Final Results

Aurora Investment Trust plc
PRELIMINARY ANNOUNCEMENT OF RESULTS
For the year ended 28 February 2007



OBJECTIVE

Capital appreciation through investments listed mainly on the London
Stock Exchange

POLICY

To invest primarily in equities but with some exposure also to Fixed
Interest.  In general the portfolio will be weighted towards the
larger rather than smaller capitalised stocks.  A distinctive feature
is an emphasis on investments in companies with exposure to economies
growing at a faster rate than the UK.

BENCHMARKS

Treasury 7.25% Stock 2007

The FTSE All-Share Index

FINANCIAL HIGHLIGHTS


                                    Year ended 28     Since launch
                                    February 2007     (13/3/1997)

Share Price (total return)^             +4.7%                 +150.0%
Net Asset Value (NAV)^^                 +0.8%           +152.5%*

Treasury 7.25% stock 2007 (total        +3.5%            +19.6%
return)^
FTSE All-Share Index                    +8.2%            +48.3%


^dividends/interest not reinvested
^^ before final dividend
*by reference to a starting value of 97.78p (net of launch expenses)


CHAIRMAN'S STATEMENT

The Year's Returns:
NAV:                +0.8% to 246.9p;


In keeping with our Manager, James  Barstow's theme in his Review,  I
have to report that the last year,  the Chinese Year of the Dog,  was
not one of our greatest.   True - we  produced a positive return  for
Shareholders - a  rise of  1.9p or  0.8% in  the net  asset value  to
246.9p per ordinary share and, subject to your approval at the Annual
General Meeting, will have paid a dividend of 3.1p per share.  But we
could, even should, have done rather better.  Our Benchmark, the FTSE
All-share  Index,  rose  8.2%  and  our  Association  of   Investment
Companies ("AIC") peer group, UK Growth, outperformed us.   Producing
a positive return  is our stated  objective but we  also aim to  earn
rather  better  returns   than  the   stock  market   and  than   our
competitors.  Last year we did not achieve those better returns  but,
as I will comment upon later, we have achieved both good absolute and
relative  returns  on  a  long-term   basis  (another  part  of   our
objective).

The underlying  cause  of our  disappointments  continues to  be  the
investments  we  have  in  certain  small  companies  each  of  whose
prospects depend on an event  or events materialising which would  in
turn result  in  a  much  higher valuation  for  the  company.    The
investments concerned are the holdings in BTG Emblaze Systems, Global
Coal Management, Medical  Marketing and Orca  Interactive.  Each  has
its own story  and James covers  them in  his Review but  so far,  in
share price terms at least, the trees have not yet born fruit.  It is
not  surprising  in   the  circumstances  that   such  jam   tomorrow
investments have proved  unrewarding because the  fruition has  taken
much longer  to come  about -  always  assuming that  it does  -  and
investors generally tend not to be that patient.  Two others of these
types  of  investment  in   the  portfolio,  Gresham  Computing   and
Monterrico Metals did produce positive returns for the year.  However
taken as a whole the seven investments cost the net asset value 18.0p
and were very largely responsible for our disappointing returns.   As
you will read in James's Review, he remains optimistic that the seven
investments, taken as a  whole, will produce  good returns; James  is
unusual as an investor in that he is very patient and we hope, indeed
believe, that in time it will be rewarded.

It is a pity that these investments are taking so long to bear  fruit
because other parts of  the portfolio did much,  much better.   James
is, as Shareholders  know, an investor  who constructs his  portfolio
from  his  -  and  the  Board's  -  view  of  the  investment  world,
identifying themes which should prosper  (and those that should  not)
and then selecting the  appropriate stocks accordingly.   Two of  his
most successful  themes  over the  last  few years  have  been  house
building (15.5% of total assets) and Ireland (22.6%); during the last
year they continued  to contribute  to the returns  of the  portfolio
handsomely.   With  holdings  in McCarthy  &  Stone,  Abbey,  Barratt
Developments and  Persimmon (+9.4p  per  share) and  Gartmore  Irish,
Anglo Irish and  Irish life  & Premium  (+10.9p per  share), the  two
themes added 20.3p  per share to  the net asset  value.  Without  the
drag of  the seven  concept stocks  the net  asset value  would  have
earned a higher return than the Benchmark.

The top five contributors and the top five detractors to the  returns
of the portfolio were as follows:



+----------------------------------------------------------------+
|                      | Increase in value | Contribution to NAV |
| Top 5 Contributors   |                   |                     |
|----------------------+-------------------+---------------------|
| 1. McCarthy & Stone  | £1,195,000        |        7.9p         |
|----------------------+-------------------+---------------------|
| 2. Gartmore Irish    |    £986,000       |        6.5p         |
|----------------------+-------------------+---------------------|
| 3. Anglo Irish Bank  |    £585,000       |        3.9p         |
|----------------------+-------------------+---------------------|
| 4. Gresham Computing |    £330,000       |        2.2p         |
|----------------------+-------------------+---------------------|
| 5. AWG Ords          |    £301,000       |        2.0p         |
|----------------------+-------------------+---------------------|
| TOP 5 CONTRIBUTORS   | £3,397,000        |        22.5p        |
+----------------------------------------------------------------+

.

