MBH Michelmersh Brick Holdings Plc

Michelmersh Brick Holdings Plc

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

Preliminary results for the year ended 31 December 2023

Positive performance - earnings ahead of market expectations

Michelmersh Brick Holdings Plc (AIM: MBH), the specialist brick manufacturer and brick-fabricator, reports its preliminary results for the year ended 31 December 2023.

Financial Highlights:

Highlights:          

·     Positive financial performance in 2023, with earnings for the year ahead of market expectations

·     Revenue and profit growth driving 11% increase in Basic EPS

·     Continued focus on pricing stability for customers to support 2024 demand outlook

·   Full production capacity maintained throughout the year alongside focused cost management has led to strong profit performance

·    Resilient operational cash generation supported investment in inventory and capital investment in solar at plants to supplement longer term energy requirement

·      Launch of SustainableBrick.com, a new website that highlights the benefits of clay brick to our broad customer base

·      Group cash of £11m at 31 December 2023 and undrawn £20m borrowing facility underpin strong financial resources and strategic optionality

·     Final dividend per share of 3.00p resulting in full year dividend of 4.50p, up 5.9% on 2022, demonstrating commitment to progressive dividend policy and confidence in a resilient outlook

Outlook:

·      Focus on maintaining a well-balanced forward order book and pricing stability expected to support resilient order intake across our diverse end market customer base for 2024

·      Energy price hedging in place with over 70% of our expected requirements secured for 2024 with the expectation of a more stable outlook expected to underpin forward prices

·     The Group continues to focus on delivering both excellence in product and customer service and with the resilient qualities of our business model the Board remains confident in the strategic outlook of the business.

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

"I am very pleased to report on another positive year for the Group, with strong growth across our key financial metrics despite the decline in the broader construction industry.

"We enter 2024 watchful of the interest rate environment and inflation trends and how these affect the timing of the anticipated increase in construction activity levels. Whilst we continue to closely monitor the impact from these macro cycles, we believe in our business model, maintaining a broad customer base across multiple end markets, and continue to see robust levels of order intake as a result.     

"As ever, the Group continues to focus on delivering both excellence in product and customer service and with the resilient qualities of our business model the Board remains confident in the strategic outlook of the business.

"As I step down from the business after 35 years of involvement with brick making I would like to thank all my colleagues who have supported me over the years, past and present.  The growth from small beginnings has only been possible by their dedication, skill and support in good times and bad.

"I have no doubt that all that has been built in terms of plant and people will mean that the business will continue to prosper from a strong financial base for shareholders, customers and importantly for our employees who make it all happen.  This business is truly unique in many ways.

"I would also like to add my personal thanks to Frank Hanna as he steps down for pastures new. We have worked together in the industry for many years, particularly since the acquisition of Freshfield Lane in 2010. He has been a valued colleague and I wish him every success in the future."

^*The Directors believe that adjusted measures provide a more useful comparison of business trends and performance. Adjusted results exclude exceptional items which include costs associated with acquisitions and the amortisation of acquired intangibles. The term adjusted is not defined under IFRS and may not be comparable with similarly titled measures used by other companies. ^.Adjusted performance results are reconciled with statutory results in the table below.

¹ EBITDA is defined as earnings before interest, tax, depreciation and amortisation

2 Organic change presents a percentage comparison year on year excluding the impact of the results of FabSpeed which was acquired on 24 November 2022^.

An analyst briefing will be held virtually at 11:30am today. To attend please email michelmersh@yellowjerseypr.com.

The Company also notes that it will be hosting an online presentation to retail investors on Thursday 28 March at 10:00am. Those wishing to join the presentation are requested to register via the following link: Meeting Registration

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, FabSpeed, Freshfield Lane, Michelmersh, Floren.be and Hathern Terra Cotta. These divisions operate within a fully integrated business, combining the production of premium, precision-made bricks, pavers, special shaped bricks, bespoke Terra Cotta products and prefabricated brick components. 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 122 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, www.bimbricks.com and www.sustainablebrick.com

Chief Executive Officers' Statement

We are pleased to report on another positive year of progress for the Michelmersh Group, which has been significantly influenced by all of our staff in the UK and Belgium and their ongoing support in continuing to provide the highest quality product and service to all of our loyal customers.

