEMPL is a company in the Harworth Estates Group and
owns the freeholds of the deep mines operated by UK Coal Production
Limited. Further the Group retains capped charges over certain
operating deep mines land against this liability but there is no
guarantee that these assets would cover the liability, and the
amount recoverable under such security is limited to the cap of
GBP3,100,000.
During the year to December 2014 all contributions have been
paid to the pension fund by UK Coal Production Limited.
Due to the likelihood that the Blenkinsopp pension liability
will be reimbursed by a third party being virtually certain a
credit equal to the IAS 19 (revised) liability was recognised as a
non-trading exceptional item in the consolidated income statement
in the year ended December 2013 and a debit for the same amount as
a non-current asset in the consolidated balance sheet.
13. INVESTMENTS
(a) Investment in subsidiaries
Year ended Year ended
December December
2014 2013
Company GBP000 GBP000
--------------------------- -------------------- -------------------
Cost:
At January and December 473,224 473,224
------------------------------- -------------------- -------------------
Provision for impairment:
At January and December 469,850 469,850
------------------------------- -------------------- -------------------
Net book amount:
At December 3,374 3,374
------------------------------- -------------------- -------------------
13. INVESTMENTS continued
(a) Investment in subsidiaries continued
Investments in subsidiaries are stated at cost less provision
for impairment. As permitted by section 616 of the Companies Act
2006, where the relief afforded under section 612 of the Companies
Act 2006 applies, cost is the aggregate of the nominal value of the
relevant number of the Company's shares and the fair value of any
other consideration given to acquire the share capital of the
subsidiary undertakings.
Particulars of the Group undertakings at December 2014 are as
follows:
Proportion
of
nominal value
of issued
share
capital held
Description by
of shares the Company
Company name Activity held %
--------------------------- --------------------- ------------- -------------------------
Harworth Insurance
Company Limited* Insurance Ordinary 100
Harworth Properties
Limited** Property investment Ordinary 100
Coalfield Estates Limited Non-trading Ordinary 100
Harworth Guarantee
Company Limited Non-trading Ordinary 100
Harworth Trustees Limited Dormant Ordinary 100
Harworth Secretariat Company secretarial
Services Limited services Ordinary 100
* see note 2 (b) above - the Company has granted a call option
to UKCMHL to acquire this entity.
The Group owns 100% of the issued share capital and voting
rights of all of the above companies, except those marked **where
the holding is indirect.
All of the above companies are incorporated in England and
Wales. They are all included in the Group's consolidated
results.
(b) Investment in associates
Group
Year ended Year ended
December December
2014 2013
GBP000 GBP000
----------------- ---------------- ---------------
At January 53,436 50,288
Share of profit 3,454 3,148
At December 56,890 53,436
-------------------- ---------------- ---------------
The Group accounts for its investment in Harworth Estates
Property Group Limited as an associate because it considers that it
has significant influence over that entity due to its 24.9%
shareholding and representation on the Harworth Estates board.
The Group's share of net assets of Harworth Estates has been
reduced by GBP5,000,000 to reflect the fact that, under the terms
of the Shareholder Agreement, the first GBP5,000,000 of dividend
income due to the Company will be paid to the Pension Schemes.
13. INVESTMENTS continued
(b) Investment in associates continued
Group continued
The results and assets and liabilities of its associate are as
follows:
2014 2013
GBP'000 GBP'000
----------------------------- ------------- --------- ---------
Harworth Estates Property Group Limited
England and
Country of incorporation Wales
Interest held at period
end 24.9% 24.9%
Non-current assets 291,484 278,613
Current assets 35,198 28,025
Current liabilities (64,436) (45,065)
Non-current liabilities (13,692) (27,003)
Revenues 13,934 13,172
Profit 13,984 12,409
Total comprehensive income 13,984 12,409
Company
Year ended Year ended
December December
2014 2013
GBP000 GBP000
------------------------ ---------------- ---------------
Fair value:
At January 53,436 50,288
Increase in fair value 3,454 3,148
At December 56,890 53,436
--------------------------- ---------------- ---------------
The fair value is measured by reference to the fair value of the
net asset value of the investment being measured. The largest
amount in net assets is investment properties (GBP289,611,000)
which are measured at fair value. All other assets and liabilities
fair value approximates carrying amounts.
Harworth Estates holds investment properties principally in five
categories. These are detailed below together with valuation
techniques used and effect on valuation from possible
sensitivities. Fair value of investment properties are determined
by obtaining an independent valuation prepared in accordance with
the current edition of the Appraisal and Valuation Standards
published by the Royal Institution of Chartered Surveyors.
External, independent valuation firms having appropriate,
recognised professional qualifications and recent experience in the
location and category of property being valued, value the portfolio
at each reporting date. Such measurement falls into level 3 of the
fair value hierarchy.
