Activities during the year and business review
The company continues its mining and property investment activities. Income for the year was derived from sales of coal from its South African operations and property rental income.

The results for the year and state of affairs of the group and the company at 31 December 2006 are shown on pages 23 to 46 and the business review on pages 10 and 11. (Click here to download full report)

Dividend
The directors recommend the payment of a dividend of 2.50p per share on the ordinary share capital for the year under review. The dividend will be payable on Monday 13 August 2007 to shareholders registered at the close of business on 23 July 2007.

Investment properties
The investment property portfolio is stated at its open market value of £17,270,000 at 31 December 2006, as valued by professional external valuers.

Financial instruments
Note 19 to the financial statements sets out the risks in respect of financial instruments. The board reviews and agrees overall treasury policies, delegating appropriate authority to the managing director. Financial instruments are used to manage the financial risks facing the group – speculative transactions are not permitted. Treasury operations are reported at each board meeting and are subject to weekly internal reporting.

Derivatives have been put in place, as required by its bankers, to reduce interest rate risk.

Directors
The directors of the company for the whole year were M A Heller, A R Heller, C A Joll, T M Kearney and J A Sibbald. The directors retiring by rotation are A R Heller, C A Joll and J A Sibbald who offer themselves for re-election.

Andrew Heller has been a director since 1998. He is a chartered accountant and has been employed by the group since 1994 under a contract of employment determinable at three months notice.

Christopher Joll has been a director since 2001 and has a contract of service determinable at three months notice. He holds a number of nonexecutive directorships of un-quoted companies. He is chairman of MJ2 Limited, a financial public relations company, which provides services to the group.

John Sibbald has been a director since 1988. He is a retired chartered accountant. Most of his career was in stockbroking in the City of London specialising in mining and international investment. He has a contract of service determinable at three months notice.

No director had any material interest in any contract or arrangement with the company during the year other than as shown in this report.

Directors’ shareholdings
The interests of the directors in the shares of the company, including family and trustee holdings where appropriate, were as follows:

There have been no changes in the above shareholdings since 31 December 2006.

Details of the options to subscribe for new ordinary shares of the company granted to the directors are contained under “Share option schemes” in the remuneration report on page 19.

Substantial interests
The following have advised that they have an interest in 3 per cent or more of the issued share capital of the company as at 27 March 2007:

Statement as to disclosure of information to auditors
The directors in office on 31 December 2006 have confirmed that they are aware there is no relevant audit information of which the auditors are unaware. Each of the directors have confirmed that they have taken all the steps they ought to have taken as directors in order to make themselves aware of any relevant audit information and to establish that it has been communicated to the auditor.

Corporate governance
The company has adopted the Guidance for Smaller Quoted Companies published by the Quoted Companies Alliance (QCA)

The QCA provides guidance to companies outside the FTSE 350 index, referred to generally as SQCs. The QCA's guidance covers the implementation of the Combined Code on Corporate Governance for SQCs and the paragraphs below set out how the company has applied this guidance during the year. The company has complied with the QCA's guidance throughout the year.

Principles of corporate governance
The group’s board appreciates the value of good corporate governance not only in the areas of accountability and risk management but also as a positive contribution to business prosperity. The board endeavours to apply corporate governance principles in a sensible and pragmatic fashion having regard to the individual circumstances of the group's business. The key objective is to enhance and protect shareholder value.

Board structure
During the year the board comprised the executive chairman, the managing director, one other executive director, and two non-executive directors. Their details appear on page 16.

The board is responsible to shareholders for the proper management of the group. A statement of directors’ responsibilities in respect of the accounts is set out on page 21. The non-executive directors have a particular responsibility to ensure that the strategies proposed by the executive directors are fully considered. To enable the board to discharge its duties, all directors have full and timely access to all relevant information and there is a procedure for all directors, in furtherance of their duties, to take independent professional advice, if necessary, at the expense of the group. The board has a formal schedule of matters reserved to it and meets bi-monthly. It is responsible for overall group strategy, approval of major capital expenditure projects and consideration of significant financing matters.

The following committees, which have written terms of reference, deal with specific aspects of the group’s affairs.

• The nomination committee is chaired by C A Joll and comprises the non-executive directors and the executive chairman. The committee is responsible for proposing candidates for appointment to the board, having regard to the balance and structure of the Board. In appropriate cases recruitment consultants are used to assist the process. All Directors to re-election at least every three years. director’s report 14 15
• The remuneration committee is responsible for making recommendations to the board on the company’s framework of executive remuneration and its cost. The committee determines the contract terms, remuneration and other benefits for each of the executive directors, including performance related bonus schemes, pension rights and compensation payments. The board itself determines the remuneration of the non-executive directors. The committee comprises the non-executive directors. It is chaired by C A Joll. The report on directors’ remuneration is set out on pages 18 and 19.
• The audit committee comprises the two non-executive directors and is chaired by C A Joll. Its prime tasks are to review the scope of external audit, to receive regular reports from PKF(UK) LLP and to review the half-yearly and annual accounts before they are presented to the board, focusing in particular on accounting policies and areas of management judgment and estimation. The committee is responsible for monitoring the controls which are in force to ensure the integrity of the information reported to the shareholders. The committee acts as a forum for discussion of internal control issues and contributes to the board’s review of the effectiveness of the group’s internal control and risk management systems and processes. The committee also considers the need for an internal audit function. It advises the board on the appointment of external auditors and on their remuneration for both audit and non-audit work, and discusses the nature and scope of the audit with the external auditors. The committee, which meets formally at least once a year, provides a forum for reporting by the group’s external auditors. Meetings are also attended, by invitation, by the managing director and group finance director.

