FOR THE NINE MONTH PERIOD ENDED 31 DECEMBER

REPORT AND ACCOUNTS FOR THE NINE MONTH PERIOD ENDED 31 DECEMBER 2006 (Company No. 5083946)

CONTENTS Page Directors and advisers 2 Chairman s statement 3 Directors report 4 Report on directors remuneration 6 Statement of directors responsibilities 7 Independent auditors report 8 Income statement 9 Balance sheet 10 Statement of changes in equity 11 Cash flow statement 12 Notes to the accounts 13 1

DIRECTORS AND ADVISERS DIRECTORS Lance O Neill (Chairman) Nigel Duxbury (Finance Director) Paul Merchant (Non-Executive) Keith Wills (Non-Executive) SECRETARY Nigel Duxbury, ACA REGISTERED OFFICE 3 rd Floor 16 Dover Street London W1S 4LR NOMINATED ADVISERS AND BROKERS Arbuthnot Securities Limited Arbuthnot House 20 Ropemaker Street London EC2Y 9AR AUDITORS Nexia Smith & Williamson 25 Moorgate London EC2R 6AY SOLICITORS Nabarro Lacon House Theobald s Road London WC1X 8RW PRINCIPAL BANKERS Lloyds TSB Bank plc 39 Piccadilly London W1V 0AA REGISTRARS Share Registrars Craven House West Street Farnham Surrey GU9 7EN 2

CHAIRMAN S STATEMENT The results for Ragusa Capital Plc (the Company ) cover the nine month period ended 31 December 2006. RESULTS FOR THE PERIOD ENDED 31 DECEMBER 2006 The Company generated a loss for the nine month period, after taxation, of 31,948 after receiving investment revenues of 151,765, having paid administrative expenses of 257,567 and recorded other net gains of 32,649. The basic and diluted loss per share was 0.1 pence. The Company had cash balances of 3,904,927 at the period end. REVIEW OF ACTIVITIES As stated in the AIM admission document, the Board believes that potential opportunities lie in the natural resources sector with the emphasis on one large and substantial investment. On 21 May 2007 the Board announced that terms had been agreed to acquire certain utility assets as well as oil and gas exploration interests in South America. The acquisition is conditional, inter alia, upon the approval of the shareholders of Ragusa and compliance with other procedural and substantive regulation governing the transaction applied under the AIM Rules and the City Code on Takeovers and Mergers. The proposed transaction, if completed, will constitute a reverse takeover under the AIM Rules, and, accordingly, at the request of the Company, dealings in Ragusa s shares were suspended from 21 May 2007 pending the despatch to shareholders of a readmission document relating to the transaction and proposed enlarged group and convening the extraordinary general meeting of Ragusa to approve the acquisition. The Board and its advisers continue to work towards completion of the proposed transaction and will update shareholders in due course. On 21 June 2007 the Board announced that it had changed its accounting reference date to 31 December and would be producing its next Report and Accounts for a shortened nine month period ending 31 December 2006. Lance O Neill Chairman 25 June 2007 3

DIRECTORS REPORT The directors present their report and the audited accounts of Ragusa Capital Plc (the Company ) for the nine month period ended 31 December 2006. PRINCIPAL ACTIVITIES AND BUSINESS REVIEW The Company was established to pursue opportunities that are considered to have the potential for the generation of sustainable growth and profitability in both the short and medium terms. A review of business developments is given in the Chairman s Statement. RESULTS AND DIVIDENDS The loss for the period, after taxation, amounted to 31,948 (Year ended 31 March 2006: 76,780 profit). The directors do not recommend the payment of a dividend (Year ended 31 March 2006: nil). FINANCIAL RISK MANAGEMENT The Company s exposure to financial risk is set out in note 19 to the accounts. DIRECTORS AND THEIR INTERESTS The membership of the Board and their beneficial interest at 31 December 2006 is set out below. Board Member Ordinary shares Warrants to of 10 pence each subscribe for shares at 54 pence each Lance O Neill 1,705,000 250,000 Nigel Duxbury 330,000 250,000 Paul Merchant 20,000 250,000 Keith Wills 35,000 - The directors interests in the company at 31 March 2006 were: Board Member Ordinary shares Warrants to of 10 pence each subscribe for shares at 54 pence each Lance O Neill 1,705,000 250,000 Nigel Duxbury 330,000 250,000 Paul Merchant 20,000 250,000 Keith Wills was appointed to the Board on 15 June 2006. 4

