annual report and accounts 2013
annual report and accounts 2013 mission statement
shaft sinkers seeks to 
generate longterm returns for 
investors by exploiting a 
global leadership position in 
the development of large 
deep complex shaft systems
strategic report
1 highlights
2 group at a glance
4 chairman’s statement
6 strategy and context
8 business model
10 chief executive’s review
15 key performance indicators
16 principal risks and uncertainties
18 corporate responsibility
20 financial review
directors’ report
24 board of directors
26 director’s report
30 corporate governance
35 audit committee report
37 other committees
39 remuneration report
44 statement of the directors’ 
responsibilities
45 report of the independent 
auditors
financial statements
48 consolidated income statement
49 consolidated statement  
of comprehensive income
50  consolidated statement  
of financial position
51  parent company statement  
of financial position
52 consolidated statement  
of changes in equity
53 consolidated statement  
of cash flows 
54 notes to the consolidated  
financial statements 
92 shareholder information 1
shaft sinkers holdings plc annual report and accounts 2013
wwwshaftsinkersgroupcom
highlights
financial highlights
strategic report
strategic
• growth in international projects to partially offset a 
challenging south african market 
• positive longterm industry fundamentals intact 
• international alliances in india china and the uk have the 
potential to support longerterm growth
financial
• revenues down 21 to gbp152 million 2012 gbp1925 
million 
• gross margins of 131 2012 117 
• pbt down 165 to gbp29 million 2012 gbp35 million 
• net debt of gbp16 million 2012 gbp21 million 
• repayment of gbp69 million standard bank loan
• material impact of legal fees related to ongoing arbitration 
of gbp39 million 2012 gbp11 million with outcome 
expected early 2015 
operational
• significant cost reduction initiatives implemented with 
expenses reduced by 17
• gbp476 million of contract extensions awarded 
• operational performance below management’s 
expectations
• fatality free year 
growth
• yearend committed order book gbp2382 million 2012 
gbp3465 million
• outstanding tenders gbp970 million 2012 gbp11 billion 
access road to styldrift  
1
2
3
9
5
4
7
6
8
current projects
historical projects
offices
gross proﬁt by geography

2012
south africa
international
66
34
2011
47
53
62
38
2013
62
38
revenue by geography

2012
south africa
international
90
10
2011
81
19
72
28
2013
72
28
order book by geography

2012
south africa
international
416
584
2013
25
75
2011
687
313
25
75
strategic report
2
shaft sinkers holdings plc annual report and accounts 2013
group at a glance
shaft sinkers holdings plc specialises in the sinking of particularly deep 
and wide vertical and decline shafts as well as the development of 
underground horizontal tunnels the group also has the capability to 
excavate ancillary infrastructure such as pump chambers and water 
sumps as well as rock handling facilities we have the capability to sink 
shafts and develop tunnels through all types of rock strata
selected 
clients
current clientsprojects
south africa anglo platinum 
 royal bafokeng  
 impala
 lonmin 
international randgold 
 vedanta
historical clientsprojects
anglo american
de beers 
rio tinto
offices
cyprus
dubai
isle of man
johannesburg  
kazakhstan
mauritius 
moscow
the netherlands
south african heritage expanding internationally  3
shaft sinkers holdings plc annual report and accounts 2013
wwwshaftsinkersgroupcom
operations south africa
1
 afplats – leeuwkop
location rustenburg north west province 
south africa
during 2013 shaft sinkers was awarded two 
further contract extensions for works at 
leeuwkop as a result shaft sinkers is currently 
engaged in sinking the main shaft at leeuwkop 
to a depth of 984m the current work is 
scheduled to be completed in june 2014 with 
further extensions likely thereafter by 25 april 
2014 the main shaft had reached 966m
2
 anglo platinumroyal bafokeng 
resources – styldrift
location rustenburg north west province 
south africa
the project involves the sinking of both the main 
and service shafts the main shaft which is 
105m in diameter will be used to hoist rock and 
transport people and material will be sunk to a 
final depth of 740m
 
the services shaft is 65m in diameter and will 
have a depth of 705m the primary function of 
this shaft is to provide for all the services such as 
water electricity air and water pumping facilities
3
 impala platinum – impala 16
location rustenburg north west province 
south africa
on 21 june 2013 shaft sinkers and its associated 
contracting and project partners successfully 
handed over beneficial control of the number 16 
shaft complex to impala platinum the main 
shaft and the ventilation shaft were sunk to a 
depth of 1657m and 1400m respectively 
following the handover shaft sinkers has been 
awarded a further contract relating to the 
number 16 shaft for lateral development to 
access the reef horizon on 25 26 and 27 levels
4
 impala platinum – impala 17
location rustenburg north west province 
south africa
the number 17 shaft project is for the sinking of 
three vertical shafts namely the main the 
ventilation and the refrigeration shafts with 
associated infrastructure
sinking of the fridge shaft has been completed 
and currently development work is being 
undertaken at both the ventilation and main shafts 
shaft sinkers agreed a new contract with impala in 
april 2014 which will run to 15 september 2014 
after which date it will terminate if not renewed 
impala is retendering the contract and shaft 
sinkers is participating in the retender process
5
 lonmin – hossy
location marikana east rustenburg north 
west province south africa
hossy shaft was designed sunk equipped and 
commissioned by shaft sinkers the scope of 
work has since been extended to include 
mechanized equipment to develop the access 
tunnels to the reef and undertake stoping
 
the project includes expansion of haulages east 
and west up to the capital footprint inclusive of all 
associated development of reef and underground 
infrastructures such as workshops and stores 
6
 lonmin – karee 3
location marikana west rustenburg north 
west province south africa
shaft sinkers holdings was awarded additional 
work by lonmin at karee 3 in november 2013 
the work at karee 3 ug2 project consists of two 
separate contracts covering the extension of the 
ug2 decline which includes the operation and 
maintenance of the decline shaft 
7
 lonmin – saffy
location marikana east rustenburg north 
west province south africa
saffy shaft was designed sunk equipped and 
commissioned by shaft sinkers the scope of 
work has since been extended to include 
mechanized equipment to develop to the reef 
international
8
 hindustan zinc – rampura
location bhilwara district rajasthan india
shaft sinkers was awarded the multishaft contract 
for hindustan zinc at the rampura agucha mine in 
india in may 2012 the mine is located in the 
bhilwara district in rajasthan and includes the 
sinking of the 950m main shaft as well as the 
500m north and south ventilation shafts on 25 
april 2014 the main shaft had reached a depth of 
368m and the north vent shaft 232m
 
in august 2013 the company received an award 
from hindustan zinc limited in recognition of its 
health and safety and site management standards 
at the rampura agucha mine
9
 randgold resources – kibali goldmines
location orientale province north eastern 
democratic republic of congo drc
the contract includes the sinking and lining of 
the main shaft to a final depth of 760m as well 
as associated development and civil works 
in august 2013 the kibali vertical shaft project 
reached 100m of presinking and in november 
2013 our teams initiated the main sinking 
following the successful completion of the site 
infrastructure civil and construction works by 
25 april 2014 shaft depth had reached 483m strategic report
4
shaft sinkers holdings plc annual report and accounts 2013
chairman’s statement
stephen oke
chairman
2013 was another challenging year for the global 
mining industry and for your company in particular 
declining commodity prices a continued focus on 
cost control by incoming management teams political 
uncertainty in some countries and concerns over poor 
economic growth in china all significantly impacted 
levels of capital expenditure in the sector which are 
estimated to have fallen by 20 during the year 
as a result of these factors a 
number of shaft sinkers’ contracts 
were delayed reworked or 
cancelled during the year and this 
has negatively impacted the 
group’s financial performance in 
2013 despite significant efforts by 
management to deliver on targets 
disappointing operational 
performance on key contracts has 
exacerbated the decline in financial 
performance i can assure you the 
focus of the management team is 
concentrated fully on the 
improvement of our operational 
performance and the negative 
impact on cash flow that has been 
felt as a result
in addition the arduous operating 
environment in south africa 
continues to impact our business 
and industry generally the 
renewed strike action after the end 
of the year which at the time of 
writing has not been resolved 
despite recent further offers being 
made is debilitating and crippling 
the platinum industry in particular 
and is clearly affecting levels of 
investment nevertheless south 
africa remains a core market for 
shaft sinkers and we hope that the 
business environment will improve 
following elections later in 2014 and 
a sensible resolution to the 
protracted strike action will be 
reached
as a result of these conditions we 
have had to take a number of 
difficult decisions to reshape the 
business and reduce our cost base 
significantly i believe however that 
the significant resizing of our 
corporate structure that has been 
undertaken to improve our 
profitability levels will not damage 
our ability to service current clients 
or dilute our expertise we also 
continue to focus on adjusting our 
contracting model to reduce risks 
and improve operational visibility i 
am delighted that despite these 
difficult conditions shaft sinkers 
delivered a creditable health and 
safety performance in 2013 with 
zero fatalities and 24 million 
fatality free shifts in the year
despite the current uncertain 
environment our strategy remains 
valid to diversify by building on our 
reputation as a trusted and 
professional operator in order to 
enter new markets around the 
world and to support projects 
beyond just the mining sector
shaft sinkers’ strong heritage and 
successful track record is unique in 
the industry and extremely 
attractive for clients seeking a 
reliable partner to construct the 
type of critical infrastructure in 
which we specialise the significant 
skills and experience we have built 
over many years are part of our 
core strengths and enable us to 
complete technically complex 
projects safely and reliably 
in addition to the sector headwinds 
outlined above during the year we 
have continued to deal with the 
legal action by eurochem relating 
to the volgakaliy project we 
reject eurochem’s allegations in 
the strongest possible manner and 
are defending them vigorously we 
believe the principal claims are 
entirely without foundation  order book by commodity

platinum
zinc
gold
25
52
23
5
shaft sinkers holdings plc annual report and accounts 2013
wwwshaftsinkersgroupcom
pleased to report that despite the 
very difficult conditions resulting 
from strike action in south africa all 
of our teams in the country remain 
ready to assist our clients in line 
with our contractual obligations 
the outlook for the remainder of 
2014 remains difficult there is no 
clear sign of when sentiment in our 
core mining markets will improve 
and the added uncertainty over 
how the growing stalemate 
between the major south african 
platinum producers and the 
association of mineworkers and 
construction union “amcu” will 
be resolved is also of great 
concern nevertheless as a result 
of the measures we have taken i 
believe that the group is well 
positioned to weather the current 
market environment in the longer 
term the outlook remains positive 
for your company in an 
environment where brownfield 
developments require mining at 
greater depths and open cut 
operations make the transition to 
underground demand for our 
services is likely to grow in 
addition in an industry which is 
capital constrained mining 
companies are likely to focus on 
extending the lives of existing 
operations where significant costs 
have already been sunk rather than 
investing in new projects that may 
have greater risk 
stephen oke
chairman
29 april 2014
furthermore we continue to 
pursue eurochem to recover the 
amounts it owes us 
dealing with these damaging 
allegations continues to take up a 
significant amount of board and 
management time as well as 
financial resources we have made 
a number of submissions to the 
arbitrators and expect the hearing 
to occur in mid 2014 with final 
determinations expected early in 
2015
given the range of challenges that 
the group is currently facing and 
the resulting shortterm cash 
pressures especially in south 
africa the board has elected to 
pay no final dividend
i would like to thank our employees 
for their considerable efforts in 
what is an extremely difficult time 
for our sector and the group the 
business is dependent upon the 
hard work dedication and skills of 
all of our employees wherever they 
are based in particular i am 
pleased to report that despite the 
very difficult conditions resulting 
from strike action in south africa 
all of our teams in the country 
remain ready to assist our clients in 
line with our contractual 
obligations 
i would like to thank our employees 
for their considerable efforts in 
what is an extremely difficult time 
for our sector and the group the 
business is dependent upon the 
hard work dedication and skills of 
all of our employees wherever they 
are based in particular i am 
charging up during presink strategic report
6
shaft sinkers holdings plc annual report and accounts 2013
strategy and context
strategy
shaft sinkers seeks to generate 
longterm returns for investors by 
exploiting a global leadership 
position in the development of 
large deep complex shaft systems 
the group aims to do this through
increased geographic 
diversification
major mining and infrastructure 
projects are increasingly located 
in growth markets such as the 
cis india and china the group is 
targeting further expansion in 
these geographies by applying its 
superior technical skills and in 
some cases forming partnerships 
with leading local firms
expansion into new end use 
markets
whilst the group’s clients are 
predominantly in the mining 
sector shaft sinkers has 
experience of operating in a 
number of industries such as 
hydroelectric and underground 
storage the group’s strong 
engineering and technical skills 
covering all elements of shaft 
sinking and underground 
construction should provide a 
strong basis for further expansion 
in this area
development of additional 
services
in order to provide improved 
services to clients shaft sinkers 
supplements its core business by 
providing additional services such 
as contract mining shaft 
maintenance underground 
construction and tunnelling shaft 
sinkers is also engaged in research 
and development activities to 
develop new technologies and 
improve existing practices
leverage of its industryleading 
technical strengths
the group’s highly skilled 
engineers and technical experts 
adopt an integrated approach to 
all aspects of shaft design 
construction and operation we 
invest heavily in training and 
employee development to 
maintain this position 
market context
short term
the main customers of shaft 
sinking contractors are mining 
companies therefore prevailing 
conditions in the sector have a 
significant influence on demand 
for the group’s services during 
2013 mining companies adhered 
to conservative policies they 
began to adopt in 2012 driven by 
three connected issues
1 poor returns to shareholders 
since 2011 total returns to 
shareholders by mining 
companies have 
underperformed all other 
sectors as a result investors 
have demanded increased 
dividends at the expense of 
capital expenditure on projects 
to increase production levels 
2 commodity price declines 
following an extended boom in 
the metals and mining sector 
falling commodity prices have 
resulted in declining profits and 
more than 60 billion of write 
downs across the sector since 
2012 during 2013 prices for 
precious metals such as gold 
silver and platinum fell by 
approximately 30 33 and 
3 respectively whilst base 
metals were also impacted with 
nickel declining by 18 and zinc 
by 4
3 increasing uncertainty and 
volatility volatility and 
uncertainty makes it hard for 
companies to approve long
term investment projects 
concerns over slowing growth 
in china and continued 
subdued growth in europe 
have not been fully offset by 
improving conditions in north 
america so the demand for key 
commodities is currently 
unclear political and regulatory 
uncertainty has also grown in a 
number of key markets in 
addition prices for a number of 
commodities are increasingly 
volatile due to factors such as 
the monetisation of 
commodities and structural 
supply issues according to a 
recent mckinsey study the 
average annual volatility of 
resource pricing since 2000 is 
almost three times the level 
seen in the 1990s
as a result of these factors mining 
companies reduced capital 
expenditure in 2013 with 
bloomberg forecasting that 
expenditure by the top 20 mining 
companies will decline by about a 
third to 66 billion in 2015 from 
2012 levels nevertheless although 
the size of our committed order 
book declined in the year it  000
50000
100000
150000
200000
250000
112010 112011 112012 112013
retail
telecoms
real estate
healthcare
banks
aerospace
technology
mining tsr
total shareholder return by sector
300000
7
shaft sinkers holdings plc annual report and accounts 2013
wwwshaftsinkersgroupcom
remains significant at gbp238 
million at year end 
longterm market dynamics
despite these negative shortterm 
trends the outlook for the sector 
is potentially more positive 
commodity prices remain close 
to the levels seen in 2008 prior to 
the financial crisis and there are a 
number of longterm factors 
which are likely to mean demand 
for shaft sinking grows
demand for metals is likely to 
remain elevated as a result of 
urbanisation in asia and 
particularly china where the 
economy is forecast to grow by 
75 in 2014 and 72 in 2015 
according to bloomberg bhp 
billiton forecasts that chinese 
growth could increase demand 
for some commodities by 75 
over the next 15 years
the mining industry faces a 
significant challenge in meeting 
this demand as many mines are 
becoming older and new major 
discoveries remain limited despite 
significant expenditure on 
exploration over recent years 
furthermore investors remain 
uncertain about companies 
investing in major greenfield 
projects given the poor returns 
such projects have generated in 
recent years
as a result the industry is likely to 
focus on prolonging the lives of 
existing mines and one of the 
most common ways this can be 
achieved is through the 
conversion of open cut mines into 
underground operations this 
approach has a number of 
benefits for mining companies as 
it minimises financial and 
operational risks because key 
infrastructure is already in place 
and the characteristics of the 
deposit are already well known
shaft sinking jumbo  strategic report
8
shaft sinkers holdings plc annual report and accounts 2013
business model
shaft sinkers has a track record of more than 
50 years developing some of the deepest and 
most geologically complex shafts in the world 
for major blue chip customers much of the 
group’s work consists of repeat projects or 
multiple contracts for the same customers
focused on delivering value
we apply the skills we have 
developed to design deliver and 
maintain technically complex 
projects to the highest standards 
of engineering anywhere in the 
world we have the capability to 
sink shafts through all types of 
rock strata
the group performs vital but 
noncore activities for major 
mining companies by sinking 
mine shafts and developing 
underground infrastructure which 
enables them to access their ore 
and sustain their businesses the 
group’s projects typically last a 
number of years and require 
specialised nontransferrable 
skills and equipment which 
mining companies do not 
generally possess
 
geological conditions and other 
variable factors can never be 
predicted comprehensively 
before sinking commences so it is 
normal for shaft sinkers to share 
these risks with its clients the 
group also ensures that contracts 
cover ongoing costs in the event 
that revenues are impacted by 
unforeseen delays in project 
execution a more detailed 
explanation of the contracting 
types follows below 
 
shaft sinkers revenue model is 
akin to that of a construction 
contractor and the group targets 
a profit margin 7 to 15 and 
overhead 10 on top of costs 
the group’s costs comprise 
specialised and semiskilled 
labour 50 specialised plant 
and equipment 30 and 
consumables and permanent 
materials 20 hence even 
though the group is heavily 
reliant on the mining industry its 
earnings model is not directly 
affected by commodity pricing 
and is directly linked to project 
delivery and growth in the 
number of new projects it 
secures
 
the group’s revenues can vary 
however as they are subject to a 
range of factors including project 
delivery schedules competitor 
activity and the overall market 
environment
the longterm value to be derived 
from shaft sinkers is the growth 
in business that should stem from 
the fact that mineral deposits are 
increasingly found at greater 
depths with the territories being 
focussed on by the group largely 
unexploited to date in the short
term there will be vloatility in the 
revenues and cash flows of the 
group but from the longer term 
growth should flow a more 
dependable earnings and hence 
dividend stream
tendering process
due to the complexity and 
longevity of a typical project 
contract negotation is critical to 
effective risk management both 
for the company and its clients 
the process recognises the need 
for contractual adjustments 
variation orders during the 
project requiring strong 
commercial skills including 
contract management quantity 
surveying and financial 
management where possible the 
company carries out its activities 
under contract terms which share 
tendering process
typical project
work on site
work proﬁle
4–9 months 3–12 months 22–54 months up to 12 years
pre
qualiﬁcation
1 month
tender 
process
5 months
contract 
negotiation
3 months
mobilisation and site establishment
cash received in advance for capex
3–12 months
presink
4–6 months
main sink
12–36 months
equipping
6–12 months
mine and 
infrastructure 
development 9
shaft sinkers holdings plc annual report and accounts 2013
wwwshaftsinkersgroupcom
risks equitably with its clients
variation orders typically occur 
when a contractor is required to 
undertake additional work which is 
not defined in the terms of the 
contract and therefore does not 
have a specified rate for shaft 
sinkers this situation usually 
occurs when the mine design or 
mining plan changes consequently 
the contractor performs the 
activity and engages the client to 
recoup the activity cost after the 
fact this is a normal occurrence in 
rates type contracts and has a cash 
flow impact which we as the 
contractor try to minimise in 
addition to delay the main risk is 
that the estimate for the work is 
inaccurate resulting in an 
inappropriate rate being agreed
preferred contract model 
selecting the right contract type 
is key to delivering value to 
shareholders historically the 
shaft sinking industry has used 
rates based contracts under 
which almost all risk is assumed 
by the contractor whilst 
potentially lucrative these 
contracts can impose significant 
burdens in the event that delays 
or other problems occur
the group’s preferred contracting 
model is costplus which fairly 
apportions project risks and 
minimizes costs by giving the 
client direct control of 
procurement through a 
transparent system the costs 
related to developing the shaft are 
reimbursed to the company while 
a reasonable markup is added for 
the benefit of the contractor 
one variation to the costplus 
model is agreed target cost 
atc in atc a target cost is 
agreed at the outset of the project 
together and set as the budget 
against which costs are measured 
costs are reimbursed with an 
added markup for the contractor 
if the actual cost is below the 
target cost then the benefits are 
shared however if the target cost 
is excceeded then a penalty is 
imposed this incentivises project 
delivery on time and on budget 
whilst sharing risks equitably
work on site
the preparatory work and sinking 
processes require specific 
technical expertise given the 
complexity and unique features of 
each project together with the 
fact that a typical project may 
take over a decade to complete
the group’s sophisticated risk 
and project management 
techniques enable us to manage 
challenging large scale 
engineering projects 
maintaining our competitive 
position also requires 
 – high standards of health and 
safety shaft sinkers applies 
leading health and safety 
standards and has a strong 
safety record
 – training and personnel 
development shaft sinkers 
operates a training facility 
which provides skills training in 
both sinking and conventional 
development and mining 
operations with structured 
development programmes for 
individuals 
 – investment in research and 
development the group is 
involved in the development of 
a new shaft scanning 
technology which has the 
potential to revolutionise the 
maintenance of shafts strategic report
10
shaft sinkers holdings plc annual report and accounts 2013
ceo’s review
following a review of the group’s 
activities last year we took a 
number of steps to restructure 
the business in the first half of 
2013 cutting costs and reducing 
operating overheads by 17 and 
ensuring the optimal mix of skills 
across our business 
gross margins improved to 13 in 
the year as a result of changes to 
the way in which certain 
engineering costs were allocated 
within our south african business 
although the margin 
improvement was offset by a rise 
in operating expenses the 
reallocation process has enabled 
us to identify a number of 
opportunities to reduce costs 
which we will pursue in 2014 
however the challenging 
conditions in the mining sector 
continued to affect our financial 
performance revenues declined 
by 21 in 2013 with gross profits 
for the year falling by 
approximately 115 as a result of 
reduced work load in south africa 
as well as the deterioration in the 
value of the rand against sterling 
which impacted profits by 
gbp02 million the gbp39 
million of legal costs associated 
with the eurochem arbitration 
processes were well above 
expectations and therefore also a 
significant drag on profitability 
operational performance across 
our projects during 2013 was 
mixed whilst our work on the 
kibali project for randgold 
resources and our projects for 
lonmin proceeded well during 
2013 we experienced operational 
problems at impala leuwkop 
styldrift and hindustan zinc 
 
despite a difficult environment 
the group won in excess of 
gbp47 million of repeat business 
from existing clients such as 
lonmin afplats and impala and 
was selected as preferred bidder 
to sink a shaft for kazchrome 
during 2013 this is testament to 
the continued hard work of our 
teams and the attractiveness of 
our proposition however shaft 
sinkers was not awarded any 
major new contracts during the 
year significantly hampering our 
planned profitability
we remain in discussions with 
kazchrome having been 
appointed as the preferred bidder 
for the kazchrome donskoy gok 
project in august 2013 and we will 
provide further updates in due 
course we also expect to be 
awarded extensions of work on 
existing projects in 2014 such as 
lonmin k3 and leeuwkop 
the group continues to tender for 
a number of significant contracts 
around the world however we 
cannot at this stage predict the 
timing or outcome of these 
processes 
cash flow is anticipated to be 
tight until the latter half of the 
year and liquidity issues in south 
africa have been exacerbated by 
the lack of revenues from the 
strikeaffected projects as well as 
poor operational performance 
we continue to review a range of 
alon davidov
chief executive officer 11
shaft sinkers holdings plc annual report and accounts 2013
wwwshaftsinkersgroupcom
options to address this issue and 
will provide further information as 
necessary 
strategy
as expected the current situation 
in the global mining sector 
continues to validate our strategy 
to diversify into different 
commodities geographies and 
sectors revenues from our 
international business rose 
strongly in the year to gbp421 
million from gbp160 million in the 
prior year and offset some of the 
decline in revenues from south 
africa revenues from our 
international business now 
represent almost 28 of total 
revenues up from approximately 
8 in 2012 and 19 in 2011 we 
expect this trend to continue over 
the medium term as we secure 
more international business 
through new partnerships 
during 2013 we also made 
progress in a number of key areas 
with regards to increasing 
diversification through the 
conclusion of collaboration 
agreements with china nonferrous 
metal industry’s foreign 
engineering and construction co 
ltd ‘nfc’ one of the largest 
chinese engineering procurement 
and construction management 
‘epcm’ companies and india’s 
tata projects limited the epcm 
subsidiary of tata group these 
two agreements whilst in the early 
stage have the potential to deliver 
significant longterm benefit by 
providing improved access to the 
growing markets of india and 
china another initiative in its early 
stages is the collaboration 
between the group and laing 
o’rourke a large uk based 
construction group we have 
jointly submitted a proposal to 
sirius minerals to perform some 
early design work
as our business internationalises 
we face a different set of risks to 
those which affect our core south 
african operations the ability to 
operate successfully within 
different legal regulatory and 
cultural norms is every bit as 
complex as the difficult geological 
or operational challenges we face 
we are therefore focusing on 
improving our project 
management skills to deal with 
these challenges and to learn from 
operations where we are working 
successfully such as kibali 
goldmines in the drc
we also continue to focus on 
changing the nature of our 
contractual arrangements with 
clients historically our work has 
been carried out on ratesbased 
contracts which expose the group 
to significant risk in the event of 
unforeseen circumstances relating 
to geological or mine plan 
adjustments which slow the rate of 
progress achieved by shaft 
sinkers when negotiating new 
contracts for existing clients we 
were successful in moving the 
contract type to one which more 
equitably shares the risks in a 
number of instances notably with 
lonmin at karee 3 and impala 16 
which have changed to an agreed 
target cost basis
operations – international
work at the kibali goldmines 
project in the democratic republic 
of congo proceeded well with a 
number of major operational 
milestones achieved during 2013 
notably the start of the main 
sinking phase in november the 
project has performed in line with 
budget and the shaft has recently 
reached a depth of 483m ahead of 
schedule with sinking proceeding 
at a rate of at least 3 metres a day 
for more than 30 continuous days 
achieving this high level of 
operational performance in what 
many consider to be a complex 
and difficult operating 
environment is a significant 
achievement 
the project for hindustan zinc 
limited ‘hzl ’ at the rampura 
agucha mine progressed more 
slowly than expected because of 
problems with a civil engineering 
subcontractor during the first half 
of the year having dismissed the 
subcontractor and taken over its 
responsibilities ourselves the 
project operated in line with 
expected rates however sinking 
progress in the later part of 2013 
was poor and resulted in higher 
than expected costs and lower 
revenues as the hzl project is 
being conducted on a rates type 
contract our revenue is linked to 
the number of metres sunk and 
the slow performance meant that 
we failed to meet expected sinking 
rates and thus our revenue was 
lower than expected whilst our 
costs remained relatively fixed  strategic report
12
shaft sinkers holdings plc annual report and accounts 2013
ceo’s review continued
the hzl team has since worked 
hard at mitigating the issues 
affecting performance and we are 
currently experiencing a much 
improved performance level
operations – south africa
the group’s south african 
operations were significantly 
impacted by the difficult operating 
environment in 2013 contracts 
were cancelled during the year in 
response to declining commodity 
prices and rising operating costs in 
the country 
despite this difficult operating 
environment we were awarded a 
number of contract extensions for 
south african clients with afplats 
lonmin and impala agreeing to an 
additional gbp476 million worth of 
work for the group this is 
testament to the vital nature of our 
work for these clients and the 
strong relationships we have built 
with their management teams 
despite the challenging 
environment 
 
we successfully reduced the level 
of outstanding variation orders 
during the first half of the year 
however they began to build again 
during the second half of 2013 
however we were successful in 
collecting many of the outstanding 
variation orders in the last quarter 
of 2013 and were therefore able to 
reduce the group’s debtors’ book 
outstanding resulting in a small 
improvement in cash before the 
repayment of debt
as a result of the removal of one 
layer of operational management 
and a range of other cost cutting 
initiatives such as consolidating 
roles eliminating unrecoverable 
costs and reducing overtime we 
were able to significantly reduce 
operational overheads total 
headcount in south africa has 
now declined from approximately 
7200 to 3923 at the end of 2013 
the group will continue to 
examine its overhead structures 
and look for opportunities to 
reduce costs in this very sensitive 
period for the mining industry
 
however these improvements 
were offset by significant 
operational underperformance at 
a number of operations with 
performance at the impala 17 and 
styldrift projects being particularly 
disappointing 
styldrift experienced poor 
operational performance over the 
last two months of the 
measurement period stemming 
from some poor planning 
our impala 17 project was severely 
impacted by safety stoppages as 
a result of section 54 notices 
during 2013 and a generally poor 
safety record in the year under 
section 54 of the mine health and 
safety act of south africa the 
mine safety inspectorate can close 
all or part of a mine in the event 
that it believes any conditions or 
particular events could impact the 
health and safety of anybody 
working in the mine see the 
corporate responsibility section 
on page 38 for more details 
management has taken various 
steps to improve the situation 
including engaging a third party 
health and safety expert firm to 
perform an independent 
assessment of site safety systems 
the assessment rated the project’s 
safety systems very highly 
although it found that in a number 
of cases issues which had been 
identified were not dealt with 
effectively a number of 
recommendations have since been 
adopted in order to improve the 
clarity of the safety reporting and 
ensure issues are fully resolved 
as a result of the operational 
difficulties at impala 17 shaft 
sinkers lost gbp06 million on the 
project in 2013 and has lost a 
further gbp09 million since the 
financial year end to march 2014 
in april 2014 after the year end 
we reached agreement with 
impala over a revision to the terms 
of the contract for impala 17 under 
which shaft sinkers will be 
compensated for labour and 
materials based on an agreed rate 
and will have the opportunity to 
be paid an additional bonus 
element based on achieving 
certain performance criteria
the revised terms which became 
effective from 15 april 2014 are 
expected to improve the financial 
performance of this contract the 
new contract runs until to 15 
september 2014 after which date 
it will terminate if not renewed 
impala is retendering the contract 
and shaft sinkers is participating 
in the retender process 13
shaft sinkers holdings plc annual report and accounts 2013
wwwshaftsinkersgroupcom
south african labour situation
after the end of the year the 
association of mineworkers and 
construction union ‘amcu’ 
initiated a protected strike 
affecting south africa’s major 
platinum producers which had 
suspended operations at impala 16 
and lonmin the current situation 
between the amcu and the mining 
companies appears deadlocked 
with little signs of movement by 
either side as a result there is 
currently little clarity on when and 
how the strike will conclude
our employees are not on strike 
however they have been 
prevented from working at 
affected sites shaft sinkers has 
contractual provisions in place 
which are designed to ensure that 
we will recover certain costs in the 
event that our clients’ operations 
are impacted by strike action not 
related to us however even with 
these contractual provisions the 
group’s profitability will be 
impacted 
mets
our mining engineering and 
technical services ‘mets’ 
division continues to find new 
opportunities for design and epcm 
contracts in 2013 mets managed 
the highly complex project to 
design engineer coordinate and 
supervise manufacture of the head 
gears for the hzl project 
this required the sourcing of more 
than 2000 tonnes of a certain 
specification of steel across china 
india and south africa we 
successfully met the aggressive 
timetables set and gained 
additional invaluable experience in 
international project management 
which will be of significant long
term benefit to the group 
furthermore in 2013 our mets 
division designed a new and 
progressive main sinking 
methodology in collaboration with 
our indian and russian offices the 
new method promises a safer and 
more cost effective sinking 
operation especially for shallower 
ventilation type shafts the group 
will be implementing this new 
sinking methodology at hzl 
health safety and environment
there were a number of 
significant positive achievements 
during the year with regards to 
health and safety notably we 
achieved zero fatalities for the 
year and the group has yet again 
recorded 2 million fatality free 
shifts across its operations 
however due to a number of 
incidents the group’s lost time 
injury frequency rate rose to 
475 from 408 in 2012 compared 
to our target of 35 as previously 
disclosed a new safety and 
behaviour campaign has been 
introduced across the group with 
the aim of creating greater 
awareness of safety standards 
and procedures we have 
reintroduced a behaviour based 
system whereby all staff 
whatever their level are required 
to report unsafe practices or site 
conditions all reports are 
compiled on a daily basis in a 
central database which produces 
trends that are analysed and 
create recommendations and 
mitigating steps this system has 
been used successfully in shaft 
sinkers in the past and its re
introduction has already started 
yielding measurable trends that 
management can recognise and 
respond to in a timely manner
the group recorded no significant 
environmental incidents at its 
operations during the year
as most of the group’s work 
takes place underground impacts 
upon the environment are limited 
nevertheless we are committed 
to achieving the highest 
standards of performance and 
the group’s projects have 
iso14001 compliant 
environmental management 
systems during 2013 our sites 
were all audited and retained their 
iso compliant status with only 
minor comments
lhd travelling down decline at bokfontein  
decline shaft strategic report
14
shaft sinkers holdings plc annual report and accounts 2013
employees
i would like to thank all of the 
group’s employees for their efforts 
in 2013 the difficult environment 
the group is operating in has 
required a number of tough 
decisions about the shape of shaft 
sinkers’ business despite this 
uncertainty i am appreciative of 
the commitment our teams have 
shown in continuing to work 
together to make shaft sinkers a 
more efficient and competitive 
company i am convinced that the 
group will emerge from this 
challenging environment as a 
stronger business ready to 
capture the significant longterm 
opportunities which exist 
outlook
the outlook for 2014 is mixed 
whilst prospects for the group’s 
international business are positive 
the continued uncertainty in south 
africa is likely to significantly 
impact our operations there 
our work for kibali goldmines in 
the drc is progressing well and 
we expect to meet operational 
and financial targets in 2014 
meanwhile operational 
performance has improved at 
hzl over the first quarter of 2014 
and we have authorised a work 
acceleration programme that will 
reduce delays and potentially 
create further opportunities 
outside the current scope 
furthermore i believe that we will 
finalise terms for the kazchrome 
project in kazakhstan in 2014 and 
that the new alliances with tata 
and nfc will begin to bear fruit 
during the year 
in south africa whilst work 
continues at a number of our 
unaffected operations we are 
constantly working on plans to 
mitigate the impact of the ongoing 
strikes by redeploying some of our 
affected work force and assisting 
our clients to reduce cost impacts 
although the labour strike is 
negatively affecting the south 
african platinum and associated 
industries we believe it will be 
resolved as a result we continue to 
compete for new projects in the 
country as well as potential 
additional work from existing 
clients 
management assess the new 
business pipeline to still be at a 
healthy level with a committed 
order book of gbp238 million at 
year end and outstanding tenders 
worth gbp 970 million
the group’s cash position remains 
tight currently however we are 
undertaking numerous initiatives 
with clients and suppliers to 
improve short term liquidity as well 
as converting unutilised assets into 
cash we expect the cash position 
to improve in the second half of the 
year as the benefit of these 
initiatives is felt
alon davidov
chief executive officer
29 april 2014
ceo’s review continued order book
£ million
0
100
200
300
400
11 12 13
301
346
238
eps
pence
11 12 13
183
492
414
0
5
10
15
20
lost time injury frequency rate
per million shifts
11 12 13
475
408
475
0
1
2
3
4
5
geographic diversity
international revenues 
as a proportion of total 
0
20
40
60
80
100
11 12 13
195
835
277
cash and cash equivalent
£ million
11 12 13
223
91
13
0
5
10
15
20
25
fatalities
2011 2012 2013
1 1
0
00
1
2
15
shaft sinkers holdings plc annual report and accounts 2013
wwwshaftsinkersgroupcom
key performance indicators
strategic
gross margin

