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 This information is provided by RNS The company news service from the London Stock Exchange

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