DIRECTORS REPORT (continued) SUPPLIER PAYMENT POLICY It is the Company s policy to agree and clearly communicate the terms of payment as part of the commercial arrangement negotiated with suppliers and then to pay according to those terms based upon the timely receipt of an accurate invoice. Trade creditor days for the Company have been calculated at 77 days (31 March 2006: 68 days). This represents the ratio expressed in days between the amounts invoiced to the Company in the period by its suppliers and the amounts due at the period-end to trade creditors falling due for payment within one year. CORPORATE GOVERNANCE The Company s ordinary shares are traded on AIM and the Company is therefore not formally required to comply with the provisions of the Combined Code. However, the Board is committed to high standards of corporate governance and as the Company grows the Board will review their compliance with the Code from time to time and will adopt such of the provisions as they consider to be appropriate to the size of the Company. DISCLOSURE OF INFORMATION TO THE AUDITORS In the case of each person who was a director at the time this report was approved: so far as that director was aware there was no relevant available information of which the Company s auditors were unaware; and that director has taken all steps that the director ought to have taken as a director to make himself or herself aware of any relevant audit information and to establish that the Company s auditors were aware of that information. This information is given and should be interpreted in accordance with the provisions of s234za of the Companies Act 1985. AUDITORS Nexia Smith & Williamson have expressed their willingness to continue in office as auditors and a resolution to appoint them will be proposed at the Annual General Meeting. Approved by the Board of Directors and signed on behalf of the Board Nigel Duxbury Secretary 25 June 2007 5

REPORT ON DIRECTORS REMUNERATION The Remuneration Committee fixes the remuneration of the executive and non-executive directors. SERVICE CONTRACTS The two executive directors are engaged under service contracts. One of the non-executive directors is engaged under a letter of appointment and the other under a consultancy agreement with a service company. The service contracts and letters of appointment are terminable by either party on three months notice and the consultancy agreement on one months notice SHARE OPTIONS The Company believes that share ownership by executive directors and senior executives strengthens the links between their personal interest and those of investors and the Board intend to consider the adoption of a share option scheme in due course. DIRECTORS INTERESTS The directors interests in the ordinary shares and warrants of the Company are set out in the directors report on page 4. DIRECTORS REMUNERATION The directors remuneration information is set out in note 4 of these accounts. By order of the Board Nigel Duxbury Secretary 25 June 2007 6

STATEMENT OF DIRECTORS RESPONSIBILITIES IN RESPECT OF THE ACCOUNTS The directors are responsible for preparing the annual report and the financial statements in accordance with applicable United Kingdom law and the International Financial Reporting Standards (IFRS) as adopted by the European Union. The directors are required to prepare financial statements for each financial period which present fairly the financial position of the Company and the financial performance and cash flows of the Company for that period. In preparing those financial statements, the directors are required to: select suitable accounting policies and then apply them consistently; present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information; provide additional disclosures when compliance with the specific requirements in IFRS is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity s financial position and financial performance; and state that the Company has complied with IFRS, subject to any material departures disclosed and explained in the financial statements. The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 1985. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The directors confirm that they have complied with these requirements and, having a reasonable expectation that the Company had adequate resources to continue in operational existence for the foreseeable future, continue to adopt the going concern basis in preparing the financial statements. 7

