REG - Michelmersh Brick - Final Results
29/03/2023 07:00
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RNS Number : 5369U Michelmersh Brick Holdings PLC 29 March 2023
29 March 2023
Michelmersh Brick Holdings Plc
("MBH", the "Company", or the "Group")
Preliminary results for the year ended 31 December 2022
Strong performance and financial resilience into FY23
Michelmersh Brick Holdings Plc (AIM: MBH), the specialist brick manufacturer
and brick-fabricator, reports its preliminary results for the year ended 31
December 2022.
Financial Highlights:
31 Dec 2022 31 Dec 2021 Change
Statutory results
Revenue £68.4m £59.5m 15.0%
Gross margin 39.4% 40.7% (1.3%)
Operating profit £11.6m £9.9m 17.2%
Profit before tax £11.4m £9.7m 17.5%
Basic earnings per share 9.41p 6.50p 44.8%
Cash from operations £19.7m £15.8m 24.7%
Net cash/(debt) £10.6m £7.7m 37.7%
Dividend per share 4.25p 3.65p 16.4%
Adjusted results*
Adjusted EBITDA(1) £16.7m £14.7m 13.6%
Adjusted operating profit £12.7m £11.1m 14.4%
Adjusted profit before tax £12.5m £10.9m 14.7%
Adjusted earnings per share 10.61p 9.33p 13.7%
Strategic and Operational Highlights:
· Excellent financial performance in 2022, with adjusted results for
the year ahead of market expectations and up on 2021 across all key adjusted
financial metrics
· Earnings accretive acquisition of FabSpeed, a leading
brick-fabricator and manufacturer of off-site pre-built brick products
completed in November 2022 for an initial £6.25m consideration
· Collaboration with partners to affect price increases in the
year, mitigating ongoing elevated inflation rates
· Focused management of production efficiency and cost base has
maintained EBITDA margins in line with 2021
· Strong, consistent operational cash generation supported capital
investment focused on incremental output improvements
· Continued delivery of sustainability targets in first year following
publication in 2021 of Sustainability Report and road map to carbon neutrality
· Group cash of £10.6m and undrawn £20m borrowing facility
underpin financial resilience, strategic optionality and flexibility to pursue
further acquisition opportunities
· Final dividend per share of 2.95p resulting in full year dividend
of 4.25p, up 16% on 2021, demonstrating commitment to progressive dividend
policy and resilient outlook
Outlook:
· Diverse end markets are expected to underpin resilience with broad
customer base from new housing, commercial, architectural specification and
repair, maintenance and improvement (RMI) markets
· High quality opening order book for 2023 with order intake
momentum continuing in the first quarter of FY23
· Energy price hedging in place with over 90% of our expected
requirements secured for 2023, within budget parameters
Commenting on the results, Martin Warner, Chairman of Michelmersh Brick
Holdings Plc, said:
"I am very pleased to report on another successful year for the Group, with
the ongoing delivery against our strategy supporting our positive 2022
financial performance despite the challenging economic environment.
"We were delighted to announce the acquisition of FabSpeed towards the end of
the year and this addition will enable us to strengthen our position as a
leading business in both clay and pre-fabricated products.
"We remain mindful that there are significant challenges in the broader
economy with elevated inflation and a higher interest rate environment
potentially impacting demand across the construction industry. We continue to
closely monitor these risks, but we believe in the fundamentals of our
strategy of maintaining a broad customer base across multiple end markets and
continue to see robust levels of order intake as a result.
"The Group continues to focus on delivering excellent products and customer
service and with the resilient fundamentals of our business the Board remains
confident in the strategic outlook of the business."
(*)The Directors believe that adjusted measures provide a more useful
comparison of business trends and performance. Adjusted results exclude
exceptional items which include costs associated with acquisitions and the
amortisation of acquired intangibles. The term adjusted is not defined under
IFRS and may not be comparable with similarly titled measures used by other
companies. (.)Adjusted performance results are reconciled with statutory
results in the table below.
(1) EBITDA is defined as earnings before interest, tax, depreciation and
amortisation(.)
An analyst briefing will be held virtually at 9:30am today. To attend please
email michelmersh@yellowjerseypr.com (mailto:michelmersh@yellowjerseypr.com) .
The Company also notes that it will be hosting an online presentation
to retail investors on Friday 31 March at 10:00am. Those wishing to join the
presentation are requested to register via the following link: Meeting
Registration
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.
