RNS Number:2111Z
Artisan (UK) PLC
29 July 2002
EMBARGOED RELEASE: 0800 HOURS, 29 JULY 2002
ARTISAN (UK) plc
(AIM)
(House builder & commercial property developer)
PRELIMINARY RESULTS FOR THE YEAR TO 31 MARCH 2002
HIGHLIGHTS
Key points:
• Profit before interest, taxation and goodwill £7.3m (£11.6m for the
year to 31st March 2001)
• Earnings per share before interest, taxation and goodwill 2.6 pence
(4.4 pence per share for the year to 31st March 2001)
• Recommended final dividend of 0.15p per share
• Dividend per share 0.4 pence for the year to 31 March 2002 (0.6 pence
per share for the year to 31st March 2001)
Commenting on the results, Artisan's Chairman Stephen Dean said:
" During the year we have undertaken and carried out an evaluation of the
Group's activities, which has resulted in a number of disposals and a goodwill
write down of £18.8m. We are now focusing on a smaller number of key larger
operating companies specialising in both commercial and residential property
development."
Enquiries:
Hansard Communications 020 7735 9415
Adam Reynolds Mobile: 07785 908158
Takki Sulaiman Mobile: 07778 419218
Seymour Pierce Limited 020 7648 8700
Sarah Wharry
Artisan (UK) plc 01480 436666
Stephen Dean, Chairman
Martyn Freeman, Chief Executive
Chris Musselle, Finance Director
ARTISAN (UK) PLC
CHAIRMAN'S STATEMENT
During the year we have undertaken and carried out an evaluation of the Group's
activities, which has resulted in a number of disposals culminating in that of
the Speymill Contracts business.
The year to 31 March 2002 saw strong performances from both our commercial and
residential property development business and in particular there has been a
strong contribution from Rippon Homes.
As reported at the interim stage, we had experienced serious difficulties with
Living Heritage as an independently managed associate business of the Artisan
Group. Although this substantially impacted upon our year end results I am
pleased to report that the Board have implemented strategic management changes
bringing Living Heritage under the direct control of the Artisan Group's
management.
The results for this period prior to goodwill, taxation and interest show a
profit of £7.31m on turnover of £59.46m.
During the year Artisan bought back 5.85m shares of its issued share capital
with a further 13.35m purchased shortly after the year end. These in total
reduced the issued share capital by nearly 7%.
The Directors will be recommending a final dividend for the year to 31 March
2002 of 0.15p, which is subject to shareholders approval at the Annual General
Meeting of the Company.
As announced in May, I am delighted to welcome both Michael Stevens and John
Hemingway to the Board as non-executive Directors and the appointment of Martyn
Freeman as Chief Executive. With their considerable expertise and experience
within the property sector, I believe that together, they will add significantly
to the future development of the Group.
The future strategy of the Group will be to concentrate primarily on larger
scale commercial and residential developments both in the UK and Europe to
generate the growth expected by our shareholders from the Company's potential.
Following these changes and with emphasis on the future growth strategy of the
Group, the Board has reviewed the goodwill accumulated on the balance sheet,
with the result that there should be a write off of all goodwill carried except
for that related to the Rippon Homes business, which amounts to £2.94m. As a
result the balance sheet value will be more in line with the market
capitalisation of the Group. As a consequence we have written down goodwill by
£18.8m and therefore the pre goodwill profit before interest and taxation of
£7.31m becomes a loss of £12.2m before interest and taxation.
After four years as Chairman of Artisan (UK) plc, I have decided to retire
following the Annual General Meeting. However to allow for an orderly
succession I have today stepped down as Chairman and I am delighted to announce
that Michael Stevens is the Company's new Chairman. The Board look to the
future with confidence and I would like to take this opportunity to thank all of
our staff for their dedication and efforts throughout this financial year.
Stephen Dean
Chairman
29 July 2002
OPERATIONS REVIEW
Commercial Development and Property
During the year Artisan (UK) Developments sold a further 40,000ft(2) of office
and industrial units on its business parks in Peterborough, St Neots and St Ives
and sold a 2 acre site to Whitbread Plc for development as an hotel and leisure
complex.
To replace its land stocks, the Company has purchased eight acres of land for
two new business parks in Huntingdon and Peterborough, on which we have started
development works, together with the three acre St Albans site purchased last
year. These three new sites will provide over 150,000ft(2) of new office
development to add to the 175,000ft(2) still to be developed on the Colmworth
Business Park and the 20,000ft(2) of property in stock and under development.
The 24,000ft(2) office block in Watford previously pre-sold by Gryphon
Developments plc, was completed early in the year and let to Citibank, releasing
the balance of the purchase price shortly after the financial year end.
