Final Results

27 April 2006 BISICHI MINING PLC Preliminary Results for the year ended 31 December 2005 2005 2004 Turnover up 16.8% £13,485,000 £11,548,000 Profit before interest, tax and £5,471,000 £5,028,000 depreciation up 8.8% Profit before tax up 4.9% £4,206,000 £4,011,000 Diluted earnings per share up 16.3% 30.19p 25.96p Dividend per share up 12.5% 2.25p 2.00p * Group profits up despite short term problem with South African coal mine * Pegasus Coal Reserve to be acquired from BHP Billiton for ZAR 51.5 million * Continuous miner back in operation and producing at near optimum levels * New order mining rights granted to Black Wattle Colliery. * High average selling price achieved for both domestic and export coal * Strong performance from UK property portfolio underpins Group profits Commenting, Michael Heller, chairman of Bisichi Mining PLC said: "2005 was a year which clearly demonstrated both the promise and challenges inherent in the Group's South African mining operations and the benefits of the Group's holding of significant property assets in the UK. We are among the first coal mines in South Africa to be granted new order mining rights and it testifies to our leadership in the areas of empowerment and social development. Meanwhile, our growth strategy in South Africa will continue to focus on acquiring and developing high quality reserves like Pegasus. With a proven management team and a solid and well-tested business model in place, I am confident that 2006 will be another year of opportunity for Bisichi Mining." END For further information, please call: Andrew Heller Tom Kearney Robert Corry, Bisichi Mining PLC 020 7415 5030 Christopher Joll MJ2 Ltd 020 7491 7776 CHAIRMAN'S STATEMENT I am pleased to be able to inform shareholders that, despite a short term problem at our South African mine, 2005 has been a satisfactory year for Bisichi Mining PLC, with group profit on ordinary activities before taxation increasing by 4.9 percent to £4,206,000 (2004: £4,011,000). 2005 was a year which clearly demonstrated both the promise and challenges inherent in our South African mining operations. In April 2005, Bisichi Mining PLC, together with our local partner Endulwini Resources, successfully negotiated the terms for the ZAR 51.5 million purchase of the Pegasus Coal Reserve from Ingwe Collieries Limited, a wholly-owned subsidiary of BHP Billiton. The approximately 12 million in situ tonne reserve, located close to our operations at the Black Wattle Colliery, contains both export grade and low phosphorous coal and is suitable for mining by the open cast method. Subject to the conversion of the prospecting and mining rights under South Africa's new Mineral and Petroleum Resources Development Act, we anticipate commencing operations in 2007. We are confident that we will be mining this high-yielding, low cost deposit well into the next decade. Our growth strategy in South Africa will continue to focus on acquiring and developing high quality reserves like Pegasus. But 2005 was also a year of challenges. In December 2005, we informed shareholders that there was a temporary cessation of operations in the continuous miner section, the same section where a fatality had recently occurred. This fatality, the first of a Black Wattle employee to occur in underground mining in the mine's history, has led to a comprehensive review of Black Wattle's safety and operational procedures to ensure that such an incident will not be repeated. Prior to the suspension of the continuous miner section, we were achieving record tonnage at the mine, although, as part of our mining plan, this was in areas of declining yield. The net effect of the suspension of the continuous miner section combined with the lower yields has had a negative impact on Black Wattle's contribution to overall net earnings in 4th Quarter of 2005 and will continue to have a negative effect on earnings in the 1st Half of 2006, albeit on a reducing basis. 2005's results have also been impacted by the writing off of expenses of £288,000 incurred during a corporate fundraising exercise which was suspended due to the fatality and the suspension of the continuous miner section. Faced with these challenges, the mine management took steps to restore the profitability of mining operations at Black Wattle Colliery, the details of which are provided in the Mining Review. Nonetheless, I am particularly pleased to report to shareholders that the continuous miner is back in operation and performing at near optimum levels. The 1st Half of 2006 will be impacted by the performance of Black Wattle Colliery. However, the prompt action taken by your company's management, coupled with the high average selling price for domestic and export products that we have achieved, give me the confidence to state that the 2nd Half of 2006 should see an improvement in profitability. Perhaps more than in any year in our recent history, Bisichi Mining PLC's UK retail property portfolio, managed by London & Associated Properties