El Oro& Exploration

Final Results

El Oro And Exploration Co Plc
01 November 2006



El Oro and Exploration Company p.l.c.
1 November 2006


Chairman's Statement


The Group profit before tax for the eighteen month period ended 30 June 2006 was
£12,018,986 (twelve months to 31 December 2004: £3,005,700 - restated).   Group
net assets at 30 June 2006 under IFRS, taking all assets at fair value were
£72,214,062 (equal to 666p per stock unit) as compared with £67,905,581 under UK
GAAP at 31 December 2004 (equal to 573p per stock unit).



The principal difference between the IFRS and UK GAAP measurement of the fair
value of net assets is that under UK GAAP at 31 December 2004 the figure took no
account of the £11,294,608 potential corporation tax due on the excess of market
values of net investments over net book cost at that date, which is recognized
in the IFRS figures at 30 June 2006.



We have declared a first and final dividend of 12p per stock unit for the
eighteen month period ended 30 June 2006. The dividend was paid on 26 October
2006 to members registered on the books of the Company at the close of business
on 22 September 2006.



'Praise the Lord and pass the ammunition', Hallelujah and Deo Gracias for this
munificent and unlikely to be repeated outcome of the past eighteen months.



Foremost amongst the contributors to the increase in profit and assets has been
the stellar performance of the Brewery sector, led by the takeover, completed in
September, of Hardys and Hansons by Greene King.  We cannot conceal a heavy
tinge of regret, both for the passing of a long established and hugely
successful regional brewer, combined with the closure of its Nottingham brewery;
and not being offered Greene King shares to carry forward our involvement. The
other leaders in the brewery sector such as Fullers and Wolverhampton & Dudley
have also demonstrated their prowess in providing services approved by their
customers and bolstered by their property portfolios and have been similarly
rewarded in the appreciation of their share prices.



An even sadder departure has been that of John Young, doyen of the Brewing
industry, passionate advocate of draught beer and guardian of his wonderful
inheritance, whose passing gift to his shareholders was to announce the sale of
the Ram Brewery; thus enhancing the asset value of Young's and enabling it to
face the future with renewed vigour. John Young lived for his Brewery and the
brewing industry. We join in the tributes to a great personality and best of
people and wish his successors and the team he leaves in place good fortune in
the future.



The stellar performance of the property sector, has seen Daejan, McKays and
Mountview thrive amongst our holdings, and has been complemented by the
spectacular results of James Halstead; these businesses, along with the
utilities where AWG now follow Bristol Water and East Surrey into private
equity, have underpinned the strength of your portfolio. We remain exposed to
the water sector via Dee Valley and see no reason we should not continue to reap
rewards in this area.



The mining sector which has enjoyed such heady rises boiled over in June:
renewed doubts over the durability of the Chinese economic miracle led to
significant downgrading in the leaders of the sector, such as BHP, Xstrata and
especially Rio Tinto. Some of our investments in the small-cap sector such as
Consolidated Minerals and Monterrico, have suffered large falls, as the
economics, or politics of their projects have been tested, and found wanting;
more recently Avocet sank , warning of increased costs and lower output.
Happily, at the time of writing, many of these miners have clawed their way
upwards, heartened by the ever-growing slew of takeovers, such as that by
Xstrata of Falconbridge, and hints of approaches throughout the sector. Amongst
the casualties, Croesus, the new guise of Central Norseman, managed to over-turn
90 years of successful gold mining by an ill-judged foray into the hedging
market. Whilst these losses are painful, we do not believe the storm will be
prolonged.  Our Australian portfolio has several projects that will soon be in
production such as Archipelago in Gold and Universal Resources in Copper; mines
such as these are sound at metal prices substantially below those prevailing
today.