INDEPENDENT AUDITORS REPORT TO THE SHAREHOLDERS OF RAGUSA CAPITAL PLC We have audited the accounts of Ragusa Capital Plc for the period ended 31 December 2006 which comprise the Income Statement, the Balance Sheet, the Statement of Changes in Equity, the Cash Flow Statement and the related notes 1 to 20. These accounts have been prepared under the accounting policies set out therein. This report is made solely to the Company s members, as a body, in accordance with Section 235 of the Companies Act 1985. Our audit work has been undertaken so that we might state to the Company s members those matters we are required to state to them in an auditors report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company s members as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of directors and auditors The directors responsibilities for preparing the Annual Report and the accounts in accordance with applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union applied in accordance with the provisions of the Companies Act 1985 are set out in the Statement of Directors Responsibilities. Our responsibility is to audit the accounts in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland). We report to you our opinion as to whether the accounts give a true and fair view and are properly prepared in accordance with the Companies Act 1985. We also report to you whether in our opinion the information given in the Directors Report is consistent with the accounts. The information given in the Directors Report includes that specific information presented in the Chairman s Statement that is cross referred from the Business Review section of the Directors Report. We also report to you if, in our opinion, the Company has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if the information specified by law regarding directors remuneration and transactions is not disclosed. We read other information contained in the Annual Report and consider whether it is consistent with the audited accounts. This other information comprises only the Directors Report, the Chairman s Statement and the Report on Directors Remuneration. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the accounts. Our responsibilities do not extend to any other information. Basis of audit opinion We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the accounts. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the accounts, and of whether the accounting policies are appropriate to the Company s circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the accounts. Opinion In our opinion: the accounts give a true and fair view, in accordance with IFRSs as adopted by the European Union applied in accordance with the provisions of the Companies Act 1985, of the state of the Company s affairs as at 31 December 2006 and of the Company s loss for the period then ended; the accounts have been properly prepared in accordance with the Companies Act 1985; and the information given in the Directors Report is consistent with the accounts. Nexia Smith & Williamson Chartered Accountants Registered Auditors Date 25 June 2007 25 Moorgate London EC2R 6AY 8

INCOME STATEMENT FOR THE PERIOD ENDED 31 DECEMBER 2006 Revenue Cost of sales Note 9 months Year ended 31 Dec 06 31 Mar 06 - - - - Gross profit - - Administrative expenses (257,567) (233,804) Other gains and losses 6 32,649 165,158 Operating loss 3 (224,918) (68,646) Investment revenues 5 151,765 216,625 (Loss)/profit before taxation (73,153) 147,979 Tax credit/(charge) 7 41,205 (71,199) (Loss)/profit for the period (31,948) 76,780 (Loss)/earnings per ordinary 10p share Basic and diluted (0.1 pence) 0.3 pence All of the Company s operations are classed as continuing. 9

BALANCE SHEET 31 DECEMBER 2006 Note 31 Dec 06 31 Mar 06 Non-current assets Property, plant and equipment 10 2,859 4,820 2,859 4,820 Current assets Investments 11 1,623,661 1,024,186 Other financial assets 12 94,428 22,640 Cash and cash equivalents 3,904,927 4,533,522 5,623,016 5,580,348 Total assets 5,625,875 5,585,168 Current liabilities Trade and other payables 13 (155,118) (41,258) Non-current liabilities Deferred tax liabilities 14 (29,994) (71,199) Total liabilities (185,112) (112,457) Net assets 5,440,763 5,472,711 Equity Share capital 15 2,401,515 2,401,515 Share premium account 3,007,463 3,007,463 Retained earnings 31,785 63,733 Total equity 5,440,763 5,472,711 The accounts were approved by the Board of Directors and authorised for issue on 25 June 2007 and were signed on its behalf by: Lance O Neill Director 10

STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD ENDED 31 DECEMBER 2006 Share Share Retained Total capital premium earnings At 31 March 2005 2,401,515 3,007,725 (13,047) 5,396,193 Profit for the year - - 76,780 76,780 Share issue costs - (262) - (262) At 1 April 2006 2,401,515 3,007,463 63,733 5,472,711 Loss for the period - - (31,948) (31,948) At 31 December 2006 2,401,515 3,007,463 31,785 5,440,763 11

CASH FLOW STATEMENT FOR THE PERIOD ENDED 31 DECEMBER 2006 Note 9 months Year ended 31 Dec 06 31 Mar 06 Net cash used in operating activities 16 (213,534) (257,868) Investing activities Interest received 151,765 216,625 Purchase of property, plant and equipment - (2,514) Loans granted (366,126) - Purchase of trading investments (200,700) (420,852) Proceeds on disposal of trading investments - 133,312 (415,061) (73,429) Financing activities Costs on the issue of shares - (262) - (262) Net decrease in cash and cash equivalents (628,595) (331,559) Cash and cash equivalents at the beginning of the period 4,533,522 4,865,081 Cash and cash equivalents at the end of the period 3,904,927 4,533,522 12

