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MBH Michelmersh Brick Holdings Plc

99.50
-3.50 (-3.40%)
28 Mar 2024 - Closed
Delayed by 15 minutes
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
  -3.50 -3.40% 99.50 99.00 100.00 102.50 99.50 102.50 782,571 14:42:33
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
Brick & Structural Clay Tile 68.38M 8.88M 0.0949 10.48 93.05M

Michelmersh Brick Holdings PLC Half-year Report (6607P)

04/09/2017 7:00am

UK Regulatory


Michelmersh Brick (LSE:MBH)
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RNS Number : 6607P

Michelmersh Brick Holdings PLC

04 September 2017

4 September 2017

Michelmersh Brick Holdings Plc

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

Half Year Results for the six months ended 30 June 2017

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 2017.

HIGHLIGHTS

Financial Highlights:

-- Turnover increased by 6% to GBP16.2 million (H1 2016: GBP15.3 million)

-- EBITDA* of GBP3.0 million (H1 2016: GBP3.0 million), with stronger earnings performance expected during the second half of the financial year

-- PBT (before exceptional item) GBP2.4 million (H1 2016: GBP2.6 million)

-- EPS (excluding exceptional item) 2.37 pence (H1 2016: 2.57 pence)

-- Net debt of GBP20.7 million after drawing GBP24 million in loans to meet acquisition payments (30 June 2016: net cash GBP2.7 million)

-- Final Dividend of 2 pence per share paid in June 2017 with an Interim Dividend declared of 0.7 pence per share payable in January 2018.

Operational Highlights:

-- Acquisition of Carlton Main Brickworks for net consideration of GBP31 million with post-acquisition integration on track. Minimal financial contribution from acquisition (7 days), but expected to significantly increase the output of bricks and financial performance of the Group during the second half of the financial year

-- Completed sale of Dunton site for total consideration of GBP2.68 million

-- Improved average selling price and forward order commitment of over 55 million bricks at period end, ahead of initial targets

-- Well positioned for a stronger operational and financial performance in H2 2017

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

"This has been another strong period for the Group, which culminated in the acquisition of Carlton Main Brickworks. The integration of Carlton is on track and forward order commitments have increased, positioning the Group for further growth in the second half. This is a transformational period for the business, which will further benefit our customers and shareholders in the future."

*EBITDA as disclosed is Operating Profit with depreciation and amortisation added back.

 
 Michelmersh Brick Holdings Plc 
  Frank Hanna, Joint CEO              01825 430 
  Stephen Morgan, Finance Director     412 
 Cenkos Securities plc 
  Bobbie Hilliam (NOMAD) 
  Harry Hargreaves                    020 7397 
  Alex Aylen (Sales)                   8900 
                                      07747 788 
 Yellow Jersey PR                      221 
                                       07555 159 
  Charles Goodwin                       808 
  Abena Affum 
 

About Michelmersh Brick Holdings PLC:

Michelmersh Brick Holdings PLC is a business with six market leading brands: Blockleys, Carlton, Charnwood, Freshfield Lane, Michelmersh and Hathern Terra Cotta. These divisions operate within a fully integrated business combining the manufacture of clay bricks, tiles 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 100 million clay bricks, tiles and pavers per annum. Michelmersh currently owns most of the UK's premium manufacturing 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

The six months to 30 June 2017 included two significant events for the future development of the Group, although both had limited impact on the trading performance reported. The acquisition of Carlton Main Brickworks Limited ("Carlton") on 23 June 2017 promises to significantly increase the Group's production capacity, EBITDA and market presence. The contribution to the Group profit for the six months to 30 June 2017 was limited to the 7 days of ownership.

In late June 2017, the sale of the former Dunton brickworks site was also completed. The land asset had been revalued upwards in 2016 by GBP1.4 million as the terms of the conditional sale contract were signed in January 2017. The asset was displayed in the balance sheet at 31 December 2016 as a non-current asset held for resale at its sale price (GBP2.68 million) less costs associated with the sale. The proceeds were included in the cash balance in the balance sheet at 30 June 2017 but with no impact on the reported profit before taxation.

The Group reported an operating profit of GBP2.4 million (HI 2016: GBP2.6 million) after turnover increased by 6% over a very strong first half in 2016. This includes a small contribution from Carlton but was ahead of our forecast as we saw the seasonal balance shift in 2017 to a stronger second half. Gross margin at 35% was slightly better than the margin for the full year 2016. Administration expenses were 7% higher than in the first six months of 2016 due to a combination of the inclusion of Carlton overheads, currency and employment related cost inflation, and additional overhead arising from investment in the sales team and engineering department.

