Artisanal Sp.co Regulatory News (ART)

11 Jul 2005 07:00

Artisan (UK) PLC11 July 2005 ARTISAN (UK) plc (AIM) (House builder & business park developer) PRELIMINARY RESULTS FOR THE YEAR TO 31 MARCH 2005 HIGHLIGHTSKey points: €122% growth in earnings per share to 0.60p (2004: 0.27p) €35% rise in operating profits to £2.72m (2004: £2.02m) •Shareholders' funds increased by 12.4% to £15.7m •No dividend recommended in order to retain available funds within the business (2004: nil) •Residential land bank expanded by over 35% •Commercial activity level increases significantly •Commercial Development operations return to profitability •Court of Appeal ruling on the Infiniteland case upholds judgment in Artisan's favour Michael W Stevens commented:"The 2005 results are most satisfying and have exceeded the market'sexpectations. This reflects the rewards of building two stable platforms for ourcore operations both with the potential for long term profit flows. The comingyear will no doubt be more challenging in the housebuilding sector, but ourcommercial operations are strong and underline the benefits of maintaining thetwo diverse business streams" Enquiries: Artisan (UK) plc 01480 436666Chris Musselle, Finance Director Mobile: 07879 412779 Martyn Freeman, Chief Executive Bankside Consultants 020 7367 8888Simon Rothschild Mobile: 07703 167065 Seymour Pierce Limited 020 7107 8000Sarah Wharry CHAIRMAN'S STATEMENT It is one of the more pleasant duties of a company chairman to report on a yearwhich sees significant growth in both operating profits and pre-tax earnings. Operating profits have risen to £2.7m (2004: £2.0m). Pre-tax profits almostdoubled to £2.1m from last year's £1.1m, partly due to the absence of thesignificant exceptional costs that were a feature of 2004, but should notdisguise the real progress made by the Group in its activities in the year. The market for our commercial business parks has been active during the yearunder review, with a much higher level of sales achieved. The prospects for thisarea of the business are expected to remain positive for 2005/06. Whilst the housing market is always likely to be punctuated by short termvolatility, the Board believes the long term prospects for housebuilding arestrongly founded on basic economic principles, and we continue to build up landreserves at Rippon Homes and seek other opportunities to expand. Inevitably any corporate activity has been inhibited whilst the Infinitelandlitigation remained open. It is to be welcomed that the Court of Appeal hasupheld the judgment of the High Court finding in favour of Artisan as explainedin the Financial Review that follows in this report. Your Board is looking forward to 2005/06 with confidence and, although weanticipate a more difficult and uncertain year for our housebuilding operations,we will redouble our efforts to pursue interesting prospects in the propertysector. Whilst the Group is in a much better position to pursue worthwhileopportunities we will not allow our pursuit of these opportunities to compromisethe stability that has been established over the past couple of years. We aredetermined to take the Group forward to restore a more robust marketcapitalisation and believe the platform to achieve this growth is now firmlyfounded. With this in mind, your Board does not recommend a dividend for the currentyear, in order that funds for investment may be retained in the business. The impressive results for the year could only have been achieved with thesupport of all the employees in the business, and I should like to acknowledgetheir efforts on behalf of the entire Board. Michael W StevensChairman 11 July 2005 OPERATIONAL REVIEW During the year, sales on the Group's business parks grew to £8.6m (2004:£4.8m). This included sales of serviced plots as well as completed properties,and has enabled us to make a significant reduction in the working capitalemployed in commercial land and stocks. This has greatly improved the return oncapital employed within Artisan (UK) Developments whilst rebalancing stocks. The most notable transaction in the year was at Vantage Park in Huntingdon,where we let the three office units constructed in the previous year andconcluded an investment sale at £2.4m to one of the Cambridge colleges in March2005. Overall, the last two months of the year proved very productive for the sale ofstock properties, to the extent that virtually all of these were sold by theyear end. This has required the rebuilding of stock levels in the first half of2005/06. Demand for forward sales on offices remains good at the present timeparticularly in the market for the smaller properties Artisan (UK) Developmentsoffers. 