22nd Aug 2006 07:01
Persimmon PLC22 August 2006 22 August 2006 RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2006 Highlights • Record pre-tax profits* up 16% at £271.5m (H1 2005: £234.9m). • Earnings per share* grew by 15% to 64.4p from 56.2p for H1 2005. • Proposed half year dividend to increase by 15% to 13.8p per share (H1 2005: 12.0p). • Turnover up by 42% to £1.5bn (H1 2005: £1.1bn). • Home completions up by more than 38% to 8,226 units (H1 2005: 5,954 units). Average selling price up 3% to £188,427 (H1 2005: £183,581). Underlying original Persimmon volumes increased by 7%. • Integration of Westbury acquisition completed ahead of expectations: gearing reduced to 50% six months ahead of schedule - strong free cash flow of £284m generated. • Synergy savings from Westbury acquisition accelerated to £10m in the first half with at least a further £20m expected in the second half. Savings in excess of £40m expected for 2007 and beyond. • Operating margin remains at industry leading level: operating margin reduced from 23.0% to 19.9% following the acquisition of the lower margin Westbury business. • Land bank strengthened: total consented plots stands at 78,305 up from 62,157 in H1 2005, this includes c. 2,000 plots pulled through from our strategic land bank. • Strategic land portfolio: up by 22% to 23,210 acres (H1 2005: 19,102 acres). • Healthy housing market: forward sales of c. £1.4bn already agreed. *stated before one off reorganisation costs of £15.4m (2005: £nil). John White, Group Executive Chairman said: "The integration of Westbury has beencompleted ahead of expectations and the group is well placed to take advantageof a strong and stable housing market. "Visitor levels to our sites remain good whilst volumes of sales reservationsand revenues are ahead of last year on a like for like basis. Currently totalsales revenues for the year 2006 including completions to date are at an alltime high of c. £2.9 billion. The high level of sales already achieved puts usin a healthy position to achieve our volume expectations for the full year." For further information, please contact: John White, Group Executive Chairman Faeth BirchMike Farley, Group Chief Executive Edward SimpkinsMike Killoran, Group Finance Director Kirsty FlockhartPersimmon plc FinsburyTel: +44 (0) 20 7251 3801 on 22 August 2006 Tel: +44 (0) 20 7251 3801Tel: +44 (0) 1904 642 199 thereafter A webcast of today's analyst presentation will be available on www.persimmonhomes.com by 2pm today. CHAIRMAN'S STATEMENT INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2006 I have great pleasure in announcing another record set of results for Persimmonfor the 6 months ended 30th June 2006. RESULTS Net pre-tax profits for the period (stated before exceptional reorganisationcosts) were £271.5 million an increase of 16% (H1 2005: £235 million). Duringthe period we completed 8,226 units (H1 2005: 5,954) representing an increase ofmore than 38%. Turnover was £1,550 million (H1 2005: £1,093 million) which is anincrease of 42% on the prior half year period. Operating profit was £309.1million (H1 2005: £251.8 million) an increase of 23%, and earnings per shareincreased 15% to 64.4p (H1 2005: 56.2p) (both stated before exceptionalreorganisation costs). On 17th January 2006 we completed the purchase of Westbury for £664 million(including costs) plus acquired debt of £422 million. The results announcedtherefore include 5 1/2 months of trading from Westbury. The integration ofWestbury has been completed ahead of expectations and the Group is well placedto take advantage of a strong and stable housing market. I am particularly pleased to report that we have achieved an operating margin onthe combined business of 19.9% (before exceptional reorganisation costs) duringthe period (H1 2005: 23.0%). Despite the expected dilution of Group marginfollowing the Westbury acquisition we continue to achieve margins at the top endof industry levels. Prior to acquisition, Westbury's operating margin was 13.9%and in decline. Our key objective post acquisition was leveraging Persimmon'sbest practice and purchasing power, and by the half year we had successfullyhalted the margin decline. Debt levels were reduced significantly ahead of our original projections at thetime of the acquisition. Whilst we made land payments of c. £320 million duringthe period, we also controlled work in progress tightly and applied strictdiscipline to our stock levels. By doing so we generated