REG - Michelmersh Brick - Final Results
25/03/2025 07:15
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RNS Number : 9633B Michelmersh Brick Holdings PLC 25 March 2025
25 March 2025
Michelmersh Brick Holdings PLC
("MBH", the "Company", or the "Group")
Preliminary results for the year ended 31 December 2024
Resilient performance; well positioned for market recovery
Michelmersh Brick Holdings Plc (AIM: MBH), the specialist brick manufacturer,
reports its preliminary results for the year ended 31 December 2024.
Financial Highlights:
31 Dec 2024 31 Dec 2023 Change
Statutory results
Revenue £70.1m £77.3m (9.3%)
Gross margin 35.8% 38.9% (3.1%)
Operating profit £8.2m £12.3m (33.3%)
Profit before tax £8.0m £12.5m (36.0%)
Basic earnings per share 6.59p 10.44p (36.9%)
Cash from operations £10.2m £13.6m (25.0%)
Net cash £6.0m £11.0m (45.5%)
Dividend per share 4.60p 4.50p 2.2%
Adjusted results*
Adjusted EBITDA(1) £14.0m £17.8m (21.3%)
Adjusted operating profit £10.1m £13.7m (26.3%)
Adjusted profit before tax £9.9m £13.8m (28.3%)
Adjusted earnings per share 8.18p 11.91p (31.3%)
Strategic and Operational Highlights:
· Resilient performance in 2024, with revenue down 9.3%, reflective
of product mix and a highly competitive pricing environment
· Despatch volumes broadly stable over the last 12 months and in
line with management expectations
· Stable market share from FY23 demonstrating the quality and
customer reach of our products
· Core and consistent discipline of maintaining a quality forward
order book supported by order intake running ahead of full manufacturing
capacity throughout the year
· Continued focus on appropriate portfolio pricing with our
customers
· Proactive approach to our sustainability initiatives with £5.6
million of capex invested in efficiency improvements across our manufacturing
base, ahead of normalised run-rate
· Active management of input costs on a risk-based approach with a
more balanced energy hedging policy
· Strong balance sheet in challenging markets with cash of £6.0
million and an undrawn £20 million borrowing facility, underpins our
financial resilience to deliver against our capital allocation framework
· Final dividend per share of 3.00p resulting in full year dividend
of 4.60p, up 2.2% on 2023, demonstrating commitment to our dividend policy and
confidence in our outlook
Outlook
· Positive momentum in our order intake from 2024 continued into Q1
2025
· Focus on maintaining a well-balanced forward order book, with
well communicated and collaborative mid-single digit price increase at the end
of Q1 2025 to offset increases in our cost base, expected to support demand
across our diverse end market customer base
· Medium-term fundamental market drivers are encouraging and the
business is well positioned, but cautious customer sentiment regarding
affordability including the elevated interest rate environment continues to
impact the expected timing of a market recovery
Commenting on the results, Tony Morris, Chair of Michelmersh Brick Holdings
PLC, said:
"The Group has been able to deliver a resilient performance once again this
year. This is despite the long trough in activity levels in the wider
construction industry, measured by the impact on brick despatch volumes, which
have declined by over 30% since the end of 2022. Michelmersh's outperformance
of this broader industry decline has been achieved by growing market share in
2023 and then maintaining those levels in 2024. The team has remained focused
on ensuring the continuity of supply of our high-quality portfolio, active
management of input costs, alongside delivering a year of significant capital
improvement programmes.
"We expect the fundamental resilience of our business model to support
performance going forward, as we continue to trade in challenging market
conditions. Against a backdrop of customer concerns about affordability and
the elevated interest rate environment, the expected timeline for market
recovery continues to face delays. However, with the strength of our balance
sheet and the significant investments made in our facilities during the year,
we are well positioned for 2025 and beyond."
(*)The Directors believe that adjusted measures provide a more useful
comparison of business trends and performance. Adjusted results exclude
exceptional costs associated with acquisitions and aborted corporate
transactions 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 below.
(1) EBITDA is defined as earnings before interest, tax, depreciation and
amortisation.(.)