13. INVESTMENTS continued
(b) Investment in associates continued
Company continued
Agricultural Natural Business Major Strategic Total
Land Resources Parks Developments Land
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------------- -------------------- ---------- -------- ------------- --------- --------
At December
2013 21,394 21,204 68,551 117,463 48,128 276,740
Transfers 4,993 (4,993) - 4,291 (4,291) -
Direct acquisitions 285 - 2,883 - 100 3,268
Subsequent
expenditure 845 382 439 19,813 1,785 23,264
Increase in
fair value (4,538) 1,058 3,533 17,388 (1,693) 15,748
Disposals (259) (221) (4,000) (23,955) (974) (29,409)
-------------------- -------------------- ---------- -------- ------------- --------- --------
At December
2014 22,720 17,430 71,406 135,000 43,055 289,611
-------------------- -------------------- ---------- -------- ------------- --------- --------
Valuation techniques underlying Harworth Estates management's
estimation of fair value
Agricultural Land
Most of the Agricultural land is valued using the market
comparison basis, with an adjustment made for the length of
remaining term on the tenancy and the estimated cost to bring the
land to its highest and best use. Where the asset is subject to a
secure letting, this is valued on a yield basis, based upon sales
of similar types of investment.
Natural Resources
Natural resource sites in the portfolio are valued based on a
discounted cash flow for the operating life of the asset.
Major Developments
Major development sites are generally valued using residual
development appraisals, a form of discounted cash flow which
estimates the current site value from future cash flows measured by
observable current land and/or completed built development values,
observable or estimated development costs, and observable or
estimated development returns.
Where possible development sites are valued by direct comparison
to observable market evidence with appropriate adjustment for the
quality and location of the property asset, although this is
generally only a reliable method of measurement for the smaller
development sites.
Strategic Land
Strategic land is valued on the basis of discounted cash flows,
with future cash flows measured by current land values adjusted to
reflect the quality of the development opportunity, the potential
development costs estimated by reference to observable development
costs on comparable sites, and the likelihood of securing planning
consent. The valuations are then benchmarked against observable
land values reflecting the current existing use of the land, which
is generally agricultural and where available, observable strategic
land values.
Business Parks
The Business Parks are valued on the basis of market comparison
with direct reference to observable market evidence including
rental values, yields and capital values and adjusted where
required for the estimated cost to bring the property to its
highest and best use. The evidence is adjusted to reflect the
quality of the property assets, the quality of the covenant profile
of the tenants and the reliability/volatility of cash flows.
13. INVESTMENTS continued
(b) Investment in associates continued
Company continued
Information about fair value measurements using significant
unobservable inputs (level 3)
As at 31 December 2014
Agricultural Natural Major Strategic Land Business Parks
Land Resources Developments
---------------- ----------------- --------------- --------------- --------------- -------------- --------------
Reversionary
rental yield % weighted average - - - - 11.0
low - - - - 8.8
high - - - - 18.1
Land value per
acre GBP000 weighted average 3 7 55 16 30
low 1 1 6 1 3
high 33 71 150 449 254
Cost report
totals* GBP000 2,334 - 107,693 56,837 19,407
*Cost report totals represent the estimated cost to bring
investment properties to their highest and best use.
As at 31 December 2013
Agricultural Natural Major Strategic Land Business Parks
Land Resources Developments
---------------- ----------------- --------------- --------------- --------------- -------------- --------------
Reversionary
rental yield % weighted average - - - - 11.4
low - - - - 8.7
high 20.3
Land value per
acre GBP'000 weighted average 3 8 47 17 32
low 1 1 12 1 3
high 33 23 192 449 253
Cost report
totals* GBP`000s 2,050 - 108,767 13,800 -
*Cost report totals represent the estimated cost to bring
investment properties to their highest and best use.
13. INVESTMENTS continued
(b) Investment in associates continued
Company continued
The tables below shows some possible sensitivities to the key
valuation metrics and the resultant changes to the valuations.
As at 31 December 2014
Valuation metric +/- +/- effect on valuation
change
------------------ ----------- ------------- --------------------------------------------------------
Agricultural Natural Major Developments Strategic Business
Land Resources Land Parks
GBP000 GBP000 GBP000 GBP000 GBP000
----------------------- ------ ------------- ----------- ------------------- ---------- ----------
Value per acre 5% 1,136 872 6,750 2,153 3,570
Rental 5% - - - - 1,735
Yield (e.g.
11% to 10%) 1% - - - - 2,451
Cost report
totals 5% 117 - 5,385 2,842 970
----------------------- ------ ------------- ----------- ------------------- ---------- ----------
As at 31 December 2013
Valuation metric +/- +/- effect on valuation
change
Agricultural Natural Major Strategic Business
Land Resources Developments Land Parks
GBP000 GBP000 GBP000 GBP000 GBP000
------------------ -------- ------------- ----------- -------------- ---------- ---------
Value per acre 5% 1,070 1,060 5,873 2,406 3,428
Rental increase 5% - - - - 2,046
Yield (e.g.
11% to 10%) 1% - - - - 3,922
Cost report
totals 5% 103 - 5,438 690 -
------------------ -------- ------------- ----------- -------------- ---------- ---------
There are no inter-relationships between unobservable
inputs.