1. ACCOUNTING POLICIES Basis of accounting Ragusa Capital Plc NOTES TO THE ACCOUNTS The accounts have been prepared in accordance with International Financial Reporting Standards (IFRSs). The financial statements have been prepared on the historical cost basis, except for the revaluation of certain financial instruments. The principal accounting policies adopted are set out below. The preparation of the accounts in conformity with generally accepted accounting practice required management to make estimates and assumptions that affect the reported amounts of assets and liabilities as well as the disclosure of contingent assets and liabilities at the balance sheet date and the reported amounts of revenues and expenses during the reporting period. Actual outcomes could differ from those estimates. New standards and interpretations During the period the IASB and IFRIC have issued certain standards and interpretations with an effective date after the date of these financial statements. The directors do not anticipate that the adoption of these statements and interpretations will have a material impact on the Company s financial statements in the period of initial application. Basis of Consolidation The Company has not prepared consolidated accounts and its subsidiary undertakings (see note 9) are excluded from consolidation because their inclusion in the consolidation would have an immaterial effect. Financial assets and liabilities Financial assets and liabilities are recognised and derecognised on the Company s balance sheet on the date the purchase or sale of an asset is under contract whose terms require delivery within the timeframe established by the market concerned. Investments held at fair value through profit or loss Investments held at fair value through profit or loss are investments that are irrevocably designated at initial recognition as held at fair value through profit or loss stated at fair value, with any resultant gain or loss recognised in profit or loss. Investments held for trading Investments held for trading are measured at subsequent reporting dates at fair value and gains and losses arising from changes in fair value are included in net profit or loss for the period. Loans and receivables held at amortised cost Loans and receivables are measured at amortised cost using the effective interest rate method, less any impairment loss recognised to reflect irrecoverable amounts. Loans and receivables that do not carry interest are stated at their nominal value as reduced by appropriate allowances for estimated irrecoverable amounts. 13

NOTES TO THE ACCOUNTS 1. ACCOUNTING POLICIES (CONTINUED) Other financial assets Where materially different to nominal value, other financial assets are measured at initial recognition at fair value and are subsequently measured at amortised cost using the effective interest rate method. No such material difference arises in these financial statements and accordingly all such assets are stated at nominal value. Cash and cash equivalents Cash and cash equivalents include call deposits held with banks and other short-term highly liquid investments with original maturities of 3 months or less. Trade and other payables Where materially different to nominal value, trade payables and other payables are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest method. No such material difference arises in these financial statements and accordingly all such liabilities are stated at nominal value. Share capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction from the proceeds. Revenue recognition Interest income is accrued on a time basis, by reference to the principal outstanding and the effective interest rate applicable. Operating loss Operating loss is stated after charging administrative costs and other gains and losses, but before investment revenues. Taxation The tax expense represents the sum of the tax currently payable and any deferred tax. The tax currently payable is based on the taxable (loss)/profit for the period. Taxable (loss)/profit differs from net (loss)/profit as reported in the income statement because it excludes items of income and expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Company s liability for current tax is calculated using tax rates that have been enacted or substantially enacted by the balance sheet date. Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of the taxable (loss)/profit, and is accounted for using the balance sheet liability method. Property, plant and equipment Depreciation is provided on cost in equal annual instalments over the estimated economic lives of the assets concerned. The following annual rates are used: Computer hardware: 3 years Fixtures and fittings: 3 years 14

NOTES TO THE ACCOUNTS 2. BUSINESS AND GEOGRAPHICAL SEGMENTS All the Company s activities are based wholly in the UK. The Company s net assets are used solely for its investment activities. 3. OPERATING LOSS 9 months Year ended 31 Dec 06 31 Mar 06 This is stated after charging: Auditors remuneration - audit services 5,000 6,000 Other services - taxation services 6,000 6,000 Depreciation 1,961 1,738 4. WAGES AND SALARIES 9 months Year ended 31 Dec 06 31 Mar 06 Fees 29,583 20,000 Salaries 67,140 51,773 Social security costs 8,580 8,957 105,303 80,730 Directors remuneration Fees Salaries Total Total 9 months 9 months 9 months Year ended 31 Dec 06 31 Dec 06 31 Dec 06 31 Mar 06 Executive directors Lance O Neill - 18,750 18,750 25,000 Nigel Duxbury - 48,390 48,390 26,773 Non-executive directors Paul Merchant 15,000-15,000 20,000 Keith Wills 14,583-14,583 - Total 29,583 67,140 96,723 71,773 15

