Regulatory Announcements
REG - Artisan (UK) PLC - Interim Results - Part 1
Released: 29/03/2010
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RNS Number : 2603J
Artisan (UK) PLC
29 March 2010
29 March 2010
ARTISAN (UK) PLC
UNAUDITED INTERIM STATEMENT FOR THE SIX
MONTHS ENDED 31 DECEMBER 2009
London, 29 March 2010: Artisan (UK) plc ("Artisan" or "the Group"), the AIM listed house builder, commercial property
developer and property investor, announces its unaudited interim results for the six months ended 31 December 2009.
· Turnover at £4.2m compared to £5.1m in the same period in 2008
· Operating loss before finance, tax and exceptional items reduces to £0.5m (2008: £1.0m loss)
· Residential: currently trading continues at a low level due to the impact of difficult conditions in the mortgage
market
· Work in Progress and stock levels reduced, although two new sites opened
· Continued cost cutting measures
Michael W. Stevens, Chairman of Artisan (UK) plc commented:
"Through the six months to 31 December 2009, the Group has seen the residential market stabilising albeit at a low level.
The tough economic factors that affected the Group's customers last year have persisted. The residential market continues
to suffer from a shortage of mortgage funds for the majority of our potential customers and possibly over cautious mortgage
valuations being provided by valuers to mortgage providers. The slowdown in the commercial property market continues to
impact on our Commercial Property division."
"Since the end of the period under review, the mortgage market appears to have eased a little with mortgage funds starting
to become more easily available and valuers moving towards improved valuations for some residential properties. We will
continue to manage the business by balancing sales, production and cash flow and adopting a flexible response as conditions
change."
For further information please contact:
Artisan (UK) plc Chris Musselle Chief Executive 01480 436666 email@artisan-plc.co.uk
Altium Capital Limited Adrian Reed Adam Sivner Nominated advisers 0845 505 4343
Bankside Consultants Simon Rothschild Financial PR advisers 020 7367 8888 07703 167065
Company website: www.artisan-plc.co.uk
CHAIRMAN'S STATEMENT
Through the six months to 31 December 2009, the Group has seen the residential market stabilising albeit at a low level.
The tough economic factors that affected the Group's customers last year have persisted. The residential market continues
to suffer from a shortage of mortgage funds for the majority of our potential customers and possibly over cautious mortgage
valuations being provided by valuers to mortgage providers. The slowdown in the commercial property market continues to
impact on our Commercial Property division. However since the end of the period under review, the mortgage market appears
to have eased a little with mortgage funds starting to become more easily available and valuers moving towards improved
valuations for some residential properties.
Results
Turnover for the 6 months to 31 December 2009 was £4.2m compared to £5.1m in the same period in 2008.
As a result of both reduced turnover and reduced margins, the Group has recorded an operating loss before finance, tax and
exceptional items for the period of £0.5m (2008: £1.0m loss). After net finance costs the loss before tax and exceptional
items was £0.7m (2008: £1.5m loss). Overall the loss before tax for the period was reduced to £0.7m (2008: £5.2m) and the
loss per share improved to 5.38p (2008: 63.87p loss).
The Board has reviewed the carrying value of our stocks and work in progress. The outcome is that overall no further
impairment of the carrying value is required and that the assessment at the previous year end remains broadly appropriate.
This results in a very minor reduction to the carrying value provision of £20,135 (2008: provision of £1.1m; and a total
provision of £1.6m for the year to 30 June 2009).
As a result of reduced interest rates and lower borrowings, finance expenses have fallen to £0.2m (2008: £0.7m). The
conversion of the Convertible Loan Note of £1.75m in June 2009 also reduced the interest charged on this loan to £nil
(2008: £0.1m).
The results continue to be prepared on a going concern basis. We have outlined in note 1 to these results the areas
considered by the board when arriving at this conclusion.
Residential Trading
During the six months we sold 22 units (2008: 15 units) generating a turnover of £3.5m, compared to £2.9m in 2008. As a
consequence of the very low volumes and low margins, the operating loss before tax, central management charges and
exceptional costs was £0.4m (2008: £0.5m loss).
