REG - Michelmersh Brick - Final Results
26/03/2024 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240326:nRSZ2160Ia&default-theme=true
RNS Number : 2160I Michelmersh Brick Holdings PLC 26 March 2024
26 March 2024
Michelmersh Brick Holdings Plc
("MBH", the "Company", or the "Group")
Preliminary results for the year ended 31 December 2023
Positive performance - earnings ahead of market expectations
Michelmersh Brick Holdings Plc (AIM: MBH), the specialist brick manufacturer
and brick-fabricator, reports its preliminary results for the year ended 31
December 2023.
Financial Highlights:
31 Dec 2023 31 Dec 2022 Change Organic change (2)
Statutory results
Revenue £77.3m £68.4m 13.0% 1.3%
Gross margin 38.9% 39.4% (0.5%) 0.6%
Operating profit £12.3m £11.6m 6.0% 5.2%
Profit before tax £12.5m £11.4m 8.8% 8.1%
Basic earnings per share 10.44p 9.41p 10.9% 10.2%
Cash from operations £13.6m £19.7m
Net cash £11.0m £10.6m
Dividend per share 4.50p 4.25p 5.9% -
Adjusted results*
Adjusted EBITDA(1) £17.8m £16.7m 6.6% 4.8%
Adjusted operating profit £13.7m £12.7m 7.9% 7.1%
Adjusted profit before tax £13.8m £12.5m 10.4% 9.6%
Adjusted earnings per share 11.91p 10.61p 12.3% 11.6%
Highlights:
· Positive financial performance in 2023, with earnings for the year
ahead of market expectations
· Revenue and profit growth driving 11% increase in Basic EPS
· Continued focus on pricing stability for customers to support 2024
demand outlook
· Full production capacity maintained throughout the year alongside
focused cost management has led to strong profit performance
· Resilient operational cash generation supported investment in
inventory and capital investment in solar at plants to supplement longer term
energy requirement
· Launch of SustainableBrick.com, a new website that highlights the
benefits of clay brick to our broad customer base
· Group cash of £11m at 31 December 2023 and undrawn £20m
borrowing facility underpin strong financial resources and strategic
optionality
· Final dividend per share of 3.00p resulting in full year dividend
of 4.50p, up 5.9% on 2022, demonstrating commitment to progressive dividend
policy and confidence in a resilient outlook
Outlook:
· Focus on maintaining a well-balanced forward order book and
pricing stability expected to support resilient order intake across our
diverse end market customer base for 2024
· Energy price hedging in place with over 70% of our expected
requirements secured for 2024 with the expectation of a more stable outlook
expected to underpin forward prices
· The Group continues to focus on delivering both excellence in
product and customer service and with the resilient qualities of our business
model the Board remains confident in the strategic outlook of the business.
Commenting on the results, Martin Warner, Chairman of Michelmersh Brick
Holdings Plc, said:
"I am very pleased to report on another positive year for the Group, with
strong growth across our key financial metrics despite the decline in the
broader construction industry.
"We enter 2024 watchful of the interest rate environment and inflation trends
and how these affect the timing of the anticipated increase in construction
activity levels. Whilst we continue to closely monitor the impact from these
macro cycles, we believe in our business model, maintaining a broad customer
base across multiple end markets, and continue to see robust levels of order
intake as a result.
"As ever, the Group continues to focus on delivering both excellence in
product and customer service and with the resilient qualities of our business
model the Board remains confident in the strategic outlook of the business.
"As I step down from the business after 35 years of involvement with brick
making I would like to thank all my colleagues who have supported me over the
years, past and present. The growth from small beginnings has only been
possible by their dedication, skill and support in good times and bad.
"I have no doubt that all that has been built in terms of plant and people
will mean that the business will continue to prosper from a strong financial
base for shareholders, customers and importantly for our employees who make it
all happen. This business is truly unique in many ways.
"I would also like to add my personal thanks to Frank Hanna as he steps down
for pastures new. We have worked together in the industry for many years,
particularly since the acquisition of Freshfield Lane in 2010. He has been a
valued colleague and I wish him every success in the future."
