Interim Results
Artisan (UK) PLC
19 December 2002
Embargoed Release: 0730hours, 19th December 2002
ARTISAN (UK) PLC
UNAUDITED INTERIM STATEMENT FOR THE SIX
MONTHS ENDED 30TH SEPTEMBER 2002
SUMMARY
• Turnover on continuing activities £13,047,813 for the six months ended
30th September 2002 (2001: £17,145,307)
• Appointment of new Chairman (Michael W. Stevens) and new CEO (Martyn
Freeman)
• Operating Loss £564,345 for the six months ended 30th September 2002
(2001: £2,066,255 operating profit) reflecting adverse cyclical conditions
• Better utilisation of housing stock in order to maximise capital return
• Artisan International established to secure major development
opportunities in the Eurozone
Michael W. Stevens, Chairman of Artisan (UK) plc commented,
'My objective remains to continue to concentrate on the core activities of
residential and commercial development, rebuilding the UK activity through
investment and possibly acquisitions where suitable and to also develop
international activity particularly in the eurozone as the UK activities become
re-established.'
For further information please contact:-
Artisan (UK) plc 01480 43 66 66
Martyn Freeman, Chief Executive
Chris Musselle, Finance Director
www.artisan-plc.co.uk
Adam Reynolds/Takki Sulaiman 020 7735 9415
Hansard Communications 07778 419 218
www.hansardcommunications.com
ARTISAN (UK) PLC
UNAUDITED INTERIM STATEMENT FOR THE SIX
MONTHS ENDED 30TH SEPTEMBER 2002
FINANCIAL HIGHLIGHTS
For the 6 months to 30th September 2002
Six Months to 30th Six Months to 30th Year to 31st March
September 2002 September 2001 2002
Turnover - continuing operations £13,047,813 £17,145,307 £42,272,870
Operating (Loss)/Profit - continuing operations £(564,345) £2,066,255** £2,402,526**
Net Debt * £18,612,286 £29,629,695 £22,944,350
Dividend per share - interim 0.0p 0.25p 0.25p
Dividend per share - final 0.15p
Net Assets £14,860,196 £35,637,249** £19,151,273
Note *(Including borrowings in Living Heritage Holdings Limited when an
associate)
**(before goodwill impairment writedown at 31 March 2002)
CHAIRMAN'S STATEMENT
A number of significant changes have been implemented in the first six months of
the financial year. In May 2002 John Hemingway and myself were invited to join
the Board and Martyn Freeman was appointed CEO. At the end of July I assumed
the role of Chairman, and Alain Brion was recruited to head the newly formed
Artisan International s.a. as a start up venture to secure major development
opportunities in the eurozone economies.
However it is not proposed to limit new activity to outside the UK, and indeed
in September the Board was disappointed not to secure another sizeable UK
development business following significant commitment of resources by the
management and its advisors. Your Board is continuing to seek suitable
acquisition opportunities to enhance the UK operations.
The core UK businesses were subject to some adverse cyclical influence during
the six months under review as reflected in the results for the period.
RESIDENTIAL HOUSING DIVISION
Rippon Homes
Rippon Homes has exceeded budgeted targets with the sale of 47 homes and managed
to carry virtually no completed stock throughout the period, optimising return
on capital employed. The new homes market is generally most buoyant in
September/October and January to April, and therefore four of the best sales
months normally arise in the second half of the financial year. Rippon Homes is
actively seeking to acquire suitable development land to rebuild its land
stocks.
Living Heritage
The residual Living Heritage housing stocks were reduced by 27 units during the
period, although this was slightly less than budgeted. The re-structuring of
management within the residential housing division is proving successful and
sales reservations have markedly improved since September 2002. All but one of
the 27 sales were of the older stock acquired when Artisan took full control of
this former associate in November 2001. The three sites being developed since
that date are only just coming into sales production but all three are expected
to be profitable and sales reservations since the reporting date have been in
excess of budget.
COMMERCIAL DIVISION
Artisan (UK) Developments
In Artisan (UK) Developments, the management decided to adopt a more prudent
marketing policy by reducing the volume of commercial buildings developed on a
speculative basis for subsequent letting and sale and undertaking the majority
of new development on a forward sale basis by marketing the development from the
plans and securing a sale of the plot prior to its construction. Both of the
new business park sites opened during the first half year, Peterborough and
Huntingdon, are being developed using this approach with encouraging starts and
the majority of further new development at Colmworth Business Park is also being
developed on this basis.
