Mineral & Fin Regulatory News (MAFL)

22 Jun 2006 07:00

Raven Capital Inc22 June 2006 22 June 2006 Raven Capital Inc. ("Raven Capital" or "the Company") Interim Results For the six months ended 31 March 2006 Chairman's statement I am pleased to present the interim results of Raven Capital covering the sixmonth period to 31 March 2006. The Company was admitted to AIM on 15 December2004 through an initial placing of 8 million ordinary shares that generated netfunds for the Company of £260,000. The results are prepared for the first time in accordance with InternationalFinancial Reporting Standards (IFRS) and in order to give the greatest level ofclarity, we have prepared a full set of notes which include a reconciliation to the results on a UK GAAP basis. The results are in line with expectations, andshow a loss before tax of £66,000. In its AIM admission document dated 1 December 2004, the Company stated that itwould initially seek to develop a group specialising in the Hedge Fund sectorthrough acquisition of target companies or joint venture transactions. TheBoard investigated a number of potential opportunities, none of which yourboard considered to be sufficiently attractive to put before shareholders andin December 2005 the Board was approached by EP Holding (S) Pte Limited ("EP"),an investment company based in Singapore which subsequently invested additionalfunds into the Company of £150,000 through a placing of 13,300,000 new ordinaryshares, representing approximately 29.99% of the enlarged share capital of the Company. On 3 April 2006 the London Stock Exchange suspended trading in the Company'ssecurities on AIM as a consequence of the Company not having completed areverse takeover or substantially implemented its investing strategy inaccordance with the timetable specified under AIM Rule 8 relating to investingcompanies. I am pleased to inform shareholders that the Board has identified a suitableacquisition opportunity in the international marketing services sector. Whilstthis opportunity is not within the market sector originally envisaged by theCompany, your Board believes that it is a suitable investment for the Companythat will enhance shareholder value. The Company has signed non-binding headsof terms in relation to this opportunity, and further announcements will bemade as appropriate. As this opportunity does not fall within the businesssector originally envisaged in the Company's AIM admission document, theobligation on shareholders that participated in the placing on AIM admission to participate in a further placing on Completion of the Company's firstacquisition will not apply in the event that the acquisition proceeds. The Board is pleased with the progress made to date and looks forward to thefuture with confidence. Graham Butt Chairman 22 June 2006 Income StatementFor the six months ended 31 March 2006 Note 6 months 19 November ended 31 2004 to March 30 September 2006 2005 Unaudited Unaudited £'000 £'000 Continuing operations Administrative expenses (68) (362) Operating loss (68) (362) Finance income 5 2 4 Loss for the period before taxation (66) (358) Tax income 7 - - Net loss for the period (66) (358) Loss per ordinary share- Basic 8 (0.19p) (1.20p) Statement of Changes in EquitySix months ended 31 March 2006 Share Share Share Profit and Total capital premium based loss payment account reserve £'000 £'000 £'000 £'000 £'000 At 19 November 2004 - - - - -Issue of new shares 78 399 - - 477Cost of issue of new shares - (166) - - (166)Net loss for the period - - - (358) (358)Share based payment - - 20 - 20At 30 September 2005 78 233 20 (358) (27) Issue of new shares 33 117 - - 150Net loss for the period - - - (66) (66)At 31 March 2006 111 350 20 (424) 57 Balance SheetAt 31 March 2006 At 31 At 30 March September 2006 2005 Unaudited Unaudited Note £'000 £'000 Assets CurrentTrade and other receivables 9 3 4Cash and cash equivalents 137 43Total assets 140 47 LiabilitiesCurrentTrade and other payables 10 83 74Total liabilities 83 74 EquityShare capital 12 111 78Share premium 350 233Share based payment reserve 20 20Profit and loss account (424) (358)Total equity 57 (27) Total equity and liabilities 140 47 Cash Flow StatementFor the six months ended 31 March 2006 6 months 19 November ended 31 2004 to March 30 September 2006 2005 Unaudited Unaudited £'000 £'000 Operating activitiesOperating loss (68) (362)Interest received 2 4Change in trade and other receivables 1 (4)Change in trade and other payables 9 74Net cash outflow from operating activities (56) (288) Financing activitiesIssue of shares 150 477Share issue costs - (146)Net cash inflow from financing activities 150 331 Net increase in cash and cash equivalents 94 43Cash and cash equivalents at beginning of period 43 -Cash and cash equivalents at end of period 137 43 Notes to the Interim ReportFor the six months ended 31 March 2006 1. General Information The information for the period ended 30 September 2005 does not constitutestatutory accounts as defined in Section 240 of the Companies Act 1985. Thefigures for the period ended 30 September 2005 have been extracted from the 2005statutory financial statements prepared under UK GAAP and adjusted wherenecessary in order to comply with International Financial Reporting Standards(IFRS) as shown in note 3. The auditors' report on those accounts wasunqualified and did not contain a statement under section 237(2) of theCompanies Act 1985. 