(*)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
2 Organic change presents a percentage comparison year on year excluding the
impact of the results of FabSpeed which was acquired on 24 November 2022(.)
An analyst briefing will be held virtually at 11:30am 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 Thursday 28 March at 10:00am. Those wishing to join
the presentation are requested to register via the following link: Meeting
Registration (https://forms.gle/D13NyGtBBkc2AyXj8)
Michelmersh Brick Holdings Plc Tel: +44 (0)1825 430 412
Peter Sharp, 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
Patrick Dolaghan
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) , www.bimbricks.com (http://www.bimbricks.com)
and www.sustainablebrick.com (http://www.sustainablebrick.com/)
Chief Executive Officers' Statement
We are pleased to report on another positive year of progress for the
Michelmersh Group, which has been significantly influenced by all of our staff
in the UK and Belgium and their ongoing support in continuing to provide the
highest quality product and service to all of our loyal customers.
At the centre of our strategy is the belief that sustainable growth is best
supported through maintaining a broad range of end customers who cover the
fullest spectrum of applications and channels within the construction
industry. Despite a 30% decline in new build construction activity over the
last twelve months, and the associated impact on brick despatches, we have
achieved these positive results this year due to this strategic approach.
Focusing our portfolio on diverse end markets, each with different supply and
demand fundamentals, has created a business that continues to deliver growth
in more challenging conditions. We remain very grateful for the longevity and
depth of our customer relationships, which support this approach and our focus
on providing excellent products and services alongside balancing the needs of
all our stakeholders.
Despite the uncertainty in the construction sector, the fundamentals in our
end markets remain positive with a critical shortage of both new residential
and social housing and a significant legacy housing inventory constructed with
brick façades, underpinning future Repairs, Maintenance and Improvement
("RMI") demand with continued requirements for brick cladding remedial
solutions. It is also clear that the two major political parties remain
committed to reversing the decades long decline in house building with the
certainty of meaningful population growth in 2024 and beyond exacerbating the
need for new housing.
Our fundamental core competency remains our significant strength in the
premium end of the brick market in the UK and Benelux regions. We view the
long-term fundamentals of these markets as positive, with brick continuing to
be the façade material of choice due to its longevity, sustainable and energy
efficiency qualities, low-cost base and broad aesthetic appeal. Demand for
bricks across the sector has declined over the last twelve months in line with
the consumer environment. Consequently, brick inventory volumes for the sector
are above the five year average at c.575 million. In response, across the
industry, manufacturing capacity of approximately 25% has been mothballed or
permanently closed in the UK with uncertainty at the point the market will
return to 2022 levels. However, given this change in dynamics from 2021 and
2022, our ability to address the market's broad spectrum supports the
resilience of our outlook.
As a complement to our core brick manufacturing business, we remain very
pleased with our acquisition of FabSpeed, which we completed at the end of
November 2022 and have had a successful first full year of ownership, focusing
on its strategic integration into our commercial and operational teams.
Subsequent to the acquisition, we have focused on the opportunities to combine
FabSpeed with our existing clay product manufacturing business, as we aim to
create a leading player in clay and associated pre-fabricated products,
including brick cladding systems, brick clad chimneys and arches. We are
excited about expanding the product offering, the enhanced routes to market,
the complementary customer base and distribution channels that FabSpeed has
now brought to the enlarged Group.
Following the decision to cease brick making operations at Charnwood in
December 2022, we previously highlighted our intention to use the vacant
factory space in the first phase of our growth strategy for FabSpeed, as we
looked to repurpose the site and expand the operations and reach of our
acquired prefabricated portfolio. The site renovation work was completed in
March and FabSpeed began prefabricated operations, alongside the existing
manufacturing of our bespoke Hathern Terra Cotta range, and will specifically
focus on expanding the customer reach of our brick slip system portfolio.
Later in the year we commenced remedial work on some vacant adjacent space at
our Carlton plant with a view to further expanding our FabSpeed operations
onto our owned sites and target further operational efficiency.
Our 2023 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 continue to deliver against our
sustainability initiatives. During the year we completed the new building to
house the automated robot pallet mixing equipment in Florenand with the
additional roof space added a further 25% of solar capacity on site to deliver
50% of our electricity requirement in Belgium on an annualised basis.
