Interim Results
Crest Nicholson PLC
22 June 2006
22nd June 2006
Interim Results Announcement
Crest Nicholson PLC, the residential and mixed use development company, today
announces interim results for the six months ended 30th April 2006.
These are the first results reported under IFRS and with housing revenue
recognised on the basis of legal completion rather than on build completion. The
results for the comparative period have been restated accordingly.
Highlights:
• Turnover up 1% to £355.1m (2005: £350.6m)
• Open market housing completions up 2.5% to 1,062 units (2005: 1,036)
• Affordable housing completions up 72% to 516 units (2005: 300)
• Total completions for 2006 expected to be over 20% higher than in 2005
• Housing turnover up 6.8% to £296.2m (2005: £277.4m)
• Housing forward sales of £354.0m
• Over 85% of the unit sales required for the 2006 target have been secured
• Strong underlying performance. The 2005 P&L and balance sheet
comparatives have been affected by the restatement to IFRS and by changing our
housing revenue recognition point to legal completion in line with our peer
group. The comparatives do not reflect the underlying progress made in the first
half:
• Operating profit of £48.8m (2005: £58.7m)
• Pre-tax profit of £39.2m (2005: £48.9m)
• Earnings per share of 24.6p (2005: 30.5p)
• Short term housing land bank increased to 16,252 plots (2005: 15,903) around 5
years supply
• Development value of contracted short term housing and commercial land
bank maintained at £3.5bn
• Interim dividend increased 7.1% to 4.5p (2005: 4.2p)
• A major new residential development in West Lothian has been secured since
the period end for 2,000 units with outline planning permission and options
on future phases already allocated for development which could total a
further 3,000 units.
Commenting today Stephen Stone, Chief Executive, said:
"The Company has made good progress in the first half, having already secured
over 85% of the unit sales required to meet our full-year target. Completions
are expected to be over 20% higher than in 2005.
"We have confidence in our ability to design and produce environmentally
efficient homes at a competitive cost and to meet the challenge of increasing
regulatory standards for sustainable development. Through the Business
Improvement Initiative and design innovation we expect to deliver steady
improvement in operating margin as the changes made feed through to future unit
completions.
"The steps we are taking to improve the business, combined with a steady market
and a quality land bank, give us confidence that Crest is set on a path of
improving performance, which will deliver results in line with our
expectations."
Enquiries to:
Crest Nicholson PLC Brunswick Group LLP
Stephen Stone, Chief Executive Andrew Fenwick
Peter Darby, Finance Director Robert Gardener
Tel: 020 7404 5959 (on day of announcement) Tel: 020 7404 5959
Tel: 01932 847272 (thereafter)
The analyst presentation will be available on the Company's web site
www.crestnicholson.com from 9.30am
Chief Executive's Statement
RESULTS AND DIVIDEND
I am delighted with the performance of the business in my first six months as
CEO and with the significant progress we are making to improve the business for
the future.
Profit before tax and dividend was £39.2m (2005: £48.9m). Our 2005 profit and
loss and balance sheet comparatives have been affected by the restatement to
IFRS and the change of housing revenue recognition from build completion to
legal completion, in line with our peer group. One consequence of this is that
the 2005 half year comparative figures are enhanced through the inclusion of
high margin sales previously recorded in 2004. This adverse impact reverses in
the second half of the current year, and we expect the full year result to be in
line with our expectations.
The Directors are confident in the future of the business and are pleased to
declare a 7% increase in the interim dividend to 4.5p (2005: 4.2p) to be paid on
1st September 2006 to shareholders on the register at the close of business on
4th August 2006.
REVIEW OF OPERATIONS
Housing
The housing market in the first half of 2006 has been stronger than in the
comparative period. While visitor levels are slightly lower than in 2005, net
reservations are higher as purchaser confidence has improved. We have now
secured over 85% of the unit sales required to meet our 2006 target.
For the half year, we are pleased to report a 2.5% increase in open market
completions to 1,062 units (2005: 1,036) and a 72% increase in affordable
housing completions to 516 units (2005: 300).
For the full year, we are expecting circa 2,000 open market completions and a
little over the 900 affordable completions previously anticipated. Total
completions are expected to be over 20% higher than the restated total for 2005
(2,417 excluding joint ventures).
For 2007, we remain on track to deliver a 15% increase in open market
completions as more of our regeneration projects come on stream.
