Interim Results

Artisan (UK) PLC 10 December 2004 ARTISAN (UK) PLC UNAUDITED INTERIM STATEMENT FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2004 Highlights •Pre tax profit of £855,831 for the six months ended 30 September 2004 (2003: £275,052) •Earnings per share of 0.24 pence per share for the six months ended 30 September 2004 (2003: Profit of 0.09 pence per share) •Land bank at Rippon Homes increased to 237 plots at 30 September 2004 from 168 plots at 31 March 2004 •Net debt increased to £8,481,319 for the six months ended 30 September 2004 (30 September 2003: Debt of £6,003,312) •Commercial trading profit turnaround •Complete divestment of all significant non core assets at modest profits in period •New banking facilities of £20m •Board update shareholders on litigation Michael W. Stevens, Chairman of Artisan (UK) plc commented, 'Once again the first six months of the financial year have shown a considerable improvement for the group profitability compared to the equivalent period last year. This is largely as a result of the improvement in market conditions for commercial property and our ability to respond to this improvement. Although the residential market has retreated from the recent unsustainable price growth, we continue to invest in residential development land and to seek acquisitions of 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 30 September 2004 Six Months to Six Months to Year to 30 September 2004 30 September 2003 31 March 2004 Turnover £10,741,460 £16,885,282 £32,116,765 Operating profit £945,725 £447,650 £2,022,046 Profit before interest and tax £1,015,201 £485,478 £1,555,435 Earnings per share 0.24p 0.09p 0.27p Net assets £14,669,859 £13,455,013 £13,977,659 Net assets per share 5.08p 4.66p 4.84p Net debt £8,481,319 £6,003,312 £4,212,534 CHAIRMAN'S STATEMENT The six months to 30 September 2004 have consolidated upon the return to profit achieved in the year to 31 March 2004. This has been achieved by continuing to focus on the core activities of residential and commercial property development. Whilst in common with the market as a whole we have experienced less buoyant conditions in the residential market, it is pleasing to note that the commercial market has significantly improved. OPERATIONAL REVIEW Housing turnover in the six month period was limited only by stock availability as the long buoyant market continued, and every property sold contributed profits. This compares favourably with the previous year when a greater turnover included low margins from the Living Heritage old stocks. Throughout the period we have continued to invest in new land, expanding our geographic coverage through the purchase of over £5m of land in Ilkeston and Eastwood, so that the current land bank stands at 237 plots (168 plots at 31 March 2004). Towards the end of the period, the housing market in the Midlands started to slow. I believe much of this slowdown was due to investors becoming more cautious, which does not directly affect Rippon Homes whose customers are largely owner occupiers, but the reporting of this has created more general uncertainty in the market. In the coming six months Rippon Homes will continue the shift in its product mix towards smaller properties to meet both market demand and planning influences, and will have the capacity to build more units this financial year compared to 2003/04, but production and sales will obviously be dependent on levels of demand. Both commercial business park turnover and profitability increased in the six months compared to the same period last year and also to the previous six month period. A positive shift in occupier demand has led to an increased number of lettings, which is to be welcomed in a strong investment market, and by September 2004 we were starting to build up a stock of let properties for sales to investors during the second half of the year. In addition, plot sales and alternative uses on the 16 acre Colmworth Business Park are resulting in work in progress levels being systematically reduced, and we are well on target to achieve our strategic medium term reduction in working capital investment to improve our return on capital. At 30 September 2004 the commercial development capacity of our land bank still stood at over 20,000 square metres providing sufficient development capacity through to 2007. FINANCIAL REVIEW The Group's turnover for the current period has reduced to £10.7m (30 September 2003: £16.9m) as a result of £6.0m on the disposal of old Living Heritage projects and £1.0m of non core disposals not being repeated in the current period. Core trading is therefore modestly ahead of the comparative period. Rippon's turnover is down £0.7m reflecting the budgeted move to a greater weighting in their second half, but commercial activity has increased by £1.4m being a 70% increase on the six months to 30 September 2003. Group Gross Margin has increased to £2.5m (30 September 2003: £2.0m) principally because of the improvement in commercial activity which generated £0.7m more gross margin than in the same period last year. Operating Profit has improved to £946,000 (30 September 2003: £448,000) as a result of the improved trading and some modest cost saving in overheads. We are pleased to report that all non-core asset disposals have been completed and the only remaining investment is a small holding in Stratus Services Group which is held at an insignificant carrying value. Gearing at 30 September 2004 is 57.8% (46.8%) having increased, as previously indicated, as a result of continued investment in residential land bank. We have secured sufficient residential land for the next financial year's activities. However we intend to