+-------------------------------------------------------------------+
|                         | Decrease in value | Detraction from NAV |
| Top 5 Detractors        |                   |                     |
|-------------------------+-------------------+---------------------|
| 1.     Global      Coal | £1,107,000        |        7.3p         |
| Management              |                   |                     |
|-------------------------+-------------------+---------------------|
| 2. BTG                  | £1,035,000        |        6.9p         |
|-------------------------+-------------------+---------------------|
| 3. Drax Group           |    £722,000       |        4.8p         |
|-------------------------+-------------------+---------------------|
| 4. Orca Interactive     |    £496,000       |        3.3p         |
|-------------------------+-------------------+---------------------|
| 5. Emblaze Systems      |    £256,000       |        1.7p         |
|-------------------------+-------------------+---------------------|
| TOP 5 DETRACTORS        | £3,616,000        |        24.0p        |
+-------------------------------------------------------------------+




Long Term NAV   5 Years: +   74.6% to     Benchmark:         +  29.6%
Returns:        246.9p;
Since launch:   + 152.5% to 246.9p;       Benchmark:         +  48.3%



Our stated objective  for Shareholders is  to achieve capital  growth
over the long-term.  As spelt out in the Business Review, your  Board
regards five years as  the appropriate time over  which to judge  the
long-term returns of the Company.  It is important in this particular
year because  Shareholders are  going  to be  asked to  consider  the
future of  the Company  and vote  on whether  it should  continue  in
business.   As elaborated  upon  later, the  Board believes  that  it
should do so.   In coming to that  conclusion it has paid  particular
attention to the  five year returns  that Shareholders have  received
and to a lesser extent to the returns since the Company was launched.

As the numbers  above and  below illustrate  and notwithstanding  the
disappointing returns of the last two years, the longer-term  returns
have been good.   We believe that amongst  the reasons for this  good
long-term performance  are  the  selection of  the  right  investment
strategy and thence the right themes for stock selection and  James's
considerable commitment to  the Company (not  only through his  share
ownership and diligence but also through his heart and soul!).

The Board (the independent members  thereof) has determined that  not
only is  it  in  Shareholders'  interests  that  the  Company  should
continue in business  as an  investment trust but  also that,  having
taken into consideration various aspects  of the job, its  resources,
its experience and the returns  earned, Mars Asset Management  should
continue as its manager.



Shareholders' Total Returns:   Over one year: +  10.1 p     +    4.7%
                               or
                               Over five years: +117.4p     +  97.8%
                               or
                               Since launch: +150.0p or     + 150.0%



Although producing good net asset  value returns is key to  producing
good Shareholders'  returns, it  is the  share price  change and  the
dividend  payments  which  determine  the  return  that  Shareholders
actually earn from their  investment in the Company.   And of  course
the return from the  net asset value and  the change in the  discount
determine the return from  the share price. The  table below shows  -
over the three time periods - those returns.

Although we monitor  the discount  closely and  regularly, we  cannot
control or manage it.   The best way of  attaining and keeping a  low
discount or  even  a premium  is  to  produce good  net  asset  value
returns, which over the longer-term we have but over the shorter-term
we haven't.    With  good  returns comes  demand  for  the  Company's
shares.  It is also important that the Board generally and that James
particularly keeps in  good contact  with Shareholders  and with  the
market place; James is most diligent in that respect.

However there  will be  times when  blocks of  shares come  onto  the
market and when there are no  immediate buyers; we have taken  powers
in the past - and will be seeking to renew those powers at the AGM  -
to buy in our own  shares.  We have been  reluctant to do so to  date
for fear of  shrinking the market  value of the  Company and  thereby
reducing the liquidity of  its shares.  However  in early May of  the
current year we did buy in 250,000 and are prepared to buy in more if
we judge that by so doing it will help minimise the discount.



+-----------------------------------------------------------------------+
|Analysis              of|  One year  |   Five years   |  Since Launch  |
|shareholders' return    |            |                |                |
|------------------------+------------+----------------+----------------|
|Increase in NAV p sh    |+1.9p |     | +105.5p |      |+149.1p |       |
|------------------------+------+-----+---------+------+--------+-------|
|Change in discount      | +5.1p|     |    -3.0p|      |  -26.6p|       |
|------------------------+------+-----+---------+------+--------+-------|
|Increase in share price |+7.0p |+3.2%| +102.5p |+85.4%|+122.5p |+122.5%|
|------------------------+------+-----+---------+------+--------+-------|
|Dividends               |+3.1p |     |  +14.7p |      |  +27.5p|       |
|------------------------+------+-----+---------+------+--------+-------|
|                        |      |     |         |      |        |       |
|------------------------+------+-----+---------+------+--------+-------|
|Total      Shareholders'|+10.1p|+4.7%| +117.4p |+97.8%|+150.0p |+150.0%|
|Return*                 |      |     |         |      |        |       |
|------------------------+------+-----+---------+------+--------+-------|
|                        |      |     |         |      |        |       |
+-----------------------------------------------------------------------+

*NB dividends not reinvested

The Dividend:


The net income available for paying the dividend, as reported in the
Consolidated Income Statement, amounted to £225,000, rather less than
the cost of paying last years dividend.  However the reason for it is
largely accounted for by timing difference in the payment of
dividends from our underlying investee companies.  Having considered
the prospects for the income account for the coming year and having
regard to the funds available in the Revenue Reserve, the Board is
recommending a dividend of 3.10p per share, an increase of 5.1%.  It
is the intention of the Board to try to keep the dividend rising at a
rate at least equal to that of inflation, although obviously it will
not be possible on all occasions.  In respect of this last year, the
5.1% increase exceeds the rate of inflation as published by the
Government, albeit it is a number that does not seem to relate to
most people's experience of their own cost of living.


