20th Sep 2007 07:01
Raven Mount plc20 September 2007 20 September 2007 RAVEN MOUNT PLC ("Raven Mount" or the "Company") INTERIM STATEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2007 HIGHLIGHTS • Group loss before tax was £3.9 million (2006: profit £0.6 million) on turnover of £32.3 million (2006: £42.7 million). • Property Fund Management business earns fees as at 30 June 2007 on US$969 million (31 December 2006: US$456 million) committed funds by Raven Russia Limited and generated a management fee during H1 2007 of £3.0 million (2006: £1.0 million). • Independent Living business commenced development on four sites comprising 408 units, construction completions of first phases in 2008. • £15.2 million net debt as at 30 June 2007 and unutilised facilities of approximately £38 million. • Interim dividend of 0.8p per Ordinary share increased by 33% (2006: 0.6p). • Pension Scheme after tax 'surplus' of £0.5 million (2006: deficit £4.9 million). • Adjusted shareholders' funds per share of 71.2p (2006: 78.1p). • Construction completed on all old Swan Hill developments, all remaining units of the Swindon development under offer. Commenting on the results, Anton Bilton, Executive Chairman, said: "We are pleased that our cautious approach over the last two years has provided us with a lowly geared balance sheet and a strong platform for future growth." Bim Sandhu, Chief Executive, said: "The directors are sufficiently confident in the business areas in which ourCompany is investing to propose a 33% increase in the Interim Dividend from 0.6pence to 0.8 pence." Enquiries to: Raven Mount plc 020 7235 0422 Anton Bilton Executive ChairmanBim Sandhu Chief ExecutiveMark Kirkland Finance Director Shore Capital & Corporate Limited 020 7408 4090 Guy Peters CHAIRMAN'S STATEMENT The loss for this interim period is attributable both to the substantial costsof establishing our two new businesses in Russia and the UK and in concludingthe final few chapters in the wind down of the Swan Hill projects. It isfrustrating that these final developments have not led to a profit but equallyit is pleasing that by the end of this year we will have moved on through thatprocess and can begin to focus energy on our new businesses. Our Independent Living business, Audley Court, is going from strength tostrength with construction commenced on all of our sites and a strong set ofreservations taken at the three sites where we have commenced marketing. Wehave various further acquisitions in the pipeline which will be exchanged in thesecond half of the year. Our Property Fund Management business opened new larger offices in Moscow duringthe first half of the year and there is currently a highly experienced team of51 people focusing on managing Raven Russia's growing portfolio. There are 18development and investment projects now under management comprising a total costcommitment of $1.9bn. Despite the high costs associated with establishing this business we remain veryexcited by the prospects for this portfolio that has been assembled at anaverage expected yield of 13% and expect to see significant growth in its valueas yields begin to align with those in Poland, Hungary and the Czech Republic atcirca 7.5%. The world is now a different place to what it was only six weeks ago and we arepleased that our cautious approach over the last two years has provided us witha lowly geared balance sheet and a strong platform for future growth. We are opportunistic in our approach and are ready to take advantage ofsituations as they arise in these turbulent times. I look forward to the next six months with a combination of excitement that weare prepared and trepidation as to where the economy may go. Anton BiltonExecutive Chairman20 September 2007 CHIEF EXECUTIVE'S REPORT Results This is the first period in which we have been required to prepare the accountsof our Group under International Financial Reporting Standards ("IFRS"). Under IFRS our Group generated a loss on ordinary activities before taxation of£3.9 million for the six month period ended 30 June 2007 (2006: profit of £0.6million) on a significantly reduced turnover of £32.3 million (2006: £42.7million). Net assets, however, only decreased marginally from £80.3 million at the yearend to £79.0 million as at 30 June as a result of the retained loss for theperiod after dividends, the downward valuation of the Raven Russia shares,mitigated by the issue of £4.5 million shares as part of the deferredconsideration owed on the purchase of Raven Property Holdings plc ("RPH").Adjusted shareholders' funds per share however decreased more significantly from75.0 pence to 71.2 pence to reflect the loss for the period. The major impact of accounting under IFRS on our balance sheet has been in therecognition of the deferred tax liabilities of £6.6 million and the fair valuingof financial assets by £0.8 million. There has also been an impact in theincome statement in the treatment of sales, where marketing costs are writtenoff as incurred, £0.4 million in the first six months. Shareholders should not be disheartened by the Company slipping into a loss asthis was to be expected