£3.6m was raised from the sale of 80,000ft(2) of offices in Sheffield and
Halifax together with two small retail properties in Ripley and Cromer. A
further £0.5m secured second tranche is receivable within two years.
Since the year end the Company has taken the opportunity to convert £860,000 of
Loan Note and accrued fees and interest against the part cost of some newly
developed commercial property in Spain valued for the company at I2.17m (approx
£1.4m).
Residential Development
The consolidation of the Company's housing activities has now been completed,
with residential development now centred on Rippon Homes with Living Heritage
integrated as its Premium brand division.
The residual house building activity in East Anglia previously undertaken by
Artisan (UK) Developments has now been completed allowing the Group to
concentrate its investment more effectively in the less volatile and lower land
cost markets in the Midlands.
Rippon Homes sold 115 houses during the year. The landbank surplus acquired
when we purchased the Company last year has been developed out, resulting in the
year being particularly profitable, and by the year end the land purchase
programme for 2002/03 had already commenced with new sites at Rainworth and
Mansfield under contract and three further site purchases in Nottinghamshire and
Derbyshire agreed with the landowners.
Our original 50% investment in Living Heritage was made in 1999, under an
agreement for the vendors to retain management control under a profits earn-out
structure until 2002. However, your Board was unhappy with both the control of
development and rate of sales, and the weak financial management, and therefore
took control of Living Heritage in October 2001 making appropriate loss
provisions to allow it to trade profitably in the future.
The management team has been changed and costs drastically reduced. New control
systems were introduced and the original activity of converting older properties
phased out as Living Heritage was re-positioned as a specialist division
alongside Rippon Homes.
As at 31 March 2002 the delayed Living Heritage conversion projects were
virtually all completed with a consequential high level of finished but unsold
stocks at the balance sheet date. Since the year end the new management team
have succeeded in substantially reducing these stocks and the associated bank
debt through increased sales levels.
Martyn Freeman
Chief Executive
29 July 2002
FINANCIAL REVIEW
For the year to 31 March 2002 Group turnover reduced to £63.3m (year to 31 March
2001 £81.4m) principally as a result of the disposal of the regional contracting
operations. Profit before interest and goodwill has decreased to £7.3m (year to
31 March 2001 £11.6m). The goodwill impairment review has turned the profit
before interest into a loss of £12.2m before interest and taxation, but will
reduce the ongoing amortisation charge by £992,000 per annum.
Following the disposal of the regional contracting businesses earlier in the
year and the sale of Speymill just prior to the year end, the group's continuing
operations comprise residential and commercial development activity and some
property investment interest. A total of £4.3m profit has been derived from the
sale of contracting subsidiaries during the year. Of the consideration £1.5m
remains outstanding as debt due to Artisan.
RESIDENTIAL COMMERCIAL PROPERTY CENTRAL TOTAL
CONTINUING
OPERATIONS
£m £m £m £m £m
Turnover 26.4 6.8 8.8 0.3 42.3
Operating
Profit
excluding
goodwill 1.7 2.0 0.3 (1.1) 2.9
Therefore the continuing turnover and profit is now derived almost entirely from
residential and commercial property development. The profits for the
forthcoming financial year will not benefit from the level of profits derived
from disposals in the current year. The future profit levels will also be
affected by the cyclical nature of development activity in the group. Artisan
is currently investing in new projects which should generate a profitable return
on equity in future years.
Share capital
During the year there have been no shares issued other than those exercisable
under the approved share option scheme and a total of 5.85 million shares have
been repurchased at an average price of 7.55p.
Balance sheet
At the year end the group had net cash balances of £0.4m and bank and other
borrowings of £23.3m representing a gearing ratio of 119.8%. However since 31
March 2001 the Artisan balance sheet has been reduced by the goodwill write down
and at the balance sheet date we have assumed £8.5m of debt arising from the
consolidation of Living Heritage. Without these two items, the gearing ratio
would have been less than the 2001 ratio of 50%. Living Heritage Developments
and its subsidiaries had always carried very high gearing as an individual
group. The Artisan debt level is relatively high but will be reduced
substantially as the stock of Living Heritage properties continues to be sold.
A further £1.7m of debt has been repaid from Living Heritage sales since the
balance sheet date.
Goodwill
As a consequence of the results and changes through the year and those currently
envisaged, the Board has undertaken an impairment review. This follows the
difficulties encountered with Living Heritage, the consequential effects thereof
and the cessation of other specific areas of activity. The result is an
exceptional write down amounting to £18.8m in the year. The amortisation
savings in future years will enhance reported profitability and the now lower
net asset value is both closer to the market value of Artisan and the value
attributed by most financial analysts when assessing the balance sheet.
