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Michelmersh Brick

  • BY: Andrew Hore |
  • POSTED: 26/04/2009 |

Michelmersh Brick fell into loss in 2008 because of higher manufacturing costs.

The brick maker maintained its revenues but higher energy and materials costs meant that an operating profit of £2.1m in 2007 was turned into a £1.1m operating loss in 2008. That was before the non-recurring costs.

Michelmersh made a pre-tax loss of £2.87m in 2008 on flat turnover of £24.2m. There was a profit of £254,000 in 2007, but that includes a £2.56m gain on the companyís Baggeridge Brick stake.

There will be no dividend this year. In 2007 a 1.1p a share dividend was paid.

The profitability of the landfill operations has improved. There are two potential landfill sites which Michelmersh is not yet exploiting. These are valuable assets. The value of landfill assets is increasing as they become more scarce.

The planning permission for an initial 16 acres of spare land in Telford has taken longer than expected to arrive. Management is hopeful that planning permission will obtained in the near future.

Michelmersh has done what it can to cut costs and energy prices have fallen. It still needs to grow revenues in order to move into profit and that will be difficult in the current market conditions.

House broker Charles Stanley forecasts a 2009 loss of £500,000.

Net debt was £17.1m at the end of 2008 and the significant depreciation charge means that the figure could fall slightly in 2009 despite the continued loss.

At 25p a share, Michelmersh is valued at £10.1m. The current net asset value is £30.8m, even after a £10.5m write down, with much of that asset value accounted for by the land assets.

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