as a result of the Company's continuing investment inthe Independent Living and the Property Fund Management businesses and theresulting increase in overheads the rewards of which should become more apparentin next year's results. In addition there was an expected significant reductionin sales in the housebuilding business and we did not have the benefit of a landsale profit of £3.4 million that we had in the comparable period last year. Audley Independent Living As at 30 June, we had commenced development on four sites now comprising 408units and were managing and marketing three additional sites (two on behalf ofNick Sanderson, CEO of Audley, and his business partner) comprising 168 units. We expect construction completions of the first phases on all four currentdevelopment sites, namely St Elphins (127 units), Mote Park (87 units),Inglewood (96 units) and Ilkley (98 units), will take place next year. Weexpect first occupation of units in the first quarter of 2008 for St Elphins andMote Park and in the third quarter for Inglewood and Ilkley. I am pleased toreport that reservations on the sites where we have recently started formalmarketing, St Elphins, Mote Park and Inglewood, have been highly encouraging (27of 37 units released); particularly so in a market sector where clients normallywant to see the finished product before committing. The current grossdevelopment value of the four sites is estimated to be above £140 million. Inaddition, once development is completed, the four operating businesses at thesesites are expected to yield significant operating income. Subsequent to the half year we also purchased the completed 67 unit WillicombePark, Tunbridge Wells site, one of the two properties which we have previouslybeen managing and marketing under the Audley brand for Nick Sanderson and hisbusiness partner. This gives us complete control of one of the assets that hasbeen and continues to be essential in demonstrating the end product to bothpotential purchasers and planners. We currently have a further four development sites in solicitors' hands, three(which would comprise approximately 250 units) of which we expect to exchange ona subject to planning basis before the year end. We are also pursuing a numberof other sites which could form part of the pipeline of projects we would expectto exchange on next year. Property Fund Management The Company continues to make good solid progress in investing, and committingto invest, Raven Russia's funds. Raven Russia now has a high quality investmentportfolio and a series of development joint ventures which, in total, willultimately comprise 1.9 million sq. m (20.5 million sq. ft.) with a currentestimated end value of US$1.9 billion. In addition to this, Raven Russia has adeal pipeline with a potential end value of US$2.0 billion. Further propertydetails are set out in the Interim Report for Raven Russia which is available onRaven Russia's web site, which can be accessed through our own websitewww.theravengroup.co.uk or directly at www.ravenrussia.co.uk. During the period the Company earned £3.0 million (2006: £1.0m) on its core basefee of 2%. As at 30 June, our Company was earning its base management fee onUS$969 million (31 December 2006: US$456 million) which translates into anannualised fee of US$19.4 million or £9.7 million at an exchange rate of $2:£1.We expect this figure to increase substantially over the next 18 months as RavenRussia builds out its existing projects. This involvement in the developmentprocess has however resulted in substantially increased overheads. It is disappointing that the Raven Russia share price, having shown some sign ofrecovery in the first half of the year, has been hit in the last few months by acombination of political problems between the UK and Russia, a general sentimentagainst commercial property, a general aversion to assets or regions that areperceived to be riskier, the general credit crunch and, only somewhatperversely, the relatively very liquid nature of the Raven Russia shares whichhave enabled some investors to exit or reduce their exposure when they cannot doso in similar but less liquid stocks. I believe the fundamentals of the business proposition have not changed and theRaven Russia share price is suffering for recklessness in other sectors andother regions. Raven Russia is and always has been a medium to long termproposition but the current markets cannot see beyond this week and whereaspreviously they did not seem to see risk anywhere now they see it everywhere.However, I think it was Keynes who alluded to the view that the markets can beirrational for a lot longer than some investors can be solvent! Residential Development I am pleased to announce that we have completed the construction of the lastmajor Swan Hill site in Swindon and all remaining units are under offer. Wetherefore expect the entirety of the £11.2 million of stock for this property tobe converted into cash by the year end. This was achieved through a largenumber of investor sales at discounts to asking prices. Legacy issues willremain and will have to be dealt with over the next few years in relation to