Following the success at Floren, we obtained our licences to add solar panels
at Blockleys, with installation completed in the second half of the financial
year. As we look into 2024 and beyond, we will continue to add to the pipeline
of sustainability and manufacturing initiatives to deliver incremental
improvements to our processes.
Importantly, our year-end cash position of £11 million and the undrawn £20
million bank facility continues 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 4.50 pence per share underlining our confidence in the resilient
outlook for the business. All of this leaves us well-positioned to deliver
further progress in our 2024 financial year and beyond.
Board changes
We announced on 26 May 2023 that Frank Hanna had informed the Board of his
decision to leave the Company to take up the position of CEO of the
Brickability Group.
Frank and I were appointed Joint Chief Executive Officers ("JCEO") in January
2016 and since that time I am very proud of the significant growth and success
the Company has achieved. Since 2016, the Group's' annual brick output has
increased from 70 million to over 122 million, the portfolio has broadened to
include brick fabricated products and the Company has entered the European
market with Floren. Frank has been associated with the Group for 32 years,
joining officially in 2010, when as a shareholder of Freshfield Lane it was
acquired by Michelmersh. Frank has been an excellent JCEO of Michelmersh and a
highly valued colleague and member of the Board and he is leaving with our
sincere thanks for his immense contribution in building a business with strong
fundamentals underpinned by the longevity and depth of our customer
relationships.
We also announced on 1 August 2023 that Martin Warner had informed the Board
of his decision to retire as Chair at the AGM in May 2024. Martin will be
succeeded by Tony Morris who is currently a Non-Executive Director. Alongside,
we also announced that Rob Fenwick had joined the Company as Non-Executive
Director.
Martin was appointed Chair in 2016, having previously been joint founder and
Chief Executive Officer. He has overseen transformational growth over that
period supporting the Group on its progressive journey to becoming a leading
premium brick manufacturer and brick prefabrication specialist across
the UK and Belgium. On a personal note, I would like to thank Martin for
his valued support and guidance over many years. I look forward to continuing
working with Tony as we look to the future with confidence and the business
being in a strong position to continue to deliver against our strategy.
Tony, who joined the Board in November 2020, has brought a wealth of
experience in M&A and equity capital markets to the Group, and over the
last three and a half years with Michelmersh has added significant
construction industry and clay manufacturing sector knowledge, alongside his
role as Chair of the Remuneration Committee.
Rob, who joined the Board in 2023, has extensive operational experience,
having spent 20 years with Howden Joinery Group plc. Rob was Chief Operating
Officer of the supply division at Howdens for 14 years before spending a year
as Chief Governance Officer. Rob is also a Non-Executive Director of Andrew
Marr International Ltd and Kronospan Holdings Ltd.
With these changes, we believe that the Board has the appropriate balance of
skills and experience to support the Group as we continue to deliver against
our strategic objectives.
Sustainability
The Group continues to believe in the importance of being a senior
representative of the clay brick manufacturing industry and to champion the
carbon and broader sustainability benefits of utilising our product portfolio
in the built environments of the UK and northern Europe. As we highlighted
last year, for Michelmersh this will always be focused on incremental
improvements as we look to our internal knowledge and the right external
partnerships to both develop and adopt the technical solutions that will
continue to deliver against the outlined targets in our 2021 Sustainability
Report. As a result, we are very pleased that during the year we have already
achieved a 24.2% reduction in carbon intensity ratio since our 2016 baseline,
well ahead of our target which we have now increased from 5% to 25% by 2030
which represents significant progress.
With the recognised importance in championing the sustainability of our
portfolio, we were delighted to launch SustainableBrick.com
(https://www.sustainablebrick.com/) , a new website that highlights the
benefits of clay brick to our broad range of end customers. This information
resource aims to reinforce to architects, the evolution and investment the
industry is making towards innovative sustainability related improvements
whilst showcasing the sustainable benefits of clay brick. The site is also
targeted at the construction industry drawing out the many carbon calculation
resources available to aid the sector in collectively and collaboratively
achieving net zero. Through the products and initiatives showcased throughout
the website we hope to lead the way in sustainable construction practices and
illustrate how these can be adopted for future generations.