11 12 13
169
117
131
0
5
10
15
20
ebitda margin

11 12 13
110
57
56
0
2
4
6
8
10
12
revenue
£ million
11 12 13
2265
1925
1522
0
50
100
150
200
250
financial
nonfinancial strategic report
16
shaft sinkers holdings plc annual report and accounts 2013
principal risks and uncertainties
internal control and risk management
the board has overall responsibility for the group’s 
system of internal control and ensuring that 
appropriate risk management processes are in place 
it has set suitable policies on internal control and 
seeks regular assurance that the system is effective 
in managing risks in the manner which it has 
approved
risk management process
the group has an ongoing process for identifying 
evaluating and managing the significant risks faced 
by the group the executive management of the 
group conducts monthly operational reviews for 
each site and for each operational department 
against measurable performance targets budgets 
and other key performance indicators to ensure 
risks are being communicated and managed 
throughout the company and this process is 
regularly reviewed by the board 
assessment of risks
the principal risks faced by the group are 
considered and formally reviewed by the board on 
an annual basis this review includes
 – the nature and extent of the risks facing the group
 – the extent and categories of risk that it regards as 
acceptable for the group to bear
 – the likelihood of the risks concerned occurring
 – the group’s ability to reduce the incidence and 
impact on the business of risks that may 
materialise through mitigating strategies and
 – the costs of operating particular controls relative 
to the benefit thereby obtained in managing the 
related risks
the most significant risks faced by the group during 
2013 are summarised below along with examples of 
relevant controls and mitigating actions they do not 
comprise all the risks associated with the group and 
are not set out in any order of priority
risk mitigating actions
strategic risk
the board is involved in setting the group’s broad strategic 
objectives and monitoring executive management’s performance 
against annually set goals there are processes in place to ensure 
the strategic objectives are effectively communicated within the 
company and regular quarterly reviews of financial performance
failure to successfully execute the group’s stated strategy and to 
meet shareholder objectives is one of the primary risks facing the 
group
safety risk
a comprehensive set of safety procedures are in place and these 
are regularly reviewed and updated for any new risks which have 
been identified in addition the group periodically introduces 
new safety campaigns to improve performance a dedicated 
safety health environment quality and training department 
‘sheqt’ monitors safety performance and events on a daily 
basis each site has a dedicated safety officer responsible for 
managing safety matters including monitoring the progress of 
action plans reporting on safety incidents and ensuring the 
group’s policies are being adhered to in this way the group 
ensures accountability and responsibility for these matters 
remains with operational management teams the safety 
committee of the board endeavours to meet at least quarterly to 
review performance reports from the sheqt department and 
reports to the board with recommendations should they be 
required
due to the nature of the group’s operations safety is a significant 
issue for the company failure to maintain high levels of safety 
can result in harm and serious injury to our employees and 
significantly impact our ability to carry out and grow our 
business
liquidity risk
the group ensures that it has sufficient cash on hand to meet 
unexpected operational expenses including the servicing of 
financial obligations this excludes the potential impact of 
extreme circumstances that cannot be reasonably predicted 
such as natural disasters in addition the group maintains 
overdraft facilities with its bankers to cover periods where high 
volumes of the operational liabilities are expected to occur 
the board and management conduct regular and intensified 
planning sessions to ensure the cash resources available to the 
group are managed in the most efficient manner especially in 
times of tight cash flow constraints when liquidity is limited 
liquidity risk is the risk that the group will not be able to meet its 
financial obligations as they fall due the group’s approach to 
managing liquidity is to ensure as far as possible that it will 
always have sufficient cash flow and marketable securities to 
meet its obligations when they fall due under both normal and 
stressed conditions without incurring unacceptable losses or risk 
damage to the group’s reputation 17
shaft sinkers holdings plc annual report and accounts 2013
wwwshaftsinkersgroupcom
risk mitigating actions
financial risk
for each of these risks the group has implemented appropriate 
policies and procedures and executive management regularly 
reviews performance against set targets daily reviews of cash 
management with rolling forecasts and strong controls are 
implemented by the executive management furthermore the 
board sets prudent policies for the hedging of currency and 
interest rate risks and the audit and risk committee reviews 
these aspects on a quarterly basis insurance is taken to protect 
the group against the risk of fraud or theft of funds
the risk of inadequate funding or inappropriately managing the 
funding of the business is one of the primary risks that could 
affect the group’s ability to trade other significant financial risks 
include the safeguarding of assets inappropriate tendering prices 
that could cause the group to lose potential contracts or 
undertake contracts which are unprofitable corrupt procurement 
practices resulting in excessive costs and mismanagement of 
expenditure
legal and regulatory risks
we adhere to the principle of selfregulation backed by 
appropriate policies and management review the group actively 
monitors regulatory and political developments on a continuous 
basis to ensure we are in compliance with all relevant regulations 
we have developed a groupwide antibribery and corruption 
policy which has been implemented throughout the group 
through the necessary procedures taking into account the 
requirements of the oecd convention on bribery of foreign 
public officials in international business transactions the us 
foreign corrupt practices act of 1977 as amended the uk 
bribery act 2010 and the antibribery and corruption statutes of 
all jurisdictions to which the company and its subsidiaries and 
affiliates are subject and any related rules and regulations the 
rolling out of an enhanced compliance framework is in progress
the group continues to robustly reject and defend against the 
eurochem claim proceedings
changes in standards laws and regulations in the countries where 
we operate may affect our business we are aware that some of 
the jurisdictions in which the group operates pose particular and 
often heightened reputational issues that need to be managed 
appropriately we are conscious of the risk of failure to comply 
with antibribery anticorruption antimoney laundering andor 
sanctions laws and regulations which could lead to share price 
devaluation financial penalties and criminal prosecutions
the group is currently subject of legal action from eurochem
external 
political risk
through its strategy of diversification both geographically and 
into other related areas of operation the board has sought to 
mitigate these risks to the extent possible political risks are 
mitigated through the contractual terms agreed and where 
appropriate the involvement of export credit agencies
the group is aware of the political social and labour relations risks 
in some of the geographies in which it operates the political social 
or economic environment in any jurisdiction may change leading to 
the inability to realise the expected results from our projects
operational risks
the group’s contracting models have been established to provide 
flexibility thus mitigating some of these risks management 
oversight strong disciplines within the operations departments 
and a focus on attracting and retaining key skills are also key 
elements of the group’s strategy regular planning by executive 
management on securing the appropriate resources for current 
and future projects form part of the mitigating strategies which 
are reviewed at all levels of management and the board
operational performance can be influenced by technical and 
engineering factors as well as events or circumstances failure to 
meet project delivery timetables and budgets may delay cash 
inflows increase capital costs and reduce profitability the risk of 
operating below best industry standards could also lead to lost 
contracts in the long run
commodity cycleglobal 
economic environment
the group seeks to mitigate this risk by pursuing a strategy to 
increase geographic commodity and end market diversity
the group’s customers operate in markets which are closely 
linked to the global economic environment and the commodities 
cycle as a result demand for the group’s services can be 
impacted by changes in global economic performance strategic report
18
shaft sinkers holdings plc annual report and accounts 2013
corporate responsibility
we believe that conducting our operations responsibly 
and sustainably in all countries in which we operate is 
important in order to remain at the forefront of shaft 
sinking and underground development over the longer 
term
with regard to corporate 
responsibility our key areas of 
focus are ensuring the safety of 
our employees and the quality of 
our operations recruiting and 
developing skilled employees and 
contributing to the communities 
within which we operate often in 
collaboration with our clients our 
corporate responsibility activities 
during 2013 are set out in the 
following section 
safety
the safety of our employees 
remains our priority and we have 
a strong safety record across our 
operations the group aims to 
develop a disciplined and 
constructive environment in 
which all employees understand 
their roles and obligations as well 
as the importance of maintaining 
safety standards through internal 
training management and safety 
standards and procedures
in 2013 we achieved zero fatalities 
and in september 2013 we 
reached two million fatality free 
shifts across our operations 
while the group’s lost time 
injury frequency rate ‘ltifr’ 
remained low at a level of 475 in 
2013 this was below our target of 
35 and a slight increase from the 
level of 408 achieved in 2012 
over the last three years our 
operations have been impacted 
by a significant increase in the 
number of section 54 notices 
issued by mine inspectors from 
the south african department of 
mineral resources section 54 
notices can result in some or all 
work at a particular mine being 
halted we have conducted a 
detailed analysis of our section 
54 statistics over the last three 
years in order to develop a better 
understanding of how to manage 
this issue 
despite a significant threefold 
increase in section 54 notices 
over the period our safety 
statistics have been broadly flat 
we believe therefore that the 
increase in section 54 notices is 
largely due to a change in policy 
at the dmr rather than a 
deterioration of our safety 
systems indeed many of the 
section 54 notices shaft sinkers 
have been subject to are the 
result of considerably more 
stringent implementation of 
existing rules and regulations 
as a result the group continues to 
strive to improve its safety 
standards by introducing new and 
innovative safety campaigns 
during 2013 we launched a 
number of additional safety 
initiatives some of which are 
outlined below 
 – in the second half of 2013 we 
began a tools and equipment 
safety campaign which aimed 
to further raise awareness of 
operating safely posters were 
distributed to all sites to discuss 
in their daily and weekly safety 
meetings and display on all the 
notice boards on site the 
campaign has already achieved 
a 38 reduction in the number 
of incidents related to tools and 
equipment and a 75 reduction 
in the number of lost time 
injuries
 – a behaviour based safety 
‘bbs’ road show was 
conducted at all our operational 
sites supervisors and crew 
were sensitised on our 
behavioural based training 
programme highlighting their 
different roles and 
responsibilities both for their 
own safety and the safety of 
their fellow employees to 
reinforce senior management’s 
commitment to safety all the 
sessions were opened by our 
operational director and a 
member of senior management 
was also present during the 
sessions 
 – a campaign to improve 
material handling standards 
was also introduced in 2013 
although the number of 
incidents fell only slightly – 
from 32 to 31 the number of 
incidents which resulted in a 
lost time injury declined 75 
indicating significant progress 
was achieved
 – engineering supervisor training 
focused specifically on their 
daily weekly and monthly 
duties including legal 
compliance and accountability 
conducting inspections and 
managing employees
we also operate our own safety 
health environment quality and 
training ‘sheqt’ learning 
academy which is a mines 
qualifications authority south 
africa specific accredited 
training facility on completion of 
training our employees are 
committed to acting responsibly 19
shaft sinkers holdings plc annual report and accounts 2013
wwwshaftsinkersgroupcom
qualified to perform their specific 
duty not only for shaft sinkers 
but in the south african mining 
industry at large
for 2014 the benchmarks set for 
our safety performance remain 
unchanged we are targeting 
ltifr of 35
training and development
we believe that our employees 
are our most valuable asset their 
skills commitment and 
capabilities are crucial to the 
success of our business 
particularly given the specialist 
nature of the work we undertake 
we have put in place a range of 
strategies and initiatives to assist 
us in recruiting and retaining 
experienced and competent staff 
across our operations 
the group undertakes training 
programmes for employees to 
develop both basic and specialist 
skills 
qualified and trained facilitators 
provide abet ‘adult basic 
education and training’ training 
to internal staff in south africa in 
order to equip them for higher 
level roles requiring a basic level 
of literacy during 2013 164 
employees enrolled in abet 
training 
the group also has an 
engineering learnership 
programme covering all the major 
trades fitters electricians 
boilermakers and riggers and 
participants complete an 
approved skills programme 
eleven engineering learners 
completed their training during 
2013 
environment
respecting and preserving the 
environment directly relates to 
our success and that of our 
industry and we recognise the 
potential impacts of climate 
change on our business the 
group’s activities are subject to 
extensive laws and regulations 
governing environmental 
protection and we work to ensure 
that all projects are compliant 
with the regulations of the 
jurisdiction in which we are 
operating 
the group complies with iso 
14001 a voluntary international 
environmental management 
standard iso audits were carried 
out across our operations during 
2013 and these audits confirmed 
our iso accreditations
since all our projects are 
undertaken on a contract basis 
initiatives to combat climate 
change and reduce ghg 
emissions remain the 
responsibility of our clients and 
we are committed to working 
with them wherever possible our 
iso 14001 accreditation assists us 
in this regard
lhd driver looking out from his cabin strategic report
20
shaft sinkers holdings plc annual report and accounts 2013
financial review
basis of preparation
the financial information 
presented has been prepared in 
terms of international financial 
reporting standards and has been 
prepared on a basis consistent 
with that used in the preparation 
of the financial statements for the 
yearended 31 december 2012
on 1 january 2013 the group 
changed its accounting policy 
governing the subsequent 
measurement of land and 
buildings from the revaluation 
model to the cost model the 
group believes that this approach 
provides more relevant and 
reliable information about the 
group’s financial position 
apart from the above mentioned 
change in accounting policy there 
have been no other changes to the 
accounting policies or new 
standards that have been applied 
during the year that had an effect 
on the reported performance in 
comparison to the prior year
overview
2013 has been another challenging 
year for the group the financial 
results were yet again impacted 
by operating difficulties 
experienced at certain sites as well 
as by section 54 safety stoppages 
imposed on various projects in 
south africa during the year 
disappointing operational 
performance and work stoppages 
coupled with the extensive legal 
fees incurred in defending the 
eurochem arbitration matters 
have all been a drain on the 
group’s cash resources 
the hindustan zinc and kibali 
goldmine projects that were 
awarded during the latter part of 
the 2012 financial year saw a full 
year’s contribution towards the 
revenues of the group with the 
kibali project performing well and 
supporting the continued 
profitability of the group
in the light of the pressures 
brought to bear on the group’s 
financial resources the board 
does not recommend a final 
dividend for 2013 
the arbitration claim filed by 
eurochem in october 2012 against 
shaft sinkers proprietary 
limited a wholly owned subsidiary 
of the group and its immediate 
holding company rossal no 126 
pty ltd continues according to 
the agreed timetables based on 
advice from the group’s legal 
counsel we continue to believe 
that the principal claims have no 
foundation and the group 
continues to contest the claim 
robustly and to pursue its counter
claim in the order of around usd16 
million the board expects an 
outcome on the first of the 
arbitrations under the building 
construction works contract in 
early 2015 the second arbitration 
under the design contract should 
also be resolved in 2015
analysis of results
income statement
profits before tax for the year of 
gbp29 million fell by 160 in 
gbp terms due to a poorer 
performance and higher legal fees 
incurred during the year the 
weaker zar average exchange 
rate for the year at zar151 
against pound sterling compared 
to an average of zar1299 in 2012 
has reduced profits by gbp02 
million 
revenue
revenues decreased by 210 to 
gbp1522 million 2012 gbp1925 
million the decrease in revenues 
was primarily as a result of 
unplanned stoppages and delays 
on the impala 17 contract the 
completion of the impala 16 
contract client decisions to halt 
expenditure at our hernic and 
moab projects coupled with the 
weakening of the zar against 
pound sterling by 140 on 
average 
the weaker zar reduced 
revenues by gbp208 million 
accounting for approximately half 
of the 210 decrease in the 
group’s revenues during the year 
in south africa revenues 
decreased by 208 in zar 
terms the decrease in revenue 
was partly offset by higher 
fullyear revenues from the kibali 
goldmine and hindustan zinc 
projects which contributed an 
additional gbp194 million to 
revenues in 2013 
 
gross profit
gross profit decreased by 115 to 
gbp200 million 2012 gbp226 
million the decrease in gross 
profit can be ascribed to the 
following factors
 – losses on impala 16 prior to 
conversion to a labour rates 
contract 21
shaft sinkers holdings plc annual report and accounts 2013
wwwshaftsinkersgroupcom
 – work stoppages and losses 
incurred on the impala 17 
contract
 – unrecovered costs incurred on 
the moab contract following 
termination and
 – the weakening of the zar by 
140
these factors were partially offset 
by
 – additional gross profit earned 
on the hindustan zinc project 
albeit at poorer profit margins 
than expected and
 – higher gross profits earned at 
the kibali goldmine project 
during the year under review 
given the reduction in contractual 
work in south africa we decided 
to reassess the allocation of our 
engineering department operating 
costs to direct expenses to more 
accurately reflect the component 
of costs related to actual projects 
this largely accounts for the 
improved gross profit margin 
which increased to 131 for the 
2013 financial year compared to 
117 in 2012 when most of the 
engineering expenses were 
allocated to direct costs
operating income
operating income increased by 
gbp02 million to gbp65 million 
due to gains made on the sale of 
property partially offset by lower 
reversals of provisions as 
compared to the previous year 
operating expense
operating expenses decreased by 
170 gbp38 million to gbp187 
million before taking higher legal 
fees into account 2012 gbp45 
million reduction during 2013 as 
a result of our operational 
performance efforts were made 
to reduce overhead levels in south 
africa leading to the 
retrenchment of staff and a 
trimming of overhead expenses 
those efforts were largely masked 
by the substantially higher legal 
fees of gbp39 million 2012 
gbp11 million incurred relating to 
the eurochem arbitration matter
the weaker zar reduced net 
operating expenses operating 
income minus operating expenses 
before taking account of legal fees 
by gbp11 million accounting for 
approximately a quarter of the 
decrease in net operating expenses 
before legal fees during the year in 
south africa net operating 
expenses before legal fees 
decreased by 624 in zar terms 
the decrease in net operating 
expenses before legal fees was due 
to the ongoing efforts at cost 
reduction while revenues declined
finance expense
during the 2013 financial year the 
group repaid gbp69 million 2012 
gbp39 million of its interest 
bearing term borrowings from the 
standard bank of south africa 
this resulted in a decrease in 
interest of approximately gbp05 
million to gbp13 million while 
additional interest was incurred on 
overdraft borrowing facilities
taxation 
in 2013 the group’s effective tax 
rate was 289 2012 300 the 
reduction in the effective tax rate 
was largely due to lower taxes paid 
in south africa with a capital gain 
on the sale of property and a 
recovery of an overprovision in the 
prior year these were offset by a 
higher average tax rate in india 
the south african standard 
corporate tax rate is 28 before 
withholding taxes the comparable 
standard tax rates in india are 
approximately 42 before 
withholding taxes while standard 
tax rates in the democratic 
republic of the congo are around 
40 before withholding taxes the 
group is resident in the isle of man 
where it is taxed at zero
effect of exchange difference on 
translation from functional to 
presentation currency
the group reports in gbp while 
the functional currencies of the 
main operations of the group are 
zar and usd the average rate of 
exchange for 2013 was zar1509 
to the gbp 2012 zar1299 and 
usd156 to the gbp 2012 
usd159 the spot rate at 31 
december 2013 saw the zar and 
the usd both weaken against the 
gbp to zar1729 2012 zar1369 
and usd165 2012 usd162 
respectively the translation of 
income statement items at the 
average rate for the year 
monetary items in the balance 
sheet at the closing spot rate and 
historical items at historical rates 
gave rise to a loss of gbp75 million 
2012 gbp30 million despite the 
reporting currency being gbp the 
group prefers to hold most of its 
surplus cash resources in the usd 
functional currency strategic report
22
shaft sinkers holdings plc annual report and accounts 2013
financial review continued
ebitda
earnings before interest tax and 
depreciation for the year were 
gbp85 million 2012 gbp109 
million a decrease of 221 this 
was due to a lower depreciation 
charge of gbp46 million 2012 
gbp57 million coupled with lower 
profits from operations at gbp39 
million 2012 gbp53 million 
earnings per share
earnings per share was calculated 
on the 475 million shares in issue 
throughout the year 
earnings per share decreased to 
414 pence 2012 492 pence 
restated a decrease of 158 the 
theoretical effect of awarding 
incentive shares to the executive 
directors of the company was 
reflected in diluted earnings per 
share of 490 pence in 2012 the 
long term incentive plan ltip 
took into account the share price at 
31 december 2010 and comparing 
it to the target growth in price of at 
least 13 per annum for ltip 
shares to vest each year and a net 
profit target growth rate of 20 
per annum these targets have not 
been met to date and so it is 
considered that there will be no 
dilution to earnings per share 
dividend policy
the group has adopted a 
progressive dividend policy with 
dividends moving broadly in line 
with earnings over time dividends 
are expected to be paid semi
annually in respect of each year 
with an interim dividend for each 
year paid in september and a final 
dividend paid in june of the 
following year in each case subject 
to the satisfaction of the solvency 
test 
interim dividends are expected to 
represent around one third and 
final dividends around two thirds of 
the full year dividend for each year 
annual dividends per share are 
expected to be covered some 25 
– 30 times by earnings per share 
in the light of the pressures 
brought to bear on the group’s 
financial resources through poor 
operating results and increased 
legal fees the board does not 
recommend a final dividend for 
2013 
financial position
total assets decreased to gbp1012 
million 2012 gbp1317 million and 
net assets decreased to gbp368 
million 2012 gbp424 million
interestbearing debt to equity has 
decreased to 79 2012 265 
the term borrowing facilities 
granted to the group by standard 
bank of south africa limited have 
been reduced by gbp69 million 
during the year in accordance with 
the amortisation schedule of the 
facilities there remains one final 
bullet payment under these 
facilities of gbp29 million zar50 
million payable at the end of 
december 2014
the group’s net debt defined as 
interest bearing debt minus cash 
has improved to gbp16 million 
2012 net debt of gbp21 million 
the group managed to collect 
many outstanding variation orders 
and to reduce its debtors’ book 
outstanding resulting in a small 
improvement in cash before the 
repayment of debt despite the 
cash consumed in its operating 
activities 
the group’s net current assets 
decreased to net current liabilities 
of gbp46 million 2012 net current 
assets gbp162 million trade 
payables remain at almost the 
same level as trade receivables 
indicating a tightening working 
capital position numerous 
initiatives are being implemented 
to ensure that sufficient cash is 
available to meet the group’s 
payment obligations in the short 
term this is being achieved partly 
through converting some of the 
group’s surplus assets into cash
ppe
new additions to property plant 
and equipment amounted to 
gbp140 million 2012 gbp127 
million the additions during the 
year comprised mainly the capital 
expenditure incurred in respect of 
the hindustan zinc and kibali 
goldmine projects as well as 
capital expenditure incurred in 
respect of the styldrift leeuwkop 
and karee 3 projects 
disposals of plant and equipment 
in 2013 were gbp24 million 2012 
gbp16 million restated the group 
disposed of its offices in south 
africa on a sale and leaseback 
basis generating cash of gbp22 
million and recording a profit of 
gbp07 million
other intangibles
the group has continued to invest 
in a 75 share of the development 
of technology for the automated 
inspection of mine shafts to date 
the group has invested gbp20 
million 2012 gbp17 million the 
development is in the prototype 
phase and it is envisaged at this 
stage that the group will not be 
required to invest any material 
amounts going forward 
inventories
inventories decreased to gbp46 
million 2012 gbp49 million in line 
with a reduction in contracts and 
revenues
trade and other receivables
trade and other receivables 
decreased to gbp333 million 
2012 gbp612 million the 
decrease in trade and other 
receivables reflects the reduction 
in contracts in south africa as well 
as the reduction in outstanding 
variation orders that had built up at 
the end of 2012 furthermore in 
2012 the counter claim against 
eurochem was reflected under 
current assets to a net value of 
gbp92 million in 2013 this has 
been reclassified to noncurrent 
assets as the outcome of the 
arbitration is only expected in early 
2015
order book
the group’s order book at financial 
reporting period end is calculated 
to represent the total value of 
estimated outstanding project 
revenues for contractually 
committed projects excluding any 
escalation which is typically built 
into the contracts the order book 
at 31 december 2013 amounted to 
gbp2382 million 2012 gbp3465 
million the decrease is mainly due 
to the discontinuance of the hernic 
moab and impala 16 contracts and  committed order book as of 31 december 2013
gbp
2018 2017 2015 2016 2014
106626580
46401231
11708375
38196281
35239857
0
20000000
60000000
80000000
100000000
40000000
120000000
23
shaft sinkers holdings plc annual report and accounts 2013
wwwshaftsinkersgroupcom
by revenue recognised during the 
year on continuing projects post 
year end we have announced the 
change to our impala 17 contract 
which has the effect of reducing 
the current order book by gbp139 
million
cash
the group ended the year with a 
positive cash balance of gbp42 
million 2012 gbp91 million and 
an overdraft bank account of 
gbp29 million 2012 nil gbp140 
million of cash was consumed in 
operating activities and legal fees 
2012 gbp05 million and a 
reduction in working capital in 2013 
of gbp159 million 2012 increase in 
working capital of gbp229 million 
further expenditures on interest 
net of interest received and taxes 
of gbp20 million 2012 gbp07 
million reduced cash on hand 
although no dividend was paid to 
shaft sinkers’ shareholders in the 
year 2012 gbp34 million gbp69 
million of interest bearing debt was 
repaid during 2013 2012 gbp39 
million during the year under 
review the group received advance 
revenues and interest free 
advances from clients that 
amounted to gbp123 million 2012 
gbp307 million project related 
capital expenditure of gbp135 
million 2012gbp121 million was 
incurred during the year
at 31 december 2013 the group held its cash in the following currencies
gbp equivalent
british pounds gbp01 million
united states dollars usd62 million gbp39 million
russian roubles rur01 million gbp00 million
indian rupees inr520 million gbp02 million
euro eur01 million gbp01 million
south african rands zar520 million gbp30 million
 includes usd30 million restricted cash
during 2012 the group set aside 
usd30 million included in the 
above cash figures as security for 
the issuance of a performance 
bond in respect of the kibali 
goldmine project these funds 
remain restricted and are not 
currently freely available for other 
use by the group
impairment of assets
an impairment review was 
conducted on all the group’s 
tangible and intangible assets and 
it was found no further 
impairment was required
an impairment loss reversal of 
gbp01 million 2012 impairment 
loss – gbp03 million was 
recognised during the year on the 
group’s plant and equipment the 
impairment reversals were 
identified following a detailed 
review of the fixed asset register 
and were identified on a line by 
line basis where impairments had 
previously been recognised for 
which the circumstances no 
longer existed at yearend
deferred revenue
deferred revenue represents 
revenues received in advance 
from clients in line with the 
group’s contracting model 
clients are generally required to 
fund the procurement of capital 
expenditures necessary for a 
project in advance of the group 
procuring those assets these 
revenues received in advance are 
deferred for recognition as and 
when the plant and equipment is 
brought into use on the project 
and amortised to revenue over 
the remaining life of the project
the other expenditures on 
projects such as labour and 
consumable materials are billed to 
clients monthly and are generally 
paid within 30 days of billing
deferred revenues in the 
statement of financial position 
decreased to gbp80 million 2012 
gbp157 million primarily as a 
result of the amortisation to profit 
of revenues previously received on 
both the hindustan zinc and kibali 
goldmine projects offset by 
increases in deferred revenues on 
the styldrift project 
deferred revenues released to 
profits during the year amounted 
to gbp200 million 2012 gbp115 
million against cash received from 
clients for advance revenue of 
gbp123 million 20112 gbp307 
million
interestfree advances from 
clients
the interest free advances relate 
to advances received from new 
contract awards during the 2012 
financial year these advances are 
repayable over the remaining 
contract period with the group’s 
billing to the relevant client having 
reached 10 of the total contract 
value
at 31 december 2013 total interest 
free advances outstanding 
amounted to gbp124 million 
2012 gbp155 million governance
24
shaft sinkers holdings plc annual report and accounts 2013
board of directors
stephen oke
nonexecutive chairman 
age 59
alon davidov
chief executive officer 
age 39
christopher hall
chief financial officer 
age 54
ian watson
independent nonexecutive 
director age 71 
roger williams
independent nonexecutive 
director age 50
appointment and  
committee membership
mr oke joined the board in 
november 2010 he was the 
senior independent director until 
30 august 2012 before being 
appointed as chairman and he 
also chairs the nominations 
committee 
mr davidov joined the board as 
chief executive officer in 
november 2010 having been a 
director of shaft sinkers pty 
since 2007 he is a member of the 
safety committee
mr hall joined the board in 
november 2010 as chief financial 
officer he originally joined the 
group in 2007 as the chief 
financial officer following three 
years as the chief executive 
officer of excellerate holdings a 
group listed on the jse 
mr watson joined the board in 
november 2010 and chairs the 
safety committee and the 
remuneration committee 
mr williams joined the board in 
november 2010 and chairs the 
audit committee 
skills and experience mr oke holds a bsc honours 
degree in geology from the 
university of southampton and an 
mba from the university of the 
witwatersrand graduate school 
of business 
he has over 35 years’ experience 
in the mining and metals industry 
of which some 12 years were 
spent in various operational 
management positions for the 
national coal board anglovaal 
ltd bp coal and johannesburg 
consolidated investment 
company limited subsequently 
he has held senior positions in the 
investment banking industry for 
smith new court merrill lynch 
nm rothschild and sons and 
standard bank specialising in the 
metals and mining sector where 
he advised on a number of 
transactions and equity capital 
fund raisings worldwide he is a 
nonexecutive director of 
international ferro metals limited 
and kolar gold limited and was 
previously on the boards of 
nikanor plc katanga mining 
limited kazakhgold group 
limited and african mining  
exploration plc 
mr davidov previously worked as 
a consultant for imr advising on 
business development from 
2006 in line with his role he was 
responsible for imr’s original 
investment in the group in 2007 
and oversight of the group’s 
subsequent development 
he was previously finance 
director of bateman litwin 
kazakhstan from 2003 to 2005 
he is a fluent russian speaker mr 
davidov has dual citizenship in 
south africa and israel 
mr hall has over 13 years’ 
experience in the oil industry 
during which time he spent seven 
years in france and also served as 
a finance director of total south 
africa 
he qualified as a chartered 
accountant and spent four years 
postqualification at 
pricewaterhousecoopers and 
ernst  young mr hall is a south 
african citizen 
mr watson is a qualified mining 
engineer with over 47 years’ 
experience of the mining industry 
he joined gold fields of south 
africa ltd in 1962 and after working 
at various gold mines became mine 
manager at successively the west 
driefontein gold mine the kloof 
gold mining company and the 
northam platinum ltd platinum 
mine and then consulting engineer 
from 19921998 
he subsequently worked as 
managing director of northam 
platinum ltd from 19982002 as 
chief executive officer of 
international ferro metals sa 
pty ltd from 20032005 and as 
chief executive officer of boynton 
investments pty ltd until his 
retirement in 2009 he is a 
professional engineer engineering 
council of south africa and holds 
a national diploma in mining from 
the witwatersrand technical 
college a mine manager’s 
certificate of competency from the 
south africa college of mining and 
has been a participant on the 34 
general management programme 
at henley management college in 
the uk he is currently non
executive chairman of bushveld 
minerals limited an aim listed 
company
mr williams is a uk and south 
african chartered accountant 
with over 20 years’ international 
experience in mining finance 
after graduating from the 
university of southampton with 
an honours degree in french and 
spanish he qualified as a 
chartered accountant with 
touche ross and joined the 
finance department of carlton 
paper 
in 1997 he joined randgold 
resources and was appointed 
group finance director in 2002 
he was subsequently chief 
financial officer of jselisted 
aeci limited and bsg resources 
limited a private company both 
involved in the mining industry 
he is an independent non
executive director of sylvania 
platinum limited he is a uk 
citizen 
  