As expected, the average sale price for the half year reduced to £188k (2005:
£208k) due to the increased volume of affordable housing. The average sales
price in the second half is expected to be higher leaving the average for the
full year a little under £200k (2005: £225k).
Our housing forward sales position at the half year was £354.0m.
Land Sales
Land sales continue to be an integral part of Crest's method of operation as our
strength in land buying, design and planning enables us to secure more land than
we need for our production requirements.
Land sales in the first half were £36.0m (2005: £28.3m). Full year land sales
are expected to be slightly lower than the £62.7m recorded in 2005.
Mixed-Use Commercial
Commercial sales from our mixed-use schemes in the first half year were £22.9m
(2005: £44.9m) and sales for the full year are now expected to be around one
third lower than the £92.3m recorded in 2005, principally because of planning
delays to the Camberley project.
Margin
In the first half of 2006, the operating margin was 13.7% and we expect to
improve on this in the second half. Given stable housing market conditions, we
would expect to see steady improvement in the operating margin percentage
resulting from the steps being taken to improve the business.
The Business Improvement Initiative is on track to achieve cost savings of £10m
per annum by the end of the 2008 year through a combination of lower product and
overhead costs. While some of these savings will be used to accelerate land
buying, the majority will be reflected in improved operating margins,
particularly in 2008, when current pre-operational sites begin to contribute
fully to unit completions.
Land Banks
The short term housing land bank has increased to 16,252 plots (2005: 15,903
plots) with a gross development value of £3.0bn (2005: £3.0bn). At the current
level of turnover this land bank represents about 5 years' supply.
The strategic housing land bank amounts to 11,783 plots (2005: 12,022). Last
year we reported that we expected to convert 3,000 units from the strategic
housing land bank to the short term land bank by the end of 2008 and we are on
track to achieve this. In 2005, we converted 495 plots. After a relatively low
number of conversions in 2006, we now expect to convert around 2,000 units in
2007 as we have already submitted planning applications for our strategic land
holdings at Hunts Grove, Gloucester and an extension to our strategic site at
Stowmarket.
The current commercial land bank amounts to 1.7m sq ft (2005: 1.7m sq ft) with a
development value of £501m (2005: £494m).
Our pipeline of regeneration projects is a key component of our future growth
and it was particularly pleasing to contract our major regeneration project at
Oakgrove, Milton Keynes and add it to the short term housing land bank. We were
also delighted that the regeneration pipeline was supplemented by our selection
as lead developer for the £250m regeneration project at Woolston Riverside in
Southampton.
Our reputation for creating well conceived high quality communities has enabled
us to secure, since the half year end, a major development project at Heartlands
in West Lothian, Scotland. The first phase of the development consists of 2,000
dwellings with outline planning permission and we have secured options on future
phases, already allocated for development, which could contribute a further
3,000 dwellings.
Since the half year end we have also contracted the Penarth regeneration project
which moves approximately 400 units into the short term housing land bank.
Design Innovation
Crest's reputation for design innovation is well established. Our recent success
in the ODPM Design for Manufacture competition with the "SixtyK" submission
demonstrated our ability to produce groundbreaking designs to increasingly
demanding standards.
This success has led to securing sites at Newport Pagnell and Maidstone which
total 216 plots.
Later this year, the "Code for Sustainable Homes" is due to be launched which
introduces new planning and environmental standards. The Code brings fresh
challenges to the housing industry and is highly likely to influence future land
supply particularly from the public sector. Good design, increasing
environmental standards and modern methods of construction are all essential
ingredients in working partnerships with local and central government.
The key to Crest's land buying success is its ability to achieve planning
consents through superior design and to create cost efficient, sustainable
solutions which meet the aspirations of landowners, particularly in the public
sector.
Financial Position
Shareholders' funds have increased by £33.7m or 13.4% to £285.6m. The net assets
attributable to ordinary shares have increased to 254p per share compared with
225p per share at 30th April 2005, an increase of 13%.
Net borrowings of £194.5m represented gearing of 68% of shareholders' funds
(2005: 93%). Preference share capital of £38m, reclassified as debt under IFRS,
was repaid on 2nd November 2005.
PROSPECTS
The current housing market is steady - reservation rates are better than in the
comparative period and we are seeing sufficient house price growth to offset
build cost inflation.
In our view, the fundamentals of the housing market remain sound - supply
continues to be constrained and demand is supported by good employment levels
and low interest rates.