Not including Carlton, the Group produced 35 million bricks in the first half of 2017 (2016: 35 million) and despatched 35 million (2016: 35 million) bricks at a slightly improved average selling price compared to 2016. The Group is well placed for the rest of the year with a strong, well balanced forward order book of over 55 million bricks spread across RMI, housing and commercial sectors.

Carlton

On 26 June 2017, the Group announced the acquisition of Carlton for a net consideration of GBP31 million. The addition of this business will have a significant impact on the structure and performance of the Group. Output will increase to over 100 million bricks and turnover and EBITDA will significantly increase with immediate effect. Over time, identified operational synergies will be implemented to improve Carlton's contribution further.

Carlton's product range is aligned with Michelmersh in that it is of high technical quality, well respected in the market and with a strong Repair Maintenance and Improvement (RMI) presence. As such, the products sit well alongside Michelmersh and will be marketed through our established channels.

Carlton produces a range of over 50 wirecut bricks at the South Yorkshire plant with a capacity of 35 million bricks per annum and employs 65 staff on a 93-acre site. Carlton's products have a strong gross margin but have a lower average selling price than Michelmersh which will dilute our premium over the market. However we expect to maintain around 35% premium over the industry.

The historic cost base assets of Carlton at completion were valued at GBP14 million although the true value is materially higher. Valuation exercises are underway that will recognise the true worth of the fixed assets and intangibles, including goodwill. Depreciation and amortisation will arise as a result of the revaluations, albeit not affecting the strong EBITDA addition to Group results.

The Board wishes to thank the staff at Carlton for the support and warm welcome given since they joined the Group. We are pleased to report that the post-acquisition integration is on track with the management team meeting key milestones in the process.

Net Debt and Working Capital

At 30 June 2017, the Group's net debt stood at GBP20.7 million (2016: net cash of GBP2.8 million). Whilst this is a significant change in the gearing position, the Board is comfortable with the level of debt and the debt covenants in place. Hedging arrangements are in place to protect the Group from significant changes in LIBOR rates over the six-year term of the main term loan and cash positive trading is expected to see the net debt position fall steadily.

New facilities totalling GBP27 million were provided by HSBC in anticipation of the Carlton acquisition. The Board is grateful for the support and guidance provided by our new banking partners. Of the GBP24 million drawn to meet completion payments, GBP3 million has already been repaid in July, principally from the proceeds of the Dunton land sale that took place within days of the acquisition completing.

Levels of working capital at 30 June 2017 have increased from those seen at 30 June 2016 as a result of the inclusion of Carlton's trading assets, but also in respect of VAT on the land sale late in June as well as accrual for costs relating to the acquisition. It is expected that working capital levels will reduce going forward.

Dividend

The Group has enjoyed a positive cash position over recent years and has returned to the payment of dividends to reward shareholders. Whilst the Group is now in a net debt position following the acquisition of Carlton, the Board recognise that increased earnings in the enlarged Group allow us to continue to maintain a progressive dividend policy and propose an interim dividend of 0.7 pence per ordinary share. The dividend will be payable on 12 January 2018 to shareholders on the register on 15 December 2017.

Outlook

This has been another strong period for the Group, which culminated in the acquisition of Carlton Main Brickworks. The integration of Carlton is on track and forward order commitments have increased, positioning the Group for further growth in the second half. This is a transformational period for the business, which will further benefit our customers and shareholders in the future. We look forward to a busy second half of 2017 with a strong contribution from Carlton.

To an extent, the Company's trading results reflect the fortunes of the wider brick industry which is now highly consolidated. Despite the increased demand enjoyed in the first half and inflationary pressures from energy and currency denominated costs, average selling prices have not as of yet reflected these factors. Michelmersh remains strongly cash generative with a long-term asset base and it continues to exceed market averages and seeks to maintain that position whilst continuing to invest in plant, people and process.

M Warner

Chairman

Consolidated Income Statement

 
 
                                        6 months      6 months   12 months 
                                        ended 30      ended 30    ended 31 
                                            June          June    December 
                                                                      2016 
                                                          2016        2016 
                                            2017 
                                            2017          2016        2016 
                                         GBP'000       GBP'000     GBP'000 
 
                                       Unaudited     Unaudited     Audited 
 Revenue                                  16,180        15,292      30,057 
 Cost of sales                          (10,420)       (9,581)    (19,709) 
 
 Gross profit                              5,760         5,711      10,348 
 Administration expenses                 (3,363)       (3,126)     (5,833) 
 Other income                                 17            13          36 
 
 Operating profit                          2,414         2,598       4,551 
 Exceptional item *                      (1,044)             -           - 
 Finance income                                5             8          18 
                                    ------------  ------------  ---------- 
 
 Profit before taxation                    1,375         2,606       4,569 
 Taxation                                  (275)         (521)     (1,010) 
                                    ------------  ------------  ---------- 
 
   Profit for the period                   1,100         2,085       3,559 
                                    ------------  ------------  ---------- 
 
   Basic earnings per share               1.35 p        2.57 p      4.38 p 
 Diluted earnings per share               1.34 p        2.55 p      4.36 p 
 

Exceptional item * relates to costs incurred in connection with the acquisition of Carlton Main Brickworks Limited.