each of the directors can be contacted at the registered office of the company at 18 athol street douglas isle of man im1 1ja 25
shaft sinkers holdings plc annual report and accounts 2013
wwwshaftsinkersgroupcom
stephen oke
nonexecutive chairman 
age 59
alon davidov
chief executive officer 
age 39
christopher hall
chief financial officer 
age 54
ian watson
independent nonexecutive 
director age 71 
roger williams
independent nonexecutive 
director age 50
appointment and  
committee membership
mr oke joined the board in 
november 2010 he was the 
senior independent director until 
30 august 2012 before being 
appointed as chairman and he 
also chairs the nominations 
committee 
mr davidov joined the board as 
chief executive officer in 
november 2010 having been a 
director of shaft sinkers pty 
since 2007 he is a member of the 
safety committee
mr hall joined the board in 
november 2010 as chief financial 
officer he originally joined the 
group in 2007 as the chief 
financial officer following three 
years as the chief executive 
officer of excellerate holdings a 
group listed on the jse 
mr watson joined the board in 
november 2010 and chairs the 
safety committee and the 
remuneration committee 
mr williams joined the board in 
november 2010 and chairs the 
audit committee 
skills and experience mr oke holds a bsc honours 
degree in geology from the 
university of southampton and an 
mba from the university of the 
witwatersrand graduate school 
of business 
he has over 35 years’ experience 
in the mining and metals industry 
of which some 12 years were 
spent in various operational 
management positions for the 
national coal board anglovaal 
ltd bp coal and johannesburg 
consolidated investment 
company limited subsequently 
he has held senior positions in the 
investment banking industry for 
smith new court merrill lynch 
nm rothschild and sons and 
standard bank specialising in the 
metals and mining sector where 
he advised on a number of 
transactions and equity capital 
fund raisings worldwide he is a 
nonexecutive director of 
international ferro metals limited 
and kolar gold limited and was 
previously on the boards of 
nikanor plc katanga mining 
limited kazakhgold group 
limited and african mining  
exploration plc 
mr davidov previously worked as 
a consultant for imr advising on 
business development from 
2006 in line with his role he was 
responsible for imr’s original 
investment in the group in 2007 
and oversight of the group’s 
subsequent development 
he was previously finance 
director of bateman litwin 
kazakhstan from 2003 to 2005 
he is a fluent russian speaker mr 
davidov has dual citizenship in 
south africa and israel 
mr hall has over 13 years’ 
experience in the oil industry 
during which time he spent seven 
years in france and also served as 
a finance director of total south 
africa 
he qualified as a chartered 
accountant and spent four years 
postqualification at 
pricewaterhousecoopers and 
ernst  young mr hall is a south 
african citizen 
mr watson is a qualified mining 
engineer with over 47 years’ 
experience of the mining industry 
he joined gold fields of south 
africa ltd in 1962 and after working 
at various gold mines became mine 
manager at successively the west 
driefontein gold mine the kloof 
gold mining company and the 
northam platinum ltd platinum 
mine and then consulting engineer 
from 19921998 
he subsequently worked as 
managing director of northam 
platinum ltd from 19982002 as 
chief executive officer of 
international ferro metals sa 
pty ltd from 20032005 and as 
chief executive officer of boynton 
investments pty ltd until his 
retirement in 2009 he is a 
professional engineer engineering 
council of south africa and holds 
a national diploma in mining from 
the witwatersrand technical 
college a mine manager’s 
certificate of competency from the 
south africa college of mining and 
has been a participant on the 34 
general management programme 
at henley management college in 
the uk he is currently non
executive chairman of bushveld 
minerals limited an aim listed 
company
mr williams is a uk and south 
african chartered accountant 
with over 20 years’ international 
experience in mining finance 
after graduating from the 
university of southampton with 
an honours degree in french and 
spanish he qualified as a 
chartered accountant with 
touche ross and joined the 
finance department of carlton 
paper 
in 1997 he joined randgold 
resources and was appointed 
group finance director in 2002 
he was subsequently chief 
financial officer of jselisted 
aeci limited and bsg resources 
limited a private company both 
involved in the mining industry 
he is an independent non
executive director of sylvania 
platinum limited he is a uk 
citizen 
  
each of the directors can be contacted at the registered office of the company at 18 athol street douglas isle of man im1 1ja governance
26
shaft sinkers holdings plc annual report and accounts 2013
directors’ report
the directors hereby present 
the annual report and 
accounts of shaft sinkers 
holdings plc the ‘company’ and 
together with its subsidiaries 
the ‘group’ for the year ended 
31 december 2013
review of the business
the strategic report has been prepared to provide 
the company’s stakeholders with a fair review of the 
business of the group and a description of the 
principal risks and uncertainties facing it the 
strategic report incorporates by reference into this 
report the following which collectively contain a 
discussion of the main trends and factors likely to 
affect the future development performance and 
position of the company’s business and the strategy 
for preserving value and for delivering objectives
strategic report on pages 2 to 23 
financial review on pages 20 to 23
internal controls and risk management on page 36
2013 key performance indicators on page 15
sustainability review and corporate social 
investment on pages 18 to 19
the strategic report may not be relied upon by 
anyone including the company’s shareholders for 
any other purpose the strategic report is designed 
to provide shareholders with an understanding of 
the company’s business and the environment in 
which it operates and of necessity only focuses on 
material issues and facts the omission of reporting 
on any specific topic should not be taken as 
implying that it is not being addressed 
this report contains forwardlooking statements by 
their nature forwardlooking statements involve a 
number of risks uncertainties and future assumptions 
because they relate to events andor depend on 
circumstances that may or may not occur in the 
future and could cause actual results and outcomes 
to differ materially from those expressed in or implied 
by the forwardlooking statements no assurance can 
be given that the forwardlooking statements 
contained in this report will be realised statements 
about the director’s expectations beliefs hopes 
plans intentions and strategies are inherently subject 
to change and they are based on expectations and 
assumptions as to future events circumstances and 
other factors which are in some cases outside the 
company’s control the information contained in this 
report has been prepared on the basis of knowledge 
and information available to directors at the date of 
its preparation it is believed that the expectations set 
out in these forwardlooking statements are 
reasonable but they may be affected by a wide range 
of variables which could cause actual results or 
trends to differ materially the forwardlooking 
statements should be read in particular in the context 
of the specific risk factors for the company identified 
in this report the company’s shareholders are 
cautioned not to place undue reliance on the 
forwardlooking statements   
the principal events of the year are covered in the 
strategic report 
dividends
during the 2013 financial year no dividends were 
paid to shareholders of the company in the light of 
the pressures brought to bear on the group’s 
financial resources through poor operating results 
and increased legal fees the board does not 
recommend a final dividend for 2013
annual general meeting
the annual general meeting ‘agm’ will be held on 
11 june 2014 at the forum 1718 mount havelock 
douglas isle of man im1 2qg at 1100 am details of 
the resolutions to be presented at the agm together 
with explanations appear in the notice of agm on 
pages 95 to 97 
share capital
as at 31 december 2013 the company’s market 
capitalisation was gbp9015000 with 47500000 
ordinary shares of no par value in issue the ordinary 
shares are listed on the premium segment of the 
london stock exchange the rights and obligations 
attaching to the company’s shares in addition to 
those conferred on their holders by law are set out in 
the articles of association a copy of which can be 
obtained from the company’s registered agent and 
the company secretary at the company’s registered 
office the holders of ordinary shares are entitled to 
receive all shareholder documents to attend and 
speak at general meetings of the company to 
appoint proxies and to exercise all voting rights and 
to participate in distributions of income or capital
amendments to the articles of association 
the company’s articles of association may only be 
amended by a special resolution at a general 
meeting of the shareholders
the board is proposing to amend the third sentence 
of article 117 of the company’s articles of association 
via a special resolution at the forthcoming agm the 
purpose of the resolution is to simplify the board 
meeting process and reduce costs by clarifying that 
board meetings shall be deemed to take place where 
the chairman of the meeting is located
major interests in shares
as at 31 march 2014 the following shareholders 
either notified the company or the company is 
aware of major interests in share where the 
threshold of 3 of the issued share capital of the 
company was crossed or reached 27
shaft sinkers holdings plc annual report and accounts 2013
wwwshaftsinkersgroupcom
number of 
voting rights 
nature of 
holding
international mineral 
resources bv 22819266 4804 direct
gtl investments 
limited 3927000 827 direct
church house 
investments 1500000 316 direct
 this shareholding comprises 2027000 shares held via gtl investments 
limited a company associated with geoffrey wolf as well as 1900000 
shares held by mr wolf
relationship agreements
international mineral resources bv ‘imr’ and the 
company entered into a relationship agreement on 
20 december 2010 the ‘’relationship agreement’’ 
which regulates the ongoing relationship between 
imr and the group with a view to ensuring that the 
group is capable of carrying on its business 
independently of imr and that transactions and 
relationships between the group and imr are at 
arm’s length and on a normal commercial basis
imr its direct and indirect beneficial owners and any 
subsidiary not including the company are referred 
to in this paragraph as its ‘’shareholder group’’ for 
the purposes of the relationship agreement an 
‘independent director’ broadly means a director of 
the company who is not a current or recent director 
officer employee or shareholder of or consultant to 
or a person having a relationship association or 
interest which is material to him with or in or who 
has been nominated by imr or any associate as 
defined in the relationship agreement of imr or 
with or in any person having a relationship which is 
material to it or him with imr or any associate of imr
under the relationship agreement imr and the 
company agree inter alia that
a imr shall not vote on any shareholder resolution 
that is required pursuant to applicable law or 
regulation to alter the company’s articles or 
memorandum of association which would be 
contrary to the maintenance of the company’s 
ability to manage and run its business independently 
of imr and the shareholder group unless such 
resolution is supported by the votes of the majority 
of independent directors
b there shall at all times be a majority of 
independent directors on the board whose number 
shall not be less than the number of directors 
nominated by imr in addition the number of 
nonexecutive independent directors shall not be 
less than the number of nonindependent directors 
imr shall exercise the voting rights attaching to the 
ordinary shares held from time to time directly or 
indirectly by it andor by any of its shareholder 
group and shall use reasonable efforts to procure 
so far as it is able that the nonindependent 
directors shall exercise their voting rights on the 
board so that if it becomes aware that an 
independent director ceases to be an independent 
director of the company for any reason that 
independent director will insofar as may be 
necessary to ensure that there continues to be a 
majority of independent directors on the board and 
that the number of nonexecutive independent 
directors shall not be less than the number of 
nonindependent directors be replaced or 
supplemented as the case may be by a new 
executive or nonexecutive director as the case 
may be who is also an independent director
c save to the extent required by law or as 
otherwise contemplated in the relationship 
agreement they shall exercise their powers in a 
manner which shall not prevent the company from 
being managed in accordance with the principles 
and provisions set out in the uk corporate 
governance code
d they shall and shall respectively use reasonable 
efforts to procure that all subsidiaries of imr and the 
company respectively shall conduct all transactions 
and relationships with imr and all subsidiaries of imr 
as the case may be on arms’ length terms
e no material agreement arrangement or 
transaction between the group and any associate of 
the controlling shareholder shall be entered into 
novated varied abrogated nor shall any agreement 
be materially amended unless approved by a 
resolution of the board which has been voted for by 
a majority of the independent directors the group 
must enforce the terms of agreements with imr and 
associates of imr unless there is a bona fide 
commercial reason not to do so and such action has 
been approved by resolution of the board which has 
been voted for by a majority of the independent 
directors
f if within five years of the date on which the 
relationship agreement is executed imr is 
presented with an opportunity to develop or acquire 
a business principally concerned with shaft sinking 
it will first offer to the company the chance to take 
up such opportunity and if the company does not 
confirm in writing within 14 days of being so 
informed that it wishes to pursue the opportunity 
then it shall be deemed to have declined it and
g save where the approval of the board has been 
given imr shall not and shall procure that no other 
member of its shareholder group shall recruit solicit 
or entice any senior employee of the company or 
any member of its group with a salary in excess of 
gbp100000 this prohibition shall not apply where 
such senior employee independently approaches 
imr imr shall have the right to appoint two 
directors to the board so long as it its group or its 
shareholder group controls 25 or more of the 
voting rights at general meetings of the company 
where such percentage control is 15 percent or  governance
28
shaft sinkers holdings plc annual report and accounts 2013
directors’ report continued
more but less than 25 the right is to appoint one 
director
at the date of this report imr has no appointed 
director on the board
relations with shareholders
the group aims to provide a high level of 
transparency and communication to investors and 
analysts on a regular and timely basis through 
announcements meetings and seminars the group 
seeks to develop a regular dialogue with investors 
and analysts and to respond to their challenges and 
to understand their sentiments and concerns 
all shareholders have the opportunity to attend and 
raise questions at the company’s annual general 
meeting the group aspires to have an investor 
relations programme that meets the aspirations of 
all of its current and potential shareholders and that 
lends itself to the growth of the group’s business 
and future sustainability
the chief executive officer and chief financial 
officer aim to meet all major shareholders at least 
twice a year and to meet with a wide range of 
shareholders and prospective investors in the united 
kingdom these discussions will focus on the results 
and businesses of the group but will also seek to 
learn of any concerns amongst investors and to gain 
a deeper understanding of their strategic objectives 
the chairman and nonexecutive directors are 
available on request to attend investor relations 
meetings or to meet with investors or analysts 
independent of the group’s management the 
chairman stephen oke remains available to 
shareholders and encourages a dialogue between 
shareholders and the company
transactions with related parties
loans to and from related parties are disclosed in 
note 21 to the annual financial statements
employees
the group employed approximately 4674 people as 
at the end of the 2013 financial year further 
information about employees is disclosed in the 
sustainability review on pages 18 to 19
post balance sheet events
the directors are not aware of any other matter or 
circumstance not disclosed in this report and arising 
since the end of the financial year not otherwise 
dealt with in the annual financial statements which 
significantly affects the financial position at 31 
december 2013 or the results of the group’s 
operations or cash flows for the year then ended
financial instruments
details of the group’s financial risk management 
objectives and policies are described in the internal 
controls and risk management on page 36 and in 
note 26 to the consolidated financial statements on 
pages 79 to 85
political donations
no political donations were made during the year 
and no donations were made to any political party 
representative or candidate in any part of the world
significant agreements and other potential legal 
impediments
the following represent significant agreements and 
other potential legal impediments which may entitle 
the counterparties to exercise termination or other 
rights in the event of a change of control of the 
company the remaining essential contractual 
arrangements can be summarised as follows
 – contracts for the purchase of inputs – the supplies 
needed to operate the group’s projects are 
secured through competitive tendering in the 
open market and can be obtained from a variety 
of sources
 – financing arrangements – the company and 
group have bank facilities in place
 – contracts relating to labour and services – the 
principal arrangements essential to the group’s 
business in south africa are collective agreements 
with trade unions representing the majority of the 
group’s employees
significant agreements – change of control
a number of agreements take effect alter or 
terminate upon a change of control of the company 
following a takeover bid such as borrowing facilities 
and contracts with clients these are deemed to be 
significant to the group’s business the group’s 
banking facilities long term and on demand with 
standard bank of south africa limited amounting to 
zar168 million gbp97 million require the approval 
of standard bank in the event of a change of 
ultimate control of its subsidiaries shaft sinkers 
pty limited or capstone 615 pty limited
the group does not have agreements with any 
director or employee that would provide 
compensation for loss of office or employment 
resulting from a takeover
auditors and disclosure of information to auditors
the group’s external auditors kpmg audit llc 
have indicated their willingness to continue in office 
and a resolution seeking to reappoint them will be 
proposed at the forthcoming agm each of the 
directors at the date of approval of this report 
confirms that
1 so far as the director is aware there is no relevant 
audit information of which the group’s auditors are 
unaware and
2 the director has taken all the steps that he ought 
to have taken as a director to make himself aware of 
any relevant audit information and to establish that 
the group’s auditors are aware of the information 29
shaft sinkers holdings plc annual report and accounts 2013
wwwshaftsinkersgroupcom
going concern
the group’s business activities and operational 
performance are detailed in the strategic report 
– refer to pages 2 to 23 the financial performance 
and liquidity of the group is described in the chief 
financial officer’s report – refer to pages 20 to 23
as described in note 123 to the consolidated annual 
financial statements the group has borrowings and 
facilities which together with receipts from clients 
fund the daily working capital requirements of the 
group
volatile economic conditions may occasionally 
create uncertainty in respect of
 – demand for the group’s services as a 
consequence of reduced capital expenditure 
within the mining and related industries and
 – the availability of bank financing in the 
foreseeable future
in assessing the group’s ability to continue as a 
going concern the board has reviewed the following
 – group forecasts and projections for at least an 18 
month forwardlooking period and up to 
december 2015 taking into account potential 
changes in group performance the forecasts and 
projections focus on both the financial 
performance as well as the liquidity of the group
 – the aforementioned forecasts and projections 
were further subjected to a stress test by applying 
a conservatism factor in order to ascertain 
whether the group will be able to operate in 
periods of duress
the group forecasts and projections indicate the 
group should be able to operate within the level of 
its capital structure the board has factored into its 
liquidity forecasts and considered the impact of 
gbp19m usd3m of cash being restricted as a 
result of the security provided to the group’s 
bankers for the performance guarantee issued in 
respect of a project
the following main assumptions have been used in 
making this assessment
 – the current overdraft facilities of the group will 
remain in place for at least the next 18 months
 – the strike action currently being experienced in 
the mining industry in south africa will cease and 
operations will return to normality by june
 – the current normal operational performance 
assumptions will be met
 – new projects have been included where formal 
tenders have been submitted and management 
have assessed the likelihood of success as strong
 – a program of surplus asset realisations will result 
in additional cash inflows
 – restricted cash will remain restricted throughout 
the period of assessment
 – in the stress test unsecured revenues which do 
not form part of the current order book are 
removed
the board has also considered the claim received 
from eurochem of an amount of approximately 
usd917 million  gbp550 million in determining its 
ability to continue as a going concern based on the 
review of the arbitration claim in consultation with 
external legal counsel the board continues to be of 
the view that the principal claims are without merit 
and the subsidiaries concerned are contesting the 
claims robustly as such the board has not forecast 
any requirement to settle amounts arising from 
these claims however given the ongoing arbitration 
processes management forecasts include best 
estimates of expenses likely to be incurred in 
defending the group’s position
the amount the group submitted as a counterclaim 
against eurochem to the net value of usd16 million 
gbp93 million for outstanding amounts payable 
under the contract as a result of the uncertainty 
regarding the timing of any receipts awarded from 
the arbitration processes has not been forecast as 
received during the future period reviewed and as 
such does not have any impact on available liquidity
various initiatives are underway to convert some of 
the available longerterm assets of the group into 
nearterm cash management is optimistic that these 
initiatives will generate additional funds that should 
assist the group to continue to support the high 
level of legal expenses related to the arbitration 
matter and enable the group to continue as a going 
concern
based on the forecasts prepared the board 
considers that the group has sufficient ability to 
meet its scheduled debt repayments during the 
forecast period from the facilities and cash flows 
available to it the current term facilities expire in 
december 2014 with a final repayment of r50 
million gbp29 million the group is in discussion 
with its bankers regarding the possible extension of 
these facilities
the directors have a reasonable expectation that 
the group has adequate resources in place to 
continue in operational existence for the foreseeable 
future the consolidated annual financial statements 
therefore continue to be prepared on a going 
concern basis
  governance
30
shaft sinkers holdings plc annual report and accounts 2013
corporate governance
stephen oke 
chairman of the board
compliance with the code
shaft sinkers holdings plc is committed to high 
standards of corporate governance this report 
details how the company has applied the principles 
and provisions of the uk corporate governance 
code 2010 and 2012 the ‘code’ the latter of which 
was published in september 2012 by the financial 
reporting council and which applies to the 
company since 1 october 2012 the company has 
complied with all relevant provisions of the code 
except in respect of
 – code provision a41 – the appointment of a 
senior independent director as the chairman of 
the board is independent and given the size of the 
company as well as the environment in which it is 
operating the board does not consider it 
necessary to appoint a senior independent 
director at this time
 – code provisions c11 and c34 – diversity the 
board does not currently have a policy on 
diversity
role of the board
the board is responsible for promoting the long
term success of the company and ensuring that its 
principal aim is to enhance the company’s longterm 
value for the benefit of shareholders whilst having 
regard to the interests of other stakeholders at its 
meetings the board reviews the group’s longterm 
strategic direction capital expenditure and budget 
plans and monitors on a regular basis the company’s 
operating and financial performance and its 
approach to risk management and corporate 
governance the board has established a formal 
schedule of matters which are reserved for its 
attention the major components include
strategy and management
 – responsibility for the overall management of the 
group
 – approval of the group’s longterm objectives and 
commercial strategy
 – approval of the annual operating and capital 
expenditure budgets and any material changes to 
them
 – approval of any specific key expenditures falling 
within preapproved budget levels
 – oversight of the group’s operations
 – review of performance in the light of the group’s 
strategy objectives business plans and budgets 
and ensuring that any necessary corrective action 
is taken
 – extension of the group’s activities into new 
business or geographic areas
 – any decision to cease to operate all or any 
material part of the group’s business
structure and capital
 – changes relating to the group’s capital structure 
including reduction of capital share issues except 
under employee share plans share buy backs 
including the use of treasury shares
 – major changes to the group’s corporate structure
 – changes to the constitutional documents of the 
company or any of its subsidiaries
 – changes to the group’s management and control 
structure
 – any changes to the company’s or any other 
listed or public company in the group listing or its 
status as a public company
financial reporting and controls
 – approval of interim and final results and any 
preliminary announcement of such results 
following the recommendation of the audit 
committee
 – approval of the annual report and accounts 
including the corporate governance statement 
and remuneration report following the 
recommendation of the audit committee
 – approval of the dividend policy
 – declaration of the interim dividend and 
recommendation of the final dividend
 – approval of any significant changes in accounting 
policies or practices following the 
recommendation of the audit committee
 – approval of treasury policies including foreign 
currency exposure and the use of financial 
derivatives
internal controls
 – ensuring maintenance of a sound system of 
internal control and risk management
 – approving an appropriate statement for inclusion 
in the annual report following the 
recommendation of the audit committee 31
shaft sinkers holdings plc annual report and accounts 2013
wwwshaftsinkersgroupcom
contracts
 – major capital projects
 – contracts which are material strategically or by 
reason of size entered into by the company or 
any subsidiary in the ordinary course of business 
for example bank borrowings above a specified 
amount and material acquisitions or disposals of 
fixed assets
 – borrowings by group companies in excess of two 
times adjusted capital and reserves defined as 
the amount of paid up share capital plus the 
amount standing to the credit of accumulated 
group reserves adjusted in accordance with the 
articles at the discretion of the board
 – material contracts of the company or any 
subsidiary not in the ordinary course of business 
for example loans and repayments foreign currency 
transactions major acquisitions or disposals
 – major investments including the acquisition or 
disposal of interests of more than 5 in the voting 
shares of any company or the making of any 
takeover offer
 – major leasing and rental arrangements
 – major partnership and alliance agreements
 – approval of any related party transactions with 
any directors forming part of such related party 
abstaining from the approval process
 – approval of key insurance policies
communication
 – approval of resolutions and corresponding 
documentation to be put forward to shareholders 
at a general meeting
 – approval of all material circulars and prospectuses 
approval of routine documents such as periodic 
circulars about scrip dividend procedures or 
exercise of conversion rights could be delegated 
to a committee
 – approval of press releases concerning matters 
decided by the board
board membership and other 
appointments
 – changes to the structure size and composition of 
the board following recommendations from the 
nomination committee
 – ensuring adequate succession planning for the 
board and key senior management
 – appointments to the board following 
recommendations by the nomination committee
 – appointment of key senior management with 
family ties to shareholders
 – selection of the chairman of the board and the 
chief executive
 – appointment of the senior independent director
 – ensuring that directors especially nonexecutive 
directors have access to independent 
professional advice at the company’s expense 
where they judge it necessary in order to 
discharge their responsibilities as directors
 – ensuring that directors have access to sufficient 
training resources for their development needs 
review of which shall be undertaken by the 
chairman on an individual director basis
 – terms and conditions of employment of directors 
and senior executives including the 
reimbursement of director’s expenses
 – membership and chairmanship of board 
committees following recommendations by the 
nomination committee
 – continuation in office of directors at the end of 
their term of office when they are due to be 
reelected by shareholders at the agm and 
otherwise as appropriate following 
recommendations by the nomination committee
 – continuation in office of any director at any time 
including the suspension or termination of service 
of an executive director as an employee of the 
company subject to the law and their service 
contract following recommendations by the 
nomination committee
 – appointment or removal of the company secretary
 – appointment reappointment or removal of the 
external auditor to be put to shareholders for 
approval following recommendations of the audit 
committee
remuneration
 – approval of the remuneration policy for the 
directors company secretary and other senior 
executives following recommendations of the 
remuneration committee
 – approval of the remuneration of the non
executive directors subject to the articles of 
association and shareholder approval as 
appropriate
 – approval of the remuneration of auditors
 – the introduction of new share incentive plans or 
major changes to existing plans to be put to 
shareholders for approval following 
recommendations of the remuneration 
committee
delegation of authority
 – the division of responsibilities between the 
chairman the chief executive and if applicable 
other executive directors which should be in 
writing
 – approval of terms of reference of board 
committees
 – receiving reports from board committees on their 
activities
 – approval of the delegation of authorities to the 
executive management and to subsidiary boards governance
32
shaft sinkers holdings plc annual report and accounts 2013
corporate governance matters
 – undertaking a formal and rigorous review 
annually of its own performance that of its 
committees and individual directors
 – determining the independence of directors
 – considering the balance of interests between 
shareholders employees customers and the 
community
 – review of the group’s overall corporate 
governance arrangements
 – receiving reports on the views of the company’s 
shareholders
policies
 – approval of material policies
other
 – the making of political donations
 – approval of the appointment of the group’s 
principal professional advisers
 – prosecution defence or settlement of litigation 
being material to the interests of the group as a 
whole
 – approval of the overall levels of insurance for the 
group including directors’  officers’ liability 
insurance and indemnification of directors
 – approval of the arrangements related to any 
group pension scheme
 – ensuring that matters requiring an approval of the 
company in a general meeting are referred to 
such meeting
 – this schedule of matters reserved for board 
decisions
directors
details of the current directors of the company and 
their biographies are set out on pages 24 to 25
under the company’s articles of association 
directors retire by rotation and all directors are 
subject to election at the first annual general 
meeting after their appointment and to reelection 
at intervals of no more than three years in 
accordance with the recommendations and 
requirements of the uk corporate governance code 
of september 2012  published by the financial 
reporting council the ‘code’ all directors should 
be subject to annual election by the shareholders 
unless the company is a smaller company below the 
ftse 350 the chairman confirms that each of the 
current directors’ individual performance continues 
to be effective and demonstrates commitment to 
the role
directors are appointed and may be removed in 
accordance with the articles of association of the 
company and the provisions of the isle of man 
companies act 2006
the board considers that stephen oke roger 
williams and ian watson are independent directors 
in accordance with the requirements of the code 
the terms and conditions of their appointment are 
available for inspection at the company’s registered 
address
directors’ interests
the following directors held a beneficial interest in 
the ordinary shares of the company at the date of 
this report
number of 
shares held
 
