Share Name Share Symbol Market Type Share ISIN Share Description
Michelmersh Brick Holdings Plc LSE:MBH London Ordinary Share GB00B013H060 ORD 20P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  -0.50 -0.45% 110.00 108.00 112.00 110.50 110.00 110.50 16,888 08:14:16
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Construction & Materials 46.3 6.4 5.8 19.0 101

Michelmersh Brick Holdings PLC Half-year Report

03/09/2019 7:01am

UK Regulatory (RNS & others)


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RNS Number : 9757K

Michelmersh Brick Holdings PLC

03 September 2019

3 September 2019

Michelmersh Brick Holdings Plc

("MBH", the "Company", or the "Group")

Half Year Results for the six months ended 30 June 2019

Michelmersh Brick Holdings Plc (AIM:MBH), the specialist brick manufacturer, is pleased to report its half year results for the six months ended 30 June 2019.

Financial Highlights

 
                                         30 June             30 June 
                                            2019                2018     Change 
 Turnover                               GBP27.2m            GBP23.1m    + 17.4% 
 Underlying(1) gross margin                41.9%               40.5%     + 1.4% 
 Underlying(1) 
  EBITDA*                                GBP6.6m             GBP5.6m    + 18.0% 
 Underlying(1) operating 
  profit                                 GBP5.4m             GBP4.7m    + 15.5% 
 Reported PBT                            GBP4.0m             GBP2.9m     +41.0% 
 Underlying(1) 
  PBT                                    GBP5.2m             GBP4.4m    + 18.3% 
 Reported Basic 
  EPS                                      3.36p               2.55p     +31.7% 
 Underlying(1) 
  EPS                                      4.55p              4.20 p     + 8.3% 
 Interim Dividend                          1.15p               1.06p      +8.5% 
                                                              GBP2.7 
 Cash from operations                    GBP6.1m                   m   + 130.1% 
 

Operational Highlights:

   --      Financial performance above expectations 
   --      Strong financial performance from UK operations 
   --      Acquisition and integration of the Belgian business 

-- Strong balanced forward order book going into H2, 7% ahead of the same period last year. (Note this excludes Floren.be forward orders and is on a like for like basis)

-- Completion of phase 1 of the Carlton investment project targeting enhanced efficiency and output

   --      Investment in IT CRM and HR infrastructures 
   --      Increased interim dividend 

Commenting on the results, Martin Warner, Chairman of Michelmersh Brick Holdings Plc, said:

"Following a very strong first half in 2019, and with a robust order book, Michelmersh can look forward to steady trading for the remainder of the year. Stocks across the industry remain at historically low levels and the volume of imported products are increasing.

The Group's performance in the first half of 2019 has continued into the second half and, with the positive backdrop to our markets, the Board expects to exceed market expectations for the full year. "

* EBITDA is defined as earnings before interest, tax, depreciation and amortisation(.) .

(1) References to 'underlying' excludes items classed as exceptional and amortisation of intangibles

 
 Michelmersh Brick Holdings Plc 
  Frank Hanna, Joint CEO              01825 430 
  Stephen Morgan, Finance Director     412 
 Canaccord Genuity Limited (NOMAD 
  and Broker) 
  Bobbie Hilliam                      020 7523 
  Georgina McCooke                     8150 
 Yellow Jersey PR 
  Charles Goodwin 
  Harriet Jackson                     020 3004 
  Annabel Atkins                       9512 
 

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

About Michelmersh Brick Holdings PLC:

Michelmersh Brick Holdings PLC is a business with seven market leading brands: Blockleys, Carlton, Charnwood, Freshfield Lane, Michelmersh, Floren and Hathern Terra Cotta. These divisions operate within a fully integrated business combining the manufacture of clay bricks and pavers. The Group also includes a landfill operator, New Acres Limited, and seeks to develop future landfill and development opportunities on ancillary land assets.

Established in 1997, the Company has grown through acquisition and organic growth into a profitable and asset rich business, producing over 120 million clay bricks and pavers per annum. Michelmersh currently owns most of the UK's premium manufacturing brick brands and is a leading specification brick and clay paving manufacturer.

