Final Results

20th Mar 2007 07:02

Raven Mount plc20 March 2007 20 March 2007 RAVEN MOUNT PLC ("Raven Mount" or the "Company") PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2006HIGHLIGHTS • Group profit before tax was £0.5 million (2005: £2.3 million) on turnover of £71.8 million (2005: £72.7 million). • The share price increased by 116 per cent., from 74.5 pence to 161.0 pence per Ordinary share, over the year. Total shareholder return of 125 per cent. (including 6.35 pence total dividends). • Total Property Fund Management income of £4.9 million, including £2.0 million of performance fee. As at 31 December 2006, management fees based on US$465 million of funds committed by Raven Russia. • Audley, our Independent Living business, achieved planning on 4 sites during the year with a total of 408 individual units. • All old Swan Hill developments were completed during the year, with the exception of the Paramount (Swindon) development. • A 33 per cent. increase in the proposed Final Dividend of 1.0p per Ordinary share in addition to the Interim Dividend of 0.6p and the Special Dividend of 5.0p per Ordinary share. • Pension deficit under FRS 17 decreased to £1.1 million (2005: £8.7 million) as at the year end. £1.6 million contributed on 2 January 2007 creating an FRS 17 surplus on that date (all other things being equal). • Proforma shareholders' funds per Ordinary share of 75.4p (2005: 77.1p). • Gross cash of £16.1 million, net cash of £8.8 million as at 31 December 2006 and total unsecured committed facilities of £40.0 million. Commenting on the results, Anton Bilton, Executive Chairman, said: "2006 was a year of consolidation and further growth for your Company and its two main new businesses. Ourfive year process of reinvention, now entering its third year, remains firmly on track and our newbusinesses are growing stronger by the day." Bim Sandhu, Chief Executive, said: "We continue to remain particularly excited about the prospects for both our Independent Living andProperty Fund Management businesses. We believe that there are some very strong fundamentals drivingthese businesses and that we now have the management teams in place to achieve our goals. In addition, weare actively pursuing second home resort based opportunities both in the UK and internationally." Enquiries:Raven Mount plc 020 7235 0422Anton Bilton Executive ChairmanBim Sandhu Chief ExecutiveMark Kirkland Finance Director Shore Capital & Corporate Limited 020 7408 4090Guy Peters Notes for Editors: Raven Mount is an AIM listed company whose principal areas of operation areproperty fund management, property development and the development and operationof Independent Living facilities. Raven Mount was founded in November 2003 by Anton Bilton (Executive Chairman),Bim Sandhu (Chief Executive) and Glyn Hirsch (Executive Deputy Chairman) andtook control of Swan Hill Group PLC, the housebuilder, in December 2003 in ahostile takeover supported by Swan Hill's four largest shareholders. In December 2004, shareholders approved the reversal of Anton Bilton and BimSandhu's private residential development group, Raven Property Holdings plc, fora total consideration of up to £40 million payable in Raven Mount shares andbegan a strategic reinvention of the business. In July 2005, Raven Mount subscribed £10 million towards the £153 million (153million shares) flotation of Raven Russia Limited ("Raven Russia") on AIM. RavenRussia was formed at Raven Mount's instigation as a vehicle for institutionalshareholders to invest in the Russian property market with an initial focus onthe Warehouse property market in the Moscow and St Petersburg regions. RavenMount's wholly owned subsidiary, Raven Russia Property Management Limited, actsas the property adviser to Raven Russia. In April 2006, Raven Russia raised afurther £310 million through the placing of 270 million shares at £1.15 each. Raven Mount is actively involved in the development and management ofIndependent Living facilities for the elderly through its Audley brand in whichit has a 75% interest with the remaining 25% being owned by the management team.In 2006, Audley obtained planning permission on four separate schemes in 2006,representing a total of 408 individual units, at St. Elphins (Matlock), MoteHouse (Maidstone), Inglewood (Berkshire) and Ilkley (Yorkshire). Audley managesexisting facilities at Willicombe Park (Tunbridge Wells), Hollins Hall(Harrogate) and Flete House (Devon). Audley currently manages 168 units. In addition, Raven Mount is actively pursuing second home resort basedopportunities, both in the UK and internationally. Raven Mount currently hasoutline planning committee consent, in a joint venture with John Hitchcox andYoo Limited, comprising a hotel and 160 second homes in 500 acres in theCotswold, as well as other potential projects in the Caribbean, Brazil and theMediterranean region. The principle shareholders of Raven Mount are Anton Bilton and Bim Sandhu, whosecombined interests equate to 43.8% of the issued share capital. Other majorshareholders are Schroder Investment Management (13.0%), SilchesterInternational Investors (7.1%), Deutsche Bank AG London (5.9%), Laxey (3.5%) andMan Financial (3.3%). www.ravenmount.co.uk www.audleylife.co.uk www.ravenrussia.co.uk Chairman's Statement 2006 was a year of consolidation and further growth for your Company and its twomain new businesses. Our five year process of reinvention, now entering itsthird year, remains firmly on track and our new businesses are growing strongerby the day. I am delighted by the market's recognition of our prospects, as expressed by ourshare price more than doubling during the period. Our Independent Living business, Audley, has gone from strength to strength withplanning consent being granted on four schemes thus providing a developmentpipeline of some 408 individual units. Construction has already commenced and weexpect to have completed units ready for occupation in the first quarter of2008. Marketing will begin in earnest this summer for all of our sites and we willthen be able to grow the Audley brand nationally, becoming synonymous with theprovision of first class Independent Living units and their associatedfacilities. Public awareness for this product is growing quickly and we believeAudley is very well placed to become the leading operator in the field. With our aging population ever growing, I remain very excited about theprospects for this sector and take this opportunity to thank the management teamfor all their hard efforts in initially establishing the business and getting usto where we are today. I am equally excited about the prospects for our Russian property fundmanagement business which provides exclusive advice to the independently listedRaven Russia Limited. Our full expectation is that the Russian economy willcontinue to grow rapidly as it benefits not just from its vast array of inherentcommodities but also from the increasing availability of credit being madeavailable to its relatively unleveraged populace. This growth in consumer demandis directly beneficial to the provision of logistic warehousing as more and morenational and international businesses attempt to feed the demand for theirproducts and to do that they desperately need warehouse space. During 2006, we advised Raven Russia in the commitment of over US$1 billion towarehouse projects and we currently have over a further US$1 billion of projectsin the pipeline. Through our introductions Raven Russia has developed a series of joint ventureswith a small group of sophisticated Russian partners and I believe this approachhas been a mainstay in our ability to transact business in an environment wherewe are undoubtedly playing a catalytic part as the concept of propertyinvestment begins to take off. Our activities have not been limited to just Moscow and St Petersburg as we haverecognised that there are immense opportunities for logistic warehousedevelopment in the other ten, one million plus populace, regional cities acrossRussia. These cities are crying out for warehouse space and it has beenfascinating to participate in this process in visiting these regions and feelthe growing prosperity and requirement for western goods. I remain very excited about the prospects for this business. We are building aportfolio with dollar yields, pre-leverage, of circa 13% and borrowing costs ofcirca 8.5% in one of the world's most dynamic economies. Despite searching allover the rest of the world we have found nothing as potentially exciting. One has to make comparables with current yields for warehouse property inHungary, Czech Republic and Poland at circa 8% and then compare those economieswith Russia's to fully grasp the potential of this opportunity. As property advisor we have built Raven Russia from being a start-up in July2005 to being the most prolific international investor in Russian real estate in2006 - an extraordinary feat in an environment where many fear to tread. We havedone this because we recognised a great opportunity, chose to take it andapplied dedicated focus and energy to getting it done. We have built anincredibly talented Moscow based 29 person strong team and have made it our fullintention to create strong local partnerships in helping Raven Russia build amulti-billion dollar portfolio of properties. I take this opportunity to applaudthe great efforts of the entire team for making this happen. We continue to seek out other interesting property orientated opportunities inboth Russia and other former CIS countries and I hope to bring further news ofthese soon. We are delighted that Numis are Raven Russia's Nomad and joint brokers withCredit Suisse and we look forward to working closely with both of them inhelping to grow the business. The UK housing market continues to rumble on and this has been a blessing forour only remaining Swan Hill development; Paramount at Swindon which is nearingcompletion. I am delighted to say that it is already over 50% pre-sold. TheRPH schemes at Brighton, Lewes and Sheffield are also well advanced. Mostsignificantly we won outline planning consent for 160 second homes and a 120 bedhotel at our "The Lakes" scheme in the Cotswolds. This designer-led projectmarks the first step in the development of our proposed Resorts Business whichwe expect to expand nationally as well as internationally with branded partners.I hope to bring you news of further exciting developments in this area thisyear. Overall it has been a year of hard work. As every entrepreneur knows the earlystage in establishing a new business is the hardest; to do it both here andabroad is exhausting. It requires determination, tenacity and huge amounts ofenergy. As I have joined my fellow executives on countless flights and seen themburn vast quantities of midnight oil I can only be humbled by their tirelessdedication and enthusiasm for our growing acorns. I take this opportunity toapplaud all of our employees for their special efforts this year and hope, asthey do, that as they continue to