Interim Results
Artisan (UK) PLC
17 December 2003
ARTISAN (UK) PLC
UNAUDITED INTERIM STATEMENT FOR THE SIX
MONTHS ENDED 30TH SEPTEMBER 2003
Highlights
• Turnover up 29% to £16,885,282 for the six months ended 30th September
2003 (2002: £13,047,813)
• Pre tax profit of £485,478 for the six months ended 30th September 2003
• (2002: Operating loss of £3,024,893)
• Earnings per share of 0.09 pence per share for the six months ended 30th
September 2003 (2002: Loss of 1.16 pence per share)
• Net debt reduced by 68% to £6,003,312 for the six months ended 30th
September 2003 compared to the comparable period last year (2002: Debt of
£18,612,286)
• Residential trading performance ahead of budget for the period
• Continued divestment of non core assets
Michael W. Stevens, Chairman of Artisan (UK) plc commented,
'The first six months of the financial year has shown a considerable improvement
for the group compared to the comparable period last year.'
'As a property developer the group's objectives are to concentrate on its core
activities of residential and commercial property development. We continue to
invest in residential development land and have been actively seeking
acquisitionsof principally residential developers to enhance growth.'
For further information please contact:
Artisan (UK) plc 01480 436666
Martyn Freeman, Chief Executive
Chris Musselle, Finance Director
www.artisan-plc.co.uk
Adam Reynolds/Ben Simons 020 7245 1100
Hansard Communications 07785 908158
www.hansardcommunications.com
FINANCIAL HIGHLIGHTS
For the 6 months to 30th September 2003
Six Months to Six Months to Year to
30th September 30th September 31st March 2003
2003 2002
Turnover £16,885,282 £13,047,813 £35,290,017
Operating
Profit/(Loss) £447,650 £(248,095) £267,920
Profit/(Loss)
before interest
and tax £485,478 £(3,024,893) £(4,747,791)
Earnings/(Loss)
per share 0.09p (1.16)p (1.95)p
Net Assets £13,455,013 £14,860,196 £13,149,505
Net Debt £6,003,312 £18,612,286 £10,620,698
CHAIRMAN'S STATEMENT
The first six months' result has continued the favourable trend in operational
profitability, with an improvement over the comparable period last year. I
remain confident that the correct strategy for Artisan is to concentrate on its
core activity of property development in the UK, with a particular emphasis on
residential development.
COMMERCIAL DIVISION
Artisan (UK) Developments
Occupational demand for the business parks developed by Artisan (UK)
Developments Ltd remained subdued for the first half of the year. Planned
production was held back in areas where supply exceeded demand and this approach
has reduced the level of finished stock held across the business parks.
The policy of seeking to achieve forward sales rather than speculative
development has proven successful in maintaining a stable cash flow and avoiding
the need to heavily discount stock units. However, the nature of the property
that Artisan offers still demands that we also maintain a reasonable level of
available stock if we are to maximise revenues as and when the market improves.
We are beginning to see early signs in the market place that give us reasons for
being mildly optimistic that the second half of the year will show an
improvement in demand from occupiers over the first half and the management
moved to cautiously increase the volume of speculative development for release
in the latter part of the financial year.
RESIDENTIAL HOUSING DIVISION
Rippon Homes
Rippon Homes including the new Living Heritage products have exceeded budgeted
targets with the sale of fifty five new homes in the period in part by bringing
forward sales expected in the second half.
Although there now appear to be modest signs of market resistance, the East
Midlands new homes market remains buoyant with virtually no stock properties
currently being carried.
Completing the integration of Living Heritage within Rippon Homes resulted in
the historic Living Heritage stock being sold, apart from the five apartments in
Midhurst for which a new approach is to be adopted. Prices for the Living
Heritage stocks were in line with budgeted expectations.
Rippon Homes has moved to broaden its area of operation into South Yorkshire and
Leicestershire and continues to purchase development sites in order to build
land stocks in Nottinghamshire, Derby and Lincolnshire.
LITIGATION
The litigation over the earlier disposal of Bickerton Construction Limited is
moving towards a conclusion. The hearing in the High Court continues but is now
not expected to conclude prior to Christmas, and is therefore unfortunately
delayed until early February due to court availability. Judgement will then be
reserved until, we estimate, sometime later in the first quarter in 2004.
