19th Sep 2006 07:01
Raven Mount plc19 September 2006 19 September 2006 RAVEN MOUNT PLC ("Raven Mount" or the "Company") INTERIM STATEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2006 HIGHLIGHTS • Group profit before tax was £0.6 million (2005: £3.1 million) on turnover of £42.7 million (2005: £40.5 million). • Property Fund Management business continues to grow, through our contract with Raven Russia, which raised a further £310 million in April 2006, bringing the full equity raised by Raven Russia to £463 million. • Independent Living business, Raven Audley, obtained its first planning permission for the 86 unit scheme at Mote Park, Maidstone and hoping for consent on a further 330 units by the year end. • Interim Dividend of 0.6p per Ordinary share (2005: 0.5p). • Special Dividend of 5.0p per Ordinary share (2005: Nil). • Pension deficit under FRS 17 after tax, decreased to £4.9 million (December 2005: £6.1 million). • Continued cash generation in the period, £19.6 million net funds at 30 June 2006 (December 2005: £5.2 million). Commenting on the results, Anton Bilton, Executive Chairman, said: "The interim period for this year has been very positively marked by the successof a secondary fundraising by Raven Russia. I remain excited about extendingthis property fund management model to other localities." Bim Sandhu, Chief Executive, said: "In recognition of the significant value created in our new business areas, oursurplus cash balances and our confidence in the future direction of the Company,the directors are pleased to announce a 20% increase in the Interim Dividend to0.6p per Ordinary share as well as a Special Dividend of 5.0p per Ordinaryshare." Enquiries to: Raven Mount plc Anton Bilton 020 7235 0422 Bim Sandhu CHAIRMAN'S STATEMENT The interim period for this year has been very positively marked by the successof a secondary fundraising by Raven Russia. In April, Raven Russia raised afurther £310 million which takes its total funds raised to £463 million and withanticipated gearing will give Raven Russia spending power of circa £1.5 billion.Over time this will prove to be beneficial to your Company both in the annualfees it charges for acting as property fund manager to Raven Russia and also inthe performance fees it hopes to achieve through the performance of RavenRussia's own share price. As at 30 June 2006, we are earning fees on US$224 million, which we expect toincrease significantly before the year end. I remain excited about extending this property fund management model to otherlocalities within Russia and the former CIS countries and we are workingdiligently on this process. Raven Audley (our Independent Living business), is growing quickly. We have wonplanning permission on Mote House in Maidstone and we hope to achieve consentson 3 further sites over the next three months. Once these planning consents arein place, construction will commence and we would look to have units availablefor sale in the first half of 2008. We are strengthening the management teamwith the appointment of a Finance Director and a Construction Director. In respect of our UK developments, we have now virtually completed and sold allremaining units from the inherited Swan Hill developments, except for theParamount scheme at Swindon. Our residential projects in Brighton, Lewes and Sheffield are also proceedingwell and we are extremely excited about the impending public launch of oursecond home joint venture development with Yoo at Lechlade, in the Cotswolds. We continue to look for new property related concepts both in the UK andoverseas and I hope to bring you news of exciting developments in these areaswith our year end results. Once again, the directors would like to thank theentire Raven Mount team for their considerable effort during the period and weremain excited about our future as we enter troublesome waters with a cash richbalance sheet, a great crew and some interesting ideas for value creation. Finally, I am pleased to announce that in addition to an Interim Dividend of0.6p per share, the directors propose a Special Dividend of 5.0p per share, asdiscussed in the Chief Executive's Statement. Anton Bilton Executive Chairman 19 September 2006 CHIEF EXECUTIVE'S REPORT Results for the six month period to 30 June 2006 The Group generated a profit on ordinary activities before taxation of £0.6million for the six month period ended 30 June 2006 (2005: £3.1 million).Turnover for the six month period, excluding share of turnover of trading jointventures, increased slightly from £40.5 million to £42.7 million, although, asin recent prior periods comparisons of turnover and relationship to profit arenot directly relevant as the Group continues to evolve new business areas inaddition to its traditional house building business. Having noted that, one significant reason for the fall in profitability betweenthe two six month periods is that the figures for the comparative period wereflattered by an £8.5 million contribution from the profit on the sale of landwhereas in the first six months of this year we generated a significantly lowerprofit of £3.4 million from land sales. Margins on