12th Sep 2005 07:00
Bovis Homes Group PLC12 September 2005 BOVIS HOMES GROUP PLC INTERIM RESULTS for the six months ended 30 June 2005 Issued 12 September 2005 The Board of Bovis Homes Group PLC today announced its interim results for 2005which have been prepared in accordance with International Financial ReportingStandards ('IFRS') which are expected to be effective at 31 December 2005. • Pre tax profit of £45.1 million (2004: £66.8 million) • Earnings per share of 26.7 pence (2004: 39.9 pence) • Interim dividend increased by 30% to 8.3 pence net per ordinary share • Period end net borrowings of £52.6 million (9.5% gearing) • Operating margin at 23.0% (2004: 25.9%) • Plots with planning consent increased to 12,354 plots (owned: 12,097 plots/controlled: 257 plots) • Strategic landholdings at 22,300 potential plots after transferring 1,587 plots to consented landholdings during the first six months Commenting on the results, Malcolm Harris, Chief Executive of Bovis Homes GroupPLC said: "The Group has continued its success in procuring, promoting and achievingresidential planning consent from its strategic landholdings. During the firsthalf of 2005, the Group converted 1,587 plots of strategic land into itsconsented land bank at a discount to market value. Further progress has alsobeen made in respect of promoting other large strategic landholdings. Based on this strategic land position, the medium to long term prospects of theGroup are good. For 2005, the Group anticipates increasing the volume of legalcompletions compared with that achieved in 2004, whilst maintaining the Group'sconsistent objective to deliver strong margins that provides for sustainablegrowth. The final outcome for volumes now depends on the number of reservationsachieved in the remaining two selling months of the year. The Group has launched two new regions, Wessex and South Midlands, effectivefrom 1 July 2005 which will contribute to providing a strong base from which toexpand the Group. The Group has increased its interim dividend by 30% to 8.3 pence per share andthe Board remains content with its stated intention to double the full yeardividend from 20.0 pence per share in 2004 to 40.0 pence per share in 2008." Enquiries: Malcolm Harris, Chief Executive Results issued by: Andrew Best /Bovis Homes Group PLC Emily Bruning On Monday 12 September Shared Value LimitedTel: 020 7321 5022/5027 Tel: 020 7321 5022/5027ThereafterTel: 01474 872427 Chairman's interim statement Bovis Homes Group PLC is pleased to announce its interim results for the sixmonths ended 30 June 2005. The interim results have been prepared in accordancewith International Financial Reporting Standards ('IFRS') which are expected tobe effective at 31 December 2005. Results For the six months ended 30 June 2005 the Group achieved a pre tax profit of£45.1 million compared with the record pre tax profit of £66.8 million achievedin the corresponding period of 2004, when the first half year profitcontribution was atypically high, driven by the exceptionally strong housingmarket at that time. Earnings per share was 26.7 pence compared with 39.9 penceachieved in the first six months of 2004. The Group's gross margin for the firsthalf of 2005 was 33.3% compared with 2004's half year gross margin of 34.7%. TheGroup previously indicated, that during the full year 2005, it expected grossmargins to reduce by circa 2% due to the increased contribution from socialhousing and construction cost increases ahead of sales price improvements. Thereduction in gross margin in the first half of the year by 1.4 percentage pointswas indicative of both these factors taking effect. Lower trading activity inthe first half of 2005 reduced the efficiency of the overhead absorption in theGroup. Hence, the Group's operating margin was 23.0% compared to 25.9% achievedin 2004. The Group achieved total turnover of £214.5 million compared with £271.7 millionin the equivalent prior year period. Included in this year's figure were landsales income and other income of £18.8 million compared with £9.9 million forthe first six months of 2004. The half year results were generated from a lower volume of legal completionsthan the prior year. The slowing of the second hand housing market had adetrimental effect on the speed of conversion of reservations to contractexchange and then onto legal completion. In the first six months of 2005, theGroup legally completed 1,089 homes compared with 1,302 legal completions in thesame period last year. As expected there was a greater contribution from socialhousing in the first half of 2005 with 246 social units (22.6% of total legalcompletions). This compared with 138 social units in the first half of 2004(10.6% of total legal completions). The Group has continued, through careful design of its sites, to moveprogressively towards smaller, more affordable homes. This, combined with theincrease in social housing, has led to a smaller average size of home andconsequently a lower average sales