2. Accounting Policies Basis of preparation The Company was incorporated as a Corporation in the Cayman Islands which doesnot prescribe the adoption of any particular accounting framework. The Board hadpreviously resolved that the Company would follow UK Accounting Standards andapply the Companies Act 1985 when preparing its annual financial statements. The Board have now resolved that Raven Capital Inc. will adopt IFRS for thefirst time in its financial statements for the year ending 30 September 2006.This interim financial report has therefore been prepared under the historicalcost convention and in accordance with International Accounting Standard 34"Interim Financial Reporting" and the requirements of International FinancialReporting Standard 1 "First Time Adoption of International Reporting Standards"relevant to interim reports. The transition to IFRS reporting has resulted in a number of changes in thereported financial statements, notes thereto and accounting principals comparedto the previous annual report. Note 3 provides further details on the transitionfrom UK GAAP to IFRS. The principal accounting policies of the Company are set out below. Taxation Current income tax assets and/or liabilities comprise those obligations to, orclaims from, fiscal authorities relating to the current or prior reportingperiod, that are unpaid at the balance sheet date. They are calculated accordingto the tax rates and tax laws applicable to the fiscal periods to which theyrelate, based on the taxable result for the year. All changes to current taxassets or liabilities are recognised as a component of tax expense in the incomestatement. Deferred income taxes are calculated using the liability method on temporarydifferences. This involves the comparison of the carrying amounts of assets andliabilities in the consolidated financial statements with their respective taxbases. In addition, tax losses available to be carried forward as well as otherincome tax credits to the Company are assessed for recognition as deferred taxassets. Deferred tax liabilities are always provided for in full. Deferred tax assetsare recognised to the extent that it is probable that they will be able to beoffset against future taxable income. Deferred tax assets and liabilities arecalculated, without discounting, at tax rates that are expected to apply totheir respective period of realisation, provided they are enacted orsubstantively enacted at the balance sheet date. Most changes in deferred tax assets or liabilities are recognised as a componentof tax expense in the income statement. Only changes in deferred tax assets orliabilities that relate to a change in value of assets or liabilities that ischarged directly to equity are charged or credited directly to equity. Financial assets The Company's financial assets include cash and trade and other receivables. All financial assets are recognised on their settlement date. All financialassets are initially recognised at fair value, plus transaction costs. Non-compounding interest and other cash flows resulting from holding financialassets are recognised in profit or loss when received, regardless of how therelated carrying amount of financial assets is measured. Trade and other receivables are provided against when objective evidence isreceived that the Company will not be able to collect all amounts due to it inaccordance with the original terms of the receivables. The amount of thewrite-down is determined as the difference between the asset's carrying amountand the present value of estimated future cash flows. Cash and cash equivalents Cash and cash equivalents comprise cash at bank and in hand. Equity Share capital is determined using the nominal value of shares that have beenissued. The share premium account represents premiums received on the initial issuing ofthe share capital. Any transaction costs associated with the issuing of sharesare deducted from share premium, net of any related income tax benefits. Retained earnings include all current and prior period results as disclosed inthe income statement. Share based payments All share-based payment arrangements are recognised in the financial statements.The Company does not currently operate equity-settled share-based remunerationplans for remuneration of its employees but has issued a share warrant. All services received in exchange for the grant of any share-based remunerationare measured at their fair values. These are indirectly determined by referenceto the fair value of the share options/warrants awarded. Their value isappraised at the grant date and excludes the impact of any non-market vestingconditions (for example, profitability and sales growth targets). Share-based payments are ultimately recognised as an expense in profit or lossor included as part of the cost of share issues with a corresponding credit tothe share based payment reserve, net of deferred tax where applicable. Ifvesting periods or other vesting conditions apply, the expense is allocated overthe vesting period, based on the best available estimate of the number of shareoptions/warrants expected to vest. Non-market vesting conditions are included inassumptions about the number of options that are expected to become exercisable.Estimates are subsequently revised, if