ELX.L Regulatory News (ELX)

1 Nov 2006 10:28

El Oro And Exploration Co Plc01 November 2006 El Oro and Exploration Company p.l.c.1 November 2006 Chairman's Statement The Group profit before tax for the eighteen month period ended 30 June 2006 was£12,018,986 (twelve months to 31 December 2004: £3,005,700 - restated). Groupnet assets at 30 June 2006 under IFRS, taking all assets at fair value were£72,214,062 (equal to 666p per stock unit) as compared with £67,905,581 under UKGAAP at 31 December 2004 (equal to 573p per stock unit). The principal difference between the IFRS and UK GAAP measurement of the fairvalue of net assets is that under UK GAAP at 31 December 2004 the figure took noaccount of the £11,294,608 potential corporation tax due on the excess of marketvalues of net investments over net book cost at that date, which is recognizedin the IFRS figures at 30 June 2006. We have declared a first and final dividend of 12p per stock unit for theeighteen month period ended 30 June 2006. The dividend was paid on 26 October2006 to members registered on the books of the Company at the close of businesson 22 September 2006. "Praise the Lord and pass the ammunition", Hallelujah and Deo Gracias for thismunificent and unlikely to be repeated outcome of the past eighteen months. Foremost amongst the contributors to the increase in profit and assets has beenthe stellar performance of the Brewery sector, led by the takeover, completed inSeptember, of Hardys and Hansons by Greene King. We cannot conceal a heavytinge of regret, both for the passing of a long established and hugelysuccessful regional brewer, combined with the closure of its Nottingham brewery;and not being offered Greene King shares to carry forward our involvement. Theother leaders in the brewery sector such as Fullers and Wolverhampton & Dudleyhave also demonstrated their prowess in providing services approved by theircustomers and bolstered by their property portfolios and have been similarlyrewarded in the appreciation of their share prices. An even sadder departure has been that of John Young, doyen of the Brewingindustry, passionate advocate of draught beer and guardian of his wonderfulinheritance, whose passing gift to his shareholders was to announce the sale ofthe Ram Brewery; thus enhancing the asset value of Young's and enabling it toface the future with renewed vigour. John Young lived for his Brewery and thebrewing industry. We join in the tributes to a great personality and best ofpeople and wish his successors and the team he leaves in place good fortune inthe future. The stellar performance of the property sector, has seen Daejan, McKays andMountview thrive amongst our holdings, and has been complemented by thespectacular results of James Halstead; these businesses, along with theutilities where AWG now follow Bristol Water and East Surrey into privateequity, have underpinned the strength of your portfolio. We remain exposed tothe water sector via Dee Valley and see no reason we should not continue to reaprewards in this area. The mining sector which has enjoyed such heady rises boiled over in June:renewed doubts over the durability of the Chinese economic miracle led tosignificant downgrading in the leaders of the sector, such as BHP, Xstrata andespecially Rio Tinto. Some of our investments in the small-cap sector such asConsolidated Minerals and Monterrico, have suffered large falls, as theeconomics, or politics of their projects have been tested, and found wanting;more recently Avocet sank , warning of increased costs and lower output.Happily, at the time of writing, many of these miners have clawed their wayupwards, heartened by the ever-growing slew of takeovers, such as that byXstrata of Falconbridge, and hints of approaches throughout the sector. Amongstthe casualties, Croesus, the new guise of Central Norseman, managed to over-turn90 years of successful gold mining by an ill-judged foray into the hedgingmarket. Whilst these losses are painful, we do not believe the storm will beprolonged. Our Australian portfolio has several projects that will soon be inproduction such as Archipelago in Gold and Universal Resources in Copper; minessuch as these are sound at metal prices substantially below those prevailingtoday. As for Gold, the dollar's demise never quite occurs, and the glimmer of anescalating price is stifled yet again - we retain our optimism; and our goldinterests continue to flourish, with Troy Resources recently surpassing theproduction of 10 tonnes of gold from the Sandstone deposit. The morerecently-visited Kazakhs have proven that old mines never die, and that there isstill space for Yurts and Velvet cloaks, and their inimitable brand ofhospitality, amongst the infinite horizon of that bountiful land. We remain confident that the ultimate highs for Gold and Gold shares remainahead, though how far we do not attempt to