nurture what are now becoming saplings; wewill all share the plentiful rewards that these hopeful oak trees will one daybring. Anton J G BiltonExecutive Chairman20 March 2007 Chief Executive's Report Shareholders achieved substantial returns in the year as measured on the widelyused Total Shareholder Return basis; namely share price performance anddividends paid. The share price increased during the year by 116%, from 74.5pence to 161.0 pence, in addition to which shareholders received total dividendsof 6.35 pence per share (totalling £6.8m), including the special dividend of 5pence per share. It is fairer to say that this share price movement is reflective of the effortsnot just of the last year but since the takeover of Raven Property Holdings justover two years ago and should be viewed as such. For this reason, and assignificant and long term investors in the business, Anton and I do not attachtoo much importance to share price movements over such relatively short periodsof time. The share price is obviously of more concern to those wishing to buyor sell or to some extent those institutional investors who are paid on theperformance of the funds that they manage. What long term shareholders shouldbe more concerned about is whether real value is being created within ourCompany (as opposed to how it is being measured by the market at a point intime) as this will determine the long term economic health of the Company andthe sustainable share price in the long run. Over any short period this may ormay not be reflected in share price movement or in increased profitability and/or net asset value. Although the creation of real value is very difficult to measure I can say thatour management and employees created significant value for our Company over theyear. There were major business developments during the year in each of our three mainbusiness areas. Firstly, the additional fund raising of £310 million by RavenRussia together with the extension of our Property Advisory Agreement by justover 5 years to 31 December 2015. Secondly, the completion of our seniormanagement team for our Independent Living business together with the receipt ofour first planning permissions for 408 units on 4 sites under Raven Audley Courtplc's control. Thirdly, the receipt of outline planning permission on our 160unit residential and hotel scheme in the Cotswolds in joint venture with JohnHitchcox and YOO Limited, representing the first significant step in the UK forour second home/resort based developments, as discussed below. Another major development, for which we are only partly responsible, is thereduction of the Swan Hill Pension Scheme fund deficit, as measured by FRS 17,to £1.1 million, pre-tax, at the year end, and following the additionalcontribution of £1.6 million on 2 January 2007, the elimination of that deficiton that date. This is not to say that the issue is by any means resolvedforever as was demonstrated by the recent turmoil in world markets.Nevertheless, we should cherish a victory in a significant battle even if thewar is by no means won. Results for the year ended 31 December 2006 Our Company generated a profit on ordinary activities before taxation of £0.5million for the year ended 31 December 2006 (2005: £2.3 million). The decreasein profitability is largely accounted for by the much greater profits made onstrategic land sales in the prior period. In addition, there was a significantincrease of £3.5 million in overheads mainly in employee related costs in thenew business areas that we are developing, in particular in our Property FundManagement business and our Independent Living business. We are also having toincorporate for the first time a £0.6m charge under FRS 20 for share optionswhich is, rather perversely in my opinion, reversed in the balance sheet. Turnover for the year decreased slightly from £72.7 million to £71.8 million,although, as in prior periods, comparisons of turnover and relationship toprofit are not directly relevant as the Company continues to evolve new businessareas in addition to its traditional housebuilding business. Stated Net Assets decreased by £3.1 million from £89.0 million at the previousyear end to £85.9 million as at 31 December 2006 largely as a result of dividendpayments, totalling £6.8 million. To some extent, this was offset by a netactuarial post tax gain of £2.8 million in relation to the FRS 17 pension funddeficit. The Company maintains healthy cash balances and unutilised facilities althoughthis is a double edged sword - whilst such excess capacity provides fire powerto undertake transactions quickly it also means that we are not utilising ourresources as efficiently as we could and indeed should. In a world of excessliquidity, access to relatively cheap funding and asset price inflation ourCompany would have earned greater returns had we been more fully invested duringthe period. Our reasons why we are not ideally where we should be at this pointin time were set out in my 2006 Interim Statement. Operating Review Our Company's three principal areas of focus continue to be Property FundManagement, the Development and Operation of Independent Living facilities andResidential Development where we would hope to increase our emphasis on resortand/or the second home market both in the UK and overseas. Property Fund Management Our Company earned an operating profit of £0.5 million on total fees of £4.9million from Raven Russia of which £2 million (£1.4 million payable in shares)was in respect of the minimum performance fee agreed for this year as a resultof the restructuring of the 2005 fee. As at the year end Raven Mount wasearning its core base fee of 2% on US$465 million (2005: US$151 million) ofgross assets purchased or committed to purchase by Raven Russia. We expect thisfigure to increase significantly during the year. The most significant development for the Company in this area was the extensionof the Property Advisory Agreement by over 5 years to 31 December 2015 and thesimultaneous additional fund raising of £310 million by Raven Russia Limited,the separately quoted AIM company. This increased Raven Russia's total equitybase to £463 million which on a geared basis should enable it to buyapproximately £1.5 billion of assets once fully invested, provided the debtmarkets in Russia continue to mature as we would wish and indeed expect. There is little Grade A warehouse space in Moscow and St Petersburg, certainlyrelative to cities of their size, and very little of it is currently availablefor purchase on the market. Raven Russia, on our advice, therefore made aconscious decision to both participate in the development process, albeit in arelatively low risk manner, whether by forward funding developers, by tenantpartnering or in joint venture with such developers in traditional profiterosion type deals, and to expand into regional cities. Raven Russia raised£310 million additional funding in April 2006 in order to do this. The advantage of this approach is that it enables the purchase of modernproperties built to Raven Russia's specification with more acceptable tenantsand lease structures and on better yields than might otherwise have been thecase. However, participation in the development process, from our perspectiveas property advisers, requires a much bigger property team than one required foradvising on investment transactions alone and this has resulted in a substantialincrease in our overhead base for this business. In addition to the substantialtime devoted by your Directors and the general support provided by our centralgroup administrative and finance staff, we currently have a team of 29employees, and growing, who are directly and fully involved in developing ourRussian business interests, principally our Property Fund Management business.Post the year end we have also entered into a long term lease commitment onpremises, which are currently being fitted out in the centre of Moscow, to houseour rapidly expanding workforce. We have been proactive in our commitment of resources in this area and whilstrevenues to date do not justify the level of this commitment we expect it willdo so in the medium term. This substantial and upfront investment in people iswithout doubt responsible for the significant progress that we have made inRussia over the last two years; in particular over the last year. The scale ofwhat we have achieved is easy to underestimate and can only truly be appreciatedby visiting Russia and trying to understand the Russian property market in thecontext of the dynamics of the economy; talking to our Russian based managersand employees; talking to the legal, tax and accounting professionals employedby Raven Russia; talking to the real estate agents and other property advisersto Raven Russia; talking to the joint venture partners, developers and tenantswe have introduced to Raven Russia; visiting the investment and developmentproperties that we have helped Raven Russia acquire etc. Whilst I fullyappreciate that most shareholders will not be in a position to do so I wouldencourage those who have the time, inclination and resources to do so. We lookforward to working with Raven Russia's new high calibre advisers and brokers,Numis and Credit Suisse, in getting their message across. Independent Living - Raven Audley Court plc (operating as Audley) I am pleased to report that we now have the full complement of the Raven AudleyCourt plc ('RAC') senior management in place to push the business forward to thenext phase. This executive team comprises Nick Sanderson as Chief Executive,Giles Rabbetts as Land Director, Ben Krauze as Planning Director, JonathanTaylor as Construction Director and Dominic Connelly as Finance Director. Theexecutive directors are supported by a team of dedicated senior marketing,project management, planning and operational personnel. All are highlyexperienced in their field and highly incentivised by their equity participationin the business. Shareholders will be aware that this business is 75% owned byour Company and 25% by the Executive Directors of RAC, now operating under theAudley name, and its employees whether directly or through a RAC EmployeeBenefit Trust. Our basic business model on a typical site involves trying to create value inthree areas; planning, development and operations. The first two in some senseare not materially different to the usual housing business model althoughplanning is relatively easier (but that is not to say easy - it never is!) andbuild costs tend to be higher as additional communal areas are required as wellas a higher specification and more adaptable units. During the year we receivedplanning permission for 408 units on 4 sites as a result of which there is asignificant uplift in the value of these sites. As accounting standards do notallow for the revaluation of stock this uplift will be reflected in the futureprofitability of the business when sales commence. We have or will havecommenced construction work on all 4 sites in the first half of the year, withthe