a strong cash inflowfrom operations of £417 million which delivered £284 million of free cashflow.This reduced gearing to 50% by 30th June 2006, six months ahead of our plans.During the period we also terminated an acquired Westbury Joint Venturearrangement, Wescott. This action reduces future funding costs and gives usgreater control benefiting the overall outcome of the developments concerned. Interest costs increased to £37.6 million (H1 2005: £16.9 million) reflectingthe extra debt taken on to fund the acquisition. ROACE was 25.0% compared with28.8% for the full year of 2005. Interest cover was a comfortable 7.8 times (H12005: 14.9 times). We are increasing the interim dividend in line with underlying earnings growthby 15% to 13.8p per share. This is an expression of our confidence in thesuccess of our latest acquisition and in the future earnings capacity of theGroup. The interim dividend will be payable on 20th October 2006 to shareholderson the Register at 1st September 2006. As previously reported we took action to integrate Westbury quickly andeffectively in order to improve performance going forward. In doing so werationalised the enlarged business with the closure of 8 offices and c. 550 jobreductions. The cost of the reorganisation has largely now been incurred at aone-off cost of c. £15 million. The synergy savings we expect to deliver fromthe action we have taken will be in excess of £40 million per annum for 2007 andbeyond. In addition, by taking swift action we have accelerated the delivery ofthe savings. For 2006 we originally forecast delivery of c. £25 million ofsavings, with £5 million realised in the period to 30th June 2006, and thebalance during the second half of 2006. In fact we have achieved savings of £10million to 30th June 2006 and are on course to deliver at least a further £20million of synergy savings in the second half. DIVISIONAL SPLIT During the period we restructured our management teams to ensure that wecontinue to apply our tried and tested discipline within the enlarged Groupwhilst maintaining the ability to react quickly to changing market conditionsand challenges. Mike Farley has taken over from me as Group Chief Executive following a verysuccessful period as Divisional Chief Executive of the original South Division.Since his appointment he has overseen the integration of Westbury and theimplementation of the new structures with great effect. We now operate from three geographic divisions each under the control of aDivisional Chief Executive who presides over a Divisional Board. This divisionalstructure has performed admirably throughout the period and is well set todeliver good results over many years. The new South Division, whose Chief Executive Nigel Greenaway (age 46) has beenwith Persimmon since 1986, completed 1,866 units at an average selling price of£192,911 (H1 2005: £186,191). Price per sq ft increased by 4% in the 12 monthperiod. Generally prices have held up well with a reduction in the use ofincentives. Margins have not been under as much pressure in this Division assome other areas of the country and they have been maintained at the previoushigh levels, whilst we continue to sell at good rates. The new Central Division, whose Chief Executive David Thornton (age 49) has beenwith Persimmon for 14 years, completed 2,968 units at an average selling priceof £168,147 (H1 2005: £169,582). Price per sq ft increased by 3% in the 12 monthperiod. Prices in this Division have generally been stable with some pressure onmargins in the north of its area of operation, whilst the Midlands has beenpatchy. Currently sales rates are quite satisfactory for the time of year. The new North Division, whose Chief Executive Jeff Fairburn (age 40) has beenwith Persimmon for 16 years, completed 1,926 units at an average selling priceof £169,432 (H1 2005: £167,114). Price per sq ft increased by 1% in the 12 monthperiod. This Division covers Scotland, an area which has continued to tradestrongly. The North East of England has firmed up following a more difficulttrading period in the second half of last year. Elsewhere in the North themarket varies from challenging to stable whilst margins have generally remainedfirm. The Charles Church brand completed 1,466 units at an average selling price of£248,731 (H1 2005: £279,014). This reduction in average selling price wasplanned to accord with our strategy of broadening the product offering and isalso below the £250,000 threshold for stamp duty increases. This was mainly dueto the impact of a high proportion of Westbury sales particularly in the NorthWest and an increased number of sales in the North generally. Charles Church volumes achieved in the first half puts us on target to completec. 