Last checked at 18 Jun 2008 14:50
TIGER RESOURCE FINANCE PLC ("Tiger" or the "Company")
PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER, 2007
REPORT OF THE CHAIRMAN
I am pleased to report further good progress for the year under review. The net asset value per share at 31 December 2007 was 5.55p compared to 4.73p at 31 December 2006 demonstrating that our conservative approach to resource investment is effective even in the difficult times experienced during the current reporting period.
During the year, Tiger purchased 19,350,000 of its own ordinary shares for a consideration of £795,028. The total number of treasury shares held by Tiger as at 31st December 2007 is 27,250,000 representing 13.48 % of the Company's issued share capital.
The Company made significant profits from the partial sale of key shareholdings during the year. A total of 5,000,000 Ascent Resources Plc shares were sold generating a profit of £902,703 and 170,100 Franconia Mineral Corp shares were disposed crystallizing a further profit of £211,675 for the Company.
The period under review was extremely volatile, particularly towards the latter half of the year, with small resource companies and often major companies demonstrating daily extreme share price volatility. This period of instability was not caused by sector or individual company fundamentals but by the perception that the US was in economic turmoil and potentially heading for a recession which would ultimately affect emerging economies and thus commodity demand.
The well publicised sub prime credit crisis produced a series of major bank write-downs affecting some of the world's best known banks and financial institutions at a scale unprecedented in the banking industry.
The investment world developed and published frequent worries that commodities prices would drop as a result of reduced demand against a forecast of global recession. Consequently, commodity prices and equities experienced considerable volatility and downward price pressure as a result of recessionary forecasting. Despite the aforementioned, metal prices performed relatively well during the period notwithstanding frequent attempts to "talk prices down".
The Tiger Board believes that we are in a sustainable commodity price range and a global recession would allow new metal production to come on line in a stable price environment. The link between the gold price and the US dollar has led to strong gold prices against a weak dollar. The creation of a Platinum Exchange Traded Fund and speculative investment activity has assisted to lift Platinum prices to above US$2,000 per ounce. Platinum prices are expected to remain high against a poor supply prognosis.
Tiger maintains, possibly conversely to most industry analysts, that the monetary and economic policy measures taken in the US may well reverse the US dollar's weakness and thus result in gold weakening significantly whilst other metals remain stable against solid supply/demand fundamentals.
Against this background, Tiger purchases have been modest with management perception being that potential risk is much greater than reward. However, we strongly believe that the coming months will offer good investment opportunities in the junior resource sector. Most companies have suffered valuation correction of up to 60% whilst in many cases technical fundamentals have advanced well beyond the levels when share prices were at an all time high. In essence, quality companies with good prospects have seen value erosion outside their control in a commodities arena where new discoveries are vital to sustain global growth and development.
We forecast that IPO activity will be limited and secondary financings will be difficult to procure. Tiger sees market conditions returning to when the Company was founded with a very similar environment for selective financings on more favourable terms to Tiger.
Tiger is strongly positioned and has more cash for investment than at that time and looks forward to a productive 2008 showing further enhancement of shareholder value.
