Michelmersh Brick Holdings PLC · LSE:MBH
Michelmersh Brick — H1 2019 Earnings Presentation
34 slides from Michelmersh Brick's earnings presentation, 2019
Slide 1: Michelmersh Brick Holdings PLC Interim Results Presentation 2019
Q@ MICHELMERSH Brick Holdings PLC INTERIM RESULTS PRESENTATION 2019
Slide 2: Disclaimer
Disclaimer The information contained in this presentation document (the “presentation”, which term includes any information provided verbally in connection with this presentation document) does not constitute an offer or solicitation to hold, sell or invest in any security and should not be consider
Slide 3: Britain's Brick Specialist
Frank Hanna – Joint CEO Stephen Morgan – Group Finance Director Britain’s Brick Specialist Michelmersh strives to be a well-invested, long term, sustainable and environmentally responsible business dedicated to delivering quality products to its long-term customer base. The Group aims to provide tra
Slide 4: Manufacturer of diverse premium brick products
We are not the market....we ensure the right volume of the right product for the right sector ▪ Manufacturer of diverse premium brick products – 120 million + ▪ Three lifetime revenue sources – bricks, landfill, investment land ▪ Margin focus, not market share ▪ Strong core market – RMI, Housing, Co
Slide 5: Interim highlights
▪ Strong financial performance - upgrade for the full year outlook and increased dividend ▪ Strong cash generation and debt reduction ▪ Targeting below 1x EBITDA ▪ Successful acquisition and integration of Floren, establishing a European presence ▪ Financial contribution from Floren in line with for
Slide 6: Key financial performance indicators
TURNOVE R UNDE RLYING GROSS MARGIN UNDE RLYING E BIT 17.4% 1.4% 15.5% UNDE RLYING E BITDA UDE RLYING PBT UNDE RLYING BASIC E PS 18.0% 18.3% 8.3% INTE RIM DIVIDE ND CASHFLOW FROM OPE RATIONS 12 MONTH NAV 8.5% 130.1% 7.7%
Slide 7: Brick Awards
Inspired Architecture. Enhancing the built environment BRICK AWARDS 2017 BDA BRICK AWARDS, RIBA AWARDS, NLA AWARDS 18 SHORTLISTED NOMINATIONS AT 2019 BRICK AWARDS
Slide 8: H1 2019 underlying results
UNDERLYING UNDERLYING UNDERLYING H1 2019/H1 H1 2019 H1 2018 2018 2018 £M £M £M Turnover +17% 27.2 23.1 46.3 Gross profit +22% 11.4 9.4 18.0 Gross margin +1.4% 41.9% 40.5% 38.9% Central costs 26.5% (6.1) (4.8) (9.0) Other income - 0.1 0.1 0.1 Operating profit +16% 5.4 4.7 9.1 EBITDA +18% 6.6 5.6 11.0
Slide 9: Reconciliation to underlying Income Statement
Reconciliation to underlying Income Statement H1 2019 H1 2018 2018 FY FAIR VALUE UNDERLYING ACQUISITION IFRS 16 £'000 £'000 £’000 ADJUSTMENT Revenue 27,165 27,165 23,136 46,324 Cost of sales (15,783) (770) 9 (16,544) (13,775) (28,305) Gross profit 11,382 (770) - 9 10,621 9,361 18,019 Administrative
Slide 10: Balance sheet summary
2019 2018 2018 30 JUNE 30 JUNE 31 DEC £M £M £M Intangible fixed assets 1 22.4 23.5 22.9 Tangible fixed assets 64.3 51.5 52.4 Net working capital 9.7 11.7 9.0 Net debt 1 (15.1) (18.1) (11.8) Deferred tax (11.9) (8.5) (8.7) NET ASSETS 69.4 60.1 63.8 NAV per share 75.1 p 69.7 p 73.7 p 1 Includes £1.3 m
Slide 11: Cash flow and net debt
H1 2019 H1 2018 £M £M Net cash generated by operations 6.1 2.7 Tax paid (0.7) (0.9) Interest paid (0.2) (0.3) Purchase of property, plant and equipment (0.8) (0.3) Proceeds of share placement 4.7 - Acquisition of Floren (net of cash acquired) (6.8) - Euro Loan drawn 5.3 - Debt repaid (1.5) (0.9) Div
Slide 12: Debt Profile 2010 - 2019
Q@ MiCHELMERSH Debt Profile 2010 - 2019 Britain’s Brick Specialists 25 . , 7.0 ! ‘ ! \ H \ \ ' \ 6.0 \ 20 ' \ f 5.0 ' \ i \ 15 i \ 4.0 i \ 2 5 1 \ 3.0 3 = ' = 10 i \ z “ 1 \ SS, 20 F ' LN “ w ' “w Senne 5 ' N ’ 1.0 ' ‘ ‘ i ‘s / i ‘Sy / . 1 ‘s / - ' i ee 2010 2011-2012, 2013 2014-2015 Tie 2017 2018 4
Slide 13: Normalised financial results since acquisition
Normalised financial results since acquisition FAIR VALUE REVALUATION UNDERLYING H1 2019 ADJUSTMENT1 DEPRECIATION2 £000 £000 £000 £000 Revenue 2,173 - - 2,173 Cost of sales Underlying (1,160) (770) (62) (1,991) Gross profit 1,013 (770) (62) 182 Administrative (428) - - (428) expenses Other income 19
Slide 14: Strong asset base