first units becoming available for residents to move into within the nextten months. As a result there will be nominal income for the RAC business in2007 and it will therefore remain loss making during the current year. We donot expect RAC to be operationally profitable until 2008. We are in discussionsand in legals to acquire a number of other sites largely on a subject toplanning basis but also without such consent where we believe the planningprofile is positive or where the price reflects the risk. Shareholders will be aware that, operationally, we are already managing threesites totalling 168 units and the operation of our future sites is very much anintrinsic part of our Independent Living model. We have to be cognisant of thefact that the provision of housing for the elderly, in particular with care, hashad a bad reputation in the UK because of the poor standard of theaccommodation, service and facilities offered and we therefore have to offermuch more than the historical provision. The first important aspect of this is the setting of the housing; we are verymuch focused on listed buildings or buildings of similar stature, an area inwhich we have considerable expertise, set in parkland like settings whichimmediately serve to change the impression that the elderly are only entitled tosecond best. The second important aspect is the level of service and variety of facilities onoffer. We very much intend to offer a home for life; where our residents getcare in their own homes should they require and their families do not sufferfrom the extra pressure of having to drop everything to take care of them ifsomething unfortunate happens. We offer more in this area than many of ourcompetitors in the retirement housing field who do not offer sufficient in theway of additional services eg a 24 hour care station, health, leisure andfitness facilities, hotel type of service, library, treatment rooms, restaurantand bar facilities etc. The provision of these facilities will allow us tocreate a profitable operating business whose income stream is not only generatedby our own residents but also by non-residents. This also enables us to extendthe profile of each project to the local area. As we expand we will also beoffering the use of all our centres to all our residents and looking to extendthe Audley franchise into other areas related to the elderly. Thirdly, our model is very much based on the fact that it is our residents whowill gain the benefit of the capital appreciation that comes from ownership oftheir own homes; ones in which our residents can live independent lives insecure settings and/or become active members of the immediate and widercommunity within which they live. The setting of our sites combined with the level of service and variety offacilities on offer together with the benefits of home ownership will, webelieve, provide a superior product to that of our competitors. Residential Development In respect of our third major business strand, residential development, we havenow completed and sold all of the units on the former Swan Hill sites with theexception of the 200 unit Swindon site. We expect to complete the fit out ofthis site this summer and although this is a loss making site it has utilisedsignificant amounts of cash resources (for a negative return) which are beingreleased as we now sell the units. We do not expect to exit this site fullyuntil the second half of 2008 at the earliest and with the recent hike ininterest rates sales on this site are likely to remain slow. The 247 unit New England Quarter, Brighton Station site, which is beingdeveloped by our joint venture partner, Barratt Developments, is scheduled forconstruction completion this year and we would expect to have repaid our bankloan and extracted our equity in the transaction by the end of next year. Saleson this site have also been slower than we would have liked as the structure ofthe joint venture encourages Barratt to maximize sales values rather than speedof sales. I am pleased to report that we have commenced development on both the 54 unitLewes and the 149 unit Sheffield Phase 1 sites. We have achieved higher thanexpected sales values on both these sites to date, Lewes in particular, andsales completions should commence next year. We shall be completing the purchase of the 339 unit Sheffield Phase 2 site inMay with vacant possession to follow 6 months thereafter. We have yet to decidewhether we will sell this site or develop it. More significantly we have obtained outline planning committee consent andentered into legally binding Section 106 planning agreements for another majorsite, at Lechlade on the Cotswolds. The development comprises a hotel and 160second homes designed by Philippe Starck, Jade Jagger and our joint venturepartner, John Hitchcox and YOO Limited, in lakeside settings in 500 acres of theCotswolds. We have commenced development, and have completed the first threeshow units. We are very excited by the prospects for this site and it will provea useful UK show case for the resort/second home business we hope to develop. We are actively pursuing high end second home resort based opportunities in aninternational arena with current target areas in the Caribbean, Brazil and theMediterranean region. The much slower pace of tying up deals, due amongst otherthings, to the longer due diligence process required, means that this can be atime consuming and protracted process. However, we believe this process isworth pursuing where the potential level of return is commensurate with theextra risk. We continue to remain bearish on UK residential property generally, other thanthe second home and retirement markets, although the market has generally heldup better, albeit in patches, than we had expected. For those of you whoremember him, I am beginning to feel a bit like Bob Beckman! Swan Hill Pension Scheme I outlined in some detail in my report last year both the issues surrounding theclosed Swan Hill final salary pension scheme (the Swan Hill Pension Scheme or 'the Scheme') and the considerable efforts that we have made, and continue tomake, to try to reduce the Scheme deficit, in the various guises that it can bemeasured. We continue to be proactive in looking carefully at both the Schemeassets and liabilities with a view to maximising returns whilst maintaining arelatively low risk profile; albeit accepting that the two parameters areusually moving in the same direction, that is, higher returns normally come atthe expense of higher risk. I say usually as, in imperfect markets, people canperceive more risk than there actually is. The Scheme benefited from both the strength in equity markets and the relativelyhigher level of equities exposure than a scheme of our maturity might otherwisewarrant. During the year, the Trustees of the Scheme, in full consultation withthe Company moved £10 million of the Scheme's assets from bonds into cash andthen into a Hedge Fund of Funds. The Trustees and ourselves both consideredbonds to be overvalued and selected, with professional advice, a Hedge Fund ofFunds which we considered to have a bond like risk profile but with higherreturns. During the year this move paid off as we achieved higher returns thanwe might otherwise have done but the acid test will be in the long run and, onthat, the judgment remains open for the time being. In addition, during the year we provided an additional contribution of £1.6million, over and above our annual contractual obligation, in the form of RavenRussia shares which we believe to be both high yielding and with the prospect ofsignificant capital growth. Perhaps one example of the market mispricing therisk/return matrix. Our basic approach to the Scheme deficit has been to try to reduce it, asrapidly as cash flows and profits, in particular taxable profits, will allow.In this, we have been successful to date. Under Financial Reporting Standard 17 'Retirement Benefits', the Scheme deficitdecreased by £7.6 million from £8.7 million as at 31 December 2005 to £1.1million as at 31 December 2006 or £6.1 million to £0.8 million on an after taxbasis. The decrease in the deficit was principally caused by the additionalcontributions of £3.4 million in cash and Raven Russia shares, just over twicethe agreed annual contribution to the Scheme, as well as a £4.0 millionactuarial gain, principally arising as a result of increase in asset values. More significantly, we contributed the entire 2007 contractual contribution of£1.6 million as a lump sum contribution on 2 January 2007 and the FRS 17calculation at that date, other things being equal, would have led to a surplusof £0.5 million; an important milestone for the Scheme and the Companyparticularly in light of the deficit of £16.2 million shown in the 31 December2004 accounts. The next actuarial valuation of the Scheme is to be undertaken as at 5 April2008. The last actuarial valuation was undertaken as at 5 April 2005 and thisresulted in a deficit of £9.3 million. It was agreed to reduce this deficit bymaking additional contributions of £1.57 million a year over a 6 year period inaddition to a contribution of £1.83 million in 2005. We are legally required tocontinue making these deficit contributions until the results of the 2008actuarial valuation are known, which will not be until towards the end of thatyear. Finally, and significantly, it is worth shareholders appreciating that ourparticipation in the Independent Living business provides a good 'hedge' againstany residual pension fund risk that we carry because, for example, the verydemographic trends that work against us on the pension fund also work for us inthe Independent Living business. Acquisition of RPH Under the terms of the Acquisition Agreement the maximum consideration, allpayable in shares, for RPH was £39.9 million of which £34.3 million has beenpaid at the year end with a balance of £5.6 million remaining. Furthermore, thesubstantial increase in the Company's share price during the year meant thatfewer shares were issued for each pound of consideration than might otherwisehave been the case, to the benefit of all shareholders other than Anton andmyself. The same will apply to any shares issued this year. Following planningconsent on the Mote, Maidstone development, we expect to issue deferredconsideration shares shortly following a formal valuation exercise. Theremainder of the above amount outstanding could be paid in respect of the Colnsite provided that, as required under the terms of the acquisition agreement,detailed planning consent is obtained and the judicial review period hasexpired, prior to 31 December 2007, the long stop date. The site currently hasdetailed consent on a small number of units and outline consent for the majorityof the site. An application has been submitted for detailed consent for 48units but the detailed consent is being withheld by the local Council becausethe Environment Agency ('EA'), are, unreasonably, objecting to the siting of theunits on flood risk issues, being the only