6th Mar 2008 07:00
Artisan (UK) PLC06 March 2008 ARTISAN (UK) PLC UNAUDITED INTERIM STATEMENT FOR THE SIX MONTHS ENDED 31 DECEMBER 2007 London, 6 March 2008: Artisan (UK) plc, the AIM listed house builder, commercial property developer and property investor, announces its unaudited interim results for the six months ended 31 December 2007. • Trading at commercial property development subsidiary robust over the period • Investment property division delivering first investments • Rippon Homes' sales down significantly due to national trading conditions and results suffering from reduced margin • The Board is declaring a dividend of 1.2p per ordinary share, to be paid on 18 April 2008 to those on the register on 25 March 2008 Michael W. Stevens, Chairman of Artisan (UK) plc commented, "In common with others in the sector, Artisan's housebuilding subsidiary has been impacted by the slowdown in the housing market. However the commercial development arm has continued to perform well and property investment has had a positive start." "Despite the downturn in housebuilding sales and the pressure on margins, the Board is confident that the trading divisions are well structured to respond to market conditions and well positioned to benefit swiftly from any improvement in trading conditions." For further information please contact: Artisan (UK) plcChris Musselle Chief Executive 01480 436666 [email protected] Brewin Dolphin Securities Nominated advisers 0845 2708613LimitedAndrew Kitchingman Bankside Consultants Financial PR advisers 020 7367 8888Simon Rothschild 07703 167065 Company website: www.artisan-plc.co.uk CHAIRMAN'S STATEMENT TradingThe Group's results for the six months to 31 December 2007 show a turnover of£10.6m (30 September 2006; £15.8m) and an operating profit of £0.7m (30September 2006; £1.3m). The profit before tax is £0.1m (30 September 2006;£1.0m) Shareholders should note that the comparative used in the accounts is the sixmonths to 30 September 2006, which follows from the change in the year end to 30June. As such it is of limited value in comparing the performance of the Group. The Board is declaring a dividend of 1.2p per ordinary share, to be paid on 18April 2008 to those on the register on 25 March 2008. The commercial division, Artisan (UK) Developments, has performed wellthroughout the period due to the revenue generated by forward sales secured inthe previous accounting period. Through careful control of build activities, theconstruction team has delivered returns in excess of those expected on thedevelopment of buildings. Whilst forward sales activity had been expected to bethe major contributor to revenue in the period, some stock sales were also inthe budget. However as a result of uncertainty in the markets and tighteningcredit conditions, new sales and stock sales were more difficult than expectedto secure. Nevertheless I am very pleased with the contribution made by thisdivision. Its turnover of £3.7m (30 September 2006; £4.5m) does not include thebuild value of the properties in the investment division, a service provided bythe developments construction team. Before allocation of central managementcharges the commercial division contributed £859,000 (30 September 2006;£633,000) of operating profit to the group. The investment property division has now seen the first two buildings move tocompletion. The first of these was completed and fully occupied prior to theperiod end. This building is partially occupied by the Group as its newheadquarters. A satisfactory valuation in excess of management's originalestimate has contributed towards a total revaluation gain of £316,000. Of thistotal the third party occupied premises provide the revaluation surplus of£222,000 (30 September 2006; £nil) reflected in the Income Statement for theperiod. The Group expects to recognise revaluation surplus on the secondinvestment property in the second half of the year. The Group had also beenexpecting to recognise further surplus on investment land, but following adetailed assessment of the International Accounting Standards, now recognisethat it would not be appropriate to recognise this gain in the Group results. Rippon Homes, our residential division, has experienced a much more difficulttrading period. A lack of consumer demand in the East Midlands and Yorkshire hasresulted in fewer sales than targeted. House prices have been relatively staticand Rippon Homes has actively pursued sales though increasing marketing spendand providing sales incentives, as have our competitors in the region. Potentialpurchasers, faced with a wide choice of available product in the market, haveproven less willing to commit to an early purchase. Instead the trend has beenfor a preference to see the finished building before committing to a purchase.This has resulted in the need to provide greater levels of finished stock. Thecarefully managed part-exchange programme has accounted for a significantproportion