We have confidence in our ability to design and produce environmentally
efficient homes at a competitive cost and to meet the challenge of increasing
regulatory standards for sustainable development. Through the Business
Improvement Initiative and design innovation we expect to deliver steady
improvement in operating margin as the changes made feed through to future unit
completions.
The steps we are taking to improve the business, combined with a steady market
and a quality land bank, give us confidence that Crest is set on a path of
improving performance, which will deliver results in line with our expectations.
Stephen Stone
22nd June 2006
Consolidated Income Statement
Unaudited statement for the half year to 30th April 2006
Half Year Half Year Full Year
2006 2005 2005
£m £m £m
Revenue 355.1 350.6 699.0
Cost of sales (283.0) (266.7) (548.2)
Gross profit 72.1 83.9 150.8
Administrative expenses (24.1) (26.1) (53.3)
Share of post tax profits from jointly 0.8 0.9 1.4
controlled entities
Profit from operations 48.8 58.7 98.9
Finance income 0.4 0.2 0.6
Finance costs (10.0) (10.0) (20.6)
Profit before taxation 39.2 48.9 78.9
Income tax expense (note 1) (11.6) (14.8) (25.0)
Profit for the period 27.6 34.1 53.9
Earnings per share (note 2)
Basic 24.6p 30.5p 48.2p
Diluted 24.4p 30.3p 47.8p
Dividends per share (note 3)
Paid 8.7p 8.3p 12.5p
Proposed 4.5p 4.2p
Consolidated Statement of Recognised Income and Expense
Unaudited statement for the half year to 30th April 2006
Half Year Half Year Full Year
2006 2005 2005
£m £m £m
Cash flow hedges: effective portion of changes (0.5) (2.7) (3.9)
in fair value
Actuarial gains/(losses) on defined benefit 6.2 (0.4) (4.8)
schemes
Tax on items taken directly to equity (1.8) 0.1 1.5
Net gain/(expense) recognised directly in 3.9 (3.0) (7.2)
equity
Profit for the period 27.6 34.1 53.9
Total recognised income for the period 31.5 31.1 46.7
Reconciliation of Movements in Consolidated Equity
Unaudited statement for the half year to 30th April 2006
Half Year Half Year Full Year
2006 2005 2005
£m £m £m
Profit for the period 27.6 34.1 53.9
Dividends on equity shares (note 3) (9.8) (9.3) (14.0)
Net gain/(expense) recognised directly in 3.9 (3.0) (7.2)
equity
Shares issued 0.3 0.6 0.8
Share based payments 0.3 0.3 0.6
Net increase in equity 22.3 22.7 34.1
Opening equity 263.3 229.2 229.2
Closing equity 285.6 251.9 263.3
The preference shares were repaid on 2nd November 2005 and, in accordance with
the Companies Act 1985, a sum of £38.0m has been transferred from retained
earnings to capital redemption reserve.
Consolidated Balance Sheet
Unaudited statement as at 30th April 2006
April April October
2006 2005 2005
ASSETS £m £m £m
Non-current assets
Property, plant and equipment 9.4 2.7 2.5
Investments in joint ventures 4.6 15.1 11.5
Deferred tax assets 30.7 27.4 32.4
44.7 45.2 46.4
Current assets
Inventories 694.5 760.9 742.7
Trade and other receivables 59.1 50.5 43.5
Cash and cash equivalents 48.5 7.2 57.0
802.1 818.6 843.2
Total assets 846.8 863.8 889.6
LIABILITIES
Current liabilities
Interest bearing loans and (44.5) (9.6) (12.9)
borrowings
Current tax liabilities (12.7) (11.2) (12.7)
Trade and other payables (233.4) (258.4) (268.4)
Provisions (1.4) (1.9) (1.7)
(292.0) (281.1) (295.7)
Non-current liabilities
Interest bearing loans and (198.5) (232.7) (225.8)
borrowings
Forward currency swaps (21.3) (23.6) (19.2)
Trade and other payables (18.7) (42.1) (48.8)
Retirement benefit obligations (29.1) (30.8) (35.3)
Provisions (1.0) (1.0) (0.9)
Deferred tax liabilities (0.6) (0.6) (0.6)
(269.2) (330.8) (330.6)
Total liabilities (561.2) (611.9) (626.3)
Net assets 285.6 251.9 263.3
SHAREHOLDERS' EQUITY
Ordinary share capital 11.3 11.2 11.2
Share premium 57.9 57.4 57.7
Capital redemption reserve 38.0 - -
Hedge reserve (2.4) (0.8) (2.0)
Retained earnings 180.8 184.1 196.4
Total shareholders' equity 285.6 251.9 263.3
Consolidated Cash Flow Statement
Unaudited statement for the half year to 30th April 2006
Half Year Half Year Full Year
2006 2005 2005
£m £m £m
Cash flow from operating activities
Profit for the period 27.6 34.1 53.9
