Bisichi Regulatory News (BISI)

18 Oct 2005 06:00

BISICHI MINING PLC Bisichi Mining PLC announces that the effect of International Financial Reporting Standard on its financial reporting are as follows:IntroductionOn 7 June 2002, the European Parliament approved a Regulation requiring alllisted companies in the European Union to prepare consolidated financialstatements under International Financial Reporting Standards ("IFRS") forfinancial periods beginning on or after 1 January 2005. Bisichi Mining PLC("Bisichi") will report its results under IFRS for the year ending 31 December2005; its first results to be reported under the new standards will be for thesix months ended 30 June 2005.In order to comply with IFRS, Bisichi will need to provide comparative numbers.The purpose of this paper is to show how balance sheets and income statementspreviously prepared under UK generally accepted accounting practice ("UK GAAP")will change under IFRS, and to explain the adjustments to reconcile the figuresfrom one basis of accounting to the other. The main reconciling items and theireffects on the balance sheet and income statement are set out as follows:Appendix 1 - Balance Sheet at 31 December 2004Appendix 2 - Income Statement for the year ended 31 December 2004Appendix 3 - Balance Sheet at 30 June 2004Appendix 4 - Income Statement for the six months ended 30 June 2004Basis of PreparationThe figures have been restated on the basis of our interpretation of all IFRScurrently applicable, and are unaudited. It is possible that conventions whichdiffer from our current interpretation will evolve within our sector, andInternational Financial Reporting Standards are subject to ongoing amendment;accordingly, the amounts disclosed in this paper may be subject to revision.Key ChangesThe main differences between UK GAAP and IFRS for the financial statementsunderreview are: * Property revaluations - surpluses or deficits on investment property revaluations are shown on the face of the income statement rather than as a movement in reserves; only a valuation movement above the cost of a development property is still taken direct to the revaluation reserve; * Financial instruments - the fair value of derivatives are recorded in the balance sheet and the movement in their value is taken to reserves or to the income statement; * Share based payments - In accordance with IFRS 2 "Share Based Payment", Bisichi has recognised a charge to the income statement representing the fair value of outstanding share options granted. The fair value of outstanding share options granted has been calculated using the Binomial options valuation model. The fair value is charged to income over the relevant option's vesting period, adjusted to reflect actual and expected levels of vesting; * Events after the balance sheet date - a proposed dividend is no longer considered to be an adjusting post-balance sheet event, but is instead a deduction from reserves in the year in which it is paid; and * Deferred tax - contingent capital gains tax implicit within a property valuation is accrued as a deferred tax liability. Transitional arrangementsIFRS 1 "First-time Adoption of International Financial Reporting Standards"sets out the procedures that the Group must follow when it adopts IFRS for thefirst time as the basis for preparing its consolidated financial statements. Ingeneral, the Group is required to determine its IFRS accounting policies andapply these retrospectively to determine its opening balance sheet as at 1January 2004 ("the transition date") under IFRS. The standard allows a numberof exceptions to this general principle to assist groups in the transition toreporting under IFRS. Where Bisichi has taken advantage of these exemptionsthey are noted below. * 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 date of 1 January 2004. As a result,all prior business combination accounting has been frozen at the transitiondate. This includes any goodwill that was previously recognised as a deductionfrom 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. * Financial Instruments: Recognition and Measurement (IAS 39) The comparative periods have not been restated for IAS39, particularly inrespect of derivative financial instruments. The fair value of theseinstruments at the start of 2005 was passed through reserves, and thesubsequent movement in the first half of 2005 is reported in the group incomestatement. The group has not applied the hedge accounting treatment that wouldallow such movements to be deferred in equity.Presentation of Financial StatementsUnder IFRS, the profit and loss account is renamed the income statement, butthere is no set