predict. Constant vigilance isrequired in the search for secure deposits of the precious metals, withavaricious governments and needy electorates ever on the look out for easytargets. The economic outlook at present appears benign, whilst the world floats on aseemingly inexhaustible tide of liquidity, sending even the Dow Jones to an alltime high, and the venerable Berkshire Hathaway past the $100,000 mark; theSage himself holding significant stakes in the only 2 stocks in the Dow JonesIndex to have actually exceeded their old highs. The Earth may appear to belongto Google, with their bid 'to control the supply of knowledge to the World' ormomentarily to the Oligarchs, with their bidding hands held high, or busydestroying the classical harmony and beauty of St. Petersburg's Palaces: forlesser mortals, the travails of the US Housing industry, indebtedness of the UScitizen and increase in Individual Voluntary Arrangements within the UnitedKingdom allied to rising interest rates, are disturbing portents. The escalatingintrusion of the State into the lives of its citizens, backed by an ever moreonerous tax regime, threatens stability far more than its alternative.Furthermore, the take-off in cheap air travel is now seen as the prime polluterand source of all the ills of the world; needless to say, another tax is seen asthe solution, especially by the Conservatives, who consign to a distantfiling-cabinet the eminently sensible report on taxation produced by LordForsyth. The carbon output from the Engines of Asia: India and China, remainssacrosanct and beyond amendment despite making the pollution from our ownservice-based economy pale into insignificance. Peter, Paul and Mary will not beleaving on their Jet Plane without a heavy gulp of guilt, and concomitant taxlevy. I would like to express some personal views: We query the sanity of those fund equity managers who eschew the assets of 'thissceptred isle, this precious stone set in a silver sea', taking in exchangeBritish or other bonds, issued by countries hopelessly indebted and with chronicbudget deficits whilst P & O, AB Ports and others disappear into the maw ofPrivate Equity or overseas traders. The Pension Funds reduce their exposure toUK equities - despite that being the only area that can sustain their clientsover the longer term; a process accelerated by the present Chancellor and hispredecessor's reduction followed by removal of the Tax Credit; destroyingpossibly £150 billion from the Pensions of all but parliamentarians and Civilservants, whilst simultaneously proclaiming success at bringing 'stability' tothe British economy. That stability is mainly apparent in the client list ofWest End Restaurants. Those citizens foolish or patriotic enough to believetheir government's promises, have been impoverished and the exposure of theBritish fund industry to its own economy has been diminished. The 45,000 'Ghost' workers in the Cameroons, costing that country £5 millionper month, are sadly replicated many times over in Britain. The soft-sellConservatives dare not whisper the Spending-cut word, even when the evidence ofappalling profligacy and woeful underachievement is everywhere to be seen. Defrahas become a byword for incompetence and overstaffing; the National Health,whilst admirable in its operatives, is sliding ever deeper into catastrophicinsolvency, dragged down by a Computer system of unbelievable ineptitude andbudget overrun; the public education system has proven itself incapable ofproviding literate and numerate graduates to stand on a par with overseasstudents. The Armed Forces, one of the few organisations retaining a smidgeon of efficiency and authority, is starved of resources and is now so small withinthe State sector as to be almost invisible; its Barracks and Hospitals, amongstthe finest and historic Georgian buildings in the Land, like the similarlydispersed asylums, have been sold off for a pittance to form bijou apartmentsfor the upwardly mobile and enrich a new generation of developers; the injuredmust take their chance in the lottery of the NHS. For the tax-payers of our country to be told they must continue coughing up tobolster this profligate government is truly grotesque. Meanwhile, the ordinaryEnglishman, paying nearly 50% of his income in tax, is excluded from the Londonhousing market, by the impossibility of competing with non-Domiciled purchaserspaying an average of 5%. The citizens of the North-East may well be content withthis state of affairs: it is unlikely that those of the South East will tolerateit indefinitely, especially when a Bank of the stature of HSBC admits to bereviewing the domicile of its Headquarters. It is enough to drive one to drink, but not to cigarettes: that avenue now tobe excluded from pubs and Restaurants: an aim but not an achievement of AdolfHitler in the 1930's, unlike General Pershing who regarded tobacco 