R B Rowan - Chairman
12 June 2008
PORTFOLIO REVIEW
| | Number | Cost | Valuation | Valuation |
| | 31/12/07 | 31/12/07 | 31/12/07 | 30/05/08 |
| | | £ | £ | £ |
| INVESTMENTS: | | | | |
| | | | | |
| African Eagle Resources Plc | 1,241,174 | 112,264 | 124,117 | 99,294 |
| Ascent Resources Plc | 24,642,857 | 550,824 | 4,127,679 | 1,232,143 |
| Franconia Minerals Corp - TSX | 475,733 | 69,939 | 412,352 | 369,800 |
| Gold Fields Ltd | 10,500 | 32,759 | 75,533 | 67,912 |
| Minmet Plc | 873,574 | 241,135 | 72,070 | 28,391 |
| Nautical Petroleum Plc | 9,000,000 | 180,000 | 967,500 | 922,500 |
| Pacific North West Capital Corp | 566,500 | 107,682 | 103,982 | 89,809 |
| Pan African Resources Plc | 5,098,333 | 175,013 | 344,137 | 267,662 |
| Ridge Mining Plc | 100,000 | 178,477 | 111,000 | 124,000 |
| River Diamonds Plc (1) | 8,144,207 | 125,000 | 350,202 | 566,667 |
| Sunrise Diamonds Plc | 665,000 | 6,650 | 9,975 | 6,650 |
| Tertiary Minerals Plc | 1,330,000 | 119,700 | 73,150 | 69,825 |
| Africa Oil Exploration Plc (2) | - | - | - | 121,875 |
| U308 Holdings Plc (3) | - | - | - | 333,333 |
| WARRANTS: | | | | |
| River Diamonds Plc (4) | 13,333,332 | - | 381,921 | - |
| | | | | |
| LOAN NOTES: | | | | |
| MIT Ventures Corp Loan Note | - | 40,000 | 40,000 | 40,000 |
| | | | | |
| TOTAL | | 1,939,443 | 7,193,618 | 4,339,861 |
1) The Company sold 8,144,207 River Diamonds Plc shares on 15 May 2008 and exercised 13,333,332 warrants. Consequently, the Company holds 13,333,332 River Diamonds Plc shares at 30 May 2008.
2) On 4 January 2008, the company acquired 625,000 Africa Oil Exploration Plc ordinary shares at a cost of £100,000. This holding is included in the portfolio valuation above at 30 May 2008.
3) On 29 January 2008, the company acquired 4,166,666 U3O8 ordinary shares at a cost of £125,000. This holding is included in the portfolio valuation above as at 30 May 2008.
4) The Company held 6,666,666 warrants in River Diamonds Plc on 31 December 2007 exercisable at 1.5p each to 23 October 2008 and a further 6,666,666 River Diamonds Plc warrants exercisable at 1.5p each to 25 February 2009. These warrants were exercised in May 2008 into 13,333,332 Ordinary 1p River Diamonds shares. Consequently, the Company did not hold any warrants at 30 May 2008.
African Eagle Resources plc (AIM - AFE, Altx: AEA) www.africaneagle.co.uk
Tiger holds 1,241,174 shares in African Eagle Resources plc ("African Eagle"). The company listed on the Alternative Exchange of the Johannesburg Stock Exchange in August 2007 following a placement of 53,457,310 shares at a price of R1.95 per share raising a total of 104 million SA Rands. African Eagle's advanced projects, the Mkushi Copper Mines in Zambia and the Miyabi gold project in Tanzania are being fast tracked towards production. The excellent local infrastructure, the straightforward mineralogy and the wealth of archive data from past operations make it likely that the Mines can be brought back into production quickly and at relatively modest capital cost. In its Miyabi Gold Project, African Eagle has defined a 520,000 ounce gold mineral resource to JORC standard, of which 71% is in the indicated category. Tiger will be closely monitoring this investment in the coming months.
Ascent Resources plc (AIM - AST) www.ascentresources.co.uk
Tiger holds 24,642,857 shares in Ascent Resources plc ("Ascent") following the disposal of 5 million shares during the year at a profit of £902,703. In November 2007, Ascent placed convertible loan notes with institutional funds managed by CIM Investment Management raising a total £2.5 million. The main purpose for raising funds was to enable Ascent to fast track its Hungarian gas development projects. Ascent entered into a farm-in agreement with Toreador Resources Corporation ("Toreador") to drill two exploratory wells and acquire 170 square kilometres of 3-D seismic in Toreador's Szolnok exploration permit in Central Hungary. Alongside the Bajsca field redevelopment in the south west and the Peneszlek development in the eastern Nyirseg region, the Toreador farm-in provides the company a platform for a third producing area to be established and if successful, could open up yet another cashflow stream for Ascent in 2009. Tiger believes that Ascent will benefit in less adverse share trading conditions and in the short term considers this position as a hold.