Annual General Meeting:  at 12 pm on 28 June, 2007 at 145-157 St John
St., London, EC1


There are two special resolutions for Shareholders' consideration at
the forthcoming Annual General Meeting - special in the sense that
they do not normally occur - which I would like to draw to
Shareholders' attention.

Resolution Number 9:        To Wind Up The
Company:
Recommendation: Vote Against
The procedure for the tenth anniversary continuation vote, which was
laid down at the time of the launch ten years ago, was that a
resolution would be put to Shareholders to wind up the Company.
However, if the Board of Directors believed that it would be in
Shareholders'' best interests that the Company should continue in
business, then it would recommend shareholders to vote against it.

Clearly it is an important matter for the Shareholders and so we have
given it full consideration.  In doing so we have taken into account
three important issues:

1.        Do we think that the investment environment over the next
five years is such that Shareholders are likely to make money?  Yes,
we do.  Both James's and my statements attest to a long-term
bullishness for shares, although we recognise there will be ups and
downs.

2.        Do we think that Mars Asset Management is capable of
exploiting the opportunities in the stock market for the benefit of
Shareholders?  Yes, we do.  Notwithstanding the difficulties of the
past year, we believe that James has the right strategy, that he has
invested in good themes, which will prove rewarding during the next
five years and that - taken as a whole - the seven concept stocks
will make a good contribution to Shareholders' returns.

3.        Will James be around and as committed for the next five
(and more) years?  Yes, he assures us he will.  As mentioned earlier
he is a committed individual; he owns 675,000 shares in the Company
and always buys more when appropriate opportunities occur; along with
his fishing, Aurora is one of the loves of his life.  We already get
the benefit of his talent, experience and commitment and we will get
the benefit of continuity, an important aspect of good long-term
returns.

As a consequence we believe that over the next five years Aurora's
shares should prove to be an excellent investment for Shareholders
and we recommend that you vote AGAINST Resolution Number 9.



Resolution Number 10:      To increase the aggregate Remuneration
Payable to the Directors:
Recommendation:                Vote For
The Board has been giving active consideration to the appointment of
new directors but in order to pay fees to them, it needs to increase
the aggregate amount payable to the Directors collectively.
Furthermore the current fee level of £13,000 per annum per director
is rather less than the going rate, which has risen in recent times
due to the considerable increase in red tape, duties and liabilities
that directors take on.  The Board believes that £150,000 in
aggregate will be enough to pay for a larger board and higher fee
rates.  We therefore recommend that you vote FOR this resolution.

I do urge as many shareholders as possible to join us for the Annual
General Meeting.  It will be held at 12 pm at Cavendish
Administration's offices at 145-157 St John Street, London
(Farringdon tube station).  It is the occasion when shareholders can
meet all of the directors and ask questions or make comments or
suggestions which we would welcome and which we feel that all
shareholders should have the benefit of hearing.  Please come and
join us.



Current Outlook and Prospects:


It seems that the current outlook and prospects - as I write this at
least - are much the same as they were a year ago.  The global
economy has continued to grow, driven as it has been by the American
consumer and the Chinese producer.  Almost all other major economies
have also contributed to the global growth, albeit to a lesser
extent.  The prospects for the coming year are much the same,
although the American consumer may contribute rather less but the
European economies rather more.  The effects of China's manufacturing
and India's service industries on global inflation have meant that it
has remained reasonably subdued (although some of the assumptions and
thence statistics on inflation are pretty questionable); commodity
prices generally and that of oil in particular are at similar levels
as those of a year ago so that they should not be a force for much
higher inflation in the next 12 months; and finally in most of the
mature economies demographics has a disinflationary, even
deflationary, influence on prices.  Notwithstanding these
disinflatinary forces, central banks have become more concerned about
the prospects for inflation - particularly for the inflation of asset
prices - and as a consequence interest rates generally are rising.

The prospects for the UK's economy are likewise much the same as they
were a year ago.  While the world's economy is driven by those of the
USA and China, the British economy is driven by the prosperity and
prospects for the City.   Despite dire predictions from the
Eurofiles, particularly the Financial Times, that the City would be
sidelined because we did not sign up to the Euro, it looks as though
it is emerging as the financial centre of choice in the world.  Aided
by mindless, over zealous and legalistic regulation in the United
States, by being fortuitously located in the best time zone, by
sensible regulation and taxation in the UK and finally and most
importantly by having a large pool of talented and experienced
people, the City has become the key driver of the UK economy.
Furthermore, and despite some of the destructive policies of our
Chancellor of the Exchequer (particularly in the area of the
country's pensions) and despite the prospects of the break up of the
United Kingdom (which must surely be of great economic benefit to
England and the City), the UK economy continues to motor on.