Michelmersh Brick Holdings Plc Tel: +44 (0)1825 430 412
Frank Hanna, Joint Chief Executive Officer
Ryan Mahoney, Chief Financial Officer
Canaccord Genuity Limited (NOMAD and Joint Broker) Tel: +44 (0)20 7523 8000
Max Hartley
Bobbie Hilliam
Harry Pardoe
Berenberg (Joint Broker) Tel: +44 (0)20 3207 7800
Richard Bootle
Detlir Elizi
Yellow Jersey PR Tel: +44 (0)7747 788 221
Charles Goodwin Tel: +44 (0)7775 194 357
Annabelle Wills
The information contained within this announcement is deemed to constitute
inside information as stipulated under the UK Market Abuse Regulations. Upon
the publication of this announcement, this inside information is now
considered to be in the public domain.
About Michelmersh Brick Holdings PLC:
Michelmersh Brick Holdings PLC is a business with seven market leading brands:
Blockleys, Carlton, FabSpeed, Freshfield Lane, Michelmersh, Floren.be and
Hathern Terra Cotta. These divisions operate within a fully integrated
business, combining the production of premium, precision-made bricks, pavers,
special shaped bricks, bespoke Terra Cotta products and prefabricated brick
components. 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 122 million
clay bricks and pavers per annum. Michelmersh currently owns most of the UK's
premium manufacturing brick 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
(http://www.mbhplc.co.uk/) and www.bimbricks.com (http://www.bimbricks.com)
Joint Chief Executive Officers' Statement
We are delighted to report on another year of significant progress for the
Michelmersh Group. These positive full year results have been achieved despite
the ongoing period of challenging economic conditions, with heightened
inflation, interest rates and negative sentiment from the conflict in Ukraine
driving volatility in the utility markets and greater levels of uncertainty in
our principal economies. Once again, we would like to thank all our staff for
their support and enduring dedication. It is due to their commitment that we
have been able to maintain the highest quality production and despatch
operations to support our customers and deliver consistent results throughout
the year.
Our strategy has focused on sustainable growth through deliberately targeting
and maintaining a diverse range of end customers that cover a broad range of
applications and channels within the construction industry. The current steady
order intake supports a robust order book, which is broadly spread across our
key markets of housing, commercial, social and specification projects and RMI
(Repair Maintenance and Improvement). Our strategic approach and focus in
addressing these diverse end markets underpins our view of the resilience in
the business to continue delivering growth as each route to market has
differing factors to drive supply and demand fundamentals. We remain very
grateful for the longevity and depth of our customer relationships which
support this approach and our focus is to provide excellent products and
services alongside balancing the needs of all our stakeholders.
Despite the more cautious outlook in the UK and European economies, it is
important to note that the production capacity of the UK and European brick
manufacturing industry remains well balanced when set against wider demand and
as an industry we still have record low inventory volumes of bricks. These
sector dynamics remain supportive of our medium-term strategy, despite what is
a more uncertain outlook. We have significant strength at the premium end of
the brick market in the UK and Benelux regions and brick continues to be the
façade material of choice due to its longevity, sustainability and energy
efficient qualities in use, low cost and broad aesthetic appeal. As such, the
Group continues to focus on manufacturing and delivering the highest quality
brick, pre-fabricated building products and paver premium-centric products to
our customers. This supports our average selling prices to be consistently at
a premium to the wider market and our objective to sell all the products we
make, underlining our earnings resilience. The ongoing strength and longevity
of our customer relationships was also a key factor in successfully
introducing the two measured forecast price increases across our portfolio at
the start and middle of the year, as we looked to offset the significant
increase in our input costs. The benefit of collaboratively working with clear
and measured timetabled price changes underpinned consistent demand from
across our customer base throughout the year.
To complement our core brick manufacturing business, we have continued to
target carefully selected, value enhancing acquisitions and were delighted to
announce the acquisition of FabSpeed at the end of November. FabSpeed is a
manufacturer of pre-fabricated building products with a significant focus on
bespoke, complex and specialist products, including chimneys, arches, canopies
and dormers. We believe that the acquisition is another important step in the
strategy for the Group to remain Britain's leading specialist brick
manufacturer. Combining FabSpeed with our existing clay product manufacturing
business will create a leading player in clay and associated pre-fabricated
products, including brick cladding systems, brick clad chimneys and arches.
Since completion, we have been delighted with the quality of both the people
and assets within the business and are excited about the broader product
offering, enhanced routes to market, the complementary customer base and
distribution channels that FabSpeed has now brought to the enlarged Group.