theold Swan Hill sites, particularly those where Swan Hill acted as maincontractor. During the period we repaid all the bank debt on our 247-unit New EnglandQuarter, Brighton station joint venture site and we expect to receiveapproximately £5.7 million of cash in the current and corresponding period nextyear through the realisation of stock as sales come through. Of the remaining64 units, 11 are currently exchanged, 7 under offer with 46 remaining to besold. We are expecting to complete development of our 54-unit Lewes scheme(www.theprintworkslewes.co.uk) by June 2008 and we have exchanged on 21 of the40 private units with a further 3 reserved. We have also exchanged on theremaining 14 social housing units with Southern Housing. Fortunately, theflooding in Sheffield did not serve to materially delay construction on ourSheffield Phase 1 site and we expect this 149 unit scheme(www.kelhamriverside.com) to now be completed before December 2008. We havecurrently exchanged sales on 33 units and would hope to substantially increasethis as the building comes out of the ground. We have yet to decide whether tosell or develop the 339-unit Sheffield Phase II site. Development has recentlycommenced on the 51-unit site in the centre of Brackley(www.collegeplacebrackley.co.uk), which also has approximately 9,000 sq ft ofcommercial space, and this is expected to be completed in the last quarter ofnext year. Marketing on this site will commence this month. I expressed my frustration on the planning issues on our joint venture secondhomes The Lakes, Lechlade, development (www.thelakesbyyoo.com) in my last yearend report. These frustrations have continued and have lately not been helpedby flooding issues throughout the country. On the one hand and understandablythese have served to distract the Environment Agency onto other mattersrequiring more immediate action. However, these very floods have served todemonstrate the integrity of what we and our team of professionals have beensaying in relation to our site. As I write this report we remain hopeful (andhope sometimes is the only thing that can be relied on in such situations) thatthe issue will shortly be resolved! Nevertheless, the delay has been costly tous as it has lead to increased holding costs and has made us miss the veryvaluable summer marketing season for this site. More generally, we continue to investigate suitable resort/second homeopportunities in the UK and overseas applying a strict acquisition criteria. Swan Hill Pension Scheme The 2006 Report and Accounts stated that under Financial Reporting Standard 17 'Retirement Benefits' ("FRS 17"), the deficit disclosed in respect of the closedSwan Hill Pension Scheme decreased from £6.1 million as at 31 December 2005 to£0.6 million at 31 December 2006 on an after tax basis. Under IAS 19, the IASequivalent of FRS 17, we do not update pension scheme valuations at the halfyear although, allowing for the annual £1.6 million deficit contribution made inJanuary 2007, the revised after tax provision has, everything else being equal,decreased to become a pension 'surplus' of £0.5 million. However, as the recentturbulence in world markets has demonstrated, not for the first time, a 'surplus' can be a very nebulous short term concept! We will continue to monitorand remain vigilant on an issue where progress needs to viewed over the mediumto long term rather than over the vagaries of a six monthly reporting cycle. Acquisition of RPH Under the terms of the RPH Acquisition Agreement the maximum consideration, allpayable in shares, was £39.9 million of which £38.4 million has been paid todate with a balance of £1.5 million remaining following the issue of 2,744,021shares at an average share price of £1.62 totalling £4.5 million of value duringthe period. The three year period in relation to which additional considerationcan be issued expires this December and I will be able to provide you with afinal report on the acquisition with the full year results of the Company. Dividends The Directors are sufficiently confident in the business areas in which ourCompany is investing to propose a 33% increase in the Interim Dividend from 0.6pence to 0.8 pence. This will be payable to shareholders whose name appears onthe Register of Members as at 12 October 2007 and will be payable on 19 October2007. Prospects Generally speaking, any rational person who has experienced the drying up ofliquidity previously should be feeling increasingly nervous if the currentuncertainty in the debt markets continues for any length of time. The good news is that we are in a solid position to weather any maelstrom and ina fair position to take advantage of any opportunities that arise. We arecurrently lowly geared which is partly a reflection of our refusal to pay forassets that we thought overvalued. Cash is king in the current environment andwe have an increasingly strong, regular and long term cash flow from our fundmanagement business. Furthermore, in Audley we have developed a highlyattractive Independent Living business which has an extremely robust businessmodel and which is therefore eminently fundable from a banking