thing they can object to having notobjected to the outline planning in the first place! Our strong legal opinion isthat 'the EA cannot give advice to the Council or an opinion that strikes at theprinciple of the planning permission for development or prevents us fromproviding the fixed number of dwellings that we have permission for'. The onlyproblem is that there are no more suitable locations to site these units! TheCouncil would like to grant planning but must listen to a consultee, the EA, whoare in no way accountable to anyone for their decision making! Councils arealways nervous to act against the advice of their consultees but it is the poorCouncil, or rather its taxpayers, who have to pick up the costs if the EA proveto be in the wrong and our advice is that they will be acting outside the scopeof their role as consultee to this reserved matters application. This maytherefore delay the grant of detailed planning. Rather ironically, this may beone situation in which unnecessary planning delays and politics between variousgovernment agencies are to the benefit of the majority of shareholders, as theAcquisition agreement requires the grant of detailed consent prior to thepayment of consideration albeit that substantial value has already been createdfor the Company. The worse news is that in the not too distant futureShareholders can probably expect a rather lengthy tome, somewhat longer than myPension Fund note of last year, on the problems inherent in the UK planningsystem! Dividends The Directors propose to pay a Final Dividend of 1.0 pence per ordinary share,making a total divided paid in respect of the year to 31 December 2006,excluding the Special Dividend of 5 pence each per share, of 1.6 pence ordinaryshare, an increase of 28% compared to last years total dividend of 1.25 pence.The final dividend is payable on Friday, 22 June 2007 to shareholders whose nameappears on the Register of Members as at Friday, 13 April 2007. Prospects We continue to remain particularly excited about the prospects for both ourIndependent Living and Property Fund Management businesses. We believe thatthere are some very strong fundamentals driving these businesses and that we nowhave the management teams in place to achieve our goals. We believe that wehave also identified some obvious but fundamental factors which will help todrive the third new business that we are trying to develop, namely the resort/second-home market. Your management remain convinced that the Russian market remains in the mediumterm one of the best, if not the best, property investment opportunity in theworld and are devoting appropriate resources to exploit that opportunity. Wehave invested heavily in top-end personnel in this business during the course ofthe year and in addition your Executive Directors continue to devote significantmanagement time to this business. In short, we are there to stay in Russia andour significant on ground management presence in Russia should open up anynumber of business opportunities in the medium term, in addition to theprovision of property services to Raven Russia. Even if the market hasrecognised the value that we are creating in Raven Mount I do not believe thatit, as yet, recognises the value that we have helped to create for Raven Russia. In last years financial statements we highlighted some of the statistics/demographics driving the provision of housing and care for the elderly sector.In particular, it is important to appreciate that increases in longevity throughimproving healthcare will lead to an increasing requirement for low dependencycare in housing settings rather than care homes as has been the casehistorically. However, there is also increasing competition, albeit from a lowbase, in this expanding sector as new competitors enter this market but webelieve that our offering is superior to that currently available in the market. The residential market remains very patchy particularly outside London; whichhas experienced very strong growth as London has rapidly become THEinternational city where anyone with substantial wealth wants at least a base.It is in this area, perhaps more than most, that we, as Executive Directors,have failed to identify the trend early enough to position ourselves in order totake advantage of the opportunity. I should say that this is one price that wehave had to pay as a consequence of our time commitment to our Russian interestsin particular. However, the macro-economic reasons behind this (e.g. theemergence of a world-wide class of substantially wealthy and mobile businessmen,entrepreneurs, professionals and financiers) are the ones that we have beenseeking to exploit in building up our UK and international resorts/second-homesbusiness and we intend to devote more resources to this area. In short, I remain very excited by the prospects for the Company despite thefact that our financial performance, as measured by profits and net assets, doesnot yet and will not in the current year, reflect the significant advances wehave made in our businesses. Company profits for the current period will behampered, in particular, by the losses of the Audley business despite the factthat value will continue to be created during the year through the developmentprocess. This value will be realised in the profit and loss account in futureyears as units are sold. Albert Einstein was not referring to financialstatements when he said "Not everything that can be counted counts, and noteverything that counts can be counted" but he might as well have been! Finally, I should like to join Anton in thanking our fellow directors, ourstaff, our advisers and our partners without whom we would not have made thesignificant advances we have made during the course of the last year. Thank youall for your indefatigable efforts. Bim SandhuChief Executive20 March 2007 Finance Director's Report Overview of results The Group generated a profit on ordinary activities before taxation of £0.5million (2005: £2.3 million) for the year to 31 December 2006, based on turnoverof £71.8 million (2005: £72.7 million). Accounting policies The Group has adopted the same accounting policies as last year, save for theadoption of FRS 20 Accounting for Share-based payment that has resulted in anannual charge to the profit and loss account of £0.6 million in respect of theoptions currently in issue. The Group will be required to prepare accounts under IFRS in respect of theaccounting period ending 31 December 2007. The impact of this change, in termsof the figures, will be primarily in respect of deferred taxation where fullrecognition of deferred tax assets and liabilities is required underInternational Accounting Standard 12: Income Taxes. The effect on the Groupwill be to recognise a deferred tax liability in respect of the fair valueuplift to stock arising from the deferred consideration payable in connectionwith the RPH acquisition. This deferred tax liability as at 31 December 2006 is£6.8 million, which will reduce net assets. The amount is already recognised bythe Group in arriving at Proforma Shareholders' Funds. In addition, the Group will be required to fair value its shares and warrants inRaven Russia Limited and Oriel Securities Limited. Pension fund Under FRS 17 'Retirement Benefits', the deficit in respect of the final salarypension scheme as at 31 December 2006 is £1.1 million (2005: £8.7 million). Thetotal market value of the pension scheme assets as at 31 December 2006 was £65.3million and the present value of its liabilities was £66.4 million. During 2006, the Group contributed a total of £3.4 million to the pensionscheme, including £0.2 million towards administrative expenses and 1.4 million(£1.6 million worth) Raven Russia Limited shares. Capital structure/deferred shares A total of 1,841,213 Ordinary shares were issued during the year. In respect ofthe RPH acquisition, 1,003,434 and 312,779 Ordinary shares were issued inSeptember and December 2006 respectively. In addition, 525,000 Ordinary shareswere issued to Non-Executive Directors on exercise of share options granted atthe time of the takeover of Swan Hill Group PLC by Raven Mount plc. Group bank facilities The Group has unsecured committed bank facilities totalling £40 million thatwere unused at the year end. Systems and controls The growth of our Property Fund Management activities has lead to a significantoperation in Russia. We have ensured that sufficient processes and controls arein place to monitor these activities and in particular the relationship withRaven Russia Limited. The agreement of fees due between the two companies isgoverned by our Property Advisory Agreement and is subject to independentassessment and verification from Investec Administration Services Limited,Administrator and Secretary to Raven Russia Limited. Financial Review Profit & Loss Account Turnover During 2006, the Group had turnover of £71.8 million (2005: £72.7 million). Turnover from Residential amounted to £66.9 million (2005: £69.2 million) ofwhich £3.8 million (2005: £17.9 million) related to land sales. In respect ofour Property Fund Management activities, the Group received management feeincome of £2.9 million and a performance fee of £2.0 million of which £1.4million was paid in Raven Russia Limited shares. Independent Living is an earlystage business and is not anticipated having stock available to sell until early2008. As at 31 December 2006, the Group was earning management fees based on US$465million of funds committed by Raven Russia Limited. Administrative expenses Administrative expenses have increased significantly during 2006 to £12.7million (2005: £9.2 million) as a result of the growth in both our Property FundManagement and Independent Living activities. Direct costs relating to the oldSwan Hill business have been significantly reduced in line with the wind down ofthose remaining assets and where appropriate, incorporated into other Groupactivities. Other income Dividend income of £0.2 million was received in respect of our Raven RussiaLimited shares. Taxation The tax charge of £2.3 million represents the utilisation of a previouslycovered deferred tax asset of £1.3 million, a deferred tax charge of £1.1million relating to contributions into the Group's defined benefit pensionscheme, and a credit of £0.1 million in respect of prior year over provisions.No current tax is payable for the year, due to the utilisation of broughtforward tax losses. Dividends In 2006, shareholders received dividend payments totalling 6.35 pence perOrdinary share (2005: 1.0 pence), including a 5.0 pence per Ordinary shareSpecial Dividend. Loss per share Basic loss per Ordinary share was 0.8 pence (2005: 0.2 pence) based on the lossafter tax and minority interest of £0.8 million (2005: £0.2 million) and on106.9 million (2005: 89.1 million) Ordinary shares being the weighted averagenumber of Ordinary shares in issue during the year. Balance sheet Stock Total stock as at the year end was £65.8 million (2005: £90.0 million). As at the year end, the