NOTES TO THE ACCOUNTS 4. WAGES AND SALARIES (CONTINUED) There were no employees during the period apart from the three directors and no (Year ended 31 March 2006: nil) directors are accruing benefits under a money purchase pension scheme. The fees paid to Keith Wills are paid through a consulting company, London Consulting Limited. Key management are those persons having authority and responsibility for planning, directing and controlling the activities of the entity. In the opinion of the Board, the Company s key management comprises the executive and non-executive directors of Ragusa Capital Plc. Their short term employee benefits for the current period were 105,303 (Year ended 31 March 2006: 80,730). 5. INVESTMENT REVENUES 9 months Year ended 31 Dec 06 31 Mar 06 Interest on bank deposits 151,765 216,625 6. OTHER GAINS AND LOSSES 151,765 216,625 9 months Year ended 31 Dec 06 31 Mar 06 Loss on sale of trading investments - (70,808) Increase in fair value of investments 32,649 235,966 7. TAX CHARGE ON (LOSS)/PROFIT ON ORDINARY ACTIVITIES 32,649 165,158 9 months Year ended 31 Dec 06 31 Mar 06 Current tax - - Deferred taxation (41,205) 71,199 (41,205) 71,199 Corporation tax is calculated at 30% (year ended 31 March 2006: 30%) of the estimated assessable (loss)/profit for the period. The (credit)/charge for the period ended 31 December 2006 and the year ended 31 March 2006 can be reconciled to the profit per the income statement as follows: 16

NOTES TO THE ACCOUNTS 7. TAX CHARGE ON (LOSS)/PROFIT ON ORDINARY ACTIVITIES (CONTINUED) Factors affecting the current tax charge for the period: 9 months Year ended 31 Dec 06 31 Mar 06 (Loss)/profit before tax (73,153) 147,979 Expected tax (credit)/charge at 30% (21,946) 44,394 Effects of: Expenses not deductible 6,000 6,000 Income not taxable 9,795 (70,790) Depreciation in excess of capital allowances - 100 Utilisation of tax losses - (945) Losses carried forward 6,151 21,241 Deferred tax (41,205) 71,199 8. LOSS PER ORDINARY SHARE (41,205) 71,199 Basic loss per share is calculated by dividing the loss attributed to ordinary shareholders of 31,948 (Year ended 31 March 2006: profit 76,780) by the weighted average number of shares of 24,015,147 (Year ended 31 March 2006: 24,015,147) during the period. The diluted loss per share calculation is identical to that used for basic loss per share as the exercise of warrants would have the effect of reducing the loss per ordinary share and is therefore not dilutive under the terms of Financial Reporting Standard 22 Earnings per Share. 9. SUBSIDIARIES Details of the Company s subsidiaries as at 31 December 2006 are as follows Name of company Country of incorporation Proportion held Business Rattlesnake Resources Inc. U.S.A. 100% Investment holding company Latigo LLC U.S.A. 75% Mining All the above companies have been excluded from consolidation. The companies listed above do not materially affect the amount of loss and the assets of the group. The cost of investment in the above subsidiaries was immaterial to recognise separately on the balance sheet. 17

NOTES TO THE ACCOUNTS 10. PROPERTY, PLANT AND EQUIPMENT Computer Fixtures Total hardware & fittings Cost At 1 April 2005-4,699 4,699 Additions 2,514-2,514 At 1 April 2006 2,514 4,699 7,213 Additions - - - At 31 December 2006 2,514 4,699 7,213 Depreciation At 1 April 2005-655 655 Charge for the period 166 1,572 1,738 At 1 April 2006 166 2,227 2,393 Charge for the period 782 1,179 1,961 At 31 December 2006 948 3,406 4,354 Carrying amount at 31 December 2006 1,566 1,293 2,859 Carrying amount at 31 March 2006 2,348 2,472 4,820 18