of Rippon's sales. Whilst there is a cost in managing this programme,it is broadly comparable to the level of incentive provided to customers notrequiring the part exchange facility. A consequence of lower sales is a reducedefficiency in the division and margins have been affected. Turnover of £6.9m (30September 2006; £11.3m) contributed an operating profit before centralmanagement charges of £153,000 (30 September 2006; £1,115,000). Balance SheetIn November 2007 we concluded negotiations to improve our banking facilities. Inaddition to reducing the interest rate to the Group on development funding, aseparate facility for the investment properties was put in place. The investmentproperty facility was drawn in February 2008 when both investment properties hadbeen occupied. Currently the facility has funds available for further investmentin land, stocks and work in progress (WIP). The Board, recognising the uncertaintrading conditions, has increased its targeted level of headroom to ensure agenerous level of liquidity is maintained. WIP has continued to be increased through both the established land purchaseprogramme and development activity. In response to lower than expected sales,the Board has restricted further land commitments, and these will be incurredonly as further sales are achieved. I feel that this approach is a prudentresponse to the prevailing market conditions Outlook Both the residential and commercial divisions have seen better tradingconditions in 2008. The improvement in the residential marketplace began towardsthe beginning of January 2008. However the Board believes that the market isstill fragile, with demand derived from customers who need to find a newproperty rather than merely "trading up" or to increase individuals' exposure toinvestment in residential property. The commercial division has seen animprovement in February 2008 and has secured reservations on stock properties.Well funded customers with a business requirement seem to have returned to themarket to some degree. Those customers who have a greater reliance on thirdparty funding are still struggling to assemble finance. A further consequence of market conditions, particularly in the residentialdivision, is that staggered build programmes have impacted on development costs;unless there is an improvement in selling prices and volume, there will be areduction in margins in future trading periods as these costs continue to workthrough. The Group has taken steps to reduce costs where possible and willcontinue to keep this important issue under review, managing our sourcing andresources to the expected trading environment. Whilst the increased costs willaffect future profitability, the Board are confident that the trading divisionsare well structured to respond to the difficult conditions while at the sametime being prepared for improvements in the market. MICHAEL W STEVENSChairman6 March 2008 ARTISAN (UK) PLCCONSOLIDATED INCOME STATEMENTSIX MONTHS TO 31 DECEMBER 2007 Unaudited Unaudited Audited Six months Six months 15 months ended ended ended 31 December 30 September 30 June 2007 2006 2007 £ £ £ Revenue 10,620,644 15,757,319 41,032,156Cost of sales (9,130,498) (13,727,141) (35,093,001) Gross profit 1,490,146 2,030,178 5,939,155Other operating income 182,465 160,044 410,264Administrative expenses (1,191,000) (921,586) (2,913,381) 481,611 1,268,636 3,436,038 Revaluation surplus on investment properties 222,280 - 261,684 Operating profit 703,891 1,268,636 3,697,722 Finance income 3,755 8,147 18,829Finance expense (627,824) (300,568) (933,642) Profit before taxation 79,822 976,215 2,782,909 Tax expense - (266,839) (671,032) Profit for the period 79,822 709,376 2,111,877 Basic and diluted earnings per share 0.97p 8.64p 25.73p ARTISAN (UK) PLCCONSOLIDATED BALANCE SHEETAT 31 DECEMBER 2007 Unaudited Unaudited Audited As at As at As at 31 December 30 September 30 June 2007 2006 2007 £ £ £ASSETS Non-current assetsIntangible assets 2,454,760 2,454,760 2,454,760Investment properties 3,192,985 - 1,515,897Property, plant and 1,001,319 394,722 437,058equipment Other receivables 116,667 - - 6,765,731 2,849,482 4,407,715Current assetsInventories 42,185,233 33,962,248 34,792,561Trade and other receivables 1,173,519 1,105,365 1,478,042Cash and cash equivalents 1,169 3,526 1,126 43,359,921 35,071,139 36,271,729 Total assets 50,125,652 37,920,621 40,679,444 LIABILITIES Non-current liabilitiesInterest bearing loans and borrowings (20,317,428) (10,309,046) (10,752,945) (20,317,428) (10,309,046) (10,752,945)Current liabilitiesTrade and other payables (8,374,508) (7,348,093) (8,098,715)Current tax provisions (67,741) (272,358) (523,527)Provisions (444,072) (444,072) (444,072) (8,886,321) (8,064,523) (9,066,314) Total liabilities (29,203,749) (18,373,569) (19,819,259) Net assets 20,921,903 19,547,052 20,860,185 EQUITY ATTRIBUTABLE TO THEEQUITY HOLDERS OF THEPARENT COMPANY Called up share capital 1,642,650 1,642,647 