TIDMMBH
RNS Number : 4411T
Michelmersh Brick Holdings PLC
20 July 2015
20 July 2015
Michelmersh Brick Holdings Plc
("MBH", the "Company", or the "Group")
Half Year Results for the six months ended 30 June 2015
Michelmersh Brick Holdings Plc (AIM:MBH), the specialist brick
manufacturer and landfill company, is pleased to report its half
year results for the six months ended 30 June 2015.
HIGHLIGHTS
Financial Highlights:
-- Turnover increased by 13% over H1 2014
-- Gross margin increased by 5.3% to 38.6% over H1 2014
-- Operating Profit GBP2.7 million comparable to GBP1.4 million in H1 2014
-- Cash generated from operations GBP2.8 million (H1 2014: GBP0.0 million)
-- Net debt at GBP0.8 million (H1 2014: GBP5.3 million)
-- Dividend paid 0.5 pence per share- first dividend since 2007
Operational Highlights
-- Completed the Freshfield Lane project to increase capacity at the plant by 20%
-- Increase in first half production volumes from 34 million in H1 2014 to 35 million
-- Despatch volumes of 36 million (H1 2014: 34 million)
-- Average selling price increased by 9% over comparable period
-- Ceased landfill operations at Telford
-- A new corporate video giving an insight into the Company's
operation is now available to watch on the Company's website:
http://www.mbhplc.co.uk/media
Commenting on the results, Eric Gadsden, Chairman of Michelmersh
Brick Holdings Plc, said:
"The results for the first half of 2015 demonstrate that
Michelmersh continues to make progress in the market. The sound
financial base and strong management structures that have been
developed over the past few years are now set to deliver continued
and meaningful profits, cash flow and allow a continuing dividend
stream. The Board is set to respond to the opportunities to
increase productivity and efficiency through investment in plant
and processes."
Enquiries:
Michelmersh Brick Holdings Plc
Martin Warner, CEO 01825 430
Stephen Morgan, Finance Director 413
Cenkos Securities plc
Bobbie Hilliam (NOMAD)
Harry Pardoe 020 7397
Oliver Baxendale (Sales) 8900
Yellow Jersey PR
07768 537
Dominic Barretto 739
07799 003
Kelsey Traynor 220
Michelmersh Brick Holdings Plc is a business with five leading
market brands: Blockleys, 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 approximately 70 million clay bricks, tiles and pavers
per annum. MBH PLC currently owns most of the UK's premium
manufacturing brands and is a leading specification brick and clay
paving manufacturer.
Recently Michelmersh's products have been successfully used in
prestigious projects such as the Brentford Lock West, the award
winning ORTUS Learning Centre and the ITV Studios, Media City at
Salford Quays. We are suppliers to high value housing developers
including Berkeley Homes, St James Homes and Octagon and our
products are often found at the forefront of key urban regeneration
projects with the stunning Elephant Park project by Lend Lease
showcasing our manufacturing capabilities
Chairman's Statement
I am pleased to report the Group's results for the six months
ended 30 June 2015 in which the Group has made continued progress.
The Group generated an operating profit of GBP2.7 million (2014:
GBP1.4 million) and a profit before taxation of GBP2.5 million, an
almost doubling of that achieved in the first half of 2014 and not
far short of the full year's profit in 2014. Turnover for the first
six months of 2015 was 13% higher than the equivalent period in
2014 as a result of a combination of volume increases and improved
average selling price. Gross margin has increased by 5.3% to 38.6%
against the equivalent period in 2014 as a result of selling price
increases. Administration costs have been held close to 2014 levels
as opportunities to manage costs are continually explored.
As previously reported, the Group's landfill operation at
Telford has ceased in a strategic review of the best options for
the future of the site. Contribution as a result has fallen and has
had a negative impact of over GBP100,000 on the results for the 6
months compared to 2014.
As the Group's borrowings have been reduced by cash generated
from operations, the underlying interest burden continues to fall,
although the results include charges incurred for early settlement
of loans. Our improved operating cash flow has allowed the Group to
repay the GBP5 million Term Loan during the half year with a
further positive impact on the interest burden. The Group expects
to be in a net positive cash position at the end of the year
including the receipt of the final GBP1.5 million of deferred land
sale proceeds due in October. The Group has reconfigured its
funding arrangements with Barclays and will cease the facility with
ABN AMRO. The Group will then have arrangements to match its
current cash and borrowing profile with reduced interest and
covenant burden but while maintaining healthy headroom to invest in
assets and processes where appropriate.