'as importantas bullets.' The effect on our pub investments is yet to be discovered, butunlikely to be good, as is the removal of soft drinks from schools, whilstsimultaneously selling off their playing fields. The urge to intrude andrestrain freedom is almost irresistible and infinite to any politician, whereeven Anthony Gormley's Merseyside sculptures at Crosby are not deemed safe onthe seashore; shame on you, pseudo-Conservatives. We all now know that Regulations will not be reduced by any of the present orpotential incumbents, that tax will get worse and the public finances moredissolute. We have no idea when the nettle-grasping will occur, as happen itmust; in the meantime, our assets, spread through this proud land and amongstthe more fecund and energetic areas of the world, will provide the wherewithalfor the wait. My thanks, as always, to my patient and wise fellow directors, our excellent andshrewd advisers and our observant and discerning auditors; and especially toDouglas Eaton for so many years of selfless service and worldwide telephoneconversations delving into the deeper recesses of the markets. The humorous team at Cheval Place, reinforced by the return of Rosanna with theassistance of Jackie and Steve, bolstered by Abbie's endless energy, prepare forthe farewell to Chris Burman and a new era, with the Accounts and Company ingood heart. C. Robin Woodbine Parish 1 November 2006 CONSOLIDATED INCOME STATEMENT(Unaudited)for the 18 month period ended 30 June 18 months to 12 months to 30 June 2006 31 Dec 2004 restated * £ £Revenue 18,659,832 5,184,007 Movement in fair value through the income statement investments 156,728 0Movement in fair value of investment properties (19,896) (4,621)Impairment (loss)/ reversal of impairment on available for sale investments (2,893,963) 798,513 (2,582,000) (2,236,176) Expenses Profit before finance costs and taxation 13,320,701 3,741,723 Finance costs: Banks 1,295,415 716,455 Other 6,300 19,568 1,301,715 736,023 Profit before taxation 12,018,986 3,005,700Taxation 3,753,302 1,080,051Profit for the period 8,265,684 1,925,649 Earnings per stock unit (basic and diluted) 76.06p 16.15p CONSOLIDATED STATEMENT OF CHANGES IN INCOME AND EXPENSE(Unaudited)for the 18 month period ended 30 June 18 months to 12 months to 30 June 2006 31 Dec 2004 Restated * £ £ Profit for the period 8,265,684 1,925,649Recognition of financial instruments at 1 January 2005: Available for sale reserve 25,640,476 0 Derivative financial instruments (232,665) 0Revaluation of available for sale investments during the 27,676,702 0periodDeferred tax on revaluation of available for sale (8,303,011) 0investments in the periodTotal recognised income and expense for the period 53,047,186 1,925,649 * Restated for the effect of adoption of IFRS (see note o) CONSOLIDATED BALANCE SHEET(Unaudited) at 30 June 30 June 2006 31 Dec 2004 restated *Assets £ £Non-current assetsProperty, plant and equipment 747,417 1,343,175Investment properties 406,014 611,475 1,153,431 1,954,650 Current assetsTrade and other receivables 236,940 380,635Financial assets: Available for sale investments 107,253,063 39,693,884Financial assets-fair valued through the income 0 39,325statement: Derivative financial instruments Commodities 1,619,941 0Cash and cash equivalents 256,656 173,608 109,366,600 40,287,452 LiabilitiesCurrent LiabilitiesFinancial liabilities: Borrowings 21,174,845 12,400,813Financial liabilities-fair valued through the income 0 128,481statement: Derivative financial instrumentsTrade and other payables 613,624 735,117Current tax liabilities 542,507 846,027 22,330,976 14,110,438 Net current assets 87,035,624 26,177,014 Non Current LiabilitiesDeferred tax liabilities 16,218,592 1,764 Net assets 71,970,463 28,129,900 Stockholders' equityOrdinary stock units 541,785 592,045Share premium 6,017 6,017Capital redemption reserve 344,442 294,182Merger reserve 3,564 (149,798)Other reserve 38,069,136 0Retained earnings 33,005,519 27,387,454Total equity 71,970,463 28,129,900 * Restated for the effect of adoption of IFRS (see note o) CONSOLIDATED CASH FLOW STATEMENT(Unaudited)for the 18 month period ended 30 June 18 months to 12 months to 30 June 2006 31 Dec 2004 restated * £ £Operating activitiesNet profit 8,265,684 1,925,649Adjustments for:Depreciation 43,168 58,933Reversal of impairment on available for sale investments (919,830) (798,513)Foreign exchange losses/(profits) 222,889 (109,017)Movement in fair value of investment properties 19,896 4,621Movement in fair value through the income statement investments (156,728) 0Finance costs 1,301,715 736,023Income tax expense 3,753,302 1,080,051Cash flow from operating profit before changes 12,530,096 2,897,747in working capital Increase in available for sale investments (12,508,090) (2,756,496)(Increase)/decrease in fair value through the income statement investments (1,254,151) 1,289,813Decrease