An analyst briefing will be held virtually at 09:30am 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, 28 March at 10:00am. Those wishing to join
the presentation are requested to register via the following link:
https://engageinvestor.news/MBH_IP25 (https://engageinvestor.news/MBH_IP25) .
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 Broker) Tel: +44 (0) 20 7523 8000
Max Hartley
Bobbie Hilliam
Harry Pardoe
Yellow Jersey PR Tel: +44 (0) 7747 788 221
Charles Goodwin Tel: +44 (0) 7775 194 357
Annabelle Wills
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 Officer's Statement
I am pleased to report on a resilient performance for our 2024 financial year
and provide details on our progress against our strategic objectives. It has
been a year of resilience for the Group despite the construction industry
remaining in a challenging environment, it now marks over a 24 month period
since our industry high point for brick despatches in 2022, which remains a
key barometer for our sector activity levels. The overall sentiment for
consumers remains dampened by the relative affordability of borrowing costs
given the higher level of prevailing interest rates acting as a significant
drag on demand across our key markets. Despite these market challenges, the
Board remains enduringly grateful to all of our people who continue to support
the Group, particularly through this year as we have managed to deliver a
significant capital improvement programme across multiple sites, whilst
ensuring there is a continuity of supply of our premium product portfolio to
our customers.
The core 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 brick despatches since the end of 2022, we
have achieved a resilient performance due to this strategic approach. Focusing
our portfolio on diverse end markets, each with different supply and demand
fundamentals, has created a business that has grown market share since the end
of 2022 to facilitate the outperformance of the broader market declines in
activity. This performance would not be possible without our customers and we
remain very grateful for the longevity and depth of these relationships. Our
focus remains 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. Following the July election, the new Government has intensified its
verbal efforts to prioritise growth with a cornerstone of this strategy being
increasing the supply of new homes in the UK. The rhetoric surrounding
improvements to the planning process and removal of some of the barriers and
red tape, which accompany planning applications, can only further improve the
dynamics for the construction industry and our own end markets.
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 24 months in line with
the consumer environment. In response, across the industry, manufacturing
capacity of approximately 25% has been mothballed or permanently closed in the
UK over this period with uncertainty at the point the market will return to
2022 levels. However, our ability to address the market's broad spectrum
allowed us to grow our market share over that period as we have outperformed
the broader level of decline in despatch volumes.
The Group's track record and fundamental inherent characteristics to deliver
operational cash generation has supported the Board in providing more clarity
around codifying the capital allocation framework priorities for the Group.
Central to this framework is the support for continued investment in projects
that address our strategic objectives to improve the innovation and
sustainability of both our product portfolio and our manufacturing operations,
together with supporting ongoing improvements in production efficiency. We are
committed to regular returns to our shareholders, through our dividend policy
linked to our adjusted earnings per share metric, and the proposal of a final
3.00p per share dividend underlines our confidence in the outlook for the
business. Alongside, we will also look to supplement dividends with share
buybacks where the Board determines that it is appropriate to do so to deliver
value for shareholders and represents an attractive investment opportunity for
the Company. Balancing the returns for our shareholders through dividends and
buybacks alongside ensuring we maintain well invested manufacturing sites are
central to the Group's capital allocation priorities. Alongside the
articulation of the capital allocation framework the Board has reviewed the
associated required level of advisor support and has taken the decision to
focus on a single Corporate Broker arrangement with Canaccord Genuity Limited
who has supported the Group with advisory support since 2018. Whilst the
timing of any further acquisitions is now more uncertain given the
availability of opportunities in our core markets, the Board will consider any
opportunities where it believes it would deliver shareholder value. However,
we will prioritise maintaining a strong balance sheet to support the overall
business plans and returns to shareholders. This strategy leaves us
well-positioned to deliver further progress and shareholder value in 2025 and
beyond.
Board changes
Martin Warner retired as Chair at the AGM in May 2024. Martin was succeeded by
Tony Morris who was previously a Non-Executive Director. Martin was
appointed Chair in 2016, having previously been joint founder and Chief
Executive Officer. He oversaw 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. With Tony as Chair we look
to the future with confidence and the business is in a strong position to
continue to deliver against our strategy.