Awards and recognition
We were delighted that our high-quality product portfolio was once again
recognised in 2023 through our successes at the Brick Development Association
("BDA") industry awards. The 47(th) BDA awards saw the Group win five awards,
alongside one commendation, which was almost a third of the awards presented
during this year's event.
This year's awards showcased the ever-expanding utilisation of brick across
the construction industry, with notable contributions in the Urban
Regeneration, Innovation and Refurbishment categories as well as celebrating
brick architecture across the wide spectrum of more traditional uses. These
accolades are a testament to the pivotal role that our products play in
housing developments, public buildings and commercial developments,
underscoring the exceptional environmental and sustainability attributes of
clay brick across the country.
Among our awards was recognition for Archio's Becontree Estate as part of a
significant house-building initiative in the London Borough of Barking and
Dagenham. Becontree Estate used Freshfield Lane's First Quality Multi which
helped successfully blend this project into the area's historic London
environment.
Further success came with MAST Architects winning the Urban Regeneration Award
with a mixed-use project in Clydebank, Scotland, located on a former shipyard
site. It represents the initial phase of a residential development plan to
reintegrate the waterfront with the town, and utilised Blockley's Porcelain
White Smooth and complementary products to harmonise the build with its
nautical surroundings.
Winning the Commercial Award, Feilden Clegg Bradley Studios, designed a
six-story office building with a focus on sustainability and community
integration. Utilising Freshfield Lane's First Quality Multi, the building's
brickwork demonstrated that energy-efficient features, beauty, functionality
and sustainability can coexist.
The recognition of these influential projects and the wider success at the
National RIBA awards on additional educational, urban regeneration and
retrofit developments further highlights that as Britain's Brick Specialists,
the Group aims to inspire beautiful, comfortable, safe and sustainable
architecture for a future built environment we can be proud of.
Charity
Our commitment to being a socially engaged and responsible employer did not
change this year and we carried on from our charitable commitments in 2022 by
increasing our donations and the provision of support to charities and
community projects. As part of our decision-making process in selecting
charities to support, we invite all staff to put forward nominations for the
following financial year. We continued the process for this year and the
charities we supported were all nominated by our people. The two main
charities we selected from the nominations were The Lighthouse Construction
Project and The Brain Tumour Centre.
The Lighthouse Construction charity carries out incredible work in the breadth
of the support they provide to workers and their families in the construction
industry. The Brain Tumour Centre not only invests heavily in scientific
research but also looks at ways they can help improve the lives of all those
who have been diagnosed with a brain tumour. In addition to the annual staff
nominations, we also supported numerous community events local to our
manufacturing facilities as well as donating to individual staff charity
fundraisers throughout the year.
Supporting education
We have been proud supporters of colleges for many years, which was cemented
by the Group with the official launch of 'Pledge 100' in 2020 to encourage
youth training in skill-based occupations and those embarking on careers in
the construction industry. The industry continues to face a very
well-publicised shortage of skilled bricklayers, with gaps in funded support
across all sectors of construction and we believe this additional assistance
is vital to encourage the next generation to apply for construction-focused
employment as the country faces the challenge of meeting the critical shortage
of both new houses alongside the importance of well-maintained older housing
stock.
We have once again supported this commitment to training the next generation
of bricklayers by donating over 120,000 bricks through our "Pledge 100"
initiative, ahead of the 100,000 we achieved annually since 2020. Supporting
industry education and training, including bricklayers and architectural
design courses, remains one of our core commitments.
Throughout 2023 we supported 14 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. With
the additional bricks this year we also supported five community and charity
led projects that support local communities surrounding our factories.
In addition to offering products 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 strong trading performance across the business, the Group
delivered positive growth for the 2023 financial year. The 2023 results
include the positive impact of FabSpeed, our prefabricated building product
acquisition in November 2022 and for comparison purposes, we include
like-for-like narrative to remove the full year of benefit in 2023 and the one
month contribution in 2022 for our key financial metrics.