only remaining old Swan Hill development was Paramount(Swindon) held at £13.5 million, having realised £25.6 million of old Swan Hillstock during the year. This has been a difficult site and we have released £0.9million of the £1.9 million provision made at the Interims, reflecting theactual level of sales (including exchanges and reservations) achieved in thesecond half of the year. Stock in relation to RPH totalled £33.0 million (2005: £31.4 million), the majoritems being Brighton (£12.4 million), Sheffield I and II (£11.9 million) andLewes (£5.0 million). During the year, RAC, our Independent Living business, obtained planningpermission in respect of four schemes. In addition to Mote, Maidstone (87units), announced at the Interims, we obtained planning on St Elphins, Matlock(127 units), Inglewood, Berkshire (96 units) and Ilkley, Yorkshire (98 units).Stock in respect of RAC at the year end totalled £12.1 million (2005: £9.8million). A gross value of £7.9 million is held representing the maximum outstanding fairvalue of the assets acquired under the terms of the RPH acquisition. Investments As at the year end, the Group held 10.7 million Raven Russia Limited shares,including shares received as part of our performance fee, at a cost of £11.0million. Based on a year end Raven Russia Limited share price of 115.5 penceper share, the market value of these shares totals £12.3 million. In addition,the value of the 7.65 million warrants over Raven Russia Limited shares, ifexercised, would be £8.8 million, an unrealised gain of £1.2 million above the£7.6 million that we would have to pay to exercise them. In November 2006, the Group acquired a minority stake in Oriel SecuritiesLimited, an independent stockbroking and advisory business, for £4.7 million.Oriel has a strong reputation in a number of sectors, including Real Estate andOverseas Property Funds. Cash and bank Net cash as at the year end was £8.8 million (2005: £5.2 million). This,however, does not illustrate the significant cash movements during the year,namely inflows from our Weybridge and Clifton developments and outflows beingdividends and our acquisition of a minority stake in Oriel Securities Limited. Shareholders' funds Shareholders' funds at the year end decreased to £87.1 million (2005: £89.3million). The principle movements were the dividends paid of £6.8 million andthe actuarial gains of £2.8 million on the pension scheme. The table belowillustrates our view of the proforma shareholders' funds of the Group. 2006 2005 £m £mProforma shareholders' funds Shareholders' funds 87.1 89.3Mark to market Raven Russia shares and warrants (net of tax @ 30%) 1.8 2.3RPH acquisition deferred consideration add-back 5.6 7.3RPH acquisition stock deferred tax liability (6.8) (7.6)Cash receivable from exercise of Share Options 6.5 - _______ _______Proforma shareholders' funds 94.2 91.3 _______ _______ m mDiluted Ordinary shares (see note 8) 124.9 118.4 Proforma shareholders' funds per diluted Ordinary share 75.4p 77.1p The above table does not reflect the excess over book value of certain stockitems. Shareholder return The share price increased from 74.5 pence to 161.0 pence per Ordinary share overthe year, an increase of 116 per cent., in addition to receiving total dividendsof 6.35 pence during the year, giving a total shareholder return of 124.6 percent. Mark KirklandFinance Director20 March 2007 Group profit and loss accountFor the year ended 31 December 2006 2006 2005 Note £'000 £'000 Turnover (including share of trading joint ventures) 1 71,781 72,815Less: Share of turnover of trading joint ventures - (123)Group turnover 71,781 72,692Cost of sales (60,624) (60,841)Gross profit 11,157 11,851Administrative expenses (12,726) (9,241)Group operating (loss)/profit (1,569) 2,610Share of operating profit/(loss) in trading joint 58 (500)venturesTotal operating (loss)/profit: Group and share oftrading joint ventures 1 (1,511) 2,110Profit on disposal of current asset investments 144 -Dividends received 5 242 -(Loss)/profit on ordinary activities before interest (1,125) 2,110and taxNet interest receivable and similar charges- Group 4 1,656 189- Joint ventures 4 12 6Profit on ordinary activities before tax 5 543 2,305Tax on profit on ordinary activities 6 (2,263) (2,600)Loss on ordinary activities after tax (1,720) (295)Minority interest 23 914 117Loss for the financial period 21 (a) (806) (178) Basic loss per Ordinary share 8 (0.8) p (0.2) pAdjusted shareholders' funds per Ordinary share 8 79.5 p 81.6 p All amounts in the current and prior periods relate to continuingactivities. Statement of Group total recognised gains and losses For the year ended 31 December 2006 2006 2005 £'000 £'000 Loss for the financial period (806) (178)Pension scheme actuarial gain net of deferred tax charge of£1,183,000 (2005: £1,670,000) 2,794 3,830Total recognised gains and losses in the period 1,988 3,652 Group balance sheetAs at 31 December 2006 2006 2005 Note £'000 £'000Fixed assetsIntangible assets 9 - (132)Tangible assets 10 363 334Fixed asset investments Investments in trading joint ventures: Share of gross assets 3,253 336 Less: Share of gross liabilities (3,152) (283) 11 101 53 Investment in associates 49 49 150 102 513 304Current assetsStocks 12 65,839 89,958Debtors 13 12,891 7,037Investments 14 15,712 10,000Cash at bank 16,053 15,113 110,495 122,108Creditors: Amounts falling due within one 16 (22,465) (18,873)yearNet current assets 88,030 103,235Total assets less current liabilities 88,543 103,539 Creditors: Amounts falling due after more thanone yearBank loans 17 (c) - (6,627)Provisions for liabilities 18 (1,894) (1,857)Net assets before pension deficit 86,649 95,055Pension deficit 3 (775) (6,100)Net assets 85,874 88,955 Capital and reservesCalled up Ordinary share capital 19 108 106Share premium account 21 (a) 2,418 1,998Other reserves 21 (b) 95,329 93,639Profit and loss account 21 (a) (10,706) (6,427)Shareholders' funds 22 87,149 89,316Minority interests 23 (1,275) (361) 85,874 88,955 The financial statements were approved by the Board of Directors and authorisedfor issue on 20 March 2007. ........................ ........................A J G Bilton B S SandhuExecutive Chairman Chief Executive Company balance sheetAs at 31 December 2006 2006 2005 Note £'000 £'000Fixed assetsFixed asset investmentsInvestment in subsidiary companies 11 88,444 88,444 88,444 88,444 Current assetsDebtors: Amounts falling due within one 13 32,842 24,833yearCash at bank - 10 32,842 24,843Creditors: Amounts falling due within one 16 (17,721) (8,061)yearNet current assets 15,121 16,782Total assets less current liabilities 103,565 105,226 Capital and reservesCalled up Ordinary share capital 19 108 106Share premium account 21 (a) 2,418 1,998Other reserves 21 (b) 81,027 79,337Profit and loss account 21 (a) 20,012 23,785Shareholders' funds 22 103,565 105,226 The financial statements were approved by the Board of Directors and authorisedfor issue on 20 March 2007. ........................ ........................A J G Bilton B S SandhuExecutive Chairman Chief Executive Group cash flow statementFor the year ended 31 December 2006 2006 2006 2005 2005 Note £'000 £'000 £'000 £'000 Net cash inflow from operating activities 26 (a) 19,096 4,647Dividends received from trading joint ventures - 250Returns on investments and servicing of financeInterest received 1,303 728Interest paid (68) (89)Dividends received from current asset investments 242 -Net cash inflow from returns on investment and servicing of finance 1,477 639Tax received - 75 Capital expenditure and financial investmentPurchase of current asset investment (4,718) (10,000)Advances to trading joint ventures (5,772) -Purchase of tangible fixed assets (162) (62)Disposal of tangible fixed assets - 24Net cash outflow from capital expenditure and financial investment (10,652) (10,038) Acquisitions and disposalsAcquisitions of subsidiaries - (1,963)Disposals of trading joint ventures - 8,582Net cash inflow from acquisitions and disposals - 6,619 Equity dividends paid to shareholders (6,821) (957)Cash inflow before financing 3,100 1,235 FinancingIssue of shares 420 -(Repayment)/addition of debt due in more than one (6,627) 4,439yearNet cash (outflow)/inflow from financing (6,207) 4,439(Decrease)/increase in net cash 26 (c) (3,107) 5,674 Notes to the financial statements 1. Segmental analysis 2006 2005 £'000 £'000 Turnover - by principal activity Residential and other property (including joint ventures) - United 66,842 69,169 Kingdom Property Fund Management of Russian properties 4,939 3,646 71,781 72,815 Less: share of turnover of trading joint - (123) ventures 71,781 72,692 Operating (loss)/profit - by principal activity Residential and other property - United Kingdom (1,997) 341 Property Fund Management of Russian properties 486 1,769 (Loss)/profit on ordinary activities before interest and tax (1,511) 2,110 For 2006, Residential and other property includes operating profits of £58,000 from joint ventures (2005: losses of £500,000). Net assets - by principal activity Residential and other property - United 56,970 79,232 Kingdom Property Fund Management of Russian properties 14,507 11,769 Operating assets 71,477 91,001 Other net funds 14,397 (2,046) Net assets 85,874 88,955 The geographical analysis of turnover by destination is not materially different from the analysis by geographical origin shown above. 2. Employee information (a) The average number of persons employed by the Group during the period was 95 (2005: 85). The total number of employees of the Group at 31 December 2006 was 103 (2005: 83). There are no employees of the Company other than 3 of the 4 Executive Directors (2005: 3). 2006 2005 £'000 £'000(b) Group employment costs including Executive Directors: Gross salaries and wages 7,486 4,866 Employer's national insurance contributions or foreign 866 530 equivalents Employer's pension costs 229 (22) 8,581 5,374 The pension credit in 2005 arose due to a curtailment gain on the defined benefit pension scheme of £761,000. (c) Directors' emoluments were: Remuneration 1,645 1,231 Pension contributions 156 133 Total 1,801 1,364 (d) Share based payments Raven Mount plc operates two equity-settled share based remuneration schemes for employees; an approved scheme and an unapproved scheme. Approved Option shares are subject to a maximum per employee of £30,000 (being the Inland Revenue limit for CSOP's). Options vest at the earliest after 3 years if the share price increase exceeds the RPI plus 3 per cent. per annum for the relevant period. Unapproved Option shares are exercisable in three equal parts, exercise will be on the third, fourth and fifth anniversaries of the Date of Grant being 8 December 2005. The Performance condition states that the share price increase must exceed the RPI plus 3 per cent. per annum and exceed the increase in the FTSE Small Cap index for the relevant period. 