 As for Gold, the dollar's demise never quite occurs, and the glimmer of an
escalating price is stifled yet again - we retain our optimism; and our gold
interests continue to flourish, with Troy Resources recently surpassing the
production of 10 tonnes of gold from the Sandstone deposit. The more
recently-visited Kazakhs have proven that old mines never die, and that there is
still space for Yurts and Velvet cloaks, and their inimitable brand of
hospitality, amongst the infinite horizon of that bountiful land.



We remain confident that the ultimate highs for Gold and Gold shares remain
ahead, though how far we do not attempt to predict. Constant vigilance is
required in the search for secure deposits of the precious metals, with
avaricious governments and needy electorates ever on the look out for easy
targets.



The economic outlook at present appears benign, whilst the world floats on a
seemingly inexhaustible tide of liquidity, sending even the Dow Jones to an all
time high, and the venerable  Berkshire Hathaway past the $100,000 mark; the
Sage himself holding significant stakes in the only 2 stocks in the Dow Jones
Index  to have actually exceeded their old highs. The Earth may appear to belong
to Google, with their bid 'to control the supply of knowledge to the World' or
momentarily to the Oligarchs, with their bidding hands held high, or busy
destroying the classical harmony and beauty of St. Petersburg's Palaces: for
lesser mortals, the travails of the US Housing industry, indebtedness of the US
citizen and increase in Individual Voluntary Arrangements within the United
Kingdom allied to rising interest rates, are disturbing portents. The escalating
intrusion of the State into the lives of its citizens, backed by an ever more
onerous tax regime, threatens stability far more than its alternative.
Furthermore, the take-off in cheap air travel is now seen as the prime polluter
and source of all the ills of the world; needless to say, another tax is seen as
the solution, especially by the Conservatives, who consign to a distant
filing-cabinet the eminently sensible report on taxation produced by Lord
Forsyth. The carbon output from the Engines of Asia: India and China, remains
sacrosanct and beyond amendment despite making the pollution from our own
service-based economy pale into insignificance. Peter, Paul and Mary will not be
leaving on their Jet Plane without a heavy gulp of guilt, and concomitant tax
levy.



I would like to express some personal views:



We query the sanity of those fund equity managers who eschew the assets of 'this
sceptred isle, this precious stone set in a silver sea', taking in exchange
British or other bonds, issued by countries hopelessly indebted and with chronic
budget deficits whilst P & O, AB Ports and others disappear into the maw of
Private Equity or overseas traders. The Pension Funds reduce their exposure to
UK equities - despite that being the only area that can sustain their clients
over the longer term; a process accelerated by the present Chancellor and his
predecessor's reduction followed by removal of the Tax Credit; destroying
possibly £150 billion from the Pensions of all but parliamentarians and Civil
servants, whilst simultaneously proclaiming success at bringing 'stability' to
the British economy. That stability is mainly apparent in the client list of
West End Restaurants. Those citizens foolish or patriotic enough to believe
their government's promises, have been impoverished and the exposure of the
British fund industry to its own economy has been diminished.



 The 45,000 'Ghost' workers in the Cameroons, costing that country £5 million
per month, are sadly replicated many times over in Britain. The soft-sell
Conservatives dare not whisper the Spending-cut word, even when the evidence of
appalling profligacy and woeful underachievement is everywhere to be seen. Defra
has become a byword for incompetence and overstaffing; the National Health,
whilst admirable in its operatives, is sliding ever deeper into catastrophic
insolvency, dragged down by a Computer system of unbelievable ineptitude and
budget overrun; the public education system has proven itself incapable of
providing literate and numerate graduates to stand on a par with overseas
students. The Armed Forces, one of the few organisations retaining a smidgeon of
  efficiency and authority, is starved of resources and is now so small within
the State sector as to be almost invisible; its Barracks and Hospitals, amongst
the finest and historic Georgian buildings in the Land, like the similarly
dispersed  asylums, have been sold off for a pittance to form bijou apartments
for the upwardly mobile and enrich a new generation of developers; the injured
must take their chance in the lottery of the NHS.