Dividends
During the course of the year, your board has paid an interim dividend of 0.25p
and recommends a final dividend of 0.15p subject to approval by shareholders at
the Annual General Meeting of the Company. The total dividend is over five
times covered by earnings per share, before goodwill, of 2.10p. The final
dividend will be payable on 2 October 2002 to shareholders on the register at 9
August 2002. The dividend is lower than last year and reflects the lower profit
achieved compared with last year.
Post balance sheet
The principal post balance sheet event is the purchase under the share buyback
authority of a further 13.35m Artisan (UK) plc shares at an average price of
8.625p.
Chris Musselle
Finance Director
29 July 2002
ARTISAN (UK) PLC
GROUP PROFIT & LOSS ACCOUNT
For The Year Ended 31 March 2002
31 Mar 2002 31 Mar 2001
Excluding Including Excluding Including
Goodwill goodwill goodwill goodwill
TURNOVER £ £ £ £
Continuing operations - existing 42,272,870 42,272,870 40,934,030 40,934,030
Discontinued activities 21,020,006 21,020,006 40,430,490 40,430,490
__________ __________ __________ __________
Group Turnover 63,292,876 63,292,876 81,364,520 81,364,520
Group's share of associate's turnover - (3,830,789) (3,830,789) (3,287,934) (3,287,934)
all continuing
__________ __________ __________ __________
59,462,087 59,462,087 78,076,586 78,076,586
COST OF SALES (49,776,974) (49,776,974) (61,981,183) (61,981,183)
__________ __________ __________ __________
GROSS PROFIT 9,685,113 9,685,113 16,095,403 16,095,403
Administrative expenses (6,267,124) (7,007,097) (6,614,259) (7,224,929)
Other operating income 83,116 83,116 1,540,824 1,540,824
Goodwill write down (exceptional) - (18,755,120) - -
__________ __________ __________ __________
GROUP OPERATING PROFIT/(LOSS) 3,501,105 (15,993,988) 11,021,968 10,411,298
Continuing operations - existing 2,871,297 (16,623,796) 9,813,058 9,202,388
Discontinued activities 629,808 629,808 1,208,910 1,208,910
Group's share of operating profit/(loss) (600,257) (600,257) 256,500 256,500
of associate
Amortisation of goodwill arising on
acquisition of associate - (41,424) - (46,030)
__________ __________ __________ __________
TOTAL OPERATING PROFIT/(LOSS) 2,900,848 (16,635,669) 11,278,468 10,621,768
Profit on disposal of fixed asset 73,414 73,414 287,277 287,277
Profit on sale of group undertaking 4,295,208 4,295,208 - -
Income from current asset investments 37,485 37,485 - -
__________ __________ __________ __________
7,306,955 (12,229,562) 11,565,745 10,909,045
Interest payable (858,729) (858,729) (1,711,977) (1,711,977)
Interest receivable & similar income 261,695 261,695 712,367 712,367
__________ __________ __________ __________
PROFIT/(LOSS) ON ORDINARY
ACTIVITIES BEFORE TAXATION 6,709,921 (12,826,596) 10,566,135 9,909,435
TAXATION (696,854) (696,854) (3,060,172) (3,060,172)
__________ __________ __________ __________
PROFIT/(LOSS) ON ORDINARY
ACTIVITIES AFTER TAXATION 6,013,067 (13,523,450) 7,505,963 6,849,263
Dividends (1,059,450) (1,059,450) (3,916,440) (3,916,440)
__________ __________ __________ __________
RETAINED FOR THE YEAR 4,953,617 (14,582,900) 3,589,523 2,932,823
__________ __________ __________ __________
Basic Earnings per share 2.10p (4.72p) 2.83p 2.59p
Diluted earnings per share 2.10p (4.72p) 2.82p 2.58p
ARTISAN (UK) PLC
GROUP BALANCE SHEET
As at 31 March 2002
31 Mar 2002 31 Mar 2001
£ £
FIXED ASSETS
Intangible fixed assets 2,942,158 14,110,245
Tangible fixed assets 894,642 2,433,528
Investment in associates - 1,214,245
_________ _________
3,836,800 17,758,018
_________ _________
CURRENT ASSETS
Investments 811,056 4,157,109
Stocks & work in progress 33,199,625 27,385,667
Debtors 16,788,113 23,868,248
Cash at bank & in hand 355,049 5,375,378
_________ _________
51,153,843 60,786,402
CREDITORS: Amounts falling due within one year (28,035,356) (35,331,379)
_________ _________
NET CURRENT ASSETS 23,118,487 25,455,023
_________ _________
TOTAL ASSETS LESS CURRENT LIABILITIES 26,955,287 43,213,041
