TIDMELX
RNS Number : 1018Y
El Oro Ltd
28 February 2017
EL ORO LTD 28 February 2017
Interim Results
El Oro Ltd announces its interim results for the six months
ended 31 December 2016.
The interim results for the six months ended 31 December 2016
will be posted to shareholders and will be available shortly on the
Company's website www.eloro.com.
Extracts from the interim results are set out below.
For further information, please contact:
Aztec Financial Services (Guernsey) Limited
Chris Copperwaite
Tel: 01481 748 831
El Oro Limited
Robin Woodbine Parish, Chairman
Una Ni Dhonaill
Tel: 020 7581 2782
EL ORO LTD
CHAIRMAN'S STATEMENT
Interim Report as at 31 December 2016
The El Oro Group's profit before taxation for the six month
period ended 31 December 2016 was GBP5,132,080 (loss before
taxation for the six months ended 31 December 2015: GBP3,875,771).
The Group's net assets at 31 December 2016 were GBP53,708,984 or
84.6p per share (net assets at 31 December 2015: GBP46,971,653 or
73.3p per share).
El Oro Limited's share price as at 31 December 2016 was 65p
(share price at 31 December 2015: 50p); a 30% increase. This
compares to a 12% increase in the FTSE All Share index and an 11%
increase in the FTSE Small Cap index over the same period.
The welcome relief evinced by these figures is akin to that
experienced by a swimmer emerging from a dive into very cold water;
albeit in our case the immersion has continued for 4 frigid years.
We cannot help but be heartened by the emergence of abundant clumps
of aconites and snowdrops, indicating the demise of Winter and
proximity of Spring whilst the S & P, Dow and FTSE indexes gain
previously unattained altitude.
The recovery that began primarily in Commodities' markets in
February last year, found new fervour in Sterling terms after
Brexit; the triumph of Donald Trump and the realisation that China
was not on the point of imminent collapse placed a new plateau
beneath copper, coal and iron ore; more recently the scatter-gun
technique of the new US President insulting all and sundry, and the
quirkiness of the Korean President have re-ignited demand for Gold,
aided by the outlook for inflation. In respect of his apparent
antagonism to the mores of today, we very much hope he implements
Lee Kuan Yew's principle: 'I try to be correct, not politically
correct'.
Coal, long the pariah of the energy world has been re-included
in the confines of acceptable conversation, as President Trump
changes course from worshipping at the altar of the Climate Change
consensus to what may be established as a healthy scepticism. The
saga of falsified figures on global warming begins to unfold
publicly, and the disadvantages of burning wood become more
obvious, just as Drax completes its conversion from coal to
imported Wood chip. The woes of Toshiba, brought to its knees by
Nuclear Power plant cost-overruns in the United States, highlight
the dangers of private sector involvement in that intensely
regulated industry; the warning lights are flashing for Hinkley
Point.
It appears ever more perverse that in the light of the
relentlessly-burgeoning deficit, the 2 great White elephants of our
age, HS2 and Hinkley Point, should seem to be sailing serenely
forward; the lesson of the egregious subsidies provided in Northern
Ireland, and consequent fall of its Government have obviously
escaped attention in the corridors of power; at the same time, the
expected revenue from Stamp Duty has fallen sharply, as a result of
the punitive increases imposed by the previous Chancellor: enormous
harm has been done to the whole assembly of Estate Agents, property
owners, developers and the entire Property sector. It has also
exacerbated the hollowing-out of Central London, into an enclave of
non-Doms, and Middle-Eastern hubbly-bubbly smokers, with even the
Knightsbridge Barracks in all its modernist monstrosity, apparently
destined for a similar fate. The sacrifice of Sefton and his
Guardsmen will soon be extinguished by the swish of the Maybach
limos, their passengers cowering behind their darkened windows.
It is quite possible that the long period of deflation endured
by Commodity producers, whilst enjoyed by consumers, is drawing to
a close. Certainly, indications within the UK are for higher levels
of Inflation, as a result of the fall in Sterling, and interest
rates in the US would also appear to be on a higher trajectory.
