The second half of 2015 has been a challenging period for your company and in particular for Black Wattle, our direct coal mining subsidiary in South Africa. Overall for the year ended 31 December 2015, your company achieved operating profit before depreciation, fair value adjustments and exchange movements (adjusted EBITDA) of £1.7 million (2014: £4.3 million).

Although Black Wattle was profitable for the first half of the year, the mine operated at a loss in the second half. This was largely because of issues over which we have no control, namely the continued weakness in the coal price and delays associated with the granting of blasting permissions. A fuller explanation of these issues and the way that your management have addressed the delays in the permissions is detailed in the Mining Review. On a related issue, your company has been both a beneficiary and a victim of the weakness of the South African Rand. On the upside we have benefitted from the fact that our export coal is priced in US Dollars, but the weakness of the Rand against Sterling, particularly in the second half of the year, has meant that we have taken a substantial exchange rate loss of £1.2million (2014: £0.1million) on consolidation of our South African Rand denominated net assets into the group balance sheet and a £0.5million loss (2014: £0.1million) through the Income Statement related to the retranslation of intercompany trading balances.


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