CREDITORS: Amounts falling due after more
than one year (7,804,014) (9,066,568)
_________ _________
NET ASSETS 19,151,273 34,146,473
_________ _________
CAPITAL & RESERVES
Called up share capital (all equity) 1,411,064 1,436,064
Share premium account 18,428,211 18,428,211
Merger reserve 515,569 9,358,749
Capital redemption reserve 25,000 -
Profit & loss account (1,228,571) 4,923,449
_________ _________
EQUITY SHAREHOLDERS' FUNDS 19,151,273 34,146,473
_________ _________
ARTISAN (UK) PLC
GROUP CASH FLOW STATEMENT
For The Year Ended 31 March 2002
31 Mar 2002 31 Mar 2001
£ £
NET CASH INFLOW FROM
OPERATING ACTIVITIES 1,496,250 5,791,772
RETURNS ON INVESTMENTS &
SERVICING OF FINANCE
Interest received 261,695 712,367
Interest paid (858,729) (1,711,977)
Dividends received 37,485 -
________ ________
NET CASH (OUTFLOW) FROM RETURNS
ON INVESTMENTS & SERVICING OF
FINANCE (559,549) (999,610)
TAXATION
UK Corporation tax paid (535,156) (1,006,686)
CAPITAL EXPENDITURE & FINANCIAL INVESTMENT
Sale of tangible fixed assets 896,163 1,006,741
Purchase of tangible fixed assets (401,397) (676,024)
________ ________
NET CASH INFLOW/(OUTFLOW) FROM
INVESTING ACTIVITIES 494,766 330,717
ACQUISITIONS & DISPOSALS
Disposal of subsidiary undertaking 5,714,818 -
Purchase of subsidiary undertakings (552,692) (11,847,585)
Net cash disposed with subsidiary undertakings (39,027) -
Purchase of share in associate - (156,479)
________ ________
NET CASH INFLOW/(OUTFLOW) FROM ACQUISITIONS & DISPOSALS 5,123,099 (12,004,064)
EQUITY DIVIDENDS
Dividends paid (656,156) (1,061,801)
________ __________
NET CASH INFLOW/(OUTFLOW) BEFORE FINANCING 5,363,254 (8,949,672)
________ __________
FINANCING
Issue of shares - 2,124,532
Cost of share issues - (127,151)
Share buy back (412,300) -
Movement in borrowing (9,985,501) 10,382,092
Capital element of finance leases 14,218 149,405
__________ _________
NET CASH (OUTFLOW)/INFLOW FROM FINANCING (10,383,583) 12,528,878
__________ _________
(DECREASE)/INCREASE IN CASH (5,020,329) 3,579,206
__________ _________
Notes
1 IMPAIRMENT REVIEW
During the year the board undertook an impairment review resulting in the
exceptional goodwill write off. The results for the year have been shown in two
column format to show the impact of goodwill charges and the results without
goodwill charge. The comparatives have been also been shown in a two column
format.
2 EARNINGS PER SHARE
The basic earnings per share are calculated by dividing the profit for the
financial year attributable to shareholders by the weighted average number of
shares in issue. In calculating the diluted earnings per share, share options
outstanding have been taken into account.
The weighted average number of shares were
31 Mar 2002 31 Mar 2001
Number Number
Basic weighted average number of shares 286,383,308 264,919,700
Dilutive potential ordinary shares:
Employee share options 126,300 999,338
___________ __________
286,509,608 265,919,038
___________ __________
3 The financial information set out in this document does not constitute
statutory group accounts.
4 The report and accounts for the year to 31 March 2002 will be posted to
shareholders shortly and, after being laid before the Annual General Meeting,
will be delivered to the Registrar of Companies.
5 The Annual General Meeting will be held at Butchers Hall, 87 Bartholomew
Close, London, EC1A 9HP at 11.30am on 17 September 2002.
Copies of this announcement will be available to the public, free of charge,
from the offices of Seymour Pierce Ltd., 29/30 Cornhill, London, EC3V 3NF during
normal office hours, with the exception of Saturdays, Sundays and bank
holidays, for 14 days from today.
Enquiries:
Hansard Communications 020 7735 9415
Adam Reynolds
Takki Sulaiman Mobile:07778 419218
Seymour Pierce Limited 020 7648 8700
Sarah Wharry
Artisan (UK) plc 01480 436666
Stephen Dean, Chairman
Martyn Freeman, Chief Executive
Chris Musselle, Finance Director
This information is provided by RNS
The company news service from the London Stock Exchange