Final Results
Michelmersh Brick Holdings PLC
21 March 2005
21 March 2005
MICHELMERSH BRICK HOLDINGS PLC
MAIDEN PRELIMINARY RESULTS SHOW MICHELMERSH SET FOR GROWTH
Michelmersh Brick Holdings plc ('Michelmersh' or 'the Company') (AIM: MBH), the
UK's largest producer of handmade specification bricks and clay paviors,
announces maiden preliminary results for the year ended 30 November 2004. The
results are in line with expectations, show good progress and include the impact
of costs and delays resulting from the extensive capital works completed during
the period.
Highlights include:
• Successful AIM flotation raising £5.2 million, before expenses
• Profit before tax £1.3 million (2003: £1.4 million pre write back of
negative goodwill)
• Turnover £18.4 million (2003: £ 18.9 million)
• £5.2 million of capital expenditure completed increasing production
capacity to 85 million bricks per annum (2003: 71 million made at full
capacity)
• Net debt £12.2 million (2003: £12.9 million)
• Recommended first dividend of 1.1p per share
• Sales team strengthened to ensure local presence in key areas of UK
and continued export into world markets
• Three awards for products at the 2004 Brick Development Brick Awards
• Planning agreement relating to land development at Telford signed and
a planning application for an initial phase of approximately 5.5 acres for
residential development being submitted.
Commenting on the results, Eric Gadsden, Chairman, said: 'We are particularly
impressed with the Company's performance over the past year and our maiden
preliminary results. Our AIM flotation was a success and we have since carried
out considerable plant development, which, despite having a slight impact on
productivity in the short term, is now complete and has put us in a strong
position going forward.'
Martin Warner, Managing Director, added: 'The capital expenditure put in place
over the past year has increased production to 85 million bricks. This frees up
other plant and allows us to satisfy the increasing demand for paviors, where we
remain the UK's leading supplier. We continue to generate good cashflow and are
recommending a dividend of 1.1p per share, underlining our confidence in the
Company's performance in the year ahead.'
For further information:
Martin Warner, Michelmersh Brick Holdings: 01442 870 227
Richard Sunderland/Jeremy Carey, Tavistock Communications: 020 7920 3150
Russell Cook/Mark Taylor, Charles Stanley & Co. Limited 020 7953 2429
CHAIRMAN'S STATEMENT
The past year has been one of significant progress for Michelmersh, the
highlight of which was the Company's flotation on AIM in May. At that time, we
raised £5.2 million, before expenses, to provide funds for continued investment
into plant and infrastructure in order to improve production efficiency,
increase output and enhance margins going forward.
Financial Results
For the year to 30 November 2004, Michelmersh made a profit before tax of £1.3
million (2003: £1.4 million pre write back of negative goodwill) on a turnover
of £18.4 million (2003: £ 18.9 million), in line with expectations outlined at
the time of the Company's interim report. We are particularly encouraged by this
performance as the comparative period reflected a large element of de-stocking
from the previous year and includes the impact of costs and delays resulting
from the extensive programme of capital works undertaken to increase capacity at
all of Michelmersh's four plants. The Company continues to generate cash and
following £5.2 million of capital expenditure (2003:£1.9 million), details of
which are given below, our borrowings at the year end were £12.2 million (2003:
£12.9 million).
The Board is recommending a dividend for the year of 1.1 pence per share. This
reflects our continued confidence in the Company's performance going forward and
is to be paid on the 15 May 2005 to shareholders on the register on 8 April
2005.
Investment
Capital investment at all Company works was completed on time and within budget.
It has increased our production output to 85 million bricks per annum, against
the 71 million we made at full capacity in 2004, and allows us to keep up with
increasing demand for paviors, for which we are the UK's leading supplier.
Upgrading our facilities caused some temporary disruption to production and
stock availability, as mentioned at the time of our interim results. However, we
are already seeing the benefits of our investment through productivity gains,
and enhanced margins from increased economies of scale. In addition, improved
efficiency will result in a better level of service for our customers and
encourage business development going forward.
Highlights of the capital investment programme included a new wire cut brick
manufacturing plant at our Blockley's works, which has allowed us to focus other
plant on the manufacture of paviors, increasing capacity at the site by an
additional eight million units. This was commissioned successfully in November
and is already exceeding production forecasts. In addition, the new hand-made
brick line at Charnwood came into operation in October and is enabling us,
amongst other projects, to meet demand for the Channel Tunnel Rail Link
development at St Pancras Station in London. At our Michelmersh works, where
we completed a new tile line, demand for additional products has been strong
in the first few months of this new financial year and the order book leads us
to believe that we will achieve sales in line with the new level of output.