the sales of completed unitscontinued to be hampered by the high prices paid for historical stock and theother factors set out in detail in previous reports. Furthermore, we haveincreased the provision on our Swindon development site by a further £1.9million to £4.5 million and following the failure of our Chesterfield project tobe short listed as a possible casino site we have written off all related costs. Stated Net Assets decreased slightly from £89.0 million at the year end to £88.7million as at 30 June 2006 largely as a result of the final dividend payment for2005. The Group generated significant cash flow during the course of the periodand net cash balances increased from £5.2 million to £19.6 million. Operating Review Our Group's three principal areas of focus continue to be Property FundManagement, the Development and Operation of Assisted Living facilities or, aswe shall refer to them from now on, Independent Living facilities andResidential Development. Property Fund Management The most significant development for the Group during the first half of the yearwas the additional fund raising of £310 million by Raven Russia Limited, theseparately quoted AIM vehicle for whom we act as the property fund manager undera long term contract. This increased total equity funds raised by Raven Russiato £463 million. On a geared basis, provided the debt markets in Russiacontinue to mature, this should enable Raven Russia to buy approximately £1.5billion of assets once fully invested. Fortunately, Raven Russia raised thesefunds before the recent turmoil in the emerging equity markets. Indeed, atleast two potential floats for other Russian property investment funds havefailed to materialise in the last few months, which enhances the first moveradvantage that Raven Russia has established. Unfortunately, nervousness aboutemerging markets has resulted in the Raven Russia share price trading at adiscount to the price of £1.15 at which the secondary fund raising took place(the original float price being £1). We are very conscious that in order to create a successful property fundmanagement business in the long run, not only do we have to show commitment tothat business e.g. in the form of co-investment into the funds, but we must alsodeliver good returns to the underlying shareholders in the property funds thatwe manage. In addition, our Group has the potential to earn significantperformance fees if it can help the shareholders of Raven Russia, ourselvesincluded, achieve significant Total Shareholder Returns (essentially measured interms of share price movement and dividends paid) and we continue to devotesignificant management time in order to achieve that aim. We believe that the Raven Russia share price dip will be a short term phenomena.Once we have helped Raven Russia commit its funds and the macro-economicfundamentals behind Raven Russia's investment strategy flow through, we believethe share price should move beyond £1.15 (whilst recognising that stock marketsand rationality do not always go hand in hand in the short term). The additional fund raising by Raven Russia in the first half of the year initself did not affect the results of Raven Mount for the period as theadditional funds raised were not invested prior to 30 June 2006 (and on which wetherefore did not earn any fees). Independent Living (formerly referred to as Assisted Living) There is currently a significant amount of interest in the provision of housingfor the elderly. Whilst shareholders will note our excitement about the sectorfrom our previous reports, the bid interest for McCarthy and Stone has served tohighlight interest in this sector to the wider investment community. There aremany bidders but there will be only one winner; with many losers potentiallylooking for alternative entry strategies into the sector. We recognise that oneoutcome is likely to be increased competition for sites, particularly for thosesites with planning permissions. However, we believe that we will retain acompetitive advantage in purchasing sites against most newcomers because of theland buying and planning expertise acquired as part of the acquisition of RavenProperty Holdings plc ("RPH") in December 2004. There is also likely to be to aplethora of offerings to potential purchasers/residents as different operatorstry to develop their own niche areas within the sector. The offerings willevolve as the sector matures. In this respect, we have chosen to rebrand ouroffering as Independent Living rather than Assisted Living. I am glad to note that in August, Raven Audley Court, now trading as Audley,obtained its first Independent Living planning permission for the 86 unit schemeat Mote Park, Maidstone, a site acquired as a part of the RPH acquisition. Weare hoping to obtain planning committee consent on a further 330 units on threesites before the year end but this is by no means certain given the nature ofthe UK planning system, highlighted by the fact that it took us over 3 years toobtain planning permission on Mote Park. My thoughts on the UK planning processare probably best left for another day! Residential Development With respect to our