Frank Hanna left the business in April 2024 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 then 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 120 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 was an excellent JCEO
of Michelmersh and a highly valued colleague and member of the Board and he
left 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.
In December 2024 I also announced my intention to retire from the Board during
2025 to move to a part-time position in the Company as an industry adviser. I
have worked in the Group for over 20 years with the last nine of these on the
Board as JCEO and CEO. I am therefore delighted to continue my support of the
Company with my industry knowledge and experience. As part of the Group's
ongoing succession planning, and following a third-party-led recruitment
process involving both internal and external candidates, the Board was pleased
to announce that Ryan Mahoney will succeed me as CEO. Ryan has been with
Michelmersh since 2021 as Chief Financial Officer ("CFO") and has worked
closely with me as part of the Executive Team, accumulating a thorough and
detailed understanding of the Company's operations and plays a key role in
developing and executing the Group's strategy; a formal search process for a
new CFO is well underway.
Rob Fenwick, who joined the Board in 2023, stepped down from his position as
Non-Executive Director of the Group in July and we would like to thank Rob for
his efforts during his time with the Board.
With these changes, both this year and as we look into 2025, 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
Sustainability and Innovation are two of the four pillars of our core company
values which remain at the forefront of our responsibility as a good corporate
citizen and drives our ambition to lead the ceramic product manufacturing
sector. Our focus for incremental positive and proactive sustainable change to
our business is testament to the trust and confidence our customers place with
our Company. The Group continued to report and track progress against
seventeen non-financial KPI disclosures in alignment with our goal to reach
net zero by 2050.
The Group continues to demonstrate reductions in potable water, virgin wood,
plastic and waste. We are close to achieving our end of year 2025 target for
10% reduction of energy, measured by kWh per tonne, as we continue to
progressively work on our decarbonisation project roadmap targets for 2030.
The Group invests in projects which will enhance our environmental profile,
optimise and increase the energy efficiency of our operations and lower the
consumption of raw materials. In the period we completed scrubber upgrades to
our Floren plant in Belgium, which complement the portfolio of investments
this year. Continuing this approach, the Group was the first brick
manufacturer to make a commitment to reduce non-essential plastics and has
furthered this initiative by investing in carbon negative bio-plastics
produced from sugar cane which we are rolling out across our sites.
The Group's products continue to be utilised in the facades of multiple
award-winning projects and proudly featured on five RIBA regional
award-winning buildings in 2024. Fulfilling our commitment to sustainability
and innovation, we were proud to achieve success at the Brick Awards
specifically in the Innovation and Sustainability categories. In the
sustainability category, five of the seven shortlisted projects specified our
products, including the HyBrick display, made from our World first green
hydrogen brick firing trials, which was unveiled at the Science Museum in
London earlier this year in a decade long exhibition and reinforces our
dedication for decarbonisation.
Awards and recognition
We were delighted that our high-quality product portfolio was once again
recognised in 2024 through our successes at the Brick Development Association
("BDA") industry awards. The 48(th) BDA awards saw the Group win nine awards,
which is a record year for the Group with this total being over half of the
total number of the sixteen awards available. This recognition is also
testament to the dedication of our many partners, the fantastic architects we
are delighted to work with and the craftsmanship and quality brickwork
installed by so many dedicated contractors.
The awards included category wins in the areas of: Sustainability,
Refurbishment, Innovation, Commercial, Urban Regeneration, multiple housing
categories and most importantly we were delighted to win the Supreme Winner
award. The importance of these awards is that fundamentally it provides a
showcase of the Group's range of clay brick which are the ideal choice for
specifiers and architects. Seeing clay brick celebrated as the façade product
of choice amongst a wide range of architectural vernacular helps to validate
the industry's strengths in promoting clay brick which offers the best value,
excellent longevity and inspiring sustainable credentials.
Among our awards was recognition for the Norton Folgate project which
deservedly won Supreme Winner at the BDA awards with its transformative and
diverse range of architectural approaches and styles. Norton Folgate
successfully re-energised this fringe gateway between the City of London and
Shoreditch and it highlights the merits and aesthetics of clay brick.