In respect of our own portfolio, despite its fairly swift
failure to achieve sufficient acceptances, the KLK offer for our
holding in M.P. Evans has raised that company to a new price level,
which has been maintained and enhanced by the recent purchases
undertaken by KLK in the market.
Whilst still well short of the estimate of value provided by
M.P. Evans during the attempted takeover, we are pleased to see
that it underpins their valuation, whilst reinforcing the tenacious
stewardship of the company that the management has displayed over
many years. This can but reflect positively on our other holdings
in the sector, underpinned by a firmer Palm Oil price, amidst
burgeoning demand in Asia. We do believe that it underscores the
durability and inherent value of many of the larger positions in
the portfolio.
We were also the beneficiaries in the Autumn of a bid, firstly
from Ancala and subsequently from Severn Trent for our holdings in
Dee Valley Water Company, again held for a considerable length of
time. Due to a nuance of the articles, whereby a majority of
shareholdings had to vote in favour, this had to be resolved by a
hearing in Court, and has only in the past few weeks been
sanctioned to go ahead. Whilst we will regret the loss of our
steady and unimpeachable dividend paid consistently by a fine
company, we will use the proceeds to reduce the outstanding
debt.
Many of our long-term holdings have also advanced to new or near
previous highs, including James Halstead, Young & Co, Renishaw,
Fulcrum Utility, Royal Dutch Shell, British American Tobacco and
Porvair, to mention a few. Herald Investment Trust with its loyal
commitments to Apple amongst other technology triumphs, continues
to enhance the reputation of its manager, Katie Potts.
Hurricane Energy, enhanced by stellar drill results and greater
optimism in the oil sector has made further advances since the
full-year, and may have more to come. Some more recent holdings,
such as Burford Capital and Bowleven have also made further
progress.
Less encouraging has been the debacle over Troy, which fell hard
after an injudicious share sale during its close period following a
rights' issue and the subsequently announced pit-wall collapse. The
reliance on a single mine in an Equatorial area subject to
consistently heavy rain stands as a severe rebuke to our failure to
take more profits when they were available. It will be a long haul
back to credibility, but the Reserves of 300,000 ounces, still
remaining despite 9 months' mining, gives us a shred of
comfort.
Elsewhere in the Mining sector, Endeavour Mining , B2 Gold, and
Nevsun, the latter enhanced by its takeover of Reservoir Minerals'
huge copper deposit in Serbia, amongst others, continue to show
promise: it is possible that the sunshine in South Africa
excessively enthuses one's judgment at the recent Mining
conferences in and around Cape Town, but a more charitable view is
that the worst has passed in the Mining Sector, and a more
favourable era has resumed for carefully selected stocks. The same
might also be true for the Lithium sector, where various car
companies, not least Volkswagen, now seeking to make amends for its
'Defeat Devices' on its diesel cars, are making public their
commitment to Electric cars.
On the home front, the Battle over Brexit has now moved into the
parliamentary arena, whilst the nay-sayers and gloom merchants
continue their sniping from the side lines. Europe itself faces its
days of destiny, with elections on the horizon in France and the
Netherlands, as well as Italy, each with its own brand of maverick
politicians, any one of whom could upset the cosy Socialist
consensus that has embroiled its constituent parts for 50 years or
more.
Greece's ejection or departure from the Euro looms ever closer,
perhaps to be followed by Italy. Either event, however unlikely,
must now be considered feasible, in the light of events on both
sides of the Atlantic. Undoubtedly such uncertainty seems to bode
well for holders of precious metals, whilst Britain's new
trajectory towards more vibrant and populous economies of Asia,
Australasia and the Americas will in due course bring it far
greater prosperity than sticking with the failed system of dogmatic
and authoritarian socialism that the E.U represents.