In respect of the speculative development stock, the first six months were
disappointing with only 7,500ft(2) of office space sold plus the forward sale of
a new distribution unit at Colmworth and a lack of sales on the remaining
10,000ft(2) office buildings at Clare Hall in St Ives. As a consequence gross
profits in Artisan (UK) Developments did not cover overheads and finance costs
during the period under review. Profitability for the year as a whole will be
dependant on completing sales on existing stocks.
The Board is confident that the strategy of minimising speculative development
exposure and completed stocks is the right one to employ to guard against any
possible downturn in the property market, and to maximise returns on capital
employed.
FINANCIAL REVIEW
The results for the six months to 30 September 2002 have reflected the trading
conditions referred to in the earlier part of this statement. In addition the
Group has incurred some additional costs associated with the departure of the
former Chairman and the refocusing of the Group's strategy..
The Group's turnover in the current interim period on continuing activities is
£13.0m (30 September 2001: £17.1m) and the operating loss on continuing activity
before cost of aborted transactions is £564,000 (30 September 2001: operating
profit £2.1m).
The operating loss incurred reflects reduced margins at Rippon Homes primarily
through increased land costs and a delay in sales at Artisan (UK) Developments
arising from a slowing of investment in commercial property in the area
immediately around Cambridge.
As already referred to, much effort has been made in disposing of the Living
Heritage stock of properties. The proceeds have been used to reduce debt.
Living Heritage net debt has reduced by £2.4m and other bank loans and vendor
loans net of the increase in overdraft have reduced by £1.9m since 31 March
2002.
The Group gearing at 30 September 2002 is 125.3% (30 September 2001 119.7%,
after adjusting for Living Heritage debt not included at 30 September 2001 and
goodwill subsequently written off at 31 March 2002). The objective is to reduce
the gearing as the Living Heritage properties and other non core assets are
sold. Furthermore the Artisan (UK) Developments' policy of securing prior sales
has enabled the Group to improve the utilisation of cash resources.
Severance payments of £510,000 in respect of executive service contracts were
paid to Mr Stephen Dean as disclosed as a post balance sheet event in the
accounts for the year to 31 March 2002. Additionally £60,000 was paid to
terminate his non-executive director's contract and further £118,750 payments on
account of contractual commissions due to a connected company were also made.
Mr Stephen Dean is no longer a director of the company. The Cater Barnard plc
loan due to be repaid as at 30th September 2002 has since been partly repaid and
the Board are actively seeking settlement of the balance. Your Board believes
that having incurred substantial management time, the dealings with Mr Dean and
his connected companies are now largely concluded.
As recently announced, the Board has appointed BDO Stoy Hayward as the Group's
new auditors. A review of the Group's corporate governance procedures in
relation to the operation of the Board is in progress and will take account of
any recommendations made in the Higgs review of the role and effectiveness of
non-executive Directors.
Your Board is in the course of reviewing the investments held in the Stratus
Services Group Inc. We are in discussions with the management of Stratus to
assess the ongoing viability of Stratus and its ability to repay the Preferred
Stock held by Artisan which is due for repayment in June 2008. The total
carrying value of the Group's investments as at 30 September 2002 is £3.6m.
Following comments and information received from the Stratus management your
Board believe it is prudent to provide £2.2m against the carrying value of this
investment whilst discussions continue with Stratus.
We will continue to keep overhead costs under review and in the period to 30
September 2002 we have reduced overhead costs in our Huntingdon and Malvern
offices. There is however some cost increase associated with the establishment
of Artisan International and a modest London office to support future
developments.
FUTURE PROSPECTS
Your Board is acutely aware of the expectation of shareholders and is pursuing a
strategy to deliver long term sustainable capital growth. To this end, I
confirm that I will shortly subscribe for new 0.5p ordinary shares in the
Company to a total of £500,000 at a price of the higher of 3p or mid-market
price. This subscription is to provide additional working capital resources for
the Group. In recognition of the inability of the Board to recommend payment of
an interim dividend to shareholders in the absence of revenue profits for the
period under review, I have offered to waive my own director's fees for the
period to 30 September 2002. My objective remains to continue to concentrate on
the core activities of residential and commercial development by rebuilding the
UK activity through investment and acquisitions where suitable and also to
develop international activity particularly in the eurozone as the UK activities
become re-established.
The Board believes that this strategy will allow the Group to diversify the
risks to the business of staying only in the UK in the event of a downturn in
the UK property sector. Your Board also believes that the potential yield in
continental Europe is presently greater than in the UK.
In conclusion I wish to thank all the staff and management for the way in which
they have welcomed me to the Group and for their continued loyalty and support.