We are convinced that strong underlying demand remains for our products and sales would be greater if mortgage funding was
more widely available. Clearly trading conditions remain difficult and sales are difficult to complete.
In response, the Group has undertaken a limited programme of shared equity sales. These allow for those home buyers who
lack a deposit, but nevertheless have stable prospects, to enter the freehold market. The Group retains an economic
interest in the property, usually 25%, up to a maximum period of normally 10 years. The Group's residual interest is
subsequently recovered as 25% of any future sale proceeds or at remortgaging equal to 25% of the then current value of the
property. Accounting requirements mean that we recognise the implicit interest cost in the transaction, creating a
reduction in turnover and margin at the current time but locking in an income over future years whilst the Group's
part-ownership of the property continues. The impact of this accounting treatment has been to reduce turnover and margin
by £0.1m (2008: £nil) during the period.
Having curtailed construction during the spring and early summer 2009, we have recommenced limited construction. We have
opened two new sites to encouraging levels of sales interest and relatively robust pricing. Sales interest has been
particularly focussed on our four bedroom houses and bungalows. We have also introduced a three bedroom detached unit that
is providing a useful bridge between the pricing of three bedroom semi-detached properties and four bedroom properties.
Commercial Trading
Artisan (UK) Developments achieved a turnover of £0.6m (2008: £2.0m) generating an operating loss before tax, central
management charges and exceptional costs of £0.3m (2008: £0.2m profit). The 2008 turnover was largely attributed to
forward sales, contracted but not completed before the downturn impacted sales opportunities. Sales during the period have
been from existing stock units. To conserve cash, Artisan (UK) Developments Limited has suspended all construction.
Future construction in the short term will most likely be as a result of achieving forward sales or forward lets to
customers.
We have generally seen the decline in investment yields abating and an improvement in yields for the best properties and
tenants. This has improved capital values and is beginning to allow for more opportunities for investment sales. However
the market is patchy and the potentially achievable capital value is quite variable.
Dividend
The Board has decided that in light of the current market conditions and trading results, no interim dividend should be
paid (2008: nil per share).
Stock and Work In Progress
The Group has adopted a policy of reducing stocks to meet market conditions. Residential customers will not commit to
purchase property without seeing the completed article, and therefore an adequate and well balanced stock of finished
product is essential. Having reduced the finished residential stocks held at the start of the financial period, we have
commenced limited construction at two new sites in Debdale and Springwood Grove, both in Mansfield. It is essential that
there is sufficient stock to meet demand as we go forward. Overall the Group has reduced stocks and work in progress to
£30.5m (2008: £39.2m).
Debt and Banking
The net debt at 31 December 2009 was reduced to £19.4m (2008: £24.7m). Included in the 2008 value is £1.5m attributable to
the Convertible Loan Note (2009: £nil). At 31 December 2009 the gross drawn bank debt was £23.8m (2008: £32.3m). The
Group's bank facility for development activity is committed by the bank until 1 July 2011.
Employees
We have continued to respond to the difficult market conditions and conserved our financial resources where possible.
Employees have assisted by agreeing a reduced working week for a period of time which the Board very much appreciates. The
majority of the Group Board also reduced their remuneration during the period under review; as Chairman and a major
shareholder I have forgone 100% of the fees due to myself during the period.
Outlook
We will continue to manage the business by balancing sales, production and cash flow and adopting a flexible response as
conditions change. The outlook for the Group remains dependent on the future market conditions which are currently
difficult to predict, due to the impact of the wider economy and the impact of the forthcoming election. We have seen an
easing of the terms associated with mortgage funds provision which is welcome, but there still remains some way to go
before more normal conditions prevail.
The commercial market continues to lag behind the residential market and sales of stock units are difficult to achieve
whilst customers lack confidence in the economy. Recently we have had some negotiations on potential forward sales, whilst
the commercial operation has opened discussions with agents looking for assistance in the promotion of schemes and
projects.
The Group continues to explore, without restriction, ideas for re-invigorating the trading operations and establishing a
means of bringing them back to more sustainable volumes of operation.