For the tax-payers of our country to be told they must continue coughing up to
bolster this profligate government is truly grotesque. Meanwhile, the ordinary
Englishman, paying nearly 50% of his income in tax, is excluded from the London
housing market, by the impossibility of competing with non-Domiciled purchasers
paying an average of 5%. The citizens of the North-East may well be content with
this state of affairs: it is unlikely that those of the South East will tolerate
it indefinitely, especially when a Bank of the stature of HSBC admits to be
reviewing the domicile of its Headquarters.



 It is enough to drive one to drink, but not to cigarettes: that avenue now to
be excluded from pubs and Restaurants: an aim but not an achievement of Adolf
Hitler in the 1930's, unlike General Pershing who regarded tobacco 'as important
as bullets.' The effect on our pub investments is yet to be discovered, but
unlikely to be good, as is the removal of soft drinks from schools, whilst
simultaneously selling off their playing fields. The urge to intrude and
restrain freedom  is almost irresistible and infinite to any politician, where
even Anthony Gormley's  Merseyside sculptures at Crosby are not deemed safe on
the seashore; shame on you, pseudo-Conservatives.



We all now know that Regulations will not be reduced by any of the present or
potential incumbents, that tax will get worse and the public finances more
dissolute. We have no idea when the nettle-grasping will occur, as happen it
must; in the meantime, our assets, spread through this proud land and amongst
the more fecund and energetic areas of the world, will provide the wherewithal
for the wait.



My thanks, as always, to my patient and wise fellow directors, our excellent and
shrewd advisers and our observant and discerning auditors; and especially to
Douglas Eaton for so many years of selfless service and worldwide telephone
conversations delving into the deeper recesses of the markets.



The humorous team at Cheval Place, reinforced by the return of Rosanna with the
assistance of Jackie and Steve, bolstered by Abbie's endless energy, prepare for
the farewell to Chris Burman and a new era, with the Accounts and Company in
good heart.



C. Robin Woodbine Parish

1 November 2006



CONSOLIDATED INCOME STATEMENT
(Unaudited)
for the 18  month period ended 30 June



                                                                                  18 months to        12 months to
                                                                                  30 June 2006         31 Dec 2004
                                                                                                          restated *
                                                                                             £                   £
Revenue                                                                             18,659,832           5,184,007
                                                                                       

Movement in fair value through the income statement investments                        156,728                   0
Movement in fair value of investment properties                                       (19,896)             (4,621)
Impairment (loss)/ reversal of impairment on available for sale investments        (2,893,963)             798,513
                                                                                   (2,582,000)         (2,236,176)

Expenses

Profit before finance costs and taxation                                            13,320,701           3,741,723

Finance costs:
     Banks                                                                           1,295,415             716,455
     Other                                                                               6,300              19,568
                                                                                     1,301,715             736,023

Profit before taxation                                                              12,018,986           3,005,700
Taxation                                                                             3,753,302           1,080,051
Profit for the period                                                                8,265,684           1,925,649

Earnings per stock unit (basic and diluted)                                             76.06p              16.15p


CONSOLIDATED STATEMENT OF CHANGES IN INCOME AND EXPENSE
(Unaudited)
for the 18  month period ended 30 June                                            18 months to        12 months to
                                                                                  30 June 2006         31 Dec 2004
                                                                                                          Restated *
                                                                                             £                   £

Profit for the period                                                                8,265,684           1,925,649
Recognition of financial instruments at 1 January 2005:
     Available for sale reserve                                                     25,640,476                   0
     Derivative financial instruments                                                (232,665)                   0
Revaluation of available for sale investments during the                              27,676,702                 0
period
Deferred tax on revaluation of available for sale                                  (8,303,011)                   0
investments in the period
Total recognised income and expense for the period                                  53,047,186           1,925,649

*  Restated for the effect of adoption of IFRS (see note o)