2004/05 was a profitable but disjointed year for house sales at Rippon Homes.From July 2004 the market in the East Midlands stood still for three monthswhilst prospective purchasers nervously watched for signs of a fall in houseprices and estate agents sought to re-align asking prices for less desirableolder properties. Despite a rally in the New Year, the business finished theyear with 118 houses sold, compared with 126 sales in the previous year whencustomer demand was at an exceptionally high level. Demand has calmed since the early-spring revival and results for the year to 31March 2006 will be significantly impacted by the condition of the market in theautumn. However, Rippon Homes enjoys a low exposure to the troubled apartmentssector and buy-to-let investors, and its houses are attractive to the moretraditional buyer. Typically this means Rippon Homes does not operate on thehigher percentage of forward-sales reported by volume housebuilders, and itremains difficult to forecast sales volumes in the current cautious market. Ourland buying strategy has allowed Rippon Homes to offer a higher percentage ofless expensive properties. We have also expanded with more sites in theconurbations west of Nottingham and Yorkshire where we expect demand will bemore resilient. One factor having an influence across both our business streams is the growingpopularity of purchasing property through private pension plans (SIPPs). FromApril 2006 the fiscal rules are set to change to enable a wider range ofproperty investments, including housing, to be purchased in this manner althoughrestricting the size of the related mortgages. Whilst the influence of theseTreasury policies on the markets is unclear, it may be that some purchasers willawait the start date for certain types of house purchase. Shareholders will be aware that Artisan has been exploring the expansion of thehousebuilding business through a possible corporate acquisition. During the yeartalks were held with several different companies, but these did not lead tofruition. We have continued to invest in the housing land bank at Rippon Homes and duringthe year we increased our landholdings by over 35%, ending the year with 230plots owned or contracted, (2004 - 168 plots). Future commercial developmentcapacity stands at over 17,000 square metres of developable floorspace, which isapproaching three years production, and new outlets are being sourced for 2006/07. The year to 31 March 2005 has demonstrated the Group's ability to return a goodlevel of operating profits through its operations and provided a sound base forfuture years. Martyn FreemanChief Executive11 July 2005 FINANCIAL REVIEW ResultsThe Group operating profit has improved to £2.72m (2004: £2.02m) an increase of35%. In particular the commercial activity at the year end was very successfulwith over £3.0m of sales achieved in the last month. Profit has grown as aresult of the improvement in commercial trading activity supported by a rise inthe margins achieved on residential sales. Earnings per share have increased by 122% to 0.60p (2004: 0.27p) Group turnover for the year to 31 March 2005 reduced to £27.3m (2004: £32.1m)due in part to the weakness of the residential housing market compared to theprior year despite the excellent recovery in business park development activity.In the year to 31 March 2004 the turnover was enhanced by the sales of olderLiving Heritage stock accounting for much of the reduction in turnover. Summary of operating results Residential Commercial Property Central Total DealingTurnover- 2005 £18.7m £8.6m - - £27.3m- 2004 £26.6m £4.8m £0.7m - £32.1m Operating profit- 2005 £3.1m £1.1m - £(1.3)m £2.9m- 2004 £3.3m £(0.1)m - £(1.0)m £2.2m The analysis of profit is before group management charges and excludes goodwill. There has been some additional exceptional expenditure in respect of disposalsof group undertakings in previous years. This is largely in respect of thelitigation continuing through the year over the Group's sale of BickertonConstruction Limited. Share Capital In the year there has been no share capital issued. Balance Sheet The net assets of the Group have continued to grow with an