2006 2006 2005 2005 Weighted Weighted average average exercise exercise price Price (pence) Number (pence) Number Outstanding at the beginning of the 80.00 6,665,000 - - year Granted during the year 105.00 1,223,809 80.00 6,665,000 Lapsed during the year 105.00 (114,287) - - Outstanding at the end of the year 83.62 7,774,522 80.00 6,665,000 The exercise price of options outstanding at the end of the year ranged between 80p and 105p (2005: 80p) and their weighted average contractual life was 2.56 years (2005: 3.94 years). Of the total number of options outstanding at the end of the year, nil (2005: nil) had vested and were exercisable at the end of the year. The weighted average fair value of each option granted during the year was 105.0p (2005: 80p). The following information is relevant in the determination of the fair value of options granted during the year under the equity settled share based remuneration schemes operated by Raven Mount plc. 2006 Equity-settled Option pricing model used Black-Scholes Weighted average share price at grant date 105 (pence) Exercise price (pence) 105 Weighted average contractual life 1096 (days) Equity-settled Equity volatility 60% Expected dividend growth rate 1.69% Risk-free interest rate 4.5% 2006 £'000 The share-based remuneration expense (note 5) comprises: Equity-settled schemes 554 The group did not enter into any share-based payment transactions with parties other than employees during the current or previous period. No share based charge has been recognised in respect of the prior period as the amount is immaterial. 3. Pensions Defined contribution scheme The Group operates a defined contribution plan based on a stakeholder pension contract and contributes to certain personal pension schemes. The Group's contributions to these are charged to the profit and loss account in the period in which they are payable and amounted to £229,000 (2005: £152,000). Defined benefit scheme Benefit accruals under the Group's final salary pension scheme ceased with effect from 31 December 2005. The Group pays contributions to the fund in order to provide security for existing pensions and the accrued benefits of current and former employees. Group contributions to the scheme for the period totalled £3.4 million (2005: £2.4 million). Following the latest actuarial valuation as at 5 April 2005, the Group's contributions were fixed at £1.8 million per annum (including £0.2 million towards administrative expenses) for six years from 1 January 2006, after which they were expected to reduce to those required to meet the scheme's administration expenses. The next actuarial valuation of the pension scheme is at 5 April 2008. The credit to the profit and loss account for the scheme was £0.2 million (2005: charge £0.2 million) of which £Nil (2005: £0.6 million) has been charged against operating profit, £nil (2005: £0.8 million) has been credited to operating profit in respect of a curtailment gain and £0.2 million has been credited to other finance income (2005: charge £0.4 million). As at 31 December 2006, the scheme had an FRS 17 deficit of £1.1 million (2005: £8.7 million), leading to the inclusion in the balance sheet of a net pension liability of £0.8 million (2005: £6.1 million) after deferred tax. The total actuarial gain recognised in the statement of total recognised gains and losses is £2.8 million (2005: gain of £3.8 million) after deferred tax. These amounts and those set out below have been determined on the advice of qualified actuaries, who are employees of Watson Wyatt Limited, based on the most recent full actuarial valuation at 5 April 2005 updated to 31 December 2006. The mortality assumptions adopted were in line with standard tables PMA92/PFA92 calendar year 2005 treating members as being one year older than their actual ages. An allowance was made for possible future mortality improvements equivalent financially to a reduction in the discount rate of 0.25 per cent. per annum. This is broadly equivalent to an increase in life expectancy of one year every ten years. The financial assumptions used for FRS 17 purposes were: 2006 2005 2004 % per % per % per annum annum annum Price inflation 3.1 2.8 2.8 General salary and wage inflation N/A N/A 4.8 Pension increases 3.1 2.8 2.8 Discount rate 5.2 4.8 5.3 The scheme's assets (excluding money purchase assets) and the expected rates of return are: 2006 2006 2005 2005 2004 2004 Expected Expected Expected rate of Market rate of Market rate of Market return value return value return value % per annum £m % per annum £m % per annum £m Equities 9.0 39.6 9.0 22.9 8.1 20.5 Bonds 4.7 20.3 4.3 30.7 4.6 29.1 Property 6.5 1.8 6.4 1.5 6.5 1.4 Cash 4.6 3.6 4.3 4.1 3.8 1.4 Total 65.3 59.2 52.4 The position of the scheme (excluding money purchase assets and liabilities) can be summarised as follows: 2006 2005 2004 £m £m £m Total market value of the scheme's assets 65.3 59.2 52.4 Present value of the scheme's (66.4) (67.9) (68.7) liabilities Resulting deficit (1.1) (8.7) (16.3) Deferred tax asset 0.3 2.6 4.9 Net pension liability (0.8) (6.1) (11.4) The following amounts are included in the financial statements: 2006 2005 £m £m Analysis of the amount charged to operating profit Current service cost - (0.6) Past service cost - - Total operating charge - (0.6) Analysis of other amounts credited to profit and loss account Gain on curtailment - 0.8 Total other gains - 0.8 2006 2005 £m £m Analysis of the amount charged to other finance income Expected return on scheme assets 3.4 3.2 Interest on scheme liabilities (3.2) (3.6) Net return 0.2 (0.4) Net credit/(charge) for the period 0.2 (0.2) Analysis of the gain recognised in statement of total recognised gains and losses (STRGL) Actual return less expected return on scheme 2.2 4.2 assets Experience (losses)/gains arising on scheme (0.5) 2.5 liabilities Changes in assumptions underlying the present value of scheme 2.3 (1.3) liabilities Actuarial gain 4.0 5.4 Deferred tax (1.2) (1.6) Net actuarial gain recognised in STRGL 2.8 3.8 Experience gains and losses 2006 2005 2004 2003 2002 Difference between the expected and actual return on scheme assets £2.2 m £4.2 m £1.6 m £3.0 m £(5.9) m Percentage of scheme assets 3.3 % 7.1 % 3.0 % 6.0 % 13.1 % Experience gains/(losses) on scheme £(0.5) m £2.5 m £0.1 m £(0.2) m £0.1 m liabilities Percentage of scheme liabilities 0.8 % 3.7 % 0.2 % 0.3 % 0.2 % Total actuarial gain/(loss) recognised £4.0 m £5.4 m £(5.5) m £(3.1) m £(8.5) m in STRGL Percentage of scheme liabilities 6.0 % 8.0 % 8.0 % 5.1 % 15.8 % 2006 2005 £m £m Movement in scheme deficit during the period At 1 January 2006 (8.7) (16.3) Movement in period: Current service cost - (0.6) Contributions paid 3.4 2.4 Curtailment gain - 0.8 Other finance income 0.2 (0.4) Actuarial gain 4.0 5.4 At 31 December 2006 (1.1) (8.7) 4. Net interest receivable and similar charges 2006 2005 £'000 £'000 Interest receivable - Group 1,486 699 - Joint ventures 12 29 Net return on amount charged to pension scheme 226 - 1,724 728 Interest payable and similar charges - Group (56) (156) - Joint ventures - (23) - Net return on amount charged to pension scheme - (354) (56) (533) Net interest receivable and similar charges - Group 1,656 189 - Joint ventures 12 6 1,668 195 5. Profit on ordinary activities before tax 2006 2005 £'000 £'000 Group profit on ordinary activities is stated after crediting: Operating rent receivable (net of outgoings) 222 305 Dividend received on Raven Russia shares 242 - Amortisation of negative goodwill 132 - and after charging: Depreciation of fixed assets 133 163 Auditors' - Fees payable to the company's auditor for the audit remuneration of the Group's annual 140 133 accounts - Tax services 223 77 - Audit of the pension scheme 9 9 - Other services 5 30 Operating lease - Other assets 693 961 rentals Share based payments charge 554 - Directors' emoluments (excluding pension 1,645 1,231 contributions) 6. Tax on profit from ordinary activities 2006 2005 £'000 £'000(a) The tax charge on the profit from ordinary activities comprises: Current tax UK corporation tax charge at the rate of 30 per cent. (2005: 30 per cent.) based on the taxable result for the - - period (Over)/under provision in respect of prior (114) 4 periods Taxable payable on profits of joint ventures 22 - (92) 4 Overseas tax - Current - 105 (92) 109 Deferred tax (note 15) Utilisation of prior year tax losses 1,270 1,861 Pension charge deferred tax movement 1,085 630 2,263 2,600 (b) The tax charge for the period is lower than the standard rate of corporation tax in the UK (30 per cent.) due to: Profit before tax 543 2,305 Expected tax charge at 30 per cent. 163 692 (Over)/under provision in respect of prior (114) 4 periods Dividends not taxable (73) - Additional tax payable on sale of properties acquired from RPH 793 - Overseas tax including foreign exchange - 58 movements Items not deductible for tax purposes 39 43 Capital allowances in excess of depreciation (39) (61) Utilisation of tax losses (821) (630) Goodwill (40) 112 Timing differences recognised in deferred - (109) tax (92) 109 7. Dividends 2006 2005 £'000 £'000 On Ordinary shares of Raven Mount plc - Special paid 5.0p per share (2005: Nil) 5,378 - - Final paid for 2005 0.75p per share (2004: 798 428 0.5p) - Interim paid for 2006 0.6p per share 645 529 (2005: 0.5p) 6,821 957 8. Loss and shareholders' funds per Ordinary share The basic loss per Ordinary share is calculated in accordance with FRS 22 on the loss for the period (before dividends on Ordinary shares) of £806,000 (2005: loss £178,000) and 106.9 million shares (2005: 89.1 million), being the weighted average number of Ordinary shares in issue excluding those owned by the Employee Share Trust. Since none of the Company's potential Ordinary shares are dilutive, there is no difference between the basic and diluted loss per share. Shareholders' funds per Ordinary share are 80.6 pence (2005: 84.1 pence). The calculation is based on shareholders' funds as at the period end of £87.1 million (2005: £89.3 million) divided by the number of shares in issue at the period end amounting to 108.1 million (2005: 106.3 million). Adjusted shareholders' funds per share are 79.5 pence (2005: 81.6 pence) based on the adjusted shareholders' funds and diluted Ordinary shares shown below. 2006 2005 £'000 £'000 Shareholders' funds per balance sheet 87,149 89,316 Convertible Ordinary £1 shares 6 6 Deferred consideration payable in Ordinary 5,594 7,286 shares Cash receivable from share options 6,517 - Adjusted shareholders' funds 99,266 96,608 '000 '000 Ordinary shares in issue at 31 December 2005 108,102 106,261 Shares issuable as deferred consideration at 31 December 2006 share price of 161.0 pence (2005: 74.5 3,475 9,780 pence) Shares issuable on conversion of Convertible Ordinary shares 5,558 2,376 Share issuable under share options 7,774 - Diluted Ordinary shares as at 31 December 2006 124,909 118,417 In 2005 the issued options in the Unapproved Share option plan (6,665,000) were not dilutive as they were options at 80 pence per share and the share price at 31 December 2005 was 74.5 pence. 