Artisan remains confident that we have a good defence, but the outcome is a
matter for the Court. Artisan has provided for the costs of the hearing and not
assumed any recovery will be made for costs and damages in favour of Artisan.
Also we have not allowed for any award against Artisan of costs and damages,
which if made could be substantial, in the financial results for the six months
to 30 September 2003.
FINANCIAL REVIEW
The Group's turnover for the current interim period has increased to £16.89m (30
September 2002 £13.05m) with operating profit increasing to £448,000 (30
September 2002 loss £248,000).
Rippon Homes has exceeded both budgeted turnover and margin as a result of the
buoyant demand conditions and a successful delivery of product. Against this
Artisan (UK) Developments has fallen behind budget as a result of the
unfavourable market conditions in South Cambridgeshire, with steady trading at
the Peterborough Business Park helping to counteract otherwise negative results.
We are pleased to report not only the realisation of the Group's investment in
The Wigmore Group plc, but a surplus of £108,000 over the carrying value as at
31 March 2003.
The Stratus Services Group Inc investment continues to be held at a prudent
level compared with the potential realisation. We are advised that Stratus'
programme for their continuous offering to raise new funds continues to
progress.
The Group gearing as at 30 September 2003 is reduced significantly at 46.8% on
£6.30m of net debt excluding current asset investments (30 September 2002
125.3%, £17.73m). This is, in part, due to great efforts resulting in the
realisation of non core and surplus assets. Also whilst new land opportunities
for residential have been found, actual cash expenditure had not necessarily
been incurred at 30 September 2003. There will also be an investment in
replenishing speculative commercial stock. Consequently we may anticipate some
increase in the gearing ratio over coming months.
Profitability is not sufficiently restored to pay an interim dividend, but the
Board would not in the present circumstances recommend payment of an interim
dividend whilst we concentrate on investing for future returns. To assist our
future distribution policy our application to court to reduce the share premium
account is proceeding through the Court and should be completed before the
financial year end.
FUTURE PROSPECTS
The ordinary profits for the full year will inevitably be largely dependent on
the recent upturn in occupier demand for office properties delivering sales of
the few remaining stock offices developed by Artisan (UK) Developments, although
a solid contribution from Rippon Homes is expected to continue through to the
year end given current housing market conditions.
The Company made a number of approaches to purchase private house building
businesses over the summer, but has been unable to date to identify a suitable
candidate for a fair price that provides an additional division beyond Rippon
Homes. As a consequence some investment has been shifted towards greater
residential land bank acquisition for the time being, but the longer term
business plan objectives are retained and will continue to be explored.
Finally, I wish to thank the staff and management for their continued loyalty to
Artisan and their great contributions to the future success of Artisan.
MICHAEL W STEVENS
Chairman
17 December 2003
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Six months to September 2003
Six months Six months Year
ended ended ended
30th September 30th September 31st March 2003
2003 2002
(Unaudited) (Unaudited) (Audited)
£ £ £
Turnover
Continuing operations 16,885,282 13,047,813 35,290,017
Operating profit/(loss)
Continuing operations 447,650 (224,171) 468,683
Discontinued activities - (23,924) (200,763)
--------- ---------- --------
Total operating
profit/(loss) 447,650 (248,095) 267,920
(Loss)/profit on disposal of
fixed assets - (6,798) 261,614
Loss on sale of
group undertaking (20,343) - (4,082)
Exceptional provisions in
respect of sale of group
undertakings in
previous years (50,000) - (1,177,949)
Exceptional
termination payments - (570,000) (570,000)
Exceptional losses and
provisions arising on
current asset investments and
loan notes - (2,200,000) (3,525,294)
