21st Mar 2005 07:01
Michelmersh Brick Holdings PLC21 March 2005 21 March 2005 MICHELMERSH BRICK HOLDINGS PLC MAIDEN PRELIMINARY RESULTS SHOW MICHELMERSH SET FOR GROWTH Michelmersh Brick Holdings plc ("Michelmersh" or "the Company") (AIM: MBH), theUK's largest producer of handmade specification bricks and clay paviors,announces maiden preliminary results for the year ended 30 November 2004. Theresults are in line with expectations, show good progress and include the impactof costs and delays resulting from the extensive capital works completed duringthe period. Highlights include:• Successful AIM flotation raising £5.2 million, before expenses• Profit before tax £1.3 million (2003: £1.4 million pre write back of negative goodwill)• Turnover £18.4 million (2003: £ 18.9 million)• £5.2 million of capital expenditure completed increasing production capacity to 85 million bricks per annum (2003: 71 million made at full capacity)• Net debt £12.2 million (2003: £12.9 million)• Recommended first dividend of 1.1p per share• Sales team strengthened to ensure local presence in key areas of UK and continued export into world markets • Three awards for products at the 2004 Brick Development Brick Awards• Planning agreement relating to land development at Telford signed and a planning application for an initial phase of approximately 5.5 acres for residential development being submitted. Commenting on the results, Eric Gadsden, Chairman, said: "We are particularlyimpressed with the Company's performance over the past year and our maidenpreliminary results. Our AIM flotation was a success and we have since carriedout considerable plant development, which, despite having a slight impact onproductivity in the short term, is now complete and has put us in a strongposition going forward." Martin Warner, Managing Director, added: "The capital expenditure put in placeover the past year has increased production to 85 million bricks. This frees upother plant and allows us to satisfy the increasing demand for paviors, where weremain the UK's leading supplier. We continue to generate good cashflow and arerecommending a dividend of 1.1p per share, underlining our confidence in theCompany's performance in the year ahead." For further information:Martin Warner, Michelmersh Brick Holdings: 01442 870 227Richard Sunderland/Jeremy Carey, Tavistock Communications: 020 7920 3150Russell Cook/Mark Taylor, Charles Stanley & Co. Limited 020 7953 2429 CHAIRMAN'S STATEMENT The past year has been one of significant progress for Michelmersh, thehighlight of which was the Company's flotation on AIM in May. At that time, weraised £5.2 million, before expenses, to provide funds for continued investmentinto plant and infrastructure in order to improve production efficiency,increase output and enhance margins going forward. Financial Results For the year to 30 November 2004, Michelmersh made a profit before tax of £1.3million (2003: £1.4 million pre write back of negative goodwill) on a turnover of £18.4 million (2003: £ 18.9 million), in line with expectations outlined at the time of the Company's interim report. We are particularly encouraged by thisperformance as the comparative period reflected a large element of de-stockingfrom the previous year and includes the impact of costs and delays resultingfrom the extensive programme of capital works undertaken to increase capacity atall of Michelmersh's four plants. The Company continues to generate cash andfollowing £5.2 million of capital expenditure (2003:£1.9 million), details ofwhich are given below, our borrowings at the year end were £12.2 million (2003:£12.9 million). The Board is recommending a dividend for the year of 1.1 pence per share. Thisreflects our continued confidence in the Company's performance going forward andis to be paid on the 15 May 2005 to shareholders on the register on 8 April2005. Investment Capital investment at all Company works was completed on time and within budget.It has increased our production output to 85 million bricks per annum, againstthe 71 million we made at full capacity in 2004, and allows us to keep up withincreasing demand for paviors, for which we are the UK's leading supplier.Upgrading our facilities caused some temporary disruption to production andstock availability, as mentioned at the time of our interim results. However, weare already seeing the benefits of our investment through productivity gains,and enhanced margins from increased economies of scale. In addition, improvedefficiency will result in a better level of service for our customers andencourage business development going forward. Highlights of the capital investment programme