Interim Results

17 October 2005 BISICHI MINING PLC Interim Results to 30 June 2005 GOOD PERFORMANCE IN THE FIRST HALF OF 2005 2005 2004 Profit before tax under UK GAAP up 48% £1,077,000 £726,000 EPS up 40% 7.24 p 5.17 p EPS diluted up 38% 7.01 p 5.07 p * Profit before tax and adjustment for IFRS for the first six months breaks through £1 million mark for the first time in the company's history * A number of growth objectives achieved in the period reported including: * + Acquisition of the Pegasus Coal Reserve, an approx 12 million in-situ tonnes of export grade and low phosphorous coal. Production scheduled to start in 2007 + Major efficiency improvements at Black Wattle Colliery resulting in significantly higher production output on a sustainable basis + 19% price increase achieved for Black Wattle coal in the South African domestic market. Majority of export coal prices underpinned by a price fix to 2007 + Senior management strengthened with the appointment of Wayne Koonin as Finance Director, South Africa + Numis Securities appointed as the company's broker Commenting on the results, Bisichi Mining PLC's chairman, Michael Heller, said: 'I said at the end of 2004 that the next challenge for Bisichi would be to leverage our successful position in South Africa in order to generate sustainable growth in our core markets and to develop opportunities in related markets. In the first half of this year we have achieved a number of objectives that are key to delivering that vision. There is much still to do, but I am confident that we will continue to be successful.' END For further information, please call: Andrew Heller Robert Corry Bisichi Mining PLC 020 7415 5030 Christopher Joll MJ2 Ltd 020 7491 7776 17 October 2005 Bisichi Mining Plc CHAIRMAN'S REVIEW I am pleased to report that in the 6 months ended 30 June 2005, Bisichi Mining made a profit on ordinary activities before taxation and before adjustments for the new International Financial Reporting Standards (IFRS) of £1,077,000 (2004: £726,000). This performance is 48% higher than the equivalent period in 2004 and is principally due to increased production at the Black Wattle Colliery and our success in achieving premium prices for our coal. The new International Financial Reporting Standards have been adopted for the first time and the conversion to the new standards has increased profit by £1,000 to £1,078,000 for the first six months of 2005. During the period under review, we achieved a number of our objectives which the directors believe will have a significant impact on our growth prospects in South Africa. The most significant was the acquisition, in concert with our black empowerment partner Endulwini Resources, of the Pegasus Coal Reserve from Ingwe Collieries Limited, a wholly-owned subsidiary of BHP Billiton. This reserve contains approximately 12 million in situ tonnes of export grade and low phosphorous coal. We are currently applying for conversion of the mining rights under South Africa's new Mineral and Petroleum Resources Development Act and we plan to begin opencast operations at the site in 2007. The geological characteristics of the Pegasus reserve give us confidence that this will be a low-cost and high yielding operation that will continue well into the next decade. In addition, the entire reserve can be mined using the opencast mining method. Second, our operations at Black Wattle Colliery have undergone a substantial improvement in production and efficiency. In particular, we have introduced improvements in our working practices, which have led to a dramatic increase in production. These changes were implemented after an extensive operational review that focussed on improving production techniques and practices by our management during the first half. Additionally investment has been made in the mine's infrastructure, including the installation of a surge bin and feeder breaker to accommodate the increased tonnage from all sections and the commissioning of a mechanical face drill for use in one of the conventional drill and blast sections. I can report that the average monthly production of coal being achieved at Black Wattle Colliery at the end of September 2005 is 32% higher than in the comparable period in 2004. Following the improvements in production, the Group had record profits in the second quarter. We have been successful in marketing our products both to the international and to the domestic marketplace. As reported in the 2004 Annual Report and Accounts, in June 2004 we fixed through to 31 March 2007 the coal price for 272,000 tonnes of our export coal. As a result, most of our export contract has not been affected by the decline in international coal prices from their record peaks in the second quarter of 2004. In July 2005, we also achieved a 19% increase in the price of our domestic coal supply contract to the ferrochrome industry. During the first half of 2005, we have also made an important personnel appointment. With the expansion of our operations in South Africa, and in particular the