Overall, as a result of this investment, our plants are now in an excellent
competitive position and better able to keep up with demand.
Sales
We continue to focus sales and production on the high quality end of our market.
Demand for our products is generated by customers building new sites or those
undertaking repair maintenance and improvement (RMI) work. In each case, the
reason our products are chosen is that the customer requires products which
complement or sympathise with the existing style of a location, or an architect
or specifier wants to achieve a specific look. The Brick Development Association
estimates that 50% of all brick sales in the UK are acquired to undertake RMI
work, demonstrating the diversity of projects which our industry supplies.
The range and quality of our handmade and machine made bricks, together with
clay paviors and hand-made clay roof tiles, coupled with the strength of our
sales team, have combined to win new prestigious customers and strengthen the
position of the Company.
Our national sales team is structured to ensure that we have a local presence in
key areas where specifiers are most likely to require our products and we
continue to export successfully into world markets.
Our strive for quality was rewarded at the 2004 Brick Development Brick Awards,
with the following awards:
• Best private housing development - Robert Adam Architects at Whiteley
Village, Surrey, using Charnwood and Michelmersh handmade bricks
• Best landscape project - Ian Randall/ Chorley Borough Council at Chorley
Town Centre, Lancashire, using Blockleys clay paviors
• Prefabrication award - Porpyrios Associates/The Weedon Partnership at
Brindleyplace, Birmingham, using Charnwood handmade bricks and special
shapes.
Consolidation
Over the past few months there has been significant consolidation in our
industry, with three major transactions taking place since the autumn. This
movement of capacity into the hands of long term players, the prohibitive costs
of building new works at current product price levels, together with the current
low level of brick stocks, will consolidate our position in the market place.
We will continue to review opportunities to make acquisitions of businesses
which will strengthen the Company.
Land Assets
Since the year end, the planning agreement relating to the comprehensive
development of the land at Telford has been signed and a planning application
for an initial phase of approximately 5.5 acres for residential development is
now being submitted. As soon as permission is received the property will be
marketed. The Company has adopted a prudent policy of valuing the land assets on
an existing use basis until this detailed consent is received so consequently
neither the anticipated uplift in value of this land, nor the remaining 54 acres
have been accounted for in the balance sheet.
People
One of the key reasons for our flotation was to enable our employees to become
shareholders and I am delighted that so many have also taken up the opportunity
to invest in our newly introduced SAYE Scheme.
We depend upon our employees for a level of production and quality of customer
service which allows us to grow as a business. I would therefore particularly
like to thank all our staff for their contribution to the success of the Company
during such a busy period of development.
Prospects
The strong level of sales and demand for our products, combined with our
improved production capacity provide us with confidence about the performance of
the Company going forward. The key variable is the fluctuating cost of energy
which has put pressure upon margins across the entire industry. To reduce the
impact of this we have raised prices, which at the time of writing have not
affected demand. In addition, improved efficiencies gained as a result of the
capital investment made during the period have limited further the affect of
increased fuel costs. With the completion of our long term investment programme
we are now in a favourable competitive position to benefit from any upward trend
in industry prices. The unique position we hold in the market has been
strengthened by our investments and this, combined with the potential from our
substantial land assets, allows me to be positive about the future.
