Interim Results
Michelmersh Brick Holdings PLC
23 August 2005
Embargoed until 0700, 23 August 2005
Michelmersh Brick Holdings Plc
Strong results show improved margins and increased profit
Michelmersh Brick Holdings PLC ('Michelmersh' or 'the Company') (AIM: MBH), the
UK's largest producer of handmade specification bricks and clay paviors,
announces today interim results for the six months to 31 May 2005.
Financial Highlights:
• Turnover rose 5.7% to £9.2 million (2004: £8.7 million)
• Operating profit increased 143% to £628,000 (2004: £259,000)
• Profit before tax grew to £208,000 (2004: £13,000)
• Gross margin improved 6% to 30% for the period
• EPS 0.5p (2004: 0.0p)
Operating Highlights:
• 33.6 million products sold in H1 (2004: 32.9 million)
• Average product selling price rose 5%
• Margins were increased through efficiencies achieved, despite rises in
energy costs
• Clay supplies secured for the foreseeable future, with the signing of an
option on a further eight acres of land at our Michelmersh plant
• Planning consent received for land at Telford resulting in:
- Options progressing for the sale of an initial 6.5 acres for
residential development
- Further options under consideration for the remaining 53 acres
- Revaluation of land to be reflected in the full year balance sheet
- Restructuring of debt in line with long term development assets
Commenting on the results, Eric Gadsden, Chairman of Michelmersh, said: 'These
positive results reflect the success of both our strategy of investment and the
strength of the business. We continue to seek ways of expanding the business,
where we can see a clear correlation between an investment opportunity and
benefits for the Company. While demand for Michelmersh products remains strong,
we remain cautiously optimistic that we can continue to perform well in a
softening market place, marked by increasing energy costs.'
For further information:
Eric Gadsden/Martin Warner, Michelmersh: 01442 870 227
Richard Sunderland/Rachel Drysdale, Tavistock Communications: 020 7920 3150
chairman's statement
I am pleased to report another robust performance for the Group during the first
half. The completion of our investment programme at the end of 2004 has
contributed to an improvement in both margins and profitability, whilst laying a
firm foundation for future growth.
Financial Results
Group turnover for the first six months increased 5.7% to £9.2 million (2004:
£8.7 million). Gross margin improved 6% to 30% and resulted in a gross profit
for the period of £2.8 million (2004: £2.1 million), an improvement of 33%.
Operating Profit also grew 143% to £628,000 (2004: £259,000), whilst profit
before taxation grew to £208,000 (2004: £13,000). Earnings per share for the
period were 0.5p (2004: 0.0p)
This is a particularly good result given the external market pressures on energy
prices and reduced demand within the brick industry.
The board is not declaring an interim dividend but again expects to recommend
the payment of a final dividend at the year end.
Operational Review
As noted previously, the investment in all four factories last year, coupled
with a strong presence in our niche markets have contributed to this highly
satisfactory result.
We manufactured 38.7 million products in the first half (2004: 34.8 million) and
sold 33.6 million (2004: 32.9 million). The average selling price increased by
5% and, despite the challenge of significantly higher energy costs, which
increased by approximately 40% across the Group compared to the prior year, we
were able to improve margins as a result of the efficiencies achieved through
our investment programme.
All of our works experienced strong demand for the period and a number of our
products were given a high profile in the national press for their contribution
to projects, including those by Seven Developments, Octagon Developments, as
well as the St Pancras Eurostar Terminal and a number of individual projects.
At our Michelmersh plant we have signed an option on eight acres that, together
with our existing land, will secure clay supplies for the foreseeable future. A
planning application to work this material is now being submitted for this land,
which is designated as a preferred area for clay extraction in the County
Mineral Plan.
Outlook
The results for the period underline the benefits gained from our strategy of
investing in the business. However, whilst our improved production and the
diversified demand for our products shelters us from the slow down being
experienced by our competitors, we are not completely immune from the general
softening within our market, nor from the challenge of recovering increased
energy costs, which will have an impact on the Group's profitability for the
year. We therefore remain cautiously optimistic about the future and continue to
look for ways of further improving efficiencies within the business whilst
maintaining the standards our customers require.
We are now in a position to service our customers from stock levels we are
comfortable with and are particularly pleased with the initial response to the
new range of imperial size bricks which are produced on the recently completed
facility at Blockleys.
We continue to consider ways in which further investment in the business can
enhance our competitive position and to review opportunities to make
acquisitions of businesses which will strengthen the Group.
Now that the S106 planning agreement for the comprehensive development of our
land at Telford has been signed, we are progressing options for the residential
development of both an initial 6.5 acres and a long term strategy for the
remaining 53 acres. This asset will then be revalued, with the new value
reflected in the balance sheet at the year end. As a result, we are reviewing
the structure of our borrowings to bring a portion of these into line with the
long term nature of our development assets.
To bring our accounting period into line with industry annual price adjustments
and ensure these synchronise with our cost base and ease the provision and
preparation of management information, we are moving our accounting year end to
31 December, from 30 November, with immediate effect. The Group historically
makes a trading loss in December as it is a short production and sales month,
with no corresponding reduction in overheads. The change of year-end will
therefore have a one-off negative impact on the Group's results for the 13
months to 31 December 2005.
