18th Oct 2005 07:00
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 toleverage our successful position in South Africa in order to generatesustainable growth in our core markets and to develop opportunities in relatedmarkets. In the first half of this year we have achieved a number of objectivesthat are key to delivering that vision. There is much still to do, but I amconfident that we will continue to be successful." END For further information, please call:Andrew HellerRobert Corry Bisichi Mining PLC 020 7415 5030Christopher Joll MJ2 Ltd 020 7491 777617 October 2005Bisichi Mining PlcCHAIRMAN'S REVIEWI am pleased to report that in the 6 months ended 30 June 2005, Bisichi Miningmade a profit on ordinary activities before taxation and before adjustments forthe new International Financial Reporting Standards (IFRS) of ‚£1,077,000 (2004:‚£726,000). This performance is 48% higher than the equivalent period in 2004and is principally due to increased production at the Black Wattle Colliery andour success in achieving premium prices for our coal. The new InternationalFinancial Reporting Standards have been adopted for the first time and theconversion to the new standards has increased profit by ‚£1,000 to ‚£1,078,000for the first six months of 2005.During the period under review, we achieved a number of our objectives whichthe directors believe will have a significant impact on our growth prospects inSouth Africa.The most significant was the acquisition, in concert with our black empowermentpartner Endulwini Resources, of the Pegasus Coal Reserve from Ingwe CollieriesLimited, a wholly-owned subsidiary of BHP Billiton. This reserve containsapproximately 12 million in situ tonnes of export grade and low phosphorouscoal. We are currently applying for conversion of the mining rights under SouthAfrica's new Mineral and Petroleum Resources Development Act and we plan tobegin opencast operations at the site in 2007. The geological characteristicsof the Pegasus reserve give us confidence that this will be a low-cost and highyielding 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 substantialimprovement in production and efficiency. In particular, we have introducedimprovements in our working practices, which have led to a dramatic increase inproduction. These changes were implemented after an extensive operationalreview that focussed on improving production techniques and practices by ourmanagement during the first half. Additionally investment has been made in themine's infrastructure, including the installation of a surge bin and feederbreaker to accommodate the increased tonnage from all sections and thecommissioning of a mechanical face drill for use in one of the conventionaldrill and blast sections. I can report that the average monthly production ofcoal being achieved at Black Wattle Colliery at the end of September 2005 is32% higher than in the comparable period in 2004.Following the improvements in production, the Group had record profits in thesecond quarter.We have been successful in marketing our products both to the international andto the domestic marketplace. As reported in the 2004 Annual Report andAccounts, in June 2004 we fixed through to 31 March 2007 the coal price for272,000 tonnes of our export coal. As a result, most of our export contract hasnot been affected by the decline in international coal prices from their recordpeaks 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 ferrochromeindustry.During the first half of 2005, we have also made an important personnelappointment. With the expansion of our operations in South Africa, and inparticular the acquisition of Pegasus, I am pleased to announce the appointmentof Wayne Koonin as Finance Director, South Africa. Wayne, who is a CharteredAccountant, has considerable experience in the South African mining industry.His expertise has already had an impact on our South African business, workingin conjunction with Robert Grobler (the General Manager) and his team.As previously announced, Numis Securities has been appointed as the company'sstockbroker and financial adviser.Our UK retail property portfolio, which is managed by London & AssociatedProperties PLC, has continued to provide us with reliable income. The sale of aretail parade of shops in a Leeds suburb was our single major propertytransaction during this period. The equities portfolio in Mineral Productscontinues to provide us with a ready source of cash should it be needed.Finally, following the acquisition of Pegasus and the improvements inproduction at Black Wattle, I look forward to the future with confidence.Michael HellerChairmanBisichi Mining PlcCONSOLIDATED INCOME STATEMENTfor 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 13,267turnover 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 2,431adjustments Gains on financial assets 12 - - Increase in value of investment - - 1,868property - Group - Joint venture - - 192 Profit on disposal of property 132 - - Share based payments charge (5) - (6) Operating profit after 1 1,207 925 4,485adjustments 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) 437interest Profit attributable to equity 757 540 2,845shareholders 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 PlcCONSOLIDATED BALANCE SHEETAs 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 14,990to 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 PlcCONSOLIDATED CASH FLOW STATEMENTFor 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 4,359adjustments 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 651liabilities Net interest paid (204) (202) (374) Income taxes paid (47) (58) (466) Net receipts/payments held for (23) - 99trading investments Net cash from operating (320) 1,734 2,902activities Cash flows from investing 130 (706) (2,250)activities Cash flows from financing (37) (34) 1,003activities Net (decrease)/increase in cash (227) 994 1,655and 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) 507end of period Bisichi Mining PlcCONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITYFor 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) 9,668January 2004 Profit for the - - - 540 540 (16) 524period Exchange - 149 - - - 149 (8) 141adjustments ______ ______ ______ _____ _____ ______ ______ ______ 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) 10,145June 2004 ______ ______ ______ ______ ______ ______ ______ ______ Balance at 1 1,045 - - 86 8,653 9,784 (116) 9,668January 2004 Profit for the - - - - 2,845 2,845 437 3,282period Exchange - 278 - - - 278 13 291adjustment Share option - - 6 - - 6 - 6charge ______ ______ ______ _____ _____ ______ ______ ______ 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 13,059December 2004 ______ ______ ______ _____ _____ ______ ______ ______ Profit for - - - - 757 757 241 998period Exchange - (397) - - - (397) (47) (444)adjustment Share option - - 5 - - 5 - 5charge ______ ______ ______ _____ _____ ______ ______ ______ 1,045 (119) 11 86 12,067 13,090 528 13,618 Increase in - - - - 187 187 - 187value financial assets at 1 January 2005 Dividend - - - - (209) (209) - (209) ______ ______ ______ _____ _____ ______ ______ ______ Balance at 30 1,045 (119) 11 86 12,045 13,068 528 13,596June 2005 Bisichi Mining PlcACOUNTING POLICIES AND NOTES TO ACCOUNTSBASIS OF ACCOUNTINGThe results for the six months ended 30th June 2005 have been prepared inaccordance with those International Financial Reporting Standards (IFRS) whichare expected to be endorsed by the European Union and to apply to the 2005 fullyear results. The reported comparative period results have been restated onthis basis. The financial statements have been prepared under the historicalcost convention, except for the revaluation of certain properties and financialinstruments. The principal accounting policies are described below.BASIS OF CONSOLIDATIONThe group accounts incorporate the accounts of Bisichi Mining Plc and all ofits subsidiary undertakings, together with the group's share of the results ofits joint ventures and associates.In preparing these financial statements, advantage has been taken of theexemptions 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 inrespect of financial instruments. The fair value of these instruments at thestart of 2005 was passed through reserves, and the subsequent movement in thefirst half of 2005 is reported in the group income statement. The group has notapplied the hedge accounting treatment that would allow such movements to bedeferred 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 businesscombinations that took place before the transition date of 1 January 2004. As aresult, all prior business combination accounting has been frozen at thetransition date. This includes any goodwill that was previously recognised as adeduction from equity.Share-based Payments (IFRS 2 "Share-based Payment")Bisichi has elected only to apply IFRS 2 to all share option schemes whereoptions have been granted since 7 November 2002 and were not fully vested at 1January 2005.Exchange differences arising on consolidation (IAS 21 "Foreign Currencies")Bisichi has elected to deem the cumulative amount of exchange differencesarising on consolidation of the net investments in subsidiaries at 1 January2004 to be zero.TURNOVERTurnover comprises sales of coal and property rental income. Turnover isrecognised when delivery of the product or service has been made and when thecustomer has a legally binding obligation to settle under the terms of thecontract and has assumed all significant risks and rewards of ownership.Turnover is only recognised on individual sales when all of the significantrisks and rewards of ownership have been transferred to a third party. In mostinstances turnover is recognised when the product is delivered to the locationspecified by the customer, which is typically when loaded into transport, wherethe customer pays the transportation costs.Rental income is recognised in the group income statement on a straight-linebasis over the term of the lease.PROPERTY PLANT AND EQUIPMENTThe cost of property, plant and equipment comprises its purchase price and anycosts directly attributable to bringing the asset to the location and conditionnecessary for it to be capable of operating in accordance with agreedspecifications. Freehold land is not depreciated. Other property, plant andequipment is stated at historical cost less accumulated depreciation.Mine developmentThe purpose of mine development is to establish secure working conditions andinfrastructure to allow the safe and efficient extraction of recoverablereserves. Depreciation on mine development is not charged until full productioncommences 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 assetsExpenditure incurred prior to the commencement of working surface mine sites,net of any residual value andtaking into account the likelihood of the site being mined, is capitalisedwithin property, plant and equipment and charged to the income statement overthe recoverable reserves of the scheme.Other assetsThe cost, less estimated residual value, of other property, plant and equipmentis 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, ateach balance sheet date. Changes to the estimated residual values or usefullives are accounted for prospectively. Heavy surface mining and other plant andequipment is depreciated at varying rates depending upon its expected usage.EMPLOYEE BENEFITSShare based remunerationThe company operates a long-term incentive plan and share option scheme. Thefair value of the conditional awards of shares granted under the long-termincentive plan and the options granted under the share option scheme aredetermined at the date of grant. This fair value is then expensed on astraight-line basis over the vesting period, based on an estimate of the numberof shares that will eventually vest. At each reporting date, the fair value ofthe non-market based performance criteria of the long-term incentive plan isrecalculated and the expense is revised. In respect of the share option scheme,the fair value of options granted is calculated using a binomial model.PensionsThe company operates a defined contribution pension scheme. The contributionspayable to the scheme are expensed in the period to which they relate.FOREIGN CURRENCIESMonetary assets and liabilities are translated at year end exchange rates andthe resulting exchange rate differences are included in the consolidated incomestatement within the results of operating activities if arising from tradingactivities