ELX.L Regulatory News (ELX)

Chairman's statement

The El Oro Group's profit before tax for the year-ended 30 June 2014 was £8,455,612 (loss before tax for the year-ended 30 June 2013 was £13,688,199). The Group's net assets at 30 June 2014 were £65,017,817 or 100.9 pence per share (30 June 2013 were £59,720,657 or 92.4 pence per share).

A final dividend of 3.6 pence per share for the year-ended 30 June 2013 was paid on 25 November 2013 to Members registered on the books of the Company at the close of business on 1 November 2013.

The Board has resolved to pay a final dividend of 3.7 pence for the year-ended 30 June 2014 on 24 November 2014 to Members registered on the books of the Company at the close of business on 31 October 2014.

The sublime summer that has blazed from May on into early August has for a while banished the memory of February's floods, and in similar vein markets have smiled benignly over the past year, with even Gold showing a modest recovery from its levels below $1200.

The mining sector has slowly dug itself out of the slough of despond, bolstered intermittently by opportunistic takeovers: hence Osisko's purchase by a combination of Agnico-Eagle and Yamana, and the current offer for Papillon by B2 Gold. The latter started life in our portfolio as Colonial Resources at around 12c, and may realize in the region of $1.80 if the deal is completed. That to some extent compensates for many other far less propitious investments. Troy, having made a placing at $1.26 in February was recovering well until early July, when a downgrade of its new resource at Karouni in Guyana caused a severe sell-off. Paul Benson's assured tenure as CEO has recently come to a close after a demanding 7-year stint, and we believe his successor Mr. Martin Purvis will oversee a resurgence of its earlier success. The latest project in Guyana is on track for production in early 2015, and we very much hope will coincide with an upturn in the Gold price. That is of course one of the great imponderables, amongst the many facing the world: at present its decline in the face of a stronger dollar has resumed, for the moment at least.

Following on from our year end Bacanora which owns a deposit of Borax and Lithium in Mexico, has gained a listing on AIM to add to that on the TSX. The excitement attendant on the success of Tesla and other battery-powered cars has driven the demand for lithium, giving a jump-start to the share-price of what was originally intended to be a boring but steady producer of an industrial raw material. We hold exposure to lithium elsewhere in the portfolio and if demand is sustained and expanded, the sufferings of our platinum shares might be somewhat assuaged, albeit by a rival for the non-carbon energy market. Our thanks are owed to the foresight and perseverance of Mr. Colin Orr-Ewing in developing this project.

Amongst our Oil holdings, Amerisur continues to impress and excel, with growing production in Colombia soon to be expanded by the addition of a pipe-line to Ecuador. Hurricane Energy finally achieved its flotation, delayed from the autumn, and after early price weakness, has confounded the nay-sayers of its innovative horizontal drilling, by delineating a substantial reserve of several hundred million barrels. Production of up to 20,000 barrels a day has recently been forecast and we await further progress with renewed enthusiasm.

Amongst industrials, Goodwin continues to fire-up formidable results, and the share price has responded despite retreating a little in recent weeks. James Halstead makes more restrained progress than hitherto, whilst the brewers, led by Young and Co, and backed up by the powerful pair of defenders, Fuller, Smith and Turner, alongside Shepherd Neame, have flourished in the sunshine and the improving economic climate of the South East.

Likewise in the property world, McKay raised money at an advantageous price in February and along with Derwent-London is trying to keep up with the soaring price of Mountview Estates; Conygar's shrewd deals and growing potential remain for the time being beneath the radar.

The Palm Oil price continues to slip, but with increased production, MP Evans and Kuala Lumpur Kepong, which has taken a controlling stake in Equatorial Palm Oil, as well as REA Holdings, continue to make modest progress upwards, we have added a further position in SGA Kaltim in recent weeks. With growing prosperity in the Far East, and changes in cooking practices, we see the possibility of further growth in these areas, although increasing production and a bumper Soyabean harvest is constraining prices at present. We are also encouraged by the growth of Utilitywise, a provider of energy pricing solutions.

In the doghouse currently is Ceravision, a developer of remote-controlled lighting systems that reduce power consumption; whilst its technology is applauded, it has shown itself slow off the mark in selling effectively and has now compounded that by dispensing with the services of two respected members of its team. Hopefully, its technological edge will eventually produce the deferred value.