Further success came with Gort Scott winning the Medium Housing Scheme Award
at Forest Road which is an affordable housing project for first-time buyers
with 90 one-bedroom homes. The triangular site is distinctively modern and
uses a beautiful blend of Floren's Vecchio and Tartufo bricks.
Winning the Large Development Housing Award, Feilden Clegg Bradley Studios
& Grant Associates, designed a new neighbourhood skirting the edge of
Bristol. Brabazon uses a host of Freshfield Lane's Selected Dark and Selected
Light bricks in the 303 newly built homes. The project works towards the goal
of bringing communities together while the site's layout inspires a more
active lifestyle.
The recognition through our industry awards reaffirms our role as leaders in
producing quality clay products that inspire sustainable architecture, where
projects are crafted with a view to the present and the future. We are excited
to continue shaping spaces that are not only functional and forward thinking
but also reflect the beauty and richness of British and European architecture.
Charity
Our commitment to being a socially engaged and responsible employer remains
unchanged as we continued our focus on charitable commitments in 2024. We
increased our overall charitable contributions as well as the provision of
support to a wider pool of charities that included not just nationally
recognised charities but also smaller and more local 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. Due to the increased focus on local and community
projects we selected one charity from the nominations to be our main
recognised charity for 2024 and this was The Lighthouse Construction Project.
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. 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 2024 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
Financial Highlights
Year ended Year ended
31 Dec 2024 31 Dec 2023 Change
Revenue £70.1m £77.3m (9.3%)
Gross margin 35.8% 38.9% (3.1%)
Adjusted* EBITDA(1) £14.0m £17.8m (21.3%)
Adjusted* operating profit £10.1m £13.7m (26.3%)
Operating profit £8.2m £12.3m (33.3%)
Adjusted* profit before tax £9.9m £13.8m (28.3%)
Profit before tax £8.0m £12.5m (36.0%)
Adjusted* basic earnings per share 8.18p 11.91p (31.3%)
Basic earnings per share 6.59p 10.44p (36.9%)
Dividend per share 4.60p 4.50p 2.2%
(*)The Directors believe that adjusted measures provide a more useful
comparison of business trends and performance. Adjusted results exclude
exceptional costs associated with acquisitions and aborted corporate
transactions 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 Chief Executive Officer's Statement below.
(1) EBITDA is defined as earnings before interest, tax, depreciation and
amortisation.
The ongoing challenges in the broader construction market have affected the
trading performance in the business during the year, and compared to our
record financial performance in 2023, with the Group being impacted across
almost all of our financial metrics.
Revenue for the year reduced by 9.3% to £70.1 million over the equivalent
comparable year in 2023 (2023: £77.3 million). This performance over the year
was predominantly impacted by the highly competitive pricing dynamics in our
sector with a broad 8% reduction in pricing in conjunction with the impact
from product and end-customer mix dynamics during the year. Alongside, there
was also a modest fall in despatches which was largely as a result of the
timing impact of a shortfall in some of our on-hand inventory of available
finished products at our Carlton plant following our two-month shutdown for
capital improvement works in Q4. Importantly, this resilient performance in a
challenging sector was due to our close relationships with our supportive
customers and the collaborative approach to portfolio pricing during the year
which helped maintain the diversity in our forward order book with order
intake running ahead of our manufacturing capacity throughout the year.
We continue to trade in a very challenging environment which has seen sector
wide UK brick despatches falling over 30% from the recent peak in 2022.
However, we have not seen this level of decline across the Group and are
pleased to report that we have increased our market share in this current
environment. We see this as an important indicator reflecting the overall
resilience of our business model. This approach is evidenced by our important
commercial indicator of order intake which is ahead of our normalised
manufacturing capacity throughout the year, reflecting the benefits of our
product portfolio's broad reach and the strong customer loyalty and
distributor relationships we have across our end markets. This visibility
supported our decision to maintain our production volumes alongside our
planned capital improvement programmes as we targeted delivering the maximum
operational leverage from our manufacturing base.