MICHAEL W STEVENS
Chairman
29 March 2010
ARTISAN (UK) PLC
CONDENSED CONSOLIDATED INCOME STATEMENT
SIX MONTHS TO 31 DECEMBER 2009
Note Unaudited Six months ended 31 December Unaudited Six months ended 31 December 2008 Audited Year ended 30 June 2009
2009
£ £ £
Revenue 3 4,195,282 5,085,194 10,926,592
Cost of sales
Before exceptional items (4,244,530) (4,405,795) (10,172,288)
Exceptional items 4 20,135 (1,200,826) (1,684,184)
Cost of sales (4,224,395) (5,606,621) (11,856,472)
Gross loss
Before exceptional items (49,248) 679,399 754,304
Exceptional items 20,135 (1,200,826) (1,684,184)
Gross loss (29,113) (521,427) (929,880)
Other operating income 152,104 159,188 343,345
Administrative expenses
Before exceptional items (961,545) (1,387,419) (2,846,302)
Exceptional items 4 - (2,510,461) (2,610,124)
Administrative expenses (961,545) (3,897,880) (5,456,426)
(838,554) (4,260,119) (6,042,961)
Revaluation surplus/(deficit) of investment 10 313,271 (462,108) (750,412)
properties
Operating loss
Before exceptional items (545,418) (1,010,940) (2,499,065)
Exceptional items 20,135 (3,711,287) (4,294,308)
Operating loss (525,283) (4,722,227) (6,793,373)
Finance income 5 10,367 189,931 29,279
Finance expense 6 (202,718) (704,482) (1,301,189)
Loss before taxation
Before exceptional items (737,769) (1,525,491) (3,770,975)
Exceptional items 20,135 (3,711,287) (4,294,308)
Loss before taxation (717,634) (5,236,778) (8,065,283)
Tax credit 7
Before exceptional items - - 12,823
Exceptional items - - 14,602
Tax credit - - 27,425
Loss for the period attributable to the equity holders of the parent
Before exceptional items (737,769) (1,525,491) (3,758,152)
Exceptional items 20,135 (3,711,287) (4,279,706)
Loss for the period attributable to the equity holders of the parent (717,634) (5,236,778) (8,037,858)
Basic and diluted loss per share 9 (5.38)p (63.87)p (97.21)p
ARTISAN (UK) PLC
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
SIX MONTHS TO 31 DECEMBER 2009
Unaudited Six months ended 31 December Unaudited Six months ended 31 December 2008 Audited Year ended 30 June 2009
2009
£ £ £
Loss for the period (717,634) (5,236,778) (8,037,858)
Other comprehensive income/(expense) for
the period
Revaluation of Group occupied property - (46,796) (46,796)
Other comprehensive income/(expense) for - (46,796) (46,796)
the period
Total comprehensive expense for (717,634) (5,283,574) (8,084,654)
the period attributable to the equity
holders of the parent
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
SIX MONTHS TO 31 DECEMBER 2009 (UNAUDITED)
Share capital Share premium account Merger reserve Capital redemption reserve Revaluation reserve Retained earnings Own shares held Total
£ £ £ £ £ £ £ £
Balance at 1 July 2008 1,642,650 10,356,683 515,569 91,750 74,840 8,773,061 (19,065) 21,435,488
Revaluation of owner occupied - - - - (46,796) - - (46,796)
property
Share based payments - - - - - 5,094 - 5,094
Dividend paid - - - - - (61,490) - (61,490)
Loss for the period - - - - - (5,236,778) - (5,236,778)
Balance at 31 December 2008 1,642,650 10,356,683 515,569 91,750 28,044 3,479,887 (19,065) 16,095,518
Issue of shares 1,025,641 1,000,000 - - - - - 2,025,641
Share based payments - - - - - 5,094 - 5,094
Loss for the period - - - - - (2,801,080) - (2,801,080)
Balance at 30 June 2009 2,668,291 11,356,683 515,569 91,750 28,044 683,901 (19,065) 15,325,173
Share based payments - - - - - 601 - 601
Loss for the period - - - - - (717,634) - (717,634)
Balance at 31 December 2009 2,668,291 11,356,683 515,569 91,750 28,044 (33,132) (19,065) 14,608,140
ARTISAN (UK) PLC
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AT 31 DECEMBER 2009
Note Unaudited As at 31 December 2009 Unaudited As at 31 December 2008 Audited As at 30 June 2009
£ £ £
ASSETS
Non-current assets
Investment properties 10 3,710,709 3,685,742 3,397,438