shareholding
alon davidov 78 554 017
roger williams 50 000 011
chris hall 23 000 005
details of the longterm incentive plan are dealt with 
elsewhere in this report showing the award of shares 
to the executive directors which have not yet 
vested
corporate governance continued 33
shaft sinkers holdings plc annual report and accounts 2013
wwwshaftsinkersgroupcom
directors’ attendance at board and committee meetings during 2013
during the 2013 financial year there were ten board meetings of the company
the attendance of individual directors at the board meetings and the members of board committee 
meetings in 2013 are shown in the table below
independent
board 
meetings 
attended in 
2013
audit 
committee
remuneration 
committee
nominations 
committee
safety 
committee
stephen oke yes 10  10 2  2 5  5 0 2  2
roger williams yes 10  10 2  2 5  5 0
ian watson yes 10  10 2  2 5  5 2  2
alon davidov no 9  10 2  2
christopher hall no 10  10
additionally the nominations committee has met twice in 2014 until 29 april
board responsibility and accountability
the chairman is responsible for the leadership of the board and sets the agenda for all board meetings the 
chairman also ensures the effectiveness of the board on all aspects of its role
the board believes it has the appropriate balance of experience skills and knowledge of the group and 
sector to enable it and its committees to carry out their activities and responsibilities effectively as required 
by the code
the board strives to have a majority of independent directors and supports the principle of diversity 
amongst its members and in the company as a whole the board remains open to increasing levels of 
diversity whilst ensuring that it is able to draw upon the necessary skills and experience as the company is 
at the date of this report small in nature the opportunity to appoint additional female directors has not yet 
arisen
the nonexecutive directors assist in setting the overall strategy of the group and maintaining a sound risk 
management and internal control systems the board is provided with regular timely and relevant 
information in a form that enables it to discharge its duties the board meets at least twice a year and strives 
to meet quarterly to assess the performance of the group all directors have access to the advice and 
services of the company secretary whose terms of reference include advising the board on corporate 
governance matters the group’s general council ensures that applicable laws and regulations are followed 
the group’s general council provides regular updates to the board on the legal and regulatory environment 
and assists in providing any training needs of the board the company ensures that related party 
transactions are identified disclosed and a regular report is presented to the board for approval when 
applicable all directors declare their interests in other businesses on appointment to the board and a 
review of any conflicts of interest is carried out at each board meeting on appointment directors are 
provided with adequate information to ensure that they fully understand the business of the group and their 
legal and regulatory responsibilities as a director of the company the board undertakes an annual review of 
its own performance
the board has put in place a procedure whereby all directors have access to independent professional 
advice at the expense of the company the company also maintains an appropriate level of directors’ and 
officers’ liability insurance governance
34
shaft sinkers holdings plc annual report and accounts 2013
corporate governance continued
board evaluation
the chairman carries out a formal evaluation of the board’s performance each year in line with best practice 
standards of corporate governance in 2014 the evaluation process was managed by prism cosec limited and 
was undertaken via a series of questionnaires covering issues relating to the functioning and business of the 
board during the year the review remains ongoing however a number of preliminary conclusions have been 
identified 
 – the board has an appropriate balance of skills experience independence and knowledge of the company 
and the industry in which it operates  
 – the performance of the chairman was assessed as being effective in managing board processes and in 
chairing meetings in a way that allowed full and open debate
 – the nonexecutive directors contribute effectively and constructively to board debate are committed to 
their roles and challenge and robustly question management
 – communication with internal and external audiences is not always sufficient and could be improved 
improving the communication of the company’s strategy aims and performance will be a key focus 
during 2014
 – there is a requirement to develop a comprehensive succession plan covering the board and senior 
management positions across the group a key task of the nominations committee going forward will be 
the development of such a succession plan
once the review is complete the board intends to undertake a further board evaluation process utilising 
external advisors within the next 12 months
board committees
the board has established four principal committees as follows
nominations committee remuneration committee audit committee safety committee
chaired by 
stephen oke ian watson roger williams ian watson
other members
roger williams roger williams stephen oke stephen oke
ian watson stephen oke ian watson alon davidov
audit committee
each member of the audit committee is considered to have extensive commercial and business leadership 
experience in particular roger williams and stephen oke have relevant and recent financial skills and 
experience
under its terms of reference which are available from the company secretary the audit committee shall 
consist of at least three members all of whom shall be independent nonexecutive directors only members 
of the audit committee have the right to attend and vote at committee meetings however other 
individuals such as the chief executive officer chief financial officer other directors the head of internal 
audit and representatives from the finance function may be invited to attend all or part of any meeting as 
and when appropriate the external auditors will be invited to attend meetings of the committee on a 
regular basis
appointments to the committee shall be for a period of up to three years which may be extended for 
further three year periods provided the director remains independent
the company secretary or their nominee shall act as the secretary of the committee the secretary shall 
also act as a coordinating intermediary between the board and the committee
membership of the audit committee
the audit committee comprises three independent nonexecutive directors roger williams as chairman 
stephen oke and ian watson stephen and roger have recent and relevant financial skills and experience 
and all of committee members have many years of experience in business and in the mining sector in 
particular 
the chief financial officer and company secretary attend all the meetings and usually the group financial 
controller the external auditors are regular attendees as are the chief executive officer and internal 
auditor   35
shaft sinkers holdings plc annual report and accounts 2013
wwwshaftsinkersgroupcom
audit committee report
as chairman of the audit committee i am pleased 
to present the report of the audit committee for the 
financial year ending 31 december 2013
role of the audit committee
the audit committee assists the board in fulfilling 
its oversight function by
 – monitoring the integrity of the group’s financial 
statements and reporting 
 – reviewing the group’s internal control and risk 
management systems
 – reviewing the group’s whistleblowing procedures
 – reviewing the group’s systems and controls for 
the prevention of
 – fraud and bribery
 – monitoring the effectiveness and independence of 
the group’s external auditors and
 – overseeing the group’s internal audit function
the committee ensures it has a thorough 
understanding of the business and its risks by regular 
communication not just with the senior executives 
but with other levels of management during the year 
in addition to formal audit committee meetings we 
discussed issues informally with management on a 
regular basis we reviewed and debated monthly 
management reports and interrogated forecasts and 
challenged the assumptions in those forecasts 
all shareholder announcements and trading updates 
are signed off not by the audit committee but by 
the entire board 
summary of items discussed at audit committee 
meetings during 2013
the audit committee met twice during the year in 
april and august
at the april 2013 meeting the following issues were 
discussed
 – annual report and accounts for the year ended 
31 december 2012
 – eurochem arbitration 
 – collection of variation orders
 – cashflow forecast
 – consideration of the going concern assumption
 – loan covenants
 – consideration of a dividend
 – external audit report
 – transfer pricing
 – fraud and bribery
at the august 2013 meeting the following items 
were discussed
 – working capital requirementcash forecast
 – banking covenants
 – impairment
 – whistleblowing
 – internal audit plan
 – external audit report on reviewed interim financial 
statements
 – review of interim report
 – eurochem arbitration 
 – principal risks and uncertainties insurance
 – consideration of a dividend
significant issues in relation to the financial 
statements
eurochem arbitration
the arbitration processes relating to the eurochem 
claim against subsidiary companies of the group of 
usd917 million previously for usd106 billion 
continued through the financial year the audit 
committee had to consider the impact the claim may 
have on the financial statements both on the carrying 
value of the 16m net receivable for shaft sinkers 
claim against eurochem and the need for any 
provisions or notes for contingent liabilities as a result 
of the claim against companies in our group in order 
to reach an opinion on this we examined all the 
relevant contracts and the various submissions to the 
arbitrators and took advice from internal and external 
legal counsel we debated the issue at length with our 
auditors and with management we concluded that 
no adjustments were necessary to the financial 
statements this view is shared by the external 
auditors and management
goingconcern 
the trading environment in south africa a key 
component of the group continues to be 
challenging anticipated projects have been 
cancelled some projects have ended in the period 
and new work has comprised extensions to existing 
contracts rather than new contracts  the mining 
sector in general has been disrupted by labour 
disputes and repeated safety stoppages in addition 
the collection of receivables relating to variation 
orders was slow in the first half of the year all this 
put pressure on the cashflow of the south african 
operations 
roger williams
independent nonexecutive director governance
36
shaft sinkers holdings plc annual report and accounts 2013
the audit committee has therefore given considerable 
attention to reviewing cashflow forecasts at least every 
quarter in the latter part of the year we have done this 
more regularly and have assessed the cashflows of the 
group as a whole not just south africa we have 
challenged assumptions on new work variations and 
receivables as well as the operating assumptions 
where performance has been below target downside 
scenarios are examined the audit committee agreed 
that the projected future cashflows support the 
goingconcern assumption in the financial statements
impairment 
the audit committee reviewed and tested the 
carrying value of fixed assets and goodwill as a 
committee as part of the year end accounts approval 
process the key areas we looked at were the 
assumptions underlying the cashflow projections and 
the discount rate used we challenged the projected 
operational performance asset sales and new 
business assumptions and looked at downside 
scenarios we concluded that the discount rate 
weighted average cost of capital at 24 is high 
and therefore conservative we agreed with 
management and the external auditors that no 
impairment was necessary impairment tests will be 
carried out at each reporting date
revenue recognition
shaft sinkers business consists of longterm 
construction contracts at what point and how much 
revenue can be recognised varies depending on the 
nature and terms of the contract it is always therefore 
an area of focus for the auditors and the audit 
committee 
we ensured revenue recognition was a key focus 
area for the external audit when we reviewed and 
debated the audit plan with the external auditors 
where new projects were undertaken involving 
upfront payments and for variation orders we 
obtained from management figures for any revenue 
recognition and the reasons for doing so we 
ascertained the status of variation order negotiations 
from management in assessing whether it was 
appropriate to recognise revenue
based on the above the audit committee concluded 
that revenue recognition is appropriate in the financial 
statements 
effectiveness of the external audit process
during 2013 kpmg audit llc was subject to external 
review by the institute of chartered accountants in 
england and wales icaew the shaft sinkers 2012 
audit file was included in this review no matters were 
identified with respect to the audit approach the 
performance or the conclusions
kpmg audit llc was also subject to kpmg’s own 
internal quality review in the year the office received 
the highest possible rating
to further assess the effectiveness of the external 
audit process we carried out a number of activities in 
the year we reviewed the audit plan to ensure it 
focused on the appropriate risk areas we assessed the 
auditors’ knowledge of the business and competence 
of their personnel we obtained the views of 
management as to the efficiency and effectiveness of 
the audit team and we took assurance from the audit 
quality reviews done by kpmg and by the icaew 
we therefore recommended the reappointment of 
kpmg 
auditor appointment and independence
kpmg have been the group’s auditors since 2007 the 
group underwent a formal tendering process in 2008 
and kpmg was chosen as the group’s worldwide 
auditors the audit committee is satisfied with kpmg’s 
effectiveness and independence and therefore we 
have not considered it necessary to retender the audit 
one of the new provisions of the 2012 uk corporate 
governance code is that ftse 350 companies should 
put the external audit contract out to tender at least 
every ten years we intend following this guidance and 
at present we envisage tendering the audit in 2017
the external auditors are required to rotate the audit 
partner responsible for the group every five years and 
the current engagement partner has been in place 
from the 2010 financial year he will therefore rotate 
after the 2014 financial year end
one of the ways we monitor the independence of the 
external auditors is through a policy we implemented 
regarding nonaudit services which have been minimal 
as indicated in the table below the audit committee 
agrees the audit fee
gbp 2013 2012
audit services 547256 200531
nonaudit services 36299 5071
internal controls and risk management
the group carries out a formal risk assessment each 
year in addition to the ongoing risk reviews at a 
project level based on those risks identified an 
internal audit plan is put together the internal audit 
function is outsourced to deloitte and the audit 
committee works closely with them to agree and 
implement a rolling three year plan
during the year internal audit reviewed financial 
reporting procedures revenue management with a 
particular focus on contract variations and how they 
are recorded and dealt with and treasury 
management  
anticorruption and business integrity
the group prohibits bribery and corruption in all 
forms throughout its business employees are 
trained in the group’s antibribery and corruption 
policy and sign acceptance thereof as part of their 
audit committee report continued 37
shaft sinkers holdings plc annual report and accounts 2013
wwwshaftsinkersgroupcom
judgement the chairman of the committee shall be 
either the chairman of the board or an independent 
nonexecutive director who shall be appointed by 
the board the chairman of the board shall not chair 
the committee when it is dealing with the matter of 
succession to the chairmanship appointments to the 
committee shall be for a period of up to three years 
which may be extended for a further three year 
periods provided the majority of the committee 
remains independent
only members of the committee shall have the right to 
attend and vote at committee meetings however 
other individuals such as the chief executive officer of 
the company the company’s head of human 
resources and external advisers of the company may 
be invited to attend for all or part of any meeting as 
and when appropriate the committee will endeavour 
to meet at least twice a year and at such other times as 
the chairman of the committee shall require
the main duties of the nominations committee 
include
 – to regularly review the structure size diversity and 
composition of the board and make 
recommendations to the board with regard to any 
changes
 – to give full consideration to succession planning for 
directors and other senior executives
 – to identify and nominate for the approval of the 
board candidates to fill board vacancies as and 
when they arise
 – to evaluate the balance of skills knowledge 
independence and experience on the board and use 
open advertising or the services of external advisers 
to facilitate the search for new candidates when 
required
 – for the appointment of a chairman to prepare a job 
specification including the time commitment 
expected
 – to review the results of the board performance 
evaluation process that relates to the composition of 
the board and
 – generally to provide recommendations to the board 
on matters regarding the appointments to the 
various committees
the committee met informally to discuss relevant 
issues during 2013 and held formal committee 
meetings on 7 february 2014 and 2 april 2014 at  the 
latter meeting the committee evaluated the directors’ 
performance in light of the resolutions to reelect all 
the directors at the forthcoming agm on 11 june 2014 
the nominations committee concluded that the 
directors’ performance continued to be effective and 
that they demonstrated commitment to their roles 
the committee is also satisfied that the backgrounds 
skills experience and knowledge of the directors 
collectively enables the board and its committees to 
discharge their respective duties and responsibilities 
effectively the committee is therefore recommending 
the reelection of all directors
conditions of employment contractors and 
suppliers also sign the policy 
as in previous years the group continued with its 
whistleblowing programme at all its operations and 
sites this programme allows all staff and contractors 
to raise any concerns about the group’s business 
practices confidentially the group’s general counsel’s 
contact details and those of the whistleblowing hotline 
are widely distributed among its operations and sites 
and highlighted periodically to staff and contractors to 
allow any person who has information regarding 
unethical practice within the group to contact the 
group’s general counsel or hotline
all reports received by the general counsel are treated 
in confidence and are either investigated by the 
general counsel or referred to an appropriate line 
manager or the internal audit function for investigation 
and resolution depending on the seriousness of the 
information received by the general counsel over the 
course of the year no fraudulent incidences were 
identified under this programme
roger williams
audit committee chairman
29  april 2014
other committees 
safety committee
the safety committee is chaired by ian watson and its 
other members are stephen oke and alon davidov 
the committee endeavours to meet quarterly and has 
responsibility for making recommendations to the 
board to ensure a safe and healthy workplace is 
created and maintained for all employees
the role of the safety committee is to assist the board 
in its oversight of the following
 – safety health environment quality and training
 – the group’s compliance with applicable legal and 
regulatory requirements associated with health 
safety environment and training matters
 – the group’s performance in relation to health safety 
environment and training and monitoring 
sustainable development and
 – the preparation of a report by the committee to be 
included in the annual report
nominations committee
the nominations committee consists of not less than 
two members and is currently chaired by stephen 
oke with roger williams as its other member a 
majority of the members shall be unconnected with 
the management of the group and free from any 
business or other relationship that could materially 
interfere with the exercise of their independent  governance
38
shaft sinkers holdings plc annual report and accounts 2013
at the meeting of 24 april 2014 consideration of the 
membership of the various board committees was 
given and the nominations committee recommended 
to the board that the current appointments be retained 
for a further 3 years
remuneration committee
the role of the committee is to establish a framework 
for setting and maintaining at appropriate levels the 
remuneration of the group’s executive directors and 
senior management in general and for setting the 
remuneration for the executive directors in particular
the committee shall be made up of at least three 
members all of whom shall be independent non
executive directors ian watson currently chairs the 
remuneration committee and its other members are 
stephen oke and roger williams the chairman of the 
board may also serve on the committee as an 
additional member if he or she was considered 
independent on appointment as chairman the 
chairman of the board shall not be chairman of the 
committee appointments to the remuneration 
committee shall be for a period of up to three years 
which may be extended for further threeyear periods 
provided the director still meets the criteria for 
membership of the committee
only members of the remuneration committee have 
the right to attend and vote at committee meetings 
however other individuals such as the chief executive 
the head of human resources and external advisers 
may be invited to attend for all or part of any meeting 
as and when appropriate
no member of the board or of the remuneration 
committee shall attend meetings of the remuneration 
committee where his or her own remuneration 
arrangements are determined
the duties of the remuneration committee include
 – to determine and agree with the board the 
framework or broad policy for the remuneration of 
the group’s chief executive officer chairman the 
executive directors the company secretary and 
such other members of the executive management 
as it is designated to consider the remuneration of 
nonexecutive directors shall be a matter for the 
chairman and the executive members of the board
 – to ensure that members of the executive 
management of the group are provided with 
appropriate incentives to encourage enhanced 
performance and are in a fair and responsible 
manner rewarded for their individual contributions 
to the success of the group
 – to review the ongoing appropriateness and 
relevance of the remuneration policy
 – to approve the design of and determine targets and 
upper limits for any performance related pay 
schemes operated by the group and approve the 
total annual payments made under such schemes 
ensuring that any performance based remuneration 
arrangements are clearly aligned with business 
strategy and objectives and are regularly reviewed
 – to review the design of all share incentive plans for 
approval by the board and shareholders for any 
such plans determine each year whether awards will 
be made and if so the overall amount of such 
awards the individual awards to executive directors 
and other senior executives and the performance 
targets to be used
 – to ensure that any performance related pay schemes 
or share incentive plans operated by the group are 
compatible with the group’s risk policies and 
systems
 – to ensure that contractual terms on termination and 
any payments made are fair to the individual and 
the group that failure is not rewarded and that the 
duty to mitigate loss is fully recognised
 – within the terms of the agreed policy and in 
consultation with the chairman andor chief 
executive as appropriate determine the total 
individual remuneration package of each executive 
director senior executives and other members of the 
executive management including bonuses incentive 
payments and share options or other share awards
 – to review and note annually the remuneration trends 
across the group and have these in mind when 
setting remuneration policy for directors
 – to be aware of and oversee any major changes in 
employee benefits structures throughout the group
 – to agree the policy for authorising claims for 
expenses from the chief executive officer the 
chairman and the other directors
 – to ensure that all provisions regarding disclosure of 
remuneration including pensions are fulfilled
 – to be exclusively responsible for establishing the 
selection criteria selecting appointing and setting 
the terms of reference for any remuneration 
consultants who advise the committee
 – to obtain reliable uptodate information about 
remuneration in other companies within the same 
sector but ensure that automatic increases are not 
implemented and consider relative performance 
judging the implications carefully
 – to give guidance to the executive management in 
setting the levels of remuneration for the group
 – to obtain shareholder approval before departing 
from the stated remuneration policy
 – to work with the company’s audit committee in 
evaluating performance criteria
 – to review and consider all executive and 
management compensation agreements
 – to work closely with the nomination committee in 
relation to the remuneration to be offered to any 
new executive director and
 – to ensure that any material payments that may be 
viewed as exgratia in nature are fully explained 
justified and subject to shareholder approval prior to 
payment
the section of the directors’ report entitled ‘directors’ 
report – remuneration’ on pages 39 to 43 shall 
constitute a remuneration report a resolution to 
approve the remuneration report will be proposed at 
the forthcoming agm
other committees continued 39
shaft sinkers holdings plc annual report and accounts 2013
wwwshaftsinkersgroupcom
remuneration report
introduction
the directors have pleasure in presenting their 
report on directors’ remuneration for the year ended 
31 december 2013
role of the remuneration committee 
the remuneration committee is a formal committee 
of the board its remit is set out in terms of reference 
formally adopted by the board in december 2010 
the terms of reference are designed to enable the 
committee to comply with the requirements relating 
to remuneration policy set out in the code a copy 
of the terms of reference can be obtained from the 
company secretary
the principal responsibilities of the remuneration 
committee are
 – to determine and agree with the board the 
framework or broad policy for the remuneration 
of the group’s chief executive officer chairman 
the executive directors the company secretary 
and such other members of the executive 
management as it is designated to consider
 – to review the ongoing appropriateness and 
relevance of the remuneration policy
 – to approve the design of and determine targets 
and upper limits for any performance related pay 
schemes operated by the group and approve the 
total annual payments made under such schemes 
and
 – to review the design of all share incentive plans for 
approval by the board and shareholders for any 
such plans determine each year whether awards 
will be made and if so the overall amount of such 
awards the individual awards to executive 
directors and other senior executives and the 
performance targets to be used
membership of the remuneration committee
the members of the committee all of whom are 
independent nonexecutive directors and were 
appointed on 19 november 2010 are as follows
 – ian watson chairman of the committee
 – stephen oke
 – roger williams
the company secretary acts as secretary to the 
committee the chief executive officer and the 
head of human resources and external advisers also 
attend committee meetings by invitation but none 
is present when the committee discusses issues 
relating to their own remuneration
advisers to the remuneration committee
the remuneration committee used no external 
advisors during 2013 
remuneration policy
the group’s remuneration policy is focused upon 
providing a level of remuneration which attracts 
retains and motivates directors and senior executives 
of sufficient calibre to achieve the group’s strategic 
goals and enhance shareholder value whilst ensuring 
that remuneration is consistent with best practice and 
provides an appropriate alignment with personal and 
business performance the committee recognises 
that there is a competitive market for successful 
executives with experience in the mining industry and 
that the provision of appropriate rewards for superior 
performance is important for the continued growth 
of the business the committee’s aim in formulating 
remuneration policy is to assess relevant benchmark 
data from sources such as other companies listed on 
the london stock exchange of a similar size and 
complexity international mining companies and the 
market generally in setting remuneration within this 
framework the committee aims to give senior 
executives every encouragement to enhance the 
group’s performance whilst ensuring that they are 
fairly but responsibly rewarded for their personal 
contributions
the committee believes that it is important to 
periodically benchmark the remuneration packages 
of senior executives
components of executive directors’ remuneration
remuneration packages are structured to provide 
an appropriate balance between fixed and variable 
elements the main components of the two 
executive directors’ remuneration and the 
percentage of each element as part of the total 
package are detailed below
salaries
salaries are reviewed annually by the committee and 
take account of the relevant benchmark data pay 
quantum and structure 
bonuses
for the years ended 31 december 2013 and 2012 the 
performance measures for the annual bonus were 
based on a group financial performance target and 
on personal performance the bonus arising from the 
performance target is up to 75 of annual salary for 
the chief executive officer and 50 of annual salary 
for the chief financial officer with a potential to earn 
an additional 15 if targets are exceeded by 10 if 
performance is 10 below target no target 
performance bonus is paid the group failed to 
achieve the financial targets in 2013 and no target 
performance bonus is therefore payable the bonus 
arising from personal performance is up to 15 of 
annual salary for the chief executive officer and the 
chief financial officer specific financial targets have 
not been disclosed as they are considered to be 
commercially confidential but they are deemed to be 
appropriately challenging the personal performance 
bonus is normally paid in december of the same year 
of measurement while the financial performance 
target bonus is deferred for one year and paid in 
december of the year following measurement governance
40
shaft sinkers holdings plc annual report and accounts 2013
expatriation structure
it is typical that where skilled staff are expatriated to 
work in a foreign country on a temporary basis the 
company provides temporary accommodation for 
its employees at no cost to the employee this is not 
considered a permanent benefit forming part of the 
remuneration of the employee but is considered a 
cost of either the project in question or a cost of 
temporary location of the employee on a limited 
duration mission employees who are relocated on a 
permanent basis are granted an allowance to 
compensate for the cost to the employee of 
relocation
provident fund
one of the group’s subsidiaries shaft sinkers pty 
limited contributes towards a provident fund the 
fund is a defined contribution fund the group 
contributes 15 of a base salary for each eligible 
member
longterm incentive plan ‘ltip’
the ltip allows the committee to make awards 
which are a conditional right to receive shares in the 
company for nil consideration an award will 
normally vest ie become exercisable over a three 
year period from the date of its grant with a third 
being eligible for vesting each year to the extent 
that the applicable performance conditions have 
been satisfied benefits in the ltip are not 
pensionable
the initial awards of these unissued performance 
ordinary shares in the company were made as to 
750000 to alon davidov 750000 to robert 
schroder a former director  and 750000 to 
christopher hall the ltip consists of a total of 
2500000 ordinary shares although 750000 were 
cancelled following the resignation of robert 
schroder in 2011 the remuneration committee can 
determine the allocation and offer of awards over 
the balance of 250000 ordinary shares
the total number of ordinary shares issued under 
the ltip on any date of issue when aggregated with 
the number of ordinary shares issued or issuable 
under any other share scheme for senior employees 
of the group in any rolling ten year period may not 
exceed five per cent of the company’s issued 
ordinary shares
if an award is forfeited or becomes incapable of 
vesting the ordinary shares subject to that award 
may not be reallocated for future awards
the performance conditions applicable to these 
initial awards are measured in stages over each of 
the vesting periods and are linked to
 – growth in earnings per share of the company 
’eps’ and
 – growth in the company’s share price
eps in respect of the financial year ending 31 
december 2011 and for each of the financial years 
ending 31 december 2012 and 31 december 2013 
the company would have needed to have achieved 
eps growth of at least 20 per annum in 
comparison to the previous financial year for the 
relevant proportion of awards to vest in full if the 
company only achieved between 1020 per annum 
growth in eps in the financial year under 
measurement between 50100 of the relevant 
proportion of awards would have vested on a 
straight line basis between those two growth points 
if the company had not achieved at least 10 per 
annum growth in eps in the financial year under 
measurement none of the relevant proportion of 
awards would have vest if however over the full 
three years’ vesting periods the company had 
achieved a compound average growth in eps of 
20 per annum despite not having achieved that 
growth rate in any particular financial year then the 
eps performance criteria would have been deemed 
to have been achieved and awards would have 
vested in full
share price in respect of the financial year ended 31 
december 2011 and for each of the financial years 
ending 31 december 2012 and 31 december 2013 
the company needed to achieve a growth in its 
share price of at least 26 per annum for the 
relevant proportion of awards to vest in full the 
base share price for the financial year ended 31 
december 2011 was the placing price 124 pence 
and thereafter any increase would be measured by 
reference to the average of the company’s closing 
share prices for the 30 days following the 
announcement of the company’s audited results for 
each financial year in the event the company only 
achieved between 1326 per annum growth in its 
share price in the financial year under measurement 
between 50100 of the relevant proportion of 
awards would vest on a straight line basis between 
those two growth points in the event the company 
did not achieve at least 13 per annum growth in 
share price in the financial year under measurement 
none of the relevant proportion of awards would 
vest if however the average of the company’s 
closing share prices over the 30 days following 
announcement of the company’s audited results for 
the year ending 31 december 2013 is 100 or more 
above the placing price despite not having achieved 
a 26 growth in its share price in any particular year 
then the share price performance criteria shall be 
deemed to have been achieved and awards shall be 
capable of vesting in full
remuneration report continued 41
shaft sinkers holdings plc annual report and accounts 2013
wwwshaftsinkersgroupcom
each award is split into three equal annual tranches within each annual tranche vesting of 50 of that 
tranche will be subject to the eps performance criteria and 50 to the share price performance criteria the 
remuneration committee will determine whether and to what extent the applicable performance conditions 
have been satisfied shortly after the announcement of the company’s audited results for each of the years 
ending 31 december 2011 31 december 2012 and 31 december 2013 respectively and if applicable to total 
eps or share price growth over the full three year vesting period
the remuneration committee may at any time amend the ltip in any respect provided that the prior 
approval of the company in general meeting is obtained for amendments to the provisions of the ltip 
relating to eligibility the overall limits on the issue of new shares the maximum entitlement for any 
participant and the basis for determining that entitlement where such changes are to the material advantage 
of participants shareholder approval is not however required for minor amendments to benefit the 
administration of the ltip to take account of changes in legislation or to obtain or maintain favourable 
taxation or regulatory treatment for participants or for any member of the group
the grant date fair value of the ltip was measured based on the monte carlo simulation option pricing 
model volatility was based on the historical share price data of the constituents of the oil services and 
equipment sector on the london stock exchange the inputs used in the measurement of the fair values at 
grant date of the ltip were as follows
description
values per 
share right 
gbp
assumed 
vesting date
share price at 
grant date 
gbp
number of 
days
number of 
shares
weighted 
average 
volatility
share price growth shares
1st tranche 063 10 april 2012 124 474 375000 5251
2nd tranche 052 10 april 2013 124 839 375000 5251
3rd tranche 072 10 april 2014 124 1204 375000 5251 
eps shares
1st tranche 122 10 april 2012 124 474 375000 5251
2nd tranche 111 10 april 2013 124 839 375000 5251
3rd tranche 099 10 april 2014 124 1204 375000 5251
for the financial year 2013 the following parameters were used in valuing the eps share that could 
potentially be earned under this ltip
description
value per share 
rights 
gbp
assumed 
vesting date
number of 
days
number of 
shares
eps shares
1st tranche 0 10 april 2012 474 –
2nd tranche 0 10 april 2013 839 –
3rd tranche 0 10 april 2014 1204 –
longterm incentive plan  
share awards 
held at 31 
december 2012
share awards 
granted during 
the year
share awards 
settled
forfeited during 
the year
share awards 
held at 31 
december 2013
alon davidov 750000 – – 750000
christopher hall 750000 – – 750000
as the final measurement date is based on the average of the company’s closing share prices over the 30 
days following announcement of the company’s audited results for the year ending 31 december 2013 and 
given the level of the company’s share price at the date of this report 1425p there are no reasonable 
prospects that any shares shall vest and post this 30 day period the ltip will no longer operate without a 
change to the measurement periods governance
42
shaft sinkers holdings plc annual report and accounts 2013
remuneration report continued
directors’ remuneration for the period 1 january 2013 to 31 december 2013
the following table gives details of directors’ remuneration for the period 1 january to 31 december 2013
salaries  
and fees bonuses benefits
value of ltip 
award
total 2013  
gbp
total 2012  
gbp
executive directors
alon davidov 229724 – 262734 33010 438641
christopher hall 190136 – 56160 262734 16438 364476
419860 – 56160 525468 49448 803117
nonexecutive directors
amre youness – – – – 60000
stephen oke 135000 – – 135000 95000
roger williams 62000 – – 62000 60667
ian watson 67000 – – 67000 62333
264000 – – 264000 278000
total 683860 – 56160 525468 214552 1081117
  the share price and eps targets under the ltip at 31 december 2013 indicated that to date no shares would be likely to vest under this plan and 
consequently the amounts previously shown as remuneration have been reversed in the current year
directors’ contracts
executive directors
the executive directors have service agreements which can be terminated by either the group or the 
executive director giving at least six months’ notice under the terms of the agreements the group reserves 
the right in its absolute discretion to terminate an executive director’s employment by making a payment in 
lieu of notice in the event of a contract being terminated the remuneration committee would determine 
the level of any compensation to be paid normally by reference to fixed elements of remuneration and the 
notice period any annual bonus payment or vesting of shares under the ltip would be dealt with in 
accordance with the rules of the particular scheme payments would normally be prorated and subject to 
the performance conditions under which the awards were granted the executive directors are subject to 
restrictive covenants which seek to prevent them from soliciting customers or employees andor competing 
with the company’s business for six months following termination of employment
dates of the service agreements are
name date of agreement notice period
alon davidov 20 december 2010 6 months
christopher hall 20 december 2010 6 months
nonexecutive directors
nonexecutive directors do not have service agreements with the company but each has a letter of 
appointment details of the letters of appointment are summarised below
name effective date of agreement notice period
stephen oke 23 december 2010 6 months
roger williams 23 december 2010 6 months 
ian watson 23 december 2010 6 months 
all directors are subject to reelection at the agm of the company following the third anniversary of 
appointment copies of all executive directors’ service agreements and the letters of appointment of the 
nonexecutive directors are available for inspection during normal business hours at the office of the 
company secretary 43
shaft sinkers holdings plc annual report and accounts 2013
wwwshaftsinkersgroupcom
nonexecutive directors’ fees
the remuneration of the nonexecutive directors other than the chairman is a matter for the chairman and 
the executive directors fees are designed to ensure that the company attracts and retains high calibre 
individuals they are reviewed on an annual basis and account is taken of the level of fees paid by other 
companies of a similar size and complexity nonexecutive directors do not participate in any annual bonus 
plan longterm incentive plan or pension arrangements
directors’ fees including committee fees on an annual basis are as follows
nonexecutive director position
annual fees 
payable 
gbp
stephen oke chairman 135000
roger williams independent nonexecutive director 62000
ian watson independent nonexecutive director 67000
annual general meeting
the committee chairman is available at the company’s agm to answer any questions on the committee’s 
activities and shareholders will be asked to vote on this remuneration report at the agm governance
44
shaft sinkers holdings plc annual report and accounts 2013
statement of directors’ responsibilities
in respect of the directors’ report and the financial statements
the directors are responsible for preparing the 
directors’ report and the financial statements in 
accordance with applicable law and regulations in 
addition the directors have elected to prepare the 
financial statements in accordance with international 
financial reporting standards as adopted by the 
eu
the financial statements are required to give a true 
and fair view of the state of affairs of the group and 
parent 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 estimates that are 
reasonable and prudent
 – state whether they have been prepared in 
accordance with international financial reporting 
standards as adopted by the eu and
 – prepare the financial statements on the going 
concern basis unless it is inappropriate to presume 
that the group and parent company will continue 
in business
the directors are responsible for keeping proper 
accounting records that are sufficient to show and 
explain the parent company’s transactions and 
disclose with reasonable accuracy at any time its 
financial position they have general responsibility 
for taking such steps as are reasonably open to 
them to safeguard the assets of the group and to 
prevent and detect fraud and other irregularities
the directors are responsible for the maintenance 
and integrity of the corporate and financial 
information included on the company’s website 
legislation governing the preparation and 
dissemination of financial statements may differ 
from one jurisdiction to another
the directors confirm that to the best of their 
knowledge
 – the financial statements prepared in accordance 
with international financial reporting standards 
as adopted by the eu give a true and fair view of 
the assets liabilities financial position and profit 
or loss of the group 
 – the annual report and accounts taken as a 
whole is fair balanced and understandable and 
provides the information necessary for 
shareholders to assess the company’s 
performance business model and strategy and
 – the management report includes a fair review of 
the development and performance of the business 
and the position of the group and the 
undertakings included in the consolidation taken 
as a whole together with a description of the 
principal risks and uncertainties that they face
by order of the board
alon davidov christopher hall
chief executive officer chief financial officer
29 april 2014 29 april 2014 45
shaft sinkers holdings plc annual report and accounts 2013
wwwshaftsinkersgroupcom
opinions and conclusions arising from our audit 
1 our opinion on the financial statements is 
unmodified 
we have audited the financial statements of shaft 
sinkers holdings plc for the year ended 31 
december 2013 in our opinion the financial 
statements
 
