Michelmersh Brick Share Discussion Threads

[bodgit] 17/10/2007 20:34

No sign of a planning application having been made as of today. Should be soon then - I hope. Good luck all.

[shanklin] 08/10/2007 15:48

For a man who, according to the 2006 Annual Report, is on circa £100k package, this is probably a significant sum. Lets hope Mr Robinson's investment is as well-timed as I'm hoping mine is here.

[alan russell] 08/10/2007 15:35

RNS Number:3376F
Michelmersh Brick Holdings PLC
8 October 2007


Michelmersh Brick Holdings PLC
(the "Company")
Director / PDMR Shareholding

The Company has been informed that Craig Robinson, Finance Director, on 5 October 2007 acquired 34,500 ordinary shares in the Company at a price of 128.5 pence per share. Accordingly, Mr Robinson is now beneficially interested in 34,500 ordinary shares, representing 0.1 per cent. of the issued ordinary share capital of the Company.

[ed 123] 19/9/2007 15:41

There's been a series of small buys after the early drop. Has this been tipped somewhere?

[ed 123] 18/9/2007 15:46

Thanks, alan russell and Shanklin. :-)

[shanklin] 18/9/2007 14:19

Worth going to...



and under "Land Allocations - Preferred Options Report:", downloading "Part 1 -Housing" from 2005. Ref "HSG11" relates to the 60 acre (as was) Blockleys site.

Cheers, Martin

[alan russell] 18/9/2007 09:23

Mmmm, I see what you mean. While it appears to be implied from the second and third paragraphs in the 14-12-05 RNS that the £10M refers to the 7 acres it is not explicit. However a more extensive quote from the company's recent e-mail makes it clear.

"The correct number of acres is 15 acres. The option originally covered the first 7 acres of land, but now 15 acres will be released to Persimmon.

The price will be increased pro rata assuming that there is no material movement in the market value of the land."

It is perhaps worth reiterating that the deal is an option only. Persimmon are under no obligation to purchase. If the bottom falls out of the land market they could walk away.

It is difficult to align the Sharelockholmes forecasts with the company's comments on the timing of revenues. Still at least it's heading the right direction!

[shanklin] 18/9/2007 07:57

Hi Alan

I don't see the RNS of 14-Dec-05 as explicitly stating that £10m relates to 7 acres.

I hold shares in MBH as I believe them to be very cheap but still suspect that £10m relates to 15 acres. Its a shame the RNSes aren't slightly more explicit about this.

At least there are some new broker forecasts about for 07 and 08 which presumably reflect some of the profits on land sales. According to Sharelockholmes,

2007 PBT £5.4m EPS 11.8p
2008 PBT £5.8m EPS 12.28p

I understand the forecast for 09 is higher still but have not yet seen what it is.

Cheers, Martin

[alan russell] 17/9/2007 21:09

Shanklin,
Check RNS of 14-12-05 for confirmation.

With all this talk of land sales it is sometimes easy to forget that planning permission for development is highly unlikely to be granted unless the clay has been extracted. Once that has occurred the land is brownfield and the presumption shifts to favour development. As long as this holds the company effectively cannot be closed and the land sold off at development prices. Asset-stripping is not an option.

MBH is a brick manufacturer first and foremost. The property side, while nice, is secondary. Another way to look at the company is as follows:

After end 2008 profits should be near enough £2M pa as long as everything else remains the same (which it won't - energy prices, land prices etc). 65 acres to be sold over 20 years = 3.25 acres pa x £1.2M = £3.9M pa (it will arrive in lumps of course not nice and even, but it'll do for this exercise). Add on operating profits and net PBT = say £6M pa. MBH cap at present share price is £46M, under 8X PBT profit. Doesn't seem expensive.

[shanklin] 17/9/2007 15:42

Hi Alan

7 acres for £10m? Are you sure about this please? I'd have expected circa £10m for the 15 acres.

Thank you, Martin

[ed 123] 17/9/2007 15:11

Thanks, alan russell, good to get confirmation.

Imho, MBH should be a solid investment, plenty of tangible asset backing and, as you say, soon to pay back its borrowings.

The company has, I think six sites. I wonder how the valuation of their sites in current use would compare with valuation of the same sites for redevelopment? There could be a lot of latent value there. Eric Gadsden will be well aware of this. I presume that eventually he will want to realise this and hopefully I'll still be a shareholder at that point.

[alan russell] 17/9/2007 14:23

I e-mailed MBH on Friday re. whether the initial phase comprised 7 or 15 acres. I have received a reply this morning - 10 out of 10 for consideration of a (very) small shareholder. MBH state that while the initial phase was 7 acres it is now 15 acres. It adds that "The price will be increased pro rata assuming that there is no material movement in the market value of the land."

The price for 7 acres was £10M gross so about £21.4M gross by end 2008. After remediation costs the net price seems to be working out at about £1.2M per acre ie £18M nett. Allow for Baggeridge proceeds and modest profits and MBH could enter 2009 with about £7M cash rather than £14M debt as at 30-6-07.

[masurenguy] 13/9/2007 13:19

Strange 3.5% drop on just a few sales.

[ed 123] 12/9/2007 10:57

Excellent asset backing, an improved operation and a robust market - what more could a shareholder want?

Alan Russell, I saw the 7 acre figure but not the 15 until now. But, again, I could have missed something.

Your valuation is helpful. I don't know if there is any further land which could be released for sale soon, but in any event at the end of brick production there will be the plant land and the clay reserves land available for sale. I don't know what that area would be and so can't estimate its value but some extra sum it would appear should added to your valuation.