PLC, has proved the merit of our long term strategy of supporting our overseas mining investments with a significant investment in UK property. The sale of the Kippax site in Leeds and the compulsory purchase of the Ritz site in Bradford, as part of that City's redevelopment, have contributed substantially to this year's profits and have offset some of the impact of the short term problems at Black Wattle Colliery. This portfolio was valued at 31 December 2005 by independent charter surveyors at £15.6 million, an increase of 18.1%. Shareholder funds now stand at £16.4 million compared to £13.0 million a year ago, an increase of 26.3% To underline our confidence in the future of Bisichi Mining, your directors are recommending a dividend of 2.25p, compared to 2.0p per share in the previous year, an increase of 12.5%. This will be paid on 14 August 2006 to shareholders on the register as of 21 July 2006. In closing, I would like to the thank the staff of Bisichi Mining, its subsidiaries in both the United Kingdom and South Africa and our associates and partners in South Africa for their contribution and continued commitment to your company. With a proven management team and a solid and well-tested business model in place, I am confident that 2006 will be another year of opportunity for your company. MICHAEL HELLER Chairman 27 April 2006 MINING REVIEW 20 April 2006 v6 Overview As the Chairman has stated, 2005 was a mixed year for our coal mining operations in South Africa. On the plus side, the agreement to acquire the Pegasus Coal Reserve from BHP Billiton represents an important investment in the future for Bisichi and its partner, Endulwini Resources. This good quality, excellent-yielding deposit has highly favourable geological conditions which will allow the entire reserve to be mined using the opencast method. We intend to begin the development and mining of the Pegasus Coal Reserve in 2007. This project very much represents the future for Bisichi in South Africa. However, at our principal direct mining operation, the Black Wattle Colliery, the combination of the decisions taken in the short term to mine lower yielding sections throughout the year and a fatal accident in the 4th Quarter severely affected the productivity of our operations. Although we have taken decisive actions to rectify the situation, the mine has taken time to recover. Nonetheless, during this difficult period we have taken steps to ensure that Black Wattle has maintained a high average selling price for both its export and domestic products. Pegasus Coal Reserve In April 2005, Bisichi Mining and its partner, Endulwini Resources, successfully negotiated the terms of acquisition for the Pegasus Coal Reserve from Ingwe Collieries Limited, a wholly-owned subsidiary of BHP Billiton. The reserve, located approximately 40 km from our existing operations at the Black Wattle Colliery, contains approximately 12 million in situ tonnes of export grade and low phosphorous coal. The average depth of the coal is approximately 17 meters (compared to 40 meters at the Black Wattle Colliery). The strip ratio (i.e, the ratio of overburden to coal) of the reserve averages about 2.2 to 1, making it ideal for mining using the opencast method. In June 2005, we agreed the terms of an offtake arrangement with BHP Billiton, whereby a fixed amount of the coal mined from the reserve would be purchased by that company for the life of the reserve. Given the prevalence of low phosphorous coal in the reserve and its proximity to Ferrobank, we believe the reserve is ideally suited to serve the ferrochrome market, which has had and continues to have a strong demand for low phosphorous reductants. We are currently in the process of applying for conversion of the mining rights under South Africa's new Mineral and Petroleum Resources Development Act and we intend to begin opencast operations at the site in 2007. In the meantime, we are carrying out the necessary feasibility, environment and engineering studies. Production: Black Wattle Colliery As we stated in last year's Report & Accounts, mining of a lower yielding section of the reserve was planned in order to take advantage of our strong long term contract prices, thereby enabling us to extract coal that would have otherwise been sterilised. Provided production levels could offset the decline in yield, this was a prudent decision which allowed us to mine more efficiently using the continuous miner and to extend the life of mine. For the bulk of the year we managed to achieve this, primarily from the continuous miner section, and we set new levels of production. For much of 2005, production at the Black Wattle Colliery averaged above 110,000 metric tonnes per month and during the 2nd Half up until December, averaged 118,000 metric tonnes per month. However, the fatal accident during the 4th Quarter, which was the first underground fatality in Black Wattle's history, had an immediate and dramatic effect on production and profitability; all the more so since the