TIDMELX
RNS Number : 6886U
El Oro Ltd
01 April 2019
EL ORO LTD 1 April 2019
Interim Results
El Oro Ltd announces its interim results for the six months
ended 31 December 2018.
The Interim Report and Unaudited Condensed Consolidated
Financial Statements for the six months ended 31 December 2018 will
be posted to shareholders and will be available shortly on the
Company's website www.eloro.com.
Extracts from the Interim Report 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 2018
The El Oro Group's loss before taxation and dividend for the six
month period ended 31 December 2018 was GBP6,576,288 (profit before
taxation for the six month period ended 31 December 2017:
GBP1,723,982). The Group's net assets at 31 December 2018 were
GBP45,828,196 or 72.5p per share (net assets at 30 June 2018:
GBP53,668,935 or 85.0p per share).
The figures referred to above reflect the adjustment of the
Group's assets and liabilities to liquidation accounting rather
than on a going concern basis (see note 2.3 for more detail) and
includes a reduction of GBP2.3 million in the valuation of,
primarily unquoted, shares where their disposal prior to
liquidation at the fair value price previously recorded might be
challenging. This possibility was alluded to in the Annual General
Meeting of 2016, when the liquidation proposal was first
introduced, and passed by a narrow margin.
It is not dissimilar to the reality currently facing the EU and
especially Eire in the event of Britain leaving without a deal.
Estimates currently being presented show a substantial reduction in
trade in Germany, Netherlands, Italy and Eire, of which the
politicians appear blissfully unaware. Such are the consequences of
abrogating a long-term relationship without a coherent and
rationally arranged agreement. Indeed, the determination displayed
by members of the Commission to punish Britain for its willful vote
in favour of its own legislature rather than an unelected
triumvirate, and mention of 'lies and damnation' for those foolish
enough to have preferred such an approach, displays an insouciant
disregard for the welfare of the citizens of Europe. No doubt
disruption will occur after a No Deal exit, if that is what
happens, but we suspect the noise surrounding its 'disaster' will
be far greater than the reality, after a relatively short
period.
Happily at the start of the current year we were rewarded by two
post-Christmas presents firstly in the form of a secondary sale of
our holding in Vena Solutions, a technology company from Toronto
developing an ancillary to Excel; this has been held for several
years, and has rewarded patient shareholders with a substantial
uplift on its original price, despite being written down last June.
Braver souls may well have retained some or all of their holdings
for further accretion, but in the light of the forthcoming
liquidation of your company, we decided to withdraw at this stage
and take our cash.
We have also reaped the rewards of our investment in Reservoir
Minerals some time ago, and its takeover by Nevsun. Last year a bid
was made by Lundin Mining, which was ultimately capped by Ziangzhi
: the proceeds were received in early January, whilst a resource
adjacent to Freeport McMoRan's Bor Mine in Serbia has been added to
the firepower of China's Belt and Road programme.
In recent weeks, Asahi has announced its purchase of Fuller's
iconic Chiswick Brewery, for GBP250m, with Fullers withdrawing from
beer production. We have always been loyal supporters of London
Pride, and admirers of the appearance of the site at Chiswick
Roundabout, but whilst tinged with sadness and regret, the
generosity of the Japanese is not to be spurned. Happily the pubs
and hotels will continue under the aegis of Fullers as hitherto,
and hopefully thrive, as has Young's for so many years.
The downturn in world markets experienced in November and
December was to some extent ameliorated for El Oro by sales enacted
over the Summer in anticipation of an agreement proposed for
September which fell at the final hurdle.
Whilst the old Stock Exchange motto 'My word is my bond' was for
us a Shibboleth to be scrupulously observed, its validity in
today's world would appear to be less rigorously applied;
nevertheless, we are grateful, in the light of subsequent falls
that many long-standing holdings were realised, giving us a
substantial cash balance at the end of December.
This has been added to in recent months, as liquidation or its
equivalent beckons. Disgorging stocks that have formed the bedrock
of the portfolio for many years is not an especially pleasant
pastime, particularly when their performance and future seems
positive. Many Gold stocks would appear to have passed their nadir,
especially as the price of the metal seems content to abide above
$1,300. Recent mergers, of Randgold with Barrick last year, and
more recently Goldcorp with Newmont amongst others have added to a
renewed sense of optimism that the worst of the Mining declines
have now passed. Miners appear intent on supplementing their
reserves by acquisition rather than exploration.
Regrettably our Bacanora lithium project at Sonora in Mexico has
thus far not recovered from the failed fund raising last year, and
a more negative view towards lithium, and languishes at lows not
seen for several years. A similar fate is being suffered by
Critical Elements, whose neighbour Nemaska Lithium is struggling to
finance its project.