perspective andon which our first sales should commence in the next six months. This is not tosay that we will be unaffected by a major credit crunch; we all will beprivately and corporately to varying degrees, but to say that we are in a goodposition to be able to cope with it. We remain highly confident in thesebusinesses. Having said that, the only thing I feel certain of at this point in time iscontinuing uncertainty and we are planning accordingly. Bim SandhuChief Executive20 September 2007 Consolidated Income Statement Unaudited Unaudited Unaudited Six months to Six months to Year to 30 June 30 June 31 December Notes 2007 2006 2006 £'000 £'000 £'000 Revenue 32,307 42,680 71,781Cost of sales (29,188) (37,246) (60,769) Gross profit 3,119 5,434 11,012Administrative expenses (7,508) (5,468) (12,858)Other income 2 238 - 386 Operating loss (4,151) (34) (1,460)Finance income 3 639 588 1,712Finance cost 3 (204) (1) (56)Share of (loss)/profit of joint ventures (204) 4 70 (Loss)/profit before tax (3,920) 557 266Tax 4 211 (509) (1,427) (Loss)/profit for the period (3,709) 48 (1,161) Attributable toEquity holders of the parent (3,002) 438 (247)Minority interest (707) (390) (914) (3,709) 48 (1,161) Basic (loss)/earnings per Ordinary share 6 (2.7) p 0.4 p (0.2) pAdjusted Shareholders' funds per Ordinary share 6 71.2 p 78.1 p 75.0 p Consolidated statement of recognised income andexpenses Unaudited Unaudited Unaudited Six months to Six months to Year to 30 June 30 June 31 December 2007 2006 2006 £'000 £'000 £'000 Losses on revaluation of available for sale investments (1,701) (2,546) (647)Tax on items recognised directly in equity 510 764 194(Loss)/profit for the period (3,709) 48 (1,161) Total recognised income and expense in the period (4,900) (1,734) (1,614) Attributable toEquity holders of the parent (4,193) (1,344) (700)Minority interest (707) (390) (914) (4,900) (1,734) (1,614) Consolidated balance sheet Unaudited Unaudited Unaudited 30 June 30 June 31 December 2007 2006 2006 £'000 £'000 £'000Non-current assets Plant and equipment 789 331 363 Investment in joint ventures (159) 39 34 Available for sale investments - 49 49 Deferred tax assets 349 2,287 552 Retirement benefit obligation 663 - - Total non-current assets 1,642 2,706 998 Current assets Inventories 82,982 69,508 65,105 Trade and other receivables 16,535 8,939 12,891 Available for sale investments 18,135 13,037 18,197 Cash and cash equivalents 2,071 34,227 16,053 Total current assets 119,723 125,711 112,246 Total assets 121,365 128,417 113,244 Current liabilities Trade and other payables (16,616) (15,785) (15,178)Tax liabilities - (11) -Bank loans and overdrafts (5,886) (29) (7,287)Short term provisions (1,835) (2,219) (1,894)Total current liabilities (24,337) (18,044) (24,359)Non-current liabilitiesBank loans (11,431) (14,549) -Retirement benefit obligation - (6,944) (1,107)Deferred tax liabilities (6,559) (7,490) (7,509) Total non-current liabilities (17,990) (28,983) (8,616) Total liabilities (42,327) (47,027) (32,975) Net assets 79,038 81,390 80,269 Equity Called up share capital 111 112 108 Share premium account 2,418 2,413 2,418 Other reserves 99,783 93,639 95,329 Retained earnings (21,292) (14,023) (16,304) Equity attributable to equity holders of the parent 81,020 82,141 81,551Minority interest (1,982) (751) (1,282) Total equity 79,038 81,390 80,269 Unaudited Unaudited Unaudited Six months Six months Year to to to 30 June 30 June 31 December 2007 2006 2006 £'000 £'000 £'000Cashflow statement (Loss)/profit before tax (3,920) 557 266 Finance income (net) (435) (587) (1,656) Share of loss/(profit) of joint ventures 204 (4) (70) Operating loss (4,151) (34) (1,460)Adjustments for: Other income (238) - (386) Depreciation charge 62 56 133 Share based payment charge 317 257 554 (Decrease)/increase in provisions (59) 362 37 Operating cash flows before movements in working capital (4,069) 641 (1,122) (Increase)/decrease in inventories (17,877) 19,792 24,264 Increase in receivables (961) (4,579) (3,915) Increase in payables 5,895 258 1,639 Pension contributions (1,770) (1,770) (1,770) (14,713) 13,701 20,218 Income taxes paid (36) (96) -Interest paid (204) - (68) (240) (96) (68) Net cash flows from operating activities (19,022) 14,246 19,028 Investing activitiesInterest received 639 587 1,303Dividends received 238 - 242Purchase of current asset investments (238) - (4,718)Amounts invested in joint ventures (4,035) - (5,772)Purchase of plant and equipment (488) (53) (162) Net cash flows from investing activities (3,884) 534 (9,107) Financing activitiesDividends paid (1,106) (798) (6,821)Issue of ordinary shares - 420 420New bank loans raised 11,431 4,712 -Repayment of bank loans (1,401) - (2,580) Net cash used in financing activities 8,924 4,334 (8,981) Net (decrease)/increase in cash and cash equivalents (13,982) 19,114 940 Cash and cash equivalents at beginning of period 16,053 15,113 15,113 Cash and cash equivalents at end of period 2,071 34,227 16,053 Transition to International Financial ReportingStandards ('IFRS') 30 June 31 December 31 December 2006 2006 2005 £'000 £'000 £'000 Profit before tax under UK GAAP as reported 