Consolidated Statement of Comprehensive Income

 
                                                                          6 months    6 months      12 months 
                                                                             ended       ended          ended 
                                                                           30 June     30 June    31 December 
                                                                              2017        2016           2016 
                                                                           GBP'000     GBP'000        GBP'000 
                                                                         Unaudited   Unaudited        Audited 
 
 Profit for the financial period                                             1,100       2,085          3,559 
                                                                        ----------  ----------  ------------- 
 
 Other comprehensive income 
  Items which will not subsequently be reclassified to profit or loss 
 Revaluation surplus of property, plant & equipment                              -           -          1,369 
 Deferred tax on revaluation                                                     -           -             49 
                                                                        ----------  ----------  ------------- 
 
 Other comprehensive income for the period net of tax                            -           -          1,418 
                                                                        ----------  ----------  ------------- 
 
 Total comprehensive income for 
 the financial period                                                        1,100       2,085          4,977 
                                                                        ----------  ----------  ------------- 
 
 

Consolidated Balance Sheet

 
                                                    As at           As at          As at 
                                                  30 June    30 June 2016    31 December 
                                                     2017                           2016 
                                                  GBP'000         GBP'000        GBP'000 
                                                Unaudited       Unaudited        Audited 
 Assets 
 Non-current assets 
 Intangible assets                                 23,687           2,475          2,469 
 Property, plant and equipment                     50,368          41,354         40,794 
                                               ----------  --------------  ------------- 
 
                                                   74,055          43,829         43,263 
 Non-current assets held for resale                     -               -          2,542 
 Current assets 
 Inventories                                        8,685           7,278          7,193 
 Trade and other receivables                       10,140           6,045          5,052 
 Investments                                            -              30              - 
 Cash and cash equivalents                          6,505           2,747          4,720 
                                               ----------  --------------  ------------- 
 
 Total current assets                              25,330          16,100         16,965 
                                               ----------  --------------  ------------- 
 
 Total assets                                      99,385          59,929         62,770 
                                               ----------  --------------  ------------- 
 Liabilities 
 Current liabilities 
 Trade and other payables                           8,914           4,899          4,702 
 Interest bearing borrowings                        6,946               -              - 
 Corporation tax payable                            1,101             521            373 
                                               ----------  --------------  ------------- 
 Total current liabilities                         16,961           5,420          5,075 
                                                    5,420 
 
 Non-current liabilities 
 Interest bearing borrowings                       20,281               -              - 
 Deferred tax liabilities                           5,545           3,914          4,052 
                                               ----------  --------------  ------------- 
                                                   25,826           3,914          4,052 
 
 Total liabilities                                 42,787           9,334          9,127 
                                               ----------  --------------  ------------- 
 
 Net assets                                        56,598          50,595         53,643 
                                               ==========  ==============  ============= 
 
 Equity attributable to equity holders 
 Share capital                                     17,234          16,247         16,294 
 Share premium account                             13,939          11,495         11,495 
 Reserves                                          18,510          16,953         18,410 
 Retained earnings                                  6,915           5,900          7,444 
                                               ----------  --------------  ------------- 
 
 Total equity                                      56,598          50,595         53,643 
                                               ==========  ==============  ============= 
 
 

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 
  2016                     16,247    11,495     16,850      4,627    49,219 
 
 Profit for the 
  period                        -         -          -      2,085     2,085 
                         --------  --------  ---------  ---------  -------- 
 
   Total comprehensive 
   income                       -         -          -      2,085     2,085 
 Share based payment            -         -        103          -       103 
 Dividends paid                 -         -          -      (812)     (812) 
 As at 30 June 
  2016                     16,247    11,495     16,953      5,900    50,595 
 
 Profit for the 
  period                        -         -          -      1,474     1,474 
 Revaluation surplus            -         -      1,369          -     1,369 
 Deferred tax on 
  revaluation                   -         -         49          -        49 
                         --------  --------  ---------  ---------  -------- 
 Total comprehensive 
  income                        -         -      1,418      1,474     2,892 
 Share based payment            -         -        109          -       109 
 Shares issued 
  in the period                47         -          -          -        47 
 Transfer to retained 
  earnings                      -         -       (70)         70         - 
                         --------  --------  ---------  ---------  -------- 
 As at 31 December 
  2016                     16,294    11,495     18,410      7,444    53,643 
 