price. The Group's average sales price perunit for the current period was £179,700 compared to £201,100 for the comparablesix months of 2004. This represented a decrease year on year of 11%. The averagesize of legally completed home decreased by 9.2% to 1,060 square feet comparedwith 1,167 square feet in the equivalent period of 2004. Hence, the averagesales price per square foot decreased by 1.6%. Construction costs per squarefoot during the first half of 2005 increased by 4.2% compared with the firsthalf of 2004. The average sales price of the Group's private homes in the first six months of2005 was £208,700 and compared to £214,700 in the equivalent period in 2004, areduction of 2.8%. The average size of private home reduced from 1,213 squarefeet to 1,143 square feet, a reduction of 5.8%, hence the average sales priceper square foot of private homes year on year increased by 3.2%. Dividends The interim dividend of the Company will amount to 8.3 pence net per share, anincrease of 30% over 2004's interim dividend of 6.4 pence. This dividend will bepaid on 25 November 2005 to holders of ordinary shares on the register at theclose of business on 30 September 2005. The level of interim dividend representsthe first step towards the Group's commitment to increasing the 2005 full yeardividend by 25% to 25.0 pence net per share. The Board remains content with its stated intention in respect of dividends. Itintends, conditional on any necessary approvals required at future generalmeetings, to increase the full year dividend for 2005 to 25.0 pence net pershare followed by a 5.0 pence per share increase each year over the three years2006 to 2008. This commitment, which is subject to a stable businessenvironment, will double the full year dividend to 40.0 pence net per share fromits 2004 base of 20.0 pence. The Board intends to offer a scrip dividend alternative, pursuant to which theshareholders may elect to receive the whole or part of their dividend in newordinary shares credited as fully paid instead of cash, for the 2005 interimdividend. Cash flow and borrowings The Group's net borrowings at 30 June 2005 stood at £52.6 million compared withopening net borrowings of £16.8 million. This level of net borrowing representeda net debt/equity ratio of 9.5%. During the six months ended 30 June 2005, theaverage net borrowings were £67.1 million and the average debt/equity ratio was12.4%. Net borrowings included, under IFRS, fair value adjustments in respect ofinterest rate swaps held against £75.0 million of the Group's borrowings. Thesefair value adjustments increased net borrowings at 30 June 2005 and 31 December2004 by £1.3 million. As a result of adjustments required under IFRS, net financing costs, whichamounted to £4.3 million, included £1.8 million in respect of imputed interestarising on deferred term land creditors. The remaining £2.5 million of netfinance costs reflected interest charges arising on the Group's fixed andfloating interest rate borrowings net of interest income arising on money marketdeposits. Land The Group ended the first half of 2005 with 12,354 controlled plots in theconsented land bank (12,097 owned plots and 257 controlled third party ownedplots). This compared with 11,528 plots (11,174 owned plots and 354 controlledthird party owned plots) at 31 December 2004. During the first six months of2005, the Group acquired 2,206 plots of land. Of this total, 1,587 plots arosefrom the successful conversion of strategic land including 1,300 plots atBrockworth Airfield, Gloucestershire, for which the Group obtained residentialplanning consent on 13 January 2005, having promoted the site through theplanning system over a number of years. The controlled consented land bankprovides the Group with approximately four years of land supply. The Group hasremained cautious in the first half of 2005 in respect of purchases of consentedland, given the consistent strength of price for land which has an implementableresidential planning consent. The substantial strategic landholdings controlledby the Group, which have short term potential for gaining residential planningconsent, provide the opportunity for the Group to limit the purchase ofconsented land without reducing its ability to target volume growth over thenext few years. The strategic land bank at 30 June 2005 stood at 22,300 potential plots comparedto 22,831 potential plots held at the start of the year. The Group added afurther 1,056 potential plots and successfully converted 1,587 plots into theconsented land bank at a discount to market value. International Financial Reporting Standards The results for the six months ended 30 June 2005 are the first results reportedunder IFRS and have been prepared on the basis of the recognition andmeasurement requirements of IFRS that are either endorsed by the EU andeffective (or available for early adoption) at 31 December 2005 or are expectedto be endorsed and effective (or available for early adoption) at that date. Thecomparative