Eric Gadsden
Chairman
CONSOLIDATED PROFIT AND LOSS ACCOUNT 2004 2003
YEAR ENDED 30 NOVEMBER 2004
£000 £000
TURNOVER 18,419 18,871
Cost of sales (12,713) (13,000)
-------- --------
GROSS PROFIT 5,706 5,871
Administrative expenses - normal (3,985) (3,132)
Administrative expenses - exceptional - 1,573
Other operating income 98 64
-------- --------
OPERATING PROFIT 1,819 4,376
Interest payable and similar charges (554) (535)
-------- --------
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 1,265 3,841
Tax on profit on ordinary activities (480) (490)
-------- --------
PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION 785 3,351
Equity dividends (2003 - non equity) (418) (60)
-------- --------
RETAINED PROFIT FOR THE YEAR 367 3,291
======== ========
EARNINGS PER SHARE
Basic 2.4p 11.6p
Diluted 2.4p 11.6p
Adjusted 2.4p 6.1p
2004 2003
CONSOLIDATED BALANCE SHEET £000 £000 £000 £000
30 NOVEMBER 2004
FIXED ASSETS
Intangible assets - positive goodwill 44 86
Tangible assets 39,597 34,908
Investments - -
-------- --------
39,641 34,994
CURRENT ASSETS
Stock 5,168 4,321
Debtors 3,918 4,042
Cash at bank and in hand 5 11
-------- --------
9,091 8,374
CREDITORS: Amounts falling due
within one year (11,505) (9,465)
-------- -------
NET LIABILITIES (2,414) (1,091)
-------- --------
TOTAL ASSETS LESS CURRENT
LIABILITIES 37,227 33,903
CREDITORS: Amounts falling due
after more than one year (4,252) (6,421)
PROVISIONS FOR LIABILITIES AND CHARGES
Deferred taxation (1,689) (1,209)
-------- --------
NET ASSETS 31,286 26,273
======== ========
CAPITAL AND RESERVES
Called-up share capital 7,604 6,150
Share premium account 3,432 -
Revaluation reserve 15,199 15,199
Profit and loss account 5,051 4,924
-------- --------
SHAREHOLDERS' FUNDS 31,286 26,273
======== ========
Equity shareholders' funds 31,286 25,283
======== ========
Non-equity shareholders' funds - 990
======== ========
CONSOLIDATED CASH FLOW STATEMENT 2004 2003
YEAR ENDED 30 NOVEMBER 2004
£000 £000 £000 £000
Net cash inflow from operating
activities 2,173 3,389
Returns on investments and
servicing of finance
Interest paid (593) (497)
-------- ------
Net cash outflow from
returns on investments and
servicing of finance (593) (497)
Taxation
Corporation tax received/
(paid) - -
-------- ------
Taxation paid - -
Capital expenditure
Purchase of tangible fixed
assets (2,360) (1,903)
Sale of tangible fixed
assets - 6
-------- ------
Net cash outflow from
capital expenditure (2,360) (1,897)
-------- ------
Net cash inflow/(outflow)
before financing (780) 995
-------- ------
Financing
Issue of new shares 1,850 -
Premium on issue of new shares 2,796 -
Capital element of hire
purchase payments (472) (8)
Repayment of director's
long term loan (3,725) -
Repayment of other loans (446) (363)
-------- ------
Net cash (outflow)/inflow
from financing 3 (371)
-------- ------
Increase/(decrease) in cash
in the year (777) 624
======== ========
SIGNIFICANT NON-CASH TRANSACTIONS
During the year fixed asset additions of £3,254,000 were acquired via new hire
purchase agreements. These asset acquisitions resulted in no cash outflow to the
group.
Notes to the accounts
1. The financial information set out above does not constitute the Company's
statutory accounts for the years ended 30 November 2003 and 2004 but is
derived from those accounts. Statutory accounts for 2003 have been delivered
to the Registrar of Companies and those for 2004 will be delivered following
the Company's annual general meeting on 26 April 2005.
The auditors have reported on those accounts, their reports were unqualified
and did not contain statements under section 237 (2) or (3) of the Companies
Act 1985.