Financial highlights
Year ended Year ended
31 Dec 2023 31 Dec 2022 Change
Revenue £77.3m £68.4m 13.0%
Gross margin 38.9% 39.4% (0.5%)
Adjusted* EBITDA(1) £17.8m £16.7m 6.6%
Adjusted* operating profit £13.7m £12.7m 7.9%
Operating profit £12.3m £11.6m 6.0%
Adjusted* profit before tax £13.8m £12.5m 10.4%
Profit before tax £12.5m £11.4m 8.8%
Adjusted* basic earnings per share 11.91p 10.61p 12.3%
Basic earnings per share 10.44p 9.41p 10.9%
Dividend per share 4.50p 4.25p 5.9%
(*)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
Revenue for the year increased by 13.0% to £77.3 million (2022: £68.4
million) over the equivalent period in 2022. Removing the impact of FabSpeed,
revenue increased by 1.3% which was supported by a price increase implemented
across the portfolio from the start of the year, as we continued to target
mitigating the increase in our input costs, offset by a 10% reduction in
despatches predominantly due to more challenging conditions in the final
quarter. The Group revenue performance undoubtedly benefited from the broader
reach of our portfolio across our diverse customer base with the construction
sector activity declining year on year by around 30%. Despite the reduction in
despatches in the fourth quarter, we took the decision to both, maintain
normal production volumes as we targeted maximum operational leverage from our
broader manufacturing base, and invest in the appropriate inventory levels to
support our FY24 expectations and to provide our loyal customer base with a
consistent supply of our product portfolio.
As a result of the positive revenue performance, operating profit of £12.3
million was up 6.0% on the comparative period (2022: £11.6 million) and
profit before tax of £12.5 million was up 8.8% (2022: £11.4 million). On a
like-for-like basis, removing FabSpeed, these increases were 5.3% and 8.1%
respectively. The lower contribution from FabSpeed to our profit performance
reflected our focus in our first full year of ownership on integration
initiatives as we aligned our commercial teams and embedded our operational
processes and procedures across the four acquired operational sites. Equally,
at acquisition, FabSpeed's product portfolio was more aligned to the new build
environment and as such our margins and profit were impacted more than the
organic business by the broader decline in construction activity, particularly
for the volume house builders.
Following over two years of significant cost base volatility we continued to
closely manage our input costs through the year. As such, we benefited from
the stability of securing the price for 90% of our energy requirements across
2023 and we have energy contracts in place for 70% of our expected
requirements in 2024 with further contracts into 2025 and 2026 in line with
this approach. Whilst remaining watchful of the impact of global macro
factors, on balance we see utility pricing returning to a more consistent
level in the medium term. The profit metrics and cost management strategy
underline the Company's continuing success of managing our operational
efficiency to maximise our financial returns, whilst importantly maintaining a
close relationship with our loyal customers through our ability to deliver a
greater degree of pricing visibility and inventory availability certainty.
On a reported basis, the results include the impact of the amortisation of
acquired intangibles which increased by £0.2 million year on year as a result
of beginning to amortise the intangible assets capitalised from our FabSpeed
acquisition. On an adjusted basis, to remove the impact of these items,
adjusted EBITDA of £17.8 million (2022: £16.7 million) is ahead by 6.6%
against 2022 and 4.8% on a like-for-like basis. As we highlighted in our 2022
year-end results, this was at a slightly reduced adjusted EBITDA margin of
23.0% (2022: 24.4%), reflecting the importance of a balanced pricing strategy
for our customers and earnings growth alongside the necessity to secure robust
forward demand in our core markets with a significant decline in construction
activity.
After a tax charge of £2.8 million (2022: £2.5 million), the Group recorded
a profit for the year after tax of £9.7 million (2022: £8.9 million), an
increase of 9.0%. The tax rate of 22.4% (2022: 22.1%) reflects our effective
Group tax rate for the year, which is a small increase on 2022 and follows the
change announced in the 2021 Budget and ratified by parliament which increased
the standard rate of UK corporation tax from 19% to 25% effective from 1
April 2023.