At the centre of our strategy is the belief that sustainable growth is best supported through maintaining a broad range of end customers who cover the fullest spectrum of applications and channels within the construction industry. Despite a 30% decline in new build construction activity over the last twelve months, and the associated impact on brick despatches, we have achieved these positive results this year due to this strategic approach. Focusing our portfolio on diverse end markets, each with different supply and demand fundamentals, has created a business that continues to deliver growth in more challenging conditions. We remain very grateful for the longevity and depth of our customer relationships, which support this approach and our focus on providing excellent products and services alongside balancing the needs of all our stakeholders.

Despite the uncertainty in the construction sector, the fundamentals in our end markets remain positive with a critical shortage of both new residential and social housing and a significant legacy housing inventory constructed with brick façades, underpinning future Repairs, Maintenance and Improvement ("RMI") demand with continued requirements for brick cladding remedial solutions. It is also clear that the two major political parties remain committed to reversing the decades long decline in house building with the certainty of meaningful population growth in 2024 and beyond exacerbating the need for new housing.

Our fundamental core competency remains our significant strength in the premium end of the brick market in the UK and Benelux regions. We view the long-term fundamentals of these markets as positive, with brick continuing to be the façade material of choice due to its longevity, sustainable and energy efficiency qualities, low-cost base and broad aesthetic appeal. Demand for bricks across the sector has declined over the last twelve months in line with the consumer environment. Consequently, brick inventory volumes for the sector are above the five year average at c.575 million. In response, across the industry, manufacturing capacity of approximately 25% has been mothballed or permanently closed in the UK with uncertainty at the point the market will return to 2022 levels. However, given this change in dynamics from 2021 and 2022, our ability to address the market's broad spectrum supports the resilience of our outlook.  

As a complement to our core brick manufacturing business, we remain very pleased with our acquisition of FabSpeed, which we completed at the end of November 2022 and have had a successful first full year of ownership, focusing on its strategic integration into our commercial and operational teams. Subsequent to the acquisition, we have focused on the opportunities to combine FabSpeed with our existing clay product manufacturing business, as we aim to create a leading player in clay and associated pre-fabricated products, including brick cladding systems, brick clad chimneys and arches. We are excited about expanding the product offering, the enhanced routes to market, the complementary customer base and distribution channels that FabSpeed has now brought to the enlarged Group.

Following the decision to cease brick making operations at Charnwood in December 2022, we previously highlighted our intention to use the vacant factory space in the first phase of our growth strategy for FabSpeed, as we looked to repurpose the site and expand the operations and reach of our acquired prefabricated portfolio. The site renovation work was completed in March and FabSpeed began prefabricated operations, alongside the existing manufacturing of our bespoke Hathern Terra Cotta range, and will specifically focus on expanding the customer reach of our brick slip system portfolio. Later in the year we commenced remedial work on some vacant adjacent space at our Carlton plant with a view to further expanding our FabSpeed operations onto our owned sites and target further operational efficiency.

Our 2023 financial performance and strong balance sheet have allowed us to deliver on our core business priorities and equally ensure that we can continue to invest in the Group and continue to deliver against our sustainability initiatives. During the year we completed the new building to house the automated robot pallet mixing equipment in Florenand with the additional roof space added a further 25% of solar capacity on site to deliver 50% of our electricity requirement in Belgium on an annualised basis. Following the success at Floren, we obtained our licences to add solar panels at Blockleys, with installation completed in the second half of the financial year. As we look into 2024 and beyond, we will continue to add to the pipeline of sustainability and manufacturing initiatives to deliver incremental improvements to our processes.    

Importantly, our year-end cash position of £11 million and the undrawn £20 million bank facility continues to provide us with both financial resilience and flexibility to continue pursuing and meeting our ongoing strategic objectives.

We remain fully committed to our progressive dividend policy with a full year dividend of 4.50 pence per share underlining our confidence in the resilient outlook for the business. All of this leaves us well-positioned to deliver further progress in our 2024 financial year and beyond.

Board changes

We announced on 26 May 2023 that Frank Hanna had informed the Board of his decision to leave the Company to take up the position of CEO of the Brickability Group.