third major business strand, residential development, I ampleased to report that we have obtained planning committee consent and enteredinto a legally binding Section 106 planning agreement for another major site, atLechlade, Coln acquired as part of the RPH purchase. The development, comprises160 second homes, designed by Philippe Starck, Jade Jagger and our joint venturepartner, Yoo, and a 120 bedroom five star condominium hotel in lakeside settingsin 500 acres of the Cotswolds countryside. We have commenced development,including the construction of the first four show units, and the first sales onthis site are expected to complete next year. We are very excited by theprospects for this site. We are actively pursuing second home opportunities in an international contextalthough progress has been slower than we would have liked. 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. Our stock of completed residential properties continue to sell at fair pricesand as at the half year we have very little stock of completed property to sell.On a more disappointing note, we have had to increase, largely as a result ofincreasing costs, the provision on our 200 unit Swindon site by £1.9 million to£4.5 million. We are currently fitting out the first phase of flats and thefirst sales on this site should begin to materialise later this year. I will be able to report in more detail on developments in all areas with theresults for the full year. Swan Hill Pension Scheme The 2005 Report and Accounts stated that under Financial Reporting Standard 17 'Retirement Benefits', the deficit disclosed in respect of the closed finalsalary pension scheme (the Swan Hill Pension Scheme) decreased from £16.3million as at 31 December 2004 to £8.7 million as at 31 December 2005 or £11.4million to £6.1 million on an after tax basis. No revised FRS 17 estimate hasbeen made at the half year although allowing for the annual deficit contributionmade in January 2006, the revised after tax provision has fallen, other thingsbeing equal, from £6.1 million at the year end to £4.9 million at 30 June 2006.Nevertheless, we continue to remain vigilant in respect of the scheme. Acquisition of RPH Under the terms of the Acquisition Agreement the maximum consideration, allpayable in shares, for RPH was £39.9 million of which £32.6 million has beenpaid to date with a balance of £7.3 million remaining. Details of the purchaseacquisition mechanism are set out in detail in prior period reports. Followingthe receipt of planning on Mote Park, Maidstone and, in particular, Lechlade,it is highly likely, subject to valuations, that the cap of £39.9 million willbe hit, if not exceeded, on sites on which we have already obtained planning. Cash Balances The Group generated significant cash flow during the period and net cashbalances increased from £5.2 million to £19.6 million and gross cash balancesfrom £15.1 million to £34.2 million. Whilst such a cash position may seemhealthy, Anton & I have never been big fans of net cash balances over anythingbut a short period of time. Consequently, we are not necessarily happy toremain in this position in the longer term. Shareholders may well therefore ask why these relatively large cash balanceshave built up. Firstly, our cash balances have increased because it has been easier to disposeof assets at fair values than it has been to buy them at realistic values.Vendors' expectations of terms, especially price and especially overseas, havebecome unrealistic given the risk factors involved in this sort of economicenvironment, but they are likely to hang on until someone offers them what theywant; which they usually do! Secondly, the significant increase in the pensionfund deficit per se and relative to the size of the Group culminating in a FRS17deficit of £16.3 million in 2004 and some of the draconian draft legislationproposed by the government a couple of years ago made us take a moreconservative approach to cash than we might otherwise have done. Having saidthat, we now have a regulatory environment that we are beginning to understand,the deficit has declined and the Group has become bigger with the acquisition ofRPH. We therefore now no longer feel that this is a major constraint on ourthinking in relation to cash. Thirdly, it has probably taken longer to obtainplanning permissions, both in our Independent Living business and our housingbusiness generally, both UK and overseas, than we would have liked and we havetherefore not invested our cash into assets as quickly as would otherwise havebeen the case. Fourthly, we exited with significant cash out of a major jointventure development because of a change of ownership of our JV partner which wasnot to our liking. Something we had not planned to do but these thingsoccasionally happen in business. More generally, we have taken a conservative view of the general economicenvironment and have held on to cash in the hope of picking up assets cheaply.Cash is king in a recessionary environment but the monarch of excess liquiditycontinues to reign despite intermittent attempts to depose him. Lastly, we continue to remain a trading and development business