1,642,650Share premium account 10,356,683 10,356,668 10,356,683Merger reserve 515,569 515,569 515,569Capital redemption reserve 91,750 91,750 91,750Revaluation reserve 93,590 - -Retained earnings 8,240,726 6,940,418 8,272,598Own shares (19,065) - (19,065) Total equity 20,921,903 19,547,052 20,860,185 ARTISAN (UK) PLCCONSOLIDATED CASH FLOW STATEMENTSIX MONTHS TO 31 DECEMBER 2007 Unaudited Unaudited Audited Six months Six months 15 months ended ended ended 31 December 30 September 30 June 2007 2006 2007 £ £ £Cash flows from operating activitiesCash used by operations (6,330,823) (3,079,129) (2,330,514)Finance income received 3,755 8,147 18,829Finance costs paid (588,107) (285,155) (898,818)Tax paid (455,786) (333,001) (486,025) Net cash used in operating activities (7,370,961) (3,689,138) (3,696,528) Cash flows from investing activitiesPurchase of property, plant and equipment (36,106) (61,360) (145,850)Capital expenditure on investment properties (2,034,946) - (238,767)Proceeds from sale of property, plant and equipment 553 3,384 5,163Proceeds from sale of current asset investment - 1,309 1,309 Net cash used in investing activities (2,070,499) (56,667) (378,145) Cash flows from financing activitiesDividends paid (122,980) - (98,384)Proceeds from the issue of ordinary share capital - - 18Purchase of own shares - - (19,065)Movement in borrowings 9,564,483 3,745,981 4,189,880 Net cash from financing activities 9,441,503 3,745,981 4,072,449 Net increase/(decrease) in cashand cash equivalents 43 176 (2,224) Cash and cash equivalents at thebeginning of the period 1,126 3,350 3,350 Cash and cash equivalents at the end of the period 1,169 3,526 1,126 ARTISAN (UK) PLCNOTES TO THE INTERIM STATEMENT 1. BASIS OF PREPARATION This consolidated interim financial information in this condensed report isprepared on the basis of the accounting policies set out in the 2007 annualreport and accounts and using accounting policies consistent with InternationalFinancial Reporting Standards ("IFRS") as endorsed by the European Union. The endorsed IFRS that will be effective (or available for early adoption) inthe financial statements for the year ending 30 June 2008 are still subject tochange and to additional interpretation and therefore cannot be determined withcertainty. Accordingly, the accounting policies for the period will only bedetermined finally when the consolidated financial statements are prepared forthe year ending 30 June 2008. The interim financial information for the 6 months ended 31 December 2007 and 30September 2006 has neither been audited nor reviewed pursuant to guidance issuedby the Auditing Practices Board, and does not constitute statutory accounts asdefined in section 240 of the Companies Act 1985. Comparative financialinformation for the 15 month period ended 30 June 2007 has been derived frominformation extracted from the statutory accounts for that period. The 2007annual report and accounts, which received an unqualified opinion from theauditors, did not include any reference to matters to which the auditors drewattention to by way of emphasis without qualifying the report, and did notcontain a statement under section 237(2) or (3) of the Companies Act 1985, havebeen filed with the Registrar of Companies. As permitted, the group has not applied IAS 34 "Interim Reporting" in preparingthis interim report. 2. ACCOUNTING POLICIES The interim financial information has been prepared by applying the accountingpolicies and presentation that were applied in the preparation of the Group'spublished consolidated financial statements for the period ended 30 June 2007,except for the following: 1. An addition to the revenue accounting policy to reflect the fact that rental income on investment properties is being received in the period for the first time. The amended revenue accounting policy is as follows: Revenue Revenue is stated exclusive of VAT and represents the value of work done andproperties sold, excluding part exchange properties which are included withincost of sales. Revenue consists of sales of trading and development properties,together with gross rental income receivable on investment properties. Revenuedoes not include the sales of investment properties, for which the profits orlosses on sale are shown separately, and rents receivable on developmentproperties, which are shown as other operating income. In respect of sales of property, revenue and profit are recognised upon legalcompletion of the legal transfer of title to the customer. Profit or loss iscalculated with reference to each site or phase within a site. Profit is recognised on long term work in progress contracts if the finaloutcome can be assessed with reasonable certainty, by including in the incomestatement revenue and related costs as contract activity progresses. Revenue iscalculated as that proportion of total contract value which costs to date bearto total expected costs for that contract. Losses are recognised as soon as theyare foreseen. 