accident occurred in the key production section where our continuous miner was operating. The decision to suspend operations of the continuous miner, coupled with continued mining of the lower yielding sections by the less-productive traditional drill-and-blast sections, created a situation with high fixed costs and depressed production - a negative position from which we are only just beginning to emerge. During the period in which the continuous mining section was suspended, we took the opportunity to overhaul the machine and to lower it by 300mm. This modification now means that the continuous miner can operate in sections of lower seam height, thus allowing us to access more areas of the mine formerly restricted to the drill and blast sections. The overhaul took approximately one month and I am pleased to report that the continuous miner is now back in operation on a three-shift basis. As with any major reconfiguration of machinery, however, there is a built-in start up period over which the continuous miner will gradually attain the production levels expected of it. We anticipate that the continuous miner will be working to optimum production capacity during the 2nd Quarter of 2006. As well as carrying out the technical improvements on the continuous miner, we conducted the feasibility work required to access the underground coal reserves north of the current mining area. The extensive borehole data available has revealed that these reserves have better yields and more favourable mining heights and we anticipate entering this area by the 2nd Half of 2006. As shareholders have previously been advised, Black Wattle also has reserves that can be mined by opencast methods. As reported in last year's accounts, we have received permission from the Middelburg Town Council (the owners of the surface rights) to mine these reserves by opencast methods. We are now in the final process of completing the necessary consultative and environmental work required for approval by the Department of Minerals and Energy (DME) and we are hopeful of receiving approval during the course of 2006. As soon as we receive permission to opencast mine we will do so, as this is a substantially cheaper production method than underground mining and will enable us to increase overall production at higher margins. New Order Mining Rights: Black Wattle Colliery I am pleased to report that the DME has granted the Black Wattle Colliery new order mining rights in accordance with the Mineral and Petroleum Resources Development Act of 2002. The Black Wattle Colliery is one of the first coal mines in South Africa to be granted new order mining rights under the new legislation. This is an important milestone which signifies that we are fully compliant with all the prevailing mining, social, labour, and black economic empowerment legislation in South Africa. Marketing: Black Wattle Colliery One of the key drivers of Black Wattle's earnings has been the strength of our contracted sales into our two main markets: a US$-based income from long-term thermal coal export sales via the Richards Bay Coal Terminal ("RBCT") and a ZAR-based income resulting from long-term contracts to supply low phosphorous coal to the South African ferrochrome market. Given the volatility of the export coal price we have witnessed over the period from June 2004 to the present, our US$ fixed price FOB export contract has proven both prudent and profitable. Our experience in exporting coal has put us in a strong position now that RBCT has agreed to expand from its existing capacity of 72 million metric tonnes to 92 million metric tonnes starting in 2008. We welcome the expansion of RBCT and expect to play an active role in the export markets in the years to come. In the South African market, in July 2005 we received a 19 percent increase in the price of our coal supply contract to the ferrochrome industry. The premium price we receive for this product plays an important role in determining the mine's overall level of profitability. During the period that operations were suspended in the continuous miner section, our production of low phosphorous coal ceased as well. Accordingly, during the period from December 2005 through February 2006, low phosphorous production was minimal. I am pleased to say that we are now back in the low phosphorous market and are returning to our budgeted level of monthly production. The domestic South African market has also proven to be quite robust. On 1 April 2006 we received an almost 15 percent increase in the price we receive for domestic steam coal. Today, the domestic market now rivals the export market in terms of margin per tonne and demand remains very strong. Health and Safety The health and safety of our employees is of utmost importance. Black Wattle Colliery constantly monitors its full compliance with all prevailing South African mine health and safety legislation. In addition to the requisite personnel appointments and assignment of direct health and safety responsibilities