This draws to mind the Prime Minister's sacking of Messrs. Gove and Patterson, amongst the most controversial but knowledgeable and effective members of his Cabinet. We are not admirers of sacking the capable and honest for reasons of expediency: the jury on the prospects for the Conservative party remains out, although some wise heads are now predicting a victory next May as a result of the economic recovery. We remain underwhelmed by the coalition and its leaders who have presided over the most disastrous reduction in our Armed Forces, leaving us dangerously vulnerable at a time of growing threats to world stability, with the increasing internal and external threats.

It is disturbing to ponder that the most recent immigration figures show the intake from Europe alone around the 400,000 mark, against an intended limit 'in the low 10,000s'. Walking along Brompton Road, one soon becomes aware of the diaspora from the Middle East, which dominates that part of London, intermingled with the ubiquitous and probably Romanian beggars who can be seen decamping of a morning from Hyde Park accompanied by the Immigration Enforcement van, prior to their day's work on the pavements.

Even more disturbing is it to hear of the proposed sale of the Knightsbridge Barracks, probably to another Middle Eastern consortium, and quite likely one which is complicit in sending aid to ISIL, whom our Armed Forces might in due course be confronting: perhaps it is no longer necessary to provide such central accommodation for an Army that has been castrated by a reduction of 20,000 and securing in their place a few hundred reservists, instead of the thousands required.

We have nursed a viper in the bosom of British society, and as the denizens of militant Islam abandon their adopted motherland, we struggle to find anyone in authority with the courage to confront the calamity that faces Western civilization, instead seeing everywhere coalescence in appeasing those hell-bent on our destruction.

Barton Biggs's brilliant book, 'Wealth, War and Wisdom' is a powerful reminder of Sir Winston Churchill's perspicacity and perseverance in arousing and subsequently leading the nation against an emerging and viciously ideological threat not dissimilar to that posed by militant Islam today.

The sorry sight of a prominent and respected Christian being persecuted for an alleged offence of some 30 years past, is made doubly disturbing when undertaken by a police force that has failed on all counts to protect the most vulnerable children in our society from abuse predominantly by members of the Pakistani community.

Throughout the World and in particular, the Middle East and North Africa, Christianity is under threat as never before, largely because ineptly managed and inanely conceived adventures, heedless of the consequences of their actions, have broken the delicate structure of checks and balances that have evolved over centuries, even if often retained by brute force. The flood of refugees thronging the camps of Jordan and Kurdistan amongst others adds to the pressure on our own borders, where migrants from North Africa or the East are prepared to face the sea or suffocation to reach the haven of the British Social Security system. We refuse the individually able from our old Commonwealth, yet permit this flood when emanating from fellow EU members.

The EU itself shows itself increasingly bankrupt and bereft of ideas, other than imposing yet more absurd restrictions on technological or other development. The latest inanity is the exclusion of Vacuum cleaners in excess of 1600 watts in the EU's glorious defiance of climate change, despite one of its member states being home to one of the most innovative designers of the past 30 years.

Where Rust and the changes of fashion since production commenced 70 years ago have failed, the Brusseaucrats have now succeeded in decreeing the demise of the Land Rover Defender, due to its failure to crumple in a collision. Our 50 year-old one is still going strong, thankfully made to the march of a different drum when durability was more highly-valued than destruction.

Those with older homes will be only too familiar with the restrictions imposed on converting or adapting their houses for holiday or other letting and the ever proliferating tangle of regulations they encounter, a problem persistent in Greece and Italy, not just from English jobsworths: all examples of the ever-tightening tentacles of the European super-state, as Mr. Hannan has described so eloquently in the pages of the Daily Mail.

Complying with FATCA and AIFMD regulations imposed by the United States and European Union respectively, has created yet more mayhem and expense across the financial sector. After centuries of inclusion of Names from Australia, New Zealand, the United States and elsewhere, no names of Lloyd's of London who are not resident for tax purposes within the UK will be permitted to continue underwriting as Unlimited Names after 2014. One shudders to think how many other perfectly viable and long-standing businesses will be affected by these intrusive and pernicious regulations. Already we hear of Commercial shoots where invitations are being refused, because of the obligation to declare the value of the gift on offer. It is certainly not in the British tradition to ask the cost of a gift before it is accepted, but what do we care about tradition, or even the old adage of 'Caveat Emptor' as a succession of mega-payouts are dished out to investors squealing from bad advice, or more likely at the whim of Supervisory bodies such as the FSA and FCA imposing arbitrary fines? Sadly the compliance and Health and Safety sectors remain one of the few growth sectors in the jobs' market, rather than new businesses building for growth. Able, hard-working graduates with first class degrees are left grateful for unpaid work, whilst they seek full-time employment.