acquisition of Pegasus, I am pleased to announce the appointment of Wayne Koonin as Finance Director, South Africa. Wayne, who is a Chartered Accountant, has considerable experience in the South African mining industry. His expertise has already had an impact on our South African business, working in conjunction with Robert Grobler (the General Manager) and his team. As previously announced, Numis Securities has been appointed as the company's stockbroker and financial adviser. Our UK retail property portfolio, which is managed by London & Associated Properties PLC, has continued to provide us with reliable income. The sale of a retail parade of shops in a Leeds suburb was our single major property transaction during this period. The equities portfolio in Mineral Products continues to provide us with a ready source of cash should it be needed. Finally, following the acquisition of Pegasus and the improvements in production at Black Wattle, I look forward to the future with confidence. Michael Heller Chairman Bisichi Mining Plc CONSOLIDATED INCOME STATEMENT for the six months ended 30 June 2005 Notes 6 months 6 months Year ended ended ended 30 June 30 June 31 Dec 2005 2004 2004 £'000 £'000 £`000 Group and share of joint ventures 7,833 5,117 13,267 turnover Less: joint ventures (1,149) - (1,719) Group Turnover 1 6,684 5,117 11,548 Operating costs (5,616) (4,192) (9,117) Operating profit before 1 1,068 925 2,431 adjustments Gains on financial assets 12 - - Increase in value of investment - - 1,868 property - Group - Joint venture - - 192 Profit on disposal of property 132 - - Share based payments charge (5) - (6) Operating profit after 1 1,207 925 4,485 adjustments Share of operating profit/(loss) 75 45 (34) in joint venture Interest receivable 40 8 25 Interest payable (244) (210) (399) Profit before tax 1,078 768 4,077 Taxation - Group 2 (62) (234) (788) - Joint venture 2 (18) (10) (7) Profit for the period 998 524 3,282 Profit attributable to minority 241 (16) 437 interest Profit attributable to equity 757 540 2,845 shareholders 998 524 3,282 Earnings per share 3 7.24p 5.17p 27.22p 3 Diluted earnings per share 7.01p 5.07p 26.51p Bisichi Mining Plc CONSOLIDATED BALANCE SHEET As at 30 June 2005 Notes 6 months 6 months Year ended ended ended 30 June 30 June 31 Dec 2005 2004 2004 £'000 £'000 £'000 Assets Non-current assets Value of properties attributable 4 14,659 13,092 14,990 to group Fair value of head lease 343 359 343 Property 15,002 13,451 15,333 Plant and equipment 4,528 3,814 5,046 Investments in Joint Ventures 1,588 1,442 1,536 Other Investments 376 352 384 Deferred tax 219 232 243 Total non-current assets 21,713 19,291 22,542 Current assets Inventories 161 33 36 Trade and other receivables 3,379 2,027 2,533 Financial assets 574 453 403 - held for trading investments - derivative financial 81 - - instruments Cash and cash equivalents 259 246 950 4,454 2,759 3,922 Liabilities Current liabilities Financial liabilities - (680) (608) (1,490) borrowings Trade and other payables (3,961) (4,214) (3,629) Current tax liabilities (275) (621) (315) (4,916) (5,443) (5,434) Non-current liabilities Financial liabilities - (5,219) (4,523) (5,580) borrowings Provisions (343) (359) (343) Deferred tax (2,093) (1,580) (2,048) Net assets 13,596 10,145 13,059 Equity Share capital 1,045 1,045 1,045 Share option reserve 11 - 6 Translation reserve (119) 149 278 Other reserves 86 86 86 Retained earnings 12,045 9,005 11,310 Total shareholders' equity 13,068 10,285 12,725 Minority interest in equity 528 (140) 334 Total equity 13,596 10,145 13,059 Bisichi Mining Plc CONSOLIDATED CASH FLOW STATEMENT For the six months ended 30 June 2005 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2005 2004 2004 £'000 £'000 £'000 Cash flows from operating activities Operating profit after 1,207 925 4,359 adjustments Depreciation 349 275 644 Gain on held for trading (9) (81) (83) investment Gain on disposal of investment (132) - - property Increase in value of investment - - (1,934) property Share based payment expense 11 - 6 Increase in net current (1,472) 875 651 liabilities Net interest paid (204) (202) (374) Income taxes paid (47) (58) (466) Net receipts/payments held for (23) - 99 trading investments Net cash from operating (320) 1,734 2,902 activities Cash flows from investing 130 (706) (2,250) activities Cash flows from financing (37) (34) 1,003 activities Net (decrease)/increase in cash (227) 994 1,655 and cash equivalents Cash and cash equivalents at 507 (1,179) (1,179) beginning of period Exchange adjustment - - 31 _______ _______ _______ Cash and cash equivalents at 280 (185) 507 end of period Bisichi Mining Plc CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY For the six months ended 30 June 2005 Share Translation Share Other Retained Total Minority Total reserve option earnings capital reserve reserves interest equity £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Balance at 1 1,045 - - 86 8,653 9,784 (116) 9,668 January 2004 Profit for the - - - 540 540 (16) 524 period Exchange - 149 - - - 