on the mine, a system of Hazard Identification and Risk Assessments has been designed, implemented and maintained at Black Wattle Colliery. Furthermore, a system of health and safety training, information and instruction is conducted on an ongoing basis. Finally, inspection and enforcement is provided through counselling, retraining, corrective counselling, and where appropriate, discipline. Immediately following the fatality at Black Wattle Colliery our mine management launched a comprehensive review of the mine's safety standards, operational procedures and codes of practices to ensure that everything possible was being done to ensure the health and safety of Black Wattle employees. Prospects Although the net effect of the suspension of the continuous miner section and the lower yields has had a negative impact on Black Wattle's contribution to overall net earnings in 4th Quarter of 2005 and will have a negative effect on earnings in the 1st Half of 2006, the 2nd Half of 2006 should see an improvement in profitability. 2005 has been a year that has tested our teams in London and South Africa. However, we have been particularly well served by our strong management team at Black Wattle, led by Mr. Robert Grobler. As evidenced by the Pegasus acquisition, the scale of the opportunities open to us in South Africa are just beginning to be realised. I am confident that the decisions made by your company's management team during this challenging period will have a positive effect on the business in the years to come ANDREW HELLER Managing Director 27 April 2006 Bisichi Mining Plc Consolidated income statement for the year ended 31 December 2005 Notes Year Year ended ended 31Dec 31 Dec 2005 2004 £'000 £`000 Group Turnover 1 13,485 11,548 Operating costs (12,037) (9,123) __________ __________ Operating profit before adjustments 1 1,448 2,425 Gains on held for trading investments 177 - Increase in value of investment 2,393 1,868 property Exceptional items 2 124 - Share of profit in joint ventures 522 92 __________ __________ Operating profit 1 4,664 4,385 Interest receivable 76 25 Interest payable (534) (399) __________ __________ Profit before tax 4,206 4,011 Taxation 3 (687) (788) __________ __________ Profit for the period 3,519 3,223 __________ __________ Profit attributable to equity 3,256 2,786 shareholders Profit attributable to minority 263 437 interest __________ __________ 3,519 3,223 __________ __________ Earnings per share 4 31.15p 26.66p __________ __________ Diluted earnings per share 4 30.19p 25.96p __________ __________ Bisichi Mining Plc Consolidated balance sheet As at 31 December 2005 2005 2004 £'000 £'000 Assets Non-current assets Value of investment properties 15,625 14,990 attributable to group Fair value of head lease 153 343 Property 15,778 15,333 Plant and equipment 5,604 5,046 Investments in Joint Ventures 2,519 1,476 Other Investments 424 384 Deferred tax 241 243 Total non-current assets 24,566 22,482 Current assets Inventories 124 36 Trade and other receivables 4,578 2,533 Assets held for trading investments 629 403 Interest derivative 36 - Cash and cash equivalents 488 950 5,855 3,922 Total assets 30,421 26,404 Liabilities Current liabilities Borrowings (2,382) (1,490) Trade and other payables (4,432) (3,629) Current tax liabilities (91) (315) (6,905) (5,434) Non-current liabilities Borrowings (4,368) (5,580) Finance lease liabilities (153) (343) Deferred tax (2,582) (2,048) (7,103) (7,971) (14,008) (13,405) Net assets 16,413 12,999 Equity Share capital 1,045 1,045 Other reserves 170 232 Retained earnings 14,606 11,388 Total shareholders' equity 15,821 12,665 Minority interest in equity 592 334 Total equity 16,413 12,999 Bisichi Mining Plc Consolidated CASH FLOW STATEMENT For the year ended 31 December 2005 Year Year ended ended 31 December 31 December 2005 2004 £'000 £'000 Cash flows from operating activities Operating profit 4,664 4,385 Depreciation 807 644 Share based payment expense 23 5 Unrealised gain on investment held for (177) (89) trading Unrealised gain on investment properties (2,393) (1,868) Share of profit of joint ventures (522) (92) Hedging 82 - ___ ___ Cash flow before working capital 2,484 2,985 Change in inventories (89) 9 Change in trade and other receivables (753) (1,004) Change in trade and other payables 750 1,598 Change in provisions (136) 6 Acquisitions of held for trading (24) (49) investments Proceeds from held for trading investments 99 148 ___ ___ Cash generated from operations 2,331 3,693 Interest received 76 25 Interest paid (534) (399) Income tax paid (331) (466) ___ ___ Cash flow from operating activities 1,542 2,853 ___ ___ Acquisition of reserves, plant and (1,348) (2,211) equipment Proceeds from sale of investment 482 - properties, reserves, plant and equipment Acquisitions of investments (41) (49) ___ ___ Cash flow from investing activities (907) (2,260) ___ ___ Cash flow from financing activities Borrowings drawn 23 1,541 Borrowings repaid (1,927) (291) Equity dividends paid (209) (188) ___ ___ Cash flow from financing activities (2,113) 1,062 ___ ___ Net (decrease) increase in cash and cash (1,478) 1,655 equivalents ___ ___ Cash and cash equivalents at 1 January 507 (1,179) Exchange adjustment 2 31 ___ ___ Cash and cash equivalents at 31 December (969) 507 ___ ___ Bisichi Mining Plc Consolidated STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY For the year ended 31 December 2005 Share Translation Other Retained Total Minority Total reserve earnings capital reserves interest equity £'000 £'000 £'000 £'000 £'000 £'000 £'000 Balance at 1 January 1,045 (137) 86 8,790 9,784 (116) 9,668 2004 Revaluation of - - - 1,868 1,868 - 1,868 investment properties Other income statement - - - 918 918 437 1,355 movements Profit for the year - - - 2,786 2,786 437 3,223 Exchange adjustments - 278 - - 278 13 291 Total recognised - 278 - 2,786 3,064 450 3,514 income and expense for the period Dividend - - - (188) (188) - (188) Equity share options - - 5 - 5 - 5 _____________ ____________ ____________ ____________ ____________ ____________ ____________ Balance at 31 December 1,045 141 91 11,388 12,665 334 12,999 2004 Adoption of IAS39 Movement on fair value - - - 82 82 - 82 of derivatives Revaluation of current - - - 89 89 - 89 assets held for trading _____________ ____________ ____________ ____________ ____________ ____________ ____________ Balance as at 1 1,045 141 91 11,559 12,836 334 13,170 January 2005 Revaluation of - - - 2,393 2,393 - 2,393 investment properties Movement on fair value - - - (58) (58) - (58) of derivatives Other income statement - - - 921 921 263 1,184 movements Profit for the year - - - 3,256 3,256 263 3,519 Exchange adjustment - (85) - - (85) (5) (90) Total recognised - (85) - 3,256 3,171 258 3,429 income and expense for the period Dividend - - - (209) (209) - (209) Equity share options - - 23 - 23 - 23 _____________ ____________ ____________ ____________ ____________ ____________ ____________ Balance at 31 December 1,045 56 114 14,606 15,821 592 16,413 2005 _____________ ____________ ____________ ____________ ____________ ____________ ____________ Bisichi Mining Plc ACOUNTING POLICIES AND NOTES TO ACCOUNTS Basis of accounting The results for the year ended 31 December 2005 have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union, for the first time. The reported comparative period results have been restated on this basis. The financial statements have been prepared under the historical cost convention, except for the revaluation of certain properties and financial instruments. The principal accounting policies are described below. Basis of consolidation The group accounts incorporate the accounts of Bisichi Mining Plc and all of its subsidiary undertakings, together with the group's share of the results of its joint ventures and associates. In preparing these financial statements, advantage has been taken of the exemptions allowed by IFRS1, first-time adoption of IFRS as follows: Financial Instruments: Recognition and Measurement (IAS 39) The comparative periods have not been restated for IAS39, particularly in respect of financial instruments. Where appropriate, the fair value of these instruments at the start of 2005 was passed through reserves, and the subsequent movement in 2005 is reported in the group income statement. The group has not applied the hedge accounting treatment that would allow movements on hedges to be deferred in equity. Business Combinations that occurred before the opening IFRS balance sheet date (IFRS 3 "Business Combinations") Bisichi has elected not to apply IFRS 3 retrospectively to business combinations that took place before the transition date of 1 January 2004. As a result, all prior business combination accounting has been frozen at the transition date. This includes any goodwill that was previously recognised as a deduction from equity. Share-based Payments (IFRS 2 "Share-based Payment") Bisichi has elected only to apply IFRS 2 to all share option schemes where options have been granted since 7 November 2002 and were not fully vested at 1 January 2005. TURNOVER Turnover comprises sales of coal and property rental income. Turnover is recognised when delivery of the product or service has been made and when the customer has a legally binding obligation to settle under the terms of the contract and has assumed all significant risks and rewards of ownership. Turnover is only recognised on individual sales when all of the significant risks and rewards of ownership have been transferred to a third party. In most instances turnover is recognised when the product is delivered to the location specified by the customer, which is typically when loaded into transport, where the customer pays the transportation costs. Rental income is recognised in the group income statement on a straight-line basis over the term of the lease. INVESTMENT PROPERTIES Investment properties comprise freehold and long leasehold land and buildings. Investment properties are carried at fair value in accordance with