The creators, supporters and imposers of the Euro should be hanging their heads in shame and taking a long respite from public service, after the disastrous effect this currency has wreaked on the Southern European states, where Banco Espirito Santo is only the latest example of failures resulting from bad debts following the 2008 crash.

The calamity that confronts France is not wholly an EU phenomenon, but partly the result of confiscatory levels of taxation, aligned with a Marxist economic agenda. It is to be hoped our own HMRC will step back from acquiring further powers of expropriation from private bank accounts, along with its pursuit of retrospective review of taxation schemes. A compliant and clear system based upon the Rule of Law is essential if Britain is to thrive and its citizens encouraged to invest in and grow their businesses. Buffeting them with ever-rising levels of taxation will, as Dr. Laffer has consistently shown, and as the latest CGT figures reveal, only result in a smaller slice going to the Exchequer.

Overweening powers are also being demonstrated by the Police, in the recent invitation to the BBC to attend the search of an exemplary citizen's home; the assertion by Lord Neuberger that the overruling of Parliament by the Judiciary is to be applauded is yet another nail in the coffin of a truly democratic State, where the Judiciary implements the will of the people expressed through Parliament, backed up by an independent police force conducting itself with the consent of the People.

The ignoring of local opposition to Wind Turbines and large housing-schemes is yet another example of the infringement of real democracy, and the overriding obsession with 'renewables' at any cost. With the removal of Mr. Patterson, one voice of reason has been eliminated and Mr. Davey can pontificate on his grotesquely expensive and unviable energy policy to his heart's content. The British people will suffer through their pay packets, financing schemes subsidized to an extent beyond the dreams of avarice, and much of it sailing serenely out of this country into the coffers of foreign enterprises. This is no genuine solution to the impending power shortage other than subsidizing the expensive stand-by supplies which was once far more efficiently provided by our solid fuel or Nuclear Power stations, good for many more years if they had not been outlawed by the malign combination of the EU and the Blair/Cameroon compliance with the Carbon reduction targets emanating from the United Nations. The safety margin of Power supplies as winter approaches is now desperately thin.

None of this bodes well for Britain, nor does the throttling of Bank lending, where even the Funding for Lending scheme has seen its amount lent reduced. Viable and sound businesses are told their accounts are to be closed, and overseas the United States sees fit to throw fines at all and sundry for non-compliance with laws peculiar to their own policies. Quite how this accumulation of fines will benefit World Recovery is impossible to discern. No doubt there will be some expensive refurbishment occurring in Washington's government regulatory offices in the coming months.

Hanging over and above all these parochial issues are the two great unknowns: The stability and solvency of the Chinese Government and its economy, crucial to the well-being of Australia and much of Africa; and the future of the Middle East, where a violent and hate-filled group has succeeded in overthrowing $45 billion worth of American spending on the Iraqi defence force. Compounding this travesty, it would appear that the doyens of the British racing fraternity are complicit in financing this force, whose tentacles stretch from Iraq, across Syria, via Gaza, to Libya and even Cardiff.

Only if the President of the United States decides to forego Putting practice and put his heart and soul into saving the final two years of his Presidency, alongside a re-awakening within the West of belief in its own Christian and Democratic traditions, can this tide be turned. The EU continues to bluster over Ukraine, including supplying arms to a government that replaced its democratically-elected predecessor: but which is a mere sideshow in the battle for supremacy between the forces of darkness and those of freedom. The advance of ideas in Science, Technology, Medicine, Literature and elsewhere hangs on the outcome.

Such considerations underline the importance of a place for Gold in our portfolio: wither it travels, time will tell, but looking ahead the portfolio has been strengthened across a somewhat reduced number of positions that have stood and we believe will continue to stand the test of time.

Hopefully the Scots continue to see the sense of our longstanding Union on the 18th and in conjunction with the remainder of the United Kingdom will prepare to depart from the disastrous union with the EU rather than their Southern neighbours. The outcome at the time of writing remains perilously close, and many of our overseas friends find the prospect of the dissolution of the United Kingdom after 300 mostly triumphant and gloriously profitable years, beyond comprehension. Those responsible for allowing this gaggle of opera-singing ideologues, Marxists and England-hating fashion designers to whip up such animosity towards their fellow countryman, with every prospect of winning either the vote or a massive pay-off, must surely be held to account.

As Bob Dylan sang "I didn't know you were saying 'Goodbye' for good, but sooner or later one of us must know, you just did what you're supposed to do'; or indeed, 'Goodbye's too good a word, gal, so I'll just say fare thee well … but don't think twice, it's all right."