The early success of the improved performance from our businesses, as a result
of our investment programme, together with our substantial land assets and
unique position in the market, enables the Board to look to the future with
confidence.
Eric Gadsden
Chairman
MICHELMERSH BRICK HOLDINGS PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Half Year to Half Year to Year to
31.05.05 31.05.04 30.11.04
£000 £000 £000
Unaudited Unaudited Audited
TURNOVER 9,166 8,687 18,419
Cost of Sales (6,325) (6,578) (12,713)
------------------------------------
GROSS PROFIT 2,841 2,109 5,706
Administrative Expenses - normal (2,232) (2,019) (3,985)
Other Operating Income 19 169 98
------------------------------------
OPERATING PROFIT 628 259 1,819
Interest Payable and Similar Charges (420) (246) (554)
------------------------------------
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 208 13 1,265
Tax on profit on Ordinary Activities - - (480)
------------------------------------
PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION 208 13 785
Dividends - - (418)
------------------------------------
RETAINED PROFIT FOR THE HALF YEAR 208 13 367
====================================
Earnings Per Share
------------------
Basic 0.5p 0.0p 2.4p
Diluted 0.5p 0.0p 2.4p
MICHELMERSH BRICK HOLDINGS PLC
CONSOLIDATED BALANCE SHEET
Half Year to Half Year to Year to
31.05.05 31.05.04 30.11.04
£000 £000 £000
Unaudited Unaudited Audited
FIXED ASSETS
Intangible Assets - positive goodwill 22 65 44
Tangible Assets 40,441 36,607 39,597
------------------------------------
40,463 36,672 39,641
CURRENT ASSETS
Stock 6,288 4,517 5,168
Debtors 4,091 4,348 3,918
Cash at Bank and In-hand 16 1 5
------------------------------------
10,395 8,866 9,091
CREDITORS : Amounts Falling due Within
One Year (13,875) (10,853) (11,505)
------------------------------------
NET LIABILITIES (3,480) (1,987) (2,414)
------------------------------------
TOTAL ASSETS LESS CURRENT LIABILITIES 36,983 34,685 37,227
CREDITORS : Amounts Falling due After
More than One Year (3,800) (2,495) (4,252)
PROVISIONS FOR LIABILITIES AND CHARGES
Deferred Taxation (1,689) (1,209) (1,689)
------------------------------------
NET ASSETS 31,494 30,981 31,286
====================================
CAPITAL AND RESERVES
Called-up Share Capital 7,604 7,604 7,604
Share Premium Account 3,432 3,481 3,432
Revaluation Reserve 15,199 15,199 15,199
Profit & Loss Account 5,259 4,697 5,051
------------------------------------
EQUITY SHAREHOLDERS' FUNDS 31,494 30,981 31,286
====================================
MICHELMERSH BRICK HOLDINGS PLC
CONSOLIDATED CASH FLOW STATEMENT
Half Year to Half Year to Year to
31.05.05 31.05.04 30.11.04
£000 £000 £000
Unaudited Unaudited Audited
Net Cash Inflow (Outflow) from Operating
Activities (912) 529 2,171
Returns on Investments and Servicing of
Finance
Interest Paid (420) (246) (592)
------------------------------------
Net Cash Outflow from Returns on Investments
and Servicing of Finance (420) (246) (592)
Taxation
Corporation Tax Received / (Paid) - - -
------------------------------------
Taxation Paid - - -
Capital Expenditure
Purchase of Tangible Fixed Assets (1,427) (2,206) (2,360)
------------------------------------
Net Cash Outflow from Capital Expenditure (1,427) (2,206) (2,360)
Equity Dividends Paid (418) - -
------------------------------------
Net Cash Inflow / (Outflow) before financing (3,177) (1,923) (781)
Financing
Shares Issued - 1,850 1,850
Premium on Issue of new Shares - 2,845 2,796
Capital Element of Hire Purchase Payments (216) (6) (471)
Repayment of Director's Long Term Loan - (3,725) (3,725)
Repayment of Other Loans (195) (188) (446)
------------------------------------
Net Cash (Outflow) / Inflow from Financing (411) 776 4
------------------------------------
Increase / (Decrease) in Cash in the Period (3,588) (1,147) (777)
====================================
Notes:
1. The figures for the half year ended 31 May 2005 & 2004 are unaudited and do
not constitute statutory accounts.
2. The figures for the year ended 30 November 2004 are abridged from audited
accounts which are filed at Companies House and on which the Company's
auditors gave an unqualified opinion.
3. Earnings per share of 0.5p have been calculated based on the profit after
tax for the six months ended 31.05.05 and 38,017,855 shares in issue for the
6 months ended 31 May 2005.
4. Taxation is based on the unaudited results at the expected rate applicable.
5. The directors are not proposing a dividend.
6. A copy of this announcement will be sent to shareholders and is available at
the Company's registered office Michelmersh Brick Holdings plc, 121
High Street, Berkhamstead, Herts, HP4 2DJ
This information is provided by RNS
The company news service from the London Stock Exchange