continue to acquire land where it can be purchased at sensible prices, not only to secure future prospects, but also to provide more flexibility in meeting market demand. This will result in some further increase in gearing. During the period new banking facilities were negotiated and completed with The Royal Bank of Scotland plc. The facility has been agreed at a total of £20 million funding, £15 million of which is on a three year committed revolving loan basis. The bank has provided the funding to support the Group's intention to invest in further residential activity whilst recognising the contribution the commercial activity delivers to the Group's activities. The increased funds from the drawdown of loan facility has allowed for greater cash balances to be available to the Group. LITIGATION As previously reported, during the half year judgment was handed down in respect of the litigation between Artisan and Infiniteland concerning the disposal of Bickerton Construction Limited ('Bickerton'). The judgment fully recognised Artisan's position, holding that the deferred consideration remained due to Artisan and dismissed all of the claimant's claims, as well as awarding costs in Artisan's favour. In this respect Artisan has been granted a legal charge over a property owned by Mr and Mrs John Aviss to the value of £350,000. However, in the face of this significant defeat the claimants have decided to appeal the decision and the appeal is to be heard in the first quarter of next year. Your Board believe that the Court will uphold the original decision. Also as we previously reported, the liquidator of Bickerton Construction Limited has made enquiries into management charges from Artisan around the time of the sale of Bickerton. The liquidator has now threatened legal action in respect of management charges of £1,400,000 paid by Bickerton to Artisan in June 2001. If proceedings are issued Artisan intends to defend its position on the validity of the management charges. If the defence is unsuccessful, the matter may result in a repayment by Artisan of an amount equal to all or part of the management charges plus costs. Provision has been made for the continuing costs of defending these actions but having regard to financial reporting standards, no provision has been made for any other liability that Artisan may incur as a result of the liquidator's threatened action. FUTURE PROSPECTS The outlook for residential sales is unpredictable at the present time with a wide range of commentary on future house prices. Most of the purchasers of our residential properties are owner occupiers rather than investors and we believe our customers are less pre-occupied with future house values, but are made cautious by uncertainty in the market. Therefore our trading performance over the coming months will be vulnerable to this uncertainty. The market for commercial property in the areas which we operate has been counter cyclical to the residential market and current enquiries bode well for the immediate future. As regards acquisitions, despite many discussions with potential targets we are yet to find a suitable purchase at a fair price. However our search will continue and, whilst an acquisition will enhance Artisan, we will continue to invest strongly in the existing operations. The Board continues to review whether a dividend to shareholders should be paid, and whilst it recognises that income yield is important, it considers greater shareholder returns will be achieved in the future through investment in the business at this time. Finally I thank the management and staff throughout the Artisan Group for their contribution to Artisan's successful results for the period. MICHAEL W STEVENS Chairman 10 December 2004 CONSOLIDATED PROFIT AND LOSS ACCOUNT Six months to 30 September 2004 Six months Six months Year ended ended ended 30 September 2004 30 September 2003 31 March 2004 (Unaudited) (Unaudited) (Audited) £ £ £ Turnover 10,741,460 16,885,282 32,116,765 --------- ---------- -------- Operating profit 945,725 447,650 2,022,046 Loss on sale of group undertaking in prior year - (20,343) (20,343) Exceptional provisions in respect of sale of group undertakings in previous years - (50,000) (554,504) Exceptional profits arising on current asset investments and loan notes 69,476 108,171 108,236 --------- ---------- -------- 1,015,201 485,478 1,555,435 Interest payable (299,994) (415,182) (486,958) Interest receivable and similar income 140,624 204,756 36,409 --------- ---------- -------- Profit on ordinary activities before taxation 855,831 275,052 1,104,886 Taxation on ordinary activities (163,631) (28,896) (336,084) --------- ---------- -------- Retained profit for the period 692,200 246,156 768,802 ========= ========== ======== Basic and diluted earnings per share 0.24p 0.09p 0.27p All amounts included in operating profit relate to continuing operations. CONSOLIDATED BALANCE SHEET As at As at As at 30 September 30 September 31 March 2004 2003 2004 (Unaudited) (Unaudited) (Audited) £ £ £ Fixed assets Intangible assets 2,549,698 2,706,682 2,628,190 Tangible assets 344,087 393,099 368,178 ----------- ---------- -------- 2,893,785 3,099,781 2,996,368 ----------- ---------- -------- Current assets Investments 5,000 289,415 177,037 Stocks and work in progress 24,006,169 17,806,594 18,726,086 Debtors 4,783,792 5,009,672 5,079,480 Cash at bank and in hand 21,265 41,088 355,653 ----------- ---------- -------- 28,816,226 23,146,769 24,338,256 Creditors Amounts falling due within one year (8,031,959) (11,735,218) (12,409,645) ----------- ---------- -------- Net current assets 20,784,267 11,411,551 11,928,611 ----------- ---------- -------- Total assets less