Our investment remit allows us to invest in UK quoted companies,
ranging from the largest, BP, to the smallest AIM company.  Most of
the capitalisation of the British stock market is not dependent upon
the UK economy - so that the prospects of the global economy are just
as important to us as those of the UK.  The strength of the UK
economy has a proportionately greater bearing on the fortunes of
smaller companies.  Given that both look set fair, then so do the
prospects for the UK stock market.  However, we should bear in mind
that this bull market is now pretty mature, being in its fifth year.
Typical of the final phase of a bull market is a lot of merger and
acquisition activity and indeed, as best my memory affords me, I do
not remember it on such a scale since the early 1970's.  It seems to
be the case that the Bank of England will continue to raise interest
rates and that too is a reason for caution.



However, trying to predict markets is a mug's game and not one that
should dominate our - or any other investors' - investment strategy.
Rather it should be determined by a critical analysis and
understanding of what's going on in the investment world and choosing
the right areas (themes) and stocks to invest in.  I think we have
learnt the lesson of investing a little too much in promising but
rather esoteric stocks and that by following our themes in a simpler,
more straightforward way, we should be able to make money for
shareholders and make more money than the market or our competitors.


Alex Hammond-Chambers
Chairman
25 May 2007


MANAGER'S REVIEW AND OUTLOOK


The Chinese called  it the year  of the  dog. In the  opinion of  the
manager  this  was  a  fitting   description  for  the  last   year's
performance of this  Company's portfolio. Moreover  just as the  year
was ending the 'dog' bit viciously - a substantial part of the year's
gains evaporated in the last two and a half trading days of the  year
as a consequence  of the  sharp correction  which took  place in  the
Chinese stock-market.

It was indeed a most  frustrating, perplexing and difficult year  for
investing in growth stocks. Whereas  from the outset the manager  was
proved correct in being full of optimism about the prospects for both
the UK economy and particularly  the stock-market, this optimism  did
not  translate  successfully  into  the  portfolio.  The  first  half
witnessed, as previously reported, a poor relative performance, which
was only partly recovered during the latter part of the year.

In brief, the  main features  which militated  against the  manager's
strategy  were  the  combination  of  bad  sentiment  towards   lower
yielding, and especially smaller, stocks by investors who adopted  an
unusually, ( in view of the strong rate of growth in the UK economy),
defensive   rather   than   confident   stance.   Furthermore,    the
unprecedented high  level of  corporate  activity by  private  equity
funds towards mid-cap companies with  dull prospects but steady  cash
flow had not been foreseen by the manager - nor indeed by many  other
commentators.

Although all  the  current  investment  themes  introduced  into  the
portfolio remain apposite and relevant, their effect was  overwhelmed
by the tidal wave of cash,  which has swamped certain sectors of  the
stock-market in the last year.  Overall, it was an exceptional  year,
during which investments in several failed management teams were more
richly rewarded than those in budding successful entrepreneurs -  the
area which the manager considers to be the Company's main remit.



Today, as a consequence of this high degree of corporate activity, or
indeed  the  rumour/hope  of  it,  in  the  manager's  opinion,  many
companies with current  cash flows  have never been  so highly  rated
during the past quarter of a  century at a time when their  prospects
are unexciting - the UK tobacco sector being the extreme example.  By
contrast, those companies  with the  potential of  future growth  and
cash flows, have  rarely been so  relatively undervalued -  providing
opportunities in abundance for the brave and patient stock  selector.
Despite having suffered from a  period of under-performance I  firmly
believe that my patience will be well rewarded; successful investment
is a long term game.

The manager remains confident that circumstances must change for  the
benefit  of  the  portfolio.  Companies  exposed  to  the   seriously
over-indebted UK consumer sector, a feature conspicuously absent from
the portfolio, will be adversely affected by any further rises in  UK
interest rates. By contrast,  the strong representation of  companies
which are  exposed to  the rapid  growth in  developing nations  will
thrive and prosper. It is a remarkable yet true fact, of which the US
centric investor is blissfully unaware,  that the global economy,  as
measured in purchasing  power parity  terms, continues  to expand  at
almost the fastest rate in history, thus in all probability providing
a favourable background for this style of investment.

It was  a mixed  blessing  when McCarthy  &  Stone, a  long  standing
favourite and  representative  of  two themes,  namely  the  relative
under-supply of new  housing and  the ageing of  the population,  was
taken over during the year. Although the exit price provided a useful
uplift to the portfolio, it was sad that the management was unable to
obtain a much  higher price  than they did  for a  company with  such
excellent future  growth  prospects and  one  which derived  such  an
exceptionally high return on capital employed.

