Final Results
Artisan (UK) PLC
10 July 2003
ARTISAN (UK) plc
(House builder & business park developer)
PRELIMINARY RESULTS FOR THE YEAR TO 31 MARCH 2003
HIGHLIGHTS
Key points:
•Debt reduced by £11.9m from non core realisations and stock reduction
•Operating Profit £268,000 (£16.6m loss for the year to 31st March 2002)
•Loss per share 1.95 pence (4.72 pence loss per share for the year to 31st
March 2002)
•Return to concentration on core activities of house building and
commercial development
Commenting on the results, Artisan's Chairman Michael Stevens said:
'We have made many significant and positive changes to the profile of Artisan in
the year. This has, among other things, resulted in the substantial reduction of
borrowings. We are now concentrating on the core business of house building and
commercial development where we feel the most benefit can be derived and I
believe we are well placed to capitalise on opportunities in this sector in the
future. I am confident that Artisan's housing markets are fundamentally strong
and the outlook for Artisan is positive.'
Enquiries:
Hansard Communications 020 7245 1100
Adam Reynolds
Mobile: 07785 908158
Seymour Pierce Limited 020 7107 8000
Sarah Wharry
Artisan (UK) plc 01480 436666
Michael Stevens, Chairman
Chris Musselle, Finance Director
CHAIRMAN'S STATEMENT
The year to March 2003 has seen many significant and positive changes to the
profile of our Group.
John Hemingway and I joined the Board in May and Stephen Dean stepped down as
Chairman at the end of July after founding the Company four years previously.
The Governance Review I announced at the last AGM has been concluded and
published on the Group's website, and the composition of two of the Board
Committees has been updated to reflect latest practice. It is topical to pay
attention to the rewards of directors and I can confirm I have waived my own
director's fees for the period under review and the Executive Directors have
waived any bonus and salary review entitlements, as the Directors are unable to
recommend a dividend for 2003.
Much energy has gone into concentrating the Group's capital and management time
towards the core housebuilding and commercial development businesses, and the
strong results from Rippon Homes have enabled the Board to approve a substantial
budget to acquire further land for housebuilding in the Midlands during 2003/04.
Borrowings have been very substantially reduced as the Group has realised its
non-core property investments in both the UK and Mallorca and has sold the
majority of the residual Living Heritage housing portfolio.
As announced in the interim report, after careful consideration we have reviewed
our investment in Stratus Services Group Inc. The Board have taken a prudent
approach and have provided a total of £3.3 million for the year against this
investment. However we continue to work towards a realisation or restructuring
of this investment. The legal action involving our disposal of Bickerton
continues and we remain confident of our position but believe a provision is
prudent.
Following several discussions with the management of Wigmore, we have succeeded
in restructuring the Loan Note investment held by Artisan. As a consequence
£400,000 is due to be received shortly, the conversion terms for the balance has
been reduced from 3p to 1.75p and the repayment of the balance spread over a
more manageable profile for Wigmore.
As a result, the provisions have reduced the Operating Profit to a Loss before
Taxation of £5.3m (2002: Loss £12.8m).
Adverse exchange rate movement and increased currency and interest rate risks
has caused us to defer our European ambitions for the present but the stated
intentions of Gordon Brown to increase the provision of new homes as a component
of the Government's Euro Convergence Strategy bodes well for the longer term UK
housebuilding.
After a difficult period of retrenchment the Group is now in a position to
endeavour to provide shareholders with the level of returns they deserve and
expect. Whilst we are facing some softness in the commercial market, we remain
confident in our residential markets. I believe that the residential housing
markets in which Artisan operates and intends to operate are fundamentally
strong and will continue to be so even if the house price increase seen in
recent years slows in its rate of growth. Following our return to concentrate on
core activity, I believe we are well placed to capitalise on opportunities in
the future. In particular we are actively seeking residential developer
acquisitions to increase our presence in this sector.
Finally I would like to thank all the staff and professional team for their
support over the last year and look forward to working with them in the future
as Artisan develops.
Michael Stevens
Chairman
10 July 2003
OPERATIONS REVIEW
2002/03 was another successful year for Rippon Homes, with the company operating
effectively and selling all available stock on a rising housing market.
The modest slowdown experienced in the South-East towards the end of the year
did not impact on the Midlands market, although the exceptional rate of increase
is not expected to be maintained in 2003/04.
During the twelve months under review Rippon Homes sold 113 houses and acquired
land for 68 plots for future development. The rate of land purchase has been
escalated to increase production capacity for 2004 onwards.