current liabilities 23,678,052 14,511,332 14,924,979 Creditors Amounts falling due after more than one year (8,442,941) (158,212) (52,320) Provisions for liabilities and charges (565,252) (898,107) (895,000) ----------- ---------- -------- Net assets 14,669,859 13,455,013 13,977,659 =========== ========== ======== Capital and reserves Called up share capital 1,442,647 1,442,647 1,442,647 Share premium account 9,456,668 18,889,230 9,456,668 Merger reserve 515,569 515,569 515,569 Capital redemption reserve 91,750 91,750 91,750 Profit and loss account 3,163,225 (7,484,183) 2,471,025 ----------- ---------- -------- Equity shareholders' funds 14,669,859 13,455,013 13,977,659 =========== ========== ======== Total overdraft and loan balances included in creditors 8,502,318 6,321,789 4,737,012 =========== ========== ======== CONSOLIDATED CASH FLOW STATEMENT Six months Six months Year ended ended ended 30 30 31 March September September 2004 2003 2004 (Unaudited) (Unaudited) (Audited) £ £ £ Net cash (outflow)/inflow from operating activities (4,414,581) 5,035,566 6,517,922 Returns on investments and servicing of finance Interest received and similar income 140,624 204,756 36,409 Interest paid (299,994) (415,182) (486,958) ---------- ---------- -------- (159,370) (210,426) (450,549) ---------- ---------- -------- Taxation UK Corporation tax paid - (237,304) (237,295) Capital expenditure and financial investment Purchase of tangible fixed assets (5,023) (15,563) (31,813) Sale of tangible fixed assets 4,260 20,746 34,284 ----------- ---------- -------- (763) 5,183 2,471 ----------- ---------- -------- Acquisitions and disposals Disposal of subsidiary undertakings - (20,343) (20,343) Management of liquid resources Sale of current asset investments and loan stock 477,966 154,271 817,897 ----------- ---------- -------- Net cash (outflow)/inflow before financing (4,096,748) 4,726,947 6,630,103 ----------- ---------- -------- Financing Advance/(repayment) of borrowings 7,483,934 (8,312,070) (8,655,115) Capital element of finance leases (2,946) (13,599) (17,413) ----------- ---------- -------- 7,480,988 (8,325,669) (8,672,528) ----------- ---------- -------- INCREASE/(DECREASE) IN CASH 3,384,240 (3,598,722) (2,042,425) =========== ========== ======== NOTES TO THE CASH FLOW STATEMENT (a) Reconciliation of operating profit to net cash (outflow)/inflow from operating activities Six months Six months Year ended ended ended 30 30 31 March September September 2004 2003 2004 (Unaudited) (Unaudited) (Audited) £ £ £ Operating profit 945,725 447,650 2,022,046 Depreciation 27,468 43,882 82,086 Amortisation 78,492 78,492 156,984 Profit on disposal of fixed assets (2,614) (7,689) (18,260) (Increase)/decrease in stock (5,280,083) 4,436,197 3,516,705 Decrease in debtors 59,235 1,335,317 629,180 (Decrease)/increase in creditors and provisions (242,804) (1,298,283) 129,181 ---------- --------- -------- Net cash (outflow)/inflow from operating (4,414,581) 5,035,566 6,517,922 activities ========== ========= ======== (b) Reconciliation of net cash flow to movement in net debt Six months Six months Year ended ended ended 30 September 30 September 31 March 2004 2003 2004 (Unaudited) (Unaudited) (Audited) £ £ £ Increase/(decrease) in cash 3,384,240 (3,598,722) (2,042,425) Cash (inflow)/outflow from decrease in debt and lease financing (7,480,988) 8,325,669 8,672,528 Cash inflow from decrease in liquid resources (477,966) (154,271) (817,897) --------- ---------- -------- Change in net debt resulting from cash flows (4,574,714) 4,572,676 5,812,206 Conversion of debtors to current asset investments - 600,000 600,000 Transfer in respect of loan notes redeemed with current asset investments 236,453 - - Proceeds due from sale of current asset investments - (663,461) - Profit on sale of current asset investments 69,476 108,171 108,236 Increase in provision against current asset investments - - (112,278) Opening net debt (4,212,534) (10,620,698) (10,620,698) --------- ---------- -------- Closing net debt (8,481,319) (6,003,312) (4,212,534) --------- ---------- -------- (c) Analysis of net cash and debt At Cash Non-cash At 31 March Flow movement 30 September 2004 NET CASH £ £ £ £ Cash at bank 355,653 (334,388) - 21,265 Bank overdrafts (3,718,628) 3,718,628 - - --------- -------- -------- --------- (3,362,975) 3,384,240 - 21,265 DEBT Finance leases (8,212) 2,946 - (5,266) Debt due within one (968,384) 907,177 - (61,207) year Debt due after more than (50,000) (8,391,111) - (8,441,111) one year Current asset 177,037 (477,966) 305,929 5,000 investment --------- -------- -------- --------- Net debt (4,212,534) (4,574,714) 305,929 (8,481,319) ========= ======== ======== ========= 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 2004 statutory accounts to 31 March 2004. 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 31 March 2004 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 19.1% due to the availability of trading and capital losses brought forward to offset against profits of the current period (30 September 2003: 10.5%). 3. The calculation of earnings per share is based on the profit on ordinary activities after taxation and 288,529,426 (30 September 2003: 288,135,983) 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 31 March 2004 was 288,332,705. There are no potentially dilutive shares in 2004 and 2003. 4. The Board has decided that there will be no interim dividend. 5. The interim statement was approved by the Board of Directors on 9 December 2004. 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. This information is provided by RNS The company news service from the London Stock Exchange

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