Property, plant and equipment 825,982 862,649 833,517
Other receivables 519,572 428,833 393,245
5,056,263 4,977,224 4,624,200
Current assets
Inventories 30,504,496 39,178,611 33,724,507
Trade and other receivables 498,848 929,738 678,405
Current tax recoverable 19,118 99,733 19,118
Cash and cash equivalents 404,056 764 1,396
31,426,518 40,208,846 34,423,426
Total assets 36,482,781 45,186,070 39,047,626
LIABILITIES
Non-current liabilities
Interest bearing loans and borrowings 11 (19,820,228) (1,543,495) (19,441,807)
(19,820,228) (1,543,495) (19,441,807)
Current liabilities
Trade and other payables (1,619,605) (3,920,032) (2,502,802)
Interest bearing loans and borrowings 11 - (23,182,953) (1,333,772)
Provisions (434,808) (444,072) (444,072)
(2,054,413) (27,547,057) (4,280,646)
Total liabilities (21,874,641) (29,090,552) (23,722,453)
Net assets 14,608,140 16,095,518 15,325,173
EQUITY ATTRIBUTABLE TO THE EQUITY HOLDERS OF THE PARENT COMPANY
Called up share capital 2,668,291 1,642,650 2,668,291
Share premium account 11,356,683 10,356,683 11,356,683
Merger reserve 515,569 515,569 515,569
Capital redemption reserve 91,750 91,750 91,750
Revaluation reserve 28,044 28,044 28,044
Retained earnings (33,132) 3,479,887 683,901
Own shares (19,065) (19,065) (19,065)
Total equity 14,608,140 16,095,518 15,325,173
ARTISAN (UK) PLC
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
SIX MONTHS TO 31 DECEMBER 2009
Unaudited Six months ended 31 December 2009 Unaudited Six months ended 31 December 2008 Audited Year ended 30 June 2009
£ £ £
Cash flows from operating activities
Loss before taxation (717,634) (5,236,778) (8,065,283)
Goodwill impairment charge - 2,454,760 2,454,760
Depreciation 26,986 34,262 64,145
Finance income (10,367) (189,931) (29,279)
Finance expense 202,718 704,482 1,301,189
Share based payments charge 601 5,094 10,188
Loss on disposal of property, plant and equipment - 2,519 2,267
Revaluation (surplus)/deficit on investment properties (313,271) 462,108 750,412
Operating loss before changes in working capital and provisions (810,967) (1,763,484) (3,511,601)
Decrease/(increase) in inventories 3,220,011 (1,337,214) 5,376,920
Decrease in trade and other receivables 53,230 154,517 441,438
Decrease in trade and other payables (892,866) (1,415,428) (4,050,322)
Cash from/(used by) operations 1,569,408 (4,361,609) (1,743,565)
Finance income received 10,367 7,838 29,279
Finance costs paid (202,313) (769,634) (1,161,697)
Tax received - - 108,040
Net cash from/(used in) operating activities 1,377,462 (5,123,405) (2,767,943)
Cash flows from investing activities
Purchase of property, plant and equipment (19,451) (3,190) (4,186)
Proceeds from sale of property, plant and equipment - 12,003 12,500
Net cash (used in)/from investing activities (19,451) 8,813 8,314
Cash flows from financing activities
Dividends paid - (61,490) (61,490)
New convertible loan note issued - 1,696,957 -
Proceeds from the issue of ordinary share capital - - 1,750,000
Movement on bank borrowings (955,351) 3,478,392 1,071,018
Net cash (used in)/from financing activities (955,351) 5,113,859 2,759,528
Net increase/(decrease) in cash and cash equivalents 402,660 (733) (101)
Cash and cash equivalents at the beginning of the period 1,396 1,497 1,497
Cash and cash equivalents at the end of the period 404,056 764 1,396
ARTISAN (UK) PLC
NOTES TO THE INTERIM STATEMENT
1. BASIS OF PREPARATION
This consolidated interim financial information in this condensed report is prepared in accordance with International
Accounting Standard 34 "Interim Financial Reporting" and on the basis of the accounting policies set out in the 2009 annual
report and accounts, being accounting policies consistent with International Financial Reporting Standards ("IFRS") as
endorsed by the European Union. The Interim Statement has been prepared on a going concern basis.
