17:00 Tue 03 Sep 2019
Michelmersh Brick - Half-year Report
("MBH", the "Company", or the "Group")
Half Year Results for the six months ended
Financial Highlights
|
| | | Change |
|
Turnover |
| | | + 17.4% |
|
Underlying1 gross margin | 41.9% | 40.5% | + 1.4% |
| |
Underlying1 EBITDA* |
| | | + 18.0% |
|
Underlying1 operating profit | | | + 15.5% |
| |
Reported PBT |
| | | +41.0% |
|
Underlying1 PBT |
| | | + 18.3% |
|
Reported Basic EPS |
| 3.36p | 2.55p | +31.7% |
|
Underlying1 EPS |
| 4.55p | 4.20 p | + 8.3% |
|
Interim Dividend | 1.15p | 1.06p | +8.5% |
| |
Cash from operations | | | + 130.1% |
|
Operational Highlights:
· Financial performance above expectations
· Strong financial performance from
· Acquisition and integration of the Belgian business
· Strong balanced forward order book going into H2, 7% ahead of the same period last year. (Note this excludes Floren.be forward orders and is on a like for like basis)
· Completion of phase 1 of the Carlton investment project targeting enhanced efficiency and output
· Investment in IT CRM and HR infrastructures
· Increased interim dividend
Commenting on the results,
"Following a very strong first half in 2019, and with a robust order book, Michelmersh can look forward to steady trading for the remainder of the year. Stocks across the industry remain at historically low levels and the volume of imported products are increasing.
The Group's performance in the first half of 2019 has continued into the second half and, with the positive backdrop to our markets, the Board expects to exceed market expectations for the full year. "
* EBITDA is defined as earnings before interest, tax, depreciation and amortisation..
1 References to 'underlying' excludes items classed as exceptional and amortisation of intangibles
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| 020 7523 8150
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Yellow Jersey PR | 020 3004 9512
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The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.
About
Established in 1997, the Company has grown through acquisition and organic growth into a profitable and asset rich business, producing over 120 million clay bricks and pavers per annum. Michelmersh currently owns most of the
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
We are
Please visit the Group's websites at: www.mbhplc.co.uk and www.bimbricks.com
Chairman's Statement
I am pleased to be reporting on another positive set of results for Michelmersh, which includes a maiden contribution from our new Belgian subsidiary, Floren et Cie ("Floren") from the date of its acquisition. The acquisition demonstrates the Board's ambition and ability to continue the operational expansion of the Group. Since being acquired on
Financial Highlights
|
| | | Change |
|
Turnover |
| | | + 17.4% |
|
Underlying1 gross margin | 41.9% | 40.5% | + 1.4% |
| |
Underlying* EBITDA2 |
| | | + 18.0 % |
|
Underlying* EBIT | | | + 15.5% |
| |
Reported PBT |
| | | +41.0% |
|
Underlying* PBT |
| | | + 18.3% |
|
Reported Basic EPS |
| 3.36p | 2.55p | +31.7% |
|
Underlying* EPS |
| 4.55p | 4.20p | + 8.3% |
|
Interim Dividend | 1.15p | 1.06p | +8.5% |
| |
Cash from operations | | | + 130.1% |
|
1Underlying gross margin is calculated by adding back
2 EBITDA is defined as earnings before interest, tax, depreciation and amortisation.
*Items deemed underlying are reconciled with the reported figures in the table Alternative Performance Measures below.
Turnover for the six months increased by 17.4% over the equivalent period in 2018, of which like for like turnover for the existing
All of the financial metrics are positive but it should be noted that underlying earnings per share shows an 8.3% improvement over H1 2018 even with a short period of contribution from Floren since acquisition.