Michelmersh strives to be a well invested, long term, sustainable, environmentally responsible business. Opportunity, training and security for all employees, whilst meeting the needs of stakeholders are at the forefront of everything we do. We aim to lead the way in producing some of Britain's premium clay products and enhancing our environment by adding value to the architectural landscape for generations to come.

We are Michelmersh Brick Holdings PLC: we are "Britain's Brick Specialist".

Please visit the Group's websites at: www.mbhplc.co.uk and www.bimbricks.com

Chairman's Statement

I am pleased to be reporting on another positive set of results for Michelmersh, which includes a maiden contribution from our new Belgian subsidiary, Floren et Cie ("Floren") from the date of its acquisition. The acquisition demonstrates the Board's ambition and ability to continue the operational expansion of the Group. Since being acquired on 15 February 2019, Floren has performed to expectations and been integrated into the wider Group structure. We welcome the new team to the Group and thank them for their efforts in the integration process and look forward to progressing together.

Financial Highlights

 
                                         30 June             30 June 
                                            2019                2018     Change 
 Turnover                               GBP27.2m            GBP23.1m    + 17.4% 
 Underlying(1) gross margin                41.9%               40.5%     + 1.4% 
                                                                         + 18.0 
 Underlying* EBITDA(2)                   GBP6.6m             GBP5.6m          % 
 Underlying* EBIT                        GBP5.4m             GBP4.7m    + 15.5% 
 Reported PBT                            GBP4.0m             GBP2.9m     +41.0% 
 Underlying* PBT                         GBP5.2m             GBP4.4m    + 18.3% 
 Reported Basic 
  EPS                                      3.36p               2.55p     +31.7% 
 Underlying* EPS                           4.55p               4.20p     + 8.3% 
 Interim Dividend                          1.15p               1.06p      +8.5% 
                                                              GBP2.7 
 Cash from operations                    GBP6.1m                   m   + 130.1% 
 

(1) Underlying gross margin is calculated by adding back GBP770,000 to the reported gross profit to eradicate the 'fair value' element of brick stock acquired at Floren and adjustment for the impact of IFRS16.

(2) EBITDA is defined as earnings before interest, tax, depreciation and amortisation(.)

(*) Items deemed underlying are reconciled with the reported figures in the table Alternative Performance Measures below.

Turnover for the six months increased by 17.4% over the equivalent period in 2018, of which like for like turnover for the existing UK business grew by 8.6%. The reported Operating Profit of GBP4.1 million (2018: GBP3.2 million) and Profit Before Taxation of GBP4.0 million (2018: GBP2.9 million) underlines the Company's continuing success of improving returns from its existing business. These financial results include a number of items that reflect accounting for the acquisition of Floren but make it difficult to extract the underlying trading performance. The table below (Alternative Performance measures) extracts these items and allows a clearer view of the underlying performance, showing a more meaningful increase in all of the main performance indicators.

All of the financial metrics are positive but it should be noted that underlying earnings per share shows an 8.3% improvement over H1 2018 even with a short period of contribution from Floren since acquisition.

The income statement reports a provisional 'Bargain' purchase of Floren of GBP0.8 million. A Bargain purchase represents the excess of the fair value of the assets and liabilities acquired over the consideration made for the business. The 'fair value' exercise involved external valuation of land and buildings, and an internal evaluation of inventory. An exercise to complete the establishment of fair value of other tangible and intangible assets and consequent deferred tax balances is under way and will be applied in the audited balance sheet as at 31 December 2019. This confirms our view that the earnings-based valuation was supported by the tangible assets being acquired. Further detail of the acquisition is provided in note 4 to this statement. The income statement also records as an exceptional item the costs associated with the acquisition as an expense below Operating profit.