As a result of the lower revenue, adjusted operating profit of £10.1 million
was down 26.3% on the comparative 2023 year (2023: £13.7 million) and
adjusted profit before tax of £9.9 million was down 28.3% (2023: £13.8
million). The mix of our product sales impacted our ability to offset the
increases in our cost base, which whilst stabilising, were still reflective of
inflationary legacy pressures and led to our profit metrics performing below
our relative revenue performance. We operated with the stability of having
secured the price for 80% of our energy requirements across 2024. Looking
forward, we have energy contracts in place for c. 60% of our expected
requirements in 2025 with further contracts into 2026 and 2027 in line with
our managed approach. Whilst remaining watchful of the impact of global macro
factors, on balance we see utility pricing performing more consistently and as
such feel it is appropriate to enter 2025 with lower hedging than 2023 given
the relative weighting of forward contract pricing to network pricing. We
believe that our resilient financial performance is as a result of the
strategy 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.
Adjusted EBITDA of £14.0 million is lower by 21.3% against 2023 (2023: £17.8
million). Our EBITDA margin of 20.0% (2023: 23.0%), a reduction of 300 basis
points on the prior year, was in line with management expectations and
represents a resilient performance given the pricing dynamics and cost
increases during the year. Our 2024 margin performance is reflective of our
medium term expectations given the additional costs forecast in the business
as a result of the increases in payroll costs following the changes announced
in the October budget in the UK.
On a reported basis, the results include the impact of the amortisation of
acquired intangibles and some exceptional items we incurred over the last 12
months. The adjustment of £1.3 million for the amortisation of intangibles is
in line with 2023 with the one-off impact this year of the net exceptional
costs of £0.5 million, being £1.0 million incurred in relation to an aborted
corporate transaction, which we communicated in our interim results; offset by
the impact of the removal of £0.5 million associated with our FabSpeed
acquisition from November 2022, related to the release of £0.8m non-cash
deferred consideration and £0.3m of non-recurring costs. As a result,
operating profit of £8.2 million was 33.3% below 2023 with profit before tax
reflecting the same performance also down 36.0% at £8.0 million.
After a tax charge of £1.9 million (2023: £2.8 million), the Group recorded
a profit for the year after tax of £6.1 million (2023: £9.7 million). The
tax rate of 22.5% (2023: 22.4%) reflects our effective Group tax rate for the
full year and which is broadly in line with 2023.
Basic earnings per share decreased by 36.9% to 6.59p (2023: 10.44p) reflective
of the drop through of our revenue reductions and cost increases during the
year.
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 2023
2024
£000 £000
Operating profit 8,171 12,338 (33.3%)
Adjustments:
Exceptional costs 543 -
Amortisation of acquired intangibles 1,372 1,370
Adjusted operating profit 10,086 13,708 (26.3%)
Depreciation 3,924 4,105
Adjusted EBITDA 14,010 17,813 (21.3%)
Finance income/(expense) (211) 119
Depreciation (3,924) (4,105)
Adjusted profit before taxation 9,875 13,827 (28.3%)
Basic earnings per share 6.59p 10.44p (36.9%)
Adjusted basic earnings per share (a) 8.18p 11.91p (31.3%)
(a) Includes adjustments to exclude amortisation of acquired intangibles and
exceptional costs
Group Cash and Working Capital
Cash generated from operations for the year was £10.2 million, compared to
£13.6 million for the same period in 2023. Operating cash conversion from
adjusted EBITDA was 72.9% compared to 76.4% in 2023, below our usual levels of
+90%. This was largely the result of investing in our inventory across all of
our manufacturing locations during the year which we continue to view as
appropriate as we target supporting our commercial teams with the right
product flexibility. This approach also underpinned the opportunity to bring
forward planned capex improvement works at our Carlton facility in the fourth
quarter with a two month shutdown ensuring that there were as minimal
interruptions as possible in the product supply for our customers.
As a result of these investment decisions and our historic ability to turn
inventory to cash we remain very confident in the underlying fundamental
cash-generating ability of the business and we expect operating cash
conversion to return to our targeted levels as we look into 2025 and beyond.