(c) Available for sale investments
In December 2012, as part of the 2012 Restructuring, the Company
acquired a 33% of the voting rights, and 90% of the economic
rights, of UKCMHL, a company incorporated in England and Wales, at
a fair value of GBP1.
Ordinarily it is presumed that where an investor holds 20% or
more of the voting power of an entity, it has significant power
over that entity. Management concluded that post restructuring it
had no control or significant influence over UKCMHL and therefore
accounted for the investment as an available for sale investment
rather than as an investment in an associate under IAS 39,
'Financial instruments: Recognition and measurement'.
UKCMHL went into administration as part of the Mining Group July
2013 Restructuring. The Company wrote off its GBP1 investment in
2013.
14. TRADE AND OTHER RECEIVABLES - CURRENT
Group Company
As at As at As at As at
December December December December
2014 2013 2014 2013
GBP000 GBP000 GBP000 GBP000
----------------------------------------- ----------------- --------------- ----------------- ---------------
Trade receivables (note 27) 264 336 264 336
Less: provision for impairment
of trade receivables - - - -
Net trade receivables 264 336 264 336
Other receivables 336 346 - 10
Prepayments and accrued income 59 - 59 -
Amounts owed by subsidiary undertakings
(note 27) - - 209 204
659 682 532 550
----------------------------------------- ----------------- --------------- ----------------- ---------------
The carrying amount of trade and other receivables approximate
to their fair value due to the short time frame over which the
assets are realised. All of the Group's and Company's receivables
are denominated in sterling.
The maximum exposure to credit risk at the reporting date is the
carrying value of each class of receivables as disclosed in note
19. The Group and Company do not hold any collateral as
security.
Movements on the Group provisions for impairment of trade
receivables are as follows:
Group
2014 2013
GBP000 GBP000
------------------------------------ ----------------- --------------
At the beginning of the year - -
Receivables written off during the
year as uncollectable - (1,017)
Provided for in the year - 1,017
At the end of the year - -
--------------------------------------- -------------- --------------
The creation and releases of the provision for impaired
receivables in 2013 was included in discontinued operations in
other operating income and expenses in the consolidated income
statement. Amounts charged to the allowance account are generally
written off when there is no expectation of any additional
recoveries.
The other classes of assets within trade and other receivables
do not contain impaired assets.
As of December 2014, trade receivables of GBP264,000 (2013:
GBP336,000) were fully performing.
As of December 2014 or December 2013, no trade receivables were
past due but not impaired.
15. ASSETS AND LIABILITIES CLASSIFIED AS HELD FOR SALE
a) Assets of disposal group
classified as held for sale
Group
* Restated
As at
As at December As at December December
2014 2013 2012
GBP000 GBP000 GBP000
------------------------------------------- --- ------------------- ------------------- ------------------
Investment properties 335 828 5,433
Assets in the course of disposal - - -
Trade and other receivables 666 1,448 897
Reinsurance assets - 8,910 -
Available for sale financial
assets 3,278 7,553 12,149
Cash and cash equivalents 840 2,963 2,824
------------------- ------------------
Total 5,119 21,702 21,303
------------------------------------------- --- ------------------- ------------------- ------------------
b) Liabilities of disposal group
classified as held for sale
Group
As at
As at December As at December December
2014 2013 2012
GBP000 GBP000 GBP000
------------------------------------------- --- ------------------- ------------------- ------------------
Trade and other payables 263 7,465 600
Provisions - 8,985 8,271
206 602 7,782
Total 469 17,052 16,653
------------------------------------------- --- ------------------- ------------------- ------------------
The assets and liabilities of the disposal group held for sale
at the year-end relate to Harworth Insurance Company Limited
('HICL'). As described in note 2, the Company granted a call option
to UKCMHL to acquire the entire issued share capital of its
subsidiary undertaking, HICL, and UKCMHL has granted the Company a
put option to require UKCMHL to acquire HICL. Exercise of the call
option is conditional upon obtaining PRA and FSA consent or the
parties agreeing that such control is no longer required. The
consideration for the call option was GBP4,650,000.
* 2012 has been restated to show the split between Cash and cash
equivalents and Available for sale financial assets.