9. Intangible assets Negative goodwill £'000 Cost and net book value At 1 January 2006 (132) Realised on sale of trading stock 132 At 31 December 2006 - 10. Tangible assets Equipment, fixtures and fittings £'000 Group Cost At 1 January 2006 1,352 Additions 162 At 31 December 2006 1,514 Depreciation At 1 January 2006 1,018 Charge for the year 133 At 31 December 2006 1,151 Net book value At 31 December 2006 363 At 31 December 2005 334 11. Fixed asset investments Investments in trading joint ventures £'000(a) Group Cost At 1 January and 31 December 2006 - Share of retained profits At 1 January 2006 53 Profit for the period 48 At 31 December 2006 101 Net book value At 31 December 2006 101 At 31 December 2005 53 There are no recognised gains or losses in the trading joint ventures apart from the profit for the year. (b) Investments in trading joint ventures The Group's investment in trading joint ventures relates to: i) Coln Park LLP, a limited liability partnership operating in Great Britain. Coln Park is the joint venture established to develop second homes in Gloucestershire. ii) Wellington Square Development Company Limited ("WSDC"), a company incorporated and operating in Great Britain. The total issued Ordinary share capital of this company is £100 of which 50 per cent. is owned by a subsidiary. WSDC is the joint venture company established to develop the retail town centre scheme in Stockton-on-Tees. The scheme was sold during 2004. The Group's share of the assets and liabilities of its trading joint ventures was as follows: 2006 2006 2005 2005 £'000 £'000 £'000 £'000 Share of assets Current assets: Residential developments 2,843 81 Debtors 178 19 Cash at bank 232 236 3,253 336 Share of liabilities Creditors: Amounts falling due within one year (3,152) (283) 101 53 The balances with joint ventures are shown in notes 13 and 16. Subsidiary companies £'000(c) Company At 1 January and 31 December 2006 88,444 The following are the main operating subsidiary companies of Raven Mount plc at 31 December 2006. Those companies marked with an asterisk (*) are owned directly by Raven Mount plc and the remainder by subsidiaries. All companies are incorporated and operate in Great Britain, and are 100 per cent. wholly owned (except where indicated). Residential and other property Raven Property Holdings plc* ("RPH") Swan Hill Homes Limited Swan Hill Homes Swindon Limited Swan Hill Property Holdings Limited Swan Hill Developments Limited Raven Property Group plc* Raven Capital Limited* Asset Management Raven Russia Investments Limited* Raven Russia Property Advisors Limited (operates partially in Russia)* Raven Russia Property Management Limited* Independent Living Raven Audley Court plc (75% owned) Raven Audley Clevedon Limited Raven Audley St Elphins Limited Raven Audley Inglewood Limited Raven Devon Limited Raven Audley Flete Limited (d) Acquisition of Raven Property Holdings plc ("RPH") and subsidiaries On 20 December 2004, the Group acquired 100% of the issued share capital of RPH. As at 31 December 2006, consideration of £34,306,000 has been settled to the former shareholders of RPH (the fair value of which was £33,199,000), in the form of Ordinary shares in the Company. In accordance with the Acquisition Agreement, up to a maximum of a further £5,594,000 may be paid up to 31 December 2007, taking the total consideration up to the maximum possible of £39,900,000, the fair value of which is £40,000,000. This maximum excludes acquisition costs. 12. Stocks Group Group Company Company 2006 2005 2006 2005 £'000 £'000 £'000 £'000 Properties under development 65,839 89,958 - - 13. Debtors Group Group Company Company 2006 2005 2006 2005 £'000 £'000 £'000 £'000 Amounts falling due within one year Trade debtors 1,243 326 - - Amounts owed by Group companies - - 32,379 24,831 Amounts owed by trading joint ventures 5,772 20 - - Deferred tax asset (note 15) - 1,270 - - Other debtors 1,300 623 375 - Prepayments and accrued income 4,576 4,798 88 2 Total 12,891 7,037 32,842 24,833 14. Investments Group Group Company Company 2006 2005 2006 2005 £'000 £'000 £'000 £'000 Listed shares - Traded on AIM 10,994 10,000 - - Other investment 4,718 - - - 15,712 10,000 - - Listed shares comprises amounts invested in Raven Russia Limited. The nature of the Group's relationship with Raven Russia is set out in note 26 under Related Party Transactions. The market value of the listed shares at 31 December 2006 was £12.3 million. In addition, the Group hold warrants to subscribe for 7,650,000 Ordinary shares in Raven Russia Limited at £1. The warrants are exercisable at any time during the five year period commencing 29 July 2005, the date of Raven Russian Limited's admission to AIM. The other investment represents shares in Oriel Securities Limited, an unlisted independent stockbroking and advisory business. 15. Deferred tax Group Group Company Company 2006 2005 2006 2005 £'000 £'000 £'000 £'000 Deferred tax asset included in debtors relating to trading losses (note 13) - 1,270 - - Pension scheme deferred tax asset 332 2,600 - - 332 3,870 - - Movement in deferred tax asset comprises: At 1 January 2006 3,870 8,031 Charge to profit and loss account (2,355) (2,491) Charge to statement of total recognised gains and (1,183) (1,670) losses At 31 December 2006 332 3,870 16. Creditors: Amounts falling due within one year Group Group Company Company 2006 2005 2006 2005 £'000 £'000 £'000 £'000 Bank loans and overdrafts (note 17) 7,287 3,240 - - Deferred income 1,257 953 - - Trade creditors 3,986 3,916 - - Amount due to Group companies - - 11,220 - Corporation tax - 209 - - Social security and other taxation 357 186 - - Accruals and other creditors 3,978 3,077 901 769 Convertible Ordinary £1 shares (note 19) 6 6 6 6 Deferred consideration (note 19) 5,594 7,286 5,594 7,286 22,465 18,873 17,721 8,061 17. Financial instruments (a) The Group finances its operations through a mixture of shareholders' funds and bank borrowings. The overall objectives and strategy are to maintain flexibility with drawings of limited duration. No hedging is used. The Board regularly reviews the amount drawn down under the borrowing facilities to ensure that gearing levels are appropriate to prevailing market conditions. Short term debtors and creditors have been excluded from the disclosures below. (b) Borrowing facilities 2006 2005 £'000 £'000 The Group has borrowing facilities as follows: Committed facilities 40,000 25,000 Overdraft facilities - 15,000 Bank loan facilities 7,287 18,319 47,287 58,319 Amounts drawn (7,287) (9,867) Amounts undrawn 40,000 48,452 Cash at bank 16,053 15,113 Total cash and facilities available 56,053 63,565 The committed facilities are unsecured. The bank loan facility is secured over the asset held by the relevant company to which the loan has been provided. (c) Profile of net financial assets The net financial assets at 31 December 2006 were as follows: 2006 2005 £'000 £'000 Current asset investments 15,712 10,000 Cash at bank 16,053 15,113 Bank loans and overdrafts (7,287) (3,240) Bank loans due after more than one year - (6,627) 24,478 15,246 The above balances are all denominated in Sterling with the exception of Euro cash at bank balances of £33,000 (2005: £33,000). The committed facilities are available for 364 days from 1 September 2006 at a rate of 1% over base rate. The bank loan facility is at a rate of the margin, LIBOR and the MLA costs. The weighted average interest rate for the period for sterling borrowings was 5.9 per cent. No interest is received and there is no maturity date on the current asset investments held by the Group. The Group did not use any financial derivatives during the year. The fair value of the current asset listed investments held by the Group was £12.3 million (2005: £11.8 million). In the opinion of the Directors there is no significant difference between the fair values and the book values of the other financial assets and liabilities. 18. Provisions for liabilities Provisions for maintenance £'000 Group At 1 January 2006 1,857 Charged to profit and loss account 736 Utilised in the period (699) At 31 December 2006 1,894 This provision is in respect of estimated rectification costs of residential house sales. 19. Called up share capital 2006 2006 2005 2005 Ordinary shares of 0.1 pence No '000 £'000 No '000 £'000 Authorised 244,000 244 244,000 244 Allotted called up and fully paid 108,102 108 106,261 106 In addition to the above, the Company has authorised 50,000 £1 redeemable preference shares, none of which have been allotted. If they were to be allotted these shares would be classified as a liability in accordance with FRS 25. Also, the Company has 6,000 £1 Convertible Ordinary shares, included in accordance with FRS 25 as creditors. The Convertible Ordinary shares carry, in proportion to the number of Ordinary shares they convert into, the same rights to dividends, voting and return of capital as the Ordinary shares. They are convertible at the option of the holders according to a pre-determined formula at any time in the five years from the Company's admission to AIM, 17 December 2003, or, to the extent not converted by 17 December 2008, at the rate of 396 Ordinary shares for each Convertible Ordinary share held at the fifth anniversary of Admission. On the basis of the 31 December 2006 share price of 161.0 pence, the Convertible Ordinary shares would convert into 5,558,000 Ordinary shares. The movements in issued share capital during the period were as follows: Ordinary shares of 0.1pence each No '000 £'000 At 1 January 2006 106,261 106 Issued during the period 1,841 2 At 31 December 2006 108,102 108 The Ordinary shares issued during the period comprise 1,003,434 issued in September 2006 and 312,779 issued in December 2006 in relation to the deferred consideration payable for the acquisition of RPH. Also 525,000 were issued to the three non-executive directors on exercise of their share options. Based on the Company's share price at 31 December 2006, the maximum remaining deferred consideration of £5,594,000 (included under FRS 25 in creditors: amounts falling due within one year) would be settled by the issue of 3,443,000 Ordinary shares. 