Michelmersh Brick Holdings Regulatory News (MBH)

24 November 2022

Michelmersh Brick Holdings Plc

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

Acquisition of Fabspeed Holdings Ltd

Michelmersh Brick Holdings Plc (AIM: MBH), the specialist brick manufacturer, today announces that it has acquired Fabspeed Holdings Ltd ("Fabspeed" or the "Business"), a leading brick fabricator and manufacturer of off-site pre-built brick products, for initial consideration of £6.25 million (the "Acquisition").

Highlights

§ Leading brick fabricator and manufacturer of off-site pre-built brick products, led by a highly experienced management team who are remaining with the business

§ Earnings accretive transaction in first full financial year following completion before synergies

§ Enhances MBH's position as a leading provider in clay and associated pre-fabricated products

§ Initial consideration of £6.25 million paid in cash on completion representing 5.3x Fabspeed's historic EBITDA of £1.2 million on a cash free, debt free basis

§ Earn out consideration of up to £2 million payable in cash subject to Business performance thresholds over a 24-month period

Frank Hanna, Joint Chief Executive Officer, said:

"We are delighted to announce the acquisition of Fabspeed and welcome the team to the Group. Fabspeed is a great addition to our business, enabling us to create a leading business in both clay and pre-fabricated products.

"With cross selling and distribution synergies to unlock over the coming periods, we expect to enhance what is already an earnings accretive deal to deliver further value for our shareholders as we integrate both businesses."

Background on Fabspeed

Fabspeed is a manufacturer of pre-fabricated building products with a significant focus on bespoke, complex and specialist products, including chimneys, arches, canopies and dormers. Fabspeed has a strong and longstanding management team who will transfer with the business following completion. The Business currently operates from three facilities, two in West Yorkshire and one in Oxfordshire, employing approximately 89 people and Fabspeed will immediately benefit from Michelmersh's broader infrastructure and management support.

Strategic Rationale

The Board believes that the Acquisition is another important step in the strategy for Michelmersh to remain Britain's leading specialist brick manufacturer. Combining Fabspeed with Michelmersh's existing clay product manufacturing business will create a leading combined group in clay and associated pre-fabricated products, including brick cladding systems and brick clad chimneys and arches. The enlarged Group will have a broader product portfolio with enhanced routes to market, with Fabspeed's complementary customer base and distribution channels.

The up-front acquisition price represents a multiple of 5.3x Fabspeed's 2021 EBITDA. The Board believes that the Acquisition is financially attractive and is in line with Michelmersh's financial performance criteria for value-enhancing acquisitions. The Acquisition will be earnings accretive in the first full financial year after completion, being 31 December 2023, and before the delivery of any revenue or cost synergies. Fabspeed has a history of delivering organic revenue and profit growth with associated strong cash conversion and delivered a profit before tax of £0.6 million for the 12 months ended 31 December 2021. At the same date, Fabspeed had gross assets of £5.2 million.

Consideration Overview

The initial cash consideration of £6.25 million on a cash-free and debt-free basis, which is subject to target working capital adjustments, has been paid on completion this morning. The consideration has been satisfied through existing cash resources. There is potential for an additional deferred consideration of up to £2 million, payable in cash, based on achieving future adjusted EBITDA growth targets over the two financial years following completion.

The information contained within this announcement is deemed to constitute inside information as stipulated under the UK Market Abuse Regulations. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

About Michelmersh Brick Holdings PLC:

Michelmersh Brick Holdings PLC is a business with seven market leading brands: Blockleys, Carlton, Charnwood, Freshfield Lane, Michelmersh, Floren and Hathern Terra Cotta. These divisions operate within a fully integrated business combining the manufacture of clay bricks 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 120 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 and www.bimbricks.com