16. CASH AND CASH EQUIVALENTS
Group Company
As at As at As at As at
December December December December
2014 2013 2014 2013
GBP000 GBP000 GBP000 GBP000
Cash 1,489 1,428 1,489 1,428
Cash equivalents - - - -
Continuing operations 1,489 1,428 1,489 1,428
------------------------------- ----------------- ----------------- ----------------- -----------------
Cash and cash equivalents
classified as held for sale 840 2,963 - -
Cash and cash equivalents
in the cash flow statement 2,329 4,391 1,489 1,428
------------------------------- ----------------- ----------------- ----------------- -----------------
16. CASH AND CASH EQUIVALENTS continued
Group
* Restated * Restated
As at As at As at
December December December
2014 2013 2012
GBP000 GBP000 GBP000
--------------------------------------------- --------- ----------- -----------
Cash (used in)/generated from operating
activates (69) (11,743) 35,741
--------------------------------------------- --------- ----------- -----------
Cash flows from investing activities
Interest received 10 6 369
Proceeds on disposal of business - - 20,000
Cash and cash equivalents transferred
ton disposal of business - - (19,898)
Investments in available for sale
financial assets - - (12,149)
Fees payable on restructure of business - - (15,215)
Proceeds on disposal of investment
property - - 21,496
Proceeds on disposal of operating
property, plant and equipment - - 3,498
Development costs of investment properties - - (5,263)
Pre-coaling expenditure for surface
mines and deferred stripping costs - - (22,961)
Purchase of operating property, plant
and equipment - - (19,816)
Cash generated from discontinued operations 1,275 8,105 -
Cash generated from/(used in) investing
activities 1,285 8,111 (49,939)
--------------------------------------------- --------- ----------- -----------
Cash (used in)/generated from financing
activities (3,278) 5,148 (8,205)
--------------------------------------------- --------- ----------- -----------
(Decrease)/increase in cash (2,062) 1,516 (22,403)
--------------------------------------------- --------- ----------- -----------
At January
Cash and cash equivalents 4,391 2,875 25,278
--------------------------------------------- --------- ----------- -----------
(Decrease)/increase in cash (2,062) 1,516 (22,403)
--------------------------------------------- --------- ----------- -----------
At December
Cash 1,489 1,428 51
Cash and cash equivalents classified
as held for sale 840 2,963 2,824
Cash and cash equivalents 2,329 4,391 2,875
--------------------------------------------- --------- ----------- -----------
* 2012 Group cash flow has been restated to include the cash
flows of the Held for sale asset and to show the restated split
between Cash and cash equivalents (see note 16) and Available for
sale financial assets (see also note 15).
17. BORROWINGS
At the 2012 Restructuring all bank loans were transferred to the
Property Division and all finance lease and generator loans were
transferred to the Mining Division.
The fire at Daw Mill colliery in February 2013 which led to its
subsequent closure resulted in the mining business being unable to
fully honour its agreements with the Group with regard to funding
on-going running costs and paying the 2012 Restructuring fees.
Therefore on 31 May 2013 the Group entered a twelve month
GBP5,000,000 term loan facility with Lloyds Bank to enable the
Group to pay the outstanding 2012 Restructuring fees and other
potential liabilities.
The bank facility was agreed with Lloyds Bank on the
understanding that the Company would repay the facility by raising
funds from an equity fundraising.
Interest on the facility accrued at a margin of 4.50 per cent.
above LIBOR and the usual mandatory regulatory costs until 31 July
2013, with a margin of 9.00 per cent. per annum applied
thereafter.
The outstanding loan drawn of GBP2,990,000 was repaid in
September 2013 from the proceeds of the Rights Issue and the
facility was terminated and the related security released.
18. TRADE AND OTHER PAYABLES
Group Company
As at As at As at As at
December December December December
2014 2013 2014 2013
GBP000 GBP000 GBP000 GBP000
------------------------------ ----------------- --------------- ----------------- ---------------
Current
Trade payables 28 52 28 52
Amounts owed to subsidiary
undertakings (note 27) - - 49 49
Taxation and social security 76 57 76 57
Accruals and deferred income 4,931 4,891 4,931 4,891
5,035 5,000 5,084 5,049
------------------------------ ----------------- --------------- ----------------- ---------------
Included in accruals and deferred income in both years is
GBP4,650,000 relating to the deferred income on the option for
Harworth Insurance Company Limited.
19. FINANCIAL INSTRUMENTS AND DERIVATIVES
The Group's principal financial instruments during the year
included trade and other receivables, cash and cash equivalents,
interest bearing borrowings and trade and other payables.
Other financial assets and liabilities
December 2014 December 2013
Fair
Book value value Book value Fair value
Group GBP000 GBP000 GBP000 GBP000
----------------------------- ------------------- --------------- ----------------- ---------------
Assets
Cash and cash equivalents 1,489 1,489 1,428 1,428
Trade and other receivables 659 659 682 682
Liabilities
Trade and other payables 4,959 4,959 4,943 4,943
------------------------------ ------------------- --------------- ----------------- ---------------
In accordance with IAS 39, the Group classifies the assets and
liabilities in the analysis above as 'loans and receivables' and
'other financial liabilities', respectively. At the 2014 and 2013
year ends, the Group did not have any 'held to maturity' or
'available for sale' financial assets or 'held for trading'
financial assets and liabilities as defined by IAS 39. No financial
assets are impaired or past due.
At the year end, the Company held cash and cash equivalents of
GBP1,489,000 (2013: GBP1,428,000).
For other financial assets and liabilities, which are all
short-term in nature, the carrying value approximates to fair
value.