579 543 2,305 IFRS adjustments:Sales and marketing expenditure write off c (22) (145) (205)Negative goodwill elimination - (132) 132 Profit before tax under IFRS 557 266 2,232 Equity under UK GAAP as reported 89,407 87,149 89,316 IFRS adjustments:Deferred tax on inventories deferred consideration a (7,314) (6,763) (7,556)Mark to market of available for sale investments b 587 2,485 3,133Deferred tax liability on excess of fair value of investments b (176) (746) (940)Sales and marketing expenditure write off c (707) (820) (684)Deferred tax asset on sales and marketing expenditure write off c 212 246 204Negative goodwill elimination 132 - 132 IFRS adjustments (7,266) (5,598) (5,711) Equity under IFRS 82,141 81,551 83,605 The principal reasons for the adjustments shown in the reconciliations between UK GAAPand IFRS are set out below: a Under UK GAAP the Group was not permitted to recognise the deferred tax liability on the deferred consideration paid in shares in respect of planning valuation gains on properties acquired as a result of the RPH acquisition. b Under UK GAAP the Group's policy was to carry current asset investments in the balance sheet at cost less any provision required for permanent diminution in value. Under IFRS, investments classified as available for sale are carried at fair value and movements in fair value are accounted for through equity. c Under IAS 2 'Inventories', costs relating to sales and marketing activities on property developments have been written off as incurred through cost of sales. The policy under UK GAAP was to expense the expenditure against the sales of those developments. Notes to the financial statements 1. Accounting Policies Basis of preparation The interim financial statements have been prepared in accordance with International Financial Reporting Standards as endorsed by the European Union ('IFRS') for the first time. The disclosures required by IFRS 1 concerning the transition from UK GAAP to IFRS are given in the Transition to International Financial Reporting Standards table. The interim financial information has been prepared under the principal accounting policies set out below. Consolidation The interim report consolidates the financial statements of Raven Mount plc and its subsidiary and joint venture undertakings drawn up to 30 June 2007. All intra-group balances, income and expenses and profits and losses resulting from intra-group transactions are eliminated in full. Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. Joint ventures In the Group's financial statements, interests in joint ventures are accounted for using the equity method of accounting. The consolidated income statement indicates the Group's share of the joint venture's turnover and includes the Group's share of the operating results, interest, pre-tax results and attributable taxation of such undertakings based on financial statements. In the consolidated balance sheet, the Group's share of the identifiable net assets attributable to its joint ventures is shown separately. Revenue recognition Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for properties and services provided in the normal course of business, net of discounts, VAT and other sales related taxes. The sale of both properties and land are recognised on legal completion. Fees receivable from property and fund management are recognised on provision of the service. Dividend income from investments is recognised when the shareholders' right to receive payment have been established. Pensions The Group ceased accrual to its final salary pension scheme with effect from 31 December 2005. The scheme's funds are administered by a Trustee and are independent of the Group's finances. Contributions are paid to the scheme in accordance with the recommendations of independent actuaries to provide retirement benefits based on benefits accrued as at 31 December 2005. A charge or credit is included in other finance income representing the difference between the increase in the liabilities from the benefits being one year closer to payment and the expected return on the scheme assets. The difference between the value of the scheme assets and its liabilities is included in the balance sheet. Deferred tax in respect of the difference is recognised separately in the balance sheet. Changes in liabilities resulting from changes in assumptions, differences between the actual and expected returns on assets and other experience gains and losses are recognised in the statement of total recognised income and expenses. The Group operates a defined contribution plan for new employees and former members of its final salary pension scheme who are current employees. Contributions to this plan, as well as to personal pension schemes, are charged to the income statement in the period in which they are payable. Dividends In accordance with IAS 10, interim dividends are recognised when they are paid and final dividends are recognised when they are approved by shareholders at a general meeting. Goodwill Goodwill arising on the acquisition of a subsidiary undertaking is the difference between the fair value of the