The audit committee also undertakes a formal assessment of the auditors’ independence each year which includes:

• a review of non-audit services provided to the group and related fees;
• discussion with the auditors of a written report detailing all relationships with the company and any other parties that could affect independence or the perception of independence;
• a review of the auditors’ own procedures for ensuring the independence of the audit firm and partners and staff involved in the audit, including the regular rotation of the audit partner; and
• obtaining written confirmation from the auditors that, in their professional judgement, they are independent.

The audit committee report is set out on page 20.

An analysis of the fees payable to the external audit firm in respect of both audit and non-audit services during the year is set out in note 4 to the financial statements.

Board and board committee meetings
The board held five regular meetings during 2006 which were attended by all directors.

The remuneration committee met twice with all members in attendance.

The audit committee met once with full attendance and with the auditors present prior to publication of the 2005 annual results. The members of the committee consulted informally prior to the publication of the 30 June 2006 half year's results which were approved by the full board.

The business of the nommination committee was dealt with by the full board and the committee had no formal meetings.

Assessment of directors' performance
The performance of the non-executive directors is assessed by the chairman and the managing director and is discussed with the senior independent director. Their recommendations are discussed at the nomination committee prior to proposals for re-election being recommended to the board. The performance of executive directors is discussed and assessed by the remuneration committee.

The directors will take outside advice in reviewing performance when they consider this necessary. The chairman and managing director have confirmed that they are satisfied with the commitment and performance of the non-executive directors.

Independent Directors
The senior independent non-executive director is Christopher Joll. The other independent non-executive director is John Sibbald.

MJ2 Limited is a company in which Christopher Joll is a minority shareholder and director. MJ2 provides financial public relations services to the company on an ad hoc basis in relation to specific transactions. John Sibbald has been a director for over nine years. For these reasons the criteria for independence set out in the Revised Combined Code are not entirely met. Despite this, the board considers that Mr Joll and Mr Sibbald are both independent.

The independent directors regularly meet prior to board meetings to discuss corporate governance issues.

Directors and officers liability insurance
The group maintains directors and officers liability insurance which is reviewed annually and is considered to be adequate.

Internal control
The directors are responsible for the group’s system of internal control and reviewing its effectiveness.

The board has designed the group’s system of internal control in order to provide the directors with reasonable assurance that its assets are safeguarded, that transactions are authorised and properly recorded and that material errors and irregularities are either prevented or would be detected within a timely period. However, no system of internal control can eliminate the risk of failure to achieve business objectives or provide absolute assurance against material misstatement or loss.

Communication with shareholders
Communication with shareholders is given a high priority. Extensive information about the group and its activities is given in the Annual Report and Accounts, and the Interim Report, which are sent to shareholders. Further information is available on the company's website, www.bisichi.co.uk. There is a regular dialogue with institutional investors. Enquiries from individuals on matters relating to their shareholdings and the business of the group are dealt with informatively and promptly.

Payment of suppliers
The company agrees terms of contracts when orders are placed. It is company policy that payments to suppliers are made in accordance with those terms, provided that suppliers also comply with all relevant terms and conditions. Trade creditors outstanding at the year end represented 8.32 days trade purchases (2005 - 5.31 days).

Disapplication of pre-emption rights
Shares allotted for cash must normally first be offered to shareholders in proportion to their existing shareholdings. The directors will, at the forthcoming Annual General Meeting of the company (Resolution 9), seek power to allot shares as if the pre-emption rights contained in Section 89(1) of the Companies Act 1985 did not apply up to a maximum of 10% of the company's issued share capital. The authority will expire at the earlier of the conclusion of the company's next annual general meeting and 15 months from the passing of Resolution 9.

Donations
No political or charitable donations were made during the year (2006: Nil).

Going concern
The directors confirm that they have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. For this reason, the going concern basis has been adopted in the preparation of the financial statements.

Other matters
The company is not a close company as defined by the Income and Corporation Taxes Act 1988.

PKF (UK) LLP have expressed their willingness to continue in office as auditors. A proposal will be made at the annual general meeting for their re-appointment, and for their remuneration to be determined by the directors. By order of the board

By order of the board
M C Stevens, Secretary
30-35 Pall Mall
London SW1Y 5LP
27 March 2007