and are nottempted to purchase property investments or other investments where the cashcould be used up very quickly at today's very heady prices! Whilst underaccounting rules, we do show some current asset investments on our balancesheet, being our shares in Raven Russia, we regard them as stock which we had topurchase in order to demonstrate our commitment to the Raven Russia endeavour.Without such demonstrable commitment we would not have helped Raven Russia raisethe funds that it has and would therefore not be earning the significantmanagement fees, our raison d'etre for helping set up Raven Russia, that weexpect to earn in future years. These shares are therefore the stock of ourfund management business. In the long run cash is a lazy asset, more so in an environment where thereturns on it are so poor; whereas, gearing imposes disciplines throughout abusiness which do not otherwise exist. We have historically believed in gearingbalance sheets aggressively and we will look to do so going forward. The directors are therefore proposing a Special Dividend of 5.0p per share, asset out below, which will reduce some of this cash surplus. The majority of the remaining net cash that we have is likely be used inexpanding our Independent Living business, developing the sites acquired as partof the RPH acquisition and acquiring niche development properties in theresidential sector, whether here or overseas. We will, however, continue to look innovatively at using surplus cash for othertrading purposes. Dividends The directors propose to pay an Interim Dividend of 0.6p per Ordinary share, anincrease of 20% compared to last years interim dividend of 0.5p, to shareholderswhose name appears on the Register of Members as at Friday, 6 October 2006 andpayable on Friday, 10 November 2006. In addition, given the cash position of the Group, outlined above, and thepositive outlook for the Company, outlined below, the directors also propose aSpecial Dividend payment of 5.0p per Ordinary share payable on the same date asthe Interim Dividend. Prospects We are not expecting the residential development business to generatesubstantial profits at a Group level for the foreseeable future for reasons setout in prior reports. The Independent Living business will continue to generatevalue enhancement although this will not be reflected in the balance sheet inthe short term. Furthermore, the business is not expected to be earningsenhancing until the year ending 31 December 2009 at current rates of expansion.The property fund management business, however, will be earnings enhancing thisyear and increasingly so in future years. Our aim in this sector is to be morethan a 'one trick pony'. Whilst we continue to seek out profitable opportunities in all three areas wewill continue to look for entrepreneurial ways to invest our equity, even ifthis means expanding beyond those areas where we are currently active providedthat we can find management of a sufficient calibre to manage those businesses. Finally, I am glad to note that whilst neither our balance sheet nor our profitand loss account currently reflect the economic value that our employees haveworked so hard to create, and neither are they likely to until the year ending31 December 2008, it has been reflected by the market in our share priceincrease since the beginning of the year. Whist we do not measure ourselves byreference to the short term movement in our share price, the directors arepleased, in particular, to have rewarded the shareholders who backed us on theoriginal inception of Raven Mount and its takeover of Swan Hill. Bim Sandhu Chief Executive 19 September 2006 CONSOLIDATED RESULTS Unaudited Unaudited Half Year Half Year Full 30 June 30 June Year 2006 2005 2005 Consolidated profit and loss account Notes £'000 £'000 £'000 Turnover (including share of trading joint ventures) 42,680 40,496 72,815Less: share of turnover of trading joint ventures - (21) (123)Group turnover 42,680 40,475 72,692 Cost of sales (37,224) (32,780) (60,841) Gross profit 5,456 7,695 11,851Administrative expenses (5,468) (4,696) (9,241)Group operating (loss)/profit (12) 2,999 2,610Share of operating profit / (loss) in trading joint 4 (175) (500)ventures(Loss)/profit on ordinary activities before interest (8) 2,824 2,110and taxNet interest receivable/(payable) and similar charges - Group 2 587 289 189 - Joint ventures 2 - (2) 6Profit on ordinary activities before taxation 579 3,111 2,305Tax on ordinary activities 3 (758) (933) (2,600)(Loss)/profit on ordinary activities after taxation (179) 2,178 (295)Minority interest 390 - 117Profit/(loss) for the financial period 211 2,178 (178) Basic earnings/(loss) per Ordinary share 5 0.2 p 2.6 p (0.2) pDividends per Ordinary share 4 0.5 p 0.5 p 1.0 pDiluted shareholders' funds per Ordinary share 5 84.0 p 78.9 p 81.6 p Statement of consolidated total recognised gains and lossesProfit/(loss) on ordinary activities after taxation 211 2,178 (178)Pension scheme actuarial gain net of deferred tax charge - - 3,830Total recognised gains and losses in the period 211 2,178 3,652 Unaudited Unaudited Full 30 June 30 June Year 2006 2005 2005 Consolidated