CONSOLIDATED BALANCE SHEET
(Unaudited)
 at 30 June
                                                                                  30 June 2006         31 Dec 2004
                                                                                                          restated *
Assets                                                                                       £                   £
Non-current assets
Property, plant and equipment                                                          747,417           1,343,175
Investment properties                                                                  406,014             611,475
                                                                                     1,153,431           1,954,650

Current assets
Trade and other receivables                                                            236,940             380,635
Financial assets:
     Available for sale investments                                                107,253,063          39,693,884
Financial assets-fair valued through the income                                              0              39,325
statement:
    Derivative financial instruments
     Commodities                                                                     1,619,941                   0
Cash and cash equivalents                                                              256,656             173,608
                                                                                   109,366,600          40,287,452

Liabilities
Current Liabilities
Financial liabilities:
     Borrowings                                                                     21,174,845          12,400,813
Financial liabilities-fair valued through the income                                         0             128,481
statement:
     Derivative financial instruments
Trade and other payables                                                               613,624             735,117
Current tax liabilities                                                                542,507             846,027
                                                                                    22,330,976          14,110,438

Net current assets                                                                  87,035,624          26,177,014

Non Current Liabilities
Deferred tax liabilities                                                            16,218,592               1,764

Net assets                                                                          71,970,463          28,129,900

Stockholders' equity
Ordinary stock units                                                                   541,785             592,045
Share premium                                                                            6,017               6,017
Capital redemption reserve                                                             344,442             294,182
Merger reserve                                                                           3,564           (149,798)
Other reserve                                                                       38,069,136                   0
Retained earnings                                                                   33,005,519          27,387,454
Total equity                                                                        71,970,463          28,129,900

*  Restated for the effect of adoption of IFRS (see note o)

CONSOLIDATED CASH FLOW STATEMENT
(Unaudited)
for the 18  month period ended 30 June
                                                                                  18 months to        12 months to
                                                                                  30 June 2006         31 Dec 2004
                                                                                                          restated *
                                                                                             £                   £
Operating activities
Net profit                                                                           8,265,684           1,925,649
Adjustments for:
Depreciation                                                                            43,168              58,933
Reversal of impairment on available for sale investments                             (919,830)           (798,513)
Foreign exchange losses/(profits)                                                      222,889           (109,017)
Movement in fair value of investment properties                                         19,896               4,621
Movement in fair value through the income statement investments                      (156,728)                   0
Finance costs                                                                        1,301,715             736,023
Income tax expense                                                                   3,753,302           1,080,051
Cash flow from operating profit before changes                                      12,530,096           2,897,747
in working capital

Increase in available for sale investments                                        (12,508,090)         (2,756,496)
(Increase)/decrease in fair value through the income statement investments         (1,254,151)           1,289,813
Decrease in trade and other receivables                                                 91,685             651,417
(Decrease)/increase in trade and other payables                                      (141,139)             215,302
Cash generated from operations                                                     (1,281,599)           2,297,783

Income taxes paid                                                                  (4,155,338)         (1,191,264)
Cash flow from operating activities                                                (5,436,937)           1,106,519

Investing Activities
Net cash disposed of with Danby Registrars Limited                                     (5,000)                   0
Cost of stock units repurchased and cancelled                                         (14,619)           (398,846)
Purchase of property, plant and equipment                                             (37,807)           (120,525)
Purchase of investment property                                                      (235,213)           (138,787)
Cash flow from investing activities                                                  (292,639)           (658,158)

Financing activities
Interest paid                                                                      (1,303,055)           (702,758)
Dividends paid to equity shareholders                                              (1,222,298)         (1,311,727)
New mortgages                                                                          194,402              97,950
Repayment of mortgages                                                                (88,355)             (2,229)
Cash flow from financing activities                                                (2,419,306)         (1,918,764)

Net decrease in cash and cash equivalents                                          (8,148,882)         (1,470,403)

Cash and cash equivalents at start of year                                        (12,079,276)        (10,608,873)
Effect of foreign exchange rate changes                                                 31,213                   0
Recognition of forward gold contracts at 1 January 2005                              (456,274)                   0
in accordance with IAS 39
Cash disposed of with subsidiary                                                         5,000                   0
Cash and cash equivalents at end of year                                          (20,648,219)        (12,079,276)


*  Restated for the effect of adoption of IFRS (see note o)



NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS



a.  Basis of preparation

The principal accounting policies adopted in the preparation of these
non-statutory financial statements are set out below. The policies have been
consistently applied to all the years presented, unless otherwise stated.  All
results are from continuing operations, unless otherwise explained.