Franconia Minerals Corporation (TSX - FRA) www.franconiaminerals.com
Tiger sold 170,100 shares in Franconia Minerals Corporation ("Franconia") during the year for a consideration of £240,949 realising a profit of £211,675 and a return of over 700% compared to original cost. Tiger currently holds a further 475,733 shares in the company. Franconia is a company focused in the exploration of Platinum Group Metals and zinc/copper in the USA. The company's most advanced project is the Birch Lake Platinum-Palladium-Copper-Nickel project, located in the Duluth Complex in north eastern Minnesota. Franconia received the third N1 43-101 technical report raising the underground inferred resource estimated on the Birch Lake, Maturi and Spruce Road properties to a total of 307.9 million tonnes. Franconia continues to execute its plan to begin active mining at the Birch Lake Project by 2012. On 19 November 2007, the company's listing moved from the TSX Venture Exchange to the Toronto Stock Exchange. Tiger believes this investment has solid fundamentals which will release value in the mid-term.
Gold Fields Limited (JSE - GFI) www.goldfields.co.za
Tiger holds 10,500 Gold Fields Limited ("Gold Fields") shares valued at £75,533. Gold Fields is one of the world's largest unhedged gold producers with an annual gold production of approximately 4 million ounces, total ore reserves of 92 million ounces and mineral resources of 252 million ounces. In December 2007, Gold Fields completed the sale of its Venezuelan assets to Rusoro Mining Ltd (Rusoro) for a consideration of approximately US$532 million payable as US$180 million in cash and 140 million newly-issued Rusoro shares representing 37% of the total shares issued in Rusoro. Tiger has held this holding for a few years and will continue to monitor its Gold Fields investment with interest, particularly during a period of bullish precious metal prices.
Minmet plc (AIM - MNT) www.minmet.ie
Tiger currently holds 873,574 shares in Minmet plc ("Minmet"). In October 2007, Minmet plc announced the termination of all arrangements with Gold Oil plc ("Gold Oil") relating to oil and gas interests in Cuba and Latin America, following a re-evaluation of these interests by the company's board. In consideration for the termination, Gold Oil deposited its 8,300,000 ordinary Minmet shares with a broker, with instructions to have the shares placed in the market and the proceeds distributed to the company. Concurrently, Minmet also deposited its 22,950,000 ordinary shares in Gold Oil with a broker, with instructions to have the shares placed in the market and the proceeds distributed to Gold Oil. In December 2007, Gold-Ore Resources Ltd. ("Gold-Ore") completed the exercise of its call option to purchase the Björkdal gold mine in Sweden. Minmet received US$2 million in cash and 4 million Gold-Ore common shares as consideration for the sale of its 100% interest in Björkdalsgruvan AB, the owner of the Björkdal mine. Tiger currently holds a relatively small investment in Minmet having realised good returns in the past.
Pacific North West Capital Corp (TSX - PFN) www.pfncapital.com
Tiger holds 566,500 shares in Pacific North West Capital Corp ("PFN"), a company focused in PGM and base metal exploration in North America. PFN has joint venture projects with major mining companies such as Anglo Platinum, Stillwater Mining Company, Xstrata Nickel and Soquem. PFN's most active project is the River Valley Project, located near Sudbury, Ontario. This project is joint-ventured 50/50 with Anglo Platinum Limited ("Anglo Platinum"). In November 2007, an additional budget of $525,000 was approved by Anglo Platinum to fast track the exploration programme at River Valley. Further ground sampling, stripping, channelling and continued evaluation on the Interior RV intrusive is currently underway to evaluate the mineral potential of the PGM zones identified in the 2006 mapping and prospecting programs. The objective of the programme is to define new PGM mineralization that could expand the current measured resource of 8.53 million tonnes containing 353,200 ounces of palladium (1.29 g/t), 116,800 ounces of platinum (0.43 g/t) and 20,400 ounces of gold (0.07 g/t). PFN has an interesting portfolio of projects which should increase shareholder value in a strong PGM market.