results for the year ended 31 December 2004 and six months ended 30June 2004 have been restated under IFRS. The Group published a report on 16 June2005 entitled "Preliminary information on the implementation of InternationalFinancial Reporting Standards for the year ended 31 December 2004" whichprovided information on the impacts of IFRS on the Group, presented the Group'sIFRS accounting policies, and restated the results for the year ended 31December 2004 under IFRS compared to the previous UK GAAP. This report indicatedthat the impact of IFRS on the Group at 31 December 2004 was to reduce netassets by £7.1 million. As at 30 June 2005, the comparable impact of IFRS was areduction in net assets of £15.2 million. At 30 June 2004, the reduction in netassets amounted to £14.6 million. The impact of IFRS on the profit and lossaccount for the year ended 31 December 2004 was to reduce pre tax profits by£0.4 million. The Group believes that the full year impact of IFRS on the 2005results will be limited, however, due to the timing of a number of transactionsrequiring adjustment under IFRS, the impact on the 2005 interim results was moremarked reducing pre tax profits by approximately £1.4 million. The correspondingimpact on the 2004 interim results was less material with a reduction ofapproximately £0.4 million. Forward order book Against the backdrop of a challenging housing market, Bovis Homes achieved to 30June 2005 a cumulative reservations total of 2,038 homes (excluding forwardsales for 2006) compared to 2,102 homes (excluding forward sales for 2005) atthe same time in 2004. This represented a reduction of 3% year on year. Duringthe first six months of 2005 the Group achieved circa 250 net reservations permonth. Social housing continues to grow as part of the Group's business,including the Group's third party partnership developments business whereaffordable homes are constructed for housing associations on their land. By theend of the first half of 2005 the Group had secured sales on 639 social housingunits compared with 295 social housing units in the comparable period of 2004.This increase in activity in respect of social housing is consistent with theGroup's prior indications that social housing would increase its contribution tooverall volumes during 2005. Market conditions The fundamentals of the UK housing market remain sound. There continues to be ashortfall in the supply of new homes to meet the increasing number of householdsin the UK. Interest rates are low relative to the long term average and buying ahouse using a mortgage remains affordable. However, activity in the UK housing market relies heavily on the confidence ofthe consumer. Consumers are displaying more caution, with many delaying thedecision to move house. After a weak fourth quarter of 2004 in terms of housingactivity and a quiet start in the first quarter of 2005, the housing marketremained subdued during the second quarter of 2005. During the first half of2005, property transactions in England and Wales, reported by NationalStatistics, were 24% lower than in the first half of 2004. The Monetary Policy Committee reduced the Bank of England base interest rate by0.25% on 4 August 2005. The Halifax has reported that it believes this rate cutwill reduce mortgage payments as a proportion of gross income for the averagenew borrower from 20% to 19%, in line with the average for the past 20 years andwell below the 34% peak in 1990. Prospects Looking forward to the second half of 2005, there remains considerableuncertainty over the robustness of the UK housing market. However, recentcommentary by the Bank of England in respect of mortgage approvals indicated a10% increase in the number of loans approved in the second quarter of 2005compared with the first quarter of 2005. Further, survey information from theRoyal Institute of Chartered Surveyors has suggested modest upturns in both thenumber of completed property sales and enquiries from potential homebuyers. The Group will benefit from a larger availability in the second half of 2005 ofsmaller, more affordable properties which are more readily saleable in a quieterhousing market. Whilst this will support the Group's aims in terms of volumes,it will continue to have a reducing effect on average sales price and averageprofit per unit. The Group anticipates that the average sales price for the fullyear 2005 will be lower than in 2004. This is largely due to the average size ofunit which, dependent on mix, may fall by circa 10% year on year. The Group believes that the medium to long term prospects are good, founded uponthe Group's strategic land bank and ability to deliver mid-market homes into asupply constrained housing market. The Group is making good progress towards itsaim of gaining planning consent on 9,000 plots of strategic land between 1January 2004 and 31 December 2006. Up to 30 June 2005, the Group had gainedplanning consent on approximately 3,750 strategic plots and progress is beingmade