These non-statutory financial statements have been prepared in accordance with
International Financial Reporting Standards and IFRIC interpretations ('IFRS')
issued by the International Accounting Standards Board (IASB), as adopted by the
European Union, and with those parts of the Companies Act 1985 applicable to
companies preparing their accounts under IFRS. This is the first time the Group
has prepared its financial statements in accordance with IFRS, having previously
prepared its financial statements in accordance with UK accounting standards (UK
GAAP). The date of transition to IFRS was 1 January 2004. The most recent
financial statements issued under UK GAAP were for the year ended 31 December
2004. Details of how the transition from UK accounting standards to IFRS has
affected the Group's reported financial position, financial performance and cash
flows are given in note o.



The non-statutory financial statements are presented in sterling. They are
prepared under the historical cost convention as modified by the revaluation of
financial instruments held for trading, financial instruments classified as
available for sale and investment properties.



The preparation of the non-statutory financial statements requires management to
make judgements, estimates and assumptions that affect the application of
policies and reported amounts of assets and liabilities, income and expenses.
Actual results may differ from these estimates. Although these estimates are
based on management's best knowledge of the amount, event or actions, where such
judgements are made they are indicated within the accounting policies below.



The preparation of the non-statutory financial statements resulted in changes to
the accounting policies as compared with the most recent annual financial
statements prepared under previous GAAP. Comparatives have been prepared under
IFRS, with the exception of items accounted for under IAS32 and IAS39 where the
exemption for restatement of comparatives has been taken. The impact on the
transition from previous GAAP to IFRS is explained in note o.



b.  Significant accounting policies

El Oro and Exploration Company p.l.c. is a company domiciled in the United
Kingdom. The consolidated financial statements of the Group for the eighteen
month period ended 30 June 2006 comprise the Company and its subsidiaries
(together referred as the 'Group').



c.  Statement of compliance

The consolidated financial statements do not include all of the information
required for full annual financial statements.



Statutory accounts for the year ended 31 December 2004 have been delivered to
the Registrar of Companies and those for the eighteen month period ended 30 June
2006 will be delivered to the Registrar of Companies following the Company's
annual general meeting.  The Auditors have reported on the accounts for the year
ended 31 December 2004 and their report was unqualified and did not contain a
statement under the Companies Act 1985 Section 237(2) or (3).



d.  Basis of consolidation

i. Subsidiaries

The consolidated financial statements include financial information in respect
of the Company and its subsidiary companies.  Subsidiary companies are entities
that are controlled by the Company. Control exists when the Company has the
power, directly or indirectly, to govern the financial and operating policies of
an entity so as to obtain benefits from its activities. The results of
subsidiary companies acquired or disposed of in the period are included in the
consolidated income statement from the date the parent gained control until such
time control ceases.



ii. Transactions eliminated on consolidation

Intra-group balances and income and expenses arising from intra-group
transactions, are eliminated in preparing the consolidated financial statements.



e.  Foreign currency

The functional currency of the Group is Great British Pounds (GBP).