20. Share schemes Share Options In December 2005, the Company adopted an unapproved share option plan and an approved Company share option plan which provide for the issue of options over Ordinary shares in the Company. The total number of Ordinary shares over which Option Shares may be granted is limited to 10 per cent. of the total number of issued Ordinary shares of the Company at any time. The total number of shares under option are 7,774,522, representing 7.2 per cent of the issued share capital at the year end. Unapproved share option plan (Unapproved Plan) Option Shares under the Unapproved Plan are exercisable in 3 equal parts. For each part, exercise will be on or after the third, fourth and fifth anniversaries of the Date of Grant at the earliest and the Performance Condition shall first be tested for each one third part on these anniversaries. Unexercised options may be reviewed against the Performance Condition in subsequent periods broadly every 6 months, but always from the Date of Grant. Options lapse if not exercised within 7 years and 3 months from the Date of Grant. The Performance Condition states that the share price increase must exceed the RPI plus 3 per cent. per annum and exceed the increase in the FTSE Small Cap Index for the relevant period. Since the grant of these options, the share price has increased by 110.4 per cent, RPI by 4.7 per cent and the FTSE small cap by 21.1 per cent. Option Shares were issued under the Unapproved Plan on 8 December 2005 over 6,665,000 Ordinary shares in the Company at an exercise price of 80.0 pence, being the average share price for the month of November 2005. Approved Company share option plan (CSOP) Employees and full-time Directors of the Group have been offered Option Shares subject to a maximum value at any one time per employee of £30,000 (being the Inland Revenue limit for CSOP's). Option Shares cannot usually be exercised until 3 years after grant and are subject to a Performance Condition that the share price increase must exceed the RPI plus 3 per cent. per annum. This is first measured on the third anniversary, thereafter half yearly based on the prior December or June. 1,223,809 Option shares were issued under the CSOP on 28 April 2006. As at 31 December 2006, 114,287 options have lapsed leaving 1,109,522 Option shares in the Company in issue at an exercise price of 105 pence. 28,571 Option shares under the CSOP have been granted to each of the Executive Directors, in addition to the Unapproved Plan. 21a. Reserves Share Capital Reserve Reverse Profit premium redemption for own acquisition Merger and loss account reserve shares reserve reserve account £'000 £'000 £'000 £'000 £'000 £'000 Group At 1 January 2006 1,998 50 (150) 62,277 31,462 (6,427) Issue of deferred consideration shares - - - - 1,690 - Share based payment credit - - - - - 554 Issue of new shares 420 - - - - - Dividend payments - - - - - (6,821) Actuarial gains net of deferred taxation on pension - - - - - 2,794 scheme Loss for the period - - - - - (806) At 31 December 2006 2,418 50 (150) 62,277 33,152 (10,706) Company At 1 January 2006 1,998 50 - - 79,287 23,785 Issue of deferred consideration shares - - - - 1,690 - Issue of new shares 420 - - - - - Share based payment credit - - - - - 554 Dividend payments - - - - - (6,821) Profit for the period - - - - - 2,494 At 31 December 2006 2,418 50 - - 80,977 20,012 The profit and loss account includes £775,000 (2005: £6,100,000) relating to the defined benefit pension deficit. The Group loss for the year includes a profit of £2,494,000 (2005: profit £8,900,000) which is dealt with in the financial statements of the parent company. 21b. Other Reserves Group Group Company Company 2006 2005 2006 2005 £'000 £'000 £'000 £'000 Capital redemption reserve 50 50 50 50 Reserve for own shares (150) (150) - - Reverse acquisition reserve 62,277 62,277 - - Merger reserve 33,152 31,462 80,977 79,287 95,329 93,639 81,027 79,337 22. Reconciliation of movements in shareholders' funds Group Group Company Company 2006 2005 2006 2005 £'000 £'000 £'000 £'000 (Loss)/profit on ordinary activities after tax (1,720) (295) 2,494 8,900 Loss attributable to minority interest 914 117 - - Dividends paid (6,821) (957) (6,821) (957) Retained (loss)/profit (7,627) (1,135) (4,327) 7,943 Issue of Ordinary shares 422 28 422 28 Merger reserve arising on issue of deferred 1,690 20,697 1,690 20,697 consideration Share based payment credit to shareholders' funds 554 - 554 - Reduction in value of shares to be issued on reverse acquisition of Swan Hill Group plc - 73 - - Actuarial gains net of deferred taxation on pension 2,794 3,830 - - scheme Net (reduction in)/addition to shareholders' funds (2,167) 23,493 (1,661) 28,668 Opening shareholders' funds 89,316 65,823 105,226 76,558 Closing shareholders' funds 87,149 89,316 103,565 105,226 23. Minority Interest 2006 2005 £'000 £'000 At 1 January 2006 (361) - Arising due to reclassification of Raven Audley Court as a subsidiary - (244) Minority share of loss for the period (914) (117) At 31 December 2006 (1,275) (361) 24. Commitments Commitments contracted for at 31 December 2006 but not provided for in these accounts were £nil (£nil). As at 31 December 2006, the Group had annual commitments under non-cancellable operating leases as set out below: Land and buildings Other 2006 2005 2006 2005 £'000 £'000 £'000 £'000 Operating leases which expire: - Within one year - - 29 53 - Between two and five years 58 91 32 53 - After five years 678 836 - - 736 927 61 106 25. Related party transactions a) On 20 December 2004, Raven Mount plc completed the acquisition of RPH for an initial consideration of 22,362,500 Ordinary shares and an additional potential deferred consideration of up to £22,010,125 in the period until 31 December 2007 subject to the satisfaction of certain criteria as per the Acquisition Agreement. All of the consideration payable will be satisfied by the issue of Ordinary Shares. As at 31 December 2006, 45,221,213 shares had been issued and up to a maximum of £5,594,000 of deferred consideration may be payable. RPH was the holding company of the residential property assets previously controlled, either directly or indirectly, by Anton Bilton and Bim Sandhu. Anton Bilton and Bim Sandhu are both directors of the Company and in light of their interest in RPH, the acquisition constituted a related party transaction for the purposes of the AIM Rules. b) In 2005 Raven Russia Limited (Raven Russia) was floated on AIM. At flotation the Group purchased £10.0 million of shares in the company and entered into a 5 year property advisory agreement to provide property advisory, management and development monitoring services to Raven Russia. In 2006, the agreement was extended to 31 December 2015. The Group will receive an annual fee of 2 per cent. of gross assets in consideration for its services. In addition, the Group is entitled to a performance fee which is calculated by reference to excess returns achieved by the shareholders of Raven Russia. Fees to the Group would range from 20 per cent. to 35 per cent. based on shareholder returns in excess of 12 per cent. to 25 per cent. per annum. In the year to 31 December 2006 the Group received management fees of £2,938,655 and a performance fee of £2,000,000, 70 per cent. of the later payable in Raven Russia shares. As at the year end, the Group have a balance of £1,143,089 due in management fee and £2,000,000 due in performance fee, which have been received post year end. Raven Russia Property Management Limited, a subsidiary of the Company, has been granted the right to subscribe for 7,650,000 Ordinary shares in Raven Russia at the placing price of 100 pence per share, exercisable until 25 July 2010. Raven Russia has granted various options to Raven Mount Employee Benefit Trust, to acquire up to 7.5 per cent. of the issued ordinary share capital of Raven Russia, on behalf of Raven Mount employees, including Directors in three equal tranches at an exercise price of the Placing Price in respect of the first tranche and the average closing mid-market price for the 20 trading days preceding the first and second anniversaries of Admission for the second and third tranches respectively. The options are performance related and exercisable between 3 and 12 years from the date of grant. Options are exercisable if compound shareholder returns exceed 12 per cent. per annum over the respective 3 year vesting periods; no options are exercisable if compound returns do not exceed 9 per cent. per annum over the vesting period. Glyn Hirsch, a director of the Company, is a director of Raven Russia Limited. c) During the period, Santon Management Limited, a company controlled by Anton Bilton and Bim Sandhu, rented space from the Group and was provided with office services, on an arms length basis. Total amounts charged to Santon in the period were £50,579. d) The Group has a 75 per cent. interest in Raven Audley Court plc which had a loss for the year of £3.7 million and an inter-company balance with Raven Mount plc of £16.8 million. The Group also charged a management fee of £200,000 and interest of £1.7 million during the year. e) The Group has a 50 per cent. interest in Coln Park LLP which has a loan due to the Group as at 31 December 2006 of £5.6 million. The Group charged Coln Park LLP a management charge of £170,000 during the year, and interest of £315,000. f) The Group established an Employee Benefit Trust (EBT) in respect of its subsidiary Raven Audley Court plc during the year. The Group advanced £375,000 to the EBT at a commercial rate of interest. At 31 December 2006 the amount outstanding was £308,000. g) The Company has taken advantage of the exemption in FRS 8 'Related Party Transactions', not to disclose transactions with 90 per cent. or more owned group companies. Other than as detailed above, there were no other related party transactions which require disclosure. 26. Cash flow notes 2006 2005 £'000 £'000(a) Reconciliation of operating (loss)/profit to cash flow from operating activities Group operating (loss)/profit (1,569) 2,610 Depreciation charge 133 163 Recognition of negative goodwill (132) - Impairment of goodwill - 73 Share based payments 554 - Profit on disposal of fixed assets - (21) Contributions to defined benefit pension scheme (1,770) (2,303) Decrease in stocks 24,119 8,433 Increase in debtors (3,915) (3,032) Increase/(decrease) in creditors 1,639 (1,324) Increase in provisions 37 68 19,096 4,667 (b) Reconciliation of net cash flow to movements in net funds 2006 2005 £'000 £ '000 (Decrease)/increase in net cash (3,107) 5,674 Decrease/(increase) in debt due in more than one 6,627 (4,439) year Change in net debt resulting from cash flows 3,520 1,235 Net funds at 1 January 2006 5,246 4,011 Net funds at 31 December 2006 8,766 5,246 (c) Analysis of changes in net funds At 1 Jan Cash At 31 Dec 2006 flows 2006 £'000 £'000 £'000 Cash at bank and in hand 15,113 940 16,053 Bank overdrafts (3,240) (4,047) (7,287) 11,873 (3,107) 8,766 Bank loans due in more than one year (6,627) 6,627 - 5,246 3,520 8,766 (d) Material non-cash item During the year the Group contributed 1,415,177 Raven Russia Limited Ordinary shares to the pension scheme at a value of £1.6 million. The financial information set out above does not constitute the Company'sstatutory accounts within the meaning of section 240 of the Companies Act 1985for the years ended 31 December 2006 or 2005, but is derived from thoseaccounts. Statutory accounts for 2005 have been delivered to the Registrar ofCompanies and those for 2006 will be delivered following the Company's AnnualGeneral Meeting. The auditors have reported on those accounts; their reports were unqualified anddid not contain statements under the Companies Act 1985, s 237 (2) or (3). This information is provided by RNS The company news service from the London Stock Exchange

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