increase from £14.0mto £15.7m as a result of the retained profit for the year. At 31 March 2005 theGroup had net cash balances of £nil (2004: £0.4m) reflecting the funding basisof our new banking facilities whereby all positive bank balances in the groupare offset against loan drawdown. This is particularly advantageous in reducingnet interest payable. The Group has borrowings of £7.1m (2004: £4.7m). Thegearing ratio is now 44.9% (2004: 31.4%) reflecting the continued investment intrading stocks as your Board seeks to improve the depth of the residential landbank. Your Board expects to take advantage of the opportunities to be gained byincreasing this gearing ratio as worthwhile new projects are identified in bothresidential and commercial activities. Work in Progress Work in progress has increased from £18.7m to £21.8m reflecting the continuedinvestment in residential land bank, whilst commercial work in progress has beensuccessfully reduced through profitable trading. The investment in commercialwork in progress will increase from the low point following the successful salesof finished units at the year end as further stock is developed for sale. As thecompletion of two of the office parks can be now be foreseen, further investmentin new business park sites is expected. Non-Core AssetsArtisan has, as indicated last year, essentially finalised the disposal of itsnon core assets with the realisations of its holdings in Stratus Services GroupInc and Partners in Property Solutions plc, both modestly in excess of balancesheet value. Artisan retains a small number of common stock shares in Stratus. Litigation The dispute with Infiniteland Limited over the sale of Bickerton ConstructionLimited continued to be a distraction during the year. After enduring the longand expensive High Court hearing which found in favour of Artisan in theprevious financial year, Infiniteland were granted leave to appeal to the Courtof Appeal. The appeal hearing was heard in February 2005 and judgment handeddown in June 2005, again in favour of Artisan, dismissing Infiniteland's claimsand upholding Artisan's right to collect the £503,000 debt outstanding togetherwith substantial costs and interest. The Court of Appeal did not grant leave toInfiniteland to appeal this judgment, but as Infiniteland intend to seek leave to appeal directly to the House of Lords, the full outstanding debt remains provided for whilst litigation continues and no assumption of any funds recoverable has been made. Also as we previously reported, the liquidator of Bickerton Construction Limitedhas made enquiries into management charges from Artisan around the time of thesale of Bickerton. At the end of 2004 the liquidator threatened legal action inrespect of management charges of £1,400,000 paid by Bickerton to Artisan in June2001. If proceedings are issued Artisan intends to defend its position on thevalidity of the management charges. If the defence is unsuccessful, the mattermay result in a repayment by Artisan of an amount equal to all or part of themanagement charges plus costs. Bankers The new corporate banking facilities agreed with The Royal Bank of Scotland plchave proven to be of significant benefit to the Group. Following the completionof the first year on 30 June 2005, the £5m top slice of funding has been renewedfor a further year, the balance having been drawn down on a three year committedrevolving credit facility. The new facility has been entered into with the clearunderstanding that it is Artisan's intention to improve its land banks and seekacquisitions.Chris MusselleFinance Director11 July 2005 ARTISAN (UK) PLC GROUP PROFIT & LOSS ACCOUNT For The Year Ended 31 March 2005 31 Mar 2005 31 Mar 2004 £ £TURNOVER 27,326,235 32,116,765 COST OF SALES (22,606,419) (28,325,253) __________ __________GROSS PROFIT 4,719,816 3,791,512 Administrative expenses (2,031,523) (1,775,720)Other operating income 33,826 6,254 __________ __________GROUP OPERATING PROFIT 2,722,119 2,022,046 Loss on sale of group undertaking in prior year (7,640) (20,343)Exceptional provisions in respect of sale of groupundertakings in previous years (125,000) (554,504)Exceptional profits arising on current asset 69,476 108,236investments and loan notes __________ __________ 2,658,955 1,555,435 Interest payable (536,538) (486,958)Interest receivable and similar income 12,631 36,409 __________ __________PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 