Dividend
The final dividend of 0.5 pence per shares for 2014 was paid on
30 June 2015. The Board is not proposing the payment of an interim
dividend but intends to establish a progressive dividend policy
with annual dividends declared out of annual profits subject to
demands for investment and other cash flow constraints.
Assets
The outline planning application for around 200 houses on our
quarry site at Charnwood has been made and we expect this to go
before the Planning Committee in the next few weeks.
Our application for a licence for landfilling at our Dunton site
has now been submitted to the Environment Agency and we are working
towards bringing this to a conclusion during the remainder of the
year and starting to consider options to activate the site in
2016.
Operational Review
Volumes of bricks sold in the first half rose to 36 million (H1
2014: 34 million), just over half of the annual capacity for the
year. Production in the period also increased from 34 to 35 million
which means that stock levels have fallen further to circa 6 weeks
sales, levels that cannot fall further whilst still able to provide
a timely and reliable service to our customers. Increased
production is both a result of the increased capacity at Freshfield
Lane along with strong production performances from all other
sites. Average selling prices of the bricks achieved in the first
half of the year were GBP422 per thousand, compared to GBP387 per
thousand in the same period last year.
Cost of production has increased by 5% in the half year over the
equivalent period in 2014 as the Group has incurred higher repair
costs and accelerated depreciation charges in respect of the
Michelmersh brickworks. Previous statements have referred to
mineral planning approval at Romsey, which secured clay resources
for up to 25 years that has encouraged investment at the site.
Repairs to the fabric of the building have commenced in 2015 in
preparation for investment in new, more efficient kilns in 2016,
and depreciation on the existing plant, which is to be replaced,
has been accelerated.
It is pleasing to report that energy costs per unit of
production have fallen in the first half of 2015 and the Group has
hedged forward into 2017 to lock into the benign energy market and
secure ongoing production costs.
Hathern Terracotta, our specialist faience operation, had a
particularly strong performance in the first half and contributed
GBP90,000, a threefold increase over the first half of 2014. The
balance of 2015 is fully ordered and scheduled for production and
delivery well into early 2016.
The delivery schedules for the first half of 2015 have seen a
strong national bias towards our repair and maintenance and
improvement ("RMI") sector core products. This helped drive selling
prices in the first six months. The average selling price per
thousand achieved in the first six months was GBP422. We delivered
just over 36 million units, 4% better than forecast. The combined
effect of these two factors saw an improvement in sales revenue.
The Group delivered more product than we actually manufactured,
resulting in a reduction of stock. We anticipate some latent stock
addition from our current work in progress during the second half
of the year at our Freshfield Lane plant.
The first six months of 2015 have continued with a positive
robust trend. The Group's current forward order commitment stands
at over 45 million units, continuing in a similar vein to the same
period last year, thus promising strong deliveries into Quarter 3
& Quarter 4. The majority of the current forward order book is
for new housing starts, regeneration and commercial projects.
Whilst we have noted planning delays in some regions for larger
sites, our RMI forecast remains strong. Key national and regional
partners have scheduled core depot product well into the latter
part of 2015. Furthermore, some of our key regional house builders
have indicated an increase in production volume well into
2017/18.
The Group continues to refine, improve and increase haulage
capability whilst improving the distribution process with key
distribution partners and end users, ensuring accurate forward
order books and smooth site deliveries.
Notable projects recently supplied by the Group include the new
Network Rail Operations Centre in Rugby, where 80,000 of our unique
Synthesis products were used, the new Student Accommodation at the
University of Hertfordshire, and a new Humanities building at
Shrewsbury School. We also saw the completion of the fantastic and
prestigious 8 Artillery Row, London. Later in the year we will
commence supply of Ronald McDonald Evelina House in Lambeth where
117,000 bespoke I-line products have been ordered through our
unique Select Order process. The current specification enquiry
level is buoyant.
Work has commenced on improving our company Building Information
Modelling ("BIM") data and IT capacity. Both these projects will be
finished shortly and yet again we will lead the way in our sector
with our BIM data and compliance. BIM was introduced as part of the
Government Construction Strategy, and describes the process of
designing a building collaboratively using one comprehensive system
of computer models. Michelmersh is at the forefront of the industry
in the generation and management of information rich digital
representation available to construction professionals.
The Board
The Board has for some time been evaluating the future
management of operations and the best structure of the Board. The
Directors have determined a realignment of responsibilities and a
change in operational structure. From 1 January 2016, the Chief
Executive role currently filled by Martin Warner will be
transferred to Frank Hanna and Peter Sharp jointly. Frank and Peter
will be responsible for day to day operations and charged with
continuing to drive forward the Group in the next phase of
Michelmersh development. I am confident that they will thrive under
the additional responsibility and the Group and its stakeholders
will benefit. Martin will continue to serve the Company in an
executive role as Deputy Chairman.