In contrast Anglo-Pacific, with its astute royalty agreements
and able executives continues its ascent, bolstered by the
improvement in iron ore prices, following the tragedy in Brazil and
also the proposed expansion of the Kestrel Coal Mine in Australia.
Perhaps Rio is now regretting its departure from the Coal market at
or near the bottom. Of some concern in recent days is the sight of
Glencore providing an apologia to the Green lobby, instead of
rejoicing in its unassailable position in providing energy for the
developing world. China has in recent days restricted imports of
coal from Australia into the port of Dalian. This is almost
certainly a political move, but demonstrates the dangers of relying
on China as one's principal customer. Happily Atalaya progresses
below the radar, with its growing production of copper near
Seville, as does Central Asian Metals, in Kazakhstan.
With liquidation of your company approaching, our unlisted
holdings are especially vulnerable as is reflected by the provision
made to fair values (see note 2.3 to the financial statements).
This may be exacerbated if these holdings were to remain in the
portfolio at the time that a liquidator is appointed. Any
interested buyers should contact the team at Cheval Place!
As already mentioned many profits were taken in the technology
sector last year, and only a few stocks have been added, primarily
large-cap and liquid US stocks, such as Microsoft, PayPal and Walt
Disney. These are deemed to be readily saleable, even if out of
character for our traditionally small-cap portfolio and less prone
to market volatility, although that remains to be seen.
One sincerely hopes that the 'abyss' forecast by Corrierre that
Britain is destined to fall into after a No Deal Brexit will not be
replicated by your company. Given a choice between a portfolio of
excellent stocks and a cash pile, I myself would choose the former,
and await developments amongst the unlisted where realisations will
occur over time. Unfortunately that is no longer on our side,
unlike the lyrics of the Rolling Stones' song of 1964.
Whilst April 12(th) or May 22(nd) have now replaced the
long-promised departure date of March 29(th) , an unyielding EU
appear determined to drag down the edifice they have presided over
with utter disregard for its citizens or their well-being.
The verruca on the foot of Eire similarly seems determined to
exacerbate age-old tensions even if the alternative to the
back-stop is a severe reduction in trade damaging the entire
nation. Rationality has disappeared, along with Bargaining prowess,
and the disloyalty displayed by such as the Balls/Boles/Left-wing
proposals beggars belief of anyone prepared to accept the result of
a clear verdict in a One-off Referendum. Hopefully the latest
renegades from the Conservative party will face deselection and
dismissal from the electorates they have betrayed.
The vision-less leaders of our nation persevere with absurd and
grotesque projects such as HS2 and Hinkley Point, closing our coal
suppliers with no alternative available, and even threatening our
wood-burning stoves. Their attack on diesel, once heralded as a
pollution free fuel has wreaked untold damage on Jaguar Land Rover,
and more recently Toyota and Honda - although the usual apologists
blame Brexit, as in everything.
Despite all these threats and empty gestures, we are sure that a
speedy exit from the embrace of socialism and state control as
exemplified by the EU, burnished by a bonfire of regulations and
hefty reductions in taxation, will unleash a rich seam of talent
and endeavour that will bring huge and lasting benefit to
Britain.
The concept of attempting to improve well-being that is within
the power of the provider, as espoused by Jordan Peterson, rather
than spending trillions on an unattainable objective attempted
vainly by Canute, in his case of the tide, and of today in
reversing the temperature of the planet, appears to us a far more
beneficial solution than those currently espoused.
By improving nutrition, and raising the well-being of a
substantial portion of the population, more might be achieved in
securing supporters of the planet's health than by punishing them
with excessive fuel bills and other hindrances to daily life.
We read that the volcanic eruption in Iceland a few years' ago,
in four days negated 5 Years' effort to control CO2 emissions on
our planet: the very carbon dioxide that is vital for the growth of
every plant. There are around 200 active volcanoes spewing out
matter every single day; just as Mt.Pinatubo in 1991 spewed out
more gases than the human race has emitted in all its years on
earth.
Sadly at present the surfeit of power awarded to the Green lobby
and its accolytes, not to mention the large subsidies in which they
wallow, militates against rational and achievable policies being
put in place.
The Climate Change Levy is shortly to be increased, and in a few
years, the sulphur content of bunker fuel, on which all our
shipping depends, is to be lowered to 0.5% adding a vast new
increase in the transport costs of goods, upon which modern man now
depends.
Within our own investment world, myriad new regulations
primarily but not solely exemplified by MIFID, are reducing
coverage of smaller companies, and threatening the smaller
brokerage sector, as well as exacerbating costs and demands on
management time. Large institutions and private equity are
swallowing an expanding share of funds for investment, although all
studies show that over the longer-term, it is the small companies
where the best returns are achieved. Happily, Herald Investment
Trust, of which we have been contented shareholders, has shown an
increase in NAV of 1224.85% since its foundation in 1994, whilst
the Smaller Companies and AIM index has increased by 181%.