3,000 units in a full year, as indicated earlier this year following theWestbury acquisition. The gross profit per plot we have achieved with this brandis at a higher level than that of the Core housing division although the marginis lower. This represents good potential for improvement as we realise betteroperating efficiencies as volumes increase and national coverage is achieved. LAND We have stated many times that land is the essential ingredient for housebuilders and the attention and emphasis we have placed upon its acquisition andcontrol over many years has been and will continue to be key to our success. Over recent years our strategy has been to acquire large land opportunitieswhere we saw best value. A number of those acquisitions are now being developedhaving been carefully master planned over the past 2-3 years. For example, the78 acre redundant brownfield site at Cape Hill Brewery in Birmingham which weagreed to purchase for £26 million in 2003 now has planning for 836 homes andwill generate sales revenue of over £145 million. Development works are wellunderway and the first release of homes for sale have been reserved veryquickly. We anticipate first occupations in September this year. Demand is verystrong and we expect the development to continue to produce good volumes andmargins for several years. Similarly, the 97 acre ex Massey Ferguson plant site in Coventry which we agreedto purchase in January 2004 for £22.5 million has been cleared and remediated.Infrastructure works are well advanced and the first homes were offered for salelast month with an excellent response from purchasers. We now have consent forover 650 homes and 36 acres for B1/B2 commercial use at this location. Theexpected gross revenue for the homes content will be in excess of £105 millionand all of the Group's brands will be active on site, Persimmon, Charles Churchand Westbury Partnerships. The Group has a total landbank of 92,156 plots, a c. 5 year supply of which78,305 plots are owned and under control with a further 13,851 plots where wehave agreed terms to purchase and are proceeding to contract. In addition wecontrol 23,210 acres of land in our strategic land portfolio. A large amount ofthe strategic land acquired with Westbury has excellent potential and we areconfident it will provide a significant number of consented plots to ourlandbank over future years. For example, we recently received a resolution togrant planning consent for over 1,000 homes on an ex-Westbury strategic site atAndover and a further c. 120 homes at Salisbury and look forward to bringing anumber of other sites on stream during the current year. Additionally we are currently finalising the planning agreements to develop c.800 homes in Bridgwater acquired with the Beazer acquisition having promotedthis land for development for many years. This shows once again the significantbenefits of our past corporate acquisition strategy. Of course Persimmon also achieves successes on its other existing long term landholdings such as the imminent conclusion of the planning negotiations for c. 630homes plus 6 hectares of employment use at Old Sarum, Salisbury. All of these strategic land holdings will be acquired at a discount to openmarket value under the terms of our legal options therefore ensuring excellentmargins and again highlights the benefits of long term strategic planning andinvestment. We were also delighted to receive consent for 280 homes at Newcastle-under-Lymeon land which was acquired by Beazer as part of a parcel of land holdings fromBritish Coal and is owned freehold at non-residential values. Given the restrictive planning regime in the UK, it has been Persimmon'slong-held view that in order to compete effectively, provide certainty and giveus the flexibility we need to operate in all market conditions, we need tomaintain and build a long landbank with a good mix of long and short term landopportunities. This has been one of the cornerstones of our success over theyears. Should Government initiatives prove successful in releasing extra volumeinto the market, we will of course review our strategy and we are confident thatPersimmon is in an excellent position to react to any change in