there is any indication that the numberof share options/warrants expected to vest differs from previous estimates. Noadjustment is made to the expense or share issue cost recognised in priorperiods if fewer share options/warrants ultimately are exercised than originallyestimated. Upon exercise of share options/warrants, the proceeds received net of anydirectly attributable transaction costs up to the nominal value of the sharesissued are allocated to share capital with any excess being recorded as sharepremium. Financial liabilities The Company's financial liabilities include trade and other payables. Financial liabilities are recognised when the Company becomes a party to thecontractual agreements of the instrument. All interest related charges arerecognised as an expense in "finance cost" in the income statement. Trade payables are recognised initially at their nominal value and subsequentlymeasured at amortised cost less settlement payments. Dividend distributions to shareholders are included in 'other short termfinancial liabilities' when the dividends are approved by the shareholders'meeting. Other provisions, contingent liabilities and contingent assets Other provisions are recognised when present obligations will probably lead toan outflow of economic resources from the Company and they can be estimatedreliably. Timing or amount of the outflow may still be uncertain. A presentobligation arises from the presence of a legal or constructive commitment thathas resulted from past events, for example, legal disputes or onerous contracts. Provisions are measured at the estimated expenditure required to settle thepresent obligation, based on the most reliable evidence available at the balancesheet date, including the risks and uncertainties associated with the presentobligation. Any reimbursement expected to be received in the course ofsettlement of the present obligation is recognised, if virtually certain as aseparate asset, not exceeding the amount of the related provision. Where thereare a number of similar obligations, the likelihood that an outflow will berequired in settlement is determined by considering the class of obligations asa whole. In addition, long term provisions are discounted to their presentvalues, where time value of money is material. All provisions are reviewed at each balance sheet date and adjusted to reflectthe current best estimate. In those cases where the possible outflow of economic resource as a result ofpresent obligations is considered improbable or remote, or the amount to beprovided for cannot be measured reliably, no liability is recognised in thebalance sheet. Probable inflows of economic benefits to the Company that do not yet meet therecognition criteria of an asset are considered contingent assets. 3. Transition to International Financial Reporting Standards The transition from previous UK GAAP to IFRS has been made in accordance withIFRS 1, "First-time Adoption of International Financial Reporting Standards".The Company's financial statements for the six months ended 31 March 2006 andthe comparatives presented for the period ended 30 September 2005 comply withall presentation recognition and measurement requirements of IFRS applicable foraccounting periods commencing on or after 1 January 2005. The following reconciliations and explanatory notes thereto describe the effectsof the transition for the financial period 2005. All explanations should be readin conjunction with the IFRS accounting policies of Raven Capital Inc.. Since Raven Capital Inc. was incorporated on 19 November 2004 that is thetransition date to IFRS. As that was the date of incorporation of the Company noreconciliation of equity is required at that date. The re-measurement of balance sheet items as at 30 September 2005 may besummarised as follows: Reconciliation as at 30 September 2005 UK GAAP Effect of IFRS transition £'000 £'000 £'000 Share premium 253 (20) 233Share based payment reserve - 20 20Total adjustment to assets and equity 253 - 253 There is no difference between the profit and loss reported under UK GAAP forthe period ended 30 September 2005 and the profit and loss as reported underIFRS. The Company has modified its former balance sheet and income statement structureon transition to IFRS. The only change is to recognise the share based paymentin connection with the warrants issued to the Company's Nominated Advisor aspart of their fee for services provided in connection with the Admission of theCompany to the AIM market in December 2004. 4. Segmental Reporting (a) By business segment (primary segment): As defined under International Accounting Standard 14 (IAS14), the only materialbusiness segment the Company has is that of an investment company. (b) By geographical segment (secondary segment): Under the definitions contained in IAS 14, the only material geographic segmentthat the Company operates in is currently Switzerland. 