Alongside the FabSpeed acquisition, we also took the strategic decision to
review the brick making operations at Charnwood. This plant contributed less
than 3% of our overall volumes and the specialised nature of the handmade
brick process meant that we generated margins and returns that are
significantly below our Group strategic targets. Following the review, the
Board took the decision that it was the appropriate time to cease brick making
operations at Charnwood in December 2022 to focus on the core growth
opportunities in the Group. Customer retention was a core consideration and
importantly many of the customers had already migrated to alternative
Michelmersh and Freshfield Lane products prior to the cessation decision. The
expertise we have generated at Charnwood is firmly embedded across the Group
and we believe that the strength of our core brands means we will be better
placed as a Group to continue our success as a premium brick manufacturer
across our UK and European markets. Ceasing brick making operations will also
release the quarry site to become surplus to requirements and, with the land
already included in the local draft housing plans, we believe this represents
the best opportunity to realise value for our shareholders. Going forward, we
will use the vacant factory space at Charnwood in the first phase of our
growth strategy for FabSpeed as we look to repurpose the site and expand the
operations and reach of our acquired pre-fabricated portfolio. This build-out
will operate alongside the existing manufacturing operations of our Hathern
Terra Cotta range, which is set to remain on-site. This is a trusted brand and
leading manufacturer of architectural terra cotta products, which we believe
has a strong future in this highly specialised market.
Our 2022 financial performance and strong balance sheet have allowed us to
deliver on our core business priorities and equally ensure that we can
continue to invest in the Group and have highly efficient manufacturing
facilities. During the year we completed the addition to our kiln drying
capacity at Carlton and invested in our clamp kilns at Freshfield Lane which
will support ongoing production efficiencies at these key sites. At Floren, we
completed the construction of a new building to house further automated robot
pallet mixing capacity. The Company will continue to invest in projects that
address our strategic objectives to expand the manufacturing capacity, support
continuous improvements in production efficiency, de-risk processes and
deliver long-term sustainability through enhanced reporting and a deliverable
sustainability roadmap.
Importantly, our year-end cash position of £10.6m (post the acquisition of
FabSpeed) and the undrawn £20m bank facility continue to provide us with both
financial resilience and flexibility to continue pursuing and meeting our
ongoing strategic objectives.
We remain fully committed to our progressive dividend policy with a full year
dividend of 4.25 pence per share underlining our confidence in the positive
outlook for the business. All of this leaves us well positioned to deliver
further progress in our 2023 financial year and beyond.
Sustainability
As a Group our strategic decision making is focused on the fundamental
objective of Michelmersh representing the sustainable face of clay brick
manufacturing. Twelve months on from the launch of our Sustainability Report
and road map to achieving carbon neutrality, we have had a positive year with
the incremental progress we set out in the report, which is monitored and
measured by our Sustainability Group.
As we discussed at the half year, we were pleased to win a competitive process
to partner with the UK Government on a research project investigating the
potential use of hydrogen fuel in the brick manufacturing process. The
programme is part of the £1 billion Net Zero Innovation Portfolio ("NZIP")
which aims to provide funding for low-carbon technologies by decreasing the
costs of decarbonisation. The project represents a flagship study on the
feasibility of replacing natural gas with hydrogen in brick manufacturing. The
first phase of the project started in the second half of 2022 and was targeted
at demonstrating the viability of fuel switching using hydrogen in the clay
brick production process at our Freshfield Lane site. The research and
development project will continue into 2023 and demonstrates our commitment to
investigating a broad range of technological opportunities that target
sustainable improvements in our manufacturing processes.
Following the investment in researching the potential for hydrogen
alternatives we were delighted to be awarded the "Decarbonisation Trailblazer"
at the Delivering Net Zero for British Ceramics Conference. This sector
conference held its inaugural event at the end of November. The event aims to
highlight the most effective decarbonisation initiatives, crucial to
delivering the broader ceramic industry's progress toward reaching Net Zero.
Furthermore, during the second half of the year, we commissioned new solar
capacity to be added to the new building at Floren, which in addition to the
capacity already in use, will deliver over 50% of the site's electricity
requirements from the first quarter of 2023. We have also launched a further
solar project in the UK at our Blockleys site as we look to investigate the
feasibility of adding solar capacity to our existing buildings. This will
continue to deliver positive changes in support of our core focus on
achieving the Group's sustainability ambitions. As we look to fuel
substitutions, we also received our new electric fork-lift trucks through the
first half of the year as our UK operations switched from diesel to electric
units.