Transactions in foreign currencies are translated at the foreign exchange rate
ruling at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies at the balance sheet date are translated to
sterling at the foreign exchange rate ruling at that date. Foreign exchange
differences arising on translation are recognised in the income statement.  The
effect of the foreign exchange are shown separately within the cash flow
statement.



f.  Property, plant and equipment

i. Owned assets

Items of property, plant and equipment are stated at cost less accumulated
depreciation.



ii. Depreciation

Depreciation is charged to the income statement on a straight-line basis over
the estimated useful lives of each item of property, plant and equipment.  The
rates of depreciation are as follows:



Freehold property                             2%
Paintings                                     2%
Computer equipment                           33%
Fixtures and fittings                        33%


Previous to the date of disposal of Danby Registrars Limited on 14 January 2005,
fixtures and fittings were depreciated at 10% or 20% on reduced net book value.



The assets residual values and useful lives are reviewed, and adjusted if
appropriate, at each balance sheet date.  An asset's carrying amount is written
down immediately to estimated recoverable amount if the asset's carrying amount
is greater than the estimated recoverable amount.



g.  Investments

Investments are recognised and de-recognised on the trade date where a purchase
or sale is made under a contract whose terms require delivery within the
timeframe established by the market concerned, and are initially measured at
fair value.



i. Investments in debt and equity securities and other financial assets

The Group's investments are defined by IFRS as investments designated at fair
value through the income statement or available for sale, depending on the
purpose for which the investment or asset was acquired.



The Group's accounting policy for each category is as follows:



Fair value through the income statement:

This category comprises only derivatives and commodities. They are carried in
the balance sheet at fair value with changes in fair value recognised in the
income statement. Fair value is either the bid price or the last traded price,
depending on the convention of the exchange on which the investment is listed.
On disposal, realised gains and losses are also recognised in the income
statement.  Transaction costs are charged to expenses in the income statement.
The Group does not have any other assets held for trading nor does it
voluntarily classify any other financial assets as being at fair value through
the income statement.



All other investments in debt and equity securities and other financial assets,
including available for sale investments:

Non-derivative financial instruments and commodities not included in the above
categories are classified as available for sale and comprise the Group's
strategic investments in entities not qualifying as subsidiaries. They are
carried at fair value with changes in fair value recognised directly in equity.
Fair value is either the bid price or the last traded price, depending on the
convention of the exchange on which the investment is listed. On disposal,
realised gains and losses are recognised in the income statement. Transaction
costs are included within the cost of the investments. Where a decline in the
fair value of an available for sale investment constitutes objective evidence of
impairment, the amount of the loss is removed from equity and recognised in the
income statement.



The event that determines when an available for sale investment becomes impaired
is when there is an event that permanently reduces the value of the investment,
where the value of the investment has declined below cost by 20% or more, or
where the value of the investment has remained below cost over a six month
period.



In respect of unlisted investments, or where the market for a financial
instrument is not active, fair value is established by using valuation
techniques, which may include using recent arms length market transactions
between knowledgeable, willing parties, if available or reference to the current
fair value of another instrument that is substantially the same. Where there is
a valuation technique commonly used by market participants to price the
instrument and that technique has been demonstrated to provide reliable
estimates of prices obtained in actual market transactions, that technique is
utilised. Where no reliable fair value can be estimated for such unlisted
investments, they are carried at cost, subject to any provision for impairment.



Foreign exchange gains and losses arising from investments are held at fair
value through the income statement are included within the changes in their fair
values.



Foreign exchange gains and losses arising on available for sale investments are
credited or charged to the income statement.



ii. Investment Income

Income from investments includes all dividends, rents and interest on
non-government securities receivable.



Dividend income from investments is recognised when the Group's right to receive
payment has been established and this is normally the ex-dividend date.
Provision is made for any dividends not expected to be received.



Where the Group has elected to receive dividends in the form of shares rather
than cash, the amount of the cash dividend forgone is recognised as income. The
excess, if any, in the value of shares received over the sum of the cash
dividend forgone is recognised as a gain in the income statement.



UK dividend income is recorded at the amount receivable without any attributable
tax credit. Overseas dividend income is shown gross of withholding tax.



