Michelmersh Brick Share Discussion Threads

[bodgit] 21/11/2008 08:41

It looks like the Ennstone share price has just about collapsed under the weight of debt and a take over approach that according to the F.T. today is unlikely to be at any more than the current lowly share price Any reason why Michelmersh won't suffer the same fate of further falls and then a takeover approach giving shareholders little more than a pint of beer if we are lucky? Good luck all.

[bodgit] 01/10/2008 21:18

The housing market has been hit seriously and the remainder of construction is in various states of uncertainty or, in some cases, panic. I am surprised that MBH have not fallen to below 20p though, in the absence of any approach, I still expect that to happen. Shame. I really liked the 'old' business model of dig stuff out of the ground, add value to it, fill up the holes with rubbish then, as a brownfield site get planning permission for residential development and sell it for lots of money. But that was then and this is now and all bets are off. I have written off the 'petty cash' amounts I invested in this one - as well as Ennstone, Inland and Taylor Wimpey. Live and learn. My choice so no complaints. Move on and good luck to all long termers.

[pugugly] 01/10/2008 16:48

" Michelmersh also revealed that it is currently in breach of one of its
banking covenants, but said talks with its bankers were progressing well.

"Our bankers remain supportive and I'm confident we will be able to
renegotiate our covenants," said Warner. The group had total liabilities of 33.0 million pounds at end-June, while net assets totalled 44.1 million."



From the TFN update of 29/9....

??? End of the red brick road ??

[bodgit] 18/9/2008 22:22

No planning application from Persimmon then? Who amongst the Directors will fall on their sword then? Or maybe they will all agree to take a 75% reduction in pay. Unlikely methinks. So, where to next? Sub 20p is my optimistic guess. Anyone else care to guess? Good luck all.

[stegrego] 18/9/2008 15:33

Looks like management are bricking it either way...

[ed 123] 20/8/2008 09:02

alan russell, agree.

In 2007 the share issue/Baggeridge Brick share transactions helped the p&l and boosted cashflow/balance sheet. In 2008 this will be missing and land is not likely to be sold (imho, due to housing market conditions), add the much higher fuel cost and things don't look so good. On the plus side, their revenues are running ahead of those of the previous year - but at what cost to margin? Will they make a profit even before the interest charge is applied? Perhaps I'm being too pessimistic. Time will tell.

Eric Gadsden's holding would give me some assurance, but my fear is that the housing downturn might have some time to run. Presently, a bit too risky for me, too.

[alan russell] 20/8/2008 08:38

Negative statement from Wienerberger yesterday. Gloomy on European building market generally; announced unspecified plant closures with possibly more to follow. With demand falling and over-capacity in the industry closures are needed to restore balance. Thankfully Weinerberger not MBH although could be MBH's turn yet. If I was braver I'd buy a few but I'm not.

[bodgit] 23/7/2008 08:38

I guess there will be more bad news to come before the 'good times' return. The comments about the Telford land are far from clear.

"Since our last statement in early June, Persimmon are now making greater progress with the planning authority. There is now a recognition on the part of the planning authority that, in the current housing market, a saleable scheme must be developed and we remain confident that a satisfactory conclusion will be reached."

The outline planning was expected to be submitted by end July. Will it be? No would be my guess. It was originally going to be last September. What does the 'saleable scheme must be developed' mean? My guess is it means a Housing Association affordable housing scheme and that most likely means lower money for MBH for the land. I dont like ambiguity and it looks like the statement is designed to be vague. I will not be buying any more of this most illiquid of shares until there is real evidence of solid financial performance. That feels like it is some years away. Good luck all.

[alan russell] 23/7/2008 08:25

Today's AGM statement.

Michelmersh Brick Holdings plc ("Michelmersh" or the "Group") (AIM:MBH), the specialist brick, land development and landfill company, announces that at its Annual General Meeting to be held later today, Eric Gadsden, Chairman of
Michelmersh, will make the following
statement:

"Despite the uncertainties in the UK Construction sector, turnover across the Michelmersh Group in the first six months is 6.6% higher than in the same period in 2007.

These are unsettled times in the housing and financial markets. Energy costs are rising, as are other input costs, but demand for bricks across the sector, after a stable year in 2007, is reducing, reflecting the current fall off
in demand in the housing market. This makes our performance all the more creditable.

While brick production is certainly under pressure, we continue to generate strong cash flow from our landfill operations. Landfill rates have continued to climb, driven by regulatory pressures as well as wider economic factors. We see no sign of any slowdown in this area of our business.