The integration of the residual Living Heritage activity as the premium brand of
Rippon Homes was concluded mid way through the year, and the Malvern offices of
Living Heritage were closed.
All the original Living Heritage sites were completed during the year and the
majority were sold, releasing funds for a substantial reduction in borrowings.
After some months of negotiation a settlement was reached shortly after the year
end with the vendors of Living Heritage.
The occupational demand for the business parks developed by Artisan (UK)
Developments remained subdued throughout the year, with the second half of the
year particularly affected with the uncertainties of the Iraq crisis. As a
consequence although the division managed to turn around the first half year
loss, planned production had to be scaled back to avoid potential excessive
stock levels. The policy of pursuing a greater proportion of forward sales has
helped maintain a stable cash flow and avoid the discounting on stock units
experienced by many of our competitors. Whilst this 'safety-first' policy
inevitably reduced turnover, the Board was able to divert investment into
residential land acquisition.
As we opened Financial Year 2003/04, the Group had 59 housing plots in
development and a land bank of 159 housing plots on 9 sites owned or agreed for
purchase predominantly in Nottinghamshire and Derbyshire, and land on four
business parks in Cambridgeshire and Hertfordshire with planning consent for
30,000 square metres of offices and industrial units.
The stated policy of disinvestment in non-core assets and activities was
substantially progressed during the year. The retail properties in Newcastle and
Rawtenstall were successfully sold towards the end of the period, together with
the retail development in Mallorca sold over the year end.
Following requests from shareholders after last year's AGM, the Directors have
adopted a policy of providing regular and detailed updates on the Group's
operations via the Company website, and we intend to maintain this well received
facility for 2003/04.
Martyn Freeman
Chief Executive
10 July 2003
FINANCIAL REVIEW
Results
Group Turnover for the year to 31 March 2003 was at a reduced £35.3m (2002:
£63.3m). However £21.0m of the total reduction was in respect of discontinued
activities sold towards the end of the 2002 financial year, and £6.3m in respect
of lower activity in property investments sales, as the portfolio of investment
properties has been successfully reduced.
Operating profit has improved by £16.9m to a profit of £268,000 from a loss of
£16.6m after goodwill and write-downs.
Summary of operating results (Continuing Activities)
Residential Commercial Property Central Total
Investment (excluding
goodwill)
Turnover
- 2003 28.1 4.7 2.5 - 35.3
- 2002 26.4 6.8 8.8 0.3 42.3
Operating
profit
- 2003 1.6 0.5 0.1 (1.6) 0.6
- 2002 1.7 2.0 0.3 (1.1) 2.9
Share Capital
At the beginning of the financial year the share buyback programme was concluded
with 13.4m of shares repurchased for £1.2m. Since then with the appointment of
Michael Stevens as Chairman, a new strategy for the Group has been defined,
concentrating on core activity. Consequently new shares were issued in December
2002 to Aspen Finance Ltd, a company in which Michael Stevens has a beneficial
interest, as part of his intention to acquire further shares in Artisan. In
April 2003, new shares, (3m shares at 2p) were issued in settlement of
outstanding liabilities to the vendors of Living Heritage.
Balance Sheet
The Net Assets of the Group have been reduced from £19.1m to £13.1m principally
as a result of the write downs on non-core assets. Net debt, which includes
current asset investment write downs, has reduced by £11.5m. At 31 March 2003
the group had net cash balances of £0.3m (2002: £0.4m) and borrowings of £11.4m
(2002: £23.3m). We do not expect any reduction in this debt level as further
reductions in Dunbar Bank debt will be matched by increases in the principal
Bank of Scotland facility as further sums are invested in stocks and
work-in-progress, principally for residential housing stock. The gearing ratio
has reduced to 83.8% (2002: 119.8%) as a result of the substantial debt
repayments in the year.
Debtors have reduced to £6.3m (2002: £16.6m). Whilst this is partly as a
consequence of the provisions referred to elsewhere in this review it also
reflects the realisation of the non-core assets and the majority of this years
balances consists of debtors arising in the normal course of trade.
The result of the substantial write-downs over the last two years has been to
create substantial negative distributable reserves. It is our intention to apply
to cancel these negative reserves by reduction of the share premium account and
the resolutions giving effect to this are set out in the notice of the Annual
General Meeting, which is a separate document.
Non-Core Assets
Artisan has concentrated on realising and rationalising its non-core assets.