Certainly not alright, and a 'Yes' vote will undoubtedly be disastrous, for all but the internal political structure of England. Only the departure of the Labour seats from Westminster, can correct Mr. Cameron's chronic failure to secure the overdue Boundary changes that could have precluded the need for a coalition in the future: a Miliband Premiership would be the death-knell for Britain's Economic revival and consign it to the by-ways of the World economy, just as Greece became in Rome's shadow.

Whatever may or may not happen, meals will continue to be cooked in Palm oil, Nigerians will use Imperial Leather soap, Londoners will need homes and offices and keep drinking beer: all represented in our diverse and enduring portfolio.

The implosion of Manchester United following the departure of Sir Alec Ferguson underlines the importance of continuing investment and strengthening of the enterprise in hand, rather than relying on the charisma and success of the individual. Apple at least for now appears to have pulled off this trick, and established itself as the largest company in the world, despite the death of its charismatic founder, Steve Jobs. It is to be hoped Louis van Gaal can bring some of the Jobs' revivalist magic into the current disembodied group of misfits: his latest signings certainly provide every prospect of renewed excitement and success.

At least our Oarsmen maintain their prowess on the water, safe from the glare of intrusive press publicity, and have repeated their fantastic conquest of Germany in the Final of the Eights, not to mention the Fours, at the Amsterdam World Championships: would that our politicians showed such prowess and determination.

It is with great sadness that I advise shareholders of the death, on April 28th, of my mother, a director of the original El Oro and Exploration Co. plc and the Exploration Company plc since 1968.

The Hon. Mrs. Elizabeth Parish brought a huge depth of wisdom, sanity and sense to her role supporting my father through the years following his purchase of the 2 companies from Rothschild's in 1938; she accompanied him on numerous visits to South Africa, Canada and Australia and many of the earliest mining investments in those countries, some of which subsequently provided the seed corn for investments in the UK Brewing, property and other sectors.

The Korean War, Suez and our betrayal by the United States, Vietnam, the collapse of the Stock Market in 1973, and again in 1987, along with the fall of the Berlin Wall, not to mention the Gulf Wars, were all surmounted successfully during this time.

In her many years as a Director, amongst the first female directors of a public company in the United Kingdom, she never wavered in her discernment, dispensing shrewd advice in a consistent and discrete manner. My sisters and I will remain enormously grateful to her for our nurturing over the past 66 years, and I especially in her support to me at El Oro, particularly during its seminal changes in 2003 and 2004.

My mother fulfilled admirably Chapter V 1, v 8 of the prophet Micah: "He hath showed thee O man what is good; and what doth the Lord require of thee, but to do justly, and to love mercy, and to walk humbly with thy God?"

As the daughter of Lord Trent, and scion of Sir Jesse Boot, she would perhaps find it ironic that in the months following her death, Boots bought back to the United Kingdom by her father from the Ligget group in 1933, was sold to Walgreen, following its buyout by Mr. Stefano Pessina and KKR. Sadly the intimated 'inversion' of Walgreen to the United Kingdom was stymied by antagonism from the President, and it may be too much to hope to see Boots repatriated to these shores in the foreseeable future.

We are also saddened to learn of the passing of another faithful shareholder and House man, Mr. Matthew Green, a regular attendee at our AGMs, and judicious in dispensing discerning advice or critical comment, as required.

We also say farewell and thank you, whilst still happily in the land of the living, to Clive Callow, long the preeminent oil analyst in the City and a fount of wisdom in that sometimes murky world, along with John Coulson, both after faithful service in the City; the dusk of their careers perhaps unnecessarily accelerated by regulations where honour and integrity have been supplanted by the ticked box.

It remains to offer my thanks to my fellow Directors, advisers and auditors as we continue our recovery from the mining slump; also my wife, Lucinda for her ongoing support and the team at Cheval Place, now joined by Rebecca Brown as PA, adjusting to the vagaries, idiosyncrasies and delights of life in Arabian Knightsbridge.

Robin Woodbine Parish

18 September 2014

CONSOLIDATED INCOME STATEMENT

For the year ended to 30 June 2014

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the year ended 30 June 2014

CONSOLIDATED BALANCE SHEET

at 30 June 2014

The Board of Directors approved and authorised the Group's financial statements for issue on 18 September 2014.

Signed on behalf of the Board by: CRW Parish (Director) and JA Wild (Director).

The Annual Report is available at www.eloro.com 

CONSOLIDATED CASH FLOW STATEMENT

For the year ended 30 June 2014