MICHAEL W STEVENS
Chairman
19th December 2002
ARTISAN (UK) PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Six months to September 2002
Six months Six months Year
ended ended ended
30th September 2002 30th September 2001 31st March 2002
(Unaudited) (Unaudited) (Audited)
£ £ £
Turnover
Continuing operations 13,047,813 17,145,307 42,272,870
Discontinued activities - 13,213,057 21,020,006
Total Turnover 13,047,813 30,358,364 63,292,876
Less: Group's share of associate's turnover -
all continuing - (3,351,006) (3,830,789)
Group Turnover 13,047,813 27,007,358 59,462,087
Operating profit
Continuing operations (564,345) 2,066,255 2,402,526
Discontinued activities - 257,195 629,808
Goodwill write down (exceptional) -
continuing - - (18,755,120)
Cost of aborted transactions - continuing (253,750) (227,626) (312,626)
Group's share of operating loss of associate - (411,921) (600,257)
Total Operating (Loss) / Profit (818,095) 1,683,903 (16,635,669)
Interest receivable and similar income 162,216 334,814 299,180
(Loss)/Profit on sale of group undertaking and (6,798) 1,924,997 4,368,622
fixed assets
Provision against loan note debtor (2,200,000) - -
Interest payable (647,217) (694,670) (858,729)
(Loss) / Profit on ordinary activities before (3,509,894) 3,249,044 (12,826,596)
taxation
Taxation on ordinary activities 381,784 (1,040,236) (696,854)
(Loss) / Profit on ordinary activities after
taxation (3,128,110) 2,208,808 (13,523,450)
Dividends - (718,032) (1,059,450)
Retained for the period (3,128,110) 1,490,776 (14,582,900)
(Loss)/Earnings per share (1.16)p 0.77p (4.72)p
Diluted (loss)/earnings per share (1.16)p 0.77p (4.72)p
Dividends per share - Total 0.0p 0.25p 0.40p
- Interim 0.0p 0.25p 0.25p
- Final 0.15p
ARTISAN (UK) PLC
CONSOLIDATED BALANCE SHEET
As at As at As at
30th September 30th September 31st March
2002 2001 2002
(Unaudited) (Unaudited) (Audited)
£ £ £
Fixed assets
Intangible fixed assets 2,863,666 13,740,801 2,942,158
Tangible fixed assets 669,987 1,428,646 894,642
Investment in associate - 919,686 -
3,533,653 16,089,133 3,836,800
Current assets
Investments 929,805 1,664,144 811,056
Stocks and work in progress 32,021,606 26,109,213 33,199,625
Debtors 7,430,064 23,123,051 16,638,113
Cash at bank and in hand 231,600 120,934 355,049
40,613,075 51,017,342 51,003,843
Creditors
Amounts falling due within one year (22,936,532) (22,772,755) (27,885,356)
Net current assets 17,676,543 28,244,587 23,118,487
Total assets less current liabilities 21,210,196 44,333,720 26,955,287
Creditors
Amounts falling due after more than
one year (6,350,000) (8,696,471) (7,804,014)
Net Assets 14,860,196 35,637,249 19,151,273
Capital and reserves
Called up share capital 1,344,314 1,436,064 1,411,064
Share premium account 18,428,211 18,428,211 18,428,211
Merger reserve 515,569 9,358,749 515,569
Capital redemption reserve 91,750 - 25,000
Profit and loss account (5,519,648) 6,414,225 (1,228,571)
Equity shareholders' funds 14,860,196 35,637,249 19,151,273
Total loan balances included
in creditors 15,322,056 13,934,492 20,797,392
ARTISAN (UK) PLC
CONSOLIDATED CASH FLOW
Six months Six months Year
ended ended ended
30th September 30th September 31st March
2002 2001 2002
(Unaudited) (Unaudited) (Audited)
£ £ £
Net cash inflow / (outflow) from
operating activities 7,791,681 (1,808,892) 1,496,250
Returns on investments and servicing of finance
Interest received and similar income 162,216 334,814 299,180
Interest paid (647,217) (694,670) (858,729)
(485,001) (359,856) (559,549)
Taxation
UK Corporation tax paid (1,906,671) (80,618) (535,156)
Capital expenditure and financial investment
Purchase of tangible fixed assets (17,354) (2,161) (401,397)
Sale of tangible fixed assets 112,376 - 896,163
95,022 (2,161) 494,766
Acquisitions and disposals
Purchase of subsidiary undertakings - - (552,692)
Disposal of subsidiary undertakings - 1,914,433 5,714,818
Cash disposal with subsidiary undertakings - (71,450) (39,027)
- 1,842,983 5,123,099
Equity dividends paid - - (656,156)
Net cash inflow / (outflow) before financing 5,495,031 (408,544) 5,363,254
Financing
Share buy back (1,162,967) - (412,300)
Repayment of borrowings (5,475,336) (7,351,950) (12,275,635)
Capital element of finance leases & hire
purchase contracts (162,323) 47,817 14,218
(6,800,626) (7,304,133) (12,673,717)