Profit on sale
of current asset investments 108,171 - -
--------- ---------- --------
485,478 (3,024,893) (4,747,791)
Interest payable (415,182) (647,217) (791,941)
Interest receivable and
similar income 204,756 162,216 200,931
--------- ---------- --------
Profit/(loss) on
ordinary activities
before taxation 275,052 (3,509,894) (5,338,801)
Taxation on
ordinary activities (28,896) 381,784 -
--------- ---------- --------
Profit/(loss) on
ordinary activities after
taxation 246,156 (3,128,110) (5,338,801)
Dividends - - -
--------- ---------- --------
Retained for the period 246,156 (3,128,110) (5,338,801)
========= ========== ========
Earnings/(loss)
per share 0.09p (1.16)p (1.95)p
Diluted earnings/(loss)
per share 0.09p (1.16)p (1.95)p
CONSOLIDATED BALANCE SHEET
As at As at As at
30th September 30th September 31st March
2003 2002 2003
(Unaudited) (Unaudited) (Audited)
£ £ £
Fixed assets
Intangible fixed assets 2,706,682 2,863,666 2,785,174
Tangible fixed assets 393,099 669,987 434,475
----------- ---------- --------
3,099,781 3,533,653 3,219,649
----------- ---------- --------
Current assets
Investments 289,415 929,805 398,976
Stocks and work in progress 17,806,594 32,021,606 22,242,791
Debtors 5,009,672 7,430,064 6,281,528
Cash at bank and in hand 41,088 231,600 344,371
----------- ---------- --------
23,146,769 40,613,075 29,267,666
Creditors
Amounts falling due within one
year (11,735,218) (22,936,532) (18,054,598)
----------- ---------- --------
Net current assets 11,411,551 17,676,543 11,213,068
----------- ---------- --------
Total assets less current
liabilities 14,511,332 21,210,196 14,432,717
Creditors
Amounts falling due after more
than one year (158,212) (6,350,000) (308,212)
Provisions for liabilities and
charges (898,107) - (975,000)
----------- ---------- --------
Net Assets 13,455,013 14,860,196 13,149,505
=========== ========== ========
Capital and reserves
Called up share capital 1,442,647 1,344,314 1,427,647
Share premium account 18,889,230 18,428,211 18,844,878
Merger reserve 515,569 515,569 515,569
Capital redemption reserve 91,750 91,750 91,750
Profit and loss account (7,484,183) (5,519,648) (7,730,339)
----------- ---------- --------
Equity shareholders' funds 13,455,013 14,860,196 13,149,505
=========== ========== ========
Total overdraft and loan balances
included in creditors 6,321,789 18,794,336 11,338,420
=========== ========== ========
CONSOLIDATED CASH FLOW
Six months Six months Year
ended ended ended
30th September 30th September 31st March
2003 2002 2003
(Unaudited) (Unaudited) (Audited)
£ £ £
Net cash inflow from operating
activities 5,035,566 7,791,681 15,305,940
Returns on investments and
servicing of finance
Interest received and similar
income 204,756 162,216 204,984
Interest paid (415,182) (647,217) (1,269,142)
----------- ---------- --------
(210,426) (485,001) (1,064,158)
----------- ---------- --------
Taxation
UK Corporation tax paid (237,304) (1,906,671) (1,935,166)
Capital expenditure and financial
investment
Purchase of tangible fixed
assets (15,563) (17,354) (24,996)
Sale of tangible fixed assets 20,746 112,376 555,339
----------- ---------- --------
5,183 95,022 530,343
----------- ---------- --------
Acquisitions and disposals
Disposal of subsidiary
undertakings (20,343) - (18,618)
Cash disposal with subsidiary
undertakings - - (6,190)
----------- ---------- --------
(20,343) - (24,808)
----------- ---------- --------
Management of liquid resources
Sale of current asset
investment 154,271 - 178,786
Equity dividends paid - - (403,294)
----------- ---------- --------
Net cash inflow before
financing 4,726,947 5,495,031 12,587,643
----------- ---------- --------
Financing
Issue of shares - - 500,000
Share buy back - (1,162,967) (1,162,967)
Repayment of borrowings (8,312,070) (5,475,336) (11,123,893)
Capital element of finance
leases & hire purchase
contracts (13,599) (162,323) (186,248)
----------- ---------- --------
(8,325,669) (6,800,626) (11,973,108)
----------- ---------- --------
(DECREASE)/INCREASE IN CASH (3,598,722) (1,305,595) 614,535
=========== ========== ========
NOTES TO THE STATEMENT OF CASH FLOWS
(a) Reconciliation of operating profit/(loss) to net cash inflow from operating
activities
Six months Six months Year
ended ended ended