regulatoryenvironments. SPACE4 AND SOCIAL HOUSING We are excited by the benefits and opportunities emerging through the WestburyPartnerships and Space4 businesses. We are supporting both these businesses withour Group expertise and procurement strengths. We have given clear direction toboth these operations and by working closely together with Housing Associationsbelieve we can offer a solution to some of the affordable housing problems theGovernment wishes to resolve. Whilst there is still a way to go, we are pleased with the response we havereceived to our initiative to provide a Modern Methods of Construction solutionto this problem. Already we are working closely on a number of land situationswith Housing Associations and associated land owners as well as refining housetypes to supply the Space4 product to them at acceptable prices. We expect toreport further good progress with these initiatives in due course. OUTLOOK Visitor levels to our sites remain good whilst volumes of sales reservations andrevenues are ahead of last year on a like for like basis. Currently total salesrevenues for the year 2006 including completions to date are at an all time highof c. £2.9 billion. In addition, we have c. 120 new outlets planned to open overthe next three months at a time when sales volumes usually increase followingthe summer months. The high level of sales already achieved and the opening ofthese new outlets puts us in a healthy position to achieve our volumeexpectations for the full year. We do not however expect to see significantselling price increases above those already realised this year. Therefore we areredoubling our efforts to keep increases in build costs and overheads to aminimum. We have been encouraged by recent moves by the Government to improve theplanning process and we welcome the decision to reconsider the necessity forfull implementation of Housing Information Packs. The Bank of England's recentdecision to implement a quarter point rise in interest rates, effectivelyreversing last August's cut, has had no tangible effect on our business or onvisitor levels or enquiries. These remain at healthy levels and employmentprospects remain good. For the majority of our homebuyers, decisions to move aredriven primarily by their family dynamics and therefore we expect this healthymarket to be sustainable. Finally, I thank all our staff, new and old, for all their efforts, particularlyover the last few months during the integration period. I have no doubt thatthanks to their hard work we have a great platform for further profitablegrowth. 22 August 2006 John White Group Executive Chairman PERSIMMON PLCConsolidated Income Statement (unaudited) Six months to Six months to Year to 30 June 30 June 31 December Note 2005 2006 2005 £m £m £m-------------------------------------------------------------------------------Revenue 1,550.0 1,093.0 2,285.7 Cost of sales (1,191.4) (799.2) (1,681.4)------------------------------------------------------------------------------- Gross profit 358.6 293.8 604.3 Operating expenses (49.8) (42.0) (76.5)Share of results of jointly 0.3 - -controlled entities-------------------------------------------------------------------------------Profit from operations before 309.1 251.8 527.8reorganisation costs Reorganisation costs (15.4) - --------------------------------------------------------------------------------Profit from operations 293.7 251.8 527.8 Finance income 0.6 0.3 0.8Finance costs (38.2) (17.2) (33.2)-------------------------------------------------------------------------------Profit before tax 256.1 234.9 495.4 Income tax expense 6 (77.0) (72.0) (150.6)-------------------------------------------------------------------------------Profit after tax (all attributable to equity 179.1 162.9 344.8holders of the parent)-------------------------------------------------------------------------------Earnings per share (after reorganisation costs)Basic 7 60.7p 56.2p 118.4pDiluted 7 60.3p 55.9p 118.0p Earnings per share (before reorganisation costs, net ofrelated tax)Basic 7 64.4p 56.2p 118.4pDiluted 7 64.0p 55.9p 118.0p PERSIMMON PLCConsolidated Balance Sheet (unaudited) Note 30 June 30 June 31 December 2006 2005 2005 £m £m £m---------------------------------------------------------------------------ASSETSNon-current assetsIntangible assets 470.5 182.0 182.0Property, plant and equipment 49.3 29.2 32.5Investment in associates - - 169.1Investment in jointly 3.4 - -controlled