Alternative Performance measures reconciliation:

 
                                                    Six months   Six months   H1 2019/    12 months 
                                                       ended        ended      H12018       ended 
                                                     30 June      30 June                31 December 
                                                       2019         2018                     2018 
                                                   -----------  -----------             ------------ 
                                                      GBP000       GBP000                  GBP000 
                                                   -----------  -----------  ---------  ------------ 
 Reported Operating profit                               4,064        3,169     +28.2%         7,054 
                                                   -----------  -----------  ---------  ------------ 
 Add back exceptional costs of 
  plant restructure (a)                                      -          930                      930 
                                                   -----------  -----------  ---------  ------------ 
 To remove the 'fair value' element 
  of acquired brick stocks so as                           770            -                        - 
  to report 'normal' trading terms 
  (b) 
                                                   -----------  -----------  ---------  ------------ 
 Amortisation of intangibles                               569          569                    1,138 
                                                   -----------  -----------  ---------  ------------ 
 IFRS16 impact                                            (13)            -                        - 
                                                   -----------  -----------  ---------  ------------ 
 'Underlying' operating profit                           5,390        4,668    + 15.5%         9,122 
                                                   -----------  -----------  ---------  ------------ 
 Finance costs - reported                                (296)        (312)                    (617) 
                                                   -----------  -----------  ---------  ------------ 
                         - exclude IFRS16 charge            59            -                        - 
                                                   -----------  -----------  ---------  ------------ 
 'Underlying' profit before taxation                     5,153        4,356    + 18.3%         8,505 
                                                   -----------  -----------  ---------  ------------ 
 
 'Underlying' operating profit 
  as above                                               5,390        4,668    + 15.5%         9,122 
                                                   -----------  -----------  ---------  ------------ 
 IFRS16 impact                                           (330)            -                        - 
                                                   -----------  -----------  ---------  ------------ 
 Depreciation                                            1,557          939                    1,842 
                                                   -----------  -----------  ---------  ------------ 
 Underlying EBITDA                                       6,617        5,607     +18.0%        10,964 
                                                   -----------  -----------  ---------  ------------ 
 
                                                                                                5.78 
 Reported Basic EPS                                     3.36 p       2.55 p      31.7%             p 
                                                   -----------  -----------  ---------  ------------ 
 Earnings adjusted by (a) and 
  (b) above                                                770          930                      930 
                                                   -----------  -----------  ---------  ------------ 
 Earnings adjusted by excluding 
  exceptional 'Bargain Purchase' 
  and Acquisition costs                                  (828) 
  Amortisation of intangibles                              567 
                                                           569          569                    1,138 
                                                   -----------  -----------  ---------  ------------ 
                                                                                                6.76 
 Underlying Basic EPS                                   4.55 p       4.20 p     + 8.3%             p 
                                                   -----------  -----------  ---------  ------------ 
 
 

IFRS 16 Leases

Treatment of plant and vehicle leases are now subject to a different accounting treatment than in prior period with the implementation of IFRS 16. Assets previously held under contract leases are now treated as a fixed asset with an associated lease liability. The effect on these Interim Statements has been to increase tangible fixed assets by GBP1.3 million, and to recognise a similar amount in long and short term interest bearing liabilities. Monthly rental charges are now replaced with depreciation and interest spread over the period of the lease. The net impact on the Income Statement is a net reduction in profit before taxation of GBP46,000 but with the charging of interest and depreciation not included in the reported EDITDA, the effect on the six month's EBITDA has been positive by GBP330,000. The comparative figures have not been restated.

Land and Assets

The Group continues to explore a range of opportunities to enhance and release the value of its land assets. The new road being developed at Telford will commence construction in 2020 as we complete the final preparations and clear planning and legal conditions. This will release substantial in-ground minerals for the brick plant and offer opportunities to release land for sale.

Capital expenditure in H1 has centred around the Telford road project and completing phase 1 of the Carlton plant replacement project. The automation of the kiln unloading process is now complete and evaluation of subsequent phases is under way that hold the opportunity to increase plant capacity and efficiency.

The Floren balance sheet reflects the same structure as the Group; a strong core of tangible fixed assets including significant land holdings and adequate working capital for the business. As a result of the acquisition, the Group's balance sheet has grown. Over the last 12 months, net asset value per share has grown 7.7% to 75 pence.