on various other strategic investments. The Group will continue to striveto replenish the land being used to deliver homes through strategic landinvestment where land is procured at a discount to market value. The conversion of a number of large strategic sites will provide the Group withthe opportunity to expand its regional structure and facilitate the plannedexpansion of the Group. Based on the good progress being made, the Group haslaunched two new regions with effect from 1 July 2005. These new regions, Wessexand South Midlands, currently have only a limited number of staff and much ofthe service provision required is delivered from existing staff, systems andassets in the more established South West and Central regions. Land is the key supply chain input for any housebuilder and the land market,through significant undersupply, has witnessed price increases far in excess ofthe well publicised increases in house prices. The Group will continue to focuson procuring land through strategic means which will provide for delivery ofsustainable shareholder returns in the medium to long term. The short term islikely to be affected by volatility in the housing market in terms oftransaction levels and prices. Pursuant to the Group's trading update on 14 July 2005, external marketexpectations for the Group's profit performance for 2005 have moderated,reflecting the Group's comments particularly in respect of volumes and changingproduct mix. The Group continues to target an increase in the volume of legalcompletions in 2005 compared with the prior year, whilst maintaining the Group'sconsistent objective to deliver strong margins that provides for sustainablegrowth. To this end, the remaining selling period of 2005 is vital to achievingthis target. Sir Nigel Mobbs Following the recent announcements regarding his ill health, Sir Nigel Mobbs hasadvised the Board of his intention to retire from the Board with effect from 9September 2005. The Board expresses its gratitude for his enormous contributionto the development of the Group since before flotation in 1997 and extends itsbest wishes to him. An announcement regarding his successor will be made in duecourse. In the meantime, I will continue as Acting Chairman. Tim Melville-Ross Acting Chairman 9 September 2005 Bovis Homes Group PLCGroup income statement (unaudited) For the six months ended Six months Six months 30 June 2005 ended ended Year ended 30 June 2005 30 June 2004 31 Dec 2004 (restated) (restated) £000 £000 £000___________________________________________________________________________ Revenue -continuingoperations 214,492 271,672 559,464Cost of sales (143,165) (177,504) (362,316)___________________________________________________________________________ Gross profit 71,327 94,168 197,148Administrativeexpenses (21,925) (23,702) (45,625)___________________________________________________________________________ Operating profitbefore financingcosts 49,402 70,466 151,523Financial income 488 137 1,228Financial expenses (4,808) (3,780) (7,938)___________________________________________________________________________ Net financingcosts (4,320) (3,643) (6,710)___________________________________________________________________________ Profit before tax 45,082 66,823 144,813Income tax expense (13,600) (20,091) (43,089)___________________________________________________________________________ Profit for theperiodattributable toequity holders ofthe parent 31,482 46,732 101,724___________________________________________________________________________ Basic earnings perordinary share 26.7p 39.9p 86.8p___________________________________________________________________________ Diluted earningsper ordinary share 26.5p 39.0p 86.1p___________________________________________________________________________ In both the current and preceding financial periods there was no materialdifference between the historical cost profits and losses and those reported inthe income statement. Bovis Homes Group PLCGroup balance sheet (unaudited) At 30 June 2005 30 June 2005 30 June 2004 31 Dec 2004 (restated) (restated) £000 £000 £000___________________________________________________________________________ AssetsProperty, plant andequipment 13,033 13,129 12,910Investments 23 23 23Deferred tax assets 10,719 9,996 10,193Trade and otherreceivables 5,924 6,593 5,870___________________________________________________________________________ Total non-current assets 29,699 29,741 28,996___________________________________________________________________________ Inventories 752,837 626,792 699,917Trade and otherreceivables 37,837 17,614 36,032Cash and cash equivalents 23,650 69,510 59,486___________________________________________________________________________ Total current assets 814,324 713,916 795,435___________________________________________________________________________ Total assets 844,023 743,657 824,431___________________________________________________________________________ EquityIssued