Included in trade and other payables is deferred income in both
years of GBP4,650,000 relating to the deferred income on the option
for Harworth Insurance Company Limited. On completion of the option
this deferred income will be offset against the net position of the
assets and liabilities held for sale of GBP4,650,000 relating to
Harworth Insurance Company Limited as shown in note 15.
20. FINANCIAL RISK MANAGEMENT
The Group's overall risk management programme focuses on credit
and liquidity risks to minimise potential adverse effects on the
Group's financial performance.
Risk management is carried out centrally under policies approved
by the Board of Directors. The Board discusses and agrees courses
of action to cover material risk management areas, including credit
risk and investment of excess liquidity.
The Group's on-going running costs are funded under a
Shareholders' Agreement with the Pension Protection Fund and
Harworth Estates which provides for the running costs of the Group
to be met by Harworth Estates by way of indemnity until 31 December
2014, and also for Harworth Estates to indemnify the Group for the
employment costs of its executive team up to certain capped amounts
for an open ended period.
For the calendar years 2015 and 2016, the Shareholders'
Agreement provides that the Group may request loans from Harworth
Estates to fund the Group's running costs. If such loans are
advanced, dividends payable by Harworth Estates to the Group equal
to an amount of such loans shall be directed to the Pension
Protection Fund so such cash will not be received by the Group. The
employment costs of the Group's executive team will continue to be
met under the agreement with Harworth Estates.
Credit risk
The Group is subject to credit risk arising from outstanding
receivables and committed cash and cash equivalents and deposits
with banks and financial institutions. The Group's policy is to
manage credit exposure to trading counterparties within defined
trading limits.
The Group is exposed to counterparty credit risk on cash and
cash equivalent balances. The Group and Company hold all of their
cash deposits with their principal bankers.
Liquidity risk
The Group is subject to the risk that it will not have
sufficient liquid resources to fund its on-going business. The
Group manages its liquidity requirements with the use of both short
and long-term cash flow forecasts.
The Group had no net debt at either the 2014 or 2013 year ends.
The Group generated cash from operating activities and investing
activities for the year of GBP61,000 (2013: used GBP3,771,000).
The table below analyses the Group's financial liabilities which
will be settled on a net basis into relevant maturity groupings
based on the remaining period at the balance sheet date to the
contractual maturity date. The amounts disclosed in the table are
the gross contractual undiscounted cash flows.
Between Between
Less than 1 and 2 and 5
1 year 2 years years
GBP000 GBP000 GBP000
------------------------------------ ---------------- --------------- -----------------
At December 2014
Trade and other payables (including
deferred income) 4,959 - -
-------------------------------------- ---------------- --------------- -----------------
At December 2013
Trade and other payables (including
deferred income) 4,943 - -
-------------------------------------- ---------------- --------------- -----------------
Capital risk management
The Group monitors cash balances to ensure it has sufficient
capital to manage and maintain its business activities. Cash
balances are disclosed note 16.
The Group is subject to the risk that its capital structure will
not be sufficient to support the growth of the business. The
Group's objectives when managing capital are to safeguard the
Group's ability to continue as a going concern in order to provide
returns for shareholders and benefits for other stakeholders and to
maintain an optimal capital structure to reduce the cost of
capital.
In order to maintain or adjust the capital structure, the Group
may adjust the amount of dividends paid to shareholders, return
capital to shareholders, issue new shares or sell assets to reduce
debt.
21. RETIREMENT BENEFIT OBLIGATIONS
Defined contribution pension schemes
The Group pays defined contribution payments to pension
insurance plans. Contributions to defined contribution schemes in
the year amounted to GBP27,000 (2013: GBP27,000). The Group has no
further payment obligations once the contributions have been paid.
The contributions are recognised as an expense when they are
due.
Defined benefit obligations
Prior to the 2012 Restructuring that was completed on 10
December 2012, the Group had three pension schemes providing
benefits based on final pensionable pay. Under the Protected
Persons Regulations established on privatisation the Company was,
as a wholly owning Parent Company, a statutory guarantor of UK Coal
Mining Limited's liabilities to the scheme. The majority of the
employees within defined benefit schemes were members of one or
other of the two industry wide schemes. Separately the Group and
Company has defined benefit obligations in respect of the
Blenkinsopp Section of the Industry-Wide Mineworkers' Pension
Scheme (the Blenkinsopp scheme). This scheme is closed to new
members.
Under the terms of the 2012 Restructuring, all of the assets and
liabilities of the pension schemes (with the exception of the
Blenkinsopp scheme) were transferred to the UKCOL section of each
of the Industry-Wide Coal Staff Superannuation Scheme and the
Industry-Wide Mineworkers' Pension Scheme. The only principal
employer in respect of these two schemes was UKCOL, a subsidiary of
UK Coal Holdings Limited which is not, and never has been, a
subsidiary of the Company. Consequently the Company has no
liability in respect of the liability of UKCOL. As all of the
liabilities of UKCML have been transferred, whilst the Company
continues to guarantee the liabilities these are now of GBPnil
value.