 – give a true and fair view of the state of the 
group’s and parent company’s affairs as at 31 
december 2013 and of the group’s profit for the 
year then ended and 
 – have been properly prepared in accordance with 
international financial reporting standards as 
endorsed by the eu 
2 our assessment of risks of material misstatement 
in arriving at our audit opinion above on the financial 
statements the risks of material misstatement that 
had the greatest effect on our audit were as follows 
eurochem arbitration claim proceedings 
refer to pages 35 to 37 audit committee report 
page 54 note 12 basis of preparation accounting 
policy and note 30 contingent liability disclosure 
the risk during 2012 eurochem a former customer 
of the group commenced arbitration proceedings 
against two south african subsidiaries of the group 
shaft sinkers pty and rossal 126 pty in the swiss  
chambers arbitration institution and the international 
chamber of commerce international court of 
arbitration these claims are for an amount of usd917 
million previously usd106 billion which is significant 
and the application of accounting standards to 
determine the amount if any to be provided as a 
liability is inherently subjective no amounts have 
been recognised in the financial statements for future 
legal costs or any settlement amount 
our response in this area our audit procedures 
included among other things review of all of the 
submissions as at 29 april 2014 to the arbitration 
proceedings from both eurochem and the group 
including statement of claimscounter claim and 
defence witness statements and expert witness 
reports and also the terms of reference of the 
arbitration panels appointed we have participated 
in detailed discussions and challenge with the board 
group legal counsel and the groups external legal 
advisers based on the contracts with eurochem 
current arbitration submissions and proceedings we 
have compared the information from all of these 
sources to management’s assessment of the position 
and need for a provision we also assessed whether 
the group’s disclosures detailing significant legal 
proceedings adequately disclose the potential 
liabilities of the group 
going concern 
refer to pages 35 to 37 audit committee report 
page 54 note 123 going concern accounting 
policy 
the risk the financial statements explain how the 
directors have formed a judgement that there is a 
reasonable expectation that the going concern basis 
is appropriate in preparing the financial statements 
of the company and the group the directors have 
concluded that the range of possible outcomes they 
have considered in arriving at this judgement is not 
sufficient to give rise to a material uncertainty 
regarding the group’s ability to continue as a going 
concern as this assessment involves consideration 
of future events there is a risk that the judgement is 
inappropriate and that the uncertainty should have 
been assessed as material in which case additional 
disclosures would have been required 
our response in respect of the above among other 
things we have critically considered current and post 
yearend trading and outlook cash collection liquidity 
and forecasting for management’s assessment of 
going concern of the group operations 
the group prepares forecasts for at least 18 months 
which consider the groups performance and 
profitability as well as liquidity to enable obligations 
to be met as they fall due these forecasts include 
legal and similar costs expected to be incurred as a 
result of defending the eurochem proceedings we 
have considered various stressed forecast scenarios 
and critically assessed the assumptions including 
revenue forecasts with consideration to current 
performance and market conditions taking into 
account the group’s forward order book and tender 
pipeline as well as the cost base and historical and 
budgeted margins 
we have also considered management’s evaluation 
of the impacts of the current arbitration proceedings 
and possible scenarios arising from any adverse 
outcomes this included an assessment of the 
group’s exposure to potential claims beyond the 
south african operation 
we have considered the adequacy and 
appropriateness of the groups disclosures with regard 
to the risks the group faces as well as management 
assessment of the appropriateness of going concern 
impairment of property plant and equipment 
gbp428 million and goodwill gbp16 million 
refer to pages 35 to 37 audit committee report 
page 59 note 139 impairment accounting policy 
and notes 6 and 7 financial disclosure 
the risk there is a risk over the recoverability of the 
group’s fixed assets and goodwill as a result of the 
current year performance and trading outlook 
demand has weakened significantly in certain 
markets and the group has encountered certain 
operational difficulties with projects due to the 
inherent uncertainty involved in forecasting and 
discounting future cash flows which are the basis of 
the assessment of recoverability this is one of the 
key judgemental areas that our audit is focussed on 
report of the independent auditors kpmg audit llc 
to the members of shaft sinkers holdings plc onl y  governance
46
shaft sinkers holdings plc annual report and accounts 2013
our response in this area our audit procedures 
included among others testing of the group’s 
budgeting procedures upon which the forecasts are 
based and the mathematical integrity of the group’s 
discounted cash flow model we critically assessed 
the assumptions used in the valuation against 
current and expected performance trends taking 
into account the open order book of the business 
we compared the assumptions to externally derived 
data where appropriate and to our own 
assessments of certain key inputs we used our own 
valuation specialists to assist us in evaluating the 
discount rate used we also assessed whether the 
group’s disclosures about the sensitivity of the 
outcome of the impairment assessment of fixed 
assets and goodwill to changes in key assumptions 
reflected the inherent risks 
revenue recognition and profit on long term 
contracts gbp1522 million 
refer to pages 35 to 37 audit committee report 
page 62 note 1315 revenue accounting policy and 
note 2 financial disclosures 
the risk the group’s contracts are long term by 
nature variable in scope and in some cases penalty 
clauses may exist due to the nature of activities 
undertaken scoping and pricing changes during the 
course of contracts may occur frequently and 
project progress can be subject to delays 
significant estimation and judgement is required by 
management with regard to the stage of completion 
and resultant revenue and profit recognised as 
contract performance spans multiple financial 
reporting periods this judgement is dependent on a 
number of variables such as stage of completion 
unforeseen technological challenges and cost 
forecasting including any unexpected costs
 
our response our procedures included among 
other things analytical procedures over revenue and 
costs on each contract performed by the group 
comparing budget to actual performance and 
agreeing amounts recognised to supporting 
documentation these procedures consider the 
contract terms phase and progress for onerous 
contracts or penalty obligations in addition we 
reconcile revenue accruals recognised deferred 
income and similar items billings and receipts we 
have agreed post year end invoicing and debtor 
collection
 
we participate in discussions with management on 
contract status and performance and contract 
basis the stage of completion is assessed by 
reference to surveys of work performed where 
appropriate we have inspected contracts for any 
onerous contract indicators or penalty clauses 
based on the current project performance and 
outlook we have assessed the estimated 
profitability of each project over its estimated 
lifecycle based on current performance and 
forecasts we have also assessed the adequacy of 
the group’s disclosures in respect of revenue 
recognition 
3 our application of materiality and an overview 
of the scope of our audit 
in establishing the overall audit strategy and 
performing the audit materiality for the group 
financial statements as a whole was set at gbp11 
million this has been calculated with reference to a 
benchmark of total group revenue of which it 
represents 07 which we consider to be one of 
the principal considerations for members of the 
company in assessing the financial performance of 
the group 
we agreed with the audit committee to report to it 
all corrected and uncorrected misstatements we 
identified through our audit with a value in excess of 
gbp55000 in addition to other audit 
misstatements below that threshold that we believe 
warranted reporting on qualitative grounds 
audits for group reporting purposes were 
performed by component auditors at key reporting 
components in the following countries republic of 
south africa “south africa” republic of india 
“india” and democratic republic of congo 
“drc” and by the group audit team in the isle of 
man the effect of this approach covered 100 of 
group revenue group profit before tax and group 
assets 
the audits undertaken for group reporting purposes 
at the key reporting components of the group were 
all performed to materiality levels set by or agreed 
with the group audit team these materiality levels 
were set to the materiality level specified above or 
lower 
detailed audit instructions were sent to all the 
auditors in these locations these instructions 
covered the significant areas that should be covered 
by the component audit teams which included the 
relevant risks of material misstatement detailed 
above and set out the information required to be 
reported to the group audit team the group 
engagement team maintained open dialogue with 
the group reporting auditors throughout their audit 
processes the group audit team was physically 
present in south africa during the conclusion of the 
substantive testing phase of the south african 
component audit in doing so the group audit team 
was actively involved in the direction and review of 
the audit engagement performed by these 
component auditors for group reporting purposes 
along with the consideration of findings and 
determination of conclusions drawn telephone 
meetings were also held with auditors in south 
africa and the other component auditor locations 
that were not physically visited 
report of the independent auditors continued 47
shaft sinkers holdings plc annual report and accounts 2013
wwwshaftsinkersgroupcom
4 we have nothing to report in respect of the 
matters on which we are required to report by 
exception 
under isas uk and ireland we are required to 
report to you if based on the knowledge we 
acquired during our audit we have identified other 
information in the annual report that contains a 
material inconsistency with either that knowledge or 
the financial statements a material misstatement of 
fact or that is otherwise misleading
 
in particular we are required to report to you if 
 – we have identified material inconsistencies 
between the knowledge we acquired during our 
audit and the directors’ statement that they 
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 or 
 – the audit committee report does not 
appropriately address matters communicated by 
us to the audit committee 
under the listing rules we are required to review 
 – the directors’ statement set out on page 44 in 
relation to going concern and 
 – the part of the corporate governance statement 
on pages 30 to 34 in the directors’ report relating 
to the company’s compliance with the nine 
provisions of the 2010 uk corporate governance 
code specified for our review 
we have nothing to report in respect of the above 
responsibilities
 
scope of report and responsibilities 
we have audited the financial statements of shaft 
sinkers holdings plc for the year ended 31 december 
2013 which comprise the group income statement 
group statement of comprehensive income the 
group and parent company statements of financial 
position the group statement of changes in equity 
and the group statement of cash flows and the 
related notes the financial reporting framework that 
has been applied in their preparation is applicable 
law and international financial reporting standards 
ifrss as endorsed by the eu
 
this report is made solely to the company’s 
members as a body our audit work has been 
undertaken so that we might state to the company’s 
members those matters we are required to state to 
them in an auditor’s report and for no other purpose 
to the fullest extent permitted by law we do not 
accept or assume responsibility to anyone other 
than the company and the company’s members as 
a body for our audit work for this report or for the 
opinions we have formed 
respective responsibilities of directors and 
auditor 
as explained more fully in the directors’ 
responsibilities statement set out on page 44 the 
directors are responsible for the preparation of 
financial statements that 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 international standards on 
auditing uk and ireland those standards require 
us to comply with the auditing practices board’s 
apb’s ethical standards for auditors 
scope of the audit of the financial statements 
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 
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
mark russell kelly
responsible individual 
for and on behalf kpmg audit llc  
statutory auditor
chartered accountants
heritage court
41 athol street
douglas
isle of man
30 april 2014  financial statements
48
shaft sinkers holdings plc annual report and accounts 2013
 note
year ended 
31 december 
2013 
gbp
year ended 
31 december 
2012 
restated
gbp
revenue 2 152153837 192538948
direct expenses 132162521 169946792
gross profit 19991316 22592156
operating income 6542612 6334496
operating expense 18736127 22571813
legal fees 32 3890393 1087712
profit from operations 3 3907408 5267127
finance income 4 317134 369180
finance expense 4 1340724 2184706
profit before income tax 2883818 3451601
income tax 5 832500 1037121
profit for the year 2051318 2414480
attributable to  
owners of the company 1966880 2334770
noncontrolling interests 84438 79710
profit for the year 2051318 2414480
earnings per share pence pence
basic earnings per share 17 414 492
diluted earnings per share 17 414 490
the accompanying notes to the consolidated annual financial statements form an integral part of the 
consolidated annual financial statements
consolidated income statement
for the year ended 31 december 2013 49
shaft sinkers holdings plc annual report and accounts 2013
wwwshaftsinkersgroupcom
consolidated statement of comprehensive income
for the year ended 31 december 2013
note
year ended  
31 december 
 2013
gbp
year ended  
31 december 
 2012
restated
gbp
profit for the year 2051318 2414480
other comprehensive income – items that are or may be reclassified to profit or loss  
foreign currency translation differences for foreign operations 7454173 2997375
other comprehensive income for the year net of tax 7454173 2997375
total comprehensive income for the year 5402855 582895
attributable to   
owners of the company 5457862 644224
noncontrolling interests 55007 61329
total comprehensive income for the year 5402855 582895
the accompanying notes to the consolidated annual financial statements form an integral part of the 
consolidated annual financial statements financial statements
50
shaft sinkers holdings plc annual report and accounts 2013
note
year ended
31 december
2013
gbp
year ended
31 december
2012
restated
gbp
assets 
noncurrent assets 57550022 54774169
property plant and equipment 6 42792122 44927436
goodwill 7 1576045 1991340
other intangible assets 8 2015462 1654621
other unlisted investments 9 613 775
account receivable 13 9174901 –
deferred taxation 11 1510147 5383394
finance lease receivables 14 480732 816603
current assets 43657826 76925063
inventories 12 4583729 4896988
trade and other receivables 13 33266898 61182602
finance lease receivables 14 299807 381903
loan to related party 211 11178 26040
loans receivable 10 – 36534
income taxation 512373 1267060
cash and cash equivalents – unrestricted 151 2414911 7240833
cash and cash equivalents – restricted 151 1819505 1893103
assets held for sale 69 749425 –
total assets 101207848 131699232
equity and liabilities 
equity 36802042 42410627
ordinary share capital 16 56563799 56563799
retained earnings 38815752 36848872
foreign currency translation reserve 9829179 2404437
common control reserve 48965631 48965631
share based payment reserve 29 – 156902
equity attributable to owners of the company 36584741 42199505
noncontrolling interest 217301 211122
noncurrent liabilities 16161087 28587863
deferred taxation 11 2237492 6924377
deferred revenue 24 4446604 6614608
interest bearing borrowings 181 – 3653395
interest free advances from clients 19 9074212 10781070
subcontractor liabilities 20 – 113382 
loan from a related party 212 155120 155166
post retirement benefit obligation 22 247659 345865
current liabilities 48244719 60700742
trade and other payables 23 33694070 36739118
deferred revenue 24 3577257 9084935
income taxation 1860446 1642899
interest bearing borrowings 182 2891477 7564971
interest free advances from clients 19 3278679 4688971
subcontractor liabilities 20 – 979848
bank overdraft 152 2942790 –
total equity and liabilities 101207848 131699232
the consolidated annual financial statements were approved by the board of directors on 29 april 2014 and 
were signed on its behalf by
stephen oke chris hall
nonexecutive chairman chief financial officer
the accompanying notes to the consolidated annual financial statements form an integral part of the 
consolidated annual financial statements
consolidated statement of financial position
as at 31 december 2013 51
shaft sinkers holdings plc annual report and accounts 2013
wwwshaftsinkersgroupcom
note
year ended
31 december
2013
gbp
year ended
31 december
2012
gbp
assets
noncurrent assets 48991288 48981358
computer equipment 9134 –
investment in subsidiaries 33 28312025 28311229
loan to subsidiary 34 20670129 20670129
current assets 8222271 6972868
other receivables 35 67690 42250
related party loans receivable 361 4922539 3456183
cash and cash equivalents – unrestricted 37 1412537 1617229
cash and cash equivalents – restricted 37 1819505 1857206
total assets 57213559 55954226
equity and liabilities
equity 54545686 55579697
ordinary share capital 16 56563799 56563799
retained earnings 2018113 1141004
share based payment reserve – 156902
current liabilities 2667873 374529
other payables 39 200803 48420
related party loan payable 362 2467070 326109
total equity and liabilities 57213559 55954226
the accompanying notes to the consolidated annual financial statements form an integral part of the 
consolidated annual financial statements
parent company statement of financial position
as at 31 december 2013 financial statements
52
shaft sinkers holdings plc annual report and accounts 2013
consolidated statement of changes in equity   
for the year ended 31 december 2013
 note
reserves
ordinary
share
capital
gbp
retained
earnings
gbp
foreign
 currency
translation
reserve
gbp
common
 control
reserve
gbp
share 
based
payment
reserve
gbp
revaluation
reserve
gbp
total
attributable
 to owners
of the 
company
 gbp
non
controlling
interest
 gbp
total
gbp
balance at 1 january 2012 56563799 37901928 574557 48965631 389235 1335757 47799645 224449 48024094
impact of change in accounting 
policy 32174 1335757 1303583 1303583
restated balance at 1 january 
2012 56563799 37934102 574557 48965631 389235 – 46496062 224449 46720511
disposal of noncontrolling 
interest in shaft sinkers mining 
pty limited to black
economic empowerment partners 64192 64192
share based payment transactions 29 232333 232333 232333
dividend paid 3420000 3420000 10464 3430464
profit for the year 2334770 2334770 79710 2414480
other comprehensive income
foreign currency translation 
differences for foreign 
operations 2978994 2978994 18381 2997375
total other comprehensive income 
for the year – 2334770 2978994 – – – 644224 61329 582895
balance at 31 december 2012  
restated 56563799 36848872 2404437 48965631 156902 – 42199505 211122 42410627
dividend paid to minority 
shareholders of shaft sinkers 
mining proprietary limited 48828 48828
share based payment transactions 29 156902 156902 156902
profit for the year 1966880 1966880 84438 2051318
other comprehensive income
foreign currency translation 
differences for foreign 
operations 7424742 7424742 29431 7454173
total other comprehensive income 
for the year – 1966880 7424742 – – – 5457862 55007 5402855
balance at 31 december 2013 56563799 38815752 9829179 48965631 – – 36584741 217301 36802042
the accompanying notes to the consolidated annual financial statements form an integral part of the 
consolidated annual financial statements 53
shaft sinkers holdings plc annual report and accounts 2013
wwwshaftsinkersgroupcom
consolidated statement of cash flows 
for the year ended 31 december 2013
note
year ended
31 december
2013
gbp
year ended
31 december
2012
gbp
cash utilised in operating activities before working capital changes 311 13991258 548068
decrease in inventories 277013 11484574
decrease  increase in trade and other receivables 18716289 42987891
decrease  increase in trade and other payables 3045048 8555240
increase in deferred revenue and advances from clients 12281662 30741671
payment of retirement benefit obligation 98206 34922
cash generated by operations 14140452 7210604
interest paid 1340724 1563575
interest received 317134 211302
dividend paid 48828 3430464
income taxation paid  refunded 312 975933 678498
net cash inflow from operating activities 12092101 3106365
cash flows from investing activities
property plant and equipment acquired 61 13349115 12136260
improvements to land and buildings 61 686463 538970
proceeds from disposal of property plant and equipment 3756558 2291117
increase in other intangible assets 360841 1334383
decrease in finance lease receivables 417967 220017
repayments received on related party loans 51396 16523
net cash outflow from investing activities 10170498 11481956
cash flows from financing activities
repayments made on interest bearing borrowings 6865840 3854832
net cash outflow from financing activities 6865840 3854832
net decrease in cash and cash equivalents 4944237 12230423
cash and cash equivalents at the beginning of the year 9133936 22298391
effect of exchange rate differences on cash and cash equivalents 2898073 934032
total cash and cash equivalents at the end of the year 1291626 9133936
the accompanying notes to the consolidated annual financial statements form an integral part of the 
consolidated annual financial statements financial statements
54
shaft sinkers holdings plc annual report and accounts 2013
11 reporting entity
shaft sinkers holdings plc “the company” is domiciled in the isle of man the company’s registered office 
is at 18 athol street douglas isle of man these consolidated annual financial statements as at and for the 
year ended 31 december 2013 comprise the company and its subsidiaries together referred to as “the 
group” and individually as the “group entities” the group is primarily involved in shaft sinking contract 
mining mine operation tunnelling and large underground excavations
12 basis of preparation
121 statement of compliance
the consolidated financial statements are prepared in accordance with international financial reporting 
standards ifrs and international financial reporting interpretations committee “ifric” interpretations 
adopted by the european union
the consolidated financial statements have been prepared in accordance with the listing rules of the london 
stock exchange
122 basis of measurement
the consolidated financial statements have been prepared on the historical cost basis except for the 
following material items in the consolidated statement of financial position
 – financial instruments at fair value through profit or loss are measured at fair value
the methods used to measure fair value are discussed further in note 1321
123 basis of preparation
going concern
as described in note 18 the group has borrowings and facilities which together with receipts from clients 
fund the daily working capital requirements of the group volatile economic conditions may occasionally 
create uncertainty in respect of
 – demand for the group’s services as a consequence of reduced capital expenditure within the mining and 
related industries and
 – the availability of bank financing in the foreseeable future
in assessing the group’s ability to continue as a going concern the board has reviewed the following
 – group forecasts and projections for at least an 18 month forwardlooking period and up to december 
2015 taking into account potential changes in group performance the forecasts and projections focus on 
both the financial performance as well as the liquidity of the group and
 – the aforementioned forecasts and projections were further subjected to a stress test by applying a 
conservatism factor in order to ascertain whether the group will be able to operate in periods of duress
the group forecasts and projections indicate the group should be able to operate within the level of its 
capital structure the board has factored into its liquidity forecasts and considered the impact of
gbp18m usd3 million of cash being restricted as a result of the security provided to the group’s bankers 
for the performance guarantee issued in respect of a project
the following main assumptions have been used in making this assessment
 – the current banking facilities of the group will remain in place for at least the next 18 months
 – the strike action currently being experienced in the mining industry in south africa will continue until 
june after which operations will return to normality
 – the current normal operational performance assumptions will be met
 – new projects have been included where formal tenders have been submitted and management have 
assessed the likelihood of success as strong
 – a program of surplus asset realisations will result in additional cash inflows
 – restricted cash will remain restricted throughout the period of assessment
 – in the stress test unsecured revenues which do not form part of the current order book are removed
the board has also considered the claim received from eurochem of an amount of approximately usd917 
million gbp550 million in determining its ability to continue as a going concern based on the review of the 
arbitration claim in consultation with external legal counsel the board continues to be of the view that the 
principal claims are without merit and the subsidiaries concerned are contesting the claims robustly as such 
the board has not forecast any requirement to settle amounts arising from these claims however given the 
ongoing arbitration processes management forecasts include best estimates of expenses likely to be 
incurred in defending the group’s position
notes to the consolidated annual financial statements
for the year ended 31 december 2013 55
shaft sinkers holdings plc annual report and accounts 2013
wwwshaftsinkersgroupcom
the amount the group submitted as a counterclaim against eurochem to the net value of usd16 million 
gbp93 million for outstanding amounts payable under the contract as a result of the uncertainty 
regarding the timing of any receipts awarded from the arbitration processes has not been forecast as 
received during the future period reviewed and as such does not have any impact on available liquidity
various initiatives are underway to convert some of the available longerterm assets of the group into 
nearterm cash management is optimistic that these initiatives will generate additional funds that will assist 
the group to continue to support the high level of legal expenses related to the arbitration matter and 
enable the group to continue as a going concern
based on the forecasts prepared the board considers that the group has sufficient ability to meet its 
scheduled debt repayments during the forecast period from the facilities and cash flows available to it the 
current term facilities expire in december 2014 with a final repayment of r50 million gbp29 million the 
group is in discussion with its bankers regarding the possible extension of these facilities
the directors have a reasonable expectation that the group has adequate resources in place to continue in 
operational existence for the foreseeable future the consolidated annual financial statements therefore 
continue to be prepared on a going concern basis
functional and presentation currency
the consolidated financial statements are prepared in british pounds which is the functional and 
presentation currency of the parent company
124 use of estimates and judgements 
the preparation of financial statements in conformity with ifrs as adopted by the eu requires 
management to make judgements estimates and assumptions that affect the application of policies and 
reported amounts of assets liabilities income and expenses actual results may differ from these estimates
accounting estimates and underlying assumptions are reviewed on an ongoing basis revisions to accounting 
estimates are recognised in the period in which the estimate is revised and in any future periods affected
in particular information about significant areas of estimation uncertainty and critical judgements in 
applying accounting policies that have a significant effect on the amounts recognised in the financial 
statements is supplied in the following notes
 – note 123 basis of preparation – going concern
 – note 65 impairment of property plant and equipment
 – note 66 useful lives of property plant and equipment
 – note 7 assessment of goodwill impairment
 – note 11 deferred tax assets
 – note 13 recognition of account receivable
 – note 22 measurement of post retirement benefit obligations
 – note 136 and 251 lease classification
 – note 1321 valuation of financial instruments
 – note 30 contingent liabilities
125 change in accounting policy
on 1 january 2013 the group changed its accounting policy governing the subsequent measurement of land 
and buildings from the revaluation model to the cost model the group believes that this approach provides 
more relevant and reliable information about the group’s financial position as it eliminates the volatility in 
property valuations caused by market conditions the change in accounting policy has been applied 
retrospectively for all periods presented in this report
the impact of the change in accounting policy to all periods presented has been summarised in note 62
13 significant accounting policies
the accounting policies set out below have been consistently applied to all periods presented in these 
consolidated financial statements except as explained above which addresses the change in accounting policy 
of land and buildings the accounting policies have been applied consistently to all entities within the group
12 basis of preparation continued financial statements
56
shaft sinkers holdings plc annual report and accounts 2013
131 basis of consolidation
subsidiaries 
subsidiaries are entities controlled by the group the group controls an entity when it is exposed to or has 
rights to variable returns from its involvement with the entity and has the ability to affect those returns 
through its power over the entity the financial statements of subsidiaries are included in the consolidated 
financial statements from the date that control commences until the date that control ceases 
the accounting policies of subsidiaries are aligned with the policies adopted by the group 
noncontrolling interests
noncontrolling interests in the net assets of consolidated subsidiaries are identified separately from the 
group’s equity therein noncontrolling interests consist of the amount of those interests at the date of the 
original business combination and the noncontrolling interest’s share of changes in equity since the date of the 
combination losses applicable to the noncontrolling interest in excess of the noncontrolling interest’s share of 
changes in equity are allocated against the interests of the group except to the extent that the noncontrolling 
interest has a binding obligation and is able to make an additional investment to cover the losses 
changes in the group’s interest in a subsidiary that do not result in a loss of control are accounted for as 
transactions with owners in their capacity of owners adjustments to noncontrolling interests are based on 
a proportionate amount of the net assets of the subsidiary no adjustments are made to goodwill and no 
gain or loss is recognised in profit or loss
acquisitions from entities under common control
business combinations arising from transfers of interests in entities that are under the control of the shareholder 
that controls the group are accounted for as if the acquisition had occurred at the beginning of the earliest 
comparative period presented or if later at the date that common control was established the assets and 
liabilities acquired are recognised at the carrying amounts recognised previously in the group controlling 
shareholder’s consolidated financial statements the components of equity of the acquired entities are added 
to the same components within group equity and any gain  loss arising is recognised directly in equity
jointly controlled operations
a jointly controlled operation is a joint venture carried on by each venturer using its own assets in pursuit of 
the joint operations the consolidated financial statements include the assets that the group controls and 
the liabilities that it incurs in the course of pursuing the joint operation and the expenses that the group 
incurs and its share of the income that it earns from the joint operation
special purpose entities
special purpose entities classified as such in accordance with sic 12 consolidation – specialpurpose entities 
special purpose entities are those companies in which the group has an interest of 50 or more of the 
voting rights or otherwise has the power to exercise control over the operations and derive the benefits 
there from due to the fact that a special purpose entity is deemed to be controlled by the group the 
financial statements of a special purpose entity are included in the consolidated annual financial statements
transactions eliminated on consolidation
intragroup balances and transactions and any unrealised income and expenses arising from intragroup 
transactions are eliminated in preparing the consolidated financial statements unrealised gains arising from 
transactions with equity accounted investees and joint ventures are eliminated against the investment to the 
extent of the group’s interest in the investee unrealised losses are eliminated in the same way as unrealised 
gains but only to the extent that there is no evidence of impairment
132 foreign currency 
foreign currency transactions
transactions in foreign currencies are translated at the functional currency of the relevant subsidiary company at 
the exchange rate at the transaction date monetary assets and liabilities denominated in foreign currencies at 
the reporting date are retranslated to the functional currency at the exchange rate at that date the foreign 
currency gain or loss on monetary items is the difference between the amortised cost in the functional currency 
at the beginning of the period adjusted for effective interest and payments during the period and the amortised 
cost in foreign currency translated at the exchange rate at the end of the reporting period nonmonetary assets 
and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional 
currency at the exchange rate at the date that their fair value was determined foreign currency differences 
arising on retranslation are recognised in profit or loss nonmonetary items that are measured in terms of 
historical cost in a foreign currency are translated using the exchange rate at the date of the transaction
notes to the consolidated annual financial statements continued
for the year ended 31 december 2013
13 significant accounting policies continued 57
shaft sinkers holdings plc annual report and accounts 2013
wwwshaftsinkersgroupcom
foreign operations
the assets and liabilities of foreign operations including goodwill and fair value adjustments arising on 
acquisition are translated to british pounds at the exchange rates at the reporting date the income and 
expenses of foreign operations excluding foreign operations in hyperinflationary economics are translated 
to british pound at exchange rates at the dates of the transactions
foreign currency differences are recognised in other comprehensive income and presented in the foreign 
currency translation reserve “translation reserve” in equity when a foreign operation is disposed of such 
that control is lost the cumulative amount in the translation reserve related to that foreign operation is 
reclassified to profit or loss as part of the gain or loss on disposal when the group disposes of only part of 
its interest in a subsidiary that includes a foreign operation while retaining control the relevant proportion of 
the cumulative amount is reattributed to noncontrolling interests
when the settlement of a monetary item receivable from or payable to a foreign operation is neither 
planned nor likely in the foreseeable future foreign exchange gains and losses arising from such monetary 
item are considered to form part of a net investment in a foreign operation and are recognised in other 
comprehensive income
133 financial instruments
nonderivative financial assets
the group initially recognises loans and receivables and deposits on the date that they are originated all 
other financial assets including assets designated at fair value through profit or loss are recognised initially 
on the trade date at which the group becomes a party to the contractual provisions of the instrument
the group derecognises a financial asset when the contractual rights to the cash flows from the asset expire 
or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which 
substantially all risks and rewards of ownership of the financial asset are transferred any interest in transferred 
financial assets that is created or retained by the group is recognised as a separate asset or liability
financial assets and liabilities are offset and the net amount presented in the statement of financial position 
when and only when the group has a legal right to offset the amounts and intends to either settle on a net 
basis or to realise the asset and settle the liability simultaneously
the group has the following nonderivative financial assets financial assets at fair value through profit or 
loss and loans and receivables
financial assets at fair value through profit or loss
a financial asset is classified at fair value through profit or loss if it is classified as held for trading or is 
designated as such upon initial recognition financial assets are designated at fair value through profit or 
loss if the group manages such investments and makes purchase and sale decisions based on their fair value 
in accordance with the group’s risk management and investment strategy upon initial recognition 
attributable transaction costs are recognised in profit or loss as incurred financial assets at fair value 
through profit or loss are measured at fair value and changes therein are recognised in profit or loss
loans and receivables
loans and receivables are financial assets with fixed or determinable payments that are not quoted in an 
active market such assets are recognised initially at fair value plus any directly attributable transaction 
costs subsequent to initial recognition loans and receivables are measured at amortised cost using the 
effective interest method less any impairment losses
loans and receivables comprise trade and other receivables loans receivable loans to related parties and 
cash and cash equivalents
cash and cash equivalents comprise cash balances and call deposits with original maturities of three months or 
less bank overdrafts that are repayable on demand and form an integral part of the group’s cash management 
are included as a component of cash and cash equivalents for the purpose of the statement of cash flows
nonderivative financial liabilities
the group initially recognises debt securities issued and subordinated liabilities on the date that they are 
originated all other financial liabilities including liabilities designated at fair value through profit or loss are 
recognised initially on the trade date at which the group becomes a party to the contractual provisions of 
the instrument
13 significant accounting policies continued financial statements
58
shaft sinkers holdings plc annual report and accounts 2013
the group derecognises a financial liability when its contractual obligations are discharged cancelled or expire
the group has the following nonderivative financial liabilities loans and borrowings bank overdrafts and 
trade and other payables
such financial liabilities are recognised initially at fair value plus any directly attributable transaction costs 
subsequent to initial recognition these financial liabilities are measured at amortised cost using the effective 
interest method
share capital
ordinary shares
ordinary shares are classified as equity incremental costs directly attributable to the issue of ordinary 
shares and share options are recognised as a deduction from equity net of any tax effects when share 
capital recognised as equity is repurchased the amount of the consideration paid including any directly 
attributable costs is recognised as a deduction from equity
134 property plant and equipment
recognition and measurement
items of plant and equipment are measured at cost less accumulated depreciation and accumulated 
impairment losses
cost includes expenditure that is directly attributable to the acquisition of the asset the cost of self
constructed assets includes the cost of materials and direct labour and any other costs directly attributable 
to bringing the asset to a working condition for its intended use and the costs of dismantling and removing 
items and restoring the site on which they are located
when parts of an item of property plant and equipment have different useful lives they are accounted for 
as separate items major components of property plant and equipment
gains and losses on disposal of an item of property plant and equipment are determined by comparing the 
proceeds from disposal with the carrying amount of property plant and equipment and are recognised net 
within other income in profit or loss when revalued assets are sold the amounts included in the revaluation 
reserve are transferred to retained earnings
subsequent costs
the cost of replacing a part of an item of property plant and equipment is recognised in the carrying amount 
of the item if it is probable that the future economic benefits embodied within the part will flow to the group 
and its cost can be measured reliably the carrying amount of the replaced part is derecognised the cost of 
daytoday servicing of property plant and equipment are recognised in profit or loss as incurred
depreciation
depreciation is calculated over the depreciable amount which is the cost of an asset or other amount 
substituted for cost less its residual value
depreciation is recognised in profit or loss on a straightline basis over the estimated useful lives of each 
part of an item of property plant and equipment since this most closely reflects the expected pattern of 
consumption of the future economic benefits embodied in the asset leased assets are depreciated over the 
shorter of the lease term and their useful lives unless it is reasonably certain that the group will obtain 
ownership by the end of the lease term land is not depreciated
the estimated useful lives are 2013 2012
buildings 50 years 50 years
plant and equipment 120 years 120 years
furniture fittings and office equipment 26 years 26 years
motor vehicles 4 years 4 years
depreciation methods useful lives and residual values are reviewed at each financial yearend and adjusted 
if appropriate estimates in respect of certain items of plant and equipment were revised – refer to note 66
notes to the consolidated annual financial statements continued
for the year ended 31 december 2013
13 significant accounting policies continued 59
shaft sinkers holdings plc annual report and accounts 2013
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135 intangible assets
goodwill
goodwill that arises upon the acquisition of subsidiaries is included in intangible assets for measurement of 
goodwill at initial recognition see note 131
subsequent measurement
goodwill is measured at cost less accumulated impairment losses 
research and development
expenditure on research activities undertaken with the prospect of gaining new scientific or technical 
knowledge and understanding is recognised in profit or loss as incurred
development activities involve a plan or design for the production of new or substantially improved 
products or processes development expenditure is capitalised only if development costs can be measured 
reliably the product or process is technically and commercially feasible future economic benefits are 
probable and the group intends to and has sufficient resources to complete development and to use of sell 
the asset the expenditure capitalised includes the cost of materials direct labour overhead costs that are 
directly attributable to preparing the asset for its intended use and capitalised borrowing costs other 
development expenditure is recognised in profit or loss as incurred
capitalised development expenditure is measured at cost less accumulated amortisation and any 
accumulated impairment losses
subsequent expenditure
subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the 
specific asset to which it relates all other expenditure is recognised in profit or loss as incurred
136 leased assets
leases in terms of which the group assumes substantially all the risks and rewards of ownership are 
classified as finance leases upon initial recognition the leased asset is measured at an amount equal to the 
lower of its fair value and the present value of the minimum lease payments subsequent to initial 
recognition the asset is accounted for in accordance with the accounting policy applicable to that asset
other leases are operating leases and the leased assets are not recognised in the group’s statement of 
financial position
137 inventories
inventories are measured at the lower of cost and net realisable value the cost of inventories is based on the 
weighted average cost method and includes expenditure incurred in acquiring the inventories production or 
conversion costs and other costs incurred in bringing them to their existing location and condition 
net realisable value is the estimated selling price in the ordinary course of business less the estimated costs 
of completion and selling expenses obsolete redundant and slow moving inventories are identified on a 
regular basis and are written down to their estimated net realisable values
138 contract work in progress
contract work in progress represents the gross unbilled amount expected to be collected from customers 
for contract work performed to date it is measured at cost plus profit recognised to date less progress 
billings and recognises losses cost includes all expenditure related directly to specific projects
contract work in progress is presented as part of trade and other receivables in the statement of financial 
position for all contracts in which costs incurred plus recognised profits exceed progress billings if progress 
billings exceed costs incurred plus recognised profits then the difference is presented as deferred revenue 
in the statement of financial position
139 impairment
financial assets
a financial asset not carried at fair value through profit or loss is assessed at each reporting date to 
determine whether there is any objective evidence that it is impaired a financial asset is impaired if objective 
evidence indicates that a loss event has occurred after the initial recognition of the asset and that the loss 
event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably
13 significant accounting policies continued financial statements
60
shaft sinkers holdings plc annual report and accounts 2013
objective evidence that financial assets including equity securities are impaired include default or 
delinquency by a debtor restructuring of an amount due to the group on terms that the group would not 
consider otherwise indications that a debtor or issuer will enter bankruptcy the disappearance of an active 
market for a security in addition for an investment in an equity security a significant or prolonged decline in 
its fair value below its cost is objective evidence of impairment
the group considers evidence of impairment for receivables at both specific asset and collective level all 
individually significant receivables are assessed for specific impairment all individually significant 
receivables found not to be specifically impaired are then collectively assessed for any impairment that has 
been incurred but not yet identified receivables that are not individually significant are collectively assessed 
for impairment by grouping together receivables with similar risk characteristics
in assessing collective impairment the group uses historical trends of the probability of default timing of 
recoveries and the amount of loss incurred adjusted for management’s judgement as to whether the current 
economic and credit conditions are such that the actual losses are likely to be greater or less than suggested 
by historical trends
an impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference 
between its carrying amount and the present value of the estimated future cash flows discounted at the 
asset’s original effective interest rate losses are recognised in profit or loss and reflected in an allowance 
account against receivables interest on the impaired asset continues to be recognised through the 
unwinding of the discount when a subsequent event causes the amount of impairment loss to decrease the 
decrease in impairment loss is reversed through profit or loss
nonfinancial assets
the carrying amount of the group’s nonfinancial assets other than inventories and deferred tax assets are 
reviewed at each reporting date to determine whether there is an indication of impairment if any such 
indication exists then the assets recoverable amount is estimated
for goodwill assets that have an indefinite useful life and intangible assets that are not yet available for use 
including capitalised development costs the recoverable amount is estimated at each balance sheet date
the recoverable amount of an asset or cashgenerating unit is the greater of its value in use and its fair value 
less costs to sell in assessing the value in use the estimated future cash flows are discounted to their 
present value using a pretax discount rate that reflects the current market assessments of the time value of 
money and the risks specific to the asset for the purpose of impairment testing assets are grouped 
together into the smallest group of assets that generate cash inflows from continuing use that are largely 
independent of the cash inflows of other assets or groups of assets the “cashgenerating unit”
an impairment loss is recognised if the carrying amount of an asset or its cashgenerating unit exceeds its 
estimated recoverable amount impairment losses are recognised in profit or loss impairment losses 
recognised in respect of cashgenerating units are allocated first to reduce the carrying amount of any 
goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit group 
of units on a pro rata basis in the case of land and buildings the revaluation decrease is recognised directly 
in other comprehensive income against the revaluation reserve
an impairment loss in respect of goodwill is not reversed in respect of other assets impairment losses 
recognised in prior periods are assessed at each reporting date for any indications that the loss has 
decreased or no longer exists an impairment loss is reversed if there has been a change in the estimates 
used to determine the recoverable amount an impairment loss is reversed only to the extent that the asset’s 
carrying amount does not exceed the carrying amount that would have been determined net of 
depreciation if no impairment loss had been recognised
1310 employee benefits
shortterm employee benefits
shortterm employee benefits are employee benefits other than termination benefitis that are expected to 
be settled wholly within twelve months after the end of the annual reporting period in which the employees 
render the related services shortterm employee benefit obligations are measured on an undiscounted basis 
and are expensed as the related service is provided
notes to the consolidated annual financial statements continued
for the year ended 31 december 2013
13 significant accounting policies continued 61
shaft sinkers holdings plc annual report and accounts 2013
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a liability is recognised for the amount expected to be paid under shortterm cash bonus or profitsharing 
plans if the group has a present legal or constructive obligation to pay this amount as a result of past service 
provided by the employee and the obligation can be estimated reliably
share based payment transactions
the grantdate fair value of sharebased payment awards granted to employees is recognised as an 
employee expense with a corresponding increase in equity over the period that the employees 
unconditionally become entitled to the awards the amount recognised as an expense is adjusted to reflect 
the number of awards for which the related service and nonmarket vesting conditions are expected to be 
met such that the amount ultimately recognised as an expense is based on the number of awards that meet 
the related service and nonmarket performance conditions at the vesting date for sharebased payment 
awards with nonvesting conditions the grantdate fair value of the sharebased payment is measured to 
reflect such conditions and there is no trueup for differences between expected and actual outcomes
defined contribution plan
a defined contribution plan is postemployment plan under which an entity pays fixed contributions into a 
separate legal entity and will have no legal or constructive obligation to pay further amounts obligations for 
contributions to defined contribution pension places are recognised as an employee benefit expense in 
profit or loss in the periods during which services are rendered by employees prepaid contributions are 
recognised as an asset to the extent that a cash refund or a reduction in future payments is available 
contributions to a defined contribution plan that is due more than 12 months after the end of the period in 
which the employees render the services are discounted to their present value
defined benefit plan
a defined benefit plan is a postemployment plan other than a defined contribution plan the group’s net 
obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount 
of future benefit that employees have earned in return for their service in the current and prior periods that 
benefit is discounted to determine its present value any unrecognised past service costs and the fair value 
of any plan assets are deducted the calculation is performed annually by a qualified actuary using the 
projected unit method
the group recognises all actuarial gains and losses arising from defined benefit plans in profit or loss the 
scheme has no plan assets and is an unfunded scheme
1311 black economic empowerment bee transactions
where the group disposes of a portion of a south african based subsidiary or operation to a bee company 
or employee benefit trust at a discount to fair value the transaction is considered to be a share based 
payment in line with the principles contained in south africa interpretation ac503 accounting for black 
economic empowerment bee transactions the discount provided or value given is calculated in 
accordance with ifrs 2 share based payments and included in the determination of the profit or loss on 
disposal
1312 provisions
a provision is recognised if as a result of a past event the group has a present legal or constructive 
obligation that can be estimated reliably and it is probable that an outflow of economic benefits will be 
required to settle the obligation provisions are determined by discounting the expected future cash flows at 
a pretax rate that reflects current market assessments of the time value of money and the risks specific to 
the liability the unwinding of the discount is recognised as finance cost
onerous contracts
a provision for onerous contracts is recognised when the expected benefits to be derived by the group 
from a contract are lower than the unavoidable cost of meeting its obligations under the contract the 
provision is measured at the present value of the lower of the expected cost of terminating the contract and 
the expected net cost of continuing with the contract before a provision is established the group 
recognises any impairment loss on the assets associated with that contract
1313 interest free advances
interest free advances are received from clients primarily to enable the group to meet its procurement 
obligations in respect of the contract in jurisdictions where normal business practices dictate that suppliers 
are paid upfront for products andor services to be delivered
13 significant accounting policies continued financial statements
62
shaft sinkers holdings plc annual report and accounts 2013
interest free advances are offset against normal monthly invoices issued to the client and are reflected in the 
statement of financial position as an undiscounted amount
1314 subcontractor liabilities
subcontractor liabilities represent the actual unpaid liability owing to subcontractors for work performed 
including retention monies owed subcontractor liabilities are initially recognised at fair value and are 
subsequently classified as nontrading financial liabilities and carried at amortised cost using the effective 
interest rate method
1315 revenue
revenue comprises the net invoiced value of contracts and other services rendered excluding value 
added tax
contract revenue
contract revenue includes the initial amount agreed in the contract plus any variations in contract work 
claims and incentive payments to the extent that it is probable that they will result in revenue and can be 
measured reliably as soon as the outcome of the contract can be estimated reliably contract revenue and 
expenses are recognised in profit or loss in proportion to the stage of completion of the contract contract 
expenses are recognised as incurred unless they create an asset related to future contract activity
the stage of completion is assessed by reference to surveys of work performed when the outcome of the 
contract cannot be estimated reliably contract revenue is recognised only to the extent of contract costs 
incurred that are likely to be recoverable anticipated losses to completion on a contract is recognised 
immediately in profit or loss
variations in contract work and claims are included to the extent that collection is probable and the amounts 
can be reliably measured
in limited circumstances contracts may be materially inpacted by a client’s actions such that the group is 
unable to complete the contracted works at all or in the manner orignially planned this may involve dispute 
resolution procedures under the relevant contract andor litigation in these circumstances the assessment 
of the project outcome whilst still following basic revenue recognition principles becomes more 
judgemental
1316 lease payments
payments made under operating leases are recognised in profit or loss on a straightline basis over the term 
of the lease
minimum lease payments made under finance leases are apportioned between the finance expense and the 
reduction of the outstanding liability the finance expense is allocated to each period during the lease term 
so as to produce a constant periodic rate of interest on the remaining balance of the liability
determining whether an arrangement contains a lease
at inception of an arrangement the group determines whether such an arrangement is or contains a lease 
a specific asset is the subject of a lease if fulfilment of the arrangement is dependent on the use of that 
specific asset an arrangement conveys the right to use the asset if the arrangement conveys to the group 
the right to control the use of the underlying asset
at inception or upon reassessment of the arrangement the group separates payments and other 
consideration required by such an arrangement into those for the lease and those for other elements on the 
basis of their relative fair values if the group concludes for a finance lease that it is impracticable to 
separate the payments reliably an asset and a liability are recognised at an amount equal to the fair value of 
the underlying asset subsequently the liability is reduced as payments are made and an imputed finance 
charge on the liability is recognised using the group’s incremental borrowing rate
1317 finance income and costs 
finance income comprises interest income of funds invested dividend income gains on the disposal of 
availableforsale financial assets changes in fair value of financial assets at fair value through profit or loss 
and gains on hedging instruments that are recognised in profit or loss interest income is recognised as it 
accrues using the effective interest method dividend income is recognised in profit or loss on the date that 
the group’s right to receive payment is established
notes to the consolidated annual financial statements continued
for the year ended 31 december 2013
13 significant accounting policies continued 63
shaft sinkers holdings plc annual report and accounts 2013
wwwshaftsinkersgroupcom
finance costs comprise interest expense on borrowings unwinding of the discount on provisions changes in 
the fair value of financial assets at fair value through profit or loss impairment losses recognised on financial 
assets and losses on hedging instruments that are recognised in profit or loss borrowing costs that are not 
directly attributable to the acquisition construction or production of a qualifying asset are recognised in 
profit or loss using the effective interest method foreign currency gains or losses are reported on a net basis
1318 income tax
income tax expense comprises current taxation and deferred taxation income tax expense is recognised in 
profit or loss except to the extent that it relates to items recognised directly in equity or in other 
comprehensive income
current tax
current taxation is the expected taxation payable on taxable income for the year using taxation rates 
enacted or substantively enacted at the reporting date and any adjustments to taxation payable in respect 
of previous years current tax payable also includes any tax liability arising from declaration of dividends not 
paid by reporting date
deferred tax
deferred taxation is recognised in respect of temporary differences between the carrying amounts of assets 
and liabilities for financial reporting purposes and the amounts used for taxation purposes
deferred taxation is not recognised for the following temporary differences the initial recognition of assets 
and liabilities in a transaction that is not a business combination and that affects neither accounting nor 
taxable profit and differences relating to investments in subsidiaries and jointly controlled entities to the 
extent that it is probable that they will not reverse in the foreseeable future in addition deferred taxation is 
not recognised for taxable temporary differences arising on the initial recognition of goodwill 
deferred taxation is measured at the taxation rates that are expected to be applied to the temporary 
differences when they reverse based on the laws that have been enacted or substantively been enacted by 
the reporting date
deferred taxation assets and liabilities are offset if there is a legally enforceable right to offset current 
taxation liabilities and assets and they relate to income taxes levied by the same authority on the same 
taxable entity or on different taxable entities but they intend to settle current taxation liabilities and assets 
on a net basis or their taxation liabilities and assets will be realised simultaneously
a deferred taxation asset is recognised for unused tax losses tax credits and deductible temporary 
differences to the extent that it is probable that future taxable profits will be available against which the 
temporary difference can be utilised deferred taxation assets are reviewed at each reporting date and are 
reduced to the extent that it is no longer probable that the related taxation benefit will be realised
1319 earnings per share
the group presents basic earnings per share data for its ordinary shares basic earnings per share is 
calculated by dividing the profit or loss attributable to ordinary shareholders of the company by the 
weighted average number of ordinary shares outstanding during the year adjusted for the company’s own 
shares diluted earnings per share is determined by adjusting profit or loss attributable to the ordinary 
shareholders and the weighted average number of ordinary shares outstanding adjusted for own shares 
held and for the effects of all diluted potential ordinary shares which may comprise convertible notes and 
share options granted to employees
1320 segment reporting
an operating segment is a component of the group that engages in business activities from which it may 
earn revenues and incur expenses including revenues and expenses that relate to transactions with any of 
the group’s other components all operating segments‘ operating results are reviewed regularly by the 
group’s executive management to make decisions about resources to be allocated to the segment and to 
assess its performance and for which discrete financial information is available
segment results that are reported to executive management include items directly attributable to a segment 
as well as those that can be allocated on a reasonable basis unallocated items comprise mainly corporate 
overhead expenses and income tax assets and liabilities
13 significant accounting policies continued financial statements
64
shaft sinkers holdings plc annual report and accounts 2013
segment capital expenditure is the total cost incurred during the year to acquire property plant and 
equipment and intangible assets other than goodwill
1321 determination of fair values
a number of the group’s accounting policies and disclosures require the determination of fair value for both 
financial and nonfinancial assets and liabilities fair values have been determined for measurement andor 
disclosure purposes based on the following methods when applicable further information about the 
assumptions made in determining fair values is disclosed in the notes specific to that asset or liability
trade and other receivables
the fair values of trade and other receivables excluding construction work in progress are estimated at the 
present value of future cash flows discounted at the market rate of interest at the measurement date 
shortterm receivables with no stated interest rate are measured at the original invoice amount if the effect 
of discounting is immaterial fair value is determined at initial recognition and for disclosure purposes at 
each annual reporting date
nonderivative financial liabilities
fair value which is determined for disclosure purposes is calculated based on the present value of future 
principal and interest cash flows discounted at the market rate of interest at the reporting date in respect of 
the liability component of convertible notes the market rate of interest is determined by reference to similar 
liabilities that do not have a conversion option for finance leases the market rate of interest is determined 
by reference to the rate per the agreement which is linked to the prime lending rate of south africa
investments in equity
the fair value of financial assets at fair value through profit or loss heldtomaturity investments and 
availableforsale financial assets is determined by reference to their quoted bid price at the reporting date 
the fair value of heldtomaturity investments is determined for disclosure purposes only
share based payments
the fair value of the group’s long term share incentive scheme is measured using monte carlo simulation 
model measurement inputs include the share price at measurement date the expected volatility based on 
an evaluation of the company’s historic volatility particularly over the historic period commensurate with 
the expected term of the instruments the expected term of the instruments expected dividends and the 
risk free interest rates based on government bonds service and nonmarket performance conditions 
attached to the transactions are not taken into account in determining fair value
1322 new standards and interpretations
a number of new standards amendments to standards and interpretations issued are not yet effective for 
the year ended 31 december 2013 and have not been applied in preparing these annual financial statements
the impact of these new standards amendment to standards and interpretations issued but not yet 
effective has been calculated and is not considered to have a significant impact on the group’s annual 
financial statements
2 revenue
 