entitiesTrade and other receivables 11.2 - -Deferred tax assets 63.9 32.1 33.3--------------------------------------------------------------------------- 598.3 243.3 416.9--------------------------------------------------------------------------- Current assetsInventories 2,973.2 2,138.1 2,197.9Trade and other receivables 193.9 95.3 107.2Cash and cash equivalents 5 39.3 96.1 10.7--------------------------------------------------------------------------- 3,206.4 2,329.5 2,315.8---------------------------------------------------------------------------Total assets 3,804.7 2,572.8 2,732.7--------------------------------------------------------------------------- LIABILITIESNon-current liabilitiesInterest bearing loans and 5 (816.0) (234.5) (233.6)borrowingsForward currency swaps 5 (86.6) (25.9) (19.5)Deferred tax liabilities (28.5) (9.2) (8.3)Retirement benefit obligation (91.6) (66.8) (73.5)Other liabilities (108.7) (59.0) (61.5)--------------------------------------------------------------------------- (1,131.4) (395.4) (396.4)--------------------------------------------------------------------------- Current liabilitiesTrade and other payables (683.2) (543.3) (529.4)Current tax liabilities (104.6) (84.2) (89.1)Forward currency swaps 5 (2.8) (1.4) (1.4)Interest bearing loans and 5 (50.2) (16.3) (24.4)borrowings--------------------------------------------------------------------------- (840.8) (645.2) (644.3)---------------------------------------------------------------------------Total liabilities (1,972.2) (1,040.6) (1,040.7)---------------------------------------------------------------------------Net assets 1,832.5 1,532.2 1,692.0---------------------------------------------------------------------------SHAREHOLDERS' EQUITYOrdinary share capital issued 29.7 29.2 29.5Share premium 230.7 226.6 229.2Own shares (5.2) (4.0) (4.1)Hedge reserve (12.5) 3.1 0.6Consolidation reserve 281.4 281.4 281.4Retained earnings 1,308.4 995.9 1,155.4---------------------------------------------------------------------------Total shareholders' equity 1,832.5 1,532.2 1,692.0--------------------------------------------------------------------------- PERSIMMON PLCConsolidated Cash Flow Statement (unaudited) Six months to Six months to Year to 30 June 30 June 31 December Note 2006 2005 2005 £m £m £m--------------------------------------------------------------------------------- Cash flows from operating activities:Net profit after income taxes 179.1 162.9 344.8 Adjustment for:Tax 77.0 72.0 150.6Finance income (0.6) (0.3) (0.8)Finance costs 38.2 17.2 33.2Depreciation charge 5.0 3.6 7.3Amortisation of intangible assets 0.1 - -Share of results of jointly controlled (0.3) - -entitiesProfit on disposal of property, plant (0.5) (0.2) (0.4)and equipmentShare-based payment charge 2.5 1.0 2.0Other non-cash items (4.0) 0.4 (0.4)---------------------------------------------------------------------------------Operating profit before working capital 296.5 256.6 536.3changes Changes in working capital:Decrease/(increase) in inventories 158.7 (145.3) (191.4)Decrease/(increase) in trade and other 31.2 3.4 (8.5)receivables(Decrease)/increase in trade and other (69.3) 25.2 10.2---------------------------------------------------------------------------------payablesNet cash from operations 417.1 139.9 346.6 Interest paid (27.6) (13.5) (25.8)Interest received 0.6 0.3 0.8Tax paid (62.2) (70.3) (144.5)---------------------------------------------------------------------------------Net cash from operating activities 327.9 56.4 177.1 Cash flows used in investingactivities:Acquisitions (508.5) - (169.1)Purchases of property, plant and equipment (5.3) (4.3) (11.1)Proceeds from sale of property, plant 1.1 0.7 1.3and equipment---------------------------------------------------------------------------------Net cash used in investing activities (512.7) (3.6) (178.9) Cash flows from/(used in) financingactivities:Repayment of borrowings (237.1) (1.6) (26.2)New loan facilities drawn 487.3 - 10.0Finance lease principal payments (0.5) (0.6) (1.2)Exercise of share options 1.0 3.3 6.1Dividends paid to Group shareholders (40.0) (38.2) (58.6)---------------------------------------------------------------------------------Net cash from/(used in) financing 210.7 (37.1) (69.9)activities---------------------------------------------------------------------------------Increase/(decrease) in net cash and cash 25.9 15.7 (71.7)equivalents 4--------------------------------------------------------------------------------- Net