Year ended Year ended
31 Dec 2024 31 Dec 2023
Net cash generated from operations £10.2m £13.6m
Tax paid (£2.3m) (£2.8m)
Interest paid/(received) (£0.2m) £0.1m
Purchase of property, plant and equipment (£5.6m) (£3.1m)
Aborted corporate transaction costs (£1.0m) -
Proceeds from sale of land - £1.1m
Own shares acquired - (£1.9m)
Settlement for cancelled share options - (£1.8m)
Settlement for exercised share options (£1.0m) -
Lease payments (£0.8m) (£0.9m)
Dividend paid (£4.2m) (£4.0m)
Other (£0.1m) £0.1m
Net (decrease)/increase in cash and cash equivalents (£5.0m) £0.4m
Net cash £6.0m £11.0m
At the year end the Group had cash of £6.0 million (2023: £11.0 million).
Our operating cash generation, Group cash position and undrawn Sterling and
Euro denominated bank facility of £20 million provides the Group with
considerable financial resilience and flexibility to pursue our clear and
codified capital allocation framework discussed above.
Property, plant and equipment
Our capital expenditure across the financial year highlights our continued
focus on proactive delivery of sustainability improvements alongside
maintaining well invested and efficient manufacturing facilities. The
principal expenditure over the year was focused on Floren and Carlton where we
brought forward and completed a significant plant improvement programmes. At
Floren, the production was offline for sixteen weeks in two separate tranches
across the year to ensure we were successful in fulfilling our customers'
despatch requirements in amongst the improvement works. The improvement works
included the installation of a new exhaust scrubber system to improve the
environmental efficiency of our manufacturing process but also to facilitate
changes in our input materials mix to extend the life of our mineral reserves.
Separately, we also undertook a full capital enhancement programme of the
equipment utilised in the end-to-end process from clay preparation through
brick making to take advantage of the timescales afforded by these planned
longer shutdowns.
Following the successful improvements at Floren we also took the decision to
bring forward planned capex at Carlton. A significant kiln refurbishment
project and key equipment upgrades originally scheduled for 2025 were
completed in November and December and through the start of 2025. Again, as
with Floren, working with our customers and targeting our inventory build
leading up to this scheduled gap in production we were largely successful in
continuing to supply all our customers' requirements.
Continuing our planned expansion of our FabSpeed brand we completed the
installation of a new facility at our Carlton site to move our existing
Stanley operations and to add brick cutting capacity, and we subsequently
closed that previously leased site. Alongside, we continued our programme of
planned rollouts to electrify our fork-lift fleet which during the year
focused on Carlton.
Settlement of share options exercised
We continue to prioritise the future expected returns of shareholders by
focusing on the volume of our issued share capital. Accordingly, following the
departure of Frank Hanna as Joint Chief Executive in April 2024, 0.85 million
of his 2019 LTIP Tranche options issued under the legacy 2017 LTIP were
exercised having met the full vesting criteria and cash settled. The cash
settlement value of £1.0 million was paid in the year which included all
associated employment tax obligations.
Dividend
The Board is pleased to continue to commit to a 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
(2023: 3.00 pence per share), which, together with the 1.60 pence per share
interim dividend (2023: 1.50 pence per share), gives a total dividend of 4.60
pence per share (2023: 4.50 pence per share), up 2.2% on last year. The
proposed dividend will be paid on 9 July 2025 to members on the register on 6
June 2025 with shares being marked ex-div on 5 June 2025.
Outlook
The resilience of our business model continues to be examined by the above 30%
decline in sector wide UK brick despatches since the end of 2022 which has in
turn led to significant fluctuations in the competitive landscape of brick
pricing in our end markets. Our approach has remained consistent through
focusing on our core competencies by continuing to invest in well-maintained
and efficient operations that manufacture the highest quality premium brick
products for our customers. We have a resolute belief in the 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
challenge in our markets, the last two years of resilient trading have largely
been achieved through maintaining a well-balanced forward order book covering
a broad range of end markets which is essential as we look to make further
strategic progress into 2025.