Adjustments for:
Interest 9.6 9.8 20.0
Tax 11.6 14.8 25.0
Share of profit of joint ventures (0.8) (0.9) (1.4)
Depreciation and other non-cash items 0.4 0.8 1.6
Operating profit before working capital 48.4 58.6 99.1
changes
Changes in working capital
Decrease/(increase) in inventories 48.2 (33.3) (15.1)
Increase in trade and other receivables (15.4) (15.7) (8.6)
Decrease in trade and other payables (66.7) (23.0) (7.7)
Cash from/(used in) operations 14.5 (13.4) 67.7
Interest and preference dividends paid (8.3) (7.9) (17.0)
Income tax paid (11.7) (12.3) (24.1)
Net cash (outflow)/inflow from operating (5.5) (33.6) 26.6
activities
Cash flows from investing activities
Purchases of property, plant and equipment (7.3) (0.7) (1.0)
Repayment of loans to joint ventures 7.7 1.8 5.6
Interest received 0.2 0.1 0.4
Net cash from investing activities 0.6 1.2 5.0
Cash flows from financing activities
Increase in bank and other loans 12.3 31.0 18.0
Repayment of preference shares (38.0) - -
Share issues 0.3 0.6 0.8
Dividends paid (9.8) (9.3) (14.0)
Net cash (outflow)/inflow from financing (35.2) 22.3 4.8
activities
Net (decrease)/increase in cash and cash (40.1) (10.1) 36.4
equivalents
Cash and cash equivalents at beginning of 44.1 7.7 7.7
period
Cash and cash equivalents at end of period 4.0 (2.4) 44.1
Accounting Policies
Basis of preparation
EU law requires that the next annual consolidated financial statements of the
Company, for the year ending 31st October 2006, be prepared in accordance with
International Financial Reporting Standards (IFRSs) adopted for use in the EU
("adopted IFRSs").
This interim financial information has been prepared on the basis of the
recognition and measurement requirements of adopted IFRSs as at 30th April 2006
that are effective (or available for early adoption) at 31st October 2006. Based
on these adopted IFRSs, the Directors have applied the accounting policies set
out below, which they expect to apply in the next annual financial statements.
However, the adopted IFRSs that will be effective (or available for early
adoption) in those annual financial statements are still subject to change and
to additional interpretations and therefore cannot be determined with certainty.
Accordingly, the accounting policies for that annual period will be determined
finally only when the annual financial statements are prepared.
The rules for first time adoption of IFRS are set out in IFRS 1 'First Time
Adoption of International Financial Reporting Standards'. In general a company
is required to define its IFRS accounting policies and apply these
retrospectively to determine its opening balance sheet under IFRS. The standard
allows a number of exceptions to this general principle to assist companies as
they make the transition to reporting under IFRS.
The Company has taken the following approach in adopting IFRS for the first
time:
• The Company has taken advantage of the transitional provisions
allowing the application of IFRS 2 'Share-based Payment' to grants of share
options that took place after 7th November 2002.
• The Company has adopted IAS 32 and 39 with effect from 1st November
2004, the date of transition to IFRS.
• The Company has decided to adopt IAS 19 (Revised) early and to
recognise all actuarial gains and losses in full at the date of transition and
in the statement of recognised income and expense in the period they are
incurred.
The summarised half year financial information is unaudited and does not
constitute full accounts.
The comparative figures for the financial year ended 31st October 2005 are not
the Company's statutory accounts for that financial year. Those accounts, which
were prepared under UK Generally Accepted Accounting Practices, have been
reported on by the Company's auditors and delivered to the registrar of
companies. The report of the auditors was unqualified and did not contain
statements under section 237(2) or (3) of the Companies Act 1985.
Consolidation
The consolidated accounts include the accounts of Crest Nicholson PLC and
entities controlled by the Company (its subsidiaries) at each reporting date.