Award Winning
We were delighted that our high-quality product portfolio was once again
recognised in 2022 through our successes at the Brick Development Association
("BDA") industry awards. The 46(th) BDA awards saw the Group win 7 awards
alongside 2 commendations.
Among our awards was recognition for Haworth Thompkins' Neptune Wharf at Fish
Island Village in the Urban Regeneration category. Neptune Wharf used
Freshfield Lane's clay facing bricks to create a group of mid-rise apartments
with homes and workspaces, in a major brownfield regeneration project to
rejuvenate a 2012 Olympic fringe area.
Further success came for one of our long-term customers, the quality new
housing developer Croudace, who won the prestigious Housebuilder Category.
Croudace has established itself as a private housebuilder with a long history
of producing high-quality homes and first-class customer service. Croudace has
used Freshfield Lane's products on several notable projects, including its
Halstead and Lindfield developments, and we were delighted for the award
recognition.
As Britain's Brick Specialists, the Group aims to inspire beautiful,
comfortable, safe and sustainable architecture that will enhance our built
environment for generations to come.
Charity
During 2022, we maintained our focus on the importance of our commitment to
supporting charities which align with our culture and values and are central
to our Corporate and Social Responsibility ("CSR") ethos. We have developed a
strong track record of supporting charities that are important to our staff
and this was the third year that we asked our staff to nominate two principal
charities for the Group to support. The charities selected were The Lighthouse
Construction Project, which is the only charity that provides emotional,
physical and financial well-being support to construction workers and their
families, and Momentum Children's Charity, which supports families whose
children are facing cancer or other life changing conditions. We were
delighted to support these two charities, both of whom received donations and
were promoted via our social media platform.
Alongside these two staff chosen charities, we also supported six other
charities during 2022 that delivered support to organisations and projects in
local areas close to our manufacturing facilities.
Supporting Education
Having supported colleges for many years, the Group officially launched its
initiative 'Pledge 100' in 2020 to encourage youth training in skill-based
occupations and those embarking on careers in the construction industry. With
the industry facing a well-publicised shortage of skilled bricklayers, with
gaps in funded support across all sectors of construction, additional
assistance is vital to encourage the next generation to apply for
construction-focused employment.
We have continued this commitment to training the next generation of
bricklayers by donating over 100,000 bricks through our "Pledge 100"
initiative. Supporting industry education and training, including bricklayers
and architectural design courses, remains one of our core commitments.
Throughout 2022 we supported eleven institutions across the UK through the
provision of bricks they need to ensure students can learn the appropriate
skills necessary to fulfil their training as bricklayers of the future.
In addition to offering product for students to learn with in practical
lessons, we also continued to supply hundreds of copies of the 'Guide to
Successful Brickwork', to vocational training courses.
Group Results
As a result of the positive trading performance across the business, the Group
delivered strong growth for the 2022 financial year. This was mainly driven by
the strength of the organic business but we also benefitted from the five
weeks of trading activity following the acquisition of FabSpeed from 23
November 2022.
Financial Highlights
Year ended Year ended
31 Dec 2022 31 Dec 2021 Change
Revenue £68.4m £59.5m 15.0%
Gross margin 39.4% 40.7% (1.3%)
Adjusted* EBITDA(1) £16.7m £14.7m 13.6%
Adjusted* operating profit £12.7m £11.1m 14.4%
Operating profit £11.6m £9.9m 17.2%
Adjusted* profit before tax £12.5m £10.9m 14.7%
Profit before tax £11.4m £9.7m 17.5%
Adjusted* basic earnings per share 10.61p 9.33p 13.7%
Basic earnings per share 9.41p 6.50p 44.8%
Dividend per share 4.25p 3.65p 16.4%
(*)The Directors believe that adjusted measures provide a more useful
comparison of business trends and performance. Adjusted results exclude
exceptional items which include costs associated with acquisitions and the
amortisation of acquired intangibles. The term adjusted is not defined under
IFRS and may not be comparable with similarly titled measures used by other
companies. Adjusted performance results are reconciled with statutory results
in the table below.
(1) EBITDA is defined as earnings before interest, tax, depreciation, and
amortisation
The strong revenue performance over the year was predominantly due to two
price increases implemented across the portfolio at the start of the year and
in July as we looked to offset the significant increase in our input costs,
whilst maintaining production volumes in line with our expectations. The
acquisition of FabSpeed added £0.7m of revenue and £0.1m of operating profit
which was in line with our expectations and continues to perform as we
expected.