Approximately one third of the proceeds from this disposal were later
redeployed in  Barratt  Developments, which  has  since  successfully
acquired Wilson  Bowden. This  latter deal,  which will  soon  propel
Barratts into the FTSE 100 index,  to join Persimmon, not to  mention
possibly also Taylor Woodrow/ Wimpey, is  likely to help to ensure  a
continuation  of   the  re-rating   of  the   rapidly   consolidating
house-building sector.



A new  addition to  residential exposure  was in  Pactolus  Hungarian
Property plc, a  company specialising in  refurbishing apartments  in
the Mayfair/Belgravia districts  of Budapest before  letting them  at
high rents to  first class  corporate tenants. This  country is  well
placed to benefit from  the renaissance of  Eastern Europe, from  the
gradual harmonisation of  wages up towards  Western European  levels.
Hungary also has the prospect, within a few years, of entry into  the
Euro, which will  then enable  mortgage interest rates  to halve  and
thereby produce a consequent strong uplift in capital values.

A small  disposal  was made  from  the large  holding  in  Persimmon.
Regrettably this holding did not perform in the same dazzling  manner
as occurred in the previous year whilst it integrated its acquisition
last  year  of  Westbury.  Meanwhile,  Abbey  made  steady  progress,
benefiting from strong conditions in both the UK and Ireland.

The longstanding  exposure  to  the rapidly  growing  Irish  economy,
through the holdings in  Anglo Irish Bank  and Gartmore Irish  Growth
Trust, produced solid  gains once  more. On account  of the  relative
size of these holdings, vis-a-vis the rest of the portfolio,  further
part disposals were made, despite their excellent prospects; in  turn
an addition was made doubling the size of the holding in Irish Life -
one of  the few  large companies  which  remain a  pure play  on  the
domestic economy.

Last year, Irish GDP expanded by no  less than 6%, on account of  the
many  dynamic  features  of  that  economy  highlighted  in  previous
reports, yet the prospects for the  next two years are no less  rosy.
Although the  housing market  is set  to slow  down from  its  recent
exceptional level,  any shortfall  is likely  to be  made good  by  a
combination of the  effect of further  maturity of SSIAs  (government
enhanced savings schemes), the boost to confidence resulting from the
rapid growth in  the N. Irish  economy, a tourist  boom, the  notable
strengthening of the European economy led  by Germany, as well as  by
the size of  investments announced  in the new  National Plan.  Under
that Plan the government, over the  next six years, aims to invest  a
massive ¤26 bn. p.a. to de-bottleneck areas of congestion in order to
improve productivity.

What a  miraculous transformation  has taken  place in  that  economy
since 1987, when unemployment was some 14% and the debt to GDP  ratio
was no less than  107%. Today the statistics  are a mere 4%,  despite
the rapid inward migration from Eastern Europe, and 25% respectively.
It is a great pity that the Olympic games were not awarded to  Dublin
rather than  London -  they  would have  no  problem in  footing  the
rapidly mounting bill.



China of course, as  is well known, is  the economy which is  growing
fastest of all. The latest official statistic has confirmed a  growth
rate in excess of 11% for the whole economy and no less than 18%  for
industrial production; meanwhile India is forecast to grow at a  more
sedate pace of  8% for the  next few years.  By contrast, the  mighty
Euro area might possibly achieve 2% if given a following wind!

Exposure to such  rapid economic growth  has from the  outset been  a
favourite investment theme, but, as  mentioned earlier, to the  great
consternation of the  manager, surprisingly was  not a fruitful  area
for this  portfolio  last  year.  It  is  a  sad  reflection  on  the
activities of stock-market professionals that really boring and staid
companies such as AWG (water) and SSE (electricity) with few virtues,
apart from their cash flow, should have produced much higher  returns
than exciting growth companies such as Standard Chartered Bank (which
has arguably the best franchise in SE Asia and the oil rich countries
of the Middle  East), Rolls Royce  (a new holding  on account of  its
burgeoning order book,  particularly from  Asia) not  to mention  the
entire mining sector whose profits  rocketed once more last year.  Oh
well, as the saying goes, every dog must have its day.

As I wrote  last year,  I firmly believe  that the  mining sector  is
still near the start of the fourth super-cycle in history, one  which
may endure for two decades. During the last twelve months this sector
made no overall headway,  but, in my opinion,  had merely paused  for
breath.  Since  the start of  the new financial  year the sector  has
broken into new high  ground and now looks  poised to make  excellent
headway.

The prices of  many metals  are currently  hitting new  highs as  the
growth in  demand from  the BRIC  countries (Brazil,  Russia,  India,
China) far  exceeds the  growth  in new  supply, leaving  perhaps  as
little as two  days consumption in  stock, e.g. copper.  Most of  the
bears on the sector will be  surprised to learn that, whereas the  US
housing industry accounts for 3% of global copper demand, China  will
consume no less  than 30% this  year. Nor will  that percentage  stay
constant as  rapid  investment programmes  are  taking place  in  the
domestic economy in terms of telecommunications and  electrification,
not to mention air conditioning and computers amongst others. Indeed,
I read that over the next five  years China intends to spend more  on
its metros and railways than the whole  of the rest of the world  has
done over the last twenty years.