The income statement reports a provisional 'Bargain' purchase of Floren of
Alternative Performance measures reconciliation:
| Six months ended | Six months ended | H1 2019/ H12018 | 12 months ended |
| | | | |
| | |
| |
Reported Operating profit | 4,064 | 3,169 | +28.2% | 7,054 |
Add back exceptional costs of plant restructure a |
- |
930 |
|
930 |
To remove the 'fair value' element of acquired brick stocks so as to report 'normal' trading terms b |
770 |
- |
|
- |
Amortisation of intangibles | 569 | 569 |
| 1,138 |
IFRS16 impact | (13) | - |
| - |
'Underlying' operating profit | 5,390 | 4,668 | + 15.5% | 9,122 |
Finance costs - reported | (296) | (312) |
| (617) |
- exclude IFRS16 charge | 59 | - |
| - |
'Underlying' profit before taxation | 5,153 | 4,356 | + 18.3% | 8,505 |
|
|
|
|
|
'Underlying' operating profit as above | 5,390 | 4,668 | + 15.5% | 9,122 |
IFRS16 impact | (330) | - |
| - |
Depreciation | 1,557 | 939 |
| 1,842 |
Underlying EBITDA | 6,617 | 5,607 | +18.0% | 10,964 |
|
|
|
|
|
Reported Basic EPS | 3.36 p | 2.55 p | 31.7% | 5.78 p |
Earnings adjusted by a and b above | 770 | 930 |
| 930 |
Earnings adjusted by excluding exceptional 'Bargain Purchase' and Acquisition costs Amortisation of intangibles | (828) 567 569 |
569 |
|
1,138 |
Underlying Basic EPS | 4.55 p | 4.20 p | + 8.3% | 6.76 p |
|
|
|
|
|
IFRS 16 Leases
Treatment of plant and vehicle leases are now subject to a different accounting treatment than in prior period with the implementation of IFRS 16. Assets previously held under contract leases are now treated as a fixed asset with an associated lease liability. The effect on these Interim Statements has been to increase tangible fixed assets by
Land and Assets
The Group continues to explore a range of opportunities to enhance and release the value of its land assets. The new road being developed at
Capital expenditure in H1 has centred around the Telford road project and completing phase 1 of the Carlton plant replacement project. The automation of the kiln unloading process is now complete and evaluation of subsequent phases is under way that hold the opportunity to increase plant capacity and efficiency.
The Floren balance sheet reflects the same structure as the Group; a strong core of tangible fixed assets including significant land holdings and adequate working capital for the business. As a result of the acquisition, the Group's balance sheet has grown. Over the last 12 months, net asset value per share has grown 7.7% to
Net debt at
Post-acquisition, the Group took advantage of strong investor demand and placed 5.6 million shares at nil discount to generate net proceeds of
Having also paid
The Board are aware that strong operating cash generation, modest debt levels and comfortable covenants gives the business flexibility to take advantage of opportunities that arise - both the Carlton and Floren acquisitions were made easier by having a strong cash/debt position.
Dividend
Consistent with the Board's stated intentions to provide a meaningful and progressive dividend, we are pleased to report that continued robust trading allows us to declare an interim dividend of
The final dividend for 2018 was paid in
Outlook
Following a very strong first half in 2019, and with a robust order book, Michelmersh can look forward to steady trading for the remainder of the year. Stocks across the industry remain at historically low levels and the volume of imported products are increasing.
The Group's performance in the first half of 2019 has continued into the second half and, with the positive backdrop to our markets, the Board expects to exceed market expectations for the full year.
Wider concerns surrounding political uncertainty, potential housebuilding slowdown in the south-east and worldwide economic pressures have yet to have a discernible impact on the brick manufacturing industry. The Directors however maintain a cautious view on these background factors and the effect they may have on brick demand and pricing in the final quarter of the financial year and 2020. Michelmersh continues to operate on the basis of a strong order book, strong loyal customer relationships and continued latent demand from the specification, housing, repair maintenance and improvement and commercial sectors. Our European acquisition has been very positive and has brought with it enormous product flexibility and future growth opportunity.
M R Warner
CHAIRMAN
Consolidated Income Statement
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|
|
|
|
|
| 6 months | 6 months | 12 months |
|
| ended 30 | ended 30 | ended 31 |
|
| June | June | December |
|
| 2019 | 2018 | 2018 |
|
| £'000 | £'000 | £'000 |
|
|
Unaudited |
Unaudited |
Audited |
Revenue |
| 27,165 | 23,136 | 46,324 |
Cost of sales |
| (16,544) | (13,775) | (28,305) |
|
|
|
|
|
Gross profit |
| 10,621 | 9,361 | 18,019 |
Administration expenses - Underlying |
| (6,041) | (4,774) | (8,994) |
- Exceptional 1 |
| - | (930) | (930) |
- Amortisation of intangibles |
| (569) | (569) | (1,138) |
|
| (6,610) | (6,273) | (11,062) |
Other income |
| 53 | 81 | 97 |
|
|
|
|
|
Operating profit |
| 4,064 | 3,169 | 7,054 |
Exceptional items - 'Bargain purchase'2 | - | 828 | - | - |
- Acquisition costs 3 |
| (567) | - | - |
|
|
|
|
|
Finance expense |
| (296) | (312) | (617) |
|
|
|
|
|
Profit before taxation |
| 4,029 | 2,857 | 6,437 |
Taxation |
| (991) | (657) | (1,452) |
Profit for the period |
|
3,038 |
2,200 |
4,985 |
Basic earnings per share |
|
3.36 p |
2.55 p |
5.78 p |
Diluted earnings per share |
| 3.26 p | 2.50 p | 5.57 p |
|
|
|
|
|
Exceptional item1 relates to costs incurred in relation to the reconfiguration of activities at the Michelmersh plant in respect of redundancies and plant accelerated depreciation.