Such spectacular returns are seldom to be found in the large-cap
sector, although certainly Reckitt-Benckiser amongst a select few
has demonstrated its possibility.
The gloomy predictions of mankind's demise have been selling
since Malthus' first forecast its imminent demise, yet in reality
poverty, hunger, dirty air and other detriments have all decreased
on a vast scale. Life is infinitely better than even 30 years ago,
and even Manchester United is resurgent and smiling. Perhaps with a
young crew, Oxford will surprise in the Boat Race.
Let us look with optimism to the future and slough off our
subjugation to the gloomsters and their hair-shirt solutions to the
World's problems. We at least will be wearing our wool or cotton,
and munching our meat, whilst the nay-sayers persist in draping
their limbs in polypropylene and other products related to
plastic.
Genesis 1:31, 'And God saw everything that he had made, and
behold, it was very good'.
My thanks to our team at Cheval Place remain profound how lucky
we have been to find such an able band of brothers, or in this
case, mostly sisters. Abbie, Nancy, Nick and Una well done; also to
Chris and Sophie in Guernsey.
Robin Woodbine Parish
1 April 2019
CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME
(Unaudited)
For the six months ended 31 December
2018 2017
Unaudited Unaudited
GBP GBP
Revenue 586,981 684,430
Net (losses) gains on investments (5,903,988) 1,931,695
------------ -----------
Total investment income (5,317,007) 2,616,125
Expenses (1,139,253) (637,639)
------------ -----------
(Loss)/profit before finance costs
and taxation (6,456,260) 1,978,486
Finance costs (120,028) (254,504)
------------ -----------
(Loss)/profit before taxation (6,576,288) 1,723,982
Taxation credit 331,009 32,979
(Loss)/profit for the period (6,245,279) 1,756,961
------------ -----------
(Loss)/profit per share (basic and diluted) (9.9p) 2.8p
------------ -----------
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY
(Unaudited)
for the six months ended 31 December
2018 2017
Unaudited Unaudited
GBP GBP
Opening capital and reserves attributable
to equity holders as at 30 June 53,668,935 55,680,730
(Loss)/profit for the period (6,245,279) 1,756,961
Increase in share capital on cancellation
of treasury shares 196,829 -
Decrease in retained earnings on cancellation
of treasury shares (199,429) -
Increase in capital redemption reserve 2,600 -
on cancellation of treasury shares
Dividends paid (1,595,460) (1,520,276)
Closing capital and reserves attributable
to equity holders as at 31 December 45,828,196 55,917,415
------------ ------------
CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL
POSITION
As at 31 December 2018 (Unaudited) and 30 June 2018
(Audited)
31 December
2018 30 June 2018
Unaudited Audited
GBP GBP
Non-current assets
Property, plant and equipment 1,955,441 2,005,207
Current assets
Investment in artwork held for resale 250,000 250,000
Investments held at fair value through
profit or loss 35,566,467 55,551,575
Trade and other receivables 141,946 562,335
Cash and cash equivalents 10,397,112 765,187
------------ -------------
Total current assets 46,355,525 57,129,097
Current liabilities
Trade and other payables 1,227,039 914,583
Current tax liabilities 10,327 240,190
Financial liabilities at fair value
through profit or loss - 2,719,192
Total current liabilities 1,237,366 3,873,965
------------ -------------
Net current assets 45,118,159 53,255,132
------------ -------------
Non-current liabilities
Deferred tax liabilities 1,245,401 1,591,404
------------ -------------
Net assets 45,828,196 53,668,935
------------ -------------
Stockholders' Equity
Share capital 631,734 434,906
Share premium reserve 6,017 6,017
Capital redemption reserve 362,241 359,641
Merger reserve 3,564 3,564
Revaluation reserve 1,108,029 1,108,029
Retained earnings reserve 43,716,611 51,756,778
------------ -------------
Total equity 45,828,196 53,668,935
------------ -------------
Net asset value per share 72.5 p 85.0 p
------- -------
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOW
(Unaudited)
For the six months ended 31 December
2018 2017
GBP GBP
Net cash flow from operating activities 14,120,528 3,327,473
Income taxes paid (244,854) (674,903)
------------ ------------
13,875,674 2,652,570
Cash flow from investing activities - (3,105)
Cash flow from financing activities (4,243,749) (3,273,171)
------------ ------------
Net movement in cash and cash equivalents 9,631,925 (623,706)
Cash and cash equivalents at 30 June 765,187 913,260
Cash and cash equivalents at 31 December 10,397,112 289,554
------------ ------------
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END
IR BGGDSIUGBGCB
(END) Dow Jones Newswires
April 01, 2019 07:30 ET (11:30 GMT)
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