DECREASE IN CASH (1,305,595) (7,712,677) (7,310,463)
ARTISAN (UK) PLC
NOTES TO THE STATEMENT OF CASH FLOWS
(a) Reconciliation of operating (loss)/profit to net cash inflow/(outflow) from
operating activities
Six months Six months Year
ended ended ended
30th September 30th September 31st March
2002 2001 2002
(Unaudited) (Unaudited) (Audited)
£ £ £
Operating (loss) / profit (818,095) 1,683,903 (16,635,669)
Depreciation 122,835 135,324 448,457
Amortisation 78,492 390,156 781,397
Goodwill write off - - 18,755,120
Loss on sale of trade investments - 94,129 -
Loss retained in associated company - 391,209 600,257
Increase/(decrease) in investments (118,749) (850,244) 103,980
Decrease in stock 1,178,019 977,835 7,395,427
Decrease / (increase) in debtors 7,008,049 (1,982,971) (129,832)
Increase / (decrease) in creditors 341,130 (2,648,233) (9,822,887)
Net cash inflow / (outflow) from
operating activities 7,791,681 (1,808,892) (1,496,250)
(b) Reconciliation of net cash flow to movement in net debt
Six months Six months Year
ended ended ended
30th September 30th September 31st March
2002 2001 2002
(Unaudited) (Unaudited) (Audited)
£ £ £
Decrease in cash (1,305,595) (7,712,677) (7,310,463)
Cash outflow from decrease in debt and
lease financing 5,637,659 7,399,767 12,545,033
Debt disposed of on sale of subsidiary - 891,460 70,796
Debt acquired with subsidiary undertakings - - (11,215,201)
Change in net debt resulting from cash flows 4,332,064 578,550 (5,909,835)
Opening net debt (22,944,350) (17,034,515) (17,034,515)
Closing net debt (18,612,286) (16,455,965) (22,944,350)
ARTISAN (UK) PLC
NOTES TO THE STATEMENT OF CASH FLOWS
(c) Analysis of net cash and debt
At Cash At
31st March 2002 Flow 30th September 2002
NET CASH £ £ £
Cash at bank 355,049 (123,449) 231,600
Bank overdrafts (2,290,134) (1,182,146) (3,472,280)
(1,935,085) (1,305,595) (3,240,680)
DEBT
Finance leases (211,873) 162,323 (49,550)
Debt due within one year (13,847,392) 4,875,336 (8,972,056)
Debt due after more than one year (6,950,000) 600,000 (6,350,000)
Net debt (22,944,350) 4,332,064 (18,612,286)
NOTES TO THE INTERIM STATEMENT
1. The interim financial information has been prepared on the basis of the
accounting policies set out in the Group's 2002 statutory accounts to
31st March 2002. The interim figures have not been audited. The interim
financial statement does not constitute statutory accounts within the
meaning of Section 240 of the Companies Act 1985 (The 'Act'). Comparative
financial information for the 12 months ended 31st March 2002 has been
extracted from the statutory accounts for the period which have been
delivered to the Registrar of Companies and upon which the auditors
gave an unqualified report, with no statement under Section 237(2) or (3)
of the Act.
2. The restatement of the 30th September 2001 interim results is to reflect
the now discontinued activities in the comparative results as well as the
30th September 2002 results. This restatement has no effect on aggregate
Group turnover and operating (loss)/profit.
3. The taxation credit for the 6 months has been calculated at an effective
rate of 31% (30th September 2001 charge: 31%).
4. The calculation of earnings per share is based on the profit on ordinary
activities after taxation and 270,540,628 (30th September 2001: 287,212,760)
ordinary shares being the weighted average number of shares in issue during
the half year. The weighted average number of shares in issue during the
twelve months ended 31st March 2002 was 286,383,308.
The calculation of diluted earnings per share is based on the profit on
ordinary activities after taxation and 270,540,628 (30th September 2001:
287,914,283) ordinary shares being the weighted average number of shares in
issue during the half-year, after allowing for share options.
5. The Board has decided that there will be no interim dividend.
6. The interim statement was approved by the Board of Directors on 18th
December 2002. Copies are being sent to all shareholders. Copies of this
statement will be available to members of the public, free of charge, from
the Company's registered office, Dean House, Sovereign Court, Ermine
Business Park, Huntingdon, Cambridgeshire, PE29 6XU.
__________________________________________________
END
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