5. Finance Income 6 months 19 November ended 31 2004 to March 30 September 2006 2005 Unaudited Unaudited £'000 £'000 Interest on bank deposits 2 4 6. Employees Remuneration Employee benefits expense Expense recognised for employee benefits is analysed below: 6 months 19 November ended 31 2004 to March 30 September 2006 2005 Unaudited Unaudited £'000 £'000 Directors fees 12 25 The average number of persons (including directors)employed by the Company during the period was: 2 3 7. Tax Income There is no tax charge for either period. The Company does not operate in theUnited Kingdom and there is no tax arising on its operations. The relationshipbetween the expected tax expense at 30% and the tax expense actually recognisedin the income statement can be reconciled as follows: 6 months 19 November ended 31 2004 to March 30 September 2006 2005 Unaudited Unaudited £'000 £'000 Loss for the period before taxation (66) (358) Tax rate 30% 30% Expected tax expense (20) (107) Losses not recognised as deferred tax asset 20 107Actual tax income - - 8. Loss per share The calculation of the basic loss per share is based on the net loss for theperiod of £66,000 (period ended 30 September 2005 : £358,000) divided by theweighted average number of shares in issue during the period of 35,085,899(period ended 30 September 2005 : 29,941,589). The impact of the warrants on the loss per share is anti-dilutive. 9. Trade and Other Receivables 31 March 30 September 2006 2005 £'000 £'000 Trade and other receivables, gross 3 4Impairment of trade and other receivables - -Trade and other receivables, net 3 4 Trade and other receivables are usually due within 30 - 60 days and do not bearany effective interest rate. The fair value of these short term financial assets is not individuallydetermined as the carrying amount is a reasonable approximation of fair value. 10. Trade and Other Payables 31 March 30 September 2006 2005 £'000 £'000 Trade and other payables 83 74 The fair value of trade and other payables has not been disclosed as, due totheir short duration, management considers the carrying amounts recognised inthe balance sheet to be a reasonable approximation of their fair value. 11. Deferred Tax Assets and Liabilities There are no deferred taxes arising from temporary differences at 31 March 2006or 30 September 2005. 12. Share Capital 31 March 30 September 2006 2005 £'000 £'000Authorised4,000,000,000 ordinary shares of 0.25p 10,000 10,000 Allotted, issued and fully paid44,366,668 (31,066,668) ordinary shares of 0.25p 111 78 Allotments during the period On 4 February 2006 the Company issued 13,300,000 new ordinary shares of 0.25p at11.3p per share in order to provide funds for the Company to allow it tocontinue to fund the search for a suitable investment opportunity. Thedifference between the total nominal value of the shares issued of £33,250 andthe total consideration received of £150,000 has been credited to the sharepremium account (£116,750). Warrants On 25 November 2004 a warrant was issued to Strand Partners Limited, theCompany's Nominated Advisor, in connection with their role in the admission ofthe Company to the AIM market. The warrant entitles Strand Partners Limited tosubscribe, at a price of 10p per share, for such number of ordinary shares asare equivalent (on a fully diluted basis) to one per cent. of the issuedordinary share capital of the Company at that time. The issued warrant may beexercised at any time during the period from 15 December 2004 to 14 December2009. The fair value of warrants granted was determined using the Black-Scholesvaluation model. Significant inputs into the calculations were: - share price of 5p per share at date of grant of warrant - exercise price of 10p per warrant as detailed above - 50% volatility based on expected share price - a risk free interest rate of 5.0%. In total £20,000 of share based expense has been included in the share premiumaccount as a cost of the admission to AIM which gave rise to share based paymentreserve. No liabilities were recognised due to share based payment transactions. 13. Related Party Transactions In the period ended 31 March 2006 Corvus Capital Inc., a shareholder in theCompany, settled expenses on behalf of the Company amounting to £10,000 (periodended 30 September 2005 : £40,000). 14. Risk Management Objectives and Policies The Company is exposed to a variety of financial risks which result from bothits operating and investing activities. The Company's risk management is closelymonitored by the board of directors, and focuses on actively securing theCompany's short to medium term cash flows by minimising the exposure tofinancial markets. Raven Capital Inc. does not actively engage in the trading of financial assetsfor speculative purposes nor does it write options. The most significantfinancial risks to which the Company is exposed to are described below: Credit risk Generally, the maximum credit risk exposure of financial assets is the carryingamount of the financial assets as shown on the face of the balance sheet (or inthe detailed analysis provided in the notes to the financial statements). Creditrisk, therefore, is only disclosed in circumstances where the maximum potentialloss differs significantly from the financial asset's carrying amount. The Company's trade and other receivables are actively monitored to avoidsignificant concentrations of credit risk. Cash flow risk The Company seeks to manage financial risks to ensure sufficient liquidity isavailable to meet foreseeable needs and to invest cash assets safely andprofitably. Short term flexibility is achieved by the raising of equity and theuse of current accounts. Enquiries:John Bick Tel: 07917 649 362 This information is provided by RNS The company news service from the London Stock Exchange