Throughout 2024 our order intake ran ahead of our manufacturing capacity which
contributed to a high quality opening forward order book to start our new
financial year. This order intake momentum has continued into the first
quarter of 2025 and this is despite the timing of a consistent recovery in
construction activity levels remaining uncertain. The contraction in sector
demand and our strong balance sheet continue to provide an opportunity to flex
our production planning, evidenced by well-planned capex shutdowns at Floren
and Carlton, and Michelmersh for the first two months of 2025, ensuring
inventory volumes of core products are available to ensure near term order
opportunity fulfilment. We are focused on continuing to diversify across RMI,
housing, commercial, social and specification projects and this whole market
strategy continues to underpin our resilient outlook.
Despite consumer demand remaining dampened by the combination of market
sentiment and the associated elevated mortgage rate environment, we remain
well placed at the premium end of the brick market in the UK and Benelux
markets. The UK Government continues to highlight its commitment to improving
the planning process and reducing the impact of special interest groups as it
looks to deliver on its clear commitment to supporting growth in the UK. These
Government statements indicate that the medium-term fundamentals of our
markets have positive momentum and alongside the inherent characteristics of
our portfolio are hugely supportive 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. We believe our
investment in our facilities throughout 2024, which is ahead of our normal
run-rate, significantly contributes to being well-positioned operationally to
benefit from an improvement in wider market conditions, including a more
favourable interest rate environment
Our active risk management of our cost base has supported our ability to
maintain balanced price stability for our customers over the last two years,
and with the focus on partnerships and collaboration with our customers we
have implemented low single digit price increases form the end of the first
quarter in 2025 as we work to support and prioritise forward demand.
Our ability to deliver sustainable operational cash generation underpins our
liquidity position at the start of the new year. Combining this with our £20
million undrawn borrowing facility provides the Group with both considerable
financial resilience and flexibility to pursue our clear capital allocation
framework as we focus on delivering further value for our shareholders.
The Group continues to operate on the basis of maintaining a well-balanced
forward order book, diverse and loyal customer and distributor relationships
supported by a robust demand from the specification, housing, RMI and
commercial sectors. The medium term fundamental market drivers for our
business are encouraging and we are very well positioned. There are ongoing
challenges in our sector with the timing of any reductions in the interest
rate environment remaining uncertain. Importantly, we believe our broad brick
and brick-fabrication portfolio supports our ability to address the full
breadth of our end markets and it is these quality fundamentals in our
business that provide resilience and underpin our outlook and as a result give
us confidence to continue to deliver against our strategic priorities as we
look into 2025 and beyond.
Peter Sharp
Chief Executive Officer
Consolidated Income Statement
for the years ended 31 December 2024 and 2023
2024 2023
£'000 £'000
Revenue 70,107 77,338
Cost of sales (44,981) (47,279)
Gross profit 25,126 30,059
Administrative expenses (15,618) (16,421)
Amortisation of intangibles (1,372) (1,370)
(16,990) (17,791)
Other income 35 70
Operating profit 8,171 12,338
Finance income/(expense) (211) 119
Profit before taxation 7,960 12,457
Taxation (1,856) (2,795)
Profit for the financial year 6,104 9,662
Basic earnings per share attributable to the equity holders of the company 6.59p 10.44p
Diluted earnings per share attributable to the equity holders of the company 6.46p 10.09p
Consolidated Statement of Comprehensive Income
for the years ended 31 December 2024 and 2023
2024 2023
£'000 £'000
Profit for the financial year 6,104 9,662
Other comprehensive income/(expense)
Items which may subsequently be reclassified to profit or loss
Currency movements (65) 41
Items which will not subsequently be reclassified to profit or loss
Revaluation deficit of property, plant and equipment (2,325) (2,692)
Revaluation surplus of property, plant and equipment 5,187 1,199