capital 59,545 59,070 59,146Share premium 145,202 142,151 142,577Hedge reserve (909) (626) (889)Retained earnings 351,470 290,226 337,381___________________________________________________________________________ Total equity 555,308 490,821 538,215___________________________________________________________________________ LiabilitiesBank loans 41,106 75,895 40,894Trade and other payables 15,328 24,269 21,465Retirement benefitobligations 20,950 20,770 20,510Long-term provisions 1,273 1,469 1,586___________________________________________________________________________ Total non-currentliabilities 78,657 122,403 84,455___________________________________________________________________________ Bank loans 35,193 - 35,376Trade and other payables 161,582 110,309 145,298Tax liabilities 13,283 20,124 21,087___________________________________________________________________________ Total current liabilities 210,058 130,433 201,761___________________________________________________________________________ Total liabilities 288,715 252,836 286,216___________________________________________________________________________ Total equity andliabilities 844,023 743,657 824,431___________________________________________________________________________ These interim accounts were approved by the Board of directors on 9 September2005. Bovis Homes Group PLCGroup statement of cash flows (unaudited) For the six months ended Six months Six months 30 June 2005 ended ended Year ended 30 June 2005 30 June 2004 31 Dec 2004 (restated) (restated) £000 £000 £000___________________________________________________________________________ Cash flows fromoperating activitiesProfit for theperiod 31,482 46,732 101,724Depreciation 750 698 1,465Investment income (488) (137) (1,228)Interest expense 4,808 3,780 7,938(Profit)/loss onsale of property,plant andequipment (15) 37 27Equity-settledshare-basedpayment expenses (129) 303 799Income tax expense 13,600 20,091 43,089___________________________________________________________________________ Operating profitbefore changes inworking capitaland provisions 50,008 71,504 153,814___________________________________________________________________________ Increase in tradeand otherreceivables (1,746) (4,447) (21,952)(Increase)/decrease in inventories (52,920) 5,252 (67,874)Increase in tradeand other payables 9,583 7,865 38,662Increase/(decrease)in provisionsand employeebenefits (1,433) 257 (1,010)___________________________________________________________________________ Cash generatedfrom operations 3,492 80,431 101,640___________________________________________________________________________ Interest paid (4,365) (3,300) (6,289)Income taxes paid (21,450) (19,000) (40,750)___________________________________________________________________________ Net cash fromoperatingactivities (22,323) 58,131 54,601___________________________________________________________________________ Cash flows frominvesting activitiesInterest received 582 135 1,155Acquisition ofproperty, plantand equipment (887) (5,654) (6,232)Proceeds from thesale of plant andequipment 29 29 68Purchase of ownshares (352) (1,351) (1,351)Sale of own shares 127 180 216___________________________________________________________________________ Net cash frominvestingactivities (501) (6,661) (6,144)___________________________________________________________________________ Cash flows fromfinancing activitiesDividends paid (16,036) (13,004) (20,517)Proceeds fromissue of sharecapital 3,024 1,318 1,820___________________________________________________________________________ Net cash fromfinancingactivities (13,012) (11,686) (18,697)___________________________________________________________________________ Net(decrease)/increase in cash and cashequivalents (35,836) 39,784 29,760Cash and cashequivalents at thestart of period 59,486 29,726 29,726___________________________________________________________________________ Cash and cashequivalents at theend of period 23,650 69,510 59,486___________________________________________________________________________ Bovis Homes Group PLCGroup statement of recognised income and expense (unaudited) For the six months ended Six months Six months 30 June 2005 ended ended Year ended 30 June 2005 30 June 2004 31 Dec 2004 (restated) (restated) £000 £000 £000___________________________________________________________________________ Effective portionof changes in fairvalue of interestrate cash flowhedges (29) 1,277 902Deferred tax onchanges in fairvalue of interestrate cash flowhedges 9 (383) (271)Actuarial losseson definedbenefits pensionscheme (1,560) (650) (1,880)Deferred tax onactuarial losseson definedbenefits pensionscheme 468 195 564___________________________________________________________________________ Netincome/(expense)recogniseddirectly in equity (1,112) 439 (685)Profit for theperiod 31,482 46,732 101,724___________________________________________________________________________ Total recognisedincome and