149 (8) 141 adjustments ______ ______ ______ _____ _____ ______ ______ ______ 1,045 149 - 86 9,193 10,473 (140) 10,333 Dividend - - - - (188) (188) - (188) ______ ______ ______ _____ _____ ______ ______ ______ Balance at 30 1,045 149 - 86 9,005 10,285 (140) 10,145 June 2004 ______ ______ ______ ______ ______ ______ ______ ______ Balance at 1 1,045 - - 86 8,653 9,784 (116) 9,668 January 2004 Profit for the - - - - 2,845 2,845 437 3,282 period Exchange - 278 - - - 278 13 291 adjustment Share option - - 6 - - 6 - 6 charge ______ ______ ______ _____ _____ ______ ______ ______ 1,045 278 6 86 11,498 12,913 334 13,247 Dividend - - - - (188) (188) - (188) ______ ______ ______ _____ _____ ______ ______ ______ Balance at 31 1,045 278 6 86 11,310 12,725 334 13,059 December 2004 ______ ______ ______ _____ _____ ______ ______ ______ Profit for - - - - 757 757 241 998 period Exchange - (397) - - - (397) (47) (444) adjustment Share option - - 5 - - 5 - 5 charge ______ ______ ______ _____ _____ ______ ______ ______ 1,045 (119) 11 86 12,067 13,090 528 13,618 Increase in - - - - 187 187 - 187 value financial assets at 1 January 2005 Dividend - - - - (209) (209) - (209) ______ ______ ______ _____ _____ ______ ______ ______ Balance at 30 1,045 (119) 11 86 12,045 13,068 528 13,596 June 2005 Bisichi Mining Plc ACOUNTING POLICIES AND NOTES TO ACCOUNTS BASIS OF ACCOUNTING The results for the six months ended 30th June 2005 have been prepared in accordance with those International Financial Reporting Standards (IFRS) which are expected to be endorsed by the European Union and to apply to the 2005 full year results. 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. The fair value of these instruments at the start of 2005 was passed through reserves, and the subsequent movement in the first half of 2005 is reported in the group income statement. The group has not applied the hedge accounting treatment that would allow such movements 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. Exchange differences arising on consolidation (IAS 21 'Foreign Currencies') Bisichi has elected to deem the cumulative amount of exchange differences arising on consolidation of the net investments in subsidiaries at 1 January 2004 to be zero. 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 locationspecified 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. 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 and restoration assets 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 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. 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. 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, as described above under the heading for lease payments. 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 group income statement. 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 consolidated income statement in the period. 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 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. 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 a net equity basis. ASSOCIATES Undertakings in which the group has a participating interest of not less than 20% in the voting capital and over which it has the power to exert significant influence are defined as associated undertakings. The financial statements include the appropriate share of the results and reserves of those undertakings. INVESTMENTS Fixed asset investments of the company are stated in the balance sheet at cost less provisons for impairment. Profits or losses on the disposal of these investments and provisions for impairment are taken to the income statement in the period of disposal/impairment. 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 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2005 2004 2004 £ £ £ Revenue Mining 6,025 4,476 10,317 Property 539 531 1,054 Other 120 110 177 6,684 5,117 11,548 Operating profit before adjustments Mining 823 593 1,855 Property 237 245 487 Other 8 87 89 1,068 925 2,431 Operating profit after adjustments Mining 823 593 1,855 Property 387 245 2,541 Other (3) 87 89 1,207 925 4,485 2 TAXATION 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2005 2004 2004 £ £ £ Based on the results for the year: Corporation tax at 30% (2004: 57 234 272 30%) Adjustment in respect of prior - - 26 years -UK Joint venture 18 10 7 75 244 305 Deferred tax 5 - 490 80 244 795 * EARNING PER SHARE Both the basic and diluted earnings per share calculations are based on a profit of £757,000 (2004: £540,000) 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 352,471 (2004: 200,088) totalling 10,803,977 (2004: 10,651,594). * PROPERTIES Properties are included at valuation as at 31 December 2004. * FINANCIAL INFORMATION The above financial information does not constitute statutory accounts within the meaning of section 240 of the Companies Act 1985. 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 interim results were approved by the Board of Bisichi Mining PLC on 17 October 2005.

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