This has resulted in provisions principally in respect of the Stratus Services
Group Inc investment which has been written down by £3.3m. We are actively
involved in discussions with the management of Stratus to realise or protect
this investment.
The Cater Barnard plc debt to Artisan has been satisfactorily settled. Surplus
land at Rippon Homes' head office has been disposed of resulting in a gain of
£261,000.
We are in dispute with Infiniteland Ltd over the sale of Bickerton Construction
Ltd and Driver Construction Ltd. The full outstanding debt has been provided for
whilst litigation continues. Bickerton Construction Ltd was placed into
liquidation by its new owners some months after our sale of the business. We are
addressing the normal enquiries from the liquidator and managing potential bond
claims totalling £700,000, against which some prudent provision has been made.
Other Activities
During the year the Company had invested in a new European development company,
Artisan International s.a.. The Group incurred a loss on disposal of £4,000 and
trading costs of £201,000 but retained potential income contingent upon the
successful outcome of a project in Massy, France.
Aborted acquisition costs in the year contributed £231,000 towards the
administration costs. However Artisan remains fully committed towards finding
new acquisitions to build on the fully rationalised asset base of the group and
to generate greater activity in the core activities of the Group.
Chris Musselle
Finance Director
10 July 2003
GROUP PROFIT & LOSS ACCOUNT
For The Year Ended 31 March 2003
31 Mar 2003 31 Mar 2002
----------------- -------------
TURNOVER £ £
Continuing operations 35,290,017 42,272,870
Discontinued activities - 21,020,006
__________ __________
35,290,017 63,292,876
Less: share of associate's continuing - (3,830,789)
turnover
__________ __________
GROUP TURNOVER 35,290,017 59,462,087
COST OF SALES (32,369,023) (51,885,067)
__________ ___________
GROSS PROFIT 2,920,994 7,577,020
Administrative expenses before (2,681,483) (4,899,004)
exceptional item
Exceptional goodwill write down - (18,755,120)
Total administrative expenses (2,681,483) (23,654,124)
Other operating income 28,409 83,116
__________ __________
GROUP OPERATING PROFIT/(LOSS) 267,920 (15,993,988)
Continuing operations 468,683 (16,623,796)
Discontinued activities (200,763) 629,808
Group's share of operating loss of - (600,257)
associate
Amortisation of goodwill arising on - (41,424)
acquisition of associate
__________ __________
TOTAL OPERATING PROFIT/(LOSS) 267,920 (16,635,669)
Profit on disposal of fixed assets 261,614 73,414
(Loss)/profit on sale of group (4,082) 4,295,208
undertaking
Exceptional provisions in respect of (1,177,949) -
sale of group undertakings in previous
years
Exceptional termination payments (570,000) -
Exceptional losses and provisions
arising on current asset investments
and loan notes (3,525,294) -
Income from current asset - 37,485
investments
__________ __________
(4,747,791) (12,229,562)
Interest payable (791,941) (858,729)
Interest receivable and similar 200,931 261,695
income
__________ __________
LOSS ON ORDINARY ACTIVITIES BEFORE (5,338,801) (12,826,596)
TAXATION
TAXATION - (696,854)
__________ __________
LOSS ON ORDINARY ACTIVITIES AFTER (5,338,801) (13,523,450)
TAXATION
Dividends - (1,059,450)
__________ __________
RETAINED FOR THE YEAR (5,338,801) (14,582,900)
__________ __________
Basic Loss per share 1.95)p (4.72)p
Diluted Loss per share (1.95)p (4.72)p
GROUP BALANCE SHEET
As at 31 March 2003
31 Mar 2003 31 Mar 2002
------------- -------------
£ £
FIXED ASSETS
Intangible fixed assets 2,785,174 2,942,158
Tangible fixed assets 434,475 894,642
_________ _________
3,219,649 3,836,800
_________ _________
CURRENT ASSETS
Investments 398,976 811,056
Stocks and work in progress 22,242,791 33,199,625
Debtors 6,281,528 16,638,113
Cash at bank and in hand 344,371 355,049
_________ _________
29,267,666 51,003,843
CREDITORS: Amounts falling due within one (18,054,598) (27,885,356)
year
_________ _________
NET CURRENT ASSETS 11,213,068 23,118,487
_________ _________
TOTAL ASSETS LESS CURRENT LIABILITIES 14,432,717 26,955,287
CREDITORS: Amounts falling due after (308,212) (7,804,014)
more than one year