Frank and I were appointed Joint Chief Executive Officers ("JCEO") in January 2016 and since that time I am very proud of the significant growth and success the Company has achieved. Since 2016, the Group's' annual brick output has increased from 70 million to over 122 million, the portfolio has broadened to include brick fabricated products and the Company has entered the European market with Floren. Frank has been associated with the Group for 32 years, joining officially in 2010, when as a shareholder of Freshfield Lane it was acquired by Michelmersh. Frank has been an excellent JCEO of Michelmersh and a highly valued colleague and member of the Board and he is leaving with our sincere thanks for his immense contribution in building a business with strong fundamentals underpinned by the longevity and depth of our customer relationships.

We also announced on 1 August 2023 that Martin Warner had informed the Board of his decision to retire as Chair at the AGM in May 2024. Martin will be succeeded by Tony Morris who is currently a Non-Executive Director. Alongside, we also announced that Rob Fenwick had joined the Company as Non-Executive Director. 

Martin was appointed Chair in 2016, having previously been joint founder and Chief Executive Officer. He has overseen transformational growth over that period supporting the Group on its progressive journey to becoming a leading premium brick manufacturer and brick prefabrication specialist across the UK and Belgium. On a personal note, I would like to thank Martin for his valued support and guidance over many years. I look forward to continuing working with Tony as we look to the future with confidence and the business being in a strong position to continue to deliver against our strategy.  

Tony, who joined the Board in November 2020, has brought a wealth of experience in M&A and equity capital markets to the Group, and over the last three and a half years with Michelmersh has added significant construction industry and clay manufacturing sector knowledge, alongside his role as Chair of the Remuneration Committee.  

Rob, who joined the Board in 2023, has extensive operational experience, having spent 20 years with Howden Joinery Group plc. Rob was Chief Operating Officer of the supply division at Howdens for 14 years before spending a year as Chief Governance Officer. Rob is also a Non-Executive Director of Andrew Marr International Ltd and Kronospan Holdings Ltd.  

With these changes, we believe that the Board has the appropriate balance of skills and experience to support the Group as we continue to deliver against our strategic objectives.  

Sustainability

The Group continues to believe in the importance of being a senior representative of the clay brick manufacturing industry and to champion the carbon and broader sustainability benefits of utilising our product portfolio in the built environments of the UK and northern Europe. As we highlighted last year, for Michelmersh this will always be focused on incremental improvements as we look to our internal knowledge and the right external partnerships to both develop and adopt the technical solutions that will continue to deliver against the outlined targets in our 2021 Sustainability Report. As a result, we are very pleased that during the year we have already achieved a 24.2% reduction in carbon intensity ratio since our 2016 baseline, well ahead of our target which we have now increased from 5% to 25% by 2030 which represents significant progress.  

With the recognised importance in championing the sustainability of our portfolio, we were delighted to launch SustainableBrick.com, a new website that highlights the benefits of clay brick to our broad range of end customers. This information resource aims to reinforce to architects, the evolution and investment the industry is making towards innovative sustainability related improvements whilst showcasing the sustainable benefits of clay brick. The site is also targeted at the construction industry drawing out the many carbon calculation resources available to aid the sector in collectively and collaboratively achieving net zero. Through the products and initiatives showcased throughout the website we hope to lead the way in sustainable construction practices and illustrate how these can be adopted for future generations.

Awards and recognition

We were delighted that our high-quality product portfolio was once again recognised in 2023 through our successes at the Brick Development Association ("BDA") industry awards. The 47^th BDA awards saw the Group win five awards, alongside one commendation, which was almost a third of the awards presented during this year's event.

This year's awards showcased the ever-expanding utilisation of brick across the construction industry, with notable contributions in the Urban Regeneration, Innovation and Refurbishment categories as well as celebrating brick architecture across the wide spectrum of more traditional uses. These accolades are a testament to the pivotal role that our products play in housing developments, public buildings and commercial developments, underscoring the exceptional environmental and sustainability attributes of clay brick across the country.

Among our awards was recognition for Archio's Becontree Estate as part of a significant house-building initiative in the London Borough of Barking and Dagenham. Becontree Estate used Freshfield Lane's First Quality Multi which helped successfully blend this project into the area's historic London environment.