The balance sheet amounts in respect of retirement benefit
obligations are:
Group Company
As at As at
As at December As at December December December
2014 2013 2014 2013
GBP000 GBP000 GBP000 GBP000
------------------------ ---------------- --------------- ---------------- ---------------
Relating to continuing
activities
Blenkinsopp 564 683 564 683
564 683 564 683
------------------------ ---------------- --------------- ---------------- ---------------
Contributions to the Blenkinsopp scheme were GBP189,300
(2013:GBP189,300) and were paid under an indemnity by UK Coal
Production Limited. It is expected that contributions of the same
amount will be paid under this indemnity or the Harworth Estates
guarantee in 2015. At December 2014, no contributions remained
unpaid (2013: GBPnil).
The pension scheme is valued annually by a qualified independent
actuary for the purposes of IAS 19 (revised) and the preparation of
financial statements. The assumptions which usually have the most
significant effect on the results of the valuation are the discount
rate, which is based on bond yields, and the rates of increase in
pensions. There are no active members of this scheme. The main
assumptions underlying the valuation of the Blenkinsopp scheme:
As at 31 As at 28
December December
2014 2013
--------------------------- ---------- ----------
Discount rate 3.6% p.a. 4.4% p.a.
Rate of pension increases 2.1% p.a. 2.4% p.a.
Rate of price inflation 3.1% p.a. 3.4% p.a.
(RPI)
Rate of price inflation 2.1% p.a. 2.4% p.a.
(CPI)
Rate of cash commutation 20.00% 20.00%
------------------------------- ---------- ----------
21. RETIREMENT BENEFIT OBLIGATIONS continued
Defined benefit obligations (continued)
Year
Year ended ended
December December
2014 2013
-------------------------------- ----------- ----------
Longevity at age 60 for current
pensioners (years) 18.7-22.1 18.9-22.3
Longevity at age 60 for future
pensioners (years) 20.4-24.1 20.5-24.4
The assumed pension increases depend on the period of service
accrual (before April 1997: no increases, after 1997: in line with
statutory minimum increases based on consumer price inflation).
The amounts recognised in the consolidated statement of
financial position:
2014 2013 2012 2011 2010
GBP000 GBP000 GBP000 GBP000 GBP000
----------------------- ----------------- ----------------- ----------------- ----------------- -----------------
Fair value of plan
assets 1,740 1,393 1,282 1,106 807
Present value of
funding obligations (2,304) (2,076) (2,002) (1,698) (1,659)
Net liability
recognised
in the statement
of financial position (564) (683) (720) (592) (852)
----------------------- ----------------- ----------------- ----------------- ----------------- -----------------
The Blenkinsopp scheme does not own any shares in the
Company.
The amounts recognised in the consolidated income statement
are:
Year ended Year ended
December December
2014 2013
GBP000 GBP000
-------------- ---------------- ---------------
Expenses (36) (21)
Interest cost (26) (27)
(62) (48)
--------------
A further GBP8,000 (2013: loss of GBP104,000) has been reflected
in the statement of comprehensive income in the year. This
represents the net effect of experience and actuarial gains and
losses on the scheme in the year.
Year ended Year ended
December December
2014 2013
Change in assets GBP000 GBP000
---------------------
Fair value of plan assets at the
start of the year 1,393 1,282
Interest income 63 57
Actual return on scheme assets
excluding interest income 213 (24)
Employer contributions 189 189
Expenses (36) (21)
Benefits paid (82) (90)
Fair value of plan assets at the
end of the year 1,740 1,393
----------------------------------- ---------------------
21. RETIREMENT BENEFIT OBLIGATIONS continued
Defined benefit obligations (continued)
Year ended Year ended
December December
2014 2013
Change in defined benefit obligations GBP000 GBP000
------------------
Present value of defined benefit obligation
at the start of the year (2,076) (2,002)
Current service cost - -
Interest cost (89) (84)
Actuarial profit/(loss) arising
from changes in demographic assumptions (243) (44)
Actuarial loss arising from changes
in financial assumptions 22 (36)
Experience losses arising on liabilities - -
Benefits paid 82 90
Present value of defined benefit obligation
at the end of the year (2,304) (2,076)
------------------
Year ended Year ended
December December
2014 2013
Analysis of the movement of the balance
sheet liability GBP000 GBP000
--------------------
At the start of the year (683) (720)
Total amounts recognised in the income
statement (62) (48)
Contributions - -
Employer contributions 189 189
Net actuarial loss recognised in
the year (8) (104)
At the end of the year (564) (683)
--------------------
Year ended Year ended
December December
2014 2013
Cumulative actuarial gains and losses
recognised in equity GBP000 GBP000
-----------------
At the start of the year 223 327
Net actuarial loss in the year (8) (104)
At the end of the year 215 223
----------------------------------------- -----------------
Year ended Year ended
December December
2014 2013
Experience gains and losses GBP000 GBP000
Actual return on scheme assets excluding
interest income 213 (24)
Actuarial loss arising from changes
in demographic assumptions (243) (44)
Actuarial loss arising from changes
in financial assumptions 22 (36)
Experience losses on liabilities - -
Net actuarial loss (8) (104)
Contributions are determined by a qualified actuary on the basis
of triennial valuations, using the projected credit unit method.