in trade and other receivables 91,685 651,417(Decrease)/increase in trade and other payables (141,139) 215,302Cash generated from operations (1,281,599) 2,297,783 Income taxes paid (4,155,338) (1,191,264)Cash flow from operating activities (5,436,937) 1,106,519 Investing ActivitiesNet cash disposed of with Danby Registrars Limited (5,000) 0Cost of stock units repurchased and cancelled (14,619) (398,846)Purchase of property, plant and equipment (37,807) (120,525)Purchase of investment property (235,213) (138,787)Cash flow from investing activities (292,639) (658,158) Financing activitiesInterest paid (1,303,055) (702,758)Dividends paid to equity shareholders (1,222,298) (1,311,727)New mortgages 194,402 97,950Repayment of mortgages (88,355) (2,229)Cash flow from financing activities (2,419,306) (1,918,764) Net decrease in cash and cash equivalents (8,148,882) (1,470,403) Cash and cash equivalents at start of year (12,079,276) (10,608,873)Effect of foreign exchange rate changes 31,213 0Recognition of forward gold contracts at 1 January 2005 (456,274) 0in accordance with IAS 39Cash disposed of with subsidiary 5,000 0Cash and cash equivalents at end of year (20,648,219) (12,079,276) * Restated for the effect of adoption of IFRS (see note o) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS a. Basis of preparation The principal accounting policies adopted in the preparation of thesenon-statutory financial statements are set out below. The policies have beenconsistently applied to all the years presented, unless otherwise stated. Allresults are from continuing operations, unless otherwise explained. These non-statutory financial statements have been prepared in accordance withInternational Financial Reporting Standards and IFRIC interpretations ("IFRS")issued by the International Accounting Standards Board (IASB), as adopted by theEuropean Union, and with those parts of the Companies Act 1985 applicable tocompanies preparing their accounts under IFRS. This is the first time the Grouphas prepared its financial statements in accordance with IFRS, having previouslyprepared its financial statements in accordance with UK accounting standards (UKGAAP). The date of transition to IFRS was 1 January 2004. The most recentfinancial statements issued under UK GAAP were for the year ended 31 December2004. Details of how the transition from UK accounting standards to IFRS hasaffected the Group's reported financial position, financial performance and cashflows are given in note o. The non-statutory financial statements are presented in sterling. They areprepared under the historical cost convention as modified by the revaluation offinancial instruments held for trading, financial instruments classified asavailable for sale and investment properties. The preparation of the non-statutory financial statements requires management tomake judgements, estimates and assumptions that affect the application ofpolicies and reported amounts of assets and liabilities, income and expenses.Actual results may differ from these estimates. Although these estimates arebased on management's best knowledge of the amount, event or actions, where suchjudgements are made they are indicated within the accounting policies below. The preparation of the non-statutory financial statements resulted in changes tothe accounting policies as compared with the most recent annual financialstatements prepared under previous GAAP. Comparatives have been prepared underIFRS, with the exception of items accounted for under IAS32 and IAS39 where theexemption for restatement of comparatives has been taken. The impact on thetransition from previous GAAP to IFRS is explained in note o. b. Significant accounting policies El Oro and Exploration Company p.l.c. is a company domiciled in the UnitedKingdom. The consolidated financial statements of the Group for the eighteenmonth period ended 30 June 2006 comprise the Company and its subsidiaries(together referred as the "Group"). c. Statement of compliance The consolidated financial statements do not include all of the informationrequired for full annual financial statements. Statutory accounts for the year ended 31 December 2004 have been delivered tothe Registrar of Companies and those for the eighteen month period ended 30 June2006 will be delivered to the Registrar of Companies following the Company'sannual general meeting. The Auditors have reported on the accounts for the yearended 31 December 2004 and their report was unqualified and did not contain astatement under the Companies Act 1985 Section 237(2) or (3). d. Basis of consolidation i. Subsidiaries The consolidated financial statements include financial information in respectof the Company and its subsidiary companies. Subsidiary companies are entitiesthat are controlled by the Company. Control exists when the Company has thepower, directly or indirectly, to