format or layout of financial statements prepared under IFRSakin to those of Schedule 4 Companies Act 1985; these will develop over timethrough industry practice. Accordingly, the presentations set out in Appendices1 to 4 do not necessarily represent how the income statements and balancesheets will look, but have been designed to demonstrate as clearly as possiblethe specific differences between UK GAAP and IFRS.Performance ReportingThe effect of adopting IFRS as at 31 December 2004, and for the year thenended, on our key performance measures are set out below:Cash FlowThe introduction of IFRS will not affect the cash flows of the business. Thepresentation of the cash flow statement for Bisichi will not differsignificantly from that under UK GAAP and, therefore, an analysis of the cashflow statement does not fall within the scope of this paper.TaxationAs the financial statements of Bisichi and each of its subsidiary undertakingswill continue to be prepared under UK GAAP or South African GAAP asappropriate, the introduction of IFRS will have no impact on the taxationstatus or tax payments of the Group.Contact:Bisichi Mining plcRobert Corry 020 7415 5030Bisichi Mining Plc Appendix 1Adoption of IFRSConsolidated balance sheet 31 December 2004 IFRS Notes 31 December 2004 UK GAAP Adjustments IFRS ‚£'000 ‚£'000 ‚£'000 Assets Non-current assets Value of properties 14,990 14,990attributable to group Fair value of head - 343 2 343lease Property 14,990 343 15,333 Plant and equipment 5,046 5,046 Investments in joint 1,536 8 1,536ventures Other investments 384 384 Deferred tax 243 3 243 ______ ______ Total non-current 21,956 22,542assets Current assets Inventories 36 36 Trade and other 2,776 (243) 3 2,533receivables Financial assets - 403 403held for trading investments Cash and cash 950 950equivalents 4,165 3,922 Liabilities Current liabilities Financial liabilities - Borrowings (1,490) (1,490) Trade and other (3,838) 209 5 (3,629)payables Current tax (315) (315)liabilities (5,643) (5,434) Non-current liabilities Financial liabilities - borrowings (5,580) (5,580) Provisions - (343) 2 (343) Deferred tax (58) (1,990) 3 (2,048) Net assets 14,840 (1,781) 13,059 Equity Share capital 1,045 1,045 Revaluation reserve 9,663 (9,663) 2 - Share option reserve - 6 6 6 Translation reserve - 278 7 278 Other reserves 86 86 Retained earnings 3,712 7,598 11,310 14,506 (1,781) 12,725 Minority interest 334 ______ 334 14,840 (1,781) 13,059 Bisichi Mining Plc Appendix 2Adoption of IFRSIncome statement for the year ended 31 December 2004 Year ended IFRS Notes Year ended 31 December Adjustments 31 December 2004 2004 UK GAAP IFRS ‚£'000 ‚£'000 ‚£'000 Group & share of joint 13,267 13,267venture turnover Less: joint ventures (1,719) (1,719) Group turnover 11,548 11,548 Operating costs (9,164) 47 1 (9,117) Operating profit before 2,384 2,431adjustments Increase in value of - 1,868 2 1,868investment property - Group - Joint venture 192 2 192 Share based payments charge - (6) 6 (6) Share of operating (loss)/ (34) (34)profit in joint venture Interest receivable 25 25 Interest payable (399) (399) Profit before taxation 1,976 2,101 4,077 Taxation - Group (300) (488) 3 (788) - Joint venture (7) - (7) Profit after taxation 1,669 1,613 3,282 Minority interest (437) - (437) Profit for the financial 1,232 1,613 2,845year Dividend (209) 209 5 - Retained profit for the 1,023 1,822 2,845financial year Bisichi Mining Appendix 3Adoption of IFRSConsolidated balance sheet 30 June 2004 IFRS Notes 30 June 2004 UK GAAP Adjustments IFRS ‚£'000 ‚£'000 ‚£'000 Assets Non-current assets Goodwill 5 (5) 1 - Value of properties 13,092 13,092attributable to group Fair value of head lease - 359 2 359 Property 13,092 359 13,451 Plant and equipment 3,814 3,814 Investments in joint 1,442 8 1,442ventures Other investments 352 352 Deferred tax - 232 3 232 ______ ______ Total non-current assets 18,705 19,291 Current assets Inventories 33 33 Trade and other 2,259 (232) 3 2,027receivables Financial assets - held 453 453for trading investments Cash and cash equivalents 246 246 2,991 2,759 Liabilities Current liabilities Financial liabilities - borrowings (608) (608) Deferred tax liabilities - - Trade and other payables (4,214) (4,214) Current tax liabilities (621) (621) ______ ______ (5,443) (5,443) Non-current liabilities Financial liabilities - Borrowings (4,523) (4,523) Provisions - (359) 2 (359) Deferred tax (56) (1,524) 3 (1,580) Net assets 11,674 (1,529) 10,145 Capital & reserves Share capital 1,045 1,045 Revaluation reserve 7,573 (7,573) 2 - Share option reserve - - Translation reserve - 147 7 147 Other reserves 86 86 Retained earnings 3,110 5,897 9,007 Total