Basic earnings per share increased by 10.9% to 10.44p (2022: 9.41p). This
increase ahead of profit was due to the benefits of a balanced capital
allocation strategy with our strong balance sheet supporting a buyback
programme which ran from November 2022 to September 2023 and reduced the basic
shares in issue by 2.25 million shares with our focus on continuing to return
value to shareholders and also to reduce the impact of share dilution.
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 2023 31 Dec 2022
£'000 £'000
Operating profit 12,338 11,609 6.0%
Adjustments:
Amortisation of acquired intangibles 1,370 1,133
Adjusted operating profit (a) 13,708 12,742 7.9%
Depreciation 4,105 3,915
Adjusted EBITDA (a) 17,813 16,657 6.6%
Finance costs 119 (214)
Depreciation (4,105) (3,915)
Adjusted profit before taxation (a) 13,827 12,528 10.4%
Basic earnings per shares 10.44p 9.41p 10.9%
Adjusted basic earnings per share (a) 11.91p 10.61p 12.3%
(a) Includes adjustments to exclude amortisation of acquired intangibles.
Net cash and working capital
Cash generated from operations for the year was £13.6 million, compared to
£19.7 million in 2022 which was an exceptionally strong year for the Group,
and was supported by our resilient trading through the year. Our operational
cash flow was impacted by the decision to invest in our inventory position
through increased raw material stocks and finished goods in support of our
expectations for 2024. As a result, operating cash conversion from adjusted
EBITDA was lower at 76.4% compared to 117.9% in 2022 although this is still
seen as a very positive performance given the broader construction activity
decline.
Year ended Year ended
31 Dec 2023 31 Dec 2022
Net cash generated from operations £13.6m £19.7m
Tax paid (£2.8m) (£1.7m)
Interest received/(paid) £0.1m (£0.2m)
Purchase of property, plant and equipment (£3.1m) (£3.0m)
Proceeds from sale of land £1.1m -
Debt repaid - (£0.8m)
Own shares acquired (£1.9m) (£1.5m)
Settlement for cancelled share options (£1.8m) -
Acquisition of FabSpeed (net of cash) - (£6.1m)
Lease payments (£0.9m) (£0.7m)
Dividend paid (£4.0m) (£3.3m)
Other £0.1m -
Net increase in cash and cash equivalents £0.4m £2.4m
Net cash before lease liabilities £11.0m £10.6m
At the year end the Group had net cash before lease liabilities of £11.0
million (2022: £10.6 million). In addition to our growing cash position, our
£20.0 million Sterling and Euro denominated bank facility remains undrawn
(2022: £20 million and undrawn) and is committed to 22 December 2026,
following the exercise in November of the second of our two one year extension
options.
As we enter 2024, the cash generating fundamentals of the Group, 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 an 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
We launched a share buyback programme at the end of November 2022, which
continued to the end of September 2023, to reduce the share capital of the
Group in order to return value to shareholders; as at 31 December 2023 the
Group had purchased 2,225,000 shares (2022: 60,000) shares for a total
consideration of £2 million (2022: £0.05 million). The shares continue to be
held as treasury shares.
Alongside the buyback programme, we continue to prioritise the future expected
returns of shareholders by focusing on the volume of our issued share capital.
As a result, 2 million 2017 LTIP options were cancelled in November 2022 and
converted to a cash settlement. The cash settlement value of £1.8 million was
paid in the year which included all associated employment tax obligations.
Property, plant and equipment
The capital expenditure invested in the year highlights our continued broader
focus on delivering technically feasible sustainability improvements. The
principal expenditure was focused on Floren where we have completed the
construction of a building to house automated robot pallet mixing equipment
and utilised the roof to add additional solar capacity which now collectively
provides over 50% of our electricity needs. Given the proven success in
Floren, we applied for a G99 Connection through the National Grid to add solar
panels to Blockleys, which we received during the first half and completed the
addition of the solar panels in H2. Alongside, we continued our programme of
planned roll-outs to electrify our fork-lift fleet which during the year was
focused on Michelmersh.
Additionally, over the last few years, we have focused on preparing non-core
land at Blockleys ahead of its release for alternative use. The sale of
surplus investment land remains an important pillar of our lifetime revenue
sources. During the year we received £1.1 million from the sale of this
surplus land with the price agreed under the terms of a legacy option
agreement. The land had previously been valued at the option price so the sale
was released at our balance sheet carrying value with no one-off impact to the
earnings statement.