Net Debt and Working Capital

Net debt at 30 June 2019 stood at GBP15.1 million (30 June 2018: GBP18.1 million) and as noted above included GBP1.3 million as a result of the adoption of IFRS 16 in this period. During the first six months of 2019, we have seen some large cash flows relating to the Floren acquisition. Acquisition consideration and associated costs paid out in the period amounted to GBP8.8 million while the net cash in Floren's balance sheet equated to GBP700,000 at acquisition and GBP800,000 at 30 June. To fund the acquisition, the Group drew GBP5.3 million from existing debt facilities in Euros such that currency fluctuations are less of a risk going forward. Floren now offers some structural currency hedging as it generates currency that meets demands elsewhere in the Group.

Post-acquisition, the Group took advantage of strong investor demand and placed 5.6 million shares at nil discount to generate net proceeds of GBP4.8 million.

Having also paid GBP2.5 million in interim and final dividend in respect of 2018 during the last six months, the underlying cash generation of the business is evident in the period end net debt figure. Historically, H2 is a stronger cash generative period than H1 and we expect to further drive down our debt by the year end.

The Board are aware that strong operating cash generation, modest debt levels and comfortable covenants gives the business flexibility to take advantage of opportunities that arise - both the Carlton and Floren acquisitions were made easier by having a strong cash/debt position.

Dividend

Consistent with the Board's stated intentions to provide a meaningful and progressive dividend, we are pleased to report that continued robust trading allows us to declare an interim dividend of 1.15 pence (2018: 1.06 pence). The dividend will be paid on 10 January 2020 to members on the register on 6 December 2019. The Board has revised upwards its guidance on the expected final dividend for 2019, as it maintains its policy of one third of the total annual dividend being paid at the interim stage and two thirds of the total annual dividend being paid at the full year.

The final dividend for 2018 was paid in June 2019 and for the first time, with shareholders having the option to elect for a scrip dividend. I am pleased to note that this facility was selected by a reasonable number of large and smaller shareholders which encourages us to maintain that facility going forwards. Those wishing to take shares in lieu of cash for the interim dividend will have until 17 December to make that election.

Outlook

Following a very strong first half in 2019, and with a robust order book, Michelmersh can look forward to steady trading for the remainder of the year. Stocks across the industry remain at historically low levels and the volume of imported products are increasing.

The Group's performance in the first half of 2019 has continued into the second half and, with the positive backdrop to our markets, the Board expects to exceed market expectations for the full year.

Wider concerns surrounding political uncertainty, potential housebuilding slowdown in the south-east and worldwide economic pressures have yet to have a discernible impact on the brick manufacturing industry. The Directors however maintain a cautious view on these background factors and the effect they may have on brick demand and pricing in the final quarter of the financial year and 2020. Michelmersh continues to operate on the basis of a strong order book, strong loyal customer relationships and continued latent demand from the specification, housing, repair maintenance and improvement and commercial sectors. Our European acquisition has been very positive and has brought with it enormous product flexibility and future growth opportunity.

M R Warner

CHAIRMAN

Consolidated Income Statement

 
 
                                                                                                                 6 months     6 months         12 
                                                                                                                                           months 
                                                                                                                 ended 30     ended 30   ended 31 
                                                                                                                     June         June   December 
                                                                                                                     2019         2018       2018 
                                                                                                                  GBP'000      GBP'000    GBP'000 
 
                                                                                                                Unaudited    Unaudited    Audited 
 Revenue                                                                                                           27,165       23,136     46,324 
 Cost of sales                                                                                                   (16,544)     (13,775)   (28,305) 
 
 Gross profit                                                                                                      10,621        9,361     18,019 
 Administration expenses - Underlying                                                                             (6,041)      (4,774)    (8,994) 
                                  - Exceptional (1)                                                                     -        (930)      (930) 
 
                                     *    Amortisation of intangibles                                               (569)        (569)    (1,138) 
                                                                                                              -----------  -----------  --------- 
                                                                                                                  (6,610)      (6,273)   (11,062) 
 Other income                                                                                                          53           81         97 
 
 Operating profit                                                                                                   4,064        3,169      7,054 
 Exceptional items - 'Bargain purchase'(2)                                                                 -          828            -          - 
                                                                                                                    (567)            -          - 
                                     *    Acquisition costs (3) 
 