Control is achieved where the Company has the power to govern the financial and
operating policies of an entity so as to obtain benefits from its activities.
The profits and losses of subsidiaries acquired or sold during the year are
included as from or up to their effective date of acquisition or disposal.
On acquisition of a subsidiary, all of the subsidiary's separable, identifiable
assets and liabilities existing at the date of acquisition are recorded at their
fair values reflecting their condition at that date. All changes to those assets
and liabilities, and the resulting gains and losses, that arise after the Group
has gained control of the subsidiary are charged to the post acquisition income
statement.
Joint ventures
A joint venture is an undertaking in which the Group has a participating
interest and which is jointly controlled under a contractual arrangement.
Where the joint venture involves the establishment of a separate legal entity,
the Group's share of results of the joint venture is included in a single line
in the consolidated profit and loss account and its share of net assets is shown
in the consolidated balance sheet as an investment.
Where the joint venture does not involve the establishment of a legal entity,
the Group recognises its share of the jointly controlled assets and liabilities
and income and expenditure on a line by line basis in the balance sheet and
income statement.
Revenue recognition
Revenue comprises the fair value of the consideration received or receivable,
net of value-added tax, rebates and discounts but excludes the sale of
properties taken in part exchange.
Revenue is recognised once the value of the transaction can be reliably measured
and the significant risks and rewards of ownership have been transferred.
Revenue is recognised on house sales at legal completion. Revenue is recognised
on land sales when contracts are exchanged and all material conditions and
obligations are met.
Revenue on commercial property sales is recognised from the point of
unconditional exchange of contracts. Where the conditions for the recognition of
revenue are met but the Group still has significant acts to perform, revenue is
recognised as the acts are performed.
Finance costs and finance income
Interest payable and receivable is recognised in the income statement on an
accruals basis using the effective interest method.
Taxation
Income tax comprises current tax and deferred tax. Income tax is recognised in
the income statement except to the extent that it relates to items recognised
directly in equity, in which case it is also recognised in equity.
Current tax is the expected tax payable on taxable profit for the period and any
adjustment to tax payable in respect of previous periods. The Group's liability
for current tax is calculated using tax rates that have been enacted or
substantively enacted by the balance sheet date.
Deferred tax is provided on temporary differences between the carrying amounts
of assets and liabilities in the financial statements and the corresponding tax
bases used in the computation of taxable profit. Deferred tax liabilities are
recognised for all taxable temporary differences, except those exempted by the
relevant accounting standard, and deferred tax assets are recognised to the
extent that it is probable that taxable profits will be available against which
deductible temporary differences can be utilised.
Dividends
Dividends are recorded in the Group's financial statements in the period in
which they are declared.
Property, plant and equipment
Freehold land is not depreciated. Freehold buildings are depreciated at 2% on
cost less residual value.
Plant, vehicles and equipment are depreciated on cost less residual value on a
straight line basis at rates varying between 10% and 33% determined by the
expected life of the assets.
Leases
A finance lease is a lease that transfers substantially all the risks and
rewards incidental to the ownership of an asset; all other leases are operating
leases.
Assets acquired under finance leases are capitalised and the outstanding future
lease obligations are shown in creditors. Operating lease rentals are charged to
the profit and loss account on a straight line basis over the period of the
lease.
Inventories
Inventories are valued at the lower of cost and net realisable value. Land
includes land under development, undeveloped land and land option payments. Work
in progress comprises direct materials, labour costs, site overheads, associated
professional fees and other attributable overheads.
Land inventories and the associated land creditors are recognised in the balance
sheet from the date of unconditional exchange of contracts. If land is purchased
on deferred settlement terms then the land and the land creditor are discounted
to their fair value. The land creditor is then increased to the settlement value
over the period of financing, with the financing element being charged as
interest expense through the income statement.
Cash and cash equivalents
Cash and cash equivalents are cash balances in hand and in the bank. For the
purpose of the cash flow statement, bank overdrafts and loans repayable within
one year are considered part of cash and cash equivalents as they form an
integral part of the Group's cash management. Offset arrangements across Group
businesses are applied to arrive at the net overdraft figure.
Retirement benefit costs
The Group operates a defined benefit pension scheme (closed to new employees)
and also makes payments into a defined contribution scheme for employees.