govern the financial and operating policies ofan entity so as to obtain benefits from its activities. The results ofsubsidiary companies acquired or disposed of in the period are included in theconsolidated income statement from the date the parent gained control until suchtime control ceases. ii. Transactions eliminated on consolidation Intra-group balances and income and expenses arising from intra-grouptransactions, are eliminated in preparing the consolidated financial statements. e. Foreign currency The functional currency of the Group is Great British Pounds (GBP). Transactions in foreign currencies are translated at the foreign exchange rateruling at the date of the transaction. Monetary assets and liabilitiesdenominated in foreign currencies at the balance sheet date are translated tosterling at the foreign exchange rate ruling at that date. Foreign exchangedifferences arising on translation are recognised in the income statement. Theeffect of the foreign exchange are shown separately within the cash flowstatement. f. Property, plant and equipment i. Owned assets Items of property, plant and equipment are stated at cost less accumulateddepreciation. ii. Depreciation Depreciation is charged to the income statement on a straight-line basis overthe estimated useful lives of each item of property, plant and equipment. Therates of depreciation are as follows: Freehold property 2%Paintings 2%Computer equipment 33%Fixtures and fittings 33% Previous to the date of disposal of Danby Registrars Limited on 14 January 2005,fixtures and fittings were depreciated at 10% or 20% on reduced net book value. The assets residual values and useful lives are reviewed, and adjusted ifappropriate, at each balance sheet date. An asset's carrying amount is writtendown immediately to estimated recoverable amount if the asset's carrying amountis greater than the estimated recoverable amount. g. Investments Investments are recognised and de-recognised on the trade date where a purchaseor sale is made under a contract whose terms require delivery within thetimeframe established by the market concerned, and are initially measured atfair value. i. Investments in debt and equity securities and other financial assets The Group's investments are defined by IFRS as investments designated at fairvalue through the income statement or available for sale, depending on thepurpose for which the investment or asset was acquired. The Group's accounting policy for each category is as follows: Fair value through the income statement: This category comprises only derivatives and commodities. They are carried inthe balance sheet at fair value with changes in fair value recognised in theincome statement. Fair value is either the bid price or the last traded price,depending on the convention of the exchange on which the investment is listed.On disposal, realised gains and losses are also recognised in the incomestatement. Transaction costs are charged to expenses in the income statement.The Group does not have any other assets held for trading nor does itvoluntarily classify any other financial assets as being at fair value throughthe income statement. All other investments in debt and equity securities and other financial assets,including available for sale investments: Non-derivative financial instruments and commodities not included in the abovecategories are classified as available for sale and comprise the Group'sstrategic investments in entities not qualifying as subsidiaries. They arecarried at fair value with changes in fair value recognised directly in equity.Fair value is either the bid price or the last traded price, depending on theconvention of the exchange on which the investment is listed. On disposal,realised gains and losses are recognised in the income statement. Transactioncosts are included within the cost of the investments. Where a decline in thefair value of an available for sale investment constitutes objective evidence ofimpairment, the amount of the loss is removed from equity and recognised in theincome statement. The event that determines when an available for sale investment becomes impairedis when there is an event that permanently reduces the value of the investment,where the value of the investment has declined below cost by 20% or more, orwhere the value of the investment has remained below cost over a six monthperiod. In respect of unlisted investments, or where the market for a financialinstrument is not active, fair value is established by using valuationtechniques, which may include using recent arms length market transactionsbetween knowledgeable, willing parties, if available or reference to the currentfair value of another instrument that is substantially the same. Where there isa valuation technique commonly used by market participants to price theinstrument and that technique has been demonstrated to provide