Tax credit on exercise of options - 26
Deferred tax on revaluation movement (969) 383
1,828 (1,043)
Total comprehensive income for the year 7,932 8,619
Consolidated Balance Sheet
as at 31 December 2024 and 2023
2024 2023
£'000 £'000
Assets
Non-current assets
Intangible assets 22,587 23,951
Property, plant and equipment 69,387 63,366
91,974 87,317
Current assets
Inventories 19,212 16,462
Trade and other receivables 9,772 9,241
Cash and cash equivalents 6,004 10,958
Total current assets 34,988 36,661
Total assets 126,962 123,978
Liabilities
Current liabilities
Trade and other payables 11,437 12,803
Lease liabilities 689 698
Corporation tax payable 1,061 1,528
Total current liabilities 13,187 15,029
Non-current liabilities
Lease liabilities 1,575 743
Deferred tax liabilities 16,269 15,362
17,844 16,105
Total liabilities 31,031 31,134
Net assets 95,931 92,844
Equity attributable to equity holders
Share capital 19,181 19,181
Share premium account 16,724 16,724
Reserves 22,764 21,615
Retained earnings 37,262 35,324
Total equity 95,931 92,844
Consolidated Statement of Changes in Equity
for the years ended 31 December 2024 and 2023
Share capital Other reserves Share premium Retained Total
earnings
£'000 £'000 £'000 £'000 £'000
As at 1 January 2023 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)
Shareplan purchase - 67 - - 67
Deferred tax on share options - (102) - - (102)
Dividend paid - - - (3,993) (3,993)
As at 31 December 2023 19,181 21,615 16,724 35,324 92,844
Profit for the year - - - 6,104 6,104
Revaluation deficit - (2,325) - - (2,325)
Revaluation surplus - 5,187 - - 5,187
Deferred tax on revaluation - (969) - - (969)
Currency difference - (65) - - (65)
Total comprehensive income/(expense) - 1,828 - 6,104 7,932
Share based payment - 426 - - 426
Released on exercise of options - (960) - - (960)
Deferred tax on share options - (104) - - (104)
Shareplan purchase - (41) - - (41)
Dividend paid - - - (4,166) (4,166)
As at 31 December 2024 19,181 22,764 16,724 37,262 95,931
Consolidated Statement of Cash Flows
for the years ended 31 December 2024 and 2023
2024 2023
£'000 £'000
Cash flows from operating activities
Profit before taxation 7,960 12,457
(Loss)/profit on sale of fixed assets (6) (15)
Finance (income)/expense 211 (119)
Depreciation 3,924 4,105
Amortisation 1,372 1,370
Share based payment charge 426 1,258
Cash flows from operations before changes in working capital 13,887 19,056
Decrease/(increase) in inventories (2,750) (6,777)
Decrease/(increase) in receivables (531) 2,560
(Decrease)/increase in payables (420) (1,219)
Net cash generated by operations 10,186 13,620
Taxation paid (2,323) (2,790)
Net cash generated by operating activities 7,863 10,830
Cash flows from investing activities
Purchase of property, plant and equipment (5,600) (3,085)
Proceeds from sale of fixed assets 6 -
Proceeds from sale of land - 1,101
Investment in intangible assets (8) (30)
Net cash used in investing activities (5,602) (2,014)
Cash flows from financing activities
Lease payments (821) (885)
Interest received/(paid) (211) 119
Aborted corporate transaction costs (958) -
Settlement of cancellation of options - (1,798)
Settlement for exercise of options (960) -
Own shares acquired (41) (1,941)
Dividend paid (4,166) (3,993)
Net cash used in financing activities (7,157) (8,498)
Net (decrease)/increase in cash and cash equivalents (4,896) 319
Cash and cash equivalents at the beginning of the year 10,958 10,598
Foreign exchange differences (58) 41
Cash and cash equivalents at the end of the year 6,004 10,958
Cash and cash equivalents comprise:
Cash at bank and in hand 6,004 10,958
Bank overdraft - -
6,004 10,958
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 2024 or 2023. The financial information has been extracted from the
Group's statutory financial statements for the years ended 31 December 2024
and 2023. 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 2024 will be filed
with the Registrar of Companies following the Company's Annual General
Meeting. The statutory accounts for the year ended 31 December 2023 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 £6,104,000 (2023: £9,662,000) and 92,601,027
(2023: 92,535,734) 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 £6,104,000 (2023: £9,662,000) and
95,547,490 (2023: 95,482,319) 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 9 July 2025 to shareholders whose names appear of the
register of members at the close of business on 6 June 2025.
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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