consideration paid and the fair value of the assets, liabilities and contingent liabilities acquired. Positive goodwill is capitalised and subject to an annual impairment review. Negative goodwill is recognised in the income statement immediately on arising. Plant and equipment Depreciation is provided under the straight-line method at the following rates to write off the depreciable element of the leasehold properties and the cost of plant and equipment over their expected useful lives: - Short leasehold properties Over the term of the lease - Equipment 12-1/2-33-1/3% - Fixtures and fittings 10-33-1/3% Leased assets Rentals paid under operating leases are charged to income on a straight-line basis over the period of the relevant lease. Valuation of available for sale investments Available for sale investments held as non-current assets or as current assets are stated at fair value with changes going through equity. The fair value of investments that are actively traded in organised financial markets is determined by reference to quoted market bid prices at the close of business on the balance sheet date. For investments where there is no active market with external investors, fair value is determined using earnings multiples. Inventories Work in progress on property developments is valued at the lower of cost and net realisable value. Costs exclude interest. Long term contracts are assessed on a contract by contract basis and are reflected in the income statement by recording turnover and related costs as contract activity progresses. Where the outcome of each long term contract can be assessed with reasonable certainty before its conclusion, the attributable profit is recognised in the income statement as the difference between the reported turnover and related costs for that contract. Taxation Current taxation Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance sheet date. Deferred tax Deferred tax is provided using the liability method on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax liabilities are recognised for all taxable temporary differences, except: • where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and • in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred tax assets are recognised for all deductible temporary differences, carry-forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax credits and unused tax losses can be utilised except: • where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and • in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each balance sheet date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date. Tax relating to items recognised directly in equity is recognised in equity and not in the income statement. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority. Financial instruments The Group does not hold or issue derivative financial instruments for trading purposes. Financial liabilities and equity Financial liabilities and equity are classified according to the substance of the financial instrument's contracted obligations rather than the financial instrument's legal form. Share based employee remuneration The Group has applied the requirements of IFRS 2 Share-based Payments. In accordance with the transitional provisions, IFRS 2 has been applied to all grants of equity instruments after 7 November 2002 that were unvested as of 1 January 2006. The Group issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured at fair value at the date of grant. The fair value determined at the grant date of the equity-settled, share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of shares that will eventually vest. Fair value is measured by use of a Black-Scholes model. Shares held for Employee Share Schemes and Employee Share Trust Raven Mount plc shares held by the Company are classified in equity as treasury or share scheme shares and are recognised at cost. Consideration received for the sale of such shares is also recognised in equity, with any difference between the proceeds from sale and the original cost being taken to revenue reserves. No gain or loss is recognised in the performance statement on the purchase, sale, issue or cancellation of equity shares. The Group's shareholdings in a subsidiary include shares held by a trust. NOTES 2. Other income Six months to Six months to Year to 30 June 30 June 31 December 2007 2006 2006 £'000 £'000 £'000 Profit on disposal of current asset available for sale investments - - 144Dividends received 238 - 242 238 - 386 3. Net finance income Six months to Six months to Year to 30 June 30 June 31 December 2007 2006 2006 £'000 £'000 £'000GroupFinance cost (204) (1) (56)Finance income 639 588 1,486 435 587 1,430Net return on amount charged to pension scheme - - 226 Net finance income 435 587 1,656 4. Taxation The taxation credit in the period relates principally to the release of part ofthe deferred tax liability established in respect of the deferred considerationon the acquisition of the RPH assets. The taxable profits made on sales of thoseassets in the period have been offset by losses elsewhere in the Group. 