2. ACCOUNTING POLICIES (Continued) 2. An addition to the property, plant and equipment note to include the following in respect of an owner occupied property occupied by the Group for the first time in the period: Property, plant and equipment Owner occupied property is stated at fair value with changes in fair value recognised directly in equity. 3. SEGMENTAL ANALYSIS The Group operates through its three principal business segments: Residential,Commercial and Property Investment. The Group does not operate outside theUnited Kingdom. A summary of the segmental trading results is shown below: Residential Commercial Property Central Total investment £ £ £ £ £RevenueSix months ended 31 December 2007 6,930,023 3,689,246 1,375 - 10,620,644Six months ended 30 September 2006 11,293,518 4,463,801 - - 15,757,31915 months ended 30 June 2007 26,961,175 14,070,981 - - 41,032,156 Operating profit beforecentral management chargesSix months ended 31 December 2007 153,010 859,286 204,071 (512,476) 703,891Six months ended 30 September 2006 1,115,409 633,472 -- (480,245) 1,268,63615 months ended 30 June 2007 2,575,694 2,142,266 261,580 (1,281,818) 3,697,722 4. TAXATION The taxation charge for the 6 months has been calculated at an expected annualeffective rate of Nil% (30 September 2006 27.3%) as the result of theanticipated use of brought forward capital and trading losses. 5. DIVIDENDS The Board has decided that subject to shareholder approval of the resolutions atthe forthcoming Extraordinary General Meeting, there will be an interim dividendof 1.2p per ordinary share. This will amount to approximately £98,500 and willbe paid on 18 April 2008 to shareholders on the register as at 25 March 2008. 6. EARNINGS PER SHARE The calculation of earnings per share is based on the profit on ordinaryactivities after taxation and 8,198,658 (30 September 2006: 8,213,236) ordinaryshares being the weighted average number of shares in issue during the halfyear. The weighted average number of shares in issue during the 15 months ended30 June 2007 was 8,208,026. There are no potentially dilutive shares in 2007 and2006. 7. INVESTMENT PROPERTIES Six months Six months 15 months ended ended ended 31 December 30 September 30 June 2007 2006 2007 £ £ £Fair valueAt beginning of period 1,515,897 - -Additions - transfer from trading stock - - 804,218- capital expenditure 1,923,718 - 449,995Transfer to property, plantand equipment in respect ofowner occupied property (468,910) - - 2,970,705 - 1,254,213Revaluations included in income statement 222,280 - 261,684At end of period 3,192,985 - 1,515,897Historical cost of investment 2,709,021 - 1,254,213properties The Group's first completed investment property was tenanted in December 2007.The valuation on this property has been prepared for the directors by Savills (L&P) Ltd and their valuation is reflected in the above summary. Part of the firstinvestment property has now been occupied by the Group and accordingly the costof this part of the property has been transferred to property, plant andequipment. 8. RECONCILIATION OF CHANGES IN EQUITY Six months Six months 15 months ended ended ended 31 December 30 September 30 June 2007 2006 2007 £ £ £ Opening equity 20,860,185 18,813,782 18,813,782Profit for the period 79,822 709,376 2,111,877Dividends paid (122,980) - (98,384)Issue of shares - - 18Purchase of own shares - - (19,065)Credit to retained earnings in respect of employee share schemes 11,286 23,894 51,957 Revaluation surplus on owner occupied property recognisedin equity 93,590 - - Closing equity 20,921,903 19,547,052 20,860,185 9. CASH USED BY OPERATIONS Six months Six months 15 months ended ended ended 31 December 30 September 30 June 2007 2006 2007 £ £ £ Profit before taxation 79,822 976,215 2,782,909Adjustments for:Profit on sale of current asset investment - (309) (309)Depreciation 34,073 18,323 59,598Share based payment charge 11,286 23,894 51,957Profit on disposal ofproperty, plant and equipment (281) (2,290) (3,190) Increase in inventories (7,392,672) (3,794,450) (5,428,981)Decrease/(increase) in trade and other receivables 187,856 136,720 (235,957) Increase/(decrease) in trade and other payables and provisions 347,304 (729,653) (205,997) Decrease in provisions - - (3,673)Revaluation surplus on investment properties (222,280) - (261,684)Finance income (3,755) (8,147) (18,829)Finance expense 627,824 300,568 933,642Cash used by operations (6,330,823) (3,079,129) (2,330,514) 10. APPROVAL OF INTERIM STATEMENT The interim statement was approved by the Board of Directors on 5 March 2008.Copies are being sent to all shareholders. Copies of this statement will beavailable to members of the public, free of charge, from the Company'sregistered office, Vantage House, Vantage Park, Washingley Road, Huntingdon,Cambridgeshire, PE29 6SR. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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