The endorsed IFRS that will be effective (or available for early adoption) in the financial statements for the year ending
30 June 2010 are still subject to change and to additional interpretation and therefore cannot be determined with
certainty. Accordingly, the accounting policies for the period will only be determined finally when the consolidated
financial statements are prepared for the year ending 30 June 2010.
The interim financial information for the 6 months ended 31 December 2009 and 31 December 2008 has neither been audited nor
reviewed pursuant to guidance issued by the Auditing Practices Board, and does not constitute statutory accounts as defined
in section 434 of the Companies Act 2006. Comparative financial information for the year ended 30 June 2009 has been
derived from information extracted from the statutory accounts for that period. The 2009 annual report and accounts, which
received an unqualified opinion from the auditors, did not include any reference to matters to which the auditors drew
attention to by way of emphasis without qualifying the report, and did not contain a statement under section 498(2) or (3)
of the Companies Act 2006, have been filed with the Registrar of Companies.
Going concern
In determining the appropriate basis of preparation of the Interim Statement, the Directors are required to consider
whether the Group can continue in operational existence for the foreseeable future.
Our ability to continue trading is dependent on our debt facilities remaining available to us. The development facility is
committed until 1 July 2011. The key factor in the ability of the Group to continue to comply with its banking covenants
will be its ability to generate cash from the sale of stock properties and we will have to take whatever steps we can to
ensure that sufficient cash flow is maintained.
If conditions in the UK economy that impact on the Group's activities worsen further than that assumed in the Group's
current internal forecasts then there is a risk that the Group may find that it is unable to meet its banking covenant
obligations and would therefore need to seek a restructuring of such facilities before their renewal. Failure to agree a
restructuring of facilities, or to obtain other funding, may cast significant doubt about the Group's ability to continue
as a going concern.
Nevertheless, the Group has met all of its interest and other payment obligations on time and based on the Group's current
internal forecasts, the Directors believe that the Group will continue to meet its banking covenant obligations for a
period of not less than 12 months from the date of this report and accordingly believe that it is appropriate to prepare
the Interim Statement on the going concern basis.
2. ACCOUNTING POLICIES
The interim financial information has been prepared by applying the accounting policies and presentation that were applied
in the preparation of the Group's published consolidated financial statements for the year ended 30 June 2009, except for
the following new and amended accounting policies:
IAS 1 (revised) Presentation of Financial Statements:
IAS 1 (revised) requires the production of a statement of comprehensive income setting out all items of income and expense
relating to non-owner changes in equity. There is a choice between presenting comprehensive income in one statement or in
two statements comprising an income statement and a separate statement of comprehensive income. The Group has chosen to
present comprehensive income in two statements. In addition, IAS 1 (revised) requires the statement of changes in
shareholders' equity to be presented as a primary statement along with certain other changes in terminology which have been
adopted in these condensed Group financial statements.
IAS 23 (revised) Borrowing Costs:
IAS 23 (revised) requires the capitalisation of borrowing costs directly attributable to the acquisition, construction or
production of a qualifying asset (one that takes a substantial period of time to get ready for use) as part of the cost of
the asset. The amendment removes the option of immediately expensing borrowing costs, subject to an exemption for
inventories manufactured in large numbers on a repetitive basis.