5. Dividends A Final Dividend for the year to 31 December 2006 of 1.0p per Ordinary share waspaid to shareholders on 3 June 2007. The Directors propose to pay an InterimDividend of 0.8p per Ordinary share. 6. Loss and shareholders' funds per Ordinary share The basic earnings/(loss) per Ordinary share is calculated in accordance withInternational Accounting Standard 33 on the loss for the period of £3,002,000(loss £247,000 for the full year to 31 December 2006 and profit £438,000 for the6 months to 30 June 2006) and 109.3 million (106.9 million for the full year to31 December 2006 and 106.4 million for the 6 months to 30 June 2006) being theweighted average number of Ordinary shares in issue excluding those owned by theEmployee Share Trust. Share options in place during the period will bedilutive, though the effect is immaterial so there is no difference betweenbasic and diluted earnings/(loss) per share. Shareholders' funds per Ordinary share are 73.1p (75.4p at 31 December 2006 and76.9p at 30 June 2006). The calculation is based on the shareholders' funds atthe period end of £81.0 million (£81.5 million at 31 December 2006 and £82.1million at 30 June 2006) divided by the number of shares in issue at the periodend amounting to 110.8 million shares (108.1 million at 31 December 2006 and106.8 million at 30 June 2006). Adjusted shareholders' funds per share are 71.2p (78.1p at 30 June 2006 and75.0p at 31 December 2006) based on the adjusted shareholders' funds and dilutedOrdinary shares shown below: 30 June 30 June 31 December 2007 2006 2006 £'000 £'000 £'000 Shareholders' funds per balance sheet 81,020 82,141 81,551Convertible Ordinary £1 shares 6 6 6Deferred consideration payable in Ordinary shares 1,138 7,286 5,594Cash receivable from share options 6,377 6,567 6,517 Adjusted shareholders' funds 88,541 96,000 93,668 '000 '000 '000Ordinary shares in issue 110,846 106,786 108,102Shares issuable as deferred consideration at 30 June 2007share price 144.5 p (HY 06: 123p, FY 06: 161.0p) 787 5,924 3,475Shares issuable on conversion of Convertible Ordinary shares 5,048 2,376 5,558Shares issuable under share options 7,660 7,841 7,774 Diluted Ordinary shares as at 30 June 2007 124,341 122,927 124,909 7. Pension scheme The surplus on the pension scheme included in the interim balance sheet is theamount 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 Consolidated statement of recognised income and expenses in respect of theinterim period. Actuarial gains and losses for the full year and the surplus/deficit at the end of the year will be presented in the annual financialstatements for the year ending 31 December 2007. 8. Comparative figures The comparative figures for the year ended 31 December 2006 and the six monthsended 30 June 2006 have been restated for the adoption of IFRS. The comparativesfigures for the year ended 31 December 2006 are not the Company's statutoryaccounts for that financial year. Those accounts, which were prepared under UKGAAP, have been reported on by the Company's auditors and delivered to theRegistrar of Companies. The report of the auditors was unqualified, did notinclude references to any matter to which the auditors drew attention by way ofemphasis without qualifying their report, and did not contain statements undersection 237(2) or (3) of the Companies Act 1985. The financial information inthis document does not constitute statutory financial statements within themeaning of section 240 of the Companies Act 1985. 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 2007 which comprises the consolidated incomestatement, consolidated statement of recognised income and expenses,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 unless-such a person is a person entitled to rely upon this report by virtue of andfor the purpose of our terms of engagement or has been expressly authorised todo so by our prior written consent. Save as above, we do not acceptresponsibility for this report to any other person or for any other purpose andwe hereby expressly 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 2007. BDO STOY HAYWARD LLPChartered Accountants London 20 September 2007 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. Audley has commenced development on four separate schemes, representing a totalof 408 individual units, at St. Elphins (Matlock), Mote House (Maidstone),Inglewood (Berkshire) and Ilkley (Yorkshire). Audley manages existing facilitiesat Willicombe Park (Tunbridge Wells), Flete House (Devon) and Hollins Hall(Harrogate), totaling 168 units under management. In addition, Raven Mount continues to investigate suitable resort/second homeopportunities, 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 650 acres in theCotswolds. The principle shareholders of Raven Mount are Anton Bilton and Bim Sandhu, whosecombined interests equate to 43.2% of the issued share capital. Other majorshareholders are Schroder Investment Management (12.5%), SilchesterInternational Investors (6.9%), Deutsche Bank AG London (5.7%), Laxey (3.4%) andMan Financial (3.2%). www.ravenmount.co.uk This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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