Provisions for liabilities and charges (975,000) -
_________ _________
NET ASSETS 13,149,505 19,151,273
=========== ===========
CAPITAL AND RESERVES
Called up share capital 1,427,647 1,411,064
Share premium account 18,844,878 18,428,211
Merger reserve 515,569 515,569
Capital redemption reserve 91,750 25,000
Profit and loss account (7,730,339) (1,228,571)
_________ _________
EQUITY SHAREHOLDERS' FUNDS 13,149,505 19,151,273
=========== ===========
GROUP CASH FLOW STATEMENT
For The Year Ended 31 March 2003
31 Mar 2003 31 Mar 2002
------------- -------------
£ £
NET CASH INFLOW FROM OPERATING 15,305,940 1,392,270
ACTIVITIES
RETURNS ON INVESTMENTS AND SERVICING OF
FINANCE
Interest received 204,984 261,695
Interest paid (1,269,142) (858,729)
Dividends received - 37,485
__________ __________
NET CASH OUTFLOW FROM RETURNS ON
INVESTMENTS AND SERVICING OF FINANCE (1,064,158) (559,549)
TAXATION
UK Corporation tax paid (1,935,166) (535,156)
CAPITAL EXPENDITURE AND FINANCIAL
INVESTMENT
Sale of tangible fixed assets 555,339 896,163
Purchase of tangible fixed assets (24,996) (401,397)
__________ __________
NET CASH INFLOW FROM INVESTING 530,343 494,766
ACTIVITIES
ACQUISITIONS AND DISPOSALS
Disposal of subsidiary undertaking (18,618) 5,714,818
Purchase of subsidiary undertakings - (552,692)
Net cash disposed with subsidiary (6,190) (39,027)
undertakings
__________ __________
NET CASH (OUTFLOW)/ INFLOW FROM
ACQUISITIONS AND DISPOSALS (24,808) 5,123,099
MANAGEMENT OF LIQUID RESOURCES
Sale of current asset investments 178,786 103,980
EQUITY DIVIDENDS
Dividends paid (403,294) (656,156)
__________ __________
NET CASH INFLOW BEFORE FINANCING 12,587,643 5,363,254
__________ __________
FINANCING
Issue of shares 500,000 -
Share buy back (1,162,967) (412,300)
Movement in borrowing (11,123,893) (11,661,100)
Capital element of finance leases (186,248) 14,218
__________ __________
NET CASH OUTFLOW FROM FINANCING (11,973,108) (12,059,182)
__________ __________
INCREASE/(DECREASE) IN CASH 614,535 (6,695,928)
============ ===========
Notes
1 LOSS PER SHARE
The basic loss per share is calculated by dividing the loss for the
financial year attributable to shareholders by the weighted average
number of shares in issue. In calculating the diluted loss per share,
share options outstanding have been taken into account.
The weighted average number of shares were
31 Mar 2003 31 Mar 2002
------------- -------------
Number Number
-------- --------
Basic weighted average 274,187,964 286,383,308
number of shares
Dilutive potential ordinary - 126,300
shares:
Employee share options
__________ __________
274,187,964 286,509,608
============= =============
2. The financial information set out in this document, which summarises the
results of the group, does not amount to statutory accounts within the
meaning of Section 240 of the Companies Act 1985. The group's auditors have
audited the statutory accounts and have issued an unqualified report thereon
within the meaning of Section 235 and have not made any statement under
Section 237(2) or (3) of the Companies Act 1985 for the year ended 31 March
2003.
3. Statutory accounts for the year ended 31 March 2002 have been delivered to
the Registrar of Companies. Statutory accounts for the year ended 31 March
2003 will be delivered to the Registrar following the Annual General
Meeting.
Certain prior year amounts in the profit and loss account have been
reclassified to conform with the 2003 presentation. No changes have been
made to accounting policies.
4. The Annual General Meeting will be held at Butchers Hall, 87 Bartholomew
Close, London, EC1A 9HP at 11.30am on 9 September 2003.
Copies of this announcement will be available to the public, free of charge,
from the offices of Seymour Pierce Ltd, Bucklersbury House, 3 Queen Victoria
Street, London, EC4N 8EL during normal office hours, with the exception of
Saturdays, Sundays and bank holidays, for 14 days from today.
Enquiries:
Hansard Communications 020 7245 1100
Adam Reynolds
Mobile: 07785 908158
Seymour Pierce Limited 020 7107 8000
Sarah Wharry
Artisan (UK) plc 01480 436666
Michael Stevens, Chairman
Martyn Freeman, Chief Executive
Chris Musselle, Finance Director
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