Further success came with MAST Architects winning the Urban Regeneration Award with a mixed-use project in Clydebank, Scotland, located on a former shipyard site. It represents the initial phase of a residential development plan to reintegrate the waterfront with the town, and utilised Blockley's Porcelain White Smooth and complementary products to harmonise the build with its nautical surroundings.

Winning the Commercial Award, Feilden Clegg Bradley Studios, designed a six-story office building with a focus on sustainability and community integration. Utilising Freshfield Lane's First Quality Multi, the building's brickwork demonstrated that energy-efficient features, beauty, functionality and sustainability can coexist.

The recognition of these influential projects and the wider success at the National RIBA awards on additional educational, urban regeneration and retrofit developments further highlights that as Britain's Brick Specialists, the Group aims to inspire beautiful, comfortable, safe and sustainable architecture for a future built environment we can be proud of.

Charity

Our commitment to being a socially engaged and responsible employer did not change this year and we carried on from our charitable commitments in 2022 by increasing our donations and the provision of support to charities and community projects. As part of our decision-making process in selecting charities to support, we invite all staff to put forward nominations for the following financial year. We continued the process for this year and the charities we supported were all nominated by our people. The two main charities we selected from the nominations were The Lighthouse Construction Project and The Brain Tumour Centre. 

The Lighthouse Construction charity carries out incredible work in the breadth of the support they provide to workers and their families in the construction industry. The Brain Tumour Centre not only invests heavily in scientific research but also looks at ways they can help improve the lives of all those who have been diagnosed with a brain tumour. In addition to the annual staff nominations, we also supported numerous community events local to our manufacturing facilities as well as donating to individual staff charity fundraisers throughout the year.

Supporting education

We have been proud supporters of colleges for many years, which was cemented by the Group with the official launch of 'Pledge 100' in 2020 to encourage youth training in skill-based occupations and those embarking on careers in the construction industry. The industry continues to face a very well-publicised shortage of skilled bricklayers, with gaps in funded support across all sectors of construction and we believe this additional assistance is vital to encourage the next generation to apply for construction-focused employment as the country faces the challenge of meeting the critical shortage of both new houses alongside the importance of well-maintained older housing stock.

We have once again supported this commitment to training the next generation of bricklayers by donating over 120,000 bricks through our "Pledge 100" initiative, ahead of the 100,000 we achieved annually since 2020. Supporting industry education and training, including bricklayers and architectural design courses, remains one of our core commitments.

Throughout 2023 we supported 14 institutions across the UK through the provision of bricks they need to ensure students can learn the appropriate skills necessary to fulfil their training as bricklayers of the future. With the additional bricks this year we also supported five community and charity led projects that support local communities surrounding our factories.

In addition to offering products for students to learn with in practical lessons, we also continued to supply hundreds of copies of the "Guide to Successful Brickwork" to vocational training courses.

Group results

As a result of the strong trading performance across the business, the Group delivered positive growth for the 2023 financial year. The 2023 results include the positive impact of FabSpeed, our prefabricated building product acquisition in November 2022 and for comparison purposes, we include like-for-like narrative to remove the full year of benefit in 2023 and the one month contribution in 2022 for our key financial metrics.

Financial highlights

^*The Directors believe that adjusted measures provide a more useful comparison of business trends and performance. Adjusted results exclude exceptional items which include costs associated with acquisitions and the amortisation of acquired intangibles. The term adjusted is not defined under IFRS and may not be comparable with similarly titled measures used by other companies. Adjusted performance results are reconciled with statutory results in the table below.

¹ EBITDA is defined as earnings before interest, tax, depreciation and amortisation

Revenue for the year increased by 13.0% to £77.3 million (2022: £68.4 million) over the equivalent period in 2022. Removing the impact of FabSpeed, revenue increased by 1.3% which was supported by a price increase implemented across the portfolio from the start of the year, as we continued to target mitigating the increase in our input costs, offset by a 10% reduction in despatches predominantly due to more challenging conditions in the final quarter. The Group revenue performance undoubtedly benefited from the broader reach of our portfolio across our diverse customer base with the construction sector activity declining year on year by around 30%. Despite the reduction in despatches in the fourth quarter, we took the decision to both, maintain normal production volumes as we targeted maximum operational leverage from our broader manufacturing base, and invest in the appropriate inventory levels to support our FY24 expectations and to provide our loyal customer base with a consistent supply of our product portfolio. 