Metal prices in particular are likely to continue to rise yet further
because there  are so  few new  mines ready  to commence  production.
Moreover every mining company is  complaining about the shortages  of
skilled personnel and  equipment; it  can currently take  up to  four
years to obtain a new drag line and more than a year to receive a new
set of tyres for a large dumper truck. Indeed one mining company  was
so desperate  to  preserve tyre  life  at a  time  of such  an  acute
shortage that it has employed women drivers to achieve this.

The eight holdings in  the mining sector  provide the portfolio  with
great diversity  and  a current  treble  weighting, so  great  is  my
conviction that the mining sector will   soon enjoy a re-rating  from
its current derisory  level in addition  to rapidly rising  earnings.
Whereas the investments  in the  large companies such  as Rio  Tinto,
Antofagasta, BHP Billiton and  Xstrata maintained their value  during
the year,  two  in  smaller companies  proved  expensive.  Monterrico
Metals  plc,  a  huge  copper  deposit  in  Peru,  was   successfully
part-acquired by  a Chinese  consortium for  a fraction  of its  true
value because the  management failed to  raise new money  in time  to
prolong the bidding  process. Global Coal  Management (formerly  Asia
Energy) suffered  from  failure to  receive  permission to  mine  its
massive  opencast  coal  deposit  in  Bangladesh  from  the  previous
administration. Fortunately  the  army  has assumed  control  of  the
country since January and  is taking key  decisions to stimulate  the
economy, as well as gaoling  many of the former corrupt  politicians.
(Little wonder that Brussels is currently taking few steps to  create
an army!) Accordingly, the management of this company is now  raising
its hopes that permission will soon be forthcoming.

As mentioned at  the start  of this  report, several  of the  smaller
holdings performed badly. BTG for example gave back most of its large
gains achieved in  the previous year  because investors have  fretted
that the company has decided to resubmit to the FDA's phase 2  trials
for Varisolve (revolutionary treatment for varicose veins) without  a
major pharmaceutical company  as partner.  The company's  diversified
portfolio of patents, particularly in respect of multiple  sclerosis,
is however  considerably more  valuable  than the  current  valuation
attributed to the whole  group, even if Varisolve  had to be  written
off completely when the trial results are published later this  year.
The management remain confident that this will not be the case.

The holding in  Medical Marketing  has diminished in  value owing  to
lack of news  from the  three separate research  platforms which  the
company is helping to finance. News will, however, be forthcoming  in
mid May from the trials into  using DNA vaccines for treating  cancer
patients. Hopes are rising, as manifested in the share price, that  a
significant deal will be contracted shortly thereafter.



Both Orca  and Emblaze  encountered major  problems which  materially
affected their share prices, although fortunately not in relation  to
their technological know-how which remains  at the cutting edge.  The
former won many contracts from the smaller telephone companies  (tier
3) to  install  their 'video  on  demand' systems  but  suffered  the
tragedy of having  their main  business partner,  Lucent, merge  with
their main  rival,  Alcatel.  Meanwhile Emblaze  has  encountered  an
industry wide VAT problem  which has caused  severe outflows of  cash
until the dispute is resolved.

Gresham Computing did rise in value during the year, yet progress  in
signing up international banks as customers for its Real Time  Nostro
accounting  system  would  appear  to  have  been  slower  than  many
investors would wish. It is, however, making inexorable progress. The
company has recently announced that the system is now accounting  for
9% of the daily foreign exchange  market. I foresee that, once  fifty
(still some way off) banks have  signed, a 'tipping point' will  have
been reached; thereafter the banks  will sign in droves. Bankers  are
like civil servants - keen to question everything, slow to come to  a
decision, yet certainly lemming-like when they do.

I still consider, once this target is eventually achieved, that  this
company has  the most  exciting and  visible potential  of any  small
company I have encountered  during my career.  A potent incentive  to
encourage a bank to adopt the system  is the fact that on account  of
faster settlement times the  capital required under  the new Basle  2
regulations will  be greatly  reduced.  My great  worry is  that  the
company may be subject to a  hostile take-over attempt before it  can
reap the rewards it so richly deserves.

I do naturally have  other concerns in  managing the portfolio  which
are mainly from a political standpoint. Not only am I concerned about
the excess  borrowing  spree in  which  the Chancellor  has  engaged,
purportedly to improve the  country's health and education  services,
yet with little  benefit to  show for  it to  date, but  also by  the
degree of indebtedness of the consumer whose ability to spend in  the
high street looks  short lived. Furthermore,  I am greatly  concerned
about the state of the housing  market, high prices and the  knock-on
effect  for  manufacturing   industry  through   the  imposition   of
unnecessarily excessive interest rates.



The Government continually makes noises  about how it will make  life
easier for house-builders to increase the supply of new housing,  but
in reality it introduces more red tape/tax, as it does in all sectors
of  industry  and  commerce,  thereby  increasing  the   difficulties
involved for companies.  Fortunately this  does greatly  work to  the
advantage of  the larger  participants by  increasing their  margins.
House-builders are still the best way  to make money out of  divorce,
immigration (whether legal or illegal), asylum seekers (definitely  a
growth industry) as well as future climate change.