Exceptional item2 - the 'Bargain purchase' reflects the excess of fair value of the assets acquired at Floren over the consideration paid. Exceptional item 3 is the costs incurred in acquiring Floren that has been expensed in the period. See note 4 for further details of the acquisition.
Consolidated Statement of Comprehensive Income
| 6 months | 6 months | 12 months |
| ended 30 June 2019 | ended 30 June 2018 | ended 31 December 2018 |
| £'000 | £'000 | £'000 |
| Unaudited | Unaudited | Audited |
|
|
|
|
Profit for the financial period | 3,038 | 2,200 | 4,985 |
|
|
|
|
Other comprehensive income Items which will not subsequently be reclassified to profit or loss |
|
|
|
Currency movements | 22 | - | - |
Revaluation deficit of property, plant and equipment | - | - | (42) |
Revaluation surplus of property, plant & equipment | - | - | 565 |
Deferred tax on revaluation | - | - | (115) |
|
|
|
|
Other comprehensive income for the period net of tax | 22 | - | 408 |
Total comprehensive income for the financial period |
3,060 |
2,200 |
5,393 |
|
|
|
|
Consolidated Balance Sheet
| | As at | As at | As at |
|
| | | 31 December 2018 |
|
| £'000 | £'000 | £'000 |
|
| Unaudited | Unaudited | Audited |
Assets |
|
|
|
|
Non-current assets |
|
|
|
|
Intangible assets |
| 22,379 | 23,517 | 22,948 |
Property, plant and equipment |
| 64,294 | 51,449 | 52,416 |
|
|
|
|
|
|
| 86,673 | 74,966 | 75,364 |
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|
|
|
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Current assets |
|
|
|
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Inventories |
| 9,135 | 8,811 | 8,309 |
Trade and other receivables |
| 11,164 | 11,054 | 8,245 |
Cash and cash equivalents |
| 8,881 | 2,571 | 5,255 |
|
|
|
|
|
Total current assets |
| 29, 180 | 22,436 | 21,809 |
|
|
|
|
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Total assets |
| 115,853 | 97,402 | 97,173 |
Liabilities |
|
|
|
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Current liabilities |
|
|
|
|
Trade and other payables |
| 9,464 | 7,372 | 7,065 |
Interest bearing borrowings |
| 1,922 | 2,666 | 1,770 |
Lease liabilities |
| 558 | - | - |
Corporation tax payable |
| 1,079 | 719 | 564 |
Total current liabilities |
| 13,023 | 10,757
| 9,399 |
|
|
|
|
|
Non-current liabilities |
|
|
|
|
Interest bearing borrowings |
| 20,714 | 18,049 | 15,310 |
Lease liabilities |
| 761 | - | - |
Deferred tax liabilities |
| 11,930 | 8,493 | 8,670 |
|
| 33,405
| 26,542 | 23,980 |
|
|
|
|
|
Total liabilities |
| 46,428 | 37,299 | 33,379 |
|
|
|
|
|
Net assets |
| 69,425 | 60,103 | 63,794 |
|
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|
|
|
Equity attributable to equity holders |
|
|
|
|
Share capital |
| 18,495 | 17,243 | 17,297 |
Share premium account |
| 15,545 | 11,518 | 11,643 |
Other reserves |
| 22,145 | 21,156 | 21,788 |
Retained earnings |
| 13,240 | 10,186 | 13,066 |
|
|
|
|
|
Total equity |
| 69,425 | 60,103 | 63,794 |
|
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|
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Consolidated Statement of Changes in Equity
| Share | Share | Other | Retained | Total | ||||
| Capital | Premium | Reserves | Earnings | Equity | ||||
|
|
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|
|
| ||||
| £'000 | £'000 | £'000 | £'000 | £'000 | ||||
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|
| ||||
As at | 17,234 | 11,495 | 20,816 | 9,838 | 59,383 | ||||
|
|
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|
| ||||
Profit for the period | - | - | - | 2,200 | 2,200 | ||||
Total comprehensive income | - | - | - | 2,200 | 2,200 | ||||
Shares issued in the period | 9 | 23 | - | - | 32 | ||||
Share based payment | - | - | 340 | - | 340 | ||||
Dividends paid | - | - | - | (1,852) | (1,852) | ||||
As at | 17,243 | 11,518 | 21,156 | 10,186 | 60,103 | ||||
|
|
|
|
|
| ||||
Profit for the period | - | - | - | 2,785 | 2,785 | ||||
Revaluation deficit | - | - | (42) | - | (42) | ||||
Revaluation surplus | - | - | 565 | - | 565 | ||||
Deferred tax on revaluation | - | - | (115) | - | (115) | ||||
Total comprehensive income | - |
- | 408 | 2,785 | 3,193 | ||||
Shares issued in the period | 54 | 125 | - | - | 179 | ||||
Transfer to retained earnings | - | - | (96) | 96 | - | ||||
Share based payment | - | - | 320 | - | 320 | ||||