We anticipate that our landfill and property reclamation programme at Blockleys will cover the next 25 years. We are able to both plan the final development and sale of these assets over a long time horizon, and, to an extent, avoid the current turmoil in development land values. The first 16 acres of land are due to be sold to Persimmon early in 2009, under our existing agreement. Since our last statement in early June, Persimmon are now making greater progress with the planning authority. There is now a recognition on the part of the planning authority that, in the current housing market, a saleable scheme must be developed and we remain confident that a satisfactory conclusion will be reached.

Over 90% of UK brick production is, for the first time, in the hands of three
international manufacturers; CRH, Weinerberger, and Heidelberg Cement. However, the emphasis of these companies is on the mass production of standard brick products. Michelmersh, with its specialist focus, is the next largest producer, followed by a relatively small number of single works mainly serving local markets. The Group's position in the market has been significantly strengthened during the period with its geographical reach and specialist product
range.

The main brick manufacturers have also announced in recent weeks the closure of several of their manufacturing units. This is taking some of the excess capacity out of the market and we believe that they will make further closures.

In our opinion this is a positive development for the longer term fortunes of the industry but in the short term, recovery of rising input costs remains a major issue for the industry and it is not clear how this will be resolved. The Board believes that Michelmersh is the only potential consolidator but we must be cautious in the present market place."

Subject to shareholder approval at the AGM, the Company's maintained dividend of 1.1 pence per share will be paid to those shareholders on the register as at 3 October 2008, on 31 October 2008. The shares will trade ex dividend from 1 October 2008. The maintained dividend reflects our continued confidence in the Group's performance going forward.

[steven1404] 14/7/2008 13:07

i think that they used the lowest land price in the valuation and i see the share price has tumbled again

[pugugly] 14/7/2008 11:44

Am I the only one still following MBH. I was initiallly nterested due to value of land and clay resource BUT have been very dissapointed by progress.

As loss making during the building boom years so what now with the virtual freezing of the new domestic build market.

More worrying the last accounts show minimal debt headrom. Floating rate borrwoings were £15,539,000 with only £1,600,000 at 31/12/07. Given the likely slowdown in sales and fairly fixed ongoing operating costs (excluding fuel) it could be that the headroom has deminished.

Anyone else who follows closely care to comment. I am also worried that the land revaluation may need to be revised significantly down given the cuts that have been and are being made by the major UK housebuilders to the value of their landbanks. .

e&oe. dyor etc No ramping or deramping intended. Just a search for a possible value entry point.

[pugugly] 11/7/2008 14:39

market looking very weak. Comments yesterday from the Worlds Largest brick maker. What hope MBH

See link

Wienerberger six-month revenues weaker than expected
Downloads
Strong first three months followed by lower revenues in second quarter of 2008

– Decline of approx. 10% in

operating EBITDA expected

for first half-year
– Optimization of plant network

capacity to reflect market

developments
Vienna, July 10, 2008 – The continuing downturn in the global economy and the resulting uncertainty among consumers and investors has affected the entire building materials industry, and Wienerberger has been unable to detach from this development. After a strong first three months with a plus of 13%, revenues recorded by the Wienerberger Group remained below expectations in the second quarter with a decline of 4% versus the comparable period of 2007. The growth in revenues totaled 3% for the first half of this year. However, it should also be noted that the exceptionally high second quarter results in 2007 were driven by a boom in Poland. Final results for the first half of 2008 are not yet available, and will be announced on August 19. Preliminary revenue figures indicate that a decline of roughly 10% in operating EBITDA for the first six months and a year-on-year decline in earnings for the full 12 months of 2008 are to be expected.



Collapse of residential construction in UK; USA significantly weaker than expected
The spread of the financial crisis to Great Britain triggered a slump in new residential construction beginning in April. Moreover, the contraction on the US market was stronger than expected with a 40% drop in housing starts since the beginning of this year. In Germany, where building permits reached a historical low in 2007, there is still no recovery in sight. Developments in Central-East Europe remained positive, but with weaker momentum on individual markets. The main growth drivers in this region are Bulgaria, Romania and Russia, while the demand for bricks in Poland continued at a high level. In the Czech Republic and Slovakia, the margin driven price strategy of Wienerberger and rising import activity by German brick producers was reflected in lower sales volumes. The Hungarian market for single- and two-family houses declined significantly in recent months as forecasted, after a surprisingly good first quarter.