Gains/losses on sale of investments are recognised in the income statement
together with their related foreign exchange differences in respect of holdings
in foreign investments.



iii. Investment properties

Investment properties are properties owned by the Group which are held to earn
rental income and for capital appreciation.  Investment properties are initially
recognised at cost and revalued at the balance sheet date to full value as
determined by professionally qualified external valuers on the basis of fair
value.



Any gain or loss arising from a change in fair value of investment properties is
recognised in the income statement. The Group has elected to use the fair value
model and depreciation is not provided on investment properties. Rental income
from investment property is accounted for when due.



h.  Transaction costs

Transaction costs are included in the cost of investments purchased and deducted
from the proceeds of investments sold for available for sale investments. These
costs are charged to the income statement for investments recognised as fair
value through the income statement.



i.  Trade and other receivables

Trade and other receivables do not carry any interest and are short term in
nature. They are accordingly stated at their nominal values as reduced by
appropriate allowances for estimated irrecoverable amounts.



j.  Cash and cash equivalents

Cash and cash equivalents comprises cash balances with an original maturity of
three months or less. Bank overdrafts that are repayable on demand and form an
integral part of the Group's cash management are included as a component of cash
and cash equivalents for the purpose of the Consolidated cash flow statement.



k.  Exceptional items

Exceptional items are major items that are separately disclosed by virtue of
their size or incidence to enable a full understanding of the Group's financial
performance. Transactions which may give rise to exceptional items are
principally gains or losses on disposal of freehold property.



l.  Financial liabilities

The Group classifies its financial liabilities into one of two categories,
depending on the purpose for which the liability was incurred.  The Group's
accounting policy for each category is as follows:



Fair value through the income statement:

This category comprises short derivative financial instruments. They are carried
in the balance sheet at fair value with changes in fair value recognised in the
income statement.



Other financial liabilities:

Other financial liabilities include the following items:

• Trade payables and other short term monetary liabilities, which are short term
in nature and are therefore stated   at their nominal values; and

• Bank borrowings and mortgages, which are initially recognised at the amount
advanced net of any transaction costs directly attributable to the issue of the
instrument. Such interest bearing liabilities are subsequently measured at
amortised cost using the effective interest rate method, which ensures that any
interest expense over the period to repayment is at a constant rate on the
balance of the liability carried in the balance sheet. 'Interest expense' in
this context includes initial transaction costs and premiums payable on
redemption, as well as any interest or coupon payable while the liability is
outstanding.



m. Taxation

The charge for current taxation is based on the results for the period as
adjusted for items which are non-assessable or disallowed. It is calculated
using rates that have been enacted or substantially enacted by the balance sheet
date. Tax payable upon realisation of revaluation gains recognised in prior
periods is recorded as a current tax charge with a release of the associated
deferred tax.



Deferred tax is provided using the balance sheet liability method in respect of
temporary differences between the carrying amount of assets and liabilities in
the financial statements and the corresponding tax bases used in computation of
taxable profit with the exception of deferred tax on revaluation movements where
the tax basis used is the accounts historic cost.



Deferred tax is provided on all temporary differences and will crystallize when
the asset for which a differential for tax has been made, has been disposed of.



Deferred tax is determined using tax rates that have been enacted or
substantially enacted by the balance sheet date and are expected to apply when
the related deferred tax asset is realised or the deferred tax liability is
settled. It is recognised in the income statement except when it relates to
items credited or charged directly to equity, in which case the deferred tax is
also dealt with in equity.



Deferred tax assets are recognised to the extent that it is probable that future
taxable profits will be available against which the temporary differences can be
utilised.