balance sheet Notes £'000 £'000 £'000 Fixed assetsIntangible assets (132) 1,533 (132)Tangible assets 331 404 334Investments in trading joint ventures: - Share of gross assets 1,844 11,465 336 - Less: Share of gross liabilities (1,787) (2,083) (283) 57 9,382 53Other investments 49 51 49 305 11,370 304Current assetsStocks 70,188 80,969 89,958Debtors: Amounts falling due within one year 8,939 5,065 7,037Debtors amounts falling due after more than one year - 2,099 - 8,939 7,164 7,037Investments 12,450 - 10,000Cash at bank 34,227 16,786 15,113 125,804 104,919 122,108Creditors: Amounts falling due within one year (15,824) (27,097) (18,873)Net current assets 109,980 77,822 103,235Total assets less current liabilities 110,285 89,192 103,539Creditors: Amounts falling due after more than one year (14,549) (2,366) (6,627)Provisions (2,219) (1,751) (1,857)Net assets before pension deficit 93,517 85,075 95,055Pension deficit 6 (4,861) (11,400) (6,100)Net assets 88,656 73,675 88,955 Capital and reservesCalled up share capital 112 86 106Share premium account 2,413 1,998 1,998Other reserves 93,639 78,963 93,639Profit and loss account (6,757) (7,372) (6,427)Shareholders' funds 89,407 73,675 89,316Minority interests (751) - (361) 88,656 73,675 88,955 Unaudited Unaudited Full 30 June 30 June Year 2006 2005 2005 Consolidated cash flow statement £'000 £'000 £'000 Operating (loss)/profit (12) 2,999 2,610Depreciation charge 56 75 163Profit on disposal of fixed assets - - (21)Share based payments charge 257 - -Impairment of goodwill - - 73Costs on closure of an operation - - (20)Contributions to defined benefit pension scheme (1,770) - (2,303)Decrease in stock 19,770 6,877 8,433(Increase)/decrease in debtors (4,579) 82 (3,032)Increase/(decrease) in creditors 258 (2,601) (1,324)Increase/(decrease) in provisions 362 (38) 68Net cash inflow from operating activities 14,342 7,394 4,647Dividends received from trading joint ventures - - 250Returns on investments and servicing of finance 587 345 639Taxation (96) 259 75 Capital expenditure and financial investment (53) (20) (10,038)Acquisition and disposals - - 6,619Dividends paid to shareholders (798) (428) (957)Cash inflow before financing 13,982 7,550 1,235Financing: - Issue of shares 421 - - - New loans 7,922 1,239 4,439 - Repayment of loans (2,390) - -Increase in net cash 19,935 8,789 5,674 Consolidated reconciliation of net cash flow to movement in netfundsIncrease in net cash 19,935 8,789 5,674Cash inflow from changes in debt (5,532) (1,239) (4,439)Increase in net funds resulting from cash flows 14,403 7,550 1,235Translation differences - (43) -Opening net funds 5,246 4,011 4,011Closing net funds 19,649 11,518 5,246 As restated Half Year Half Year Full 30 June 30 June Year 2006 2005 2005 Reconciliation of movements in shareholders' funds £'000 £'000 £'000 (Loss)/profit on ordinary activities after taxation (179) 2,178 (295)Loss attributable to minority interests 390 - 117Dividends (798) (428) (957) (587) 1,750 (1,135)Issue of new shares 6 8 28Increase in share premium 415 - -Merger reserve arising on acquisition of Raven Property - 6,094 20,697Holdings PLCReduction in value of shares to be issued on reverseacquisition of Swan Hill Group PLC - - 73Share based payments credit to shareholders' funds 257 - -Actuarial gain net of deferred taxation on pension - 3,830schemeNet addition to shareholders' funds 91 7,852 23,493 Opening shareholders' funds 89,316 65,823 65,823Closing shareholders' funds 89,407 73,675 89,316 NOTES 1. Basis of consolidation and preparation The unaudited interim financial statements have been consolidated and preparedon a basis consistent with the accounting policies set out in the Raven Mountplc annual report and accounts for the year ended 31 December 2005, except forthe adoption of FRS20 in connection with share based payments. This has had noeffect on the previously reported results for the year ended 31 December 2005and the 6 months ended 30 June 2005. The figures reported for the year ended 31 December 2005 have been compiled fromthe 2005 Raven Mount annual report and accounts. The independent auditors'report on the 2005 Raven Mount accounts was unqualified. The financialinformation in this document does not constitute statutory financial statementswithin the meaning of section 240 of the Companies Act 1985. 2. Net interest receivable/(payable) and similar charges are as follows: Half Year Half Year Full 30 June 30 June Year 2006 2005 2005 £'000 £'000 £'000GroupInterest payable (1) (96) (156)Interest receivable 588 385 699 587 289 543Net return on amount charged to pension scheme - - (354)Net interest receivable 587 289 189Joint venturesInterest payable - (2) (23)Interest receivable - - 29 - (2) 6 3. The taxation charge relates to the utilisation of part of the deferred taxasset created in prior years. No current tax is expected to arise in thecurrent period. 4. A Final Dividend for the year to 31 December 2005 of 0.5p per Ordinaryshare was paid to shareholders on 3 June 2006. The directors propose to pay anInterim Dividend of 0.6p per Ordinary share and a Special Dividend of 5.0p perOrdinary share. 