As a result of the strong revenue growth, operating profit of £11.6m was up
17.2% on 2021 (FY21: £9.9m), and profit before tax of £11.4m was up 17.5%
(FY21: £9.7m). As we highlighted at our half year announcement, the impact of
the inflationary environment, and most specifically elevated utility costs,
impacted our profit margins by around 200 basis points in the first half but,
as expected, we ended the year at 24.4%, in line with 2021. The Group's policy
is to manage our input costs on a risk-based approach and this process
underpinned the visibility of our input costs with over 90% of our energy
requirements fixed for the financial year facilitating our ability to manage
our profit expectations. We have continued to secure our expected forecast
energy volumes and have entered contracts which are again in place for over
90% of our expected requirements in 2023, with further contracts into 2024 and
2025 in line with this approach. These results and strategy underline the
Company's continuing success of managing our operational efficiency to
maximise our financial returns, whilst importantly maintaining and
prioritising a close relationship with our loyal customers.
Additionally, our positive profit and earnings metrics reflect the increased
depreciation costs of £0.3m in FY22, which is a result of the increased value
of our well-invested manufacturing facilities and the investment made in new
electric fork-lifts across our sites. The benefit of paying down the last of
our borrowings, with the final payment of £0.8m in the first half of this
financial year, maintained finance costs of £0.2m (FY21: £0.2m) despite the
higher interest rate environment across the financial year.
On a reported basis, the results include the impact of the amortisation of
acquired intangibles and, on an adjusted basis to remove the impact of these
items, adjusted EBITDA of £16.7m (FY21: £14.7m) is ahead by 13.6% against
FY21. This was at an adjusted EBITDA margin of 24.4%, reflecting the
successful management of the impact from the volatile utility cost environment
to deliver a margin in line with 2021.
After a tax charge of £2.5m (FY21: £3.6m), the Group recorded a profit for
the year after tax of £8.9m (FY21: £6.1m). The tax rate of 22% (FY21: 36.8%)
reflects our blended effective Group tax rate for the full year as we operate
in the UK (19%) and Belgium (25%). The reduction from 36.8% from 2021 is as a
result of 2021 including the impact from the adjustment of the Group's net
deferred tax liabilities following the change announced in the 2021 Budget
that will increase the standard rate of UK corporation tax from 19% to 25%
effective from 1 April 2023.
Basic earnings per share increased by 44.8% to 9.41p (FY21: 6.50p).
The table below (Adjusted Performance measures) provides a clear
reconciliation of the adjusted performance to the reported numbers.
Adjusted performance measures: Year ended Year ended Change
31 Dec 31 Dec 2021
2022
£000 £000
Operating profit 11,609 9,920 17.2%
Adjustments:
Amortisation of acquired intangibles 1,133 1,198
Adjusted operating profit (a) 12,742 11,118 14.4%
Depreciation 3,915 3,583
Adjusted EBITDA (a) 16,657 14,701 13.6%
Finance costs (214) (223)
Depreciation (3,915) (3,583)
Adjusted profit before taxation (a) 12,528 10,895 14.7%
Basic earnings per shares 9.41p 6.50p 44.8%
Adjusted basic earnings per share (a) 10.61p 9.33p 13.7%
(a) Includes adjustments to exclude amortisation of acquired intangibles
Net Cash and Working Capital
Cash generated from operations for the year was £19.7m, compared to £15.8m
in 2021, benefiting from the consistent positive trading through the year and
maintaining our regular and efficient working capital cycle. Operating cash
conversion from adjusted EBITDA was 117.9% compared to 107.5% in 2021 once
again reflecting the consistent quality of the fundamental cash generating
ability of the business.
Year ended Year ended
31 Dec 2022 31 Dec 2021
Net cash generated from operations £19.7m £15.8m
Tax paid (£1.7m) (£2.3m)
Interest paid (£0.2m) (£0.2m)
Purchase of property, plant and equipment (£3.0m) (£4.2m)
Debt repaid (£0.8m) (£10.7m)
Own shares acquired (£1.5m) -
Proceeds from share issue - £0.4m
Acquisition of FabSpeed (net of cash) (£6.1m) -
Lease payments (£0.7m) (£0.5m)
Dividend paid (£3.3m) (£1.9m)
Net increase/(decrease) in cash and cash equivalents £2.4m (£3.6m)
Net cash before lease liabilities £10.6m £7.7m
At the year end the Group had net cash before lease liabilities of £10.6m
(2021: £8.5m; debt of £0.8m). As we indicated during our half year results,
the Group repaid the remaining Group borrowings with the early repayment of
the final £0.8m of debt in Floren which was the remaining portion of debt
from the 2019 acquisition. In addition to our growing cash position, our
£20.0m Sterling and Euro denominated bank facility remains undrawn (2021:
£20.0m) and is committed to 22 December 2025, following the exercise in
November of the first of our two 1-year extension options.