2013 
gbp
2012 
gbp
contract revenue
revenue from south african core operations 110006469 176464872
revenue from international core operations 42147368 16074076
 152153837 192538948
notes to the consolidated annual financial statements continued
for the year ended 31 december 2013
13 significant accounting policies continued 65
shaft sinkers holdings plc annual report and accounts 2013
wwwshaftsinkersgroupcom
3 profit from operations
 
2013 
gbp
2012 
gbp
is arrived at after taking into account
auditors’ remuneration
582555 205602
– for audit services rendered 546256 200531
– for nonaudit services rendered 36299 5071
impairment allowance on trade and other receivables – note 262
21813 631723
– raised 21813 1292680
– reversed – 660957
bad debts written off 2701 10135
consulting fees paid 785202 1480866
legal fees paid – note 32 3890393 1087712
depreciation of property plant and equipment – note 61 4614576 5671753
impairment loss reversed  raised on plant and equipment – note 65 62540 346560
derecognition of items replaced on plant and equipment – note 68 257884 459501
profit on disposal of property plant and equipment 1362091 645763
personnel costs 98064940 139042970
employee benefits – share based payments – note 29 156902 232333
write down of inventory to net realisable value due to obsolesence – note 12 36246 4908
operating lease charges 1438342 1275171
profit on foreign exchange differences 41766 2764804
directors’ fees 264000 278000
provision raised for future retirement benefit obligations relating to past employees 
– note 22 – 35200
loss on recognition of account receivable – 889646
reversal of provision for interest and indirect taxes – 903633
reversal of provision for site demobilisation costs – 374339
31 profit from operations before abnormal items
the results of the group were affected by an exceptional abnormal item during the year under review a 
reconciliation has therefore been prepared below whereby the profit from operations as reflected in the 
consolidated income statement is reconciled to the profit from operations before exceptional abnormal 
items details around the nature of the exceptional abnormal item are more fully described below
 note
2013
gbp
2012
gbp
profit from operations as per consolidated income statement 3907408 5267127
adjusted for abnormal items
– legal fees 32 3890393 1087712
profit from operations before exceptional abnormal items 7797801 6354839
32 legal fees
as more fully described in note 302 the group is involved in arbitration proceedings involving one of the 
group’s former clients due to the complexity of the matter the group has and continues to incur a 
substantial amount of legal fees during the period leading up to the formal arbitration hearing that is 
currently scheduled for the second half of 2014 the nature and magnitude of the legal fees incurred in 
respect of this matter is considered to be abnormal when evaluating the quality of earnings of the group 
and as a result has been separately disclosed in the statement of income financial statements
66
shaft sinkers holdings plc annual report and accounts 2013
4 finance income and costs
 
2013 
gbp
2012 
gbp
interest on call and current account balances 2379 54817
sundry interest received 63839 20463
interest on finance lease receivables 93859 139214
interest on receivables 157058 –
interest earned from revenue authorities – 154686
finance income 317134 369180
interest paid on interest bearing borrowings 812337 1291422
interest on bank overdraft 243915 191536
sundry interest paid 1827 8340
interest due to revenue authorities 282645 693408
finance costs 1340724 2184706
net finance costs recognised in profit and loss 1023590 1815526
5 income tax
 
2013 
gbp
2012 
gbp
current tax expense
– current year 2135538 1823288
– prior year over provision 621630 1037049
dividend withholding tax 11719 2511
deferred tax
– current year 1409793 588016
– prior year under provision 716666 836387
total income tax 832500 1037121
reconciliation of effective tax rate   
current year’s charge as a percentage of profit before tax 289 302
nondeductible expenditure 176 271
nontaxable income 132 31
dividend withholding taxes 04 01
prior year under provision 135 58
foreign taxation 75 10
special deductions – 82
unutilised assessed loss raised as deferred tax asset 04
foreign tax rate differential 27 95
isle of man corporate tax rate – –
the group’s foreign tax rate differential decreased from 95 in 2012 to 27 in 2013 the decrease was 
caused mostly by a decrease in profitability of the south african operations of the group resulting in a 
decrease in taxable income 
the company is subject to tax in the isle of man at the standard tax rate of 0 2012 0
notes to the consolidated annual financial statements continued
for the year ended 31 december 2013 67
shaft sinkers holdings plc annual report and accounts 2013
wwwshaftsinkersgroupcom
6 property plant and equipment
61 reconciliation of property plant and equipment
plant and 
equipment
capital 
work in 
progress land buildings
furniture 
fittings 
and office 
equipment motor vehicles total
2013
cost or valuation
balance at beginning of year – restated 60604190 2045623 1838104 3406166 3353691 1227971 72475745
additions 12949124 – – 686463 373363 26628 14035578
transfer to plant and equipment 761036 761036 – – – – –
assets classified as held for sale 1209238 1209238
disposals 4532457 – 828940 828940 17595 270999 6478931
effect of exchange differences 
on translation from functional to 
presentation currency 13108459 329235 277267 632534 727688 224824 15300007
balance at end of year 55464196 955352 731897 2631155 2981771 758776 63523147
depreciation and impairment losses
balance at beginning of year – restated 23851865 – – 445321 2544955 706168 27548309
depreciation 3889625 – – 79228 486937 158786 4614576
impairment 61896 – – – 177 467 62540
derecognition of replaced items 257884 – – – – – 257884
assets classified as held for sale 601792 – – – – – 601792
disposals 3782174 – – 187188 11731 103371 4084464
effect of exchange differences 
on translation from functional to 
presentation currency 6092707 – – 77716 600859 169666 6940948
balance at end of year 17460805 – – 259645 2419125 591450 20731025
carrying value
balance at beginning of year – restated 36752325 2045623 1838104 2960845 808736 521803 44927436
additions 12949124 – – 686463 373363 26628 14035578
transfer to plant and equipment 761036 761036 – – – – –
impairment 61896 – – – 177 467 62540
derecognition of replaced items 257884 – – – – – 257884
assets classified as held for sale 607446 – – – – – 607446
disposals 750283 – 828940 641752 5864 167628 2394467
depreciation for the year 3889625 – – 79228 486937 158786 4614576
effect of exchange differences 
on translation from functional to 
presentation currency 7015752 329235 277267 554818 126829 55158 8359059
balance at end of year 38003391 955352 731897 2371510 562646 167326 42792122 financial statements
68
shaft sinkers holdings plc annual report and accounts 2013
plant and 
equipment
capital 
work in 
progress land buildings
furniture 
fittings 
and office 
equipment
motor 
vehicles total
2012 – restated
cost or valuation
balance at beginning of year 60425545 – 1754015 3441716 3212587 1037888 69871751
additions 8935812 2154829 242782 296188 468306 577313 12675230
derecognition of replaced items 983840 – – – – – 983840
disposals 2206599 – – – 38091 285838 2530528
effect of exchange differences 
on translation from functional to 
presentation currency 5566728 109206 158693 331738 289111 101392 6556868
balance at end of year 60604190 2045623 1838104 3406166 3353691 1227971 72475745
depreciation and impairment losses
balance at beginning of year 21868225 – – 420016 2311533 565182 25164956
depreciation 4962912 – – 64393 447284 197164 5671753
impairment 344013 – – – 2547 – 346560
derecognition of replaced items 524339 – – – – – 524339
disposals 885174 – – – – – 885174
effect of exchange differences 
on translation rom functional to 
presentation currency 1913772 – – 39088 216409 56178 2225447
balance at end of year 23851865 – – 445321 2544955 706168 27548309
carrying value
balance at beginning of year 38557320 – 1754015 3021700 901054 472706 44706795
additions 8935812 2154829 242782 296188 468306 577313 12675230
impairment 344013 – – – 2547 – 346560
derecognition of replaced items 459501 – – – – – 459501
disposals 1321425 – – – 38091 285838 1645354
depreciation for the year 4962912 – – 64393 447284 197164 5671753
effect of exchange differences 
on translation from functional to 
presentation currency 3652956 109206 158693 292650 72702 45214 4331421
balance at end of year 36752325 2045623 1838104 2960845 808736 521803 44927436
62 change in accounting policy
on 1 january 2013 the group changed its accounting policy governing the subsequent measurement of land 
and buildings from the revaluation model to the cost model the group believes that this approach provides 
more relevant and reliable information about the group’s financial position
the change in accounting policy has been applied retrospectively for all periods presented
the following table represents the adjustments made to the statement of financial position on 
implementation of the new accounting policy
all amounts in gbp land buildings
revaluation 
reserve
deferred  
tax liability
retained 
 earnings
balance at 1 january 2012 as previously 
reported 2614190 3787430 1335757 6795749 37901928
impact of change in accounting policy 860175 797904 1335757 354496 32174
restated balance at 1 january 2012 1754015 2989526 – 6441253 37934102
balance at 31 december 2012 as previously 
reported 2744891 3865665 1400353 7418870 36801482
impact of change in accounting policy at 
1 january 2012 860175 797904 1335757 354496 32174
impact of change in accounting policy 
during 2012 46612 106916 64596 138044 15216
restated balance at 31 december 2012 1838104 2960845 – 6926330 36848872
the change in accounting policy had an insignificant effect on the earnings per share during the current and 
comparative periods
notes to the consolidated annual financial statements continued
for the year ended 31 december 2013
6 property plant and equipment continued 69
shaft sinkers holdings plc annual report and accounts 2013
wwwshaftsinkersgroupcom
63 land and buildings
land and buildings include
portion 305 of the farm scheerpoort no 477 jq including residential buildings and improvements being 
casa d’vliet
portion 73 a portion of 63 of the farm oorzak 335 for the new training centre the construction of the new 
training centre was substantially completed in 2013
64 encumbrances
the group’s plant and equipment is encumbered by a cession to standard bank of south africa limited as 
security for its guarantee and banking facilities as set out in note 183
65 impairment
property plant and equipment in the south african region was subjected to an impairment test using a 
discounted cash flow model on the same assumptions as more fully decribed in note 7 based on the results 
of the assessment no impairment losses were deemed necessary
an impairment reversal of gbp62 540 2012 impairment loss – gbp346 560 was recognised during the 
year on the group’s plant and equipment the impairment reversals arose following a detailed review of the 
fixed asset register and were identified on a line by line basis where impairments had previously been 
recognised for which the circumstances no longer existed at year end
the impairment reversal during the current year and the impairment loss recognised during the prior year all 
relate to the south african segment of the group
66 change in estimate
the useful lives and residual values were assessed not to have changed during the year and therefore there 
was no change in the current year depreciation charge 2012 decrease in useful life and an additional 
depreciation charge of gbp08 million 
the following key assumptions were considered during the annual evaluation of useful lives
 – mechanical stress which refers to forces and loads applied to assets which lead to degradation over time
 – electrical loading which refers to stresses such as continuous loading temporary overloading and 
exposure to short circuit fault current
 – operational practices which refers to how frequently an asset is subject to operations
 – environmental conditions including pollution salt acid rain humidity and extreme temperature that are 
prevalent and causes long term degradation and
 – maintenance practices which refers to the frequency of routine inspection and maintenance that is 
performed on plant and equipment
67 capital work in progress
capital work in progress relates to the construction of the group’s new training centre and improvements to 
the group’s johannesburg offices as well as items of plant and equipment which at the reporting date were 
not yet available for use
68 derecognition of components replaced
components with a carrying value of gbp257 884 2012 gbp459 501 were replaced with new improved 
items resulting in the original component being derecognised to profit and loss
69 noncurrent assets held for sale
plant and equipment with a net book value of gbp749 425 2012 nil has been classified as held for sale 
management committed selling these assets during the next 12 months no gains or losses in profit or loss 
arose on the transfer from property plant and equipment to noncurrent assets held for sale
7 goodwill
goodwill arose on the acquisition of rossal 126 proprietary limited by the group during 2007 the balance 
represents the excess of the cost of the acquisition over the group’s interest in fair value of the identifiable 
assets and liabilities of that company
6 property plant and equipment continued financial statements
70
shaft sinkers holdings plc annual report and accounts 2013
reconciliation of goodwill balances
 
2013 
gbp
2012 
gbp
opening balance 1991340 2172667
foreign currency translation reserve 415295 181327
closing balance 1576045 1991340
allocation of goodwill to cash generating units
goodwill has not been allocated to individual cash generating units as it is believed that goodwill relates to 
the specialised industry expertise and experiences within the group itself that allows the group to operate in 
various different geographical segments
impairment testing
an impairment test was performed on 31 december 2013 on the goodwill balance of the group whereby the 
recoverable amount of the group’s underlying assets was based on its value in use which was determined 
using a discounted cash flow model
the recoverable amount was compared to the carrying amount of goodwill and it was found that the 
recoverable amount exceeded the carrying amount 
key assumptions used in the discounted cash flow projections
 – the forecast earnings before interest taxation depreciation and amortisation for the period 2014 to 2018 
submitted to the board of directors 
 – no growth in earnings were taken into consideration beyond the abovementioned forecast periods 
 – for the purposes of a conservative impairment test a risk adjusted weighted average cost of capital of 
248 2012 169 was used as the discount rate in determining the present value of future cash flows 
and
 – annual capital expenditure averages gbp62 million 2012 gbp145 million during the period fy2014 to 
fy2018
8 other intangible assets
2013
gbp
2012
gbp
development costs capitalised 2015462 1654621
during the 2012 financial year the group concluded an agreement with sightpower incorporated whereby 
the parties agreed to further develop intellectual property relating to automated mine shaft inspection 
through a subsidiary of the group
since the development of the intellectual property is still continuing no amortisation or impairment losses 
have been raised against the development costs incurred to date as the current net book value is deemed to 
be fully recoverable once the development of the technology is complete
9 other unlisted investment
 
2013
gbp
2012
gbp
shares in rand mutual assurance company limited at fair value 613 775
the group holds 50 600 shares 2012 50 600 in rand mutual assurances company limited “rand 
mutual” or “the assurer” rand mutual is a mutual assurer as defined in the insurance act of south africa 
the number of shares held is based on the value of policies held in relation to all policies issued by the 
assurer the group makes contributions to rand mutual for the purpose of prioritising mine accident 
insurance an adjustment to the shareholding is performed annually by the assurer at a price determined by 
the assurer the shares held are at fair value and adjustments to fair value are accounted for in profit or loss
notes to the consolidated annual financial statements continued
for the year ended 31 december 2013
7 goodwill continued 71
shaft sinkers holdings plc annual report and accounts 2013
wwwshaftsinkersgroupcom
10 loans receivable
2013
gbp
2012
gbp
current
– loan receivable – concrete lining products proprietary limited – 36534
 – 36534
the loan to concrete lining products proprietary limited was unsecured bore no interest and was 
repayable on demand the loan was settled during the 2013 financial year
11 deferred taxation
 