It is to be hoped that President Trump's more pragmatic and
sanguine approach towards relations with Russia will not be
thwarted by the nostalgic yearning for the old certainties of the
Cold War: the malevolence of the East Coast Press (even when
exacerbated by the new President's outbursts) and the interests of
the Military-Industrial complex, combined with a long history of
antagonism to the old USSR, will be formidable opponents to the
recognition of Russia, whatever its internal failings, as our
foremost ally in defeating the rise of Militant Islam.
In Britain, huge challenges face the new Conservative
administration, where the NHS remains embedded in excess
expenditure and severe management challenges; Defence has been
impaired and emasculated, resulting in loss of morale and lack of
reliable equipment, and Education stutters forward, hampered by
modern thinking on providing 'safe spaces' where students can
retreat from being challenged on ideas alien to their customary
thinking; and the suspicion is entrenched that able students are
being passed over for admission to University in favour of those
with 'potential' from more deprived backgrounds.
More pertinent to the Fund Management sector, endless new
regulations are imposed, tying able fund managers in ever more
complex knots from which even Houdini would find it difficult to
escape. The same applies to the Banking sector, and it will be
instructive to see how much of the recent regulatory regime in the
States survives President Trump's intended reforms.
The Housing sector in the UK, often accused of 'hoarding' land
to enhance prices, has recently rebuffed such charges, pointing out
the time taken to secure full planning permission on even the
simplest building plots. President Reagan's maxim that the
Government Is the Problem, rings ever truer.
The current imbroglio over the Rating Reviews, which threatens
especially our beloved Pub sector with an enormous rise in costs,
highlights a taxation structure ill-suited to today's internet era:
it would be perverse if those Clubs, Charities, and old-era
businesses were to be driven out of existence because of their
location in South-East England, whilst the On-line Giants continue
their charmed existence safe in the ether of their tax-free zones.
The increasing burden of the Living wage likewise threatens real
businesses employing actual people, foremost amongst which is the
hospitality sector. In addition, direct taxation remains excessive,
still bordering on 50%, as well as complex, and remains overdue for
simplification and reduction.
We are confident that our larger investments in the hospitality
sector will continue to thrive, but many on the margin will be
seriously threatened and it is to be hoped that the current
Chancellor will be more sensitive to the potential damage than his
predecessor proved to be and prompter in ameliorating the
threats.
Looking to the Future, Shareholders will be aware that a Special
Resolution was passed at the 2016 AGM, to put your company into
liquidation after the 2018 AGM, UNLESS a vote to continue is passed
prior to that date.
Whilst there may well be many who would welcome the bird in the
hand, it was also apparent at that AGM that a sizeable number do
not regard that route as liable to bring best value to
shareholders, not least due to the comparatively illiquid nature of
many of your Company's larger holdings.
Your Board is in the meantime, looking at whatever other options
are available to it, and remains cognisant of the discount
prevailing over the current share price. This has in the past
proved attractive for new arrivals, and undoubtedly continues to be
so, even if of remorse to long-term holders.
It is my personal belief that a continuation would prove to more
advantageous in the longer-term, as we move closer to our no-debt
position and with fewer but larger holdings, many established in
promising and consistently successful areas.
I am sure the Directors will mull over these matters with their
usual panache, and choose a path that will bring benefit to us
all.
In recent weeks, we mourn the passing of Sarah Nops, a loyal
shareholder and doyenne of the Cooking world, whose delicious and
sustaining food has graced many Annual Meetings. We treasure her
memory and the example she set of honest endeavour, tremendous but
unsung talent and stoical disregard of her own suffering.
We also mourn the recent death of Mr.Gwyther, Cobbler, hotelier,
farmer and businessman extraordinaire of Bishop's Castle, who
epitomised so many of the virtues of hard work and mastery of his
own craft: having helped revitalise and re-develop Bishop's Castle
in the 60s,he never forewent his craft of cobbling, repairing shoes
for 4 generations of my family. His essential common sense and
aptitude have been a guiding-light to us for more than half a
century.
Psalm XXIV v 6: For by wise Counsel thou shalt make thy war, and
in the multitude of counsellors there is safety.