As we enter 2023, the cash generating fundamentals of the Group, its net cash
position and strong balance sheet provide us with the capacity to continue to
invest in the business to support both capital initiatives and our commitment
to maintaining our progressive dividend policy. Importantly, the strength of
our balance sheet provides us with significant confidence in our financial
stability as we continue to trade in a more uncertain economic environment.
Our long-term policy is to maintain a strong financial position and keep the
ratio of net debt to adjusted EBITDA comfortably under two times.
Purchase of own shares
At the end of 2021, we announced our programme to fund the purchase of our own
shares, through an 'Employee Benefit Trust' ("EBT"), in order to meet the
future obligations of the LTIP and SAYE schemes and during the year we have
purchased 1,335,114 shares for total consideration of £1.5m. Alongside, we
launched a share buyback programme at the end of November to reduce the share
capital of the Group in order to return value to shareholders; as at 31
December 2022 the Group had purchased 60,000 shares for a total consideration
of £0.05m.
Acquisition and integration of FabSpeed
We completed the acquisition of FabSpeed on 23 November for a total cash
consideration of £6.4m, comprised of £6.25m of initial consideration
after adjusting for the level of working capital at completion of £0.15m.
There is potential for an additional deferred consideration of up to £2m,
payable in cash, based on achieving future adjusted EBITDA growth targets over
the two financial years following completion.
Property, plant and equipment
Capital expenditure in the year highlights our commitment and focus in
maintaining efficient manufacturing facilities whilst focusing on delivering
against our sustainable road map. The principal expenditure was focused on the
completion of our kiln drying capacity at Carlton which will support ongoing
production efficiency at this key site. Alongside, we have invested in our
clamp kilns at Freshfield Lane to improve operational efficiency.
Additionally, whilst we completed the new road at Telford in 2021 to
facilitate the release of the remaining mineral reserves at Blockleys to
support the long-term operations, we have completed some ancillary drainage
works to enable the release of some of the land for alternative use; selling
surplus investment land remains an important pillar of our lifetime revenue
sources. At Floren, we completed the construction of a building to house
automated robot pallet mixing equipment and importantly the roof will be
utilised to add additional solar capacity at the start of 2023. Reflecting
this broader focus on sustainability we continued to roll-out our new fleet of
electric fork-lifts across our sites as we prioritise switching to sustainable
solutions where the current available technology provides viable alternatives.
Dividend
The Board is pleased to continue to commit to our progressive dividend policy
reflecting a balanced approach to generating and returning value to our
shareholders, and as such, the Board is recommending a final dividend of 2.95
pence per share (FY21: 2.50 pence per share), which, together with the 1.30
pence per share interim dividend (FY21: 1.15 pence per share), gives a total
dividend of 4.25 pence per share (FY21: 3.65 pence per share), up 16.4% on
last year. The proposed dividend will be paid on 12 July 2023 to members on
the register on 9 June 2023 with shares being marked ex-div on 8 June 2023.
Outlook
We are proud of our track record of consistently delivering against our
strategic targets of overseeing well-maintained and efficient operations that
manufacture the highest quality premium brick products for our customers. Our
resilient medium-term outlook is underpinned by the quality of our product
portfolio and the strength of our customer and distributor relationships and,
as a result, we enter 2023 with a high-quality forward order book,
deliberately covering a breadth of end market channels from RMI, housing to
commercial, social and specification projects, now further expanded by
FabSpeed.
Despite the ongoing challenging market conditions, we remain well placed at
the premium end of the brick market in the UK and Benelux markets. The
long-term fundamentals of these markets are positive, with brick continuing to
be the façade material of choice due to its longevity, sustainability and
energy efficient qualities in use, low cost and broad aesthetic appeal, whilst
equally, available brick stocks remain at historic lows.
Importantly, the strength of our balance sheet provides us with financial
resilience and also flexibility to pursue further acquisition opportunities
where they meet our commercial and financial criteria as we target attractive
opportunities that complement our existing portfolio.