Pan African Resources plc (AIM - PAF) www.panafricanresources.com
Tiger holds 5,098,333 shares in Pan African Resources plc ("Pan African"). In July 2007 Pan African completed the acquisition of Barberton Mines Limited ('Barberton') and the Company's ordinary shares ('Shares') began trading on Altx, the junior market of the Johannesburg Stock Exchange. The shares were also re-admitted to trading on AIM following shareholder approval for the acquisition of Barberton, which constituted a reverse takeover under AIM Rules. Pan African is now the largest gold production and exploration company trading on the growing Altx market with in situ mineral reserves at the Barbeton mine of some 359Koz (1.37Mt @ 8,16g/t) producing approximately 95 - 100,000oz per annum over an expected mine life of 10 years. Pan African is considered a good long term investment and Tiger believes that the company's share price has not appreciated significantly due to adverse market conditions.
Nautical Petroleum plc (AIM - NPE) www.nauticalpetroleum.com
Tiger holds 9,000,000 shares in Nautical Petroleum plc ("Nautical"). Nautical is an independent hydrocarbon exploration and development company listed on London's AIM market. The company's mission is to acquire, develop and add value to discovered heavy oil projects, initially on the United Kingdom Continental Shelf ("UKCS"). Nautical currently operates 8 blocks and is an active partner in 7 others in the UKCS and France. The Company continues to follow a conservative policy, focusing on discovered oil with minimal exposure to exploration risk and preferring to retain highest equity shares in Nautical operated Joint Ventures. The Company continues to mitigate risk through farming out to aligned partners at a premium, as evidenced by the participation of new UKCS entrant Canamens Energy Limited and Silverstone Energy Limited in the Mermaid project - both along with Nautical's existing partner, Celtic Oil Limited. The company continues to seek further farmouts, especially on blocks where significant expenditure is required on either new seismic or drilling. Tiger is confident that Nautical's experienced management team will add value to the various projects currently held in the company's portfolio.
Ridge Mining plc (AIM - RDG) www.ridgemining.com
Tiger holds 100,000 shares in Ridge Mining plc ("Ridge Mining"). Ridge Mining is an AIM and PLUS traded company, focused on developing prospective Platinum Group Metal (PGM) projects in the Bushveld Complex of South Africa. The Company's two most advanced PGM projects are the 50% owned Blue Ridge Project on the eastern limb of the Bushveld Complex where development commenced in January 2007 and first production is scheduled for the fourth quarter of 2008 and the nearby Sheba's Ridge Project, a joint venture with Anglo Platinum and the Industrial Development Corporation of South Africa where a full feasibility study was completed at the end of 2007. The Sheba's Ridge feasibility study is in the process of an independent technical audit, the results of which are scheduled for release in 2008. Tiger sees Ridge Mining performing well in the bullish PGM sector.
River Diamonds plc (AIM - RVD) www.riverdiamonds.co.uk
Tiger holds 8,144,207 shares in River Diamonds plc ("River Diamonds") at 31 December 2007. Tiger realised a profit of £200,768 in May 2008 through the sale of this holding and exercised its 13,333,332 1.5p warrants at the same time increasing Tiger's holding to the equivalent number of shares. During 2007, River Diamonds directed its focus to the gold sector and acquired a 100% stake in the Vatukoula Gold Mine in Fiji, a producing gold mine containing 830,000oz of reserves and a 5.15 million oz resource. As part of the planned restart of the mine, substantial development exploration is planned. This programme will initially focus on mineralisation along strike and down dip of the existing ore bodies. On completion of this programme, exploration will begin on the Basala target which is approximately 200 square metres and has an elevated soil gold grade of 0.25 ppm. There is also exploration potential at two further localities around the caldera, the Nasomo magnetic target and the Waikatakata area. River Diamonds believes that there is significant further upside potential for additional resources in the Vatukoula project.
