Half-year Report

4 September 2018

Michelmersh Brick Holdings Plc

("MBH", the "Company", or the "Group")

Half Year Results for the six months ended 30 June 2018

Michelmersh Brick Holdings Plc (AIM:MBH), the specialist brick manufacturer, is pleased to report its half year results for the six months ended 30 June 2018.

Financial Highlights

Operational Highlights:

· Full operational integration of the Carlton plant

· Successful restructuring of operations at the Michelmersh plant

· Strong, balanced order book into Q1 2019 - 10.5% ahead of June 2017

· Contract signed for Carlton investment project targeting enhanced efficiency and output

· New key high value products introduced to the market

· Increased interim dividend

Commenting on the results, Martin Warner, Chairman of Michelmersh Brick Holdings Plc, said:

"The strong growth achieved during the period reflects not only the successful acquisition and integration of Carlton but also improved sales and operational progress across our other divisions. With a robust order book for the rest of this year and into next year, and the market demand for bricks remaining strong, the outlook is positive and we are confident in meeting our full year targets."

* EBITDA as disclosed is Operating Profit with depreciation and amortisation added back.

1 References to 'underlying' excludes items classed as exceptional

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About Michelmersh Brick Holdings PLC:

Michelmersh Brick Holdings PLC is a business with six market leading brands: Blockleys, Carlton, Charnwood, Freshfield Lane, Michelmersh and Hathern Terra Cotta. These divisions operate within a fully integrated business combining the manufacture of clay bricks, tiles and pavers. 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 100 million clay bricks, tiles 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 and www.bimbricks.com

Chairman's Statement

The first half of 2018 was another busy and successful period for the Group which resulted in positive growth in all of the underlying key performance indicators, despite the difficult winter weather in the early part of the year. Reported profit before taxation of £2.9 million was double that of the corresponding period (2017: 1.4 million) and excluding exceptional items in both periods was up 57%. Turnover was up 43% with growth achieved in each of the Group's divisions excluding the Michelmersh plant, which was successfully restructured in the period. The plant has delivered an improved performance since the restructuring in February 2018 and we anticipate this being maintained in the second half of the year. We have a strong, well-balanced forward order book of just over 67 million units as of 30 June this year, which was 10.5% ahead of the same period last year, indicating continued robust deliveries for the Group for H2 and the early part of 2019.

Underlying EBITDA* is perhaps a better measure of performance as it expresses operational performance and excludes non-cash charges for amortisation and depreciation; the Group's H1 2018 underling EBITDA at £5.6 million was 87% greater than that for the comparative period in 2017. Whilst Carlton is a significant part of that growth, the performance of all of the Group's plants has been pleasing. Each of our plants have different dynamics that shift with the market. In this year, Blockleys, in particular, has had a very strong first half and it is expected that this strong performance will continue. This reflects the investment put into the plant over the years but also the hard work and expertise of the production and sales teams in place.

Underlying Earnings per share (excluding amortisation of intangibles and exceptional items) increased by 60% to 4.2 pence (2017: 2.6 pence) for the six months and 7.5 pence for the last twelve months.

Carlton Integration

The Group's brickmaking activities are now fully integrated since the business of Carlton was transferred into the main operating company, Michelmersh Brick UK Limited, with effect from 31 December 2017. Operationally, culturally and legally, Carlton is now a division within the Group. The plant has been assessed for future investment and several projects have been identified that are expected to generate ongoing cost savings, reduce risk of interruption and ultimately provide increased capacity. The Group has entered into a contract for the first phase and both off-site and on-site work has now commenced.

References to 'underlying' excludes items classed as exceptional

*Earnings before interest taxation and depreciation and amortisation excluding exceptional items that are material and non-recurring

Michelmersh Plant

In February 2018, the Board made the difficult decision to cease hand-made brick and tile production at the Michelmersh plant in order to streamline operations and improve operational performance. The Group's hand-made brick production has now been fully migrated to our dedicated hand-made plant at Charnwood. The six months income statement shows the financial consequences which were the costs of redundancy of the majority of the workforce and the accelerated depreciation of specific plant and machinery no longer required. These costs have been displayed as exceptional on the face of the financial statements and are non-recurring. Since the change in operations at the plant, the concentration on machine-made bricks has seen better returns than anticipated with enhanced revenue from the sale of the hand-made and tile stocks. Operating on a lower output has reduced risk and increased contribution from the site as expected.

