Interim Results - 6 Months to 30 September 1999

Artisan (UK) PLC 11 November 1999 ARTISAN (UK) PLC AIM (Commercial and Leisure Industry Contractor) PRELIMINARY RESULTS FOR THE 6 MONTH PERIOD TO 30 SEPTEMBER 1999-11-10 KEY POINTS: Turnover increased to £15.48m (10.46) UP 46% Pre-tax profit increased to £2.081m (0.673) UP 226% EPS at 30.0.99 1.6p DIVIDEND 0.20p per share Commenting on the results, Stephen Dean said 'I am extremely pleased with the progress the group has made in terms of organic growth, although this is not reflected in the market perception of the construction industry. We are based in an area that is experiencing a strong demand for housing as well as industrial developments and I see no reason why this should not continue through 2000'. Enquiries: Artisan (UK) plc 01480 436666 Stephen Dean, Chairman Mobile 0385 938 782 Seymour Pierce Ltd. 0171 648 8700 Richard Feigen/Sarah Wharry Boswell City Financial PR Ltd. 0171 583 2001 Glenda Boswell Mobile 0468 235 725 ARTISAN (UK) Plc INTERIM STATEMENT The period under review has seen significant development of our trading subsidiaries both organically and by acquisition with the addition of Joseph Driver Building Limited and a 50% stake in Living Heritage Holdings Limited, to the Group. The Group trading has continued to expand with turnover up 48% and profit before tax 226%. At the period end the Group had net cash balances of 1,895,934. Also at the period end the Group had Bank and short-term borrowings of 1,978,781, representing a gearing ratio of 12.2% reduced from 63% at the year end. The Open Offer announced in July 1999 was well supported by shareholders and resulted in 55,844,877 shares being placed at 6p representing a take up of 73.38%. The Board intends to pay an interim dividend of 0.20p per share. The dividend will be paid on 29 February 2000 to all shareholders on the register at 26 November 1999. SPEYMILL CONTRACTS LIMITED: The first six months has seen a continuation of the good results achieved last year. In keeping with its strategy to increase its client base geographically, Speymill have opened a new regional office in Leeds sourcing work in and around northern England. The leisure industry is buoyant and despite changes within the industry, most notably Allied Domecq, Greenalls and Greene King. These changes particularly in respect of Allied Domecq , will bring about substantial work in re-branding public houses. Speymill have continued to provide clients with a quality product on time and to the required standards which has continued to enhance relationships with repeat business. Most notably this is with the Old Monk Pub Company where we have completed projects at Horseferry Road and Middlesex Street in London, Rotherham, Leeds and a new concept, Springbok Bar also at Leeds. Yates's Wine Lodge continue to provide Speymill with repeat business with three projects on site at the moment in Aylesbury, Grantham and Harlow. Speymill also continues to work with national breweries and currently has two large Rat and Parrot concepts for Scottish and Newcastle at Milton Keynes and Cambridge. Additionally Speymill completed the new Edwards concept for Bass at Romford, as well as continuing to work with Charles Wells, Pizza Express and De Vere Hotels. New clients for Speymill include Luminar Leisure, following the successful completion of the Chicago Rock Cafe at Maidstone. The refurbishment of Legends Nightclub, Mayfair and a new members only club, Abigail's Party, both for Perthshire Leisure Plc. together with two Bar Med projects for Surrey Free Inns at Manchester and Liverpool, are additions to Speymill's clients. BERNARD WARD LIMITED: The first six months have seen the continued development and expansion of Bernard Ward with turnover up to £1.9 million for the six months. Part of this continued development is increasing the client awareness of the projects that Bernard Ward are capable of undertaking up to a value of £1.5 million. Bernard Ward continues to carry out the all-important small jobs and is equally comfortable carrying out jobs to the value of £20,000 and applies the same management expertise. Bernard Ward continues to operate in and around Peterborough but its planned expansion will target works in and around Cambridge. Bernard Ward maintains a wide and