Sunrise Diamonds plc (AIM - SDS) www.sunrisediamonds.com
Tiger holds 665,000 shares in Sunrise Diamonds plc ("Sunrise Diamonds"). The company announced the finding of macro diamonds in drill samples from Kimberlite Pipes 10 and 17 as well as a significant number of larger sized stones and a relatively coarse stone size distribution in the samples from Pipe 17. The diamonds recovered from Pipe 17 have positive value characteristics, most being colourless and of moderate to good quality. Pipe 17 has a surface area of approximately 2 hectares and is being followed up for larger scale sampling. Sunrise Diamonds has continued to leverage on its exclusive licence to use the BHP Billiton diamond exploration database in Finland with the recent agreement with Mantle Diamonds Limited ("Mantle") giving it a 20% joint venture interest and free carry to a mining decision, in two kimberlite targets identified from the database on ground controlled by Mantle. Sunrise Diamonds is continuing its project generative work elsewhere in Finland and overseas and further news is expected in the coming months.
Tertiary Minerals plc (AIM - TYM) www.tertiaryminerals.com
Tiger holds 1,330,000 shares in Tertiary Minerals plc ("Tertiary Minerals"). Tertiary Minerals plc was awarded an exploration licence covering a major deposit of fluorspar near Storuman in the Vasterbotten district of Northern Sweden. The Company has moved quickly to evaluate the Storuman project and recently announced the results of its initial drilling programme where fluorspar mineralisation was intersected in each of 10 holes drilled over a strike length of 2km. Although assay results are awaited, early indications suggest that the Storuman project hosts a large body of fluorspar mineralisation with potential for significant extensions. Tertiary Minerals has provided in full against the Ghurayyah tantalum-niobium-zircon project until such time as a new exploration licence is issued by the ministry of mines and minerals in Saudi Arabia on acceptable terms and conditions. Tiger will closely follow progress of the Storuman project to evaluate potential return from this investment.
INCOME STATEMENT
YEAR ENDED 31 DECEMBER 2007
| | 2007 | 2006 Restated* |
| | £ | £ |
| Profit on sale of non-current investments | 1,114,378 | 695,774 |
| Income: | | |
| Investment income | 1,387 | 1,174 |
| Interest receivable | 230,498 | 181,097 |
| Administrative expenses | (375,687) | (493,248) |
| | | |
| PROFIT BEFORE TAXATION | 970,576 | 384,797 |
| | | |
| Taxation | (255,120) | (157,332) |
| | | |
| PROFIT ATTRIBUTABLE TO EQUITY SHAREHOLDERS | 715,456 | 227,465 |
| | | |
| | | |
| Basic earnings per share | 0.39p | 0.12p |
| Diluted earnings per share | 0.37p | 0.11p |
* Details of the prior year restatement are shown in notes below.
STATEMENT OF CHANGES IN EQUITY
YEAR ENDED 31 DECEMBER 2007
| | Share capital | Share premium | Capital redemption reserve | Revaluation reserves | Share based payment reserves | Accumulated profit | Total |
| | £ | £ | £ | £ | £ | £ | £ |
| As at 31 Dec 05 | 2,358,819 | 1,554,856 | - | 3,666,188 | - | 2,000,841 | 9,580,704 |
| Recognition of deferred tax liability on adopting IFRS * | - | - | - | (1,099,856) | - | - | (1,099,856) |
| | | | | | | | |
| As at 31 Dec 05 | 2,358,819 | 1,554,856 | - | 2,566,332 | - | 2,000,841 | 8,480,848 |
| | | | | | | | |
| Changes in equity for 2006 | | | | | | | |
| Available-for-sale investments | | | | | | | |