 Profit for the 
  period                        -         -          -      1,100     1,100 
 Total comprehensive 
  income                        -         -          -      1,100     1,100 
 Shares issued 
  in the period               940     2,444          -          -     3,384 
 Share based payment            -         -        100          -       100 
 Dividends paid                 -         -          -    (1,629)   (1,629) 
 
 As at 30 June 
  2017                     17,234    13,939     18,510      6,915    56,598 
                         ========  ========  =========  =========  ======== 
 
 
 

Consolidated Statement of Cash Flows

 
                                          6 months    6 months       12 months 
                                             ended       ended           ended 
                                           30 June     30 June     31 December 
                                              2016        2015            2015 
                                           GBP'000     GBP'000         GBP'000 
                                           30 June     30 June     31 December 
                                              2017        2016            2016 
                                         Unaudited   Unaudited         Audited 
 
 Net cash generated by operating 
  activities                                   757       1,628           4,766 
                                        ----------  ----------  -------------- 
 
 Cash flows from investing activities 
 Purchase of property, plant 
  and equipment                              (344)     (1,004)         (2,254) 
 Purchase of subsidiary undertaking       (23,289)           -               - 
  net of cash acquired 
 Acquisition costs                           (406)           -               - 
 Proceeds from sale of investment                -           -              30 
 Proceeds from sale of land                  2,680           -               - 
 Proceeds on disposal of property, 
  plant and equipment                           12           -               8 
                                        ----------  ----------  -------------- 
 
 Net cash used in investing 
  activities                              (21,347)     (1,004)         (2,216) 
  Net cash used in investing 
   activities                              (1,004)     (1,004)           (227) 
                                        ----------  ----------  -------------- 
 
 Cash flows from financing activities 
 Bank loan drawdown                         24,000           -               - 
 Proceeds of share issue                         4           -              47 
 Dividends paid                            (1,629)       (812)           (812) 
                                        ----------  ----------  -------------- 
 
  Net cash generated by / (used 
   in) financing activities                 22,375       (812)           (765) 
                                        ----------  ----------  -------------- 
 
 
 Net increase / (decrease) in 
  cash and cash equivalents                  1,785       (188)           1,785 
 
 Cash and cash equivalents at 
  beginning of period                        4,720       2,935           2,935 
                                        ----------  ----------  -------------- 
 
 Cash and cash equivalents at 
  end of period                              6,505       2,747           4,720 
                                        ==========  ==========  ============== 
 
 Cash and cash equivalents comprise: 
 Cash at bank and in hand                    6,505       2,747               4,720 
 Bank overdraft                                  -           -                   - 
                                        ----------  ----------  ------------------ 
 
                                             6,505       2,747               4,720 
                                        ==========  ==========  ================== 
 
 

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 the AIM Market 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 2017. "The group has chosen not to adopt IAS 34 "Interim Financial Statements" in preparing the interim financial information."

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 2016 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 2017 and 30 June 2016 is unaudited.

   3.     EARNINGS PER SHARE 

The calculation of earnings per share is based on a profit of GBP1,100,000 (six months ended 30 June 2016 -GBP2,085,000; 12 months ended 31 December 2016-GBP3,559,000) and 81,654,156 (at 30 June 2016 and 31 December 2016 81,234,656) being the weighted average number of ordinary shares in issue.

Diluted

At 30 June 2017 there were 151,796 dilutive shares under option leading to 81,806,412 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 CARLTON MAIN BRICKWORKS LIMITED ("Carlton") 

On 23 June 2017, the Company completed the acquisition of 100% of the share capital of Carlton Main Brickworks Limited for a maximum gross consideration of GBP38.4 million payable in cash (GBP31.5 million), deferred cash (GBP3.5 million) and by the issue of 4,694,444 new Michelmersh Brick Holdings Plc ordinary shares valued at 72 pence (GBP3.4 million). The book value of the net assets of Carlton at acquisition was GBP19 million after applying a valuation of the land and buildings that was conducted by independent valuers. The excess of consideration over book assets is recorded as 'intangible' in the consolidated balance sheet as at 30 June 2017.

However, the initial accounting for the acquisition is incomplete and the amounts recognised in the financial statements are provisional. An exercise to establish 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 2017.

This information is provided by RNS

The company news service from the London Stock Exchange

END

IR SSDFLDFWSELU

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September 04, 2017 02:00 ET (06:00 GMT)

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