 Finance expense                                                                                                    (296)        (312)      (617) 
                                                                                                              -----------  -----------  --------- 
 
 Profit before taxation                                                                                             4,029        2,857      6,437 
 Taxation                                                                                                           (991)        (657)    (1,452) 
                                                                                                              -----------  -----------  --------- 
 
   Profit for the period                                                                                            3,038        2,200      4,985 
                                                                                                              -----------  -----------  --------- 
 
   Basic earnings per share                                                                                        3.36 p       2.55 p     5.78 p 
 Diluted earnings per share                                                                                        3.26 p       2.50 p     5.57 p 
 
 

Exceptional item(1) relates to costs incurred in relation to the reconfiguration of activities at the Michelmersh plant in respect of redundancies and plant accelerated depreciation.

Exceptional item(2 -) the 'Bargain purchase' reflects the excess of fair value of the assets acquired at Floren over the consideration paid. Exceptional item (3) is the costs incurred in acquiring Floren that has been expensed in the period. See note 4 for further details of the acquisition.

Consolidated Statement of Comprehensive Income

 
                                                                          6 months    6 months      12 months 
                                                                             ended       ended          ended 
                                                                           30 June     30 June    31 December 
                                                                              2019        2018           2018 
                                                                           GBP'000     GBP'000        GBP'000 
                                                                         Unaudited   Unaudited        Audited 
 
 Profit for the financial period                                             3,038       2,200          4,985 
                                                                        ----------  ----------  ------------- 
 
 Other comprehensive income 
  Items which will not subsequently be reclassified to profit or loss 
 Currency movements                                                             22           -              - 
 Revaluation deficit of property, plant and equipment                            -           -           (42) 
 Revaluation surplus of property, plant & equipment                              -           -            565 
 Deferred tax on revaluation                                                     -           -          (115) 
                                                                        ----------  ----------  ------------- 
 
 Other comprehensive income for the period net of tax                           22           -            408 
                                                                        ----------  ----------  ------------- 
 
   Total comprehensive income for the financial period                       3,060       2,200          5,393 
                                                                        ----------  ----------  ------------- 
 
 

Consolidated Balance Sheet

 
                                               As at           As at          As at 
                                             30 June    30 June 2018    31 December 
                                                2019                           2018 
                                             GBP'000         GBP'000        GBP'000 
                                           Unaudited       Unaudited        Audited 
 Assets 
 Non-current assets 
 Intangible assets                            22,379          23,517         22,948 
 Property, plant and equipment                64,294          51,449         52,416 
                                          ----------  --------------  ------------- 
 
                                              86,673          74,966         75,364 
 
 Current assets 
 Inventories                                   9,135           8,811          8,309 
 Trade and other receivables                  11,164          11,054          8,245 
 Cash and cash equivalents                     8,881           2,571          5,255 
                                          ----------  --------------  ------------- 
 
 Total current assets                        29, 180          22,436         21,809 
                                          ----------  --------------  ------------- 
 
 Total assets                                115,853          97,402         97,173 
                                          ----------  --------------  ------------- 
 Liabilities 
 Current liabilities 
 Trade and other payables                      9,464           7,372          7,065 
 Interest bearing borrowings                   1,922           2,666          1,770 
 Lease liabilities                               558               -              - 
 Corporation tax payable                       1,079             719            564 
                                          ----------  --------------  ------------- 
 Total current liabilities                    13,023          10,757          9,399 
 
 Non-current liabilities 
 Interest bearing borrowings                  20,714          18,049         15,310 
 Lease liabilities                               761               -              - 
 Deferred tax liabilities                     11,930           8,493          8,670 
                                          ----------  --------------  ------------- 
                                              33,405          26,542         23,980 
 
 Total liabilities                            46,428          37,299         33,379 
                                          ----------  --------------  ------------- 
 
 Net assets                                   69,425          60,103         63,794 
                                          ==========  ==============  ============= 
 
 Equity attributable to equity holders 
 Share capital                                18,495          17,243         17,297 
 Share premium account                        15,545          11,518         11,643 
 Other reserves                               22,145          21,156         21,788 
 Retained earnings                            13,240          10,186         13,066 
                                          ----------  --------------  ------------- 
 