varied workload including a new extension to Milton Golf Club, classroom extensions to Wistow School, alterations at Oundle School, extension at Deacon School Peterborough and works at Comberton Village College. This workload includes a new office block for Camrascan, six new build flats at St Neots and an industrial building at Whittlesey. Being on approved lists for Peterborough City Council, Lincolnshire County Council, Cambridgeshire County Council, Northants County Council as well as the National Health Trust and other authorities within the region, Bernard Ward continues to have numerous opportunities for work. This division will continue with its planned expansion as well as maintaining its longstanding reputation for providing quality products on time to the desired standard. JOSEPH DRIVER BUILDING LIMITED: Artisan acquired an 84% holding in Joseph Driver Building Limited in August 1999 and the company exercised its option on 27 October 1999 to acquire the remaining 16%. The business was formed some 40 years ago as a regional contractor based in Tring, Hertfordshire and the acquisition further endorses the Boards' strategy of building a regional network of both general and specialist contractors. Established in 1966, Joseph Driver Building Limited carry out a broad spectrum of building works ranging from projects with local authorities for schools, N.H.S. Trusts, residential works for housing associations and private clients and their own residential developments. The versatility of Joseph Driver Building Limited includes working on projects ranging from £150,000 to £2.5 million with refurbishments/conversions, new build or design and build. Currently, Joseph Driver Building Limited are working on a variety of projects which include: 1. New classroom block at Letchworth for Hertfordshire County Council. 2. Design and build thirty-six houses at Hemel Hempstead. 3. New build seven house development in Rickmansworth. 4. Conversion at Coppersworth Hospital for N.H.S. Trust. 5. Six house residential development in Northamptonshire. Joseph Driver Building Limited have a wealth of experience and it is the intention to build on this expertise, to move the company forward, to build from this sound base. DEAN COMMERCIAL DEVELOPMENTS/DEAN HOMES LIMITED: The emphasis on the company's development programme has concentrated on its three commercial business parks in St Neots, Godmanchester and Peterborough, Cambridgeshire. During the period the company sold its entire long leasehold interest in Cardinal Park, Godmanchester to Guardian Properties, a subsidiary of Guardian Assurance and also entered a build contract and profit share agreement. The anticipated reversionary value of the scheme is £5.47m with a yield of 8% in which Dean Commercial has a 40% share. Five of the twelve distribution units on the site are complete with the balance due for completion in the latter part of this financial year and early next financial year. The company has under construction a bespoke electronics factory on the St Neots Park for Prosol Electronics which is due to be completed by mid December. Several speculative units and the entire road and services infrastructure are under construction, and enquiries for both leasehold and freehold interest on the site remain at an encouraging level. The company has currently three residential sites under construction in association with other developers and has three sites on its own account. All the sites concentrate on the Cambridgeshire area, along the M11, A14 and A1 corridor where housing demand remains very strong. Substantial investment has been made by Dean Homes Limited as joint venture partner to Living Heritage Holdings Limited in its developments in Haywards Heath, Warwick, Camptonbury and Shenley. LIVING HERITAGE HOLDINGS LIMITED: In July this year Artisan (UK) Plc acquired a 50% stake in Living Heritage Holdings Limited. Under the terms of the transaction, Artisan (UK) Plc has an option over the remaining 50% equity interest and also a priority profit share in the profit of Living Heritage Holdings Limited. The company has made a 1st stage payment of £300,000, together with a working capital loan of £850,000, repayable in part by next March. The full consideration is payable in three years' time dependent upon the