| Valuation gains, less losses taken to equity | - | - | - | (93,262) | - | - | (93,262) |
| Transferred to profit on sale of non-current investments | - | - | - | (422,241) | - | - | (422,241) |
| Deferred taxation on items taken directly to equity | - | - | - | 154,651 | - | - | 154,651 |
| | | | | | | | |
| Net income / (expense) recognised directly in equity | - | - | - | (360,852) | - | - | (360,852) |
| Profit for the year | - | - | - | - | - | 227,465 | 227,465 |
| | | | | | | | |
| Total recognised income and expense for the year | - | - | - | (360,852) | - | 227,465 | (133,387) |
| | | | | | | | |
| Shares bought back and held in treasury | - | - | - | - | - | (289,992) | (289,992) |
| Shares held in treasury cancelled | (350,000) | - | 350,000 | - | - | - | - |
| Share option costs charged against income | - | - | - | - | 130,118 | - | 130,118 |
| | | | | | | | |
| As at 31 Dec 2006 | 2,008,819 | 1,554,856 | 350,000 | 2,205,480 | 130,118 | 1,938,314 | 8,187,587 |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | Share capital | Share premium | Capital redemption reserve | Revaluation reserves | Share based payment reserves | Accumulated profit | Total |
| | £ | £ | £ | £ | £ | £ | £ |
| Available-for-sale investments | | | | | | | |
| Valuation gains, less losses taken to equity | - | - | - | 2,636,389 | - | - | 2,636,389 |
| Transferred to profit on sale of non-current investments | - | - | - | (532,896) | - | - | (532,896) |
| Deferred taxation on items taken directly to equity | - | - | - | (525,965) | - | - | (525,965) |
| | | | | | | | |
| Net income / (expense) recognised directly in equity | - | - | - | 1,577,528 | - | - | 1,577,528 |
| Profit for the year | - | - | - | - | - | 715,456 | 715,456 |
| | | | | | | | |
| Total recognised income and expense for the year | | | | 1,577,528 | | 715,456 | 2,292,984 |
| | | | | | | | |
| Issue of share capital | 11,900 | 2,975 | - | - | - | - | 14,875 |
| Shares bought back and held in treasury | - | - | - | - | | (795,028) | (795,028) |
| | | | | | | | |
| As at 31 Dec 2007 | 2,020,719 | 1,557,831 | 350,000 | 3,783,008 | 130,118 | 1,858,742 | 9,700,418 |
* Details of the prior year restatement are shown in notes below.
BALANCE SHEET
AS AT 31 DECEMBER 2007
| | 2007 | 2006 Restated* |
| | £ | £ |
| NON CURRENT ASSETS | | |
| Financial assets | | |
| Available-for-sale investments | 7,193,618 | 5,103,467 |
| | | |
| CURRENT ASSETS | | |
| Trade and other receivables | 113,621 | 117,161 |
| Cash and cash equivalent | 4,204,464 | 4,215,479 |
| | 4,318,085 | 4,332,640 |
| | | |
| TOTAL ASSETS | 11,511,703 | 9,436,107 |
| | | |
| | | |
| EQUITY AND LIABILITIES | | |
| | | |
| EQUITY ATTRIBUTABLE TO SHAREHOLDERS | | |
| Called up share capital | 2,020,719 | 2,008,819 |
| Share premium account | 1,557,831 | 1,554,856 |
| Share capital redemption | 350,000 | 350,000 |
| Revaluation reserve account | 3,783,008 | 2,205,480 |
| Share based payment reserves | 130,118 | 130,118 |
| Profit and loss account | 1,858,742 | 1,938,314 |
| TOTAL EQUITY | 9,700,418 | 8,187,587 |
| | | |
| NON CURRENT LIABILITIES | | |
| Deferred tax liabilities | 1,471,170 | 945,205 |
| | | |
| CURRENT LIABILITIES | | |
| Trade and other payables | 47,313 | 148,715 |
| Corporate tax payable | 292,802 | 154,600 |
| | 340,115 | 303,315 |
| | | |
| TOTAL LIABILITIES | 1,811,285 | 1,248,520 |
| | | |
| TOTAL EQUITY AND LIABILITIES | 11,511,703 | 9,436,107 |
* Details of the prior year restatement are shown in notes below.