Strong asset base Group Fixed Assets by Category Landholdings (Acres) Land Assets by Location
Slide 15: Logical market – market equilibrium
Logical market – market equilibrium 2018 AND 2019 CUMULATIVE OUTPUT AND INDUSTRY BRICK STOCKS (MILLION) EXCESS OVER OUTPUT Source: BIS ▪ H1 2019 Output up 2% on H1 2018 ▪ H1 2019 Despatch = H1 2018 Despatch ▪ H1 2019 – Output > Despatches 23 million bricks ▪ Imports still increasing
Slide 16: UK brick manufacturing highly concentrated
UK BRICK MANUFACTURERS MARKET SHARE UK BRICK WORKS Source: Published statistics and management estimates ▪ UK brick manufacturing highly concentrated ▪ UK Capacity c. 2 billion ▪ Group ASP at a premium of 35% to the market
Slide 17: UK Housing Dynamics
UK Housing Dynamics STRONG DEMAND FOR NEW HOUSING ▪ Continued shortage of new housing from long-term underbuilding ▪ Mortgage availability remains good ▪ Government & Labour both committed to increasing housing supply ▪ Supportive Government policies (Help to Buy) remain in place MAJOR UK POLITICAL
Slide 18: Outlook
INDUSTRY ▪ Continued constrained market capacity ▪ Complex barriers to entry ▪ Continued demand for residential development and latent RMI market MICHELMERSH ▪ Positive outlook – looking to capitalise on the recent success of enlarged Group with enhanced geography ▪ Conversion of strong balanced H2
Slide 19: Appendices
APPENDICES
Slide 20: The Group's acquisition timeline
Combination of organic and acquisitive strategies Background and strategy overview ▪ Experienced senior management team with successful track record of: ▪ acquisitions ▪ improving capacities & efficiencies ▪ integration ▪ the utilisation of ‘plug & play’ processes ▪ A commitment to sustainable ongoi
Slide 21: Why Brick is the UK's external cladding material of choice
Why Brick is the UK’s external cladding material of choice DEVELOPER/RMI/SPECIFIERS END USER/CUSTOMERS/CLIENTS ▪ Low cost & strong value at point of use ▪ Low Maintenance/low cost of ownership ▪ Forgiving of tolerance ▪ Durability ▪ Suits UK vernacular ▪ Aesthetics ▪ Favoured by planners ▪ Matches e
Slide 22: Urban Regeneration
Urban Regeneration Wembley Park
Slide 23: Off-site panel systems
Off – site panel systems University College London Hospital
Slide 24: City Apartments
City Apartments Orchard Gardens, West Grove South
Slide 25: Inspired Architecture
Inspired Architecture College of Pathologists
Slide 26: Aspirational Client Build
Aspirational Client Build Kenley Grange
Slide 27: Quality New Homes
Quality New Homes Longcross, The Grove, Kings Weald, Bewley Homes, Dujardin Mews
Slide 28: Education Sector
Education Sector Conservatoire of Music, Birmingham University
Slide 29: Commercial
Commercial Buckingham Green
Slide 30: Acquisition of Floren - Overview
Acquisition of Floren - Overview Successfully executed Q1 2019 ▪ €9.4 million cash paid on completion ▪ Total consideration up to £8.7 million - deferred consideration of 400,000 Michelmersh ordinary shares over 24 months if EBITDA targets are met (max. value €500,000) ▪ Represented below 6x normali
Slide 31: Acquisition of Floren
Acquisition of Floren An excellent strategic fit ▪ Established, profitable, clay brick manufacturing business with core markets in both Belgium and the UK THE BUSINESS ▪ Generated €1.7 million normalised EBITDA in 2018 with revenues of €5.7 million ▪ ▪ 120 acres of land (only 50% in current operatio
Slide 32: Floren Site Location
Floren Site Location Brecht, Antwerp, Belgium ✓ Strong road network/access ✓ Close proximity to Antwerp shipping port FLOREN, BRECHT, ANTWERP ✓ Situated adjacent to the Campine Channel ✓ Last remaining brick plant in Brecht ✓ 14 minutes from Brecht to Antwerp main railway BRECHT, ANTWERP, BELGIUM
Slide 33: Floren offers a premium product range
Floren offers a premium product range TARTUFO REF EPPEGEM BRUNELLO MEETKERKE METEOR LF TAILOR MADE MECHELEN ALPHEN AD RIJN AGAATH PALLAS IN GRIMBERGEN ANGLIA NIEUWERKERKEN PALLAS IN GRIMBERGEN (2)
Slide 34: Britain's Brick Specialists
Q@ MICHELMERSH Britain's Brick Specialists Freshfield Lane Danehill Haywards Heath Sussex RH17 7HH Tel: 0844 9310022 www.mbhplic.co.uk
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