The most recent valuations for the purpose of determining
contributions were at 31 December 2009, which were agreed in
September 2011. This showed an estimated past service deficit of
GBP2,674,000. The next valuation has yet to be agreed and
signed.
The sensitivity of the defined benefit obligation to changes in
the weighted principal assumptions is:
21. RETIREMENT BENEFIT OBLIGATIONS continued
Defined benefit obligations (continued)
Year
Year ended ended
December December
2014 2013
GBP000 GBP000
Change in discount rate by 0.1% 39 33
Change in price inflation (and
associated assumptions) by 0.1% 20 17
Increase in life expectancy by
1 year 43 35
--------------------------------------
The above sensitivity analyses are based on a change in an
assumption while holding all other assumptions constant. In
practice some of the assumptions may be correlated. No changes have
been made to the method and types of assumptions from those in the
previous year.
22. CALLED UP SHARE CAPITAL
2014 2013
Number of Number of
Group and Company shares GBP000 shares GBP000
--------------------- ---------------- -----------------
Authorised share
capital
At the start and
end of the year
Ordinary shares of Unlimited Unlimited Unlimited Unlimited
1 pence each
---------------- -----------------
Issued and fully
paid
Ordinary shares of
1 pence each
January 605,456,480 6,055 299,298,160 2,993
Shares issued in
Rights Issue - - 299,298,160 2,993
Shares issued under
LTIP - - 6,860,160 69
December 605,456,480 6,055 605,456,480 6,055
---------------- -----------------
On 11 September 2013 the Company issued 299,298,160 ordinary
shares at 2.0 pence each to qualifying shareholders, pursuant to
the 1 for 1 fully underwritten Rights Issue announced by the
Company on 7 August 2013. Net proceeds raised after costs of
GBP838,000, was GBP5,148,000.
Long Term Incentive Plan
A Long Term Incentive Plan was introduced in 2000 for Executive
Directors and Senior Executives. Details of the plan are set out in
the Directors' Remuneration Report. During the year, GBPnil (2013:
GBPnil) shares were granted under the LTIP. The shares are awarded
at an exercise price of GBPnil. Shares outstanding at December 2014
are as follows:
2014 2013
Number Number
Exercisable from 2014 - 1,676,478
Exercisable from 2015 - -
---------------
A reconciliation of option movements over the year to December
2014 is shown below:
Year ended Year ended
December December
2014 2013
Number Number
Outstanding at the start of the
year 1,676,478 12,349,638
Granted - -
Adjustment in respect of Rights
Issue - 2,540,160
Exercised - (6,860,160)
Expired (1,676,478) (6,353,160)
Outstanding at the end of the year - 1,676,478
------------------------------------ ----------------- -----------------
22. CALLED UP SHARE CAPITAL continued
Cessation of employment
If an award holder ceases to be employed within the Group by
reason of injury, ill health or disability (evidenced to the
satisfaction of the Remuneration Committee), redundancy,
retirement, or upon the sale or transfer out of the Group or the
Company or undertaking employing the award holder (each 'a Good
Reason' and such an award holder, a 'Good Leaver'), then:
As regards awards for which the vesting date has not by then
occurred, he or she must normally wait until the normal vesting
date in respect of the award before being permitted to exercise it
(save that the Remuneration Committee will have the discretion
instead to allow the award holder to exercise some or all of such
unvested awards within the period of 12 months, or such shorter
period as is determined by the Remuneration Committee, following
the date of cessation of employment); and
Ordinarily, where an award holder ceases to be employed within
the Group (or gives notice to terminate his or her employment) for
any reason other than a Good Reason, any awards held by him or her
(whether vested or not) will lapse and cease to be exercisable.
However, the Remuneration Committee will have the discretion,
subject to such additional conditions as it determines (including a
power to reduce the number of shares under award whether such award
has vested or not), to permit the award holder to exercise some or
all of his or her awards on the same basis as a Good Leaver.
The total charge for the year relating to employee share-based
payment plans was GBPnil (2013: GBP480,000) all of which related to
equity settled share-based payment transactions.
23. SHARE PREMIUM ACCOUNT
2014 2013
Group and Company Notes GBP000 GBP000
At January 32,911 30,756
Premium on shares issued
in Rights Issue - 2,993
Costs relating to Rights
Issue - (838)
At December 32,911 32,911
-----------------
24. OTHER RESERVES
Capital
redemption
reserve Total
Group GBP000 GBP000
At January 2013 and 2014 and December
2013 and 2014 257 257
Capital
redemption
reserve Total
Company GBP000 GBP000
At January 2013 and 2014 and December
2013 and 2014 257 257
The capital redemption reserve did not represent realised
reserves at either the 2014 or 2013 year ends.