Outlook
The results for the first half of 2015 demonstrate that
Michelmersh continues to make progress in the market. The sound
financial base and strong management structures that have been
developed over the past few years are now set to deliver continued
and meaningful profits, cash flow and allow a continuing dividend
stream. The Board is set to respond to the opportunities to
increase productivity and efficiency through investment in plant
and processes.
The UK construction industry is now in a period of measured
growth and the outcome of the election should provide a backdrop
for this to continue. The brick industry has responded to the
improvement in demand by increasing capacity where it can through
investment and in de-mothballing those plants where this is
possible. Imports continue to fill the gap between demand and
supply although economic conditions may make this less attractive
as time goes on.
In the first five months of the year industry average selling
prices were 20% over the equivalent period last year although
volumes have fallen slightly as the market settles to the new
normality. More recently there are signs that the period of
frenetic growth has ceased and competitive forces are strong as the
construction industry has responded to the increased level of
activity and have adjusted their purchasing and stock processes
accordingly. However the structural balance of supply and demand
should ensure that brick manufacturing remains a busy and
profitable sector. We expect the second half of 2015 to be quieter
than the first half but we are comfortable with the market
expectations for the full year ended 31 December 2015.
The effect of change of ownership of 70% of the UK brick
manufacturing market is yet to be clear, but the expected period of
stability and growth is good for the industry and the economy as a
whole.
Michelmersh is enjoying the results of the changing economic and
industry landscape. The Board expects opportunities to arise to
expand the scale of the Group and continue to monitor opportunities
in our market place.
Eric Gadsden
Chairman
20July 2015
Consolidated Income Statement
6 months 6 months 12 months
ended 30 ended 30 ended 31
June June December
2015 2014 2014
GBP'000 GBP'000 GBP'000
Unaudited Unaudited Audited
Revenue 15,327 13,581 28,476
Cost of sales (9,411) (9,055) (19,750)
Gross profit 5,916 4,526 8,726
Administration expenses (3,244) (3,162) (6,086)
Other income 41 48 161
Operating profit 2,713 1,412 2,801
Finance costs (209) (133) (199)
------------ ------------ ----------
Profit before taxation 2,504 1,279 2,602
Taxation (501) (275) (401)
------------ ------------ ----------
Profit for the period 2,003 1,004 2,201
------------ ------------ ----------
Basic earnings per share 2.47 p 1.24 p 2.72 p
Diluted earnings per share 2.46 p 1.23 p 2.72 p
Consolidated Statement of Comprehensive Income
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2015 2014 2014
GBP'000 GBP'000 GBP'000
Unaudited Unaudited Audited
Profit for the financial period 2,003 1,004 2,201
---------- ---------- -------------
Other comprehensive income
Items that will not be reclassified subsequently to profit or loss
Revaluation deficit of property, plant & equipment - - (1,000)
Deferred tax on revaluation - - (128)
---------- ---------- -------------
Other comprehensive income for the period net of tax - - (1,128)
---------- ---------- -------------
Total comprehensive income for
the financial period 2,003 1,004 1,073
---------- ---------- -------------
Consolidated Balance Sheet
As at As at As at
30 June 30 June 2014 31 December
2015 2014
GBP'000 GBP'000 GBP'000
Unaudited Unaudited Audited
Assets
Non-current assets
Intangible assets 2,475 2,436 2,476
Property, plant and equipment 42,472 42,611 41,899
---------- -------------- -------------
44,947 45,047 44,375
Amounts falling due after one year
Other receivables - 1,397 -
---------- -------------- -------------
Total non-current assets 44,947 46,444 44,375
Current assets
Inventories 6,239 6,536 6,084
Trade and other receivables 8,198 7,598 7,346
Investments 30 31 30
Cash and cash equivalents 132 62 2,809
---------- -------------- -------------
Total current assets 14,599 14,227 16,269
---------- -------------- -------------
Total assets 59,546 60,671 60,644
---------- -------------- -------------
Liabilities
Current liabilities
Trade and other payables 4,840 3,762 3,940
Provisions 6 288 112
Interest bearing borrowings 906 215 19
Corporation tax payable 871 275 370
---------- -------------- -------------
6,623 4,540 4,441
---------- -------------- -------------
Non-current liabilities