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 3.00
pence per share (2022: 2.95 pence per share), which, together with the 1.50
pence per share interim dividend (2022: 1.30 pence per share), gives a total
dividend of 4.50 pence per share (2022: 4.25 pence per share), up 5.9% on last
year. The proposed dividend will be paid on 10 July 2024 to members on the
register on 7 June 2024 with shares being marked ex-div on 6 June 2024.
Outlook
We are proud to have maintained our track record of consistent delivery
against our strategic and financial targets despite the steep decline in
construction activity over the last financial year. Despite these challenges,
our singular vision of well-maintained and efficient operations that
manufacture the highest quality premium brick products for our customers
remains the integral element to our success. We believe in the resilient
fundamentals of our business which is underpinned by the quality of our
product portfolio and the strength of our customer and distributor
relationships.
Despite the lower consumer demand in our markets, 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. Importantly,
the ongoing strength of our balance sheet provides us with financial strength
and also the flexibility to invest in our strategic capital allocation
options.
As we enter 2024, whilst there are more positive inflation and interest rate
indicators across the UK and Northern Europe, the landscape remains uncertain
as does the inflection point for improved activity levels in the construction
industry. In our cost base, given the high energy requirements for brick
manufacturing, the outlook for energy pricing looks to be improving and we
will continue to target the appropriate balance of fixed price certainty
alongside the opportunity to access the potential for improved pricing. With
this balance in mind, we are deliberately hedged at 70% for 2024 with further
contracts into 2025 and 2026.
As ever, we remain focused on mitigating our cost risks alongside maintaining
appropriate portfolio pricing to support our customers, and as such, we have
held prices at the start of 2024. The Group continues to prioritise a quality
and balanced 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. We believe the
quality fundamentals in our business will provide resilience and we are well
placed to continue our strategic progress through 2024 and beyond.
Peter Sharp
Chief Executive Officer
Consolidated Income Statement
for the year ended 31 December 2023
2023 2022
£'000 £'000
Revenue 77,338 68,375
Cost of sales (47,279) (41,463)
Gross profit 30,059 26,912
Administrative expenses (16,421) (14,225)
Amortisation of intangibles (1,370) (1,133)
(17,791) (15,358)
Other income 70 55
Operating profit 12,338 11,609
Finance income/(expense) 119 (214)
Profit before taxation 12,457 11,395
Taxation (2,795) (2,518)
Profit for the financial year 9,662 8,877
Basic earnings per share attributable to the equity holders of the company 10.44p 9.41p
Diluted earnings per share attributable to the equity holders of the company 10.09p 9.20p
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2023
2023 2022
£'000 £'000
Profit for the financial year 9,662 8,877
Other comprehensive income/(expense)
Items which may subsequently be reclassified to profit or loss
Currency movements 41 (257)
Items which will not subsequently be reclassified to profit or loss
Revaluation deficit of property, plant and equipment (2,692) (1,115)
Revaluation surplus of property, plant and equipment 1,199 2,716
Tax credit on exercise of options 26 18
Deferred tax on revaluation movement 383 (466)
(1,043) 896
Total comprehensive income for the year 8,619 9,773
Consolidated Balance Sheet
as at 31 December 2023
2023 2022
£'000 £'000
Assets
Non-current assets
Intangible assets 23,951 25,291
Property, plant and equipment 63,366 65,932
87,317 91,223
Current assets
Inventories 16,462 9,684
Trade and other receivables 9,241 11,801
Cash and cash equivalents 10,958 10,598
Total current assets 36,661 32,083
Total assets 123,978 123,306
Liabilities
Current liabilities
Trade and other payables 12,803 15,860
Lease liabilities 698 761
Corporation tax payable 1,528 1,159
Total current liabilities 15,029 17,780
Non-current liabilities
Lease liabilities 743 523