expensefor the periodattributable toequity holders ofthe parent 30,370 47,171 101,039___________________________________________________________________________ Notes to the accounts 1 Basis of preparation Bovis Homes Group PLC ('the Company') is a company domiciled in the UnitedKingdom. The consolidated interim accounts of the Company for the six monthsended 30 June 2005 comprise the Company and its subsidiaries (together referredto as 'the Group') and the Group's interest in associates. The consolidated interim accounts were authorised for issue by the directors on9 September 2005. The accounts are unaudited but have been reviewed by KPMGAudit Plc. EU law (IAS Regulation EC 1606/2002) requires that the next annual consolidatedfinancial statements of the Group, for the year ending 31 December 2005, beprepared in accordance with International Financial Reporting Standards ('IFRS')adopted for use in the EU ('adopted IFRS'). The interim accounts have been prepared on the basis of the recognition andmeasurement requirements of IFRS in issue that either are endorsed by the EU andeffective (or available for early adoption) at 31 December 2005 or are expectedto be endorsed and effective (or available for early adoption) at 31 December2005, the Group's first annual reporting date at which it is required to useadopted IFRS. Based on these adopted and unadopted IFRS, the directors have madeassumptions about the accounting policies expected to be applied when the firstannual IFRS financial statements are prepared for the year ending 31 December2005. The directors have assumed IAS 19 'Employee benefits (revised)' issued by theInternational Accounting Standards Board will be adopted by the EU in sufficienttime that it will be available for use in the annual IFRS financial statementsfor the year ending 31 December 2005. The adopted IFRS that will be effective (or available for early adoption) in theannual financial statements for the year ending 31 December 2005 are stillsubject to change and to additional interpretations and therefore cannot bedetermined with certainty. Accordingly, the accounting policies for the annualperiod will be determined finally only when the first annual financialstatements are prepared for the year ending 31 December 2005. The interim accounts do not constitute statutory accounts within the meaning ofSection 240 of the Companies Act 1985. The figures for the half years ended 30June 2005 and 30 June 2004 are unaudited. The figures for the year ended 31December 2004 are also unaudited but have been derived from the Company'sstatutory accounts for the year ended 31 December 2004 as adjusted to complywith IFRS expected to be effective (or available for early adoption) at 31December 2005. The Company's statutory accounts for the year ended 31 December2004, which were prepared in accordance with UK Generally Accepted AccountingPractices ('UK GAAP'), have been reported on by the Company's auditors anddelivered to the registrar of companies. The report of the auditors wasunqualified and did not contain statements under Section 237(2) or (3) of theCompanies Act 1985. The Group issued a restatement of its accounts for 2004under IFRS on 16 June 2005, including reconciliations of comparative figures tothe latest published accounts. The preparation of financial statements in conformity with IFRS requiresmanagement to make judgements, estimates and assumptions that affect theapplication of policies and reported amounts of assets and liabilities, incomeand expenses. The estimates and associated assumptions are based on historicalexperience and various other factors that are believed to be reasonable underthe circumstances, the results of which form the basis of making judgementsabout carrying values of assets and liabilities that are not readily apparentfrom other sources. Actual results may differ from these estimates. The accounting policies have been applied consistently for all periods presentedin these consolidated interim accounts and in preparing an opening IFRS balancesheet at 1 January 2004 for the purpose of the transition to IFRS. Notes to the accounts continued 2 Basis of consolidation The consolidated interim accounts incorporate the accounts of the Company andentities controlled by the Company (its subsidiaries) made up to 30 June.Control is achieved where the Company has the power to govern the financial andoperating policies of an entity so as to obtain benefits from its activities.The existence and effect of potential voting rights that are currentlyexercisable or convertible are considered when assessing whether the Groupcontrols another entity. Associates are those entities in which the Group has significant influence, butnot control, over the financial and operating policies. The consolidated interimaccounts include the Group's share of the total recognised gains and losses ofassociates on an equity accounted basis, from the date that significantinfluence commences until the date that significant influence ceases. 