reliableestimates of prices obtained in actual market transactions, that technique isutilised. Where no reliable fair value can be estimated for such unlistedinvestments, they are carried at cost, subject to any provision for impairment. Foreign exchange gains and losses arising from investments are held at fairvalue through the income statement are included within the changes in their fairvalues. Foreign exchange gains and losses arising on available for sale investments arecredited or charged to the income statement. ii. Investment Income Income from investments includes all dividends, rents and interest onnon-government securities receivable. Dividend income from investments is recognised when the Group's right to receivepayment has been established and this is normally the ex-dividend date.Provision is made for any dividends not expected to be received. Where the Group has elected to receive dividends in the form of shares ratherthan cash, the amount of the cash dividend forgone is recognised as income. Theexcess, if any, in the value of shares received over the sum of the cashdividend forgone is recognised as a gain in the income statement. UK dividend income is recorded at the amount receivable without any attributabletax credit. Overseas dividend income is shown gross of withholding tax. Gains/losses on sale of investments are recognised in the income statementtogether with their related foreign exchange differences in respect of holdingsin foreign investments. iii. Investment properties Investment properties are properties owned by the Group which are held to earnrental income and for capital appreciation. Investment properties are initiallyrecognised at cost and revalued at the balance sheet date to full value asdetermined by professionally qualified external valuers on the basis of fairvalue. Any gain or loss arising from a change in fair value of investment properties isrecognised in the income statement. The Group has elected to use the fair valuemodel and depreciation is not provided on investment properties. Rental incomefrom investment property is accounted for when due. h. Transaction costs Transaction costs are included in the cost of investments purchased and deductedfrom the proceeds of investments sold for available for sale investments. Thesecosts are charged to the income statement for investments recognised as fairvalue through the income statement. i. Trade and other receivables Trade and other receivables do not carry any interest and are short term innature. They are accordingly stated at their nominal values as reduced byappropriate allowances for estimated irrecoverable amounts. j. Cash and cash equivalents Cash and cash equivalents comprises cash balances with an original maturity ofthree months or less. Bank overdrafts that are repayable on demand and form anintegral part of the Group's cash management are included as a component of cashand cash equivalents for the purpose of the Consolidated cash flow statement. k. Exceptional items Exceptional items are major items that are separately disclosed by virtue oftheir size or incidence to enable a full understanding of the Group's financialperformance. Transactions which may give rise to exceptional items areprincipally gains or losses on disposal of freehold property. l. Financial liabilities The Group classifies its financial liabilities into one of two categories,depending on the purpose for which the liability was incurred. The Group'saccounting policy for each category is as follows: Fair value through the income statement: This category comprises short derivative financial instruments. They are carriedin the balance sheet at fair value with changes in fair value recognised in theincome statement. Other financial liabilities: Other financial liabilities include the following items: • Trade payables and other short term monetary liabilities, which are short termin nature and are therefore stated at their nominal values; and • Bank borrowings and mortgages, which are initially recognised at the amountadvanced net of any transaction costs directly attributable to the issue of theinstrument. Such interest bearing liabilities are subsequently measured atamortised cost using the effective interest rate method, which ensures that anyinterest expense over the period to repayment is at a constant rate on thebalance of the liability carried in the balance sheet. "Interest expense" inthis context includes initial transaction costs and premiums payable onredemption, as well as any interest or coupon payable while the liability isoutstanding. m. Taxation The charge for current taxation is based on the results for the period asadjusted for items which are non-assessable or disallowed. It is calculatedusing rates that have been enacted or substantially enacted by the balance sheetdate. Tax payable upon realisation of revaluation gains recognised in