Michelmersh Brick Holdings Regulatory News (MBH)

23 Jul 2008 07:00

23 July 2008

Embargoed, 0700hrs

Michelmersh Brick Holdings plc

AGM Statement

Michelmersh Brick Holdings plc ("Michelmersh" or the "Group") (AIM:MBH), the specialist brick, land development and landfill company, announces that at its Annual General Meeting to be held later today, Eric Gadsden, Chairman of Michelmersh, will make the following statement: 

"Despite the uncertainties in the UK Construction sector, turnover across the Michelmersh Group in the first six months is 6.6% higher than in the same period in 2007.

These are unsettled times in the housing and financial markets. Energy costs are rising, as are other input costs, but demand for bricks across the sector, after a stable year in 2007, is reducing, reflecting the current fall off in demand in the housing market. This makes our performance all the more creditable.

While brick production is certainly under pressure, we continue to generate strong cash flow from our landfill operations. Landfill rates have continued to climb, driven by regulatory pressures as well as wider economic factors. We see no sign of any slowdown in this area of our business.

We anticipate that our landfill and property reclamation programme at Blockleys will cover the next 25 years. We are able to both plan the final development and sale of these assets over a long time horizon, and, to an extent, avoid the current turmoil in development land values. The first 16 acres of land are due to be sold to Persimmon early in 2009, under our existing agreement. Since our last statement in early June, Persimmon are now making greater progress with the planning authority. There is now a recognition on the part of the planning authority that, in the current housing market, a saleable scheme must be developed and we remain confident that a satisfactory conclusion will be reached. 

Over 90% of UK brick production is, for the first time, in the hands of three international manufacturers; CRH, Weinerberger, and Heidelberg Cement. However, the emphasis of these companies is on the mass production of standard brick products. Michelmersh, with its specialist focus, is the next largest producer, followed by a relatively small number of single works mainly serving local markets. The Group's position in the market has been significantly strengthened during the period with its geographical reach and specialist product range.

The main brick manufacturers have also announced in recent weeks the closure of several of their manufacturing units. This is taking some of the excess capacity out of the market and we believe that they will make further closures. 

In our opinion this is a positive development for the longer term fortunes of the industry but in the short term, recovery of rising input costs remains a major issue for the industry and it is not clear how this will be resolved. The Board believes that Michelmersh is the only potential consolidator but we must be cautious in the present market place."

Subject to shareholder approval at the AGM, the Company's maintained dividend of 1.1 pence per share will be paid to those shareholders on the register as at 3 October 2008, on 31 October 2008. The shares will trade ex dividend from 1 October 2008. The maintained dividend reflects our continued confidence in the Group's performance going forward.