As we step forward on more solid ground, I would like to express
my thanks to the splendid team in Cheval Place, Una, Abbie, Nick
and Nancy, as well as Chris Copperwaite and his colleagues in
Guernsey for their support and unflagging efforts during some
trying times. As the songster Johnny Nash wrote 'I can see clearly
now, the rain has gone, I can see all obstacles in my way'.
More obstacles can certainly be expected, but we are now in a
far better position from which to deal with them, and have a
greater degree of confidence that shareholders will benefit from
staying on board for the journey ahead.
Robin Woodbine Parish
28 February 2017
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (Unaudited)
for the six months ended 31 December
31 December 31 December
2016 2015
GBP GBP
Revenue 656,151 776,117
Net gains / (losses) on investments 5,483,782 (3,270,535)
------------ ------------
Total investment income /(loss) 6,139,933 (2,494,418)
Expenses (617,495) (760,069)
------------ ------------
Profit /(loss) before finance
costs and taxation 5,522,438 (3,254,487)
Finance costs (390,358) (621,284)
------------ ------------
Profit /(loss) before taxation 5,132,080 (3,875,771)
Taxation (charge) /credit (504,521) 540,635
Profit /(loss) for the period 4,627,559 (3,335,136)
------------ ------------
Profit /(loss) per share (basic and diluted) 7.3p (5.2p)
------------ ------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Unaudited)
for the six months ended 31 December
31 December 31 December
2016 2015
GBP GBP
Opening capital and reserves
attributable to equity holders 50,598,883 51,827,562
Total comprehensive income
and profit / (loss) for the
financial year 4,627,559 (3,335,136)
Decrease in equity - (2,960)
Dividends paid (net) (1,517,458) (1,517,813)
Closing capital and reserves
attributable to equity holders 53,708,984 46,971,653
------------ ------------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (Unaudited)
As at 31 December
31 December 31 December
2016 2015
GBP GBP
Non-current assets
Property, plant and equipment 619,817 1,094,063
Investment in artwork 500,000 -
Intangible asset 66,000 -
1,185,817 1,094,063
------------ ------------
Current assets
Trade and other receivables 156,691 462,703
Investments held at fair value
through profit or loss 70,582,683 64,421,349
Cash and cash equivalents 719,412 3,087,037
------------ ------------
Total current assets 71,458,786 67,971,089
Current liabilities
Trade and other payables 303,608 513,205
Current tax liabilities 813,888 257,177
Financial liabilities at fair
value through profit or loss 4,683,313 3,549,666
Total current liabilities 5,800,809 4,320,048
------------ ------------
Net current assets 65,657,977 63,651,041
------------ ------------
Non-current liabilities
Borrowings 11,000,000 15,000,000
Deferred tax liabilities 2,134,810 2,773,451
------------ ------------
Total non-current liabilities 13,134,810 17,773,451
------------ ------------
Net assets 53,708,984 46,971,653
------------ ------------
Capital and reserves attributable
to equity holders
Share capital 437,732 444,185
Share premium reserve 6,017 6,017
Capital redemption reserve 356,815 347,402
Merger reserve 3,564 3,564
Retained earnings reserve 52,904,856 46,170,485
------------ ------------
Total equity 53,708,984 46,971,653
------------ ------------
Net asset value per share 84.6 p 73.3 p
------- -------
CONSOLIDATED STATEMENT OF CASH FLOW (Unaudited)
For the six months ended 31 December
31 December 31 December
2016 2015
GBP GBP
Net cash flow from operations 1,633,066 4,314,029
Income taxes paid (82,055) (39,586)
------------ ------------
1,551,011 4,274,443
Cash flow from investing activities (16,746) -
Cash flow from financing activities (1,881,733) (7,211,563)
------------ ------------
Net movement in cash and cash
equivalents (347,468) (2,937,120)
Cash and cash equivalents at
30 June 693,943 6,243,048
Effect of foreign exchange
rate changes 372,937 (218,891)
Cash and cash equivalents at
31 December 719,412 3,087,037
------------ ------------
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END
IR EASAPAENXEFF
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February 28, 2017 10:19 ET (15:19 GMT)
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