As a result of the positive revenue performance, operating profit of £12.3 million was up 6.0% on the comparative period (2022: £11.6 million) and profit before tax of £12.5 million was up 8.8% (2022: £11.4 million). On a like-for-like basis, removing FabSpeed, these increases were 5.3% and 8.1% respectively. The lower contribution from FabSpeed to our profit performance reflected our focus in our first full year of ownership on integration initiatives as we aligned our commercial teams and embedded our operational processes and procedures across the four acquired operational sites. Equally, at acquisition, FabSpeed's product portfolio was more aligned to the new build environment and as such our margins and profit were impacted more than the organic business by the broader decline in construction activity, particularly for the volume house builders.

Following over two years of significant cost base volatility we continued to closely manage our input costs through the year. As such, we benefited from the stability of securing the price for 90% of our energy requirements across 2023 and we have energy contracts in place for 70% of our expected requirements in 2024 with further contracts into 2025 and 2026 in line with this approach. Whilst remaining watchful of the impact of global macro factors, on balance we see utility pricing returning to a more consistent level in the medium term. The profit metrics and cost management strategy underline the Company's continuing success of managing our operational efficiency to maximise our financial returns, whilst importantly maintaining a close relationship with our loyal customers through our ability to deliver a greater degree of pricing visibility and inventory availability certainty.  

On a reported basis, the results include the impact of the amortisation of acquired intangibles which increased by £0.2 million year on year as a result of beginning to amortise the intangible assets capitalised from our FabSpeed acquisition. On an adjusted basis, to remove the impact of these items, adjusted EBITDA of £17.8 million (2022: £16.7 million) is ahead by 6.6% against 2022 and 4.8% on a like-for-like basis. As we highlighted in our 2022 year-end results, this was at a slightly reduced adjusted EBITDA margin of 23.0% (2022: 24.4%), reflecting the importance of a balanced pricing strategy for our customers and earnings growth alongside the necessity to secure robust forward demand in our core markets with a significant decline in construction activity.

After a tax charge of £2.8 million (2022: £2.5 million), the Group recorded a profit for the year after tax of £9.7 million (2022: £8.9 million), an increase of 9.0%. The tax rate of 22.4% (2022: 22.1%) reflects our effective Group tax rate for the year, which is a small increase on 2022 and follows the change announced in the 2021 Budget and ratified by parliament which increased the standard rate of UK corporation tax from 19% to 25% effective from 1 April 2023.   

Basic earnings per share increased by 10.9% to 10.44p (2022: 9.41p). This increase ahead of profit was due to the benefits of a balanced capital allocation strategy with our strong balance sheet supporting a buyback programme which ran from November 2022 to September 2023 and reduced the basic shares in issue by 2.25 million shares with our focus on continuing to return value to shareholders and also to reduce the impact of share dilution.

The table below (Adjusted Performance measures) provides a clear reconciliation of the adjusted performance to the reported numbers.

^a Includes adjustments to exclude amortisation of acquired intangibles.

Net cash and working capital

Cash generated from operations for the year was £13.6  million, compared to £19.7 million in 2022 which was an exceptionally strong year for the Group, and was supported by our resilient trading through the year. Our operational cash flow was impacted by the decision to invest in our inventory position through increased raw material stocks and finished goods in support of our expectations for 2024. As a result, operating cash conversion from adjusted EBITDA was lower at 76.4% compared to 117.9% in 2022 although this is still seen as a very positive performance given the broader construction activity decline. 

At the year end the Group had net cash before lease liabilities of £11.0 million (2022: £10.6 million). In addition to our growing cash position, our £20.0 million Sterling and Euro denominated bank facility remains undrawn (2022: £20 million and undrawn) and is committed to 22 December 2026, following the exercise in November of the second of our two one year extension options.

As we enter 2024, the cash generating fundamentals of the Group, net cash position and strong balance sheet provide us with the capacity to continue to invest in the business to support both capital initiatives and our commitment to maintaining our progressive dividend policy. Importantly, the strength of our balance sheet provides us with significant confidence in our financial stability as we continue to trade in an uncertain economic environment.

Our long-term policy is to maintain a strong financial position and keep the ratio of net debt to adjusted EBITDA comfortably under two times.