Deferred tax liabilities 4,593 4,434 4,593
Interest bearing borrowings - 5,171 4,916
---------- -------------- -------------
4,593 9,605 9,509
---------- -------------- -------------
Total liabilities 11,216 14,145 13,950
---------- -------------- -------------
Net assets 48,330 46,526 46,694
========== ============== =============
Equity attributable to equity holders
Share capital 16,247 16,166 16,247
Share premium account 11,495 11,495 11,495
Reserves 17,564 18,883 17,530
Retained earnings 3,024 (18) 1,422
---------- -------------- -------------
Total equity 48,330 46,526 46,694
========== ============== =============
Consolidated Statement of Changes in Equity
Share Share Merger Share Revaluation Retained Total
Capital Option Reserve Premium Reserve Earnings Equity
Reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 1 January
2014 16,162 246 979 11,495 19,705 (3,084) 45,503
Profit for the
period - - - - - 1,004 1,004
-------- -------- -------- -------- ------------ --------- --------
Total comprehensive
income - - - - - 1,004 1,004
Share based payment - 15 - - - - 15
Shares issued 4 - - - - - 4
Transfer to retained
earnings - - - - (30) 30 -
Reclassification* - - - - (2,032) 2,032 -
As at 30 June
2014 16,166 261 979 11,495 17,643 (18) 46,526
Profit for the
period - - - - - 1,197 1,197
Revaluation deficit - - - - (1,000) - (1,000)
Deferred tax on
revaluation - - - - (128) - (128)
-------- -------- -------- -------- ------------ --------- --------
Total comprehensive
income - - - - (1,128) 1,197 69
Share based payment - 18 - - - - 18
Shares issued 81 - - - - - 81
Transfer to retained
earnings - (231) - - (12) 243 -
As at 31 December
2014 16,247 48 979 11,495 16,503 1,422 46,694
Profit for the
period - - - - - 2,003 2,003
Total comprehensive
income - - - - - 2,003 2,003
Share based payment - 39 - - - - 39
Dividends paid - - - - - (406) (406)
Transfer to retained
earnings - - - - (5) 5 -
As at 30 June
2015 16,247 87 979 11,495 16,498 3,024 48,330
======== ======== ======== ======== ============ ========= ========
* Reclassification relates to the revalued element of the land
sold in October 2013 which is deemed to have completed in 2014 and
is now transferred to realised reserves.
Consolidated Statement of Cash Flows
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2015 2014 2014
GBP'000 GBP'000 GBP'000
Unaudited Unaudited Audited
Net cash generated by/(used
in) operating activities 2,799 (40) 2,400
---------- ---------- --------------
Cash flows from investing activities
Purchase of property, plant
and equipment (958) (1,157) (2,069)
Proceeds from sale of investment - 31 31
Proceeds from sale of land - - 1,500
Proceeds on disposal of property,
plant and equipment - 8 4
---------- ---------- --------------
Net cash used in investing
activities (958) (1,118) (534)
---------- ---------- --------------
Cash flows from financing activities
Repayment of interest bearing
borrowings (5,000) - (155)
Dividends paid (406) - -
Proceeds of share issue - 4 85
Repayment of finance lease
obligations (2) (3) (5)
---------- ---------- --------------
Net cash (used in)/generated
by
financing activities (5,408) 1 (75)
---------- ---------- --------------
Net (decrease)/increase in
cash and cash equivalents (3,567) (1,157) 1,791
Cash and cash equivalents at
beginning of period 2,795 1,004 1,004
---------- ---------- --------------
Cash and cash equivalents at
end of period (772) (153) 2,795
========== ========== ==============
Cash and cash equivalents comprise:
Cash at bank and in hand 132 62 2,809
Bank overdraft (904) (215) (14)
---------- ---------- ----------------
(772) (153) 2,795
========== ========== ================
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
2015.
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 2014 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 2015
and 30 June 2014 is unaudited.
3. EARNINGS PER SHARE
The calculation of earnings per share is based on a profit of
GBP2,003,000 (six months ended 30 June 2014 -GBP1,004,000; 12
months ended 31 December 2014 -GBP2,201,000) and 81,234,656 (H1
2014: 80,818,963, full Year 2014: 80,861,273) being the weighted
average number of ordinary shares in issue.
Diluted
At 30 June 2015 there were a total of 12,500 share options held
by employees, which are not considered dilutive (30 June 2014 -
25,000; 31 December 2014 - 12,500).
At 30 June 2015 there were 201,828 dilutive shares under option
leading to 81,436,484 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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR QDLFFEDFZBBV
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