cash and cash equivalents at 7.7 79.4 79.4beginning of period---------------------------------------------------------------------------------Net cash and cash equivalents at end of 33.6 95.1 7.7period 5--------------------------------------------------------------------------------- PERSIMMON PLCConsolidated Statement of Recognised Income and Expense (unaudited) Six months to Six months to Year to 30 June 30 June 31 December 2006 2005 2005 £m £m £m----------------------------------------------------------------------------------- Effective portion of changes in fair value (18.7) (3.0) (6.5)of cash flow hedgesActuarial losses on defined benefit schemes (16.2) - (7.6)Taxation on items taken directly to equity 10.5 1.4 4.2Net expense recognised directly in equity (24.4) (1.6) (9.9)-----------------------------------------------------------------------------------Profit for the period 179.1 162.9 344.8-----------------------------------------------------------------------------------Total recognised income for the 154.7 161.3 334.9period----------------------------------------------------------------------------------- Notes (unaudited) 1. Accounting Policies This interim information has been prepared by applying the accounting policies and presentation that were applied in the preparation of the Group's published consolidated financial statements for the year ended 31 December 2005, except for the following changes: The Group has assumed additional retirement benefit obligations following the acquisition of Westbury plc. The schemes have been stated at the present value of the obligation at the date of acquisition, less the fair value of the scheme assets. Further detail on the schemes will be presented in the financial statements for the year ending 31 December 2006. Investment in jointly controlled entities is measured using the net equity method. The Group's share of the result of jointly controlled entities is credited/charged to the income statement. Exchange rate differences arising on translation are reflected in the income statement. 2. Dividends The final dividend for 2005 of 19.0p (2004: 18.4p) was approved by shareholders during the period and a charge of £55.9m (2004: £53.1m) was taken to reserves. The directors propose an interim dividend of 13.8p (2005: 12.0p). No charge has yet been made for this dividend in accordance with IAS 10 (Events After the Balance Sheet Date). 3. Business Combinations On 17 January 2006 the Group acquired the entire issued share capital of Westbury plc for a total consideration, including preliminary investment at 24 November 2005, of £664.0m. This consideration was satisfied by cash of £650.6m and loan notes of £13.4m. The fair value of the loan notes at issuance was equal to face value. Westbury was a UK housebuilder with the bulk of its operations being in the south of England and Wales. In the period to 30 June 2006 the acquired business contributed £370.6m of revenue and £64.5m to gross profit. If the acquisition had occurred on 1 January 2006, the estimated revenue would have been £375.5m with gross profit of £66.2m. Effect of the acquisition The acquisition had the following effect on the Group's assets and liabilities: Acquiree's net assets at the acquisition date Provisional Book Value Fair Value £m £m------------------------------------------------------------------------------ Intangible assets 43.1 61.9Property, plant and equipment 17.3 16.8Investment in jointly controlled entities 3.1 3.1Deferred tax assets 13.5 30.0Inventories 944.6 933.8Cash 104.3 104.3Bank overdrafts (131.3) (131.3)Bank loans (370.4) (370.4)Forward currency derivatives (24.5) (24.5)Other receivables and payables (94.9) (126.4)Retirement benefit obligation (38.4) (38.4)Deferred tax liabilities (2.2) (21.7)-----------------------------------------------------------------------------Net assets 464.2 437.2Goodwill on acquisition 226.8-----------------------------------------------------------------------------Consideration paid (including costs) 664.0 Loan notes issued as consideration (13.4)Net cash and cash equivalents 27.0acquiredExisting investment in Westbury plc shares (169.1)-----------------------------------------------------------------------------Net cash outflow in period 508.5----------------------------------------------------------------------------- At 30 June 2006 the fair values of the assets and liabilities acquired noted above are provisional. During the period the Group acquired the remaining 50% interest in Wescott Holdings Limited. 