annualised post tax profits for the 27 months to 31 March 2002. Living Heritage mainly operates in the northern Home Counties of Hertfordshsire, Buckinghamshire and Bedfordshire. Primarily its developments are historic buildings and outbuildings (barns). Additionally it seeks to exploit the market by obtaining planning permission to develop the grounds with sympathetically designed residences. Living Heritage Holdings Limited currently has five sites under construction in Haywards Heath, Warwick, Redbourne, Shenley and Camptonbury. Based in Malvern, Worcestershire the business is well placed to expend the mid-western side of the country in Gloucestershire, Oxfordshire and Warwickshire. CURRENT PROSPECTS: Artisan's construction industry activities are currently buoyant, with development books and enquires at good levels throughout the Group. The residential and commercial businesses are also experiencing strong demand and, subject to any radical change in interest rates, appear to be on course for continued activity through 2000. The Company has recently agreed to acquire two property investment businesses mainly for shares and once the properties are sold will substantially enhance the Company's balance sheet and working capital surpluses. The likely increase in shareholder funds and eventually cash is expected to be in the order of £2,100,000. Both share placings will be done at levels substantially above the July open offer price and reflect the current share price. The Board remains confident that the current trading prospects for its subsidiaries remains good. FUTURE STRATEGY: Your Board continues to explore opportunities of increasing shareholder value, either by merger, or acquisition within the Group's current business sector. Notwithstanding the recent share price movements, your Board continues to be concerned that along with other smaller quoted construction companies, the investment markets rating of your businesses remains low. It has, therefore, decided to evaluate other more highly rated market sectors, which may provide better returns for shareholders. No firm decision would be taken without the prior approval of shareholders. Following a reduction in the shareholding of Rosenoble Limited, Mr Graham Robeson will retire as non-executive director, as at 9 November 1999. The board will be seeking a suitable replacement to join the Board when appropriate. Finally, I take this opportunity to thank the management and staff of the Company for their commitment and continuing loyal support. In conclusion, your Board believes that a satisfactory year is in prospect. CONSOLIDATED PROFIT AND LOSS ACCOUNT Six months Six months Fifteen ended ended months 30 September 30 ended 1999 September 31 March (Unaudited) 1998 1999 (Unaudited) (Audited) Turnover Existing operations 14,215,261 10,455,605 27,160,625 Acquisitions 1,260,559 - 1,188,095 15,475,820 10,455,605 28,348,720 Operating profit Existing operations 1,697,845 672,666 1,456,456 Acquisitions 131,312 - 18,265 1,829,157 672,666 1,474,721 Other income 292,899 - - Interest (41,277) (34,103) (100,890) Profit on ordinary 2,080,779 638,563 1,373,831 activities before taxation Taxation (644,172) (197,955) (459,031) Profit on ordinary 1,436,607 440,608 914,800 activities after taxation Dividends (283,261) - (991,213) Retained profit 1,153,346 440,608 76,413 Earnings per share 1.57p 1.30 Fully diluted 1.53p 1.27 Dividend per share 0.20p CONSOLIDATED BALANCE SHEET As at As at As at 30 September 30 31 March 1999 September 1999 (Unaudited) 1998 (Audited) (Unaudited) Fixed assets Tangible fixed assets 888,339 140,410 338,953 Intangible fixed assets 1,309,174 12,000 117,358 2,197,513 152,410 456,311 Current assets Investments 226,875 - 411,634 Stocks 6,512,035 2,113,644 2,928,893 Debtors 7,780,483 4,283,247 5,432,798 Cash at bank and in hand 1,188,834 - 677,776 15,708,227 6,396,891 9,451,101 Creditors Amounts falling due (8,610,607) (4,861,315) (6,177,816) within one year Net current assets 7,097,620 1,535,576 3,273,285 Total assets less current 9,295,133 1,687,986 3,729,596 liabilities Creditors Amounts falling due after 2,801,901 776,811 1,906,837 more than one year Net Assets 6,493,232 911,175 1,822,759 Capital reserves Called up share capital 704,753 346,619 379,119 Share premium account 3,418,178 - 219,685 Other reserves 1,027,127 (146,519) 1,034,127 Profit and loss account 1,343,174 711,075 189,828 Equity shareholders funds 6,493,232 911,175 1,822,759 CONSOLIDATED CASH FLOW Six months Fifteen ended months 30 ended September 31 March 1999 1998 (Unaudited) (Audited) Net cash (outflow) from operating (2,363,336) (339,687) activities Returns on investments and servicing Other income 292,899 124,260 Interest paid (41,277) (225,150) Net cash inflow (outflow) from returns on investments and servicing of 251,622 (100,890) finance Taxation UK Corporation tax paid (65,135) (431,341) Capital expenditure and financial investment Sale of tangible fixed assets - 136,170 Purchase of tangible fixed assets (98,652) (172,457) Net cash (outflow) from investing (98,652) (36,287) activities Acquisitions and disposals Purchase of subsidiary undertakings 1,578,789 (248,870) Cash acquired with subsidiary (146,694) 175,391 undertaking Net cash (outflow) from (1,432,095) (73,479) Acquisitions and disposals Equity dividends paid (291,633) (1,299,580) Net cash inflow/(outflow) before (3,999,229) (2,281,264) financing Financing Issue of shares net of costs 3,524,127 1,432,831 Additions to borrowing 900,000 1,000,000 Capital element of finance leases 86,160 (83,964) Net cash inflow from financing 4,510,287 2,348,867 Increase in cash and cash 511,058 67,603 equivalents NOTES TO THE STATEMENT OF CASH FLOWS (a) Reconciliation of Operating profit to net cash inflow from operating activities: Six months Fifteen ended months 30 year ended September 31 March 1999 1999 (Unaudited) (Audited) Operating profit 1,829,157 1,474,721 Depreciation 57,439 65,352 Amortisation of goodwill 19,612 - Profit on sale of tangible fixed - (6,109) assets (Increase) in debtors 2,531,897 1,848,996 (Increase) in stocks 2,945,781 1,269,751 Increase in creditors 1,023,375 1,656,730 Increase in investments 184,759 (411,634) Net Cash (Increase)/(Outflow) from (2,363,336) (339,687) operating activities (b) Reconciliation of net cash flow to movement in net debt: Six months Fifteen ended months 30 year ended September 31 March 1999 1999 (Unaudited) (Audited) Increase/(decrease) in cash 511,058 67,603 Cash inflow from increase in debt (986,160) (1,095,434) and lease financing Change in net debt resulting from (475,102) (1,027,831) cash flows Opening net (debt)/funds (474,716) 553,115 Closing net (debt) (949,818) (474,716) (c) Analysis of net cash and debt: At Cash At 31 March Flow 30 1999 September 1999 NET CASH £ £ £ Cash at bank 677,776 511,058 1,188,834 DEBT Finance leases (152,492) (86,160) (238,652) Debt due within one (139,875) (60,125) (200,000) year Debt due after more (860,125) (839,875) (1,700,000) than one year Net (debt) (474,716) (475,102) (949,818) 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 1999 statutory accounts to 31 March 1999, including the adoption of merger accounting principles in respect of Dean Homes Limited and Speymill Contracts Limited in accordance with FRS6 accounting. The comparisons for the six months to 30 September 1998 have been prepared on a proforma basis. 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 15 months ended 31 March 1999 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 taxation charge for the 6 months has been calculated at an effective rate of 31% (1999 33%). 3. The calculation of earnings per share is based on the profit on ordinary activities after taxation and 91,785,354 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 fifteen months ended 31 March 1999 was 70,366,647. The calculation of fully diluted earnings per share is based on the profit on ordinary activities after taxation and 93,965,354 ordinary shares being the weighted average number of shares in issue during the half-year, after allowing for share options. 4. The Directors have declared an interim dividend of 0.20p per share to shareholders on the register at the close of business on 26th November 1999 which will be paid on 29th February 2000. 5. The interim statement was approved by the board of Directors on 11 November 1999. Copies of this statement will be available to members of the public, free of charge, from the Company's registered office, Dean House, The Anderson Centre, Spitfire Close, Ermine Business Park, Huntingdon, Cambridgeshire, PE18 6XY.
UK 100