2,135,048 1,104,886 Taxation (397,565) (336,084) __________ __________RETAINED PROFIT FOR THE YEAR 1,737,483 768,802 __________ __________ Basic earnings per share 0.60p 0.27pDiluted earnings per share 0.60p 0.27p All recognised gains and losses in the current and prior year are included inthe profit and loss account. ARTISAN (UK) PLC GROUP BALANCE SHEET As at 31 March 2005 31 Mar 2005 31 Mar 2004 £ £FIXED ASSETSIntangible fixed assets 2,471,206 2,628,190Tangible fixed assets 340,199 368,178 __________ __________ 2,811,405 2,996,368 __________ __________CURRENT ASSETSInvestments 5,000 177,037Stocks and work in progress 21,786,214 18,726,086Debtors 6,791,533 5,079,480Cash at bank and in hand 5,207 355,653 __________ __________ 28,587,954 24,338,256CREDITORS: Amounts falling due within one year (8,094,628) (12,409,645) __________ __________NET CURRENT ASSETS 20,493,326 11,928,611 __________ __________ TOTAL ASSETS LESS CURRENT LIABILITIES 23,304,731 14,924,979 CREDITORS: Amounts falling due after more (7,060,746) (52,320)than one yearProvisions for liabilities and charges (528,843) (895,000) __________ __________NET ASSETS 15,715,142 13,977,659 __________ __________CAPITAL AND RESERVESCalled up share capital 1,442,647 1,442,647Share premium account 9,456,668 9,456,668Merger reserve 515,569 515,569Capital redemption reserve 91,750 91,750Profit and loss account 4,208,508 2,471,025 __________ ___________EQUITY SHAREHOLDERS' FUNDS 15,715,142 13,977,659 __________ ___________ ARTISAN (UK) PLC GROUP CASH FLOW STATEMENT For The Year Ended 31 March 2005 31 Mar 2005 31 Mar 2004 £ £NET CASH (OUTFLOW)/INFLOW FROM OPERATINGACTIVITIES (2,121,632) 6,517,922 RETURNS ON INVESTMENTS AND SERVICING OF FINANCEInterest received 12,631 36,409Interest paid (489,149) (486,958) ________ ________NET CASH OUTFLOW FROM RETURNS ON INVESTMENTS AND SERVICING OF FINANCE (476,518) (450,549) TAXATIONUK Corporation tax paid (520,064) (237,295) CAPITAL EXPENDITURE AND FINANCIAL INVESTMENTSale of tangible fixed assets 4,894 34,284Purchase of tangible fixed assets (25,294) (31,813) ________ ________NET CASH (OUTFLOW)/INFLOW FROM (20,400) 2,471INVESTING ACTIVITIES ACQUISITIONS AND DISPOSALSDisposal of subsidiary undertaking in prior year (7,640) (20,343) ________ ________NET CASH OUTFLOW FROM ACQUISITIONS AND DISPOSALS (7,640) (20,343) ________ ________NET CASH (OUTFLOW)/INFLOW BEFORE USE OF LIQUIDRESOURCES AND FINANCING (3,146,254) 5,812,206 MANAGEMENT OF LIQUID RESOURCESSale of current asset investments 477,966 817,897 FINANCINGMovement in borrowing 6,042,362 (8,655,115)Capital element of finance leases (5,892) (17,413) __________ __________NET CASH INFLOW/(OUTFLOW )FROM FINANCING 6,036,470 (8,672,528) __________ __________ INCREASE/(DECREASE) IN CASH 3,368,182 (2,042,425) __________ __________ Notes 1 EARNINGS PER SHAREThe basic earnings per share is calculated by dividing the profit for thefinancial year attributable to shareholders by the weighted average number ofshares in issue. The weighted average number of shares were 31 Mar 2005 31 Mar 2004 Number NumberBasic weighted average number of shares 288,529,426 288,332,705 There were no dilutive potential ordinary shares in 2005 or 2004 2. The financial information set out in this document, which summarisesthe results of the group, does not amount to statutory accounts within themeaning of Section 240 of the Companies Act 1985. The group's auditors haveaudited the statutory accounts and have issued an unqualified reportthereon within the meaning of Section 235 and have not made any statement underSection 237(2) or (3) of the Companies Act 1985 for the year ended 31 March2005. 3. Statutory accounts for the year ended 31 March 2004 have been deliveredto the Registrar of Companies. Statutory accounts for the year ended 31 March2005 will be delivered to the Registrar following the Annual General Meeting. No changes have been made to accounting policies. 4. The Annual General Meeting will be held at Butchers Hall, 87Bartholomew Close, London, EC1A 9HP at 11.00am on 7 September 2005. Copies of this announcement will be available to the public, free of charge,from the offices of Seymour Pierce Ltd, Bucklersbury House, 3 Queen VictoriaStreet, London, EC4N 8EL during normal office hours, with the exception ofSaturdays, Sundays and bank holidays, for 14 days from today. This information is provided by RNS The company news service from the London Stock Exchange