Net Debt and Working Capital

Cash generated from operating activities was £2.7 million and represented a significant improvement over the comparative period and is expected to continue through the second half of the year, with net debt expected to be below one times EBITDA during 2019. The strong cash flow has allowed early repayment of the remaining £1.75 million of the deferred consideration for the acquisition of Carlton in August 2018 which will further reduce the Group's ongoing interest burden. Net debt at the end of June 2018 stood at £18.1 million (30 June 2017: £20.7 million) after paying £1.9 million in dividends during the period. Half year cash balances were adversely affected by delayed customer receipts as the month end fell on a weekend with a strong subsequent cash inflow the following week.

Dividend

The trading performance and continued cash generation of the Group provides the Board with the confidence to declare an increased interim dividend of 1.06 pence per ordinary share (2017: 0.7 pence) in line with the stated progressive dividend policy. The interim dividend will be payable on 11 January 2019 to members on the share register on 14 December 2018.

Outlook

The Group has produced another positive trading performance whilst successfully completing both the integration of Carlton and the restructuring of the Michelmersh plant. Industry statistics support the backdrop that demand for bricks remains strong, with imports filling shortfalls and industry brick stocks near historic lows. Housebuilders remain confident in the near to medium term. The uncertainty around Brexit does not seem to have entered the activity pattern of housebuilding or the Repair, Maintenance and Improvement market, but remains an unknown that could affect the industry going forward. Furthermore, two new key high value products were introduced in the first half of 2018 and these will begin to make a positive contribution in the latter part of 2018 and into 2019.

Looking ahead, production in the second half is traditionally lower than the first half due to planned maintenance shut downs. The strong trading in the first six months also depleted plant stock levels due to high volumes outstripping output. More widely, energy input prices that have risen over the recent months, are forecast to continue. Despite this, with the benefits of the significant acquisition made last year, alongside the continued performance of our well invested works and future investment plans, the Board remains confident of delivering results for the full year in-line with market expectations.

M R Warner

CHAIRMAN

Consolidated Income Statement

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 relates to costs incurred in connection with the acquisition of Carlton Main Brickworks Limited.

Consolidated Statement of Comprehensive Income

Consolidated Balance Sheet

Consolidated Statement of Changes in Equity

*Excess of issue price over nominal value for shares issued as part consideration for the acquisition of Carlton Main Brickworks Limited originally treated as share premium has been re-classified as merger reserve.

Consolidated Statement of Cash Flows

NOTES TO THE GROUP INTERIM REPORT

1. GENERAL INFORMATION

Michelmersh Brick Holdings Plc ("the Company") is a public limited company incorporated in the United Kingdom under the Companies Act 2006 (registration number 3462378). The Company is domiciled in the United Kingdom and its registered address is Freshfield Lane, Danehill, Haywards Heath, West Sussex, RH17 7HH. The Company's Ordinary Shares are traded on the AIM Market of the London Stock Exchange plc. Copies of the Interim Report and Annual Report and Accounts may be obtained from the address above, or at www.mbhplc.co.uk.

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 European Union. IFRS is subject to amendment and interpretation by the International Accounting Standards Board (IASB) and the IFRS Interpretations Committee and there is an ongoing process of review and endorsement by the European Commission. The financial information has been prepared on the basis of IFRS that the Directors expect to be adopted by the European Union and applicable as at 31 December 2018. "The group has chosen not to adopt IAS 34 "Interim Financial Statements" in preparing the interim financial information."

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 31 December 2017 have been filed with the Registrar of Companies. The report of the auditors on those statutory accounts was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under section 498(2) or (3) of the Act.

The financial information for the six months ended 30 June 2018 and 30 June 2017 is unaudited.

3. EARNINGS PER SHARE

The calculation of earnings per share is based on a profit of £2,200,000 (six months ended 30 June 2017 -£1,100,000; 12 months ended 31 December 2017-£2,212,000) and 86,191,712 (at 30 June 2017 81,654,156 and 31 December 2017, 83,913,140) being the weighted average number of ordinary shares in issue.

Diluted

At 30 June 2017 there were 1,811,232 (30 June 2017: 151,796, and at 31 December 2017 1,138,070) dilutive shares under option leading to 88,002,944 (30 June 2017: 81,806,412, and at 31 December 2017 85,051,210) weighted average number of ordinary shares for the purposes of diluted earnings per share. A calculation is performed to determine the number of share options that are potentially dilutive based on the number of shares that could have been acquired at fair value, considering the monetary value of the subscription rights attached to outstanding share options.