IAS 40 `Investment Properties'. Properties are recognised as investment properties when held for long-term rental yields, and after consideration has been given to a number of factors including length of lease, quality of tenant and covenant, value of lease, management intention for future use of property, planning consents and percentage of property leased. Investment properties are revalued annually by professional external surveyors and included in the balance sheet at their fair value. Gains or losses arising from changes in the fair values of assets are recognised in the consolidated income statement in the period to which they relate. In accordance with IAS 40, investment properties are not depreciated. The difference between the book value of the investment property and the first valuation on recognition as an investment property is taken to reserves in accordance with IAS 40. Properties held for use in the business or in the course of restoration, renovation or held for development or sale, are not recognised as investment properties and are held at depreciated historical cost. PROPERTY PLANT AND EQUIPMENT The cost of property, plant and equipment comprises its purchase price and any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in accordance with agreed specifications. Freehold land is not depreciated. Other property, plant and equipment is stated at historical cost less accumulated depreciation. Mine development The purpose of mine development is to establish secure working conditions and infrastructure to allow the safe and efficient extraction of recoverable reserves. Depreciation on mine development is not charged until full production commences or the assets are put to use. On commencement of full production, depreciation is charged over the life of the mine on a straight-line basis. Surface mine development Expenditure incurred prior to the commencement of working surface mine sites, net of any residual value and taking into account the likelihood of the site being mined, is capitalised within property, plant and equipment and charged to the income statement over the life of the recoverable reserves of the scheme. Other assets The cost, less estimated residual value, of other property, plant and equipment is written off on a straight-line basis over the asset's expected useful life. Residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. Changes to the estimated residual values or useful lives are accounted for prospectively. Heavy surface mining and other plant and equipment is depreciated at varying rates depending upon its expected usage. The depreciation rates generally applied are: Mining equipment The shorter of its useful life or the life of the mine Mining reserves Over the expected life of the reserves Motor vehicles 25-33 per cent Office equipment 10-33 per cent EMPLOYEE BENEFITS Share based remuneration The company operates a long-term incentive plan and share option scheme. The fair value of the conditional awards of shares granted under the long-term incentive plan and the options granted under the share option scheme are determined at the date of grant. This fair value is then expensed on a straight-line basis over the vesting period, based on an estimate of the number of shares that will eventually vest. At each reporting date, the fair value of the non-market based performance criteria of the long-term incentive plan is recalculated and the expense is revised. In respect of the share option scheme, the fair value of options granted is calculated using a binomial model. Pensions The company operates a defined contribution pension scheme. The contributions payable to the scheme are expensed in the period to which they relate. FOREIGN CURRENCIES Monetary assets and liabilities are translated at year end exchange rates and the resulting exchange rate differences are included in the consolidated income statement within the results of operating activities if arising from trading activities and within finance cost/income if arising from financing. For consolidation purposes, income and expense items are included in the consolidated income statement at average rates, and assets and liabilities are translated at year end exchange rates. Translation differences arising on consolidation are taken directly to reserves. Where foreign operations are disposed of, the cumulative exchange differences of that foreign operation are recognised in the consolidated income statement when the gain or loss on disposal is recognised. FINANCIAL INSTRUMENTS Bank loans and overdrafts Bank loans and overdrafts are included as financial liabilities on the group balance sheet at the amounts drawn on the particular facilities. Interest payable on those facilities is expensed as a finance cost in the period to which it relates. Finance lease liabilities Finance lease liabilities arise for those investment properties held under a leasehold interest and accounted for as investment property. The liability is initially calculated as the present