5. The basic earnings/(loss) per Ordinary share is calculated in accordancewith Financial Reporting Standard 22 on the profit for the period of £211,000(loss £178,000 for the full year to December 2005 and profit £2,178,000 for the6 months to June 2005) and 106.4 million (89.1 million for the full year toDecember 2005 and 82.4 million for the 6 months to June 2005) being the weightedaverage number of Ordinary shares in issue excluding those owned by the EmployeeShare Trust. Share options in place during the period will be dilutive, thoughthe effect is immaterial so there is no difference between basic and dilutedearnings/(loss) per share. Shareholders' funds per Ordinary share are 83.7p (84.1p at 31 December 2005 and86.1p at 30 June 2005). The calculation is based on the shareholders' funds atthe period end of £89.4 million (£89.3 million at December 2005 and £73.7million at June 2005) divided by the number of shares in issue at the period endamounting to 106.8 million shares (106.3 million at December 2005 and 85.6million at June 2005). Diluted shareholders' funds per share are 84.0p (78.9p at 30 June 2005 and 81.6pat 31 December 2005 based on the diluted shareholders' funds and dilutedOrdinary shares shown below: Half Year Half Year Full 30 June 30 June Year 2006 2005 2005 £'000 £'000 £'000Shareholders' funds per balance sheet 89,407 73,675 89,316Convertible Ordinary £1 shares 6 6 6Deferred consideration payable in Ordinary shares 7,286 14,903 7,286 Cash received from share options 6,567 - -Diluted shareholders' funds 103,266 88,584 96,608 '000 '000 '000Ordinary shares in issue 106,786 85,608 106,261Shares issuable as deferred consideration at 30 June 2006 share price 123.0 p (HY 05: 61.5 p, FY 05: 74.5p) 5,924 24,233 9,780Shares issuable on conversion of Convertible Ordinary shares 2,376 2,376 2,376Shares issuable under share options 7,841 - -Diluted Ordinary shares as at 30 June 2006 122,927 112,217 118,417 6. The deficit on the pension scheme included in the interim balance sheet isthe amount calculated at the prior year end, adjusted for contributions in thecurrent period. No revaluation of assets and liabilities of the scheme has beencarried out in the period and, accordingly, there is no gain or loss shown inthe statement of total recognised gains and losses in respect of the interimperiod. Actuarial gains and losses for the full year and the surplus/ deficitat the end of the year will be presented in the annual financial statements forthe year ending 31 December 2006. Independent review report to Raven Mount plc Introduction We have been instructed by the Company to review the financial information forthe six months ended 30 June 2006 which comprises the consolidated profit andloss account, statement of consolidated total recognised gains and losses,consolidated balance sheet, consolidated cash flow statement and accompanyingnotes. We have read the other information contained in the interim report andconsidered whether it contains any apparent misstatements or materialinconsistencies with the financial information. Our report has been prepared in accordance with the terms of our engagement toassist the company in meeting the requirements of the rules of the London StockExchange for companies trading securities on the Alternative Investment Marketand for no other purpose. No person is entitled to rely on this report unlesssuch a person is a person entitled to rely upon this report by virtue of and forthe purpose of our terms of engagement or has been expressly authorised to do soby our prior written consent. Save as above, we do not accept responsibilityfor this report to any other person or for any other purpose and we herebyexpressly disclaim any and all such liability. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by the directors. The directors areresponsible for preparing the interim report in accordance with the rules of theLondon Stock Exchange for companies trading securities on the AlternativeInvestment Market which require that the half-yearly report be presented andprepared in a form consistent with that which will be adopted in the company'sannual accounts having regard to the accounting standards applicable to suchannual accounts. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board for use in the United Kingdom by auditorsof fully listed companies. A review consists principally of making enquiries ofgroup management and applying analytical procedures to the financial informationand underlying financial data and based thereon, assessing whether theaccounting policies and presentation have been consistently applied unlessotherwise disclosed. A review excludes audit procedures such as tests ofcontrols and verification of assets, liabilities and transactions. It issubstantially less in scope than an audit performed in accordance withInternational Standards on Auditing (UK and Ireland) and therefore provides alower level of assurance than an audit. Accordingly we do not express an auditopinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 June 2006. BDO STOY HAYWARD LLPChartered Accountants London 19 September 2006 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
RAV.L