 Total equity                                 69,425          60,103         63,794 
                                          ==========  ==============  ============= 
 
 

Consolidated Statement of Changes in Equity

 
                            Share     Share      Other   Retained     Total 
                          Capital   Premium   Reserves   Earnings    Equity 
 
                          GBP'000   GBP'000    GBP'000    GBP'000   GBP'000 
 
 As at 1 January 
  2018                     17,234    11,495     20,816      9,838    59,383 
 
 Profit for the 
  period                        -         -          -      2,200     2,200 
                         --------  --------  ---------  ---------  -------- 
 
   Total comprehensive 
   income                       -         -          -      2,200     2,200 
 Shares issued 
  in the period                 9        23          -          -        32 
 Share based payment            -         -        340          -       340 
 Dividends paid                 -         -          -    (1,852)   (1,852) 
 As at 30 June 
  2018                     17,243    11,518     21,156     10,186    60,103 
 
 Profit for the 
  period                        -         -          -      2,785     2,785 
 Revaluation deficit            -         -       (42)          -      (42) 
 Revaluation surplus            -         -        565          -       565 
 Deferred tax on 
  revaluation                   -         -      (115)          -     (115) 
                         --------  --------  ---------  ---------  -------- 
 Total comprehensive 
  income                        -         -        408      2,785     3,193 
 Shares issued 
  in the period                54       125          -          -       179 
 Transfer to retained 
  earnings                      -         -       (96)         96         - 
 Share based payment            -         -        320          -       320 
 As at 31 December 
  2018                     17,297    11,643     21,788     13,066    63,794 
 
 Profit for the 
  period                        -         -          -      3,038     3,038 
 Currency difference            -         -          -         22        22 
 Total comprehensive 
  income                        -         -          -      3,060     3,060 
 Shares issued 
  in the period             1,198     3,902          -          -     5,100 
 Share based payment            -         -        358          -       358 
 Dividends paid                 -         -          -    (2,887)   (2,887) 
 
 As at 30 June 
  2019                     18,495    15,545     22,146     13,239    69,425 
                         ========  ========  =========  =========  ======== 
 
 
 

Consolidated Statement of Cash Flows

 
                                          6 months    6 months       12 months 
                                             ended       ended           ended 
                                           30 June     30 June     31 December 
                                              2019        2018            2018 
                                           GBP'000     GBP'000         GBP'000 
 
 
                                         Unaudited   Unaudited         Audited 
 
 Net cash generated by operations            6,144       2,670          11,669 
 Taxation paid                               (760)       (935)         (1,823) 
 
 Net cash generated by operating 
  activities                                 5,384       1,735           9,846 
                                        ----------  ----------  -------------- 
 
 Cash flows from investing activities 
 Purchase of property, plant 
  and equipment                              (810)       (316)         (1,985) 
 Purchase of subsidiary undertaking        (6,768)           -               - 
  net of cash acquired 
 Proceeds on disposal of property, 
  plant and equipment                           29          42              45 
                                        ----------  ----------  -------------- 
 
 Net cash used in investing 
  activities                               (7,549)       (274)         (1,940) 
                                        ----------  ----------  -------------- 
 
 Cash flows from financing activities 
 Bank loan drawdown                          5,264           -               - 
 Interest paid                               (238)       (312)           (617) 
 Repayment of interest bearing 
  liabilities                                (970)       (885)         (4,520) 
 Principle elements of lease 
  rentals                                    (480) 
 Proceeds of share issue                     4,703          32             211 
 Dividends paid                            (2,488)     (1,853)         (1,853) 
                                        ----------  ----------  -------------- 
 
  Net cash generated by / (used 
   in) financing activities                  5,791     (3,018)         (6,779) 
                                        ----------  ----------  -------------- 
 
 
 Net increase / (decrease) in 
  cash and cash equivalents                  3,626     (1,557)           1,127 
 
 Cash and cash equivalents at 
  beginning of period                        5,255       4,128           4,128 
                                        ----------  ----------  -------------- 
 