2013 
gbp
2012 
gbp
balance at beginning of year 1540983 1568343
current year movement
– temporary differences recognised in profit or loss 1409793 588016
– prior year overprovision recognised in profit or loss 716666 836387
foreign currency translation reserve 120511 275731
balance at end of year 727345 1540983
deferred tax asset 1510147 5383394
deferred tax liability 2237492 6924377
727345 1540983
comprising
– capital allowances 4187375 5578480
– stock adjustment on construction contracts – 323127
– prepaid expenses 43155 49739
– retention debtors 372396 486994
– deferred revenue 451163 1488824
– provisions 2819796 2741914
– unrealised foreign exchange losses – 109172
– unutilised rebates – 229333
– tax losses 507913 64519
– other 96709 76007
727345 1540983
12 inventories
2013 
gbp
2012 
gbp
consumable stores and spare parts 4257422 4159683
strategic spare parts 315549 585875
contract work in progress 10758 151430
4583729 4896988
consumable stores include electrical wire oils  diesel paint and protective clothing
strategic spare parts include critical parts and consumables utilised in the daytoday servicing of the 
group’s plant and equipment strategic spare parts are managed as items of inventory and are therefore 
included in the carrying amount of inventories due to the critical nature of these items such parts may be 
on hand for prolonged periods
during the 2013 financial year the write down of inventories to net realisable value amounted to gbp36 246 
fy2012 gbp4 908 due to obsolesence financial statements
72
shaft sinkers holdings plc annual report and accounts 2013
13 trade and other receivables
2013 
gbp
2012 
gbp
trade receivables 27606865 62242994
impairment allowance – refer to note 262 70985 2589117
other receivables and amounts not yet billed to clients 5731018 1528725
33266898 61182602
the group has ceded its south african trade receivables to standard bank of south africa limited as 
security for its guarantee and banking facilities refer note 183
at 31 december 2013 trade receivables include retentions of gbp5 203 055 2012 gbp3 282 856 relating 
to contracts in progress advances for which the related work has not yet started are presented as deferred 
revenue refer note 24 and amounted to gbp8 023 861 2012 gbp15 699 543
an amount of gbp9 174 901 2012 gbp8 084 661 is subject to arbitration as a result of a dispute with a 
former client during the year it was determined that the account receivable would not be collected during 
the following twelve months and as a result the account receivable was classified as a noncurrent asset at 
31 december 2013 
all the necessary actions have been taken by the directors to recover the amount the recoverability of the 
amount has been considered based on external and internal legal advice and the balance recorded at the 
reporting date is deemed recoverable based on the facts of the matter interest free advances received from 
the client reduced the gross balance owing by the client it is envisaged that these will be settled 
simultaneously
14 finance lease receivables
2013 
gbp
2012 
gbp
noncurrent finance lease receivables 480732 816603
current finance lease receivables 299807 381903
780539 1198506
141 leasing arrangements
the group enters into finance leasing arrangements with qualifying employees in respect of motor vehicles 
that are acquired for use by the employees on the group’s projects the average term of finance leases 
entered into is 5 years 
142 amounts receivable under finance leases
gross investment 
in finance lease 
receivable 
gbp
unearned finance 
income 
gbp
present value of 
minimum lease 
payments 
gbp
31 december 2013
due within one year 344075 44268 299807
due between one and five years 542521 61789 480732
886596 106057 780539
31 december 2012
due within one year 476734 94831 381903
due between one and five years 920771 104168 816603
1397505 198999 1198506
the interest rate inherent in the leases is fixed at the contract date for the entire lease term and is linked to 
the prime interest rate of south africa at 31 december 2013 the average effective interest rate contracted is 
approximately 105 2012 97 
finance lease receivable balances are secured over the motor vehicles leased
notes to the consolidated annual financial statements continued
for the year ended 31 december 2013 73
shaft sinkers holdings plc annual report and accounts 2013
wwwshaftsinkersgroupcom
15 cash and cash equivalents
151 cash and cash equivalents
2013 
gbp
2012 
gbp
call accounts – 129650
current funds at bank 4211895 8996195
cash on hand 22521 8091
4234416 9133936
152 bank overdraft
2013
gbp
2012
gbp
current funds at bank 2942790 –
2942790 –
net cash and cash equivalents 1291626 9133936
comprising of
– unrestricted cash and cash equivalents
527879 7240833
– cash and cash equivalents 2414911 7240833
– bank overdraft
2942790 –
– restricted cash and cash equivalents 1819505 1893103
1291626 9133936
the majority of current and call accounts are held at standard bank of south africa limited and have been 
ceded to them as security for facilities provided to the group as described in note 183
restricted cash and cash equivalents comprise of funds amounting to usd3 million that are held in a cash 
collateral account in favour of standard bank plc as security for a performance guarantee issued by the 
group in respect of the project the use of these funds is restricted as long as the performance guarantee 
remains in place
16 ordinary share capital
2013 
gbp
2012 
gbp
authorised share capital
63333333 ordinary shares with no par value
issued share capital
47500000 ordinary shares with no par value 2012 47500000 ordinary shares  
with no par value 56563799 56563799
reconciliation of share capital
shares issued on incorporation 1 1
shares issued on admission 58900000 58900000
capitalised listing expenses 2336202 2336202
56563799 56563799
the holders of ordinary shares are entitled to receive dividends as declared from time to time and are 
entitled to one vote per share at meetings of the company at the reporting date no shares of the company 
were held by the group financial statements
74
shaft sinkers holdings plc annual report and accounts 2013
17 earnings per share
basic earnings per share
the calculation of basic earnings per share is based on the profit attributable to ordinary shareholders of 
gbp1 966 880 2012 gbp2 334 770 and a weighted average number of shares outstanding of 47 500 000 
2012 47 500 000
diluted earnings per share
the calculation of diluted earnings per share is based on the profit attributable to ordinary shareholders of 
gbp1 966 880 2012 gbp2 334 770 and a weighted average number of shares outstanding of 47 500 000 
2012 47 688 545
2013
shares
2012
shares
weighted average number of ordinary shares at the end of the year used in the 
computation of basic earnings per share 47500000 47500000
shares that may potentially be issued in terms of the ltip as described in note 29 – 188545
weighted average number of ordinary shares at the end of the year 47500000 47688545
18 interest bearing borrowings
181 noncurrent portion
2013 
gbp
2012 
gbp
secured bank loans – 3653395
– 3653395
182 current portion
2013 
gbp
2012 
gbp
secured bank loans 2891477 7564971
2891477 7564971
total interest bearing borrowings 2891477 11218366
183 terms and debt repayment
the secured bank loans relate to loan facilities provided by standard bank of south africa limited that are 
secured by the following 
 – a notarial general covering bond binding all of the moveable property and effects of shaft sinkers 
proprietary limited
 – a covering mortgage bond over land and buildings of shaft sinkers proprietary limited and
 – a notarial special covering bond binding the winders of shaft sinkers proprietary limited
the secured bank loans are categorised into the following facilities that are subject to the terms and 
conditions detailed below
 – a mezzanine bullet facility totaling zar500 million gbp29 million 2012 zar500 million  gbp37 
million bearing interest at the 3 month johannesburg interbank agreed rate plus 675 and is 
repayable on 31 december 2014
 – a senior amortising facility totaling zar nil 2012 zar530 million  gbp39 million bearing interest at 
the 3 month johannesburg interbank agreed rate plus 220 and was repayable quarterly in arrears 
from 31 december 2010
 – a senior bullet facility totaling zar nil 2012 zar500 million  gbp37 million bearing interest at the 
3 month johannesburg interbank agreed rate plus 250 and was repaid on 31 december 2013
the secured bank loan is subject to the following covenants which are measured on a biannual basis
 – interest cover ratio must be larger or equal to 5 times
 – leverage ratio must be smaller than or equal to 2 times
 – cumulative debt service cover ration must be larger than 225 times
at 31 december 2013 the group is in compliance with its loan covenants
notes to the consolidated annual financial statements continued
for the year ended 31 december 2013 75
shaft sinkers holdings plc annual report and accounts 2013
wwwshaftsinkersgroupcom
19 interest free advances from clients
2013 
gbp
2012 
gbp
opening balance 15470041 24433596
advances received – 15768762
advances offset against debtors invoicing 2954235 23374357
foreign exchange difference on translation – 979944
effect of exchange differences on translation from functional to presentation currency 162915 2337904
closing balance 12352891 15470041
comprising
– noncurrent portion 9074212 10781070
– current portion 3278679 4688971
12352891 15470041
the advances received are us dollar denominated contractual working capital advances received from 
clients during 2012 the balance of one of the advances outstanding was applied to reduce the gross amount 
owing to the group – refer note 13 it is envisaged that these will be settled simultaneously with the client 
the balance outstanding at 31 december 2013 represent an advance received from a client for a project 
being performed by the group in india the advance is repayable over the period up to june 2017 as a 
percentage of revenue invoiced
20 subcontractor liabilities
2013
gbp
2012
gbp
trade receivables include claims against clients in respect of subcontractor liabilities 
these liabilities are only settled when payment has been received from clients
noncurrent portion – 113382
current portion – 979848
– 1093230
during the year under review the group terminated the subcontracting agreement with its principle 
subcontractor used in india all amounts owed to the subcontractor were offset against amounts owed to 
the group for payments that the group made on the subcontractors behalf
21 related party loans
211 loan to a related party – current
2013 
gbp
2012 
gbp
loan to bee partner 11178 26040
the loan to the black economic empowerment partner was granted during 2012 to assist him to purchase 
shares in shaft sinkers mining proprietary limited as part of the group’s black economic empowerment 
strategy in terms of the loan agreement the loan bears interest at the south african prime rate and is 
expected to be settled during 2014 
212 loan from a related party – noncurrent
2013 
gbp
2012 
gbp
loan from sight power incorporated 155120 155166
the loan made by sight power incorporated is made in terms of the shareholder agreement between sight 
power incorporated and the group the funds will be utilised in the development of the mine shaft 
inspection technology that is being developed the loan is unsecured bears interest at 2 per annum and is 
repayable in terms of the shareholder agreement repayment is not expected to have to be made within the 
next 12 months and the loan is therefore classified as a noncurrent obligation  financial statements
76
shaft sinkers holdings plc annual report and accounts 2013
22 post retirement benefit obligations
2013 
gbp
2012 
gbp
unfunded obligations
present value of post retirement medical aid obligations 175622 278535
present value of retirement fund obligations 72037 67330
total post retirement benefit obligation 247659 345865
movements in the obligation
opening balance 345865 377070
obligation for future medical aid subsidies provided – 29479
obligation for future pension fund subsidies provided – 5721
medical aid subsidies paid 26654 25876
pension fund subsidies paid 3248 9046
foreign currency translation reserve 68304 31483
closing obligation 247659 345865
recognised in profit and loss
present value of future medical aid payments – 29479
present value of future pension fund payments – 5721
– 35200
the group subsidises a closed group of pensioners’ medical aid contributions the monthly subsidies which 
are reviewed annually by the group are charged against the obligation raised the obligation is the 
estimated present value of the obligation payable over the recipients’ remaining lives
the group contributes towards the sentinel mining industry retirement fund in favour of six disability 
claimants these contributions are charged against the obligation raised the obligation is the estimated 
present value of contributions until retirement date
independent actuarial valuations in respect of these obligations were performed as at 31 december 2012 by 
momentum specialised insurance a valuation of the obligation is performed every second year
the scheme has no plan assets and is an unfunded scheme
the group expects gbp29 842 in subsidies to be contributed to these defined benefits schemes in 2014
principal actuarial assumptions used in the last actuarial valuation performed as at 31 december
2013 
valuation 

2012 
valuation 

longterm rate of investment return 78 78
inflation rate 63 63
future medical cost increases 68 68
future increases in employer contributions in respect of retirement fund 63 63
assumptions regarding future mortality are based on published statistics and mortality tables the current 
longevities underlying the values of the obligations in the defined benefit plans are as follows
notes to the consolidated annual financial statements continued
for the year ended 31 december 2013 77
shaft sinkers holdings plc annual report and accounts 2013
wwwshaftsinkersgroupcom
assumptions specifically relating to post retirement medical aid obligation
2013
valuation

2012
valuation

number of members 59 59
average age of members 779 769
assumptions specifically in respect of retirement fund subsidies 
number of pensioners 6 6
average age of disability pensioners 532 522
average monthly subsidy gbp 108 119
assumed health care cost trend rates have a significant effect on the amounts recognised in profit or loss a 
one percentage change in assumed health care cost trend rates has the following effects on profit or loss
one  
increase 
2013 
gbp
one  
increase 
2012 
gbp
effect on interest cost – 295
effect on post retirement benefit obligation 2014 2920
23 trade and other payables
2013 
gbp
2012 
gbp
trade and other payables 29489259 29302473
end of contract bonus accruals 1293258 1909249
leave bonus accrual 209563 380964
leave pay accrual 2701990 5146432
33694070 36739118
24 deferred revenue
2013 
gbp
2012 
gbp
deferred revenue
– noncurrent 4446604 6614608
– current 3577257 9084935
8023861 15699543
deferred revenue comprises advances received from clients for which the related work has not yet been 
performed deferred revenue is released to the statement of comprehensive income on a stage of 
completion method as the services to which the deferred revenue relates are performed
22 post retirement benefit obligations continued financial statements
78
shaft sinkers holdings plc annual report and accounts 2013
25 commitments
251 operating lease commitments
2013 
gbp
2012 
gbp
future operating lease charges relating to property
– payable within 1 year 1493032 1182752
– payable between 1 and 5 years 4095060 3223252
5588092 4406004
future operating lease charges relating to office equipment
– payable within 1 year 75981 89702
– payable between 1 and 5 years 46241 53879
122222 143581
total future operating lease charges
– payable within 1 year 1569013 1272454
– payable between 1 and 5 years 4141301 3277131
5710314 4549585
future lease charges except for operating leases relating to properties are subject to changes in the prime 
lending rate of south africa the lease agreements continue indefinitely unless terminated in terms of the 
agreements which require a three month notice period
252 capital commitments
2013 
gbp
2012 
gbp
capital expenditure authorised
– contracted for –
– not yet contracted for 5603092 43773881
commitment toward sight power incorporated for the development of intelectual 
property contracted for at yearend – 947192
the commitments of the group will primarily be funded through funds received from clients as well as 
through the use of available cash and banking facilities of the group
notes to the consolidated annual financial statements continued
for the year ended 31 december 2013 79
shaft sinkers holdings plc annual report and accounts 2013
wwwshaftsinkersgroupcom
26 financial risk instruments and risk management
the board’s overall policy is to maintain a strong capital base so as to maintain investor creditor and market 
confidence having sufficient and extensive capital in the form of plant and equipment is the key to success 
of the group having the necessary equipment available gives the group a competitive edge in the 
tendering process and avoids delays in the startup of new contracts certain key plant items are scarce in 
the market and have a long lead time from ordering to receiving
the group has exposure to the following risks
 – market risk
 – credit risk
 – liquidity risk
this note presents information about the group’s exposure to each of the above risks the group’s 
objectives policies and process for measuring and managing risk and the group’s management of capital 
further quantitative disclosures are included throughout these consolidated financial statements
exposure to currency and credit risk arises in the normal course of the group’s business forward exchange 
contracts are used as a means of reducing exposure to fluctuations in foreign exchange rates the group 
generally does not speculate in derivative instruments there were no forward exchange rate contracts at 
the reporting date
the board of directors has overall responsibility for the establishment and oversight of the group’s risk 
management the audit committee has been mandated with the responsibility of developing and monitoring 
the group’s risk management policies the committee is assisted in its role by internal audit internal audit 
undertakes both regular and ad hoc reviews of risk managements controls and procedures the results of 
which are reported to the audit committee the group audit committee reports to the board of directors on 
a regular basis
the group’s risk management policies are established to identify and analyse the risks faced by the group 
to set appropriate risk limits and controls and monitor risks and adherence to limits risk management 
policies and systems are reviewed regularly to reflect changes in market conditions and the group’s 
activities the group through its training management and safety standards and procedures aims to 
develop a disciplined and constructive control environment in which all employees understand their roles 
and obligations as well as the importance of maintaining safety standards
261 market risk
market risk is the risk that changes in the market prices such as foreign exchange rates interest rates and 
equity prices that will affect the group’s income or the value of its holdings of financial instruments the 
objective of market risk management is to manage and control market risk exposures within acceptable 
parameters while optimising the return
foreign currency risk
the group is exposed to currency risk on contract revenue purchases and borrowings that are denominated 
in a currency other than the respective functional currencies of the group primarily the south african rand 
us dollar usd russian rouble rur the united arab emirate dirham dirham the congolese franc 
cdf the euro the indian rupee and the kazakstan tenge
the group ensures that its net exposure is kept to an acceptable level by buying and selling foreign 
currencies at spot rates where necessary to address short term imbalances the group invoices in foreign 
currencies where possible where its cost base is also in foreign currencies in order to achieve a natural 
hedge position in volatile markets the group will consider using forward exchange contracts to mitigate 
foreign currency risks board approval will however be obtained before the group enters into any forward 
foreign exchange contracts despite the reporting currency being the british pound the group 
prefers to hold most of its surplus cash resources in the us dollar functional currency financial statements
80
shaft sinkers holdings plc annual report and accounts 2013
the group’s exposure to foreign currency risk was as follows
zar
2013
zar
2012
finance lease receivables 13497231 16402638
trade and other receivables 259626166 498303784
loan to related party – current 193298 1115385
cash and cash equivalents 729297 39250741
deferred revenue 44715536 98008354
interest bearing borrowings 50000000 153533430
trade and other payables 264820641 461989641
bank overdraft 50887316 –
gross statement of financial position exposure 136377501 158458877
usd
2013
usd
2012
trade and other receivables 23642507 32893930
account receivable 15127506 –
cash and cash equivalents 6325381 7692691
loans from related parties – 250640
interest free advances 20367446 24988757
deferred revenue 9809325 12217464
trade and other payables 627675 399929
subcontracting liabilities – 1419438
gross statement of financial position exposure 14290948 1310393
rur
2013
rur
2012
trade and other receivables 161389804 183998664
cash and cash equivalents 220077 948647
trade and other payables 10086486 51188979
gross statement of financial position exposure 151523395 133758332
dirham
2013
dirham
2012
trade and other receivables 323624 10338
cash and cash equivalents – 68147
trade and other payables 15060 218665
gross statement of financial position exposure 308564 140180
cdf
2013
cdf
2012
trade and other payables 1911610364 –
gross statement of financial position exposure 1911610364 –
euro
2013
euro
2012
trade and other receivables 3199 –
cash and cash equivalents 146190 423450
trade and other payables 236426 272806
gross statement of financial position exposure 87037 150644
notes to the consolidated annual financial statements continued
for the year ended 31 december 2013
26 financial risk instruments and risk management continued 81
shaft sinkers holdings plc annual report and accounts 2013
wwwshaftsinkersgroupcom
rupee
2013
rupee
2012
trade and other receivables 163981839 14997503
cash and cash equivalents 19695909 57345637
trade and other payables 478337088 73150319
gross statement of financial position exposure 294659340 807179
tenge
2013
tenge
2012
trade and other receivables 3007122900 5913133
cash and cash equivalents 174538900 947587
trade and other payables 40781822 10653
gross statement of financial position exposure 8965204 6850067
the following significant exchange rates applied during the year
2013 2012
average rate per 
pa
reporting date 
spot rate
average rate per 
pa
reporting date 
spot rate
denomination in foreign currency
zar 1 0067 0058 0077 0073
usd 1 0640 0606 0631 0619
rur 1 0020 0019 0020 0020
dirham 1 0174 0165 0172 0168
cdf 1 0001 0001 0001 0001
euro 1 0849 0835 0811 0817
inr 1 0011 0010 0012 0011
kzt 1 0004 0004 0004 0004
sensitivity analysis
a 15 percent strengthening of the british pound against the south african rand us dollar the russian 
rouble the dirham the congolese franc the euro the indian rupee and the kazakstan tenge would have 
resulted in changes in equity and profit by the following amounts the analysis assumes all variables in 
particular interest rates remain constant the analysis is performed in the same manner for 2012
2013 
gdp
2012 
gdp
– south african rand 1180961 1732748
– us dollar 1299905 1537265
– russian rouble 420477 407294
– dirham 7642 3541
– franc 172045 –
– euro 10899 18470
– indian rupee 433149 1368
– kazakstan tenge 5245 4213
74275 229585
a 15 percent weakening in the british pound would have had an opposite effect
26 financial risk instruments and risk management continued financial statements
82
shaft sinkers holdings plc annual report and accounts 2013
26 financial risk instruments and risk management continued
interest rate risk
the group is exposed to interest rate risk as it borrows and invests excess funds at both fixed and floating 
interest rates the risk is managed by maintaining an appropriate mixture between fixed and floating rate 
borrowings and placings within the market exposure expectations the group also uses interest rate swaps 
where deemed necessary to hedge its exposure to floating interest rates
interest rates used to discount estimated cash flows where applicable are based on the bank prime lending 
rate at reporting date and were as follows
variable interest rates
 – loans and borrowings are linked to the johannesburg interbank agreed rate jibar and ranges 
between jibar plus 22 to jibar plus 68
 – loans to and from related parties bears interest at the prime lending rate of south africa less 200 per 
annum
at the reporting date the interest rate profile of the group‘s interest bearing financial instruments were
variable rate instruments
2013 
gbp
2012 
gbp
financial assets 5026133 10358482
financial liabilities 5989387 11373532
963254 1015050
cash flow sensitivity analysis
a change of 100 basis points in interest rates at the reporting date would have decreased profit or loss by 
the amounts shown below this analysis assumes that all other variables remain constant the analysis is 
performed on the same basis for 2012
2013 
gbp
2012 
gbp
interest bearing bank loan 28915 112184
finance lease receivables 7805 11985
loans receivable 112 260
related party loans 1551 1552
cash and cash equivalents 42344 91339
bank overdraft 29428 –
9633 10152
262 exposure to credit risk
credit risk is the risk of financial loss to the group if a customer or counterparty to a financial instrument 
fails to meet its contractual obligations and arises principally from the group’s receivables from customers
trade and other receivables
the group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer as 
well as the demographics of the group’s customer base including the default risk of the industry and 
country in which the customers operate
management has established a policy of spreading the customer base outside of africa and into eastern and 
western europe and india this is to optimise geographical concentration of credit risk
the board of directors has established parameters which if these are to be exceeded prior approval from 
the board is required before submission of a tender to the potential new customer these parameters are 
based on items such as the value of the contract the type of contract and location of the contract
the group establishes an allowance for impairment that represents its estimate of incurred losses in respect 
of trade and other receivables the main component of this allowance is a specific loss component that 
relates to individually significant exposure and a collective loss component established of similar assets in 
respect of losses that have been incurred but not yet identified the collective loss allowance is determined 
based on historical data of payment statistics for similar financial assets
notes to the consolidated annual financial statements continued
for the year ended 31 december 2013 83
shaft sinkers holdings plc annual report and accounts 2013
wwwshaftsinkersgroupcom
account receivable
an amount of gbp9 174 903 2012 gbp8 084 661 is subject to arbitration as a result of a dispute with a 
former client during the year it was determined that the account receivable would not be collected during 
the following twelve months and as a result this was included in noncurrent assets at 31 december 2013 
the directors are of the view that this remains the case at 31 december 2013
all necessary actions have been taken by the directors to recover the amount the recoverability of the 
amount has been considered based on external and internal legal advice and the balance recorded at the 
reporting date is deemed recoverable based on the facts of the matter
impairment losses
the aging and impairment losses thereon at reporting date was
2013 2012
gross trade
receivables
gbp
gross 
 impairment
gbp
gross trade
receivables
gbp
gross 
 impairment
gbp
group
current 22474223 19022 25244629 65656
30 to 60 days 993996 – 10341601 –
60 to 90 days 1456135 – 1374905 –
past 90 days 2682511 51963 25281859 2523461
27606865 70985 62242994 2589117
reconciliation of impairment
2013
gbp
2012
gbp
opening balance 2589117 2108259
impairments raised during the year 21813 1292680
impairments reclassified to account receivable 2584269 –
impairments reversed during the year – 660957
foreign exchange differences 44324 150865
closing balance 70985 2589117
amounts are identified on a linebyline basis where management is of the opinion that there is sufficient 
doubt over the recoverability of such amounts the amount reclassified to the account receivable is 
denominated in us dollars the net receivable was transferred out of trade and other receivables to a 
separate line item on the statement of financial position to fall in line with the expected settlement date
management have raised impairments based on key assumptions and estimates in terms of the contract 
should management’s estimates of the future not reflect actual events further impairments may be 
identified
the group believes that no further impairments are necessary other than those raised above in respect of 
trade receivables the balance of trade receivables relate to customers that have had a good track record 
with the group in the past
the maximum exposure to credit risk for trade receivables at the reporting date by geographic region was
 2013 2012
gross trade
receivables
gbp
gross impairment
gbp
gross trade
receivables
gbp
gross impairment
gbp
group
south african operations 14012474 70985 37972760 65656
international operations 13594391 – 24270234 2523461
27606865 70985 62242994 2589117
26 financial risk instruments and risk management continued financial statements
84
shaft sinkers holdings plc annual report and accounts 2013
the maximum credit risk exposure by customer type at reporting date was within the mining industry which 
comprises the full outstanding balance at reporting date
loans and other recievables
the group has provided funding to related parties and employees in the form of loans and finance lease 
receivables respectively these loans and other receivables are considered low risk by management as these 
receivables are mostly secured by the underlying asset in the case of finance lease receivables no 
allowances for impairment is therefore deemed necessary for these loans the maximum exposure of the 
group to credit risk relating to loans and other receiavbles are reflected by the carrying amount of these 
instruments and are summarised below
2013
gbp
2012
gbp
loans receivable – 36534
loan to related party 11178 26040
finance lease receivables 780539 1198506
791717 1261080
cash and cash equivalents
management considers the credit risk relating to its cash and cash equivalents to be low due to the fact that 
all of its cash and cash equivalents are invested at reputable financial institutions with good credit ratings 
which are monitored by the board of directors on an ongoing basis
263 liquidity risk
liquidity risk is the risk that the group will not be able to meets its financial obligations as they fall due the 
group’s approach to managing liquidity is to ensure as far as possible that it will always have sufficient cash 
flow and marketable securities to meet its obligations when they fall due under both normal and stressed 
conditions without incurring unacceptable losses or risk damage to the group’s reputation
the group ensures that it has sufficient cash on hand to meet unexpected operational expenses including 
the servicing of financial obligations this excludes the potential impact of extreme circumstances that cannot 
be reasonably predicted such as natural disasters in addition the group maintains overdraft facilities with its 
bankers to cover periods where high volumes of the operational liabilities are expected to occur the current 
overdraft facility that the group maintains amounts to zar775 million gbp45 million
the board and management conducts regular and intensified planning sessions to ensure the cash resources 
available to the group are managed in the most efficient manner especially in times of tight cash flow 
constraints when liquidity is limited 
the following are the contractual maturities of financial liabilities undiscounted including interest payments 
and excluding the impact of netting agreements
carrying 
 amount
gbp
contractual 
cash flows
gbp
less than 
 1 year
gbp
1 – 5 years
gbp
more than 
 5 years
gbp
group
2013
interest bearing borrowings – standard 
bank of south africa limited 2891477 3235084 3235084 – –
loan from a related party 155120 155120 – 155120 –
interest free advances received from clients 12352891 12352891 3278679 9074212 –
trade and other payables 33694070 33694070 33694070 – –
2012
interest bearing borrowings – standard 
bank of south africa limited 11218366 13752348 9584738 4167610 –
loan from a related party 155166 155166 – 155166 –
interest free advances received from clients 15470041 15470041 4688971 10781070 –
subcontractor liabilities 1093680 1093680 1093680 – –
trade and other payables 36739118 36739118 36739118 – –
notes to the consolidated annual financial statements continued
for the year ended 31 december 2013
26 financial risk instruments and risk management continued 85
shaft sinkers holdings plc annual report and accounts 2013
wwwshaftsinkersgroupcom
264 accounting classifications and fair values
financial assets measured at fair value
financial assets measured at fair value comprises of the unlisted investment of the group which is deemed 
to be a level 1 on the fair value hierarchy
financial assets not measured at fair value
financial assets not measured at fair value comprise of loan receivables account receivables trade and 
other receivables finance lease receivables and cash and cash equivalents
the carrying amount of these instruments is a fair approximation of their fair values
financial liabilities not measured at fair value
financial liabilities not measured at fair value comprise of bank overdraft and the secured interest bearing 
borrowings of the group 
the carrying amount of the bank overdraft is a fair approximation of its fair value
the fair value of the secured interest bearing borrowing at 31 december 2013 amount to gbp3235084 and 
is deemed to be a level 2 on the fair value hierarchy 
265 capital risk management
the group manages its capital to ensure that the entities in the group will be able to continue as a going 
concern while maximising the return to stakeholders through optimisation of the debt and equity balance
the capital structure of the group consists of debt which includes the borrowings as disclosed in note 18 
and equity attributable to owners of the parent comprising reserves and retained earnings as disclosed
the board reviews the capital structure and as part of this review considers the cost of capital and the risks 
associated with each class of capital in addition the board of directors considers the liquity and solvency of 
the group on an ongoing basis
the group’s capital structure remains unchanged since 2012 the group manages its capital in order to 
ensure that no contravention of the loan covenants occurs
there has been no change to how the group manages its capital and the strategy for capital maintenance 
from 2012 
27 related parties
271 identification of related parties
the subsidiaries associates and joint venture companies of the group are listed below
a wholly owned subsidiaries directly held
 – shaft sinkers management company limited 
 – shaft sinkers european operations limited
b wholly owned subsidiaries indirectly held
 – capstone 615 proprietary limited 
 – rossal 126 proprietary limited
 – jascoma investments limited
 – shaft sinkers proprietary limited
 – shaft sinkers international proprietary limited1
 – shaft sinkers rus llc registered in russia
 – shaft sinkers fze registered in dubai
 – capstone international fzco registered in dubai
 – shaft sinkers mauritius limited 
 – shaft sinkers cooperatief ua
 – shaft sinkers international bv
 – shaft sinkers belgium bvba
 – shaft sinkers uk limited 
 – global mining services bv
26 financial risk instruments and risk management continued financial statements
86
shaft sinkers holdings plc annual report and accounts 2013
c partially owned subsidiary indirectly held
 – 70 2012 70 in shaft sinkers zimbabwe private limited
1
 – 74 2012 74 in shaft sinkers mining proprietary limited
 – 80 2012 80 in gartly resources limited
 – 80 2012 nil in gartly resources cyprus limited
 – 25 2012 25 in shaft sinkers kazakstan
2
d joint venture companies indirectly held
 – 50 2012 50 in rsv–shaft sinkers international proprietary limited
 – 486 2012 486 in sdm mining contractors proprietary limited
1  dormant companies
2   the company is controlled by the group through the shareholder agreement despite of the fact that less than 50 of the shares are held by the company
the directors of the company and other members of the executive management are defined as key 
management
the directors of the company are listed in the directors’ report
the directors’ emoluments are disclosed in note 3
272 material party related transactions
transactions with related parties
related party loans – refer note 21
interest paid to and received from related parties – refer note 4
the above transactions were conducted on an arms length basis
273 transactions with key management personnel
the group provides non cash benefits to key management by way of a long term share incentive plan as 
described in note 29
 