30th September 30th September 31st March
2003 2002 2003
(Unaudited) (Unaudited) (Audited)
£ £ £
Operating profit/(loss) 447,650 (248,095) 267,920
Depreciation 43,882 122,835 191,438
Amortisation 78,492 78,492 156,984
Profit on disposal of fixed
assets (7,689) - -
Increase in investments - (118,749) -
Decrease in stock 4,436,197 1,178,019 10,956,834
Decrease in debtors 1,335,317 7,008,049 6,592,020
Decrease in creditors and
provisions (1,298,283) (228,870) (2,859,256)
---------- --------- --------
Net cash inflow from operating
activities 5,035,566 7,791,681 15,305,940
========== ========= ========
(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
2003 2002 2003
(Unaudited) (Unaudited) (Audited)
£ £ £
(Decrease)/increase in cash (3,598,722) (1,305,595) 614,535
Cash outflow from decrease in debt
and lease financing 8,325,669 5,637,659 11,310,141
Cash inflow from decrease in
liquid resources (154,271) - (178,786)
--------- ---------- --------
Change in net debt resulting from
cash flows 4,572,676 4,332,064 11,745,890
Conversion of debtors to current
asset investments 600,000 - -
Proceeds due from sale of current
asset investments (663,461) - -
Profit on sale of current asset
investments 108,171 - -
Change in market value of current
asset investments - - (233,294)
Opening net debt (10,620,698) (22,944,350) (22,133,294)
--------- ---------- --------
Closing net debt (6,003,312) (18,612,286) (10,620,698)
--------- ---------- --------
NOTES TO THE STATEMENT OF CASH FLOWS
(c) Analysis of net cash and debt
At Cash Non-cash At
31st March Flow movement 30th September
2003 2003
NET CASH £ £ £ £
Cash at bank 344,371 (303,283) - 41,088
Bank overdrafts (1,664,921) (3,295,439) - (4,960,360)
--------- -------- -------- ---------
(1,320,550) (3,598,722) - (4,919,272)
DEBT
Finance leases (25,625) 13,599 - (12,026)
Debt due within one year (9,373,499) 8,312,070 (250,000) (1,311,429)
Debt due after more than
one year (300,000) - 250,000 (50,000)
Current asset investment 398,976 (154,271) 44,710 289,415
--------- -------- -------- ---------
Net debt (10,620,698) 4,572,676 44,710 (6,003,312)
========= ======== ======== =========
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 2003 statutory accounts to 31st
March 2003. 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 2003 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 2002 interim results is to reflect the
now discontinued activities in the comparative results as well as the 30th
September 2003 results and the treatment of exceptional termination payments
to be consistent with 31st March 2003 year end. This restatement has no effect
on aggregate Group turnover and profit/(loss) on ordinary activities before
taxation.
3. The taxation charge for the 6 months has been calculated at an effective rate
of 10.5% due to the availability of trading losses brought forward to offset
against profits of the current period (30th September 2002 credit: 31%).
4. The calculation of earnings per share is based on the profit on ordinary
activities after taxation and 288,135,983 (30th September 2002: 270,540,628)
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 2003 was 274,187,964.
The calculation of diluted earnings per share is based on the profit on ordinary
activities after taxation and 288,135,983 (30th September 2002: 270,540,628)
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 17 December
2003. 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, Mace House, Sovereign Court, Ermine Business Park,
Huntingdon, Cambridgeshire, PE29 6XU.
NOMINATED ADVISER PRINCIPAL BANKERS
Seymour Pierce Bank of Scotland
29/30 Cornhill 14 Friar Lane
London EC3V 3NF Leicester LE1 5RA
STOCKBROKER SOLICITORS
Seymour Pierce Philip Speer & Co
29/30 Cornhill 51 Cambridge Place
London EC3V 3NF Cambridge CB2 1NS
AUDITORS REGISTRAR
BDO Stoy Hayward Capita IRG Plc
8 Baker Street Balfour House
London 390-398 High Road
W1U 3LL Ilford, Essex IG1 1NP
FINANCIAL PR
Hansard Communications
14 Kinnerton Place South
London SW1X 8EH
Artisan (UK) Plc
Registered office: Mace House, Sovereign Court, Ermine Business Park,
Huntingdon, Cambridgeshire, PE29 6XU
Telephone 01480 436666 Facsimile 01480 436231
Registered No. 3630998
MICHAEL W STEVENS
Chairman
17 December 2003
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