2. The financial information set out above has been prepared on the basis of the
accounting policies as set out in the statutory accounts for the year ended
30 November 2004.
3. Analysis of Net Debt
Net Cash: At Cash Non At 30
1 December Flow Cash November
2003 2004
£000 £000 £000 £000
Cash at bank 11 (6) - 5
Bank overdraft (6,240) (771) - (7,011)
-------- -------- -------- --------
(6,229) (777) - (7,006)
======== ======== ======== ========
Debt less than one year (362) (14) - (376)
Debt more than one year (6,271) 4,185 - (2,086)
Hire purchase liabilities (18) 472 (3,254) (2,800)
-------- -------- -------- --------
(6,651) 4,643 (3,254) (5,262)
======== ======== ======== ========
Net Debt (12,880) 3,866 - (12,268)
======== ======== ======== ========
4. Tangible Fixed Assets - Group
Freehold Site Motor Plant & Equipment Fixtures& Total
land & development vehicles machinery fittings
buildings
COST OR VALUATION £000 £000 £000 £000 £000 £000 £000
At 1 December 2003 21,870 29 111 23,628 558 169 46,365
Additions 312 34 4 5,220 19 25 5,614
------ ------ ------ ------ ------ ------ ------
At 30 November 2004 22,182 63 115 28,848 577 194 51,979
====== ====== ====== ====== ====== ====== ======
DEPRECIATION
At 1 December 2003 - 29 111 10,734 451 132 11,457
Charge for the year - - 3 857 36 29 925
------ ------ ------ ------ ------ ------ ------
At 30 November 2004 - 29 114 11,591 487 161 12,382
====== ====== ====== ====== ====== ====== ======
NET BOOK VALUE
At 30 November 2004 22,182 34 1 17,257 90 33 39,597
====== ====== ====== ====== ====== ====== ======
At 30 November 2003 21,870 - - 12,894 107 37 34,908
====== ====== ====== ====== ====== ====== ======
Hire purchase agreements
Included within the net book value of £39,597,000 is £3,261,000 (2003 - £23,000)
relating to assets held under hire purchase agreements. The depreciation charged
to the accounts in the period in respect of such assets amounted to £17,000
(2003 - £2,000).
Capital commitments 2004 2003
£000 £000
Contracted but not provided for in the accounts 147 618
====== ======
5. Tangible Fixed Assets - Company
Freehold Office
Property Equipment Total
£000 £000 £000
COST OR VALUATION
At 1 December 2003 14,160 - 14,160
Additions 268 9 277
-------- -------- --------
At 30 November 2004 14,428 9 14,437
======== ======== ========
DEPRECIATION
At 1 December 2003 - - -
Charge for the year - - -
-------- -------- --------
At 30 November 2004 - - -
======== ======== ========
NET BOOK VALUE
At 30 November 2004 14,428 9 14,437
======== ======== ========
At 30 November 2003 14,160 - 14,160
======== ======== ========
Revaluation of fixed assets
The group's freehold property was revalued by the directors on 30 November 2003,
based on a valuation carried out by Carter Jonas LLP, Chartered Surveyors, on a
depreciated replacement cost basis for brickwork properties, and an existing use
value for land used for mineral extraction or waste disposal. Other property has
been valued at open market value. These valuations incorporate certain
assumptions in relation to the future use of the properties and the estimated
useful economic life relating to clay extraction and landfill facilities. The
group's freehold property was valued at £21,870,000, resulting in an increase in
the revaluation reserve of £9,793,000.
In respect of the freehold property stated at a valuation, the comparable
historical cost and depreciation values are as follows:
Group Company Group Company
2004 2004 2003 2003
Historical cost: £000 £000 £000 £000
At 1 December 2003 6,671 5,114 6,641 5,114
Additions 312 268 30 -
-------- -------- -------- --------
At 30 November 2004 6,983 5,382 6,671 5,114
======== ======== ======== ========
No depreciation has been charged in respect of the above assets.
All other tangible assets are stated at historical cost.
6. Creditors: Amounts falling due within one year
Group Group
2004 2003
£000 £000
Bank loans and overdrafts 7,387 6,602
Trade creditors 1,810 1,035
Amounts owed to group undertakings - -
Other taxation and social security 581 637
Hire purchase agreements 635 7
Other creditors 13 13
Corporation tax - -
Proposed dividend 418 -
Accruals and deferred income 661 1,171
------- -------
11,505 9,465
======== ========
7. Creditors: Amounts falling due after more than one year
Group Group
2004 2003
£000 £000
Bank loans 2,086 2,476
Other loans - 108
Director's loan accounts - 3,826
Hire purchase agreements 2,166 11
------- -------
4,252 6,421
======= =======
8. Earnings Per Share
Basic
The calculation of earnings, per share is based on earnings of £785,000 (2003 -
£3,291,000) and 32,968,005 (2003 - 28,339,285) ordinary shares. The figure has
been calculated using a weighted average figure following the issue of shares in
the year.
Diluted
The diluted figure is based on the same figures as above but takes into account
the weighted average unexercised share options in existence during the year.
These amounted to 681,269 shares.
Adjusted
The adjusted figure is based on the same figures on the basic calculation but
excludes all exceptional items.
9. Copies of this report have been sent to shareholders. Copies are also
available free of charge to members of the public from the Company's registered
office at 121 High Street, Berkhamsted, Hertfordshire, HP4 2DJ and shall remain
available for at least one month.
This information is provided by RNS
The company news service from the London Stock Exchange