The Chinese  Government  appears  to be  slowly  starving  the  North
Koreans into submission and forcing them to close down their  nuclear
facilities. Let us hope they are successful. A much greater threat to
the level of stock-markets, however, would currently appear to  arise
from Iran which boasts about its nuclear capability. I cannot see any
resolution to that  problem so  am keen to  increase the  portfolio's
exposure to energy assets outside the Straits of Hormuz, be they Drax
power station, coal, uranium, oil or natural gas.

On a more cheerful note the  IMF has recently published its  outlook;
it predicts a continuation of strong  growth for both the UK and  the
global economy.   UK interest rates  may not yet  have reached  their
peak until inflationary pressures abate - which even the Governor  of
the Bank expects to occur later this year.

After several  years  of  upward revaluation  of  property  and  bond
markets,  equities,   by   comparison,  appear   to   be   relatively
undervalued.  UK equities are now as cheap relative to ten-year bonds
as they have been at any time  during the last thirty years. It is  a
sobering thought for any  "bear" that, even  though the mid-cap  area
may be highly  valued, some 40%  of the  FTSE 100 is  currently on  a
prospective price/earnings  ratio of  under 11  times; moreover,  the
smallest capitalisations also appear particularly cheap.

Few commentators would disagree that there is a high probability that
more share  buy-backs, more  corporate  activity and  further  strong
dividend growth will occur to buoy the market; conditions for private
equity remain so favourable.

In conclusion, your manager  remains optimistic about the  portfolio,
being confident that good news flow for the smaller stocks, which has
been long delayed, will finally start to occur in what is a much more
auspicious year for Chinese investors. Roll on the year of the golden
pig.


M.J.BARSTOW
25 May 2007


CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 28 FEBRUARY 2007



  Year ended 28 February 2007   Year ended 28 February 2006




                       Revenue Capital Total   Revenue Capital  Total
                         £'000   £'000 £'000     £'000   £'000  £'000


Gains  on  investments       -     795   795         -   3,714  3,714
at fair value  through
profit or loss
Exchange   differences       -     144   144         -   (155)  (155)
on overdraft
Realised                  (58)       -  (58)       137       -    137
(losses)/gains of
trading subsidiary at
fair value through
profit or loss
Unrealised losses of         -       -     -     (831)       -  (831)
trading subsidiary at
fair value through
profit or loss
Investment income          921       -   921       835       -    835
Total income               863     939 1,802       141   3,559  3,700
Investment  management   (195)   (195) (390)     (178)   (178)  (356)
fees
Other expenses           (207)       - (207)     (225)       -  (225)
Profit before  finance     461     744 1,205     (262)   3,381  3,119
costs and tax
Finance costs            (236)   (236) (472)     (207)   (207)  (414)
Profit before tax          225     508   733     (469)   3,174  2,705
Tax                          -       -     -         -       -      -
Profit for the year        225     508   733     (469)   3,174  2,705

Earnings per  share  -   1.49p   3.36p 4.85p   (3.10p)  21.01p 17.91p
basic and diluted



The total  column of  this statement  represents the  Group's  Income
Statement, prepared under  IFRS.   The revenue  and capital  columns,
including the  revenue  and  capital earnings  per  share  data,  are
supplementary information prepared  under guidance  published by  the
AIC.

All revenue  and capital  items in  the above  statement derive  from
continuing operations.  No  operations were acquired or  discontinued
during the period.  All revenue is attributable to the equity holders
of the parent company.  There are no minority interests.

The Board recommends a final dividend of 3.10p per share



CONSOLIDATED BALANCE SHEET
AT 28 FEBRUARY 2007


                                                    2007      2006
                                                   £'000     £'000

NON-CURRENT ASSETS
Investments at fair value through profit or loss  44,864    44,003

CURRENT ASSETS
Investments held for trading                           -     1,111
Other receivables                                     40       152
Taxation recoverable                                  41        30
Cash and cash equivalents                            337        98
                                                     418     1,391

TOTAL ASSETS                                      45,282    45,394

CURRENT LIABILITIES:
Purchases for future settlement                      120         -
Other payables                                       125       118
Bank overdraft                                     7,740     8,266
                                                   7,985     8,384


TOTAL ASSETS LESS CURRENT LIABILITIES             37,297    37,010

EQUITY
Called up share capital                            3,777     3,777
Share premium account                             10,997    10,997
Realised capital reserve                          14,886    12,228
Unrealised capital reserve                         7,539     9,689
Revenue reserve                                       98       319

TOTAL EQUITY                                      37,297    37,010

Net assets per ordinary share                    246.88p   244.98p



CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 28 FEBRUARY 2007



2007
                     Share   Share Realised Unrealised Revenue  Total
                   capital premium  capital    capital reserve
                           account  reserve    reserve
                     £,000   £,000    £,000      £,000   £,000  £,000

Opening equity       3,777  10,997   12,228      9,689     319 37,010

Profit/(loss) for        -       -    2,658    (2,150)     225    733
the year

Dividends paid           -       -        -          -   (446)  (446)

Closing equity       3,777  10,997   14,886      7,539      98 37,297





2006
                     Share   Share Realised Unrealised Revenue  Total
                   capital premium  capital    capital reserve
                           account  reserve    reserve
                     £,000   £,000    £,000      £,000   £,000  £,000