included a new wire cut brickmanufacturing plant at our Blockley's works, which has allowed us to focus otherplant on the manufacture of paviors, increasing capacity at the site by anadditional eight million units. This was commissioned successfully in Novemberand is already exceeding production forecasts. In addition, the new hand-madebrick line at Charnwood came into operation in October and is enabling us, amongst other projects, to meet demand for the Channel Tunnel Rail Link development at St Pancras Station in London. At our Michelmersh works, where we completed a new tile line, demand for additional products has been strong in the first few months of this new financial year and the order book leads us to believe that we will achieve sales in line with the new level of output. Overall, as a result of this investment, our plants are now in an excellent competitive position and better able to keep up with demand. Sales We continue to focus sales and production on the high quality end of our market.Demand for our products is generated by customers building new sites or thoseundertaking repair maintenance and improvement (RMI) work. In each case, thereason our products are chosen is that the customer requires products whichcomplement or sympathise with the existing style of a location, or an architector specifier wants to achieve a specific look. The Brick Development Associationestimates that 50% of all brick sales in the UK are acquired to undertake RMIwork, demonstrating the diversity of projects which our industry supplies. The range and quality of our handmade and machine made bricks, together withclay paviors and hand-made clay roof tiles, coupled with the strength of oursales team, have combined to win new prestigious customers and strengthen theposition of the Company. Our national sales team is structured to ensure that we have a local presence inkey areas where specifiers are most likely to require our products and wecontinue to export successfully into world markets. Our strive for quality was rewarded at the 2004 Brick Development Brick Awards,with the following awards: • Best private housing development - Robert Adam Architects at Whiteley Village, Surrey, using Charnwood and Michelmersh handmade bricks • Best landscape project - Ian Randall/ Chorley Borough Council at Chorley Town Centre, Lancashire, using Blockleys clay paviors • Prefabrication award - Porpyrios Associates/The Weedon Partnership at Brindleyplace, Birmingham, using Charnwood handmade bricks and special shapes. Consolidation Over the past few months there has been significant consolidation in ourindustry, with three major transactions taking place since the autumn. Thismovement of capacity into the hands of long term players, the prohibitive costsof building new works at current product price levels, together with the currentlow level of brick stocks, will consolidate our position in the market place. We will continue to review opportunities to make acquisitions of businesseswhich will strengthen the Company. Land Assets Since the year end, the planning agreement relating to the comprehensivedevelopment of the land at Telford has been signed and a planning applicationfor an initial phase of approximately 5.5 acres for residential development isnow being submitted. As soon as permission is received the property will bemarketed. The Company has adopted a prudent policy of valuing the land assets onan existing use basis until this detailed consent is received so consequentlyneither the anticipated uplift in value of this land, nor the remaining 54 acreshave been accounted for in the balance sheet. People One of the key reasons for our flotation was to enable our employees to becomeshareholders and I am delighted that so many have also taken up the opportunityto invest in our newly introduced SAYE Scheme. We depend upon our employees for a level of production and quality of customerservice which allows us to grow as a business. I would therefore particularlylike to thank all our staff for their contribution to the success of the Companyduring such a busy period of development. Prospects The strong level of sales and demand for our products, combined with ourimproved production capacity provide us with confidence about the performance ofthe Company going forward. The key variable is the fluctuating cost of energywhich has put pressure upon margins across the entire industry. To reduce theimpact of this we have raised prices, which at the time of writing have notaffected demand. In addition, improved efficiencies gained as a result of thecapital investment made during the period have limited further the affect