NOTES TO THE ACCOUNTS 11. INVESTMENTS 31 Dec 06 31 Mar 06 Investments carried at fair value through profit or loss 374,790 1,024,186 Investments held for trading 882,745 - Loans to other entities carried at amortised cost 366,126-1,623,661 1,024,186 The financial assets carried at fair value through profit or loss and the investments held for trading included above, represent investments in AIM listed equity securities, secured convertible loan notes and warrants that present the Company with opportunity for return through dividend income and trading gains. The equity securities have no fixed maturity or coupon rate and their fair values are based on quoted market price. The secured convertible loan notes were converted into equity securities after the period end and their fair values have, therefore, been based on the quoted market price of the underlying equity securities at the period end. The Company s intention is to exercise the warrants in the short term and their fair value has, therefore, been based on the quoted market price of the underlying equity security at the period end. The loans to other entities have no fixed maturity date and do not carry interest. The Company s intention is to recall these loans in the short term. 12. OTHER FINANCIAL ASSETS 31 Dec 06 31 Mar 06 Other taxes and social security 36,043 - Prepayments and accrued income 58,385 22,640 94,428 22,640 19

13. TRADE AND OTHER PAYABLES Ragusa Capital Plc NOTES TO THE ACCOUNTS 31 Dec 06 31 Mar 06 Trade payables 49,409 13,387 Taxation and social security 6,275 3,421 Accruals and deferred income 99,434 24,450 14. DEFERRED TAX LIABILITIES Trading and capital losses 155,118 41,258 Changes in fair value of investments Total At 1 April 2006-71,199 71,199 Charge to profit and loss account (50,607) 9,402 (41,205) At 31 December 2006 (50,607) 80,601 29,994 The deferred tax balance arises on the unrealised gains on the Company s investments, valued at their fair value. At the balance sheet date, the Company had nil (Year ended 31 March 2006: 102,907) available to offset against future profits. 15. CALLED UP SHARE CAPITAL 31 Dec 06 31 Dec 06 31 Mar 06 31 Mar 06 Number Number of shares of shares Authorised Ordinary shares of 10 pence 100,000,000 10,000,000 100,000,000 10,000,000 Allotted, called up and fully paid Ordinary shares of 10 pence 24,015,147 2,401,515 24,015,147 2,401,515 At 31 December 2006, and as at 31 March 2006, the Company had in issue 1,796,296 warrants to subscribe for ordinary shares in the Company at 54 pence per share, of which 1,750,000 warrants are exercisable at any time before the tenth anniversary of admission and 46,296 warrants are exercisable at any time before the fifth anniversary of admission. The Company s shares were admitted to trading on AIM on 15 July 2004. 20

NOTES TO THE ACCOUNTS 16. NOTES TO THE CASH FLOW STATEMENT 9 months Year ended 31 Dec 06 31 Mar 06 (Loss)/profit for the period (31,948) 76,780 Adjustments for: Tax (41,205) 71,199 Depreciation on property, plant and equipment 1,961 1,738 Other gains and losses (32,649) (165,158) Investment revenues (151,765) (216,625) (255,606) (232,066) Increase/(decrease) in creditors 113,860 (43,311) (Increase)/decrease in debtors (71,788) 17,509 Net cash used in operating activities (213,534) (257,868) 17. CAPITAL COMMITMENTS There were no capital commitments at 31 December 2006. 18. CONTINGENT LIABILITIES There were no contingent liabilities at 31 December 2006. 19. FINANCIAL RISK MANAGEMENT The Company s operations expose it to a variety of financial risks that include the effects of changes in price risk, credit risk and interest rate risk. Given the size of the Company the Board has not delegated the responsibility of monitoring financial risk management to a sub-committee of the Board. The Company has not entered into derivative transactions nor does it trade financial instruments as a matter of policy. Price risk The Company is exposed to price risk due to inflationary increases in the purchase price of the goods and services it purchases in the UK and equity securities price risk on quoted equity investments. Credit risk The Company s credit risk is attributable to its deposits of cash and cash equivalents. The risk is limited because the counterparties are banks with high credit ratings assigned by international credit-rating agencies. 21

NOTES TO THE ACCOUNTS 19. FINANCIAL RISK MANAGEMENT (CONTINUED) Interest rate risk The Company s financial instruments comprise cash at bank and various items such as trade debtors, current asset investments and creditors that arise directly from its operations. The main purpose of these instruments is to provide finance for operations. The cash at bank comprises inter bank deposits held on call, and on one or two month fixed terms with interest earned during the period at an average rate of 4.69%. 20. RELATED PARTY TRANSACTIONS During the period the Company paid EP&F Capital plc 20,935 (Year ended 31 March 2006: 20,647) in respect of advisory services. Both Nigel Duxbury and Lance O Neill are directors of EP&F Capital plc. At the period end Nil (Year ended 31 March 2006: Nil) was outstanding. 22