Deferred tax liabilities 15,362 16,034
16,105 16,557
Total liabilities 31,134 34,337
Net assets 92,844 88,969
Equity attributable to equity holders
Share capital 19,181 19,181
Share premium account 16,724 16,724
Reserves 21,615 21,435
Retained earnings 35,324 31,629
Total equity 92,844 88,969
Consolidated Statement of Changes in Equity
for the year ended 31 December 2023
Share capital Other reserves Share premium Retained Total
earnings
£'000 £'000 £'000 £'000 £'000
As at 1 January 2022 19,127 21,763 16,536 27,698 85,124
Profit for the year - - - 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 - (76) - 6,129 6,053
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
As at 31 December 2022 19,181 21,435 16,724 31,629 88,969
Profit for the year - - - 9,662 9,662
Revaluation deficit - (2,692) - - (2,692)
Revaluation surplus - 1,199 - - 1,199
Tax credit on exercise of options - 26 - - 26
Deferred tax on revaluation - 383 - - 383
Currency difference - 41 - - 41
Total comprehensive income/(expense) - (1,043) - 9,662 8,619
Share based payment - 1,258 - - 1,258
Purchase of own shares - - - (1,974) (1,974)
Deferred tax on share options - (102) - - (102)
Shareplan purchase - 67 - - 67
Dividend paid - - - (3,993) (3,993)
As at 31 December 2023 19,181 21,615 16,724 35,324 92,844
Consolidated Statement of Cash Flows
for the year ended 31 December 2023
2023 2022
£'000 £'000
Cash flows from operating activities
Profit before taxation 12,457 11,395
Profit on sale of fixed assets (15) -
Finance (income)/expense (119) 214
Depreciation 4,105 3,915
Amortisation 1,370 1,133
Share based payment charge 1,258 980
Cash flows from operations before changes in working capital 19,056 17,637
Decrease/(increase) in inventories (6,777) 1,022
Decrease/(increase) in receivables 2,560 307
(Decrease)/increase in payables (1,219) 683
Net cash generated by operations 13,620 19,649
Taxation paid (2,790) (1,655)
Net cash generated by operating activities 10,830 17,994
Cash flows from investing activities
Purchase of property, plant and equipment (3,085) (3,028)
Proceeds from sale of land 1,101 -
Investment in intangible assets (30) -
Acquisition - (6,073)
Net cash used in investing activities (2,014) (9,101)
Cash flows from financing activities
Lease payments (885) (721)
Repayment of interest-bearing liabilities - (785)
Interest received/(paid) 119 (214)
Proceeds of share issue - 31
Settlement of cancellation of options (1,798)
Own shares acquired (1,941) (1,540)
Dividend paid (3,993) (3,276)
Net cash used in financing activities (8,498) (6,505)
Net increase in cash and cash equivalents 319 2,388
Cash and cash equivalents at the beginning of the year 10,598 8,467
Foreign exchange differences 41 (257)
Cash and cash equivalents at the end of the year 10,958 10,598
Cash and cash equivalents comprise:
Cash at bank and in hand 10,958 10,598
Bank overdraft - -
10,958 10,598
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 2023 or 2022. The financial information has been extracted from the
Group's statutory financial statements for the years ended 31 December 2023
and 2022. 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 2023 will be filed
with the Registrar of Companies following the Company's Annual General
Meeting. The statutory accounts for the year ended 31 December 2022 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 £9,662,000 (2022: £8,877,000) and 92,535,734
(2022: 94,467,688) 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 £9,662,000 (2022: £8,877,000) and
95,482,319 (2022: 96,444,459) weighted average number of ordinary shares.
4. Dividend
The Board has recommended a final dividend for the year of 3.00 pence per
share, to be paid on 10 July 2024 to shareholders whose names appear of the
register of members at the close of business on 7 June 2024.
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.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR JAMFTMTATBMIRecent news on Michelmersh Brick Holdings
See all newsREG - Michelmersh Brick - Director/PDMR Shareholding
AnnouncementREG - Michelmersh Brick - Availability of Annual Report and Notice of AGM
AnnouncementREG - Michelmersh Brick - Directorate Change
AnnouncementREG - Michelmersh Brick - Final Results
AnnouncementREG - Michelmersh Brick - TR-1 - Notification of major holdings
Announcement