ofincreased fuel costs. With the completion of our long term investment programmewe are now in a favourable competitive position to benefit from any upward trendin industry prices. The unique position we hold in the market has beenstrengthened by our investments and this, combined with the potential from oursubstantial land assets, allows me to be positive about the future. Eric GadsdenChairman CONSOLIDATED PROFIT AND LOSS ACCOUNT 2004 2003YEAR ENDED 30 NOVEMBER 2004 £000 £000TURNOVER 18,419 18,871Cost of sales (12,713) (13,000) -------- -------- GROSS PROFIT 5,706 5,871 Administrative expenses - normal (3,985) (3,132)Administrative expenses - exceptional - 1,573Other operating income 98 64 -------- --------OPERATING PROFIT 1,819 4,376 Interest payable and similar charges (554) (535) -------- --------PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 1,265 3,841 Tax on profit on ordinary activities (480) (490) -------- --------PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION 785 3,351 Equity dividends (2003 - non equity) (418) (60) -------- --------RETAINED PROFIT FOR THE YEAR 367 3,291 ======== ========EARNINGS PER SHAREBasic 2.4p 11.6pDiluted 2.4p 11.6pAdjusted 2.4p 6.1p 2004 2003CONSOLIDATED BALANCE SHEET £000 £000 £000 £00030 NOVEMBER 2004 FIXED ASSETSIntangible assets - positive goodwill 44 86Tangible assets 39,597 34,908Investments - - -------- -------- 39,641 34,994 CURRENT ASSETSStock 5,168 4,321Debtors 3,918 4,042Cash at bank and in hand 5 11 -------- -------- 9,091 8,374 CREDITORS: Amounts falling duewithin one year (11,505) (9,465) -------- ------- NET LIABILITIES (2,414) (1,091) -------- --------TOTAL ASSETS LESS CURRENTLIABILITIES 37,227 33,903 CREDITORS: Amounts falling dueafter more than one year (4,252) (6,421) PROVISIONS FOR LIABILITIES AND CHARGESDeferred taxation (1,689) (1,209) -------- --------NET ASSETS 31,286 26,273 ======== ========CAPITAL AND RESERVESCalled-up share capital 7,604 6,150Share premium account 3,432 -Revaluation reserve 15,199 15,199Profit and loss account 5,051 4,924 -------- --------SHAREHOLDERS' FUNDS 31,286 26,273 ======== ======== Equity shareholders' funds 31,286 25,283 ======== ========Non-equity shareholders' funds - 990 ======== ======== CONSOLIDATED CASH FLOW STATEMENT 2004 2003YEAR ENDED 30 NOVEMBER 2004 £000 £000 £000 £000 Net cash inflow from operating activities 2,173 3,389 Returns on investments andservicing of finance Interest paid (593) (497) -------- ------Net cash outflow from returns on investments and servicing of finance (593) (497) TaxationCorporation tax received/(paid) - - -------- ------Taxation paid - - Capital expenditure Purchase of tangible fixed assets (2,360) (1,903) Sale of tangible fixedassets - 6 -------- ------Net cash outflow from capital expenditure (2,360) (1,897) -------- ------Net cash inflow/(outflow) before financing (780) 995 -------- ------Financing Issue of new shares 1,850 -Premium on issue of new shares 2,796 -Capital element of hire purchase payments (472) (8)Repayment of director's long term loan (3,725) -Repayment of other loans (446) (363) -------- ------Net cash (outflow)/inflow from financing 3 (371) -------- ------Increase/(decrease) in cash in the year (777) 624 ======== ======== SIGNIFICANT NON-CASH TRANSACTIONS During the year fixed asset additions of £3,254,000 were acquired via new hirepurchase agreements. These asset acquisitions resulted in no cash outflow to thegroup. Notes to the accounts 1. The financial information set out above does not constitute the Company's statutory accounts for the years ended 30 November 2003 and 2004 but is derived from those accounts. Statutory accounts for 2003 have been delivered to the Registrar of Companies and those for 2004 will be delivered following the Company's annual general meeting on 26 April 2005. The auditors have reported on those accounts, their reports were unqualified and did not contain statements under section 237 (2) or (3) of the Companies Act 1985. 2. The financial information set out above has been prepared on the basis of the accounting policies as set out in the statutory accounts for the year ended 30 November 2004. 