TIDMMBH
RNS Number : 0766J
Michelmersh Brick Holdings PLC
26 June 2017
26 June 2017
Michelmersh Brick Holdings Plc
(the "Company" or "Michelmersh" or the "Group")
Acquisition of Carlton Main Brickworks Limited
Michelmersh is pleased to announce that it has acquired the
entire issued share capital of Carlton Main Brickworks Limited
("Carlton") for a net consideration of GBP31.2 million. The
Acquisition is expected to be significantly earnings enhancing for
the Group.
Carlton is a highly respected regional brick manufacturer,
operating from a 93-acre site brickwork based in Barnsley,
Yorkshire. The factory, first established in the 1880's, currently
manufactures up to 37 million wirecut bricks per annum and has a
strong product offering that complements the geography and market
segment of Michelmersh.
Acquisition Highlights:
-- Carlton is being acquired for a gross consideration of up to
GBP38.4 million, which includes the cash balances of Carlton at
completion, being GBP7.2 million. The directors consider the net
consideration to the Company of the acquisition to therefore be
GBP31.2 million
-- Carlton reported audited turnover of GBP13.1 million and
unaudited adjusted EBITDA of GBP5.6 million after adding back
non-recurring expenses (directors' emoluments) for the 12 months
ended 31 March 2016.
-- Carlton is expected to increase Michelmersh's output to over
100 million bricks per annum, an expected increase of over 40 per
cent. to Michelmersh's current output.
-- Michelmersh is funding the acquisition through the issue of
ordinary shares in the Company, its own cash resources and new debt
facilities provided by HSBC including a GBP20.0 million term loan,
a GBP6.0 million RCF and a GBP1.0 million overdraft facility.
-- The Acquisition will give Michelmersh access to new regional
markets, provide opportunities for cross selling and product
synergies and increase output efficiency. Other operational
synergies are expected to benefit the enlarged Group over time.
-- The Acquisition is expected to be significantly earnings
enhancing in the current financial year and increase the overall
operational cash flow of the Company going forward, assisting in,
post debt servicing and repayment, further investment within the
Group and future shareholder distributions.
The Board considers that the acquisition of Carlton is an
important strategic step forward in the growth of the Company,
adding significant scale, output and earnings to the Group.
Michelmersh's turnover and profit before tax will be immediately
enhanced by the addition of Carlton.
The acquisition gives the Company the ability to expand its
quality product offering in line with our premium-centric core
strategy, and consequently will increase the Group's annual output
to 100 million bricks. Furthermore, the addition of Carlton will
broaden an already very strong and loyal customer base, giving
access to new regional markets with cross sales opportunities and
product synergies. Carlton also brings with it a popular and highly
regarded RMI focused product line. This itself will give the
enlarged Group the ability to strengthen its market offering whilst
greatly improving efficiency and output per capita.
The Group welcomes the Carlton team to the business and look
forward to building on the significant success already achieved by
its dedicated team in Barnsley.
Financial Information on Carlton
In the 12 months ended 31 March 2016, Carlton made an audited
profit before taxation of GBP2.62 million on turnover of GBP13.1
million, which represents an unaudited adjusted EBITDA of GBP5.56
million after adding non-recurring expenses (directors'
emoluments). The audited net assets of Carlton at 31 March 2016
amounted to GBP9.3 million, including land and buildings at book
value of GBP0.6 million but which have been independently valued
for the Group at GBP6.3 million.
Acquisition Terms of Carlton
The gross consideration for Carlton is up to GBP38.4 million.
The gross consideration however includes the cash balances of
Carlton at completion, being GBP7.2 million. The Directors believe
therefore a maximum net consideration for Carlton of GBP31.2
million is a more meaningful consideration value for
shareholders.
The net consideration for Carlton is being financed through a
mixture of new facilities provided by HSBC and its own cash
balances. The Board are also anticipating proceeds from the
completion of the sale of the Dunton landfill site shortly. The new
bank facilities comprise:
- GBP20.0million term loan,
- GBP6.0 million RCF and a
- GBP1.0 million overdraft facility.
Not all of the facilities will be drawn initially but will
provide headroom for seasonal cashflows and investment.
The maximum net consideration of Carlton will be satisfied as
follows:
- Cash on completion of GBP30.7 million, less a retention of GBP800,000 pending completion
- GBP3.5 million deferred consideration payable in three
instalments on the first three anniversaries of completion of
GBP1.75 million followed by two payments of GBP0.875 million
respectively. The deferred consideration will carry interest at
2.75% plus bank base rate payable quarterly in arrears and is
secured on the Barnsley property owned by Carlton.
- 4.7 million Michelmersh ordinary shares of 20 pence each at 72 pence per share
- GBP0.8 million potential additional consideration pending
agreement of a Completion Statement relating to Carlton's working
capital.
Application has been made for 4,694,444 ordinary shares of 20
pence in the company to be admitted to trading on AIM, with
dealings expected to commence on 29 June 2017. These ordinary
shares are being issued pursuant to the authorities granted to the
Company at its last AGM.
Integration of Carlton
The Stephenson family has owned Carlton since the 1970's and the
vendors comprise Oliver and Matthew Stephenson and Derek and John
Wilson (deceased). Oliver Stephenson, Carlton's Chairman and major
shareholder, will cease to be employed by Carlton but will support
the integration of the business into the enlarged Group through a
two-year consultancy agreement.
Carlton will sit alongside the Group's other brickworks and will
continue to manufacture its well respected range of products. The
current Managing Director, Pat Furr, is retiring from the business
at the end of 2017 but will help with the business transfer as the
current manufacturing team fall into the Group operating management
structure that will oversee performance, quarry management and
health and safety. The sales staff at Carlton will continue to
serve the existing customer base but over time will be integrated
into the Michelmersh national sale structure to encourage cross
selling of products and widening of the geographical presence of
the enlarged Group.
Carlton has invested in its business particularly over recent
years and has a strong production capability. Under Michelmersh,
investment in plant and process is a core consideration and
operations will be evaluated to determine whether investment can
improve efficiencies.
This announcement contains inside information.
Enquiries:
Michelmersh Brick Holdings
Plc
Frank Hanna, Joint CEO
Stephen Morgan, Finance 01825
Director 430 413
Cenkos Securities plc
Bobbie Hilliam (NOMAD)
Harry Pardoe 020 7397
Alex Aylen (Sales) 8900
07747
Yellow Jersey PR 788 221
07555
Charles Goodwin 159 808
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
This information is provided by RNS
The company news service from the London Stock Exchange
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