shareholders' equity 11,814 1,529 10,285 Minority interest (140) _____ _ (140) 11,674 (1,529) 10,145 Bisichi Mining Plc Appendix 4Adoption of IFRSIncome statement for the six months ended 30 June 2004 Six months IFRS Notes Six months ended ended Adjustments 30 June 2004 30 June 2004 UK GAAP IFRS ‚£'000 ‚£'000 ‚£'000 Group & share of joint 5,117 5,117venture turnover Less: joint ventures - - Group Turnover 5,117 5,117 Operating costs (4,234) 42 1 (4,192) Operating profit 883 925 Share of operating 45 45(loss)/profit in joint venture Interest receivable 8 8 Interest payable (210) (210) Profit before taxation 726 42 768 Taxation - Group (234) (234) - Joint venture (10) (10) Profit after Taxation 482 42 524 Minority interest 16 16 Profit for the Financial 498 42 540Year Dividend - (188) 5 (188) Retained Profit for the 498 (146) 352financial year Bisichi Mining PlcAdoption of IFRSNotes1 GoodwillOn the transition to International Financial Reporting Standards, the companyreviewed the carrying value of its goodwill at 1 January 2004 and determinedthat the unamortized balance should be written down to zero as at that date.2 Revaluation surplus reported in the group income statementIAS40, Investment Property, requires that the surplus or deficit on therevaluation of investment properties is reported in the group income statement.This includes the revaluation of the group's investment properties, and, for2004, the group's share of the revaluation surplus on a property held in ajoint ventureThe group balance sheet in appendices 1 and 3 show the consequentreclassification of the UK GAAP revaluation reserve to the retained profitreserve. This change in accounting will not affect distributable reserves.Previously, revaluation surpluses or deficits, to the extent that any deficitwas not permanent, were reported as a movement in the revaluation reserve.Deferred tax previously classified as debtors falling due in more than one yearare reported as non-current assets.3 Deferredtax on the revaluation surplus reported as part of the tax chargeIAS12, Income Taxes, requires a provision for the tax that would be payable ifthe portfolio was sold. This is included within deferred tax and is a reductionin net assets. The movement in this provision in any reporting period isreported as part of the tax charge in the group income statement.Previously under UK GAAP, FRS19, Deferred Tax, specifically prohibited thisprovision being made.4 Fair value of derivative financial instrumentsIAS39, Financial Instruments: Recognition and Measurement, requires theinterest rate hedging instruments, which the group uses to manage interest raterisk, to be carried at fair value. Movements in fair value are reported in thegroup income statement. The hedge accounting treatment that would allow suchmovements to be deferred in equity has not been applied.Previously, the fair value of these financial instruments was only disclosed inthe notes to the financial statements.Listed investments which were previously held at cost have been revalued underthe requirements of IAS 39 to fair value at the balance sheet date.The group has taken advantage of the provisions of IAS 39 which permitprospective application of this standard from 1 January 2005.5 Dividends not declared by the period endIAS10, Events after the Balance Sheet Date, requires that dividends notdeclared by the end of the accounting period are excluded from the results.Previously, dividends declared after the end of the accounting period wereincluded as a deduction from profit for the period.6 Share option expenseIFRS2, Share-based Payment, requires an expense to be reported in the groupincome statement, based on the fair value of the options granted to directorsand employees of the group, to be spread over the vesting period of theoptions. The group has taken advantage of the exemption allowed by IFRS1,First-time adoption of IFRS, to only apply this to options granted after 7thNovember 2002 and which were not fully vested at 1 January 2005.7 Foreign currency translationIAS 21, The effects of changes in foreign exchange rates, requires net exchangedifferences arising on the translation of foreign entities to be separatelytracked within equity and the cumulative amounts disclosed. The group has takenadvantage of the exemption allowed by IFRS 1 to deem the cumulative exchangeadjustment at 1 January 2004 to be zero.8 Joint ventures single line equity accountingThis is a presentational change only. The interest in, and share of results of,joint ventures is shown as a single line in the income statement and on thegroup balance sheet, including the group's share of the revaluation surplus.ENDBISICHI MINING