3. Analysis of Net Debt Net Cash: At Cash Non At 30 1 December Flow Cash November 2003 2004 £000 £000 £000 £000Cash at bank 11 (6) - 5Bank overdraft (6,240) (771) - (7,011) -------- -------- -------- -------- (6,229) (777) - (7,006) ======== ======== ======== ========Debt less than one year (362) (14) - (376)Debt more than one year (6,271) 4,185 - (2,086)Hire purchase liabilities (18) 472 (3,254) (2,800) -------- -------- -------- -------- (6,651) 4,643 (3,254) (5,262) ======== ======== ======== ========Net Debt (12,880) 3,866 - (12,268) ======== ======== ======== ======== 4. Tangible Fixed Assets - Group Freehold Site Motor Plant & Equipment Fixtures& Total land & development vehicles machinery fittings buildings COST OR VALUATION £000 £000 £000 £000 £000 £000 £000 At 1 December 2003 21,870 29 111 23,628 558 169 46,365 Additions 312 34 4 5,220 19 25 5,614 ------ ------ ------ ------ ------ ------ ------ At 30 November 2004 22,182 63 115 28,848 577 194 51,979 ====== ====== ====== ====== ====== ====== ====== DEPRECIATION At 1 December 2003 - 29 111 10,734 451 132 11,457 Charge for the year - - 3 857 36 29 925 ------ ------ ------ ------ ------ ------ ------ At 30 November 2004 - 29 114 11,591 487 161 12,382 ====== ====== ====== ====== ====== ====== ======NET BOOK VALUE At 30 November 2004 22,182 34 1 17,257 90 33 39,597 ====== ====== ====== ====== ====== ====== ====== At 30 November 2003 21,870 - - 12,894 107 37 34,908 ====== ====== ====== ====== ====== ====== ====== Hire purchase agreements Included within the net book value of £39,597,000 is £3,261,000 (2003 - £23,000)relating to assets held under hire purchase agreements. The depreciation chargedto the accounts in the period in respect of such assets amounted to £17,000(2003 - £2,000). Capital commitments 2004 2003 £000 £000 Contracted but not provided for in the accounts 147 618 ====== ====== 5. Tangible Fixed Assets - Company Freehold Office Property Equipment Total £000 £000 £000COST OR VALUATIONAt 1 December 2003 14,160 - 14,160Additions 268 9 277 -------- -------- --------At 30 November 2004 14,428 9 14,437 ======== ======== ======== DEPRECIATIONAt 1 December 2003 - - -Charge for the year - - - -------- -------- --------At 30 November 2004 - - - ======== ======== ======== NET BOOK VALUEAt 30 November 2004 14,428 9 14,437 ======== ======== ========At 30 November 2003 14,160 - 14,160 ======== ======== ======== Revaluation of fixed assets The group's freehold property was revalued by the directors on 30 November 2003,based on a valuation carried out by Carter Jonas LLP, Chartered Surveyors, on adepreciated replacement cost basis for brickwork properties, and an existing usevalue for land used for mineral extraction or waste disposal. Other property hasbeen valued at open market value. These valuations incorporate certainassumptions in relation to the future use of the properties and the estimateduseful economic life relating to clay extraction and landfill facilities. Thegroup's freehold property was valued at £21,870,000, resulting in an increase inthe revaluation reserve of £9,793,000. In respect of the freehold property stated at a valuation, the comparablehistorical cost and depreciation values are as follows: Group Company Group Company 2004 2004 2003 2003Historical cost: £000 £000 £000 £000At 1 December 2003 6,671 5,114 6,641 5,114Additions 312 268 30 - -------- -------- -------- --------At 30 November 2004 6,983 5,382 6,671 5,114 ======== ======== ======== ======== No depreciation has been charged in respect of the above assets. All other tangible assets are stated at historical cost. 6. Creditors: Amounts falling due within one year Group Group 2004 2003 £000 £000 Bank loans and overdrafts 7,387 6,602Trade creditors 1,810 1,035Amounts owed to group undertakings - -Other taxation and social security 581 637Hire purchase agreements 635 7Other creditors 13 13Corporation tax - -Proposed dividend 418 -Accruals and deferred income 661 1,171 ------- ------- 11,505 9,465 ======== ========7. Creditors: Amounts falling due after more than one year Group Group 2004 2003 £000 £000 Bank loans 2,086 2,476Other loans - 108Director's loan accounts - 3,826Hire purchase agreements 2,166 11 ------- ------- 4,252 6,421 ======= ======= 8. Earnings Per Share Basic The calculation of earnings, per share is based on earnings of £785,000 (2003 -£3,291,000) and 32,968,005 (2003 - 28,339,285) ordinary shares. The figure hasbeen calculated using a weighted average figure following the issue of shares inthe year. Diluted The diluted figure is based on the same figures as above but takes into accountthe weighted average unexercised share options in existence during the year.These amounted to 681,269 shares. Adjusted The adjusted figure is based on the same figures on the basic calculation butexcludes all exceptional items. 9. Copies of this report have been sent to shareholders. Copies are alsoavailable free of charge to members of the public from the Company's registeredoffice at 121 High Street, Berkhamsted, Hertfordshire, HP4 2DJ and shall remainavailable for at least one month. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Michelmersh Brick Holdings