value of the minimum lease payments, reducing in subsequent reporting periods by the apportionment of payments to the lessor. Interest rate derivatives The group uses derivative financial instruments to manage the interest rate risk associated with the financing of the group's business. No trading in such financial instruments is undertaken. At each reporting date, these interest rate derivatives are recognised at fair value, being the estimated amount that the group would receive or pay to terminate the agreement at the balance sheet date, taking into account current interest rates and the current credit rating of the counterparties. The gain or loss at each fair value remeasurement is recognised immediately in the income statement. Held for trading investments Financial assets/liabilities held for trading or short-term gain are measured at fair value and movements in fair value are charged/credited to the income statement in the period. Trade receivables Trade receivables do not carry any interest and are stated at their nominal value as reduced by appropriate allowances for estimated recoverable amounts. Trade payables Trade payables are not interest bearing and are stated at their nominal value. JOINT VENTURES Investments in joint ventures, being those entities over whose activities the group has joint control, as established by contractual agreement, are included at cost together with the group's share of post acquisition reserves, on an equity basis. INVENTORIES Inventories are stated at the lower of cost and net realisable value. Cost includes materials, direct labour and overheads relevant to the stage of production. Net realisable value is based on estimated selling price less all further costs to completion and all relevant marketing, selling and distribution costs. DEFERRED TAX Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the tax computations, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. In respect of the deferred tax on the revaluation surplus, this is calculated on the basis of the chargeable gains that would crystallise on the sale of the investment portfolio as at the reporting date. The calculation takes account of indexation on the historical cost of the properties and any available capital losses. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the group income statement, except when it relates to items charged or credited directly to equity, in which case it is also dealt with in equity. DIVIDENDS Dividends payable on the ordinary share capital are recognised as a liability in the period in which they are approved. CASH AND CASH EQUIVALENTS Cash comprises cash in hand and on-demand deposits. Cash equivalents comprises short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. 1 SEGMENTAL ANALYSIS 31 December 31 December 2005 2004 £ £ Revenue Mining 12,278 10,317 Property 1,086 1,054 Other 121 177 _______ _______ 13,485 11,548 _______ _______ Operating profit before adjustments Mining 1,008 1,852 Property 436 490 Other 4 83 _______ _______ 1,448 2,425 _______ _______ Operating profit Mining 1,066 1, 784 Property 3,417 2,518 Other 181 83 _______ _______ 4,664 4,385 _______ _______ 2 EXCEPTIONAL ITEMS 31 December 31 December 2005 2004 £ £ Gain on sale of investment 412 - properties Costs in relation to suspended fund (288) - raising _______ _______ 124 - _______ _______ 3 TAXATION 31 December 31 December 2005 2004 £ £ Based on the results for the year: Corporation tax at 30% (2004: 30%) 154 272 Adjustment in respect of prior years (1) 26 - UK _______ _______ 153 298 Deferred tax 534 490 _______ _______ 687 788 _______ _______ * EARNING PER SHARE Both the basic and diluted earnings per share calculations are based on a profit of £3,256,000 (2004: £2,786,000). The basic earnings per share have been calculated on 10,451,506 (2004: 10,451,506) ordinary shares being in issue during the period. The diluted earnings per share have been calculated on the number of shares in issue of 10,451,506 (2004: 10,451,506) plus the dilutive potential ordinary shares arising from share options of 334,746 (2004: 280,664) totalling 10,786,252 (2004: 10,732,170). * FINANCIAL INFORMATION The above financial information does not constitute statutory accounts within the meaning of section 240 of the Companies Act 1985. The financial information has been extracted from the groups annual report and accounts for the year ended 31 December 2005 on which the auditors have not yet expressed an opinion, but for which an unqualified report is expected. Statutory accounts for the year ended 31 December 2004 which were prepared under UK generally accepted accounting principles (UKGAAP), have been delivered to the Registrar of Companies; the report of the auditors on those accounts was unqualified and did not contain a statement under Section 237(2) or (3) of the Companies Act 1985. * Board approval These preliminary results were approved by the Board of Bisichi Mining PLC on 27 April 2006.

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