As we enter 2023, the ongoing higher inflation environment continues to
provide an uncertain backdrop as we look to manage our supply chain and input
costs. Given the high energy requirements for brick manufacturing, our energy
price hedging policy remains incredibly important to ensure that we are well
placed to manage the impact of utility price volatility over the medium term,
with our requirements again materially hedged at over 90% for 2023 with
further contracts into 2024 and 2025. We remain focused on mitigating these
risks through maintaining appropriate portfolio pricing, and in collaboration
with our customers we introduced our standard timetabled price increase at the
start of January 2023.
Following the acquisition in November, FabSpeed will be earnings accretive in
its first full financial year being part of the Group with expected revenue
and profit in line with its historic performance before we move into the first
phase of our growth strategy commencing with the build-out of the existing
space at our Charnwood facility. Given FabSpeed's historically lower profit
margins the Group will see some EBITDA margin percentage dilution over the
short term as we work in collaboration with our customers to ensure robust
forward demand in our core end markets and move to prioritise targeting
earnings growth over the medium term to balance the requirements of our
stakeholders.
The Group continues to prioritise a quality forward order book derived from
our diverse and broad loyal customer and distributor relationships supported
by demand from across the social and specification housing, RMI and commercial
sectors. With elevated inflation and higher interest rates potentially
impacting demand for our products, we believe the quality fundamentals in our
business will provide resilience and we are well placed to continue our
strategic progress through 2023 and beyond.
Frank Hanna and Peter Sharp
Joint Chief Executive Officers
Consolidated Income Statement
for the year ended 31 December 2022
2022 2021
£'000 £'000
Revenue 68,375 59,524
Cost of sales (41,463) (35,369)
Gross profit 26,912 24,155
Administrative expenses (14,225) (13,398)
Amortisation of intangibles (1,133) (1,198)
(15,358) (14,596)
Other income 55 361
Operating profit 11,609 9,920
Finance expense (214) (223)
Profit before taxation 11,395 9,697
Taxation (2,518) (3,568)
Profit for the financial year 8,877 6,129
Basic earnings per share attributable to the equity holders of the company 9.41p 6.50p
Diluted earnings per share attributable to the equity holders of the company 9.20p 6.27p
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2022
2022 2021
£'000 £'000
Profit for the financial year 8,877 6,129
Other comprehensive income/(expense)
Items which may subsequently be reclassified to profit or loss
Currency movements (257) (216)
Items which will not subsequently be reclassified to profit or loss
Revaluation deficit of property, plant and equipment (1,115) (2,855)
Revaluation surplus of property, plant and equipment 2,716 4,125
Tax credit on exercise of options 18 274
Deferred tax on revaluation movement (466) (1,404)
896 (76)
Total comprehensive income for the year 9,773 6,053
Consolidated Balance Sheet
as at 31 December 2022
2022 2021
£'000 £'000
Assets
Non-current assets
Intangible assets 25,291 20,222
Property, plant and equipment 65,932 63,205
91,223 83,427
Current assets
Inventories 9,684 10,060
Trade and other receivables 11,801 10,551
Corporation tax receivable - 190
Cash and cash equivalents 10,598 8,467
Total current assets 32,083 29,268
Total assets 123,306 112,695
Liabilities
Current liabilities
Trade and other payables 15,860 11,636
Lease liabilities 761 491
Interest bearing borrowings - 143
Corporation tax payable 1,159 -
Total current liabilities 17,780 12,270
Non-current liabilities
Interest bearing borrowings - 642
Lease liabilities 523 117
Deferred tax liabilities 16,034 14,542
16,557 15,301
Total liabilities 34,337 27,571
Net assets 88,969 85,124
Equity attributable to equity holders
Share capital 19,181 19,127
Share premium account 16,724 16,536
Reserves 21,435 21,763
Retained earnings 31,629 27,698
Total equity 88,969 85,124
Consolidated Statement of Changes in Equity
for the year ended 31 December 2022
Share capital Other reserves Share premium Retained Total
earnings
£'000 £'000 £'000 £'000 £'000
As at 1 January 2021 18,789 21,581 15,827 23,454 79,651
Profit for the period - - - 6,129 6,129
Revaluation deficit - (2,855) - - (2,855)
Revaluation surplus - 4,125 - - 4,125
Tax credit on exercise of options - 274 - - 274
Deferred tax on revaluation - (1,404) - - (1,404)
Currency difference - (216) - - (216)
Total comprehensive income - (76) - 6,129 6,053
Share based payment - 882 - - 882
Released on maturity of options 160 (624) - 464 -