4. Reconciliation of Net Cash Flow to Net Debt Six months to Six months to Year to 30 June 30 June 31 December 2006 2005 2005 Note £m £m £m----------------------------------------------------------------------------- Increase/(decrease) in net cash and 25.9 15.7 (71.7)cash equivalents(Increase)/decrease in debt and (263.1) 2.2 17.4finance leases-----------------------------------------------------------------------------(Increase)/decrease in net debt from (237.2) 17.9 (54.3)cash flowsNet debt acquired (394.9) - -New finance leases (0.4) (0.8) (1.4)Non-cash movements (15.6) (2.9) (16.3)-----------------------------------------------------------------------------(Increase)/decrease in net debt (648.1) 14.2 (72.0)Net debt at beginning of period (268.2) (196.2) (196.2)-----------------------------------------------------------------------------Net debt at end of period 5 (916.3) (182.0) (268.2)----------------------------------------------------------------------------- 5. Analysis of Net Debt 30 June 30 June 31 December 2006 2005 2005 Note £m £m £m------------------------------------------------------------------------------ Cash and cash equivalents 39.3 96.1 10.7Bank overdrafts (5.7) (1.0) (3.0)------------------------------------------------------------------------------Net cash and cash equivalents 33.6 95.1 7.7Bank loans due after more than one year (230.0) - (10.0)US/UK senior loan notes due within one (18.6) (14.3) (20.2)yearUS/UK/EU senior loan notes due after more (584.7) (233.0) (222.3)than one yearOther loan notes (24.8) - -Forward currency swaps (89.4) (27.3) (20.9)Finance leases (2.4) (2.5) (2.5)------------------------------------------------------------------------------Net debt at end of period 4 (916.3) (182.0) (268.2)------------------------------------------------------------------------------ 6. Taxation Taxation has been calculated at 30.0% of profit before taxation (six months to 30 June 2005: 30.6% and year ended 31 December 2005: 30.4%). This is the estimated effective tax rate for the year to 31 December 2006. 7. Earnings Per Share Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders of £179.1m (£190.0m before reorganisation costs of £15.4m, net of related tax of £4.5m) (six months to 30 June 2005: £162.9m and year ended 31 December 2005: £344.8m) by the weighted average number of ordinary shares in issue, excluding those held by the Employee Share Ownership Trust and the Employee Benefit Trust which are treated as cancelled. The weighted average number of ordinary shares in issue during the period was 295,189,559 (30 June 2005: 289,689,694 and 31 December 2005: 291,120,186). For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all potentially dilutive ordinary shares from the start of the accounting period. The Company has only one category of potentially dilutive ordinary shares: those share options and awards granted to directors and employees where the exercise price is less than the average market price of the Company's ordinary shares during the year. The weighted average number of ordinary shares so calculated is 296,966,396 (30 June 2005: 291,318,992 and 31 December 2005: 292,236,493). 8. Basis of Preparation The figures for the half years to 30 June 2006 and 30 June 2005 are unaudited. The figures included in the Income Statement for the year to 31 December 2005, the Balance Sheet at 31 December 2005, the Cash Flow Statement for the year to 31 December 2005 and the Statement of Recognised Income and Expense for the year to 31 December 2005 are extracts from the latest published accounts which have been delivered to the Registrar of Companies. The report from the auditors on those accounts was (i) unqualified, (ii) did not include a reference to any matters which the auditors drew attention to without qualifying their report, and (iii) did not contain a statement under section 237 (2) or (3) of the Companies Act 1985. 9. The Interim Report was approved by the Board of Directors on 21 August 2006 and is being sent to all shareholders. Further copies are available upon request from the Company Secretary, Persimmon plc, Persimmon House, Fulford, York YO19 4FE. Further information about the Group can be found on the Persimmon website at:www.persimmonhomes.com This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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