2013
gbp
2012
gbp
key management compensation comprises
shortterm employee remuneration and benefits 3144396 6151196
share based payments – note 29 156902 232333
2987494 5918863
28 retirement benefit information
the group has made provision for various retirement funds covering substantially all permanent employees
there are two retirement funds all of which are defined contributions funds governed by the pension funds 
act of 1956
the following contributions to the two funds were made during the year
2013
gbp
2012
gbp
republic of south africa
– sentinel mining industry retirement fund 4477522 5719133
– mine employees pension fund 3272043 5733412
7749565 11452545
29 share based payment arrangements
description of the share based payment arrangements
on 23 december 2010 the then three executive directors of the company were given awards over a number of 
ordinary shares of the company this share based payment arrangement was to be satisfied at the end of the 
vesting periods and effected through the transfer of ordinary shares to the participants this share based 
payment arrangement is therefore considered to be equity settled as defined in ifrs 2 – share based payments
notes to the consolidated annual financial statements continued
for the year ended 31 december 2013
27 related parties continued 87
shaft sinkers holdings plc annual report and accounts 2013
wwwshaftsinkersgroupcom
terms and conditions of the share based payment arrangements
the share based payment arrangement comprise of two performance conditions that is measured in stages 
over the vesting periods the performance conditions described below are independent of each other and 
therefore have been accounted for as separate share based payment arrangements 
the performance conditions that are applied for the share based payment arrangements are as follows
 – growth in earnings per share of the company “eps”
 – growth in the company’s share price
eps share based payment arrangement
in order for the shares attributable to the growth in earning per share of the company to vest the group 
had to achieve a growth in earnings for each of the financial years ending 31 december 2011 to 31 december 
2013 of at least 20 per cent per annum in the event that the growth in earnings is between 10 and 20 per 
cent per annum between 50 to 100 percent of the shares would vest on a straight line basis in the event 
that the growth in earnings is less than 10 percent none of the shares would vest
in the event that the compounded growth per annum over the three year period is 20 percent per annum  
all of the shares would vest to the participants despite not having achieved the targeted growth rate in a 
particular year
share price based payment arrangement
in order for the shares attributable to the growth in share price of the company to vest the share price of 
the company has to achieve growth of at least 26 per cent per annum for each of the financial years ending 
31 december 2011 to 31 december 2013 the base price for the financial year ended 31 december 2011 is the 
placing price at which the company’s shares were listed ie gbp 124 per share in the event that the growth 
in share price is between 13 and 26 percent per annum between 50 to 100 percent of the shares would vest 
on a straight line basis in the event that the share price growth rate is less than 13 per annum none of the 
relevant shares would vest
in the event that the closing share prices over the 30 days following the announcement of the group’s 
audited results for the financial year ending 31 december 2013 is 100 percent or more above the placing 
price despite not having achieved the 26 percent per annum growth in its share price in any year the share 
price performance criteria will be deemed to have been achieved and the participants will be entitled to 100 
percent of the share awards
at 31 december 2013 and at the date of this report neither the share price nor the eps targets were achieved 
therefore at 31 december 2013 the quantum attributable to the award of the shares has been reversed
inputs for measurement of grant date fair values
the grant date fair value of the share based payment arrangements was measured based on the monte 
carlo simulation option pricing model volatility was based on the historical share price data of the 
constituents of the oil services and equipment sector on the london stock exchange the inputs used in the 
measurement of the fair values at grant date of the share based payment arrangements were as follows
description
value per 
 share right
gbp
assumed 
 vesting
date
share price 
 at grant date
gbp
number  
of days
number of  
shares
weighted 
 average
volatility
share price growth
1st tranche 063 10 april 2012 124 474 375000 5251
2nd tranche 052 10 april 2013 124 839 375000 5251
3rd tranche 072 10 april 2014 124 1204 375000 5251
eps shares
1st tranche 122 10 april 2012 474 375000 5251
2nd tranche 111 10 april 2013 839 375000 5251
3rd tranche 099 10 april 2014 1204 375000 5251
employee benefits
2013
gbp
2012
gbp
reversal arising on share based payment arrangements granted on 23 december 2010 156902 232333
29 share based payment arrangements continued financial statements
88
shaft sinkers holdings plc annual report and accounts 2013
none of the share rights have vested at 31 december 2013 the fair value of these at grant date is dependent 
on market conditions and nonvesting conditions
2013
number  
of shares
2012 
number  
of shares
reconciliation of outstanding share awards in terms of the long term incentive plan
share awards held at 1 january 1500000 1500000
share awards settled  forfeited during the year 1500000 –
share awards held at 31 december – 1500000
none of the vesting conditions pertaining to the long term incentive plan have been met at the end of 
december 2013 and as a result the share awards were forfeited during the year
30 contingent liabilities
2013 
gbp
2012 
gbp
301  contractual performance andor retention guarantees and payment bonds 
held by contracted clients and service providers at balance sheet date 22117674 22308573
302  during the 2012 financial year a former client eurochem volgakaliy llc commenced arbitration 
proceedings against shaft sinkers proprietary limited with whom the contract was signed and rossal 
no 126 proprietary limited the immediate holding company both of which are wholly owned 
subsidiaries of the group the arbitration proceedings are with the swiss chambers’ arbitration 
institution and the international chamber of commerce on substantially the same facts eurochem was 
claiming approximately usd800 million gbp485 million based on current exchange rates in alleged 
damages and loss of profits during the current period eurochem initially increased the quantum of its 
claim to usd1060 million gbp643 million based on current exchange rates and has in its latest 
submission to the swiss chamber’s arbitration institution decreased the quantum of its claim to 
usd917 million approximately gbp556 million based on current exchange rates based on legal advice 
and review of the claims the subsidiaries concerned continue to robustly defend these claims shaft 
sinkers proprietary limited has further lodged its counter claims amounting to approximately usd16 
million approximately gbp97 million based on current exchange rates for amounts owing to it by the 
former client the counterclaims have been lodged with the swiss chambers’ arbitration institution and 
the international chamber of commerce these amounts have been included in noncurrent account 
receivable the group has continued to incur legal and professional fees in respect of this matter which 
have been fully expensed as incurred up to the current period end
as set out in note 123 it is not always possible to have absolute certainty as to the final outcome of 
any arbitration process before the arbitrators have made a final ruling accordingly the ultimate 
outcome of the matter cannot presently be determined and no provision for any receipt or expense 
aside from legal costs that may result has been made in the financial statements
the board anticipates that the outcome of the proceedings will only be of practical effect in early 2015 
and some legal costs will be incurred during this period in defending these matters
during the period under review the group recovered an amount of rouble 548 million gbp11 million 
from eurochem through the disposal of plant and equipment that formed part of the initial claim
notes to the consolidated annual financial statements continued
for the year ended 31 december 2013
29 share based payment arrangements continued 89
shaft sinkers holdings plc annual report and accounts 2013
wwwshaftsinkersgroupcom
311 cash generated by operating activities before working capital changes
note
2013
gbp
2012
gbp
profit from operations per statements of comprehensive income 3907408 5251911
adjustments for noncash items included in
depreciation of property plant and equipment 4614576 5686969
profit  loss on disposal of property plant and equipment 1362091 645763
impairment losses reversed  recognised on plant and equipment 62540 346560
derecognition of items replaced on plant and equipment 257884 459501
impairment allowance on trade and other receivables raisedreversed 21813 631723
bad debts written off 2701 10135
loss on recognition of account receivable – 889646
raisingreversal of write down of inventory to net realisable value 36246 4908
deferred revenue released during the year 19957344 11518703
profit on disposal of interest in shaft sinkers mining proprietary limited – 105062
unrealised foreign exchange difference 1293009 84788
share based payment expense arising on share based payment arrangements 29 156902 232333
increase in retirement benefit obligation – 35200
reversal of provision for demobilisation costs – 374339
reversal of provision for interest and indirect taxes – 903633
13991258 548068
312 income taxation paidrefunded
2013
gbp
2012
gbp
amount payable  receivable at the beginning of the year 375839 558182
prior year over provision 621630 1037049
amount charged to the statement of comprehensive income 2135538 1823288
dividend withholding taxes paid 11719 2511
amount payable at the end of the year 1348073 375839
foreign currency translation reserve 422540 533227
975933 678498
32 segmental reporting
information about reportable segments
the group has two reportable segments as described below which are the group’s strategic divisions the 
strategic divisions of the group are geographically different and are managed separately due to the unique 
challenges and risks that are present when operating in different jurisdictions although the mets division is 
a strategically important part of the business it is not regarded as a separate operating segment as defined 
in ifrs 8 due to the fact that the contribution that the mets division contributes to the group is less than 
10 of the total contribution of the group’s contracting activities
the following describes the group’s operating segments
 – south africa – contract services provided to clients within the republic of south africa
 – international – contract services provided to clients outside of the borders of the republic of south africa
the group’s international revenues are mostly derived from contract services provided in india and the 
democratic republic of the congo with the revenues generated from india making up the majority of 
foreign revenues
information regarding the results of each reportable segment is included below performance is measured 
based on segment profit before income tax as described below performance is measured based on 
segment profit before income tax as included in the internal management reports that are reviewed by the 
group’s executive management the information is prepared under ifrs and is consistent with the group’s 
accounting policies segment profit is used to measure performance as management believes that such 
information is the most relevant in evaluating the results of certain segments taking into consideration the 
unique risk characteristics of each of these segments
31 notes to the cash flow statement financial statements
90
shaft sinkers holdings plc annual report and accounts 2013
other corporate activities comprise activities that do not by definition form part of the operating segments 
as well as the head office activities which could not be assigned to an individual segment inter segment 
transactions are concluded on an arm’s length basis
south africa international other corporate activities total
2013
gbp
2012
gbp
2013
gbp
2012
gbp
2013
gbp
2012
gbp
2013
gbp
2012
gbp
external revenues 110006469 176464872 42147368 16074076 – – 152153837 192538948 
gross profit 12471323 18630596 7519993 3961560 – – 19991316 22592156 
depreciation and 
amortisation 3516042 5096206 1018020 511154 80514 64393 4614576 5671753 
finance income 266777 316878 – 109 50357 52193 317134 369180 
finance expense 1001129 2104089 339595 80617 – – 1340724 2184706 
reportable segment profit 
before income tax 1176944 4526488 2867637 2312740 1160763 3387627 2883818 3451601 
reportable segment assets 54325532 86011384 41902016 32966831 4980300 14532624 101207848 133510839 
capital expenditure 6950703 7732634 6398412 4403626 686463 538970 14035578 12675230 
reportable segment 
liabilities 29169071 43387485 29280318 30550507 5956417 15845556 64405806 89783548 
the international segment is made up as follows
india drc other total international
2013
gbp
2012
gbp
2013
gbp
2012
gbp
2013
gbp
2012
gbp
2013
gbp
2012
gbp
external revenues 23341690 8942837 18626994 2424215 178684 4707024 42147368 16074076 
gross profit 4620465 1121857 2892114 342319 7414 2497384 7519993 3961560 
depreciation and 
amortisation 651633 17828 363341 – 3046 493326 1018020 511154 
finance income – 109 – – – – – 109 
finance expense 327477 80617 – – 12118 – 339595 80617 
reportable segment profit 
before income tax 3137262 584769 827819 342319 1097444 1385652 2867637 2312740 
reportable segment assets 26779852 20469186 12662025 2894029 2460139 9603616 41902016 32966831 
capital expenditure 4880347 4026471 1518065 377155 – – 6398412 4403626 
reportable segment 
liabilities 20031986 24320861 8430237 4578622 818095 1651024 29280318 30550507 
33 investment in subsidiaries
company
2013
gbp
2012
gbp
investment in shaft sinkers management company limited 28295890 28295890
investment in shaft sinkers cooperatief ua 15339 15339
investment in shaft sinkers european operations 796 –
28312025 28311229
the company owns the entire issued share capital of shaft sinkers management company limited as well as 
shaft sinkers european operations and 99 of the issued share capital of shaft sinkers cooperatief ua
34 loan to subsidiary
company
2013
gbp
2012
gbp
loan to shaft sinkers management company limited 20670129 20670129
the loan is unsecured bears no interest and has no formal terms of repayment
notes to the consolidated annual financial statements continued
for the year ended 31 december 2013
32 segmental reporting continued 91
shaft sinkers holdings plc annual report and accounts 2013
wwwshaftsinkersgroupcom
35 other receivables
company
2013
gbp
2012
gbp
refundable deposits 16448 9406
prepaid expenditure 13007 13404
vat recoverable 38235 19440
67690 42250
36 related party loans
361 related party loans receivable
company
2013
gbp
2012
gbp
shaft sinkers proprietary limited 4770176 3206600
shaft sinkers cooperatief ua 1399 652
shaft sinkers international bv 150964 148303
shaft sinkers belgium bvba – 61420
shaft sinkers free zone enterprise – 9135
capstone international free zone corporation – 30073
4922539 3456183
the related party loans receivable are unsecured bears no interest and are repayable on demand
362 related party loan payable
company
2013
gbp
2012
gbp
shaft sinkers free zone enterprise 304971 –
capstone international free zone corporation 48817 –
shaft sinkers management company limited 2113282 326109
2467070 326109
the related party loans payable are unsecured bear no interest and are repayable on demand
37 cash and cash equivalents
company
2013
gbp
2012
gbp
current funds at bank – unrestricted 1412537 1617229
current funds at bank – restricted 1819505 1857206
3232042 3474435
38 other payables
company
2013
gbp
2012
gbp
accruals 200803 48420 financial statements
92
shaft sinkers holdings plc annual report and accounts 2013
investor services iom limited at the address 
mentioned above
shareholders may also contact the company 
secretary at
prism cosec limited
10 margaret street
london
united kingdom
w1w 8rl
telephone 44 0 20 3008 6446
for other enquiries please contact the company  
at the registered office or call mr christopher hall  
on 44 0 1624 640689
 
analysis of ordinary shareholders
as at 22 april 2014
number of 
holders 
number of 
shares
1–1000 shares 21 0 14079
1001–5000 68 0 193098
5001–50000 106 4 1803017
50001–100000 24 4 1931365
100001–500000 23 10 4762757
500001 and over 14 82 38795684
256 47500000 
general information
shaft sinkers holdings plc’s shares are quoted on the 
london stock exchange copies of the group’s annual 
report and accounts interim results and interim 
management statements and major presentations to 
analysts and institutional shareholders are available 
from the company secretary
dividends
as noted in the directors’ report on page 26 no 
final dividend has been recommended by the board 
at the date of this report
registrars and transfer office
the company’s ordinary share register is maintained 
by computershare investor services iom limited 
international house
castle hill
victoria road
isle of man
im2 4rb
any queries about the administration of holdings of 
ordinary shares such as change of address change 
of ownership or dividend payments should be 
directed to the company’s registrars
enquiries
shareholders who wish to contact the company on 
any matter relating to their shareholding are invited 
to contact the company’s registrars computershare 
shareholder information 93
shaft sinkers holdings plc annual report and accounts 2013
wwwshaftsinkersgroupcom
legal advisors
jones day
21 tudor street
london 
ec4y 0dj
appleby 
1st floor
3 copthall avenue
ec2r 7bh
london
united kingdom
quinn emanuel urquhart  sullivan uk llp
one fleet place
london
ec4m 7ra
bryan cave
88 wood street
london 
ec2v 7aj
auditors
kpmg audit llc
heritage court
41 athol street
douglas
isle of man
im99 1hn
registered office
shaft sinkers holdings plc
18 athol street
douglas
isle of man
im1 1ja
website wwwshaftsinkersgroupcom
telephone 44 01624 640 689
registered in the isle of man
company no 006057v
company secretary
prism cosec limited
10 margaret street
london 
w1w 8rl
united kingdom
telephone 44 0 1624 640 689
stockbroker
westhouse securities limited
heron tower
110 bishopsgate
london
ec2n 4ay
corporate information  financial statements
94
shaft sinkers holdings plc annual report and accounts 2013
the following are provisional dates
annual general meeting and interim management statement wednesday 11 june 2014
interim results august 2014
interim management statement november 2014
financial calendar for 2014 95
shaft sinkers holdings plc annual report and accounts 2013
wwwshaftsinkersgroupcom
notice of annual general meeting
notice is hereby given that the annual general meeting of the company will be held at the forum 1718 
mount havelock douglas isle of man im1 2qg 1100 am on 11 june 2014 to consider and if thought fit pass 
the following resolutions resolutions 1 to 10 inclusive as ordinary resolutions and resolutions 11 and 12 as 
special resolutions
ordinary business
1 to receive and adopt the audited annual accounts for the financial year ended 31 december 2013 
together with the reports of the directors and the auditors on those accounts
2 to approve the directors’ remuneration report set out on pages 39 to 43 of the annual report  
accounts for the financial year ended 31 december 2013 
3 to reelect alon davidov as a director of the company 
4 to reelect christopher hall as a director of the company 
5 to reelect stephen oke as a director of the company 
6 to reelect ian watson as a director of the company 
7 to reelect roger williams as a director of the company 
8 to reappoint kpmg audit llc as auditors of the company to hold office until the conclusion of the next 
annual general meeting
9 to authorise the directors to determine kpmg audit llc’s remuneration as auditors of the company
10 to approve the recommendation of no final dividend in respect of the 2013 financial year
special business
11 that for the purposes of article 64 of the company’s articles of association the relevant “allotment 
period” shall be the period from the conclusion of this annual general meeting until 30 june 2015 or if 
sooner the end of the company’s annual general meeting in 2015 and the relevant “nonpreemption 
amount” shall be such number of equity securities as shall be equal to 5 per cent of the number of 
ordinary shares in issue as at 29 april 2014
12 that the third sentence of article 117 of the company’s articles of association be amended by the 
deletion of the words “where the largest group of those participating is assembled or if there is no group 
which is larger than any other group””
by order of the board
prism cosec limited
secretary
29 april 2014
shaft sinkers holdings plc
18 athol street
douglas
isle of man
im1 1ja
 
notes
proxies
1 a shareholder is entitled to appoint another person as his proxy to exercise all or any of his rights to 
attend and to speak and vote at the annual general meeting a shareholder may appoint more than one 
proxy in relation to the annual general meeting provided that each proxy is appointed to exercise the 
rights attached to a different share or shares held by that shareholder a proxy need not also be a 
shareholder of the company
2 a form of proxy is enclosed and to be valid it must be received at the offices of the company’s registrars 
computershare investor services jersey limited co queensway house hilgrove street st helier 
jersey je1 1es or at the email address infocomputersharecoje or by fax to 44 0 870 873 5851 by 
1100 am on friday 6 june 2014 completion and return of a form of proxy will not prevent a shareholder 
from attending and voting at the annual general meeting in person if heshe so wishes
notice of annual general meeting financial statements
96
shaft sinkers holdings plc annual report and accounts 2013
3 a space has been included in the form of proxy to allow shareholders to specify the number of shares in 
respect of which that proxy is appointed shareholders who return the form of proxy duly executed but 
leave this space blank will be deemed to have appointed the proxy in respect of all of their shares 
shareholders who wish to appoint more than one proxy in respect of their shareholding should contact 
the company’s registrars computershare investor services iom limited on their helpline number 44 
0 1534 825230 for additional forms of proxy or you may photocopy the form of proxy provided with 
this document indicating on each copy the name of the proxy you wish to appoint and the number of 
ordinary shares in the company in respect of which the proxy is appointed all forms of proxy should be 
returned together in the same envelope
4 in the case of joint holders any one holder may vote if more than one holder is present at the meeting 
only the vote of the senior will be accepted seniority being determined in the order in which the names 
appear on the register of shareholders of the company
corporate representatives
5 corporate shareholders may appoint corporate representatives to attend speak and vote on their behalf 
at the annual general meeting where a person is authorised to represent a corporate shareholder at the 
meeting any director or the secretary may require him to produce a certified copy of the resolution from 
which he derives his authority
right to attend and vote at the annual general meeting
6 to be entitled to attend and vote at the annual general meeting and for the purpose of the 
determination by the company of the votes they may cast shareholders must be registered in the 
register of members of the company at 11am on friday 6 june 2014 or in the event of any adjournment 
11am on the date which is two days before the time of the adjourned meeting changes to entries on the 
register of shareholders after the relevant deadline shall be disregarded in determining the rights of any 
person to attend and vote at the annual general meeting
documents on display
7 copies of each director’s service contract or letter of appointment will be available for inspection at the 
registered office of the company during normal business hours on any weekday public holidays 
excepted from the date of this notice until the conclusion of the annual general meeting and at the 
offices of shaft sinkers the forum 1718 mount havelock douglas isle of man im1 2qg for 15 minutes 
prior to and during the annual general meeting
total number of shares and voting rights
8 as at 11am on 28 april 2014 being the latest practicable date prior to publication of this notice the 
company’s issued share capital comprised 47500000 ordinary shares carrying one vote each 
therefore the total number of voting rights in the company as at 28 april 2014 is 47500000
questions at the annual general meeting
9 any shareholder attending the meeting has the right to ask questions the company must cause to be 
answered any such question relating to the business being dealt with at the meeting but no such answer 
need be given if a to do so would interfere unduly with the preparation for the meeting or involve the 
disclosure of confidential information b the answer has already been given on a website in the form of 
an answer to a question or c it is undesirable in the interests of the company or the good order of the 
meeting that the question be answered
conduct at meeting
10 we ask all those present at the annual general meeting to facilitate the orderly conduct of the meeting 
and reserve the right if orderly conduct is threatened by a person’s behaviour to require that person to 
leave for security reasons all hand luggage may be subject to examination prior to the entry to the 
annual general meeting cameras tape recorders laptop computers and similar equipment may not be 
taken into the annual general meeting
notice of annual general meeting continued 97
shaft sinkers holdings plc annual report and accounts 2013
wwwshaftsinkersgroupcom
explanatory notes to the notice of annual general meeting
the notes on the following pages give an explanation of the resolutions
resolutions 1 to 10 are proposed as ordinary resolutions resolutions 11 and 12 are proposed as special 
resolutions 
resolution 1 annual report and accounts 2013
the purpose of this resolution is to receive and adopt the directors’ and auditor’s reports and the 
accounts for the year ended 31 december 2013
resolution 2 remuneration report
the purpose of this resolution is to approve the directors’ remuneration report set out on pages 39 to 43 
of the annual report  accounts
resolution 3 to 7 directors
in accordance with the company’s articles of association all directors have to submit themselves for 
reelection at least every three years if they wish to continue serving and are eligible biographical details of 
the directors presenting themselves for election can be found on pages 24 and 25 of the annual report the 
nominations committee of the company has evaluated the directors’ performance and deemed their 
performance to be effective the committee is therefore recommending the reelection of all directors
resolutions 8 and 9 auditors
the purpose of these resolutions is to reappoint kpmg audit llc as the company’s auditors and authorise 
the board to fix their remuneration
resolution 10 dividend
the purpose of this resolution is to approve the recommendation of the board not to declare a final dividend 
for 2013
resolution 11 authority to allot
the purpose of this resolution is to propose that the period under which directors have authority to allot shares 
for cash consideration to existing shareholders or other person be i extended to 30 june 2015 or if sooner 
the end of the company’s annual general meeting in 2015 and ii limited to 2375000 ordinary shares which 
represents approximately 5 per cent of the number of ordinary shares in issue as at today’s date
resolution 12 amendment to articles – board meetings
the purpose of this resolution is to simplify the board meeting process and reduce costs by clarifying that 
board meetings shall be deemed to take place where the chairman of the meeting is located this page has been intentionally left blank 99
shaft sinkers holdings plc annual report and accounts 2013
wwwshaftsinkersgroupcom
form of proxy – shaft sinkers holdings plc agm 2014
to be valid the form of proxy must be received by post or during normal business hours only by hand by the 
registrar co computershare investor services jersey limited po box 329 queensway house hilgrove street 
st helier jersey je1 1es or at the email address infocomputersharecoje or by fax to 44 0 870 873 5851 no 
later than 1100 am on 6 june 2014 or 48 hours preceding the date and time for any adjourned meeting
iwe 
of 
being the holders of  ordinary shares 
hereby appoint 
of 
or failing him 
of 
or failing him the chairman of the meeting as myour proxy to vote for meus on myour behalf at the 
annual general meeting of shareholders of the company to be held at the forum 1718 mount havelock 
douglas isle of man im1 2qg at 1100 am on 11 june 2014 and at every adjournment of that meeting 
please indicate with and ‘x’ or tick in the appropriate space below how you wish your votes to be cast
agenda item vote for vote against vote withheld
1 to receive and adopt the group’s audited annual accounts 
for the financial year ended 31 december 2013
2 to approve the directors’ remuneration report for the 
financial year ended 31 december 2013
3 to reelect alon davidov as a director of the company
4 to reelect christopher hall as a director of the company
5 to reelect stephen oke as a director of the company
6 to reelect ian watson as a director of the company
7 to reelect roger williams as a director of the company
8 to reappoint kpmg audit llc as auditors of the company 
to hold office until the conclusion of the next annual 
general meeting
9 to authorise the directors to determine kpmg audit llc’s 
remuneration as auditors of the company
10 to approve the board’s recommendation of nonpayment of 
a final dividend
special business
11 authority to allot ordinary shares equal to 5 per cent of the 
number of ordinary shares in issue as at 28 april 2014
12 to amend the third sentence of article 117 of the company’s 
articles of association by the deletion of the words “where 
the largest group of those participating is assembled or if 
there is no group which is larger than any other group”
 
signed at on  2014
signatures 
assisted by me where applicable 
full names of signatory if signing in a representative capacity please use block capital letters  
proxy form for annual general meeting   annual report and accounts 2013
shaft sinkers holdings plc
isle of man 
18 athol street
douglas
isle of man
im1 1ja
telephone 44 0 1624 640 688


Summary:
 strategic report
10
shaft sinkers holdings plc annual report and accounts 2013
ceo’s review
following a review of the group’s 
activities last year we took a 
number of steps to restructure 
the business in the first half of 
2013 cutting costs and reducing 
operating overheads by 17 and 
ensuring the optimal mix of skills 
across our business 
gross margins improved to 13 in 
the year as a result of changes to 
the way in which certain 
engineering costs were allocated 
within our south african business 
although the margin 
improvement was offset by a rise 
in operating expenses the 
reallocation process has enabled 
us to identify a number of 
opportunities to reduce costs 
which we will pursue in 2014 
however the challenging 
conditions in the mining sector 
continued to affect our financial 
performance revenues declined 
by 21 in 2013 with gross profits 
for the year falling by 
approximately 115 as a result of 
reduced work load in south africa 
as well as the deterioration in the 
value of the rand against sterling 
which impacted profits by 
gbp02 million the gbp39 
million of legal costs associated 
with the eurochem arbitration 
processes were well above 
expectations and therefore also a 
significant drag on profitability 
operational performance across 
our projects during 2013 was 
mixed whilst our work on the 
kibali project for randgold 
resources and our projects for 
lonmin proceeded well during 
2013 we experienced operational 
problems at impala leuwkop 
styldrift and hindustan zinc 
 
despite a difficult environment 
the group won in excess of 
gbp47 million of repeat business 
from existing clients such as 
lonmin afplats and impala and 
was selected as preferred bidder 
to sink a shaft for kazchrome 
during 2013 this is testament to 
the continued hard work of our 
teams and the attractiveness of 
our proposition however shaft 
sinkers was not awarded any 
major new contracts during the 
year significantly hampering our 
planned profitability
we remain in discussions with 
kazchrome having been 
appointed as the preferred bidder 
for the kazchrome donskoy gok 
project in august 2013 and we will 
provide further updates in due 
course we also expect to be 
awarded extensions of work on 
existing projects in 2014 such as 
lonmin k3 and leeuwkop 
the group continues to tender for 
a number of significant contracts 
around the world however we 
cannot at this stage predict the 
timing or outcome of these 
processes 
cash flow is anticipated to be 
tight until the latter half of the 
year and liquidity issues in south 
africa have been exacerbated by 
the lack of revenues from the 
strikeaffected projects as well as 
poor operational performance 
we continue to review a range of 
alon davidov
chief executive officer 11
shaft sinkers holdings plc annual report and accounts 2013
wwwshaftsinkersgroupcom
options to address this issue and 
will provide further information as 
necessary 
strategy
as expected the current situation 
in the global mining sector 
continues to validate our strategy 
to diversify into different 
commodities geographies and 
sectors revenues from our 
international business rose 
strongly in the year to gbp421 
million from gbp160 million in the 
prior year and offset some of the 
decline in revenues from south 
africa revenues from our 
international business now 
represent almost 28 of total 
revenues up from approximately 
8 in 2012 and 19 in 2011 we 
expect this trend to continue over 
the medium term as we secure 
more international business 
through new partnerships 
during 2013 we also made 
progress in a number of key areas 
with regards to increasing 
diversification through the 
conclusion of collaboration 
agreements with china nonferrous 
metal industry’s foreign 
engineering and construction co 
ltd ‘nfc’ one of the largest 
chinese engineering procurement 
and construction management 
‘epcm’ companies and india’s 
tata projects limited the epcm 
subsidiary of tata group these 
two agreements whilst in the early 
stage have the potential to deliver 
significant longterm benefit by 
providing improved access to the 
growing markets of india and 
china another initiative in its early 
stages is the collaboration 
between the group and laing 
o’rourke a large uk based 
construction group we have 
jointly submitted a proposal to 
sirius minerals to perform some 
early design work
as our business internationalises 
we face a different set of risks to 
those which affect our core south 
african operations the ability to 
operate successfully within 
different legal regulatory and 
cultural norms is every bit as 
complex as the difficult geological 
or operational challenges we face 
we are therefore focusing on 
improving our project 
management skills to deal with 
these challenges and to learn from 
operations where we are working 
successfully such as kibali 
goldmines in the drc
we also continue to focus on 
changing the nature of our 
contractual arrangements with 
clients historically our work has 
been carried out on ratesbased 
contracts which expose the group 
to significant risk in the event of 
unforeseen circumstances relating 
to geological or mine plan 
adjustments which slow the rate of 
progress achieved by shaft 
sinkers when negotiating new 
contracts for existing clients we 
were successful in moving the 
contract type to one which more 
equitably shares the risks in a 
number of instances notably with 
lonmin at karee 3 and impala 16 
which have changed to an agreed 
target cost basis
operations – international
work at the kibali goldmines 
project in the democratic republic 
of congo proceeded well with a 
number of major operational 
milestones achieved during 2013 
notably the start of the main 
sinking phase in november the 
project has performed in line with 
budget and the shaft has recently 
reached a depth of 483m ahead of 
schedule with sinking proceeding 
at a rate of at least 3 metres a day 
for more than 30 continuous days 
achieving this high level of 
operational performance in what 
many consider to be a complex 
and difficult operating 
environment is a significant 
achievement 
the project for hindustan zinc 
limited ‘hzl ’ at the rampura 
agucha mine progressed more 
slowly than expected because of 
problems with a civil engineering 
subcontractor during the first half 
of the year having dismissed the 
subcontractor and taken over its 
responsibilities ourselves the 
project operated in line with 
expected rates however sinking 
progress in the later part of 2013 
was poor and resulted in higher 
than expected costs and lower 
revenues as the hzl project is 
being conducted on a rates type 
contract our revenue is linked to 
the number of metres sunk and 
the slow performance meant that 
we failed to meet expected sinking 
rates and thus our revenue was 
lower than expected whilst our 
costs remained relatively fixed  strategic report
12
shaft sinkers holdings plc annual report and accounts 2013
ceo’s review continued
the hzl team has since worked 
hard at mitigating the issues 
affecting performance and we are 
currently experiencing a much 
improved performance level
operations – south africa
the group’s south african 
operations were significantly 
impacted by the difficult operating 
environment in 2013 contracts 
were cancelled during the year in 
response to declining commodity 
prices and rising operating costs in 
the country 
despite this difficult operating 
environment we were awarded a 
number of contract extensions for 
south african clients with afplats 
lonmin and impala agreeing to an 
additional gbp476 million worth of 
work for the group this is 
testament to the vital nature of our 
work for these clients and the 
strong relationships we have built 
with their management teams 
despite the challenging 
environment 
 
we successfully reduced the level 
of outstanding variation orders 
during the first half of the year 
however they began to build again 
during the second half of 2013 
however we were successful in 
collecting many of the outstanding 
variation orders in the last quarter 
of 2013 and were therefore able to 
reduce the group’s debtors’ book 
outstanding resulting in a small 
improvement in cash before the 
repayment of debt
as a result of the removal of one 
layer of operational management 
and a range of other cost cutting 
initiatives such as consolidating 
roles eliminating unrecoverable 
costs and reducing overtime we 
were able to significantly reduce 
operational overheads total 
headcount in south africa has 
now declined from approximately 
7200 to 3923 at the end of 2013 
the group will continue to 
examine its overhead structures 
and look for opportunities to 
reduce costs in this very sensitive 
period for the mining industry
 
however these improvements 
were offset by significant 
operational underperformance at 
a number of operations with 
performance at the impala 17 and 
styldrift projects being particularly 
disappointing 
styldrift experienced poor 
operational performance over the 
last two months of the 
measurement period stemming 
from some poor planning 
our impala 17 project was severely 
impacted by safety stoppages as 
a result of section 54 notices 
during 2013 and a generally poor 
safety record in the year under 
section 54 of the mine health and 
safety act of south africa the 
mine safety inspectorate can close 
all or part of a mine in the event 
that it believes any conditions or 
particular events could impact the 
health and safety of anybody 
working in the mine see the 
corporate responsibility section 
on page 38 for more details 
management has taken various 
steps to improve the situation 
including engaging a third party 
health and safety expert firm to 
perform an independent 
assessment of site safety systems 
the assessment rated the project’s 
safety systems very highly 
although it found that in a number 
of cases issues which had been 
identified were not dealt with 
effectively a number of 
recommendations have since been 
adopted in order to improve the 
clarity of the safety reporting and 
ensure issues are fully resolved 
as a result of the operational 
difficulties at impala 17 shaft 
sinkers lost gbp06 million on the 
project in 2013 and has lost a 
further gbp09 million since the 
financial year end to march 2014 
in april 2014 after the year end 
we reached agreement with 
impala over a revision to the terms 
of the contract for impala 17 under 
which shaft sinkers will be 
compensated for labour and 
materials based on an agreed rate 
and will have the opportunity to 
be paid an additional bonus 
element based on achieving 
certain performance criteria
the revised terms which became 
effective from 15 april 2014 are 
expected to improve the financial 
performance of this contract the 
new contract runs until to 15 
september 2014 after which date 
it will terminate if not renewed 
impala is retendering the contract 
and shaft sinkers is participating 
in the retender process 13
shaft sinkers holdings plc annual report and accounts 2013
wwwshaftsinkersgroupcom
south african labour situation
after the end of the year the 
association of mineworkers and 
construction union ‘amcu’ 
initiated a protected strike 
affecting south africa’s major 
platinum producers which had 
suspended operations at impala 16 
and lonmin the current situation 
between the amcu and the mining 
companies appears deadlocked 
with little signs of movement by 
either side as a result there is 
currently little clarity on when and 
how the strike will conclude
our employees are not on strike 
however they have been 
prevented from working at 
affected sites shaft sinkers has 
contractual provisions in place 
which are designed to ensure that 
we will recover certain costs in the 
event that our clients’ operations 
are impacted by strike action not 
related to us however even with 
these contractual provisions the 
group’s profitability will be 
impacted 
mets
our mining engineering and 
technical services ‘mets’ 
division continues to find new 
opportunities for design and epcm 
contracts in 2013 mets managed 
the highly complex project to 
design engineer coordinate and 
supervise manufacture of the head 
gears for the hzl project 
this required the sourcing of more 
than 2000 tonnes of a certain 
specification of steel across china 
india and south africa we 
successfully met the aggressive 
timetables set and gained 
additional invaluable experience in 
international project management 
which will be of significant long
term benefit to the group 
furthermore in 2013 our mets 
division designed a new and 
progressive main sinking 
methodology in collaboration with 
our indian and russian offices the 
new method promises a safer and 
more cost effective sinking 
operation especially for shallower 
ventilation type shafts the group 
will be implementing this new 
sinking methodology at hzl 
health safety and environment
there were a number of 
significant positive achievements 
during the year with regards to 
health and safety notably we 
achieved zero fatalities for the 
year and the group has yet again 
recorded 2 million fatality free 
shifts across its operations 
however due to a number of 
incidents the group’s lost time 
injury frequency rate rose to 
475 from 408 in 2012 compared 
to our target of 35 as previously 
disclosed a new safety and 
behaviour campaign has been 
introduced across the group with 
the aim of creating greater 
awareness of safety standards 
and procedures we have 
reintroduced a behaviour based 
system whereby all staff 
whatever their level are required 
to report unsafe practices or site 
conditions all reports are 
compiled on a daily basis in a 
central database which produces 
trends that are analysed and 
create recommendations and 
mitigating steps this system has 
been used successfully in shaft 
sinkers in the past and its re
introduction has already started 
yielding measurable trends that 
management can recognise and 
respond to in a timely manner
the group recorded no significant 
environmental incidents at its 
operations during the year
as most of the group’s work 
takes place underground impacts 
upon the environment are limited 
nevertheless we are committed 
to achieving the highest 
standards of performance and 
the group’s projects have 
iso14001 compliant 
environmental management 
systems during 2013 our sites 
were all audited and retained their 
iso compliant status with only 
minor comments
lhd travelling down decline at bokfontein  
decline shaft strategic report
14
shaft sinkers holdings plc annual report and accounts 2013
employees
i would like to thank all of the 
group’s employees for their efforts 
in 2013 the difficult environment 
the group is operating in has 
required a number of tough 
decisions about the shape of shaft 
sinkers’ business despite this 
uncertainty i am appreciative of 
the commitment our teams have 
shown in continuing to work 
together to make shaft sinkers a 
more efficient and competitive 
company i am convinced that the 
group will emerge from this 
challenging environment as a 
stronger business ready to 
capture the significant longterm 
opportunities which exist 
outlook
the outlook for 2014 is mixed 
whilst prospects for the group’s 
international business are positive 
the continued uncertainty in south 
africa is likely to significantly 
impact our operations there 
our work for kibali goldmines in 
the drc is progressing well and 
we expect to meet operational 
and financial targets in 2014 
meanwhile operational 
performance has improved at 
hzl over the first quarter of 2014 
and we have authorised a work 
acceleration programme that will 
reduce delays and potentially 
create further opportunities 
outside the current scope 
furthermore i believe that we will 
finalise terms for the kazchrome 
project in kazakhstan in 2014 and 
that the new alliances with tata 
and nfc will begin to bear fruit 
during the year 
in south africa whilst work 
continues at a number of our 
unaffected operations we are 
constantly working on plans to 
mitigate the impact of the ongoing 
strikes by redeploying some of our 
affected work force and assisting 
our clients to reduce cost impacts 
although the labour strike is 
negatively affecting the south 
african platinum and associated 
industries we believe it will be 
resolved as a result we continue to 
compete for new projects in the 
country as well as potential 
additional work from existing 
clients 
management assess the new 
business pipeline to still be at a 
healthy level with a committed 
order book of gbp238 million at 
year end and outstanding tenders 
worth gbp 970 million
the group’s cash position remains 
tight currently however we are 
undertaking numerous initiatives 
with clients and suppliers to 
improve short term liquidity as well 
as converting unutilised assets into 
cash we expect the cash position 
to improve in the second half of the 
year as the benefit of these 
initiatives is felt
alon davidov
chief executive officer
29 april 2014
ceo’s review continued