In respect of defined benefit schemes, the net obligation is calculated by
estimating the amount of future benefit that employees have earned in return for
their service in the current and prior periods, such benefits measured at
discounted present value, less the fair value of the scheme assets. The discount
rate used to discount the benefits accrued is the yield at the balance sheet
date on AA credit rated bonds that have maturity dates approximating to the
terms of the Group's obligations. The calculation is performed by a qualified
actuary using the projected unit method. The operating and financing costs of
such plans are recognised separately in the income statement; service costs are
spread systematically over the lives of employees and financing costs are
recognised in the periods in which they arise.
In accordance with IFRS 1, the Group has recognised the pension liability in
full as at 1st November 2004.
The Group has applied the requirements of IAS 19 (revised) for the year ended
31st October 2005, recognising expected scheme gains and losses via the income
statement and actuarial gains and losses via reserves.
Payments to the defined contribution schemes are accounted for on an accruals
basis.
Financial Instruments
Trade receivables
Trade receivables which do not carry any interest are stated at their nominal
value less impairment losses.
Trade payables
Trade creditors are generally stated at their nominal amount; finance charges
are recognised where material (see inventories).
Borrowings
Interest bearing bank loans and overdrafts are measured initially at fair value,
net of direct issue costs. Finance charges are accounted for on an accruals
basis in the income statement using the effective interest method and are added
to the carrying amount of the instrument to the extent that they are not settled
in the period in which they arise.
Borrowings in foreign currencies are retranslated at the period end exchange
rate with differences recorded in the income statement. This is offset by the
change in fair value of derivative financial instruments which are fair value
hedges (see below).
Derivative financial instruments and hedge accounting
The Group uses currency swaps to manage financial risk. Those instruments that
meet the hedge accounting criteria are treated as hedges. The Group does not use
derivative financial instruments for speculative purposes.
Derivative financial instruments are recognised at fair value. The fair value of
swaps is the estimated amount that the Group would receive or pay to terminate
the swap at the balance sheet date, taking into account exchange rates and the
current creditworthiness of the swap counterparties.
Where the derivative instrument is deemed an effective hedge over the exposure
being hedged, the derivative instrument is treated as a hedge and hedge
accounting applied. Under a fair value hedge the change in the fair value of the
derivative is recognised in the income statement and offsets the movement in
fair value of the hedged item. Under a cash flow hedge, gains and losses on the
effective portion of the change in the fair value of the derivative instrument
are recognised directly in equity.
Changes in the fair value of derivative financial instruments that do not
qualify for hedge accounting and any ineffectiveness in the hedge relationship
are recognised in the income statement as they arise.
Hedge accounting is discontinued when the hedging instrument expires or is sold,
terminated or exercised, or no longer qualifies for hedge accounting. At that
time, any cumulative gain or loss on the hedging instrument recognised in
reserves is retained in reserves until the forecasted transaction occurs. If a
hedged transaction is no longer expected to occur, the net cumulative gain or
loss recognised in reserves is transferred to net profit or loss for the period.
Share-based payments
Charges for employee services received in exchange for share-based payments have
been made for all schemes granted after 7th November 2002.
The fair value of such options has been calculated using a binomial
option-pricing model, based upon publicly available market data at the point of
grant. The fair value is expensed on a straight line basis over the vesting
period, based on the Group's estimate of shares that will eventually vest with a
corresponding credit to equity.
Own shares held by ESOP Trust
Transactions of the Group sponsored ESOP Trust are included in the Group
consolidation. In particular, the Trust's purchases of shares in the Company are
debited to equity through retained earnings.
Provisions
A provision is recognised in the balance sheet when the Group has a present
legal or constructive obligation as a result of a past event and it is probable
that an outflow of economic benefits will be required to settle the obligation.
If the effect is material, provisions are determined by discounting the expected
future cash flows at a pre-tax rate that reflects current market assessments of
the time value of money and, where appropriate, the risks specific to the
liability.
Notes
1 Taxation
Half Year Half Year Full Year
2006 2005 2005
£m £m £m
Current taxation 11.6 14.8 25.0
Deferred taxation - - -
11.6 14.8 25.0
2 Earnings per share
Basic earnings per share are calculated on the profit attributable to ordinary
shareholders of £27.6m (2005: £34.1m) on a weighted average of 112.4m (2005:
111.7m) ordinary shares in issue during the six months.