Apropos valuation, Eric Gadsden had a better idea of the value of Baggeridge Brick than did the market, initially. Hanson's reserves put a big markup onto its shareprice at its takeover. There may be significantly more value in Michelmersh's reserves than we realise.

My guess, FWIW - Eric Gadsden is now into his 60's and may be looking towards retirement in a few years. I would expect him now to buy some small bolt-ons that perhaps wouldn't interest the majors. That way he can grow Michelmersh with a view to possibly selling the company in three or so years time.

[alan russell] 12/9/2007 10:57

Thumbtwiddle,
It might be useful if you could include a graph in the header of the share price since flotation. I don't know when I have ever seen a more perfect seris of increasing lows - you could draw a line alomost perfectly along them. One for the TA brigade!

[alan russell] 12/9/2007 10:10

Solid results; very pleasing to see. I feel the most significant item is the news that the proceeds of the sale of the first phase to Persimmon will all be received in 2008 rather than 2008 & 2009 as previously stated.

So what's MBH worth? I know this is all very broad brush but here goes. Debt at 30-6-07 was £14.4M. The company states that due to the proceeds from the sale of land, profit from Baggeridge and trading profits this will be eliminated by start 2009. So PBT of £180,000 as announced today add back £650,000 interest no longer payable = £830,000 x 2 = £1.6M pa from end 2008. Solid ongoing operations but nothing widely exciting, say x 12 = £19m cap from operations.

After sale of first phase there will be 73 acres left (se below). The company has previously estimated that the 60 acres would be released over 15 years so with the site now extended to 80 acres it seems a reasonable assumption that it will be released over 20 years. Net proceeds are about £1.2M pa so the remaining 73 acres would realise £78M or £4.4M pa. Discounting £4.4m for 20 years at 8% = £43M cap from property.

£19M + £43M = £62M. Present cap at 130.5pps = £49.6M, so is a share price of 163p next year justified? At these numbers the company could easily pay a divi of 5% of today's share price

One matter has me at a bit of a loss. In the RNS of 14-12-05 announcing the Persimmon deal the company referred to the first phase of the sale as 7 acres. In today's statement it refers to the "anticipated sale of the initial 15 acres". I don't recollect any announcement since 14-12-05 about an increase in the first phase. I had a quick look through some RNS's but did not see it although it could have come out in the blizzard of announcements about Baggeridge and I have missed it. Could someone a bit more knowledgeable than me clarify please? The above assumes 7 acres.

EDit: I should have stressed the above is glorified guesswork! If it is accurate to within 20% either way I would be amazed.

[bodgit] 12/9/2007 08:12

Good results. Should see an uplift in the share price I note in particular that 1,000 homes are possible at Telford. I guess the value in that alone is about equivalent to the current market cap, if not significantly higher. Looks like these are a 'tuck away in a drawer and forget about them for a few years' share - unless of course soeone comes along and bids for them. I wish! Good luck all.

[bodgit] 11/9/2007 07:10

alan r, thanks for reply and thereby confirming I am not talking to myself! All my shareholdings are in nominee or ISA accounts and snail mail is not involved. No RNS posting yesterday, or (yet)this morning? Curious. Good luck all anyway.

[alan russell] 10/9/2007 23:45

Probably held up in the post. Might arrive tomorrow.

[bodgit] 10/9/2007 07:30

Guess I am talking to myself on here! No sign of interims yet? Hmmmmm. RNS of 1 Aug says: 'The Company will announce its interim results on 10 September 2007.' Have I missed something??

[bodgit] 09/9/2007 11:26

As a recent new investor in MBH, 'hello' and hope that the interims tomorrow give a boost to MBH in a somewhat turbulent market. Good luck all.

[alan russell] 03/9/2007 13:46

Edit - sorry, tried to post chart but wouldn't work

[meadow50] 01/8/2007 13:24

small top up again today but had to pay just under 118p

[alan russell] 01/8/2007 12:00

RNS Number:2873B
Michelmersh Brick Holdings PLC 01 August 2007


Michelmersh Brick Holdings plc
("Michelmersh" or "the Company")


Acceptance of Offer for Baggeridge Brick Plc Shares at 247p Per Share

Michelmersh announced on 4 June 2007 that it held a 23.12 per cent. stake in Baggeridge Brick PLC ("Baggeridge") and was continuing to evaluate a possible offer for Baggeridge at a price of no less than 225 pence per share. In light of an increased offer for Baggeridge by Wienerberger Finance Service B.V. ("Wienerberger") at a price of 247 pence per share, the Board of Michelmersh confirmed on 15 June 2007, that it would no longer be proceeding with an offer for Baggeridge. Michelmersh acquired its 23.1 per cent. interest in Baggeridge at an average cash acquisition price of 214.8 pence per share.

On 3 July 2007, Michelmersh announced that it had acquired a further 809,000 Baggeridge ordinary shares, increasing its holding to 25.1 per cent of the issued share capital of Baggeridge. The consideration for these shares was satisfied by way of the issue of 1,998,230 new Michelmersh shares.

After further consideration, the Board of Michelmersh has decided that it is in the best interests of the Company to accept the offer of 247 pence per share by Wienerberger in respect of its entire holding of 10,356,869 ordinary shares in Baggeridge and has effected this acceptance.

In a trading update issued on 3 July 2007, Michelmersh announced that it continues to see strong demand for its products across all group companies and that the Board anticipates underlying operating profit for the six months to 30 June 2007 will be significantly higher than the comparable period in 2006 and will be ahead of estimates for the period.

The Company will announce its interim results on 10 September 2007.