Shares issued during the year 114 - 307 - 421
Dividend paid 64 - 402 (2,349) (1,883)
As at 31 December 2021 19,127 21,763 16,536 27,698 85,124
Profit for the period - - - 8,877 8,877
Revaluation deficit - (1,115) - - (1,115)
Revaluation surplus - 2,716 - - 2,716
Tax credit on exercise of options - 18 - - 18
Deferred tax on revaluation - (466) - - (466)
Currency difference - (257) - - (257)
Total comprehensive income - 896 - 8,877 9,773
Opening adjustment - (10) - - (10)
Share based payment - 980 - - 980
Purchase of own shares - - - (1,540) (1,540)
Released on maturity of options 16 (1,661) - 65 (1,580)
Deferred tax on share options - (533) - - (533)
Shares issued during the year 8 - 23 - 31
Dividend paid 30 - 165 (3,471) (3,276)
As at 31 December 2022 19,181 21,435 16,724 31,629 88,969
Consolidated Statement of Cash Flows
for the year ended 31 December 2022
2022 2021
£'000 £'000
Cash flows from operating activities
Profit before taxation 11,395 9,697
Finance expense 214 223
Depreciation 3,915 3,583
Amortisation 1,133 1,198
Share based payment charge 980 882
Cash flows from operations before changes in working capital 17,637 15,583
Decrease/(increase) in inventories 1,022 12
Decrease/(increase) in receivables 307 638
(Decrease)/increase in payables 683 (412)
Net cash generated by operations 19,649 15,821
Taxation paid (1,655) (2,250)
Net cash generated by operating activities 17,994 13,571
Cash flows from investing activities
Purchase of property, plant and equipment (3,028) (4,228)
Acquisition (6,073) -
Net cash used in investing activities (9,101) (4,228)
Cash flows from financing activities
Lease payments (721) (530)
Repayment of interest-bearing liabilities (785) (10,688)
Interest paid (214) (223)
Proceeds of share issue 31 421
Own shares acquired (1,540) -
Dividend paid (3,276) (1,883)
Net cash used in financing activities (6,505) (12,903)
Net increase in cash and cash equivalents 2,388 (3,560)
Cash and cash equivalents at the beginning of the year 8,467 12,243
Foreign exchange differences (257) (216)
Cash and cash equivalents at the end of the year 10,598 8,467
Cash and cash equivalents comprise:
Cash at bank and in hand 10,598 8,467
Bank overdraft - -
10,598 8,467
NOTES TO GROUP PRELIMINARY STATEMENT
1. Accounting Policies
The consolidated financial statements have been prepared in accordance
with UK-adopted international accounting standards and with those parts of
the Companies Act 2006 applicable to companies reporting under accounting
standards as adopted for use in the UK.
The consolidated financial statements are presented in sterling and all values
are rounded to the nearest thousand ("£000") except where otherwise
indicated.
2. Financial Information
The financial information set out in this Preliminary Announcement does not
constitute the Group's statutory financial statements for the years ended 31
December 2022 or 2021. The financial information has been extracted from the
Group's statutory financial statements for the years ended 31 December 2022
and 2021. The auditors have reported on those financial statements; their
report was unqualified, did not include references to any matters to which the
auditors drew attention by way of emphasis and did not contain a statement
under Section 498(2) or (3) of the Companies Act 2006.
The statutory accounts for the year ended 31 December 2022 will be filed
with the Registrar of Companies following the Company's Annual General
Meeting. The statutory accounts for the year ended 31 December 2021 have
been filed with the Registrar of Companies. The report of the auditors on
those statutory accounts was also unqualified, and also did not contain a
statement under section 498(2) or (3) of the Act.
3. Earnings Per Share
Basic
The calculation of earnings per share from continuing operations based upon
the profit for the year of £8,877,000 (2021: £6,129,000) and 94,467,688
(2021: 94,305,964) weighted average number of ordinary shares.
Diluted
The calculation of diluted earnings per share from continuing operations based
upon the profit for the year of £8,877,000 (2021: £6,129,000) and
96,444,459 (2021: 97,684,101) weighted average number of ordinary shares.
4. Dividend
The Board has recommended a final dividend for the year of 2.95 pence per
share, to be paid on 12 July 2023 to shareholders whose names appear of the
register of members at the close of business on 9 June 2023.
5. Annual Report and Accounts
Copies of this announcement are available and the Annual Report will be
available in due course on the Group's website www.mbhplc.co.uk
(http://www.mbhplc.co.uk/) and from the Company's registered office
at Freshfield Lane, Danehill, Haywards Heath, West Sussex RH17 7HH.
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