Diluted earnings per share are calculated on the profit attributable to ordinary
shareholders of £27.6m (2005: £34.1m) on a weighted average of 113.2m (2005:
112.6m) ordinary shares on the basis that 2.4m (2005: 2.3m) share options had
been exercised.
3 Dividends
Half Year Half Year Full Year
2006 2005 2005
Dividends paid
Cost £9.8m £9.3m £14.0m
Dividends per share 8.7p 8.3p 12.5p
Dividend proposed
Cost £5.0m £4.7m
Dividends per share 4.5p 4.2p
The proposed interim dividend was approved by the Board on 22nd June 2006 and
will be paid on 1st September 2006 to shareholders on the register at the close
of business on 4th August 2006. No charge has yet been made for this dividend in
accordance with IAS10 - Events after the balance sheet date.
4 Analysis of net debt
Half Year Half Year Full Year
2006 2005 2005
£m £m £m
Current assets
Cash and cash equivalents 48.5 7.2 57.0
Current liabilities
Bank overdrafts and loans (23.8) (9.6) (12.9)
Loan notes (20.7) - -
4.0 (2.4) 44.1
Non-current liabilities
Preference shares - (38.0) (38.0)
Bank loans (117.0) (97.0) (84.0)
US Dollar Loan notes at original cost (99.4) (120.1) (120.1)
Exchange rate difference on US Dollar 17.9 22.4 16.3
Loan notes
(198.5) (232.7) (225.8)
(194.5) (235.1) (181.7)
5 Transition to IFRS
The disclosures concerning the transition from UK GAAP to IFRS, including the
reconciliations of equity at 1st November 2004 (the date of transition to IFRS),
at 31st October 2005 (the date of the last UK GAAP accounts) and at 30th April
2005 and the reconciliations of profit for the full year and half year 2005,
were published on the Group's website www.crestnicholson.com on 21st February
2006. Some minor amendments to those reconciliations have been made which are
reflected in the reconciliations set out below and the full reconciliations
published on the Group's website have been updated accordingly. The effect of
these amendments has been to reduce equity at 31st October 2005 by £2.8m but
there has been no impact on profit before tax for the year to that date.
Reconciliation of prior period Income Statements
Half Year Full Year
2005 2005
£m £m
Revenue
Group turnover per UK GAAP 310.7 701.7
Change to legal completion on housing 45.7 27.0
Other changes to revenue recognition (5.8) (29.7)
Group revenue per IFRS 350.6 699.0
Profit from operations
Operating profit including joint ventures per UK 43.7 94.9
GAAP
Change to legal completion on housing 15.1 11.2
Other changes to revenue recognition (0.4) (7.6)
Reduced charge for pension costs 0.1 0.3
Increased charge for share based payments - (0.5)
Increased margin from discounted inventory 0.4 1.1
Reallocate joint venture interest and taxation (0.2) (0.5)
Profit from operations per IFRS 58.7 98.9
Net finance costs
Net interest payable per UK GAAP (7.8) (15.7)
Reallocate dividend on preference shares (1.0) (2.1)
Increased charge for pension costs - (0.2)
Interest charge on deferred payments (1.0) (2.0)
Net finance costs per IFRS (9.8) (20.0)
Taxation
Tax charge per UK GAAP (10.9) (24.5)
Change to legal completion on housing (4.5) (3.4)
Other changes to revenue recognition 0.2 1.7
Reallocate joint venture taxation 0.2 0.5
Deferred tax on discounting of land creditors 0.2 0.8
Deferred tax on share based payments - (0.1)
Tax charge per IFRS (14.8) (25.0)
Reconciliation of prior period equity
Half Year Full Year
2005 2005
£m £m
Shareholders' funds per UK GAAP 348.6 367.4
Reclassification of preference shares as debt (38.0) (38.0)
Recognition of pension scheme deficit and (23.0) (26.1)
prepayment write off
Change to legal completion on housing (20.2) (23.0)
Other changes to revenue recognition (15.9) (21.1)
Eliminate accrued dividend 4.7 9.8
Discounting of long term creditors (3.5) (3.7)
Hedge reserve arising on currency swap (0.8) (2.0)
Shareholders' equity per IFRS 251.9 263.3
6 Interim Statement
The Interim Statement for the half year will be sent to all shareholders and
copies will also be available from Crest House, 39 Thames Street, Weybridge,
Surrey KT13 8JL, the Company's Registered Office.
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