and within finance cost/income if arising from financing.For consolidation purposes, income and expense items are included in theconsolidated income statement at average rates, and assets and liabilities aretranslated at year end exchange rates. Where foreign operations are disposedof, the cumulative exchange differences of that foreign operation arerecognised in the consolidated income statement when the gain or loss ondisposal is recognised.FINANCIAL INSTRUMENTSBank loans and overdraftsBank loans and overdrafts are included as financial liabilities on the groupbalance sheet at the amounts drawn on the particular facilities. Interestpayable on those facilities is expensed as a finance cost in the period towhich it relates.Finance lease liabilitiesFinance lease liabilities arise for those investment properties held under aleasehold interest and accounted for as investment property. The liability isinitially calculated as the present value of the minimum lease payments,reducing in subsequent reporting periods by the apportionment of payments tothe lessor, as described above under the heading for lease payments.Interest rate derivativesThe group uses derivative financial instruments to manage the interest raterisk associated with the financing of the group's business. No trading in suchfinancial instruments is undertaken.At each reporting date, these interest rate derivatives are recognised at fairvalue, being the estimated amount that the group would receive or pay toterminate the agreement at the balance sheet date, taking into account currentinterest rates and the current credit rating of the counterparties. The gain orloss at each fair value remeasurement is recognised immediately in the groupincome statement.Financial assets/liabilities held for trading or short-term gain are measuredat fair value and movements in fair value are charged/credited to theconsolidated income statement in the period.INVESTMENT PROPERTIESInvestment 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 propertieswhen held for long-term rental yields, and after consideration has been givento a number of factors including length of lease, quality of tenant andcovenant, value of lease, management intention for future use of property,planning consents and percentage of property leased. Investment properties arerevalued annually by professional external surveyors and included in thebalance sheet at their fair value. Gains or losses arising from changes in thefair values of assets are recognised in the consolidated income statement. Inaccordance with IAS 40, investment properties are not depreciated. Thedifference between the book value of the investment property and the firstvaluation on recognition as an investment property is taken to reserves inaccordance with IAS 40. Properties held for use in the business or in thecourse of restoration, renovation or held for development or sale, are notrecognised as investment properties and are held at depreciated historicalcost.JOINT VENTURESInvestments in joint ventures, being those entities over whose activities thegroup has joint control, as established by contractual agreement, are includedat cost together with the group's share of post acquisition reserves, on a netequity basis.ASSOCIATESUndertakings in which the group has a participating interest of not less than20% in the voting capital and over which it has the power to exert significantinfluence are defined as associated undertakings. The financial statementsinclude the appropriate share of the results and reserves of thoseundertakings.INVESTMENTSFixed asset investments of the company are stated in the balance sheet at costless provisons for impairment. Profits or losses on the disposal of theseinvestments and provisions for impairment are taken to the income statement inthe period of disposal/impairment.DEFERRED TAXDeferred tax is the tax expected to be payable or recoverable on differencesbetween the carrying amounts of assets and liabilities in the financialstatements and the corresponding tax bases used in the tax computations, and isaccounted for using the balance sheet liability method. Deferred taxliabilities are generally recognised for all taxable temporary differences anddeferred tax assets are recognised to the extent that it is probable thattaxable profits will be available against which deductible temporarydifferences can be utilised. In respect of the deferred tax on the revaluationsurplus, this is calculated on the basis of the chargeable gains that wouldcrystallise on the sale of the investment portfolio as at the reporting date.The calculation takes account of indexation on the historical cost of theproperties and any available capital losses.Deferred tax is calculated at the tax rates that are expected to apply in theperiod when the liability is settled or the asset is realised. Deferred tax ischarged or credited in the group income statement, except when it relates toitems charged or credited directly to equity, in which case it is also dealtwith in equity.DIVIDENDSDividends payable on the ordinary share capital are recognised as a liabilityin the period in which they are approved.CASH AND CASH EQUIVALENTSCash comprises cash in hand and on-demand deposits. Cash equivalents comprisesshort-term, highly liquid investments that are readily convertible to knownamounts of cash and which are subject to an insignificant risk of changes invalue. 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 aprofit of ‚£757,000 (2004: ‚£540,000) The basic earnings per share have beencalculated on 10,451,506 (2004: 10,451,506) ordinary shares being in issueduring the period. The diluted earnings per share have been calculated on thenumber of shares in issue of 10,451,506 (2004: 10,451,506) plus the dilutivepotential 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 withinthe meaning of section 240 of the Companies Act 1985. Statutory accounts forthe year ended 31 December 2004 which were prepared under UK generally acceptedaccounting principles (UKGAAP), have been delivered to the Registrar ofCompanies; the report of the auditors on those accounts was unqualified and didnot 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 17October 2005.ENDBISICHI MININGRelated Shares:
Bisichi