The total tax charge and tax liability for the eighteen months is treated within
the consolidated financial statements as follows:

                                                            18 months     12 months
                                                            to 30 Jun      to 31 Dec
                                                                 2006        2004
                                                                  £           £

Shown within the consolidated income statement:
   Corporation tax charge for the eighteen months            3,753,302  1,080,051



Included within current tax liabilities in the balance sheet:  542,507    846,027



n.  Share capital

i. Repurchase of share capital

When share capital recognised as equity is repurchased, the amount of the
consideration paid, including directly attributable costs, is recognised as a
change in equity.



ii. Dividends

Equity dividends are recognised when they become legally payable on approval by
the shareholders at the annual general meeting of the Group.



l. Pension costs

The Group contributes to Self Investing Personal Pension plans for C.R.W. Parish
and two employees. Contributions are recognized when payable.



ii. Dividends

Dividends to stockholders are recognised as a liability in the period in which
they are declared.

The following dividends were declared by the Group:


                                                  18 months         12 months
                                                 to 30 Jun          to 31 Dec
                                                     2006              2004
                                                        £                £

11.5p (2004: 11.0p) per stock unit               1,247,601         1,313,722



The Directors proposed an interim and final dividend of 12.0 pence (2004: 11.5
pence) per stock unit totalling £1,380,284 (2004: £1,247,601).  The dividend
will be paid on 26 October 2006 to stockholders on the register of members on 22
September 2006.



o. Explanation of transition to IFRS

The above accounting policies have been applied in preparing the consolidated
interim financial statements for the twelve months ended 31 December 2005 and
the comparative information for the twelve months ended 31 December 2004.  The
requirements of IAS32 'Financial Instruments: Disclosure and Presentation' and
IAS39 'Financial Instruments: Recognition and Measurement' have been adopted
with effect from 1 January 2005.  The comparative figures do not therefore
incorporate any restatements in respect of either IAS32 or IAS39.



The following statement sets out the changes made to stockholders' funds at 1
January 2004 and 31 December 2004 following the adoption of IFRS and separately
the changes at 1 January 2005 to reflect the adoption of IAS32 and IAS39.


                        Group     Group      Group     Group        Group        Group         Group        Group
                        Share     Share    Reval'n   Cap Red       Merger       Profit         Other
                      Capital   Premium    Reserve   Reserve      Reserve     and Loss       Reserve        Total
                                                                                          (Available
                                                                                            for sale
                                                                                        investments)
                            £         £          £         £            £            £             £            £
At 1 Jan 2004         592,045     6,017    204,256   289,081    (149,798)   25,009,680             0   25,951,281
(UK GAAP)
 Note 1                     0         0          0         0            0    1,958,175             0    1,958,175
 Note 2                                  (204,256)                             204,256                          0
At 1 Jan 2004         592,045     6,017          0   289,081    (149,798)   27,172,111             0   27,909,456
(IFRS)
 Note 3                     0         0          0     5,101            0    (398,846)             0    (393,745)
 Note 4                     0         0          0         0            0        1,995             0        1,995
 Note 5                     0         0          0         0            0    1,925,649             0    1,925,649
 Note 6                     0         0          0         0            0  (1,313,455)             0  (1,313,455)
At 31Dec 2004         592,045     6,017          0   294,182    (149,798)   27,387,454             0   28,129,900
(IFRS)
 Note 7                     0         0          0         0            0    (232,664)             0    (232,664)
 Note 8                     0         0          0         0            0            0    25,640,476   25,640,476
At 1 Jan 2005         592,045     6,017          0   294,182    (149,798)   27,154,790    25,640,476   53,537,712
(IFRS)

 Note 1           IRFS Adjustments:  Increase in value to deemed cost of 41 Cheval Place-£654,738, reversal of the
                  2004 dividend to stockholders-£1,313,455 and adjustment to deferred taxation-£(10,018).
 Note 2           Reclassify Revaluation reserves.
 Note 3           Purchase and cancellation of own shares.
 Note 4           Forfeited dividends.
 Note 5           Profit for the twelve months.
 Note 6           Dividends paid in 2004.
 Note 7           Restatement of values of impaired stocks.
 Note 8           Adjustment at 1 January 2005 in respect of IAS32 and IAS39 : Increase in value of available for
                  sale instruments, less taxation at 30%




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