Purchase of own shares

We launched a share buyback programme at the end of November 2022, which continued to the end of September 2023, to reduce the share capital of the Group in order to return value to shareholders; as at 31 December 2023 the Group had purchased 2,225,000 shares (2022: 60,000) shares for a total consideration of £2 million (2022: £0.05 million). The shares continue to be held as treasury shares.

Alongside the buyback programme, we continue to prioritise the future expected returns of shareholders by focusing on the volume of our issued share capital. As a result, 2 million 2017 LTIP options were cancelled in November 2022 and converted to a cash settlement. The cash settlement value of £1.8 million was paid in the year which included all associated employment tax obligations.

Property, plant and equipment

The capital expenditure invested in the year highlights our continued broader focus on delivering technically feasible sustainability improvements. The principal expenditure was focused on Floren where we have completed the construction of a building to house automated robot pallet mixing equipment and utilised the roof to add additional solar capacity which now collectively provides over 50% of our electricity needs. Given the proven success in Floren, we applied for a G99 Connection through the National Grid to add solar panels to Blockleys, which we received during the first half and completed the addition of the solar panels in H2. Alongside, we continued our programme of planned roll-outs to electrify our fork-lift fleet which during the year was focused on Michelmersh.  

Additionally, over the last few years, we have focused on preparing non-core land at Blockleys ahead of its release for alternative use. The sale of surplus investment land remains an important pillar of our lifetime revenue sources. During the year we received £1.1 million from the sale of this surplus land with the price agreed under the terms of a legacy option agreement. The land had previously been valued at the option price so the sale was released at our balance sheet carrying value with no one-off impact to the earnings statement.

Dividend

The Board is pleased to continue to commit to our progressive dividend policy reflecting a balanced approach to generating and returning value to our shareholders, and as such, the Board is recommending a final dividend of 3.00 pence per share (2022: 2.95 pence per share), which, together with the 1.50 pence per share interim dividend (2022: 1.30 pence per share), gives a total dividend of 4.50 pence per share (2022: 4.25 pence per share), up 5.9% on last year. The proposed dividend will be paid on 10 July 2024 to members on the register on 7 June 2024 with shares being marked ex-div on 6 June 2024.  

Outlook

We are proud to have maintained our track record of consistent delivery against our strategic and financial targets despite the steep decline in construction activity over the last financial year. Despite these challenges, our singular vision of well-maintained and efficient operations that manufacture the highest quality premium brick products for our customers remains the integral element to our success. We believe in the resilient fundamentals of our business which is underpinned by the quality of our product portfolio and the strength of our customer and distributor relationships.

Despite the lower consumer demand in our markets, we remain well placed at the premium end of the brick market in the UK and Benelux markets. The long-term fundamentals of these markets are positive, with brick continuing to be the façade material of choice due to its longevity, sustainability and energy efficient qualities in use, low cost and broad aesthetic appeal. Importantly, the ongoing strength of our balance sheet provides us with financial strength and also the flexibility to invest in our strategic capital allocation options.

As we enter 2024, whilst there are more positive inflation and interest rate indicators across the UK and Northern Europe, the landscape remains uncertain as does the inflection point for improved activity levels in the construction industry. In our cost base, given the high energy requirements for brick manufacturing, the outlook for energy pricing looks to be improving and we will continue to target the appropriate balance of fixed price certainty alongside the opportunity to access the potential for improved pricing. With this balance in mind, we are deliberately hedged at 70% for 2024 with further contracts into 2025 and 2026.

As ever, we remain focused on mitigating our cost risks alongside maintaining appropriate portfolio pricing to support our customers, and as such, we have held prices at the start of 2024. The Group continues to prioritise a quality and balanced forward order book derived from our diverse and broad loyal customer and distributor relationships, supported by demand from across the social and specification housing, RMI and commercial sectors. We believe the quality fundamentals in our business will provide resilience and we are well placed to continue our strategic progress through 2024 and beyond.

Peter Sharp

Chief Executive Officer

Consolidated Income Statement

for the year ended 31 December 2023

Consolidated Statement of Comprehensive Income

for the year ended 31 December 2023

Consolidated Balance Sheet

as at 31 December 2023

Consolidated Statement of Changes in Equity

for the year ended 31 December 