As at | 17,297 | 11,643 | 21,788 | 13,066 | 63,794 | ||||
|
|
|
|
|
| ||||
Profit for the period | - | - | - | 3,038 | 3,038 | ||||
Currency difference | - | - | - | 22 | 22 | ||||
Total comprehensive income | - |
- | - | 3,060 | 3,060 | ||||
Shares issued in the period | 1,198 | 3,902 | - | - | 5,100 | ||||
Share based payment | - | - | 358 | - | 358 | ||||
Dividends paid | - | - | - | (2,887) | (2,887) | ||||
|
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| ||||
As at | 18,495 | 15,545 | 22,146 | 13,239 | 69,425 | ||||
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Consolidated Statement of Cash Flows
| 6 months | 6 months | 12 months |
|
| ended 30 June 2019 | ended 30 June 2018 | ended 31 December 2018 |
|
| £'000 | £'000 | £'000 |
|
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|
|
|
|
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|
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| Unaudited | Unaudited | Audited |
|
|
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Net cash generated by operations | 6,144 | 2,670 | 11,669 |
|
Taxation paid | (760) | (935) | (1,823) |
|
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|
|
|
|
Net cash generated by operating activities | 5,384 | 1,735 | 9,846 |
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Cash flows from investing activities |
|
|
|
|
Purchase of property, plant and equipment | (810) | (316) | (1,985) |
|
Purchase of subsidiary undertaking net of cash acquired | (6,768) | - | - |
|
Proceeds on disposal of property, plant and equipment | 29 | 42 | 45 |
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Net cash used in investing activities | (7,549) | (274) | (1,940) |
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Cash flows from financing activities |
|
|
|
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Bank loan drawdown | 5,264 | - | - |
|
Interest paid | (238) | (312) | (617) |
|
Repayment of interest bearing liabilities | (970) | (885) | (4,520) |
|
Principle elements of lease rentals | (480) |
|
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|
Proceeds of share issue | 4,703 | 32 | 211 |
|
Dividends paid | (2,488) | (1,853) | (1,853) |
|
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Net cash generated by / (used in) financing activities | 5,791 | (3,018) | (6,779) |
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Net increase / (decrease) in cash and cash equivalents | 3,626 | (1,557) | 1,127 |
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Cash and cash equivalents at beginning of period | 5,255 | 4,128 | 4,128 |
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Cash and cash equivalents at end of period | 8,881 | 2,571 | 5,255 |
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Cash and cash equivalents comprise: |
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| |
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| |
Cash at bank and in hand | 8,881 | 2,571 | 5,255 | |
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NOTES TO THE GROUP INTERIM REPORT
1. GENERAL INFORMATION
2. ACCOUNTING POLICIES
Basis of preparation
The interim financial information in this report has been prepared using accounting policies consistent with IFRS as adopted by the
IFRS 16 Leases |
The Group has adopted IFRS 16 using the modified retrospective method (including appropriate practical expedients), with the effect of initially applying this standard recognised at the date of initial application (i.e. IFRS 16 eliminates the classification for lessees of leases as operating leases or finance leases and treats all in a similar way to finance leases. It replaced IAS 17 Leases and related interpretations. |
Statutory accounts
Financial information contained in this document does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006 ("the Act"). The statutory accounts for the year ended
The financial information for the six months ended
3. EARNINGS PER SHARE
The calculation of earnings per share is based on a profit of
Diluted
At
4. ACQUISITION OF SUBSIDIARY
On
An exercise to complete the establishment of fair value of other tangible and intangible assets and consequent deferred tax balances is under way and will be applied in the audited balance sheet as at
This information is provided by RNS, the news service of the
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