25. CAPITAL AND OTHER FINANCIAL COMMITMENTS
Capital expenditure contracted for at 31 December 2014 is GBPnil
(2013: GBPnil).
26. OPERATING LEASE COMMITMENTS
Neither the Group nor the Company had any interest in any
operating leases (2013: GBPnil).
27. RELATED PARTY TRANSACTIONS
Group
The remuneration of the Directors is disclosed in the Directors'
Remuneration Report. The only other key manager is the Company
Secretary whose remuneration is disclosed in note 5.
Harworth Estates Group
Revenue includes GBP1,458,000 (2013: GBP1,168,000) in respect of
recharges to the Harworth Estates Group for on-going costs of the
Company and secretarial services provided. Note 2 provides details
of the changes to the agreement under which these recharges
operates.
As part of the Heads of Terms for the transaction outlined in
the Chairman's Statement, Harworth Estates has indemnified the
Company is respects of costs it incurs in respect of this
transaction should it not proceed.
The Harworth Estates Group at 31 December 2014 owed GBP261,000
(2013: GBP336,000) to the Company.
Mining business
Revenue includes GBPnil (2013: GBP367,000) in respect of
recharges to the mining business, prior to the Mining Group July
2013 Restructuring for on-going costs of the Company and
secretarial services provided. At the date of the Mining Group July
2013 Restructuring the amount due, net of bad debt relief, from the
mining business, was GBP1,017,000. This balance is not expected to
be recovered and has been written off.
The mining business paid contributions to the Blenkinsopp
pension scheme of GBPnil (2013: GBP95,000) in the period under the
indemnity agreement entered into at the 2012 Restructuring.
Following the Mining Group July 2013 Restructuring this deed of
indemnity was transferred to UK Coal Production Limited a member of
the new mining group. UK Coal Production Limited is not a related
party.
Company
The Company carried out the following transactions with
subsidiary undertakings.
Management charges
During the year the Company raised management charges of
GBP1,000 on subsidiary undertakings (2013: GBPnil)
Dividends received
During the year the Company received dividends of GBPnil (2013:
GBPnil) from subsidiary undertakings.
Interest
During the year the Company received interest of GBP5,000 (2013:
GBP5,000) from and paid interest of GBP1,000 (2013: GBP1,000) to
subsidiary companies that form part of the continuing
operations.
All transactions occurred whilst the related parties were
subsidiary undertakings.
Receivables and indebtedness
Details of the Company's receivables and indebtedness are set
out in notes 14 and 18 and amounts due from, or owed to, related
parties are set out below:
As at December As at December
2014 2013
Owed to:- GBP000 GBP000
------------------
Scratching Cat - -
Harworth Guarantee Company
Limited (49) (49)
(49) (49)
--------------------------- ------------------
As at December As at December
2014 2013
Owed by:- GBP000 GBP000
---------------------------------
Harworth Estates Property Group
Limited 261 336
Coalfield Estates Limited 209 204
470 540
27. RELATED PARTY TRANSACTIONS continued
Peel Group
The Peel Group through Goodweather Holdings Limited hold over 30
per cent of the ordinary shares of the Company and are therefore a
related party.
Peel were required by Lloyds Bank to provide a guarantee to
Lloyds Bank for the facility entered into by the Company on 31 May
2013. At the same time the Company entered into a counter indemnity
with Peel which enabled Peel to claim against the Company should
Lloyds Bank make a claim under the guarantee. In addition Peel was
also required to undertake to underwrite an equity placing to raise
at least GBP5,000,000 as part of the security package. Both the
facility and counter indemnity have since been terminated.
On 7 August 2013 Peel entered into an underwriting agreement
with the Company to fully underwrite the Rights Issue. The
underwriting agreement provided for Peel to be paid by the Company
a commission of the greater of (i) one per cent. of the aggregate
value at the issue price of the underwritten shares or (ii)
GBP50,000. A payment of GBP50,000 was subsequently paid.
Peel entered into an irrevocable undertaking with the Company on
7 August 2013, pursuant to which they agreed to procure the take up
of their respective entitlement under the Rights Issue in full and
to procure to vote in favour of the Rights Issue resolutions, to
the extent they were permitted by law to do so. Peel subsequently
met these undertakings.
During the year Peel invoiced GBP41,666 (2013: GBP40,000) in
respect of Steven Underwood's fees and expenses and GBP16,000
(2013: GBP1,300) for the rental of office space and services.
Stonebrook Associates
Certain of Jonson Cox's travel expenses and costs in relation to
his duties at Coalfield Resources and Harworth Estates (GBP4,565 in
2014 and GBP4,638 in 2013) are invoiced to Coalfield Resources by
Stonebrook Associates, a company controlled by him.
Scratching Cat
Geoff Mason, our Company Secretary, supplies his service through
Scratching Cat Limited, a company of which he is a director. During
the year charges were made in relation to company secretarial
duties of GBP27,000 (2013: GBP92,000) and charges of GBP5,000
(2013: GBP111,000) made for supply of other personnel whom provided
interim finance support to the Group.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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