3 Accounting policies Full details of the Company's IFRS accounting policies are contained within adocument entitled "Preliminary information on the implementation ofInternational Financial Reporting Standards for the year ended 31 December 2004"which was published by the Group on its website on 16 June 2005. 4 Reconciliation of net cash flow to net debt Six months Six months ended ended Year ended 30 June 2005 30 June 2004 31 Dec 2004 £000 £000 £000___________________________________________________________________________ Net(decrease)/increasein net cash andcash equivalents (35,836) 39,784 29,760Fair valueadjustments tointerest rateswaps (29) 1,277 902Net debt at startof period (16,784) (47,446) (47,446)___________________________________________________________________________ Net debt at end ofperiod (52,649) (6,385) (16,784)___________________________________________________________________________ Analysis of net debt:Cash and cashequivalents 23,650 69,510 59,486Bank loans (75,000) (75,000) (75,000)Fair value ofinterest rateswaps (1,299) (895) (1,270)___________________________________________________________________________ Net debt (52,649) (6,385) (16,784)___________________________________________________________________________ 5 Income taxes Current tax Current tax expense for the interim periods presented is the expected tax paybleon the taxable income for the period, calculated using a corporation tax rate of30% applied to the pre-tax income of the interim period, adjusted to takeaccount of deferred taxation movements. Current tax for current and prior periods is classified as a current liabilityto the extent that it is unpaid. Amounts paid in excess of amounts owed areclassified as a current asset. Notes to the accounts continued 6 Dividends The following dividends were paid by the Group. Six months Six months ended ended Year ended 30 June 2005 30 June 2004 31 Dec 2004___________________________________________________________________________ Dividend cost (£000) 16,036 13,004 20,517Dividend per share (pence) 13.6 11.1 6.4/11.1___________________________________________________________________________ An interim dividend in respect of 2005 of 8.3 pence per share, amounting to atotal dividend of £9,820,000 based on the shares in issue as at 9 September2005, was declared by the Board on 9 September 2005. This interim dividend willbe paid on 25 November 2005 to shareholders on the register at the close ofbusiness on 30 September 2005, with an ex-dividend date of 28 September 2005.This dividend has not been recognised as a liability at the balance sheet date. 7 Earnings per share Basic earnings per ordinary share for the six months ended 30 June 2005 iscalculated on profit after tax of £31,482,000 (six months ended 30 June 2004:£46,732,000; year ended 31 December 2004: £101,724,000) over the weightedaverage of 117,840,652 (six months ended 30 June 2004: 117,048,745; year ended31 December 2004: 117,196,751) ordinary shares in issue during the period. Diluted earnings per ordinary share is calculated on profit after tax of£31,482,000 (six months ended 30 June 2004: £46,732,000; year ended 31 December2004: £101,724,000) over the diluted weighted average of 118,791,437 (six monthsended 30 June 2004: 119,990,423; year ended 31 December 2004: 118,125,595)ordinary shares potentially in issue during the period. The diluted averagenumber of shares is calculated in accordance with IAS 33 "Earnings Per Share".The dilutive effect relates to the average number of potential ordinary sharesheld under option during the period. This dilutive effect amounts to the numberof ordinary shares which would be purchased using the aggregate difference invalue between the market value of shares and the share option exercise price.The market value of shares has been calculated using the average ordinary shareprice during the period. Only share options which have met their cumulativeperformance criteria have been included in the dilution calculation. There is nomaterial dilutive effect on the profit after tax used in the diluted earningsper share calculation. 8 Explanation of transition to IFRS An explanation of how the transition from UK GAAP to IFRS has affected theGroup's financial position, financial performance and cash flows was publishedby the Group on its website on 16 June 2005, contained within a documententitled "Preliminary information on the implementation of InternationalFinancial Reporting Standards for the year ended 31 December 2004". Thisdocument included a reconciliation of equity reported under UK GAAP and IFRS at1 January 2004, the date of transition to IFRS. 9 Circulation to shareholders The interim report will be sent to shareholders. Further copies will beavailable on request from the Company Secretary, Bovis Homes Group PLC, TheManor House, North Ash Road, New Ash Green, Longfield, Kent DA3 8HQ. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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