Optimization measures scheduled for plant network
Against the backdrop of higher inflation, rising interest rates and a growing credit shortage, further weakness can be expected on markets across Europe. In addition to the optimization activities implemented during the previous year, which focused above all on extensive plant shutdowns in the USA, the Wienerberger Managing Board has introduced a further package of measures that is designed to counter these developments quickly through active capacity management. Optimization steps that were scheduled for the plant network over the mid-term will now be moved forward to adjust capacity and thereby better reflect current market conditions. Smaller and unprofitable plants will be shut down and their production will be shifted to larger facilities. These measures will result in approximately € 25 million of cash expenses and extraordinary write-downs of approx. € 25 million. These plant shutdowns are expected to reduce costs by roughly € 30 million (not adjusted for inflation) beginning in 2009.



Increased focus on growth projects in CEE and emerging markets
In spite of the deteriorating economic conditions, Wienerberger will continue its long-term expansion program to strengthen its geographic portfolio. Activities are designed to focus above all on growth in Central-East Europe and the emerging markets. These investments will total roughly € 500 million in 2008. Selected growth projects are also planned for 2009, whereby the volume will be less than investments made during the accelerated growth program in 2007 and 2008.
For additional information contact:

[wcjan26] 08/7/2008 14:45

that md wants to walk around a couple of the sites and see the piles of unsold stock that must be sitting around everywhere.

[davidosh] 08/7/2008 12:02

The FD has fairly recently been a buyer at 200% higher than these levels so even someone in a great position to view the company can get it wrong !

[steven1404] 08/7/2008 11:00

all the markets are depressed i think it will be a good 6 months before we get out of this sit even my oily stocks are down

[ed 123] 08/7/2008 09:10

Bodgit, we've all done it at some time. Tough market out there. :-)

[bodgit] 08/7/2008 08:51

Ed 123, thanks 4 that. The money is not the problem as I have only a modest holding and I only ever invest what I can afford to lose. The problem is my pride has been severely dented for getting this one so very wrong - and for not selling before now! Good luck all.

[ed 123] 08/7/2008 08:20

Sorry to hear your situation, Bodgit. Eric's holding will give protection against an opportunistic low bid for the company. I remember not so long ago when a bid for Baggeridge was contemplated. Thankfully, that didn't happen and a useful profit on the shares purchased was achieved. The land isn't going to vanish. They need to cut costs and keep up turnover as best they can - easy to say.

I hope it works out well for you eventually.

[bodgit] 08/7/2008 07:45

Looks like Persimmon are not in any hurry to get their wallet out for MBH land at Telford. Will any of the other volume house builders be in any hurry? Unlikely. So, my guess MBH are sat on a land assett that no one wants right now and with their brick demand highly likely to be falling with costs rising they are looking at big problems ahead. So what price MBH shares? Time will tell.

Anyone here with an alternative view?

Edit: My average purchase price is 116.03 p. I hold these for the very long term now!

[steven1404] 03/7/2008 10:52

awful news i am down by 50 per share not looked at the price for a while should have sold but lets look pos hopefully it will swing back up

[pugugly] 03/7/2008 10:36

Further to 181 above press today Taylor Wimpey writing land bank down by 11%. Could there be a knock-on to MBH especially after the collapse of the new build market. Persimmon share price also in free fall

[pugugly] 02/7/2008 15:11

Just been relooking at the 2007 accounts. As theasset value looked interesting however, what is the value of old brick making plant and machinery? In addition so far as I can tell the borrowings at 31/12/08 were £15.7 MILLION.

Assume an interest rate payable of 8.5% and this will produce an interest charge of some £1.25 MILLION. More if the average amount borrowed is higher - In 2007 interest charge excluding borrowing for investment was £1.8 MILLION. Given the slow down in the economy there could be a very significant loss this year.

Anyone any knowledge of the banking covenants?

e&oe. Comments, amendments etc..

[wcjan26] 02/7/2008 10:09

talk about hindsight. nearly shorted this a month ago when i reviewed their accounts but was put off by the difficulty of borrowing the stock. shame.

[bodgit] 01/7/2008 20:55

PUGUGLY, thanks for that. FWIW I agree that a further significant book loss is likely on these - and my other construction shares too! I still like the business model of dig stuff out of the ground, add value to it, sell the holes left behind for filling in with rubbish and then get planning permissions to build on the reclaimed brownfield land. I have another one like that - Ennstone - and they are well underwater too! Looks like they will both be a LTBH situation - maybe ok for the pension pot in ten years or so. Cheers.