CASH FLOW STATEMENT
YEAR ENDED 31 DECEMBER 2007
| | Notes | 2007 | 2006 |
| | | £ | £ |
| CASH FLOW FROM OPERATIONS | | | |
| Administrative expenses | | (375,687) | (493,248) |
| Decrease/(Increase) in receivables | | 103,540 | (106,723) |
| (Decrease)/Increase in payables | | (101,401) | 85,535 |
| Share option charges | | - | 130,118 |
| Interest received | | 230,498 | 181,516 |
| Other income and investment income received | | 1,387 | 1,174 |
| Receipts from sale of fixed asset investments | | 1,193,652 | 984,208 |
| Payments to acquire fixed asset investments | | (165,934) | (75,013) |
| Corporate tax paid | | (116,917) | (658,841) |
| | | | |
| Net cash flow from operations | | 769,138 | 48,726 |
| | | | |
| | | | |
| CASH FLOW FROM FINANCING ACTIVITIES | | | |
| Issue of shares | | 14,875 | - |
| Purchase of own shares for treasury | | (795,028) | (289,992) |
| | | | |
| Net cash flow from financing | | (780,153) | (289,992) |
| | | | |
| | | | |
| Net increase/(decrease) in cash in the period | | (11,015) | (241,266) |
| Cash at the beginning of the period | | 4,215,479 | 4,456,745 |
| Cash at the end of the period | | 4,204,464 | 4,215,479 |
Basis of preparation
The financial statements have been prepared in accordance with international financial reporting standards (IFRS). The measurement bases and principal accounting policies of the group are set out below.
The policies have changed from the previous year when the financial statements were prepared under applicable United Kingdom Generally Accepted Accounting Principles (UK GAAP). The comparative information has been restated in accordance with IFRS. The changes to accounting policies are explained in note 14, together with the reconciliation of opening balances. The date of transition to IFRS was 1 January 2006 (transition date). The accounting policies that have been applied in the opening balance sheet have also been applied throughout all periods presented in the financial statements. These accounting policies comply with each IFRS that is mandatory for accounting periods beginning on 1 January 2007.
As a result of adopting IFRS, Deferred tax liability is now recognised on the revaluation value of investments. Based on a tax rate of 30% the provision recognised on transition to IFRS was £1,099,856. During the year ended 31 December 2006, a negative provision of £154,651 was included in the financial statements. Consequently, the net adjustment to the current financial statements was £945,205. This liability is recognised directly in Equity, in the Revaluation Reserve Account.
Valuation of Investments
Investments are initially measured at fair value plus incidental acquisition costs. Subsequently they are measured at fair value (previously mid-market) in accordance with IAS 39. This is either the bid price or the last traded price, depending on the convention of the exchange on which the investment is quoted.
Investments are recognised as available-for-sale financial assets. Gains and losses on measurement are recognised in equity except for impairment losses and foreign exchange gains and losses on monetary items denominated in a foreign currency, until the assets are derecognised, at which time the cumulative gains and losses previously recognised in equity are recognised in the Income Statement.
This preliminary statement is not the Company's statutory accounts. The statutory accounts for the year ended 31 December 2006 have been approved by the directors and have received an audit report which was unqualified and did not contain statements under s237(2) and (3) of the Companies Act 1985. These statutory accounts have not been delivered to the Registrar of Companies and will be sent to shareholders on 28 June 2007.
The statutory accounts for the year ended 31 December 2007 are currently being delivered to the Registrar of Companies and shareholders and have received an audit report which was unqualified and did not contain statements under s237(2) and (3) of the Companies Act 1985.
The Annual General Meeting of the Company will be held on Monday 14 July 2008 at 3.00 p.m. at the Drayton Suite, Jury's Kensington Hotel, 109 - 113 Queensgate, London SW7 5LR.
By order of the Board
18 June 2007
For further information please contact:
| Bruce Rowan, Chairman | Tel: +0044 (0) 20 7486 3997 |
| Colin Bird, Director | Tel: +0044 (0) 20 7581 4477 |