 Cash and cash equivalents at 
  end of period                              8,881       2,571           5,255 
                                        ==========  ==========  ============== 
 
 Cash and cash equivalents comprise: 
 
 Cash at bank and in hand                    8,881       2,571             5,255 
                                        ==========  ==========  ================ 
 
 

NOTES TO THE GROUP INTERIM REPORT

   1.     GENERAL INFORMATION 

Michelmersh Brick Holdings Plc ("the Company") is a public limited company incorporated in the United Kingdom under the Companies Act 2006 (registration number 3462378). The Company is domiciled in the United Kingdom and its registered address is Freshfield Lane, Danehill, Haywards Heath, West Sussex, RH17 7HH. The Company's Ordinary Shares are traded on AIM, part of the London Stock Exchange plc. Copies of the Interim Report and Annual Report and Accounts may be obtained from the address above, or at www.mbhplc.co.uk.

   2.     ACCOUNTING POLICIES 

Basis of preparation

The interim financial information in this report has been prepared using accounting policies consistent with IFRS as adopted by the European Union. IFRS is subject to amendment and interpretation by the International Accounting Standards Board (IASB) and the IFRS Interpretations Committee and there is an ongoing process of review and endorsement by the European Commission. The financial information has been prepared on the basis of IFRS that the Directors expect to be adopted by the European Union and applicable as at 31 December 2018. "The group has chosen not to adopt IAS 34 "Interim Financial Statements" in preparing the interim financial information."

 
            IFRS 16 Leases 
           The Group has adopted IFRS 16 using the modified retrospective 
            method (including appropriate practical expedients), with the 
            effect of initially applying this standard recognised at the 
            date of initial application (i.e. 1 January 2019). Accordingly, 
            the information presented for 2018 has not been restated - 
            i.e. it is presented, as previously reported, under IAS 17 
            and related interpretations. 
            IFRS 16 eliminates the classification for lessees of leases 
            as operating leases or finance leases and treats all in a similar 
            way to finance leases. It replaced IAS 17 Leases and related 
            interpretations. 
 

Statutory accounts

Financial information contained in this document does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006 ("the Act"). The statutory accounts for the year ended 31 December 2018 have been filed with the Registrar of Companies. The report of the auditors on those statutory accounts was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under section 498(2) or (3) of the Act.

The financial information for the six months ended 30 June 2019 and 30 June 2018 is unaudited.

   3.     EARNINGS PER SHARE 

The calculation of earnings per share is based on a profit of GBP4,905,000 (six months ended 30 June 2018 -GBP2,200,000; 12 months ended 31 December 2018-GBP4,985,000) and 90,427,069 (at 30 June 2018 86,191,712 and 31 December 2018, 86,312,463) being the weighted average number of ordinary shares in issue.

Diluted

At 30 June 2018 there were 2,815,170 (30 June 2018: 1,811,232, and at 31 December 2018 2,242,595) dilutive shares under option leading to 93,242,239 shares (30 June 2018: 88,002,944, and at 31 December 2018 88,655,058) being the weighted average number of ordinary shares for the purposes of diluted earnings per share. A calculation is performed to determine the number of share options that are potentially dilutive based on the number of shares that could have been acquired at fair value, considering the monetary value of the subscription rights attached to outstanding share options.

   4.     ACQUISITION OF SUBSIDIARY 

On 15 February 2019, the Company completed the acquisition of 100% of the share capital of Floren et Cie for a maximum gross consideration of GBP8.7 million, payable in cash (GBP8.3 million), and deferred ordinary Michelmersh Brick Holdings Plc ordinary shares to a value of GBP400,000 provided certain targets are met. The provisional fair value of the net assets of Floren at acquisition was GBP9.5 million after applying a valuation of the land and buildings that were conducted by independent valuers and internal evaluation of the fair value of brick stocks.

An exercise to complete the establishment of fair value of other tangible and intangible assets and consequent deferred tax balances is under way and will be applied in the audited balance sheet as at 31 December 2019.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

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1 Year Michelmersh Brick Chart

1 Year Michelmersh Brick Chart

1 Month Michelmersh Brick Chart

1 Month Michelmersh Brick Chart
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