* Mine remained closed. Access to Panguna mine still not possible.

The Panguna mine site is still a ‘no go zone'. There is a landowner claim in the National Court of Papua New Guinea seeking declarations on landowner representation and compensation for the period of mine closure. Bougainville Copper Limited (BCL) is defending the matter.

* Slow progress towards autonomous government.

The date for the election of the first ‘autonomous' government under the new constitution is yet to be announced.

* Continued diversification of investment into equities.

As a result of BCL being unable to mine at Panguna its income is derived from cash and equity investments. The move from purely cash to a mix of cash and equities has reduced the impact of the depreciating value of the kina against the Australian dollar and lower interest rates compared with the previous year.

* Tax dispute of substantial proportions

The IRC has issued BCL with a demand for additional tax of K13.24 million, which together with penalties totals K32.98 million. This represents approximately 21% of BCL's non-mining assets.

2003 2002

Investment income (K'000) 19,234 11,973

Operating profit (K'000) 14,497 7,870

Earnings per share (toea) 3.61 1.96

Shareholders' funds (K'000) 316,104 301,607

Return on shareholders' funds (per cent) 4.6 2.6