priorperiods is recorded as a current tax charge with a release of the associateddeferred tax. Deferred tax is provided using the balance sheet liability method in respect oftemporary differences between the carrying amount of assets and liabilities inthe financial statements and the corresponding tax bases used in computation oftaxable profit with the exception of deferred tax on revaluation movements wherethe tax basis used is the accounts historic cost. Deferred tax is provided on all temporary differences and will crystallize whenthe asset for which a differential for tax has been made, has been disposed of. Deferred tax is determined using tax rates that have been enacted orsubstantially enacted by the balance sheet date and are expected to apply whenthe related deferred tax asset is realised or the deferred tax liability issettled. It is recognised in the income statement except when it relates toitems credited or charged directly to equity, in which case the deferred tax isalso dealt with in equity. Deferred tax assets are recognised to the extent that it is probable that futuretaxable profits will be available against which the temporary differences can beutilised. The total tax charge and tax liability for the eighteen months is treated withinthe consolidated financial statements as follows: 18 months 12 months to 30 Jun to 31 Dec 2006 2004 £ £ Shown within the consolidated income statement: Corporation tax charge for the eighteen months 3,753,302 1,080,051 Included within current tax liabilities in the balance sheet: 542,507 846,027 n. Share capital i. Repurchase of share capital When share capital recognised as equity is repurchased, the amount of theconsideration paid, including directly attributable costs, is recognised as achange in equity. ii. Dividends Equity dividends are recognised when they become legally payable on approval bythe shareholders at the annual general meeting of the Group. l. Pension costs The Group contributes to Self Investing Personal Pension plans for C.R.W. Parishand two employees. Contributions are recognized when payable. ii. Dividends Dividends to stockholders are recognised as a liability in the period in whichthey are declared. The following dividends were declared by the Group: 18 months 12 months to 30 Jun to 31 Dec 2006 2004 £ £ 11.5p (2004: 11.0p) per stock unit 1,247,601 1,313,722 The Directors proposed an interim and final dividend of 12.0 pence (2004: 11.5pence) per stock unit totalling £1,380,284 (2004: £1,247,601). The dividendwill be paid on 26 October 2006 to stockholders on the register of members on 22September 2006. o. Explanation of transition to IFRS The above accounting policies have been applied in preparing the consolidatedinterim financial statements for the twelve months ended 31 December 2005 andthe comparative information for the twelve months ended 31 December 2004. Therequirements of IAS32 "Financial Instruments: Disclosure and Presentation" andIAS39 "Financial Instruments: Recognition and Measurement" have been adoptedwith effect from 1 January 2005. The comparative figures do not thereforeincorporate any restatements in respect of either IAS32 or IAS39. The following statement sets out the changes made to stockholders' funds at 1January 2004 and 31 December 2004 following the adoption of IFRS and separatelythe changes at 1 January 2005 to reflect the adoption of IAS32 and IAS39. Group Group Group Group Group Group Group Group Share Share Reval'n Cap Red Merger Profit Other Capital Premium Reserve Reserve Reserve and Loss Reserve Total (Available for sale investments) £ £ £ £ £ £ £ £At 1 Jan 2004 592,045 6,017 204,256 289,081 (149,798) 25,009,680 0 25,951,281(UK GAAP) Note 1 0 0 0 0 0 1,958,175 0 1,958,175 Note 2 (204,256) 204,256 0At 1 Jan 2004 592,045 6,017 0 289,081 (149,798) 27,172,111 0 27,909,456(IFRS) Note 3 0 0 0 5,101 0 (398,846) 0 (393,745) Note 4 0 0 0 0 0 1,995 0 1,995 Note 5 0 0 0 0 0 1,925,649 0 1,925,649 Note 6 0 0 0 0 0 (1,313,455) 0 (1,313,455)At 31Dec 2004 592,045 6,017 0 294,182 (149,798) 27,387,454 0 28,129,900(IFRS) Note 7 0 0 0 0 0 (232,664) 0 (232,664) Note 8 0 0 0 0 0 0 25,640,476 25,640,476At 1 Jan 2005 592,045 6,017 0 294,182 (149,798) 27,154,790 25,640,476 53,537,712(IFRS) Note 1 IRFS Adjustments: Increase in value to deemed cost of 41 Cheval Place-£654,738, reversal of the 2004 dividend to stockholders-£1,313,455 and adjustment to deferred taxation-£(10,018). Note 2 Reclassify Revaluation reserves. Note 3 Purchase and cancellation of own shares. Note 4 Forfeited dividends. Note 5 Profit for the twelve months. Note 6 Dividends paid in 2004. Note 7 Restatement of values of impaired stocks. Note 8 Adjustment at 1 January 2005 in respect of IAS32 and IAS39 : Increase in value of available for sale instruments, less taxation at 30% This information is provided by RNS The company news service from the London Stock Exchange