Opening equity       3,777  10,997    8,099     10,644   1,226 34,743

Profit/(loss) for        -       -    4,129      (955)   (469)  2,705
the year

Dividends paid           -       -        -          -   (438)  (438)

Closing equity       3,777  10,997   12,228      9,689     319 37,010




CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 28 FEBRUARY 2007


                                                      2007       2006
                                                     £'000      £'000

NET CASH FLOW FROM OPERATING ACTIVITIES
Cash inflow from investment income and interest        921        835
Cash inflow/(outflow) from held for trading          1,053    (1,805)
current asset investments
Cash outflow from management expenses                (489)    (1,096)


Payments to acquire non-current asset investments (10,642)   (13,514)
Receipts on disposal of non-current asset           10,695     14,436
investments

Tax paid                                              (11)       (12)

NET CASH FLOW FROM OPERATING ACTIVITIES              1,527    (1,156)



CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid                                       (446)      (438)
(Decrease)/increase in bank borrowings               (526)      1,515
Interest paid                                        (461)      (413)
NET CASH FLOW FROM FINANCING ACTIVITIES            (1,433)        664


INCREASE/(DECREASE) IN CASH                             94      (492)



Cash and cash equivalents at beginning of year          98        745

Increase/(decrease) in cash                             94      (492)
Currency translation difference                        145      (155)

Cash and cash equivalents at end of year               337         98




NOTES


1.   Status of this report
The above results for the year ended 28 February 2007 are unaudited.
This financial  information  does  not  constitute  the  Company  and
Group's statutory accounts for the year ended 28 February 2007, which
will be finalised on the basis  of the financial information in  this
Preliminary Announcement.

Statutory accounts for  the year  ended 28  February 2007  are to  be
delivered to the Registrar of Companies following the Annual  General
Meeting.

The information  for  the  year  ended  28  February  2006  has  been
extracted from the  latest published audited  financial statements.
The audited financial statements for the year ended 28 February  2006
have been filed with the Registrar  of Companies.  The report of  the
auditors on those  accounts contained no  qualification or  statement
under section 237(2) or (3) of the Companies Act 1985.



   2.  Basis of accounting
The financial statements of the Company and the Group have been
prepared in accordance with International Financial Reporting
Standards (IFRS), which comprise standards and interpretations
approved by the IASB and International Accounting Standards and
Standing Interpretations Committee interpretations approved by the
IASC that remain in effect, and to the extent that they have been
adopted by the European Union.

Under IFRS, the  Statement of Recommended  Practice (SORP) issued  by
the Association of Investment Companies has no formal status, but the
Group has taken the guidance of  the SORP into account to the  extent
that is appropriate and compatible with IFRS.

The accounting policies  are unchanged  from those used  in the  last
annual financial statements except where otherwise stated.


3.  Income

                                                  2007    2006
    Income from investments:                     £'000   £'000
    Franked dividends from listed investments      822     739
    Unfranked income from overseas dividends        57      63
    Income from listed fixed interest securities    29      25
                                                   908     827



  Other income:
  Interest receivable  13     8
                       13     8

                      921   835



4.  Investment Management Fees and other Expenses


                                                2007                    2006
                                       Revenue Capital Total   Revenue Capital Total
                                         £'000   £'000 £'000     £'000   £'000 £'000
  Investment management fees
                                           195     195   390       178     178   356
  - monthly                                  -       -     -         -       -     -

  - performance
                                           195     195   390       178     178   356
  Administration fees                       65       -    65        59       -    59
  Custodian's fees                          12       -    12        13       -    13
  Registrar's fees                           8       -     8         6       -     6
  Directors' fees                           67       -    67        67       -    67
  Auditors' fees: - audit of the            18       -    18        20       -    20
  Company
         and consolidated financial
         statements
         - non-statutory interim             -       -     -         3       -     3
  advice
        -  tax advice                        6       -     6         6       -     6
  Miscellaneous expenses                    31       -    31        51       -    51
  Total other expenses                     207       -   207       225       -   225



5.          Ordinary Dividends

                                                         2007   2006
                                                        £'000   £'000
Dividends reflected in the financial
statements:
Final dividend paid for the year 2006 at 2.95p (2005:
2.9p)                                                     446     438

Dividends not reflected in the financial statements:
Proposed final dividend for the year 2007 at 3.10p
per share (2006: 2.95p)                                   461     446



6.          Earnings per Share
             Earnings per share are based  on the profit of  £733,015
(2006: £2,705,425) attributable   to 15,107,250   (2006:  15,107,250)
ordinary shares of 25p.

Supplementary information is  provided as  follows: revenue  earnings
per share are  based on the  revenue profit of  £224,985 (2006:  loss
£468,732); capital earnings per  share are based  on the net  capital
gains of  £508,030 (2006:  £3,174,157), attributable  to 15,107,250
(2005: 15,107,250) ordinary shares of 25p.


Company Secretary and Registered Office:
Cavendish Administration Limited
145-157 St John Street
London EC1V 4RU

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