The Group has evaluated its business processes and where developments are considered to fall under the requirements of IAS
23 (revised) borrowing costs are capitalised. No borrowing costs have been capitalised in the period ended 31 December
2009.
IFRS 8 Operating Segments:
The Group has adopted IFRS8, "Operating Segments", with effect from 1 July 2009. IFRS 8 requires operating segments to be
identified on the basis of internal financial reports about components of the Group that are regularly reviewed by the
chief operating decision maker, which in the case of the Group is the Group Board, in order to allocate resources to the
segments and to assess their performance and is effective in the EU for accounting periods beginning on or after 1 January
2009. In contrast, the previous standard on Segment Reporting (IAS 14) required the Group to identify segments on a
business and geographical basis, using a risk and rewards approach, with the Group's system of internal financial reporting
to key management personnel serving only as the starting point for the identification of such segments.
3. SEGMENTAL ANALYSIS
The Group operates through its three principal business segments which form the basis upon which the Group reports for
management and statutory purposes. The Group does not operate outside the United Kingdom. The business segments are as
follows:
Residential development Residential house development mainly in the East Midlands, Lincolnshire and Yorkshire
areas
Commercial development Business park development concentrated in East Anglia and Hertfordshire.
Property investment. Property investment activities throughout the UK
Other Represents unallocated Group overheads and consolidation adjustments
A summary of the segmental trading results, assets and liabilities is shown below:
Six months ended 31 December 2009 Residential Development Commercial Development Property investment Other Total
Income statement £ £ £ £ £
Revenue
External revenue 3,476,305 569,000 149,977 - 4,195,282
Inter-segment revenue - - 21,930 (21,930) -
3,476,305 569,000 171,907 (21,930) 4,195,282
Segment result
Segment result before central charges and exceptional items (430,075) (272,329) 443,510 (286,524) (545,418)
Exceptional items 20,135 - - - 20,135
Segment result before central charges but after exceptional items (409,940) (272,329) 443,510 (286,524) (525,283)
Central charges (163,671) (163,856) (52,338) 379,865 -
Segment result after central charges and exceptional items (573,611) (436,185) 391,172 93,341 (525,283)
Finance income 10,207 160 - - 10,367
Finance expense (195,735) (73,451) (37,579) 104,047 (202,718)
Loss before taxation (759,139) (509,476) 353,593 197,388 (717,634)
Tax - - - - -
Loss after taxation (759,139) (509,476) 353,593 197,388 (717,634)
Statement of Financial Position
Segment assets 21,586,826 11,425,114 5,162,368 (1,691,527) 36,482,781
Segment liabilities 17,465,712 10,948,899 4,294,977 (10,834,947) 21,874,641
Restated six months ended 31 December 2008 Residential Development Commercial Development Property investment Other Total
Income statement £ £ £ £ £
Revenue
External revenue 2,897,447 2,037,766 149,981 - 5,085,194
Inter-segment revenue - - 21,930 (21,930) -
2,897,447 2,037,766 171,911 (21,930) 5,085,194
Segment result
Segment result before central charges and exceptional items (490,063) 202,304 (347,444) (375,737) (1,010,940)
Exceptional items (3,603,665) (99,941) - (7,681) (3,711,287)
Segment result before central charges but after exceptional items (4,093,728) 102,363 (347,444) (383,418) (4,722,227)
Central charges (242,652) (217,575) (65,773) 526,000 -
Segment result after central charges and exceptional items (4,336,380) (115,212) (413,217) 142,582 (4,722,227)
Finance income 7,691 147 - 182,093 189,931
Finance expense (608,741) (223,384) (109,753) 237,396 (704,482)
Loss before taxation (4,937,430) (338,449) (522,970) 562,071 (5,236,778)
Tax - - - - -
Loss after taxation (4,937,430) (338,449) (522,970) 562,071 (5,236,778)
Statement of Financial Position
Segment assets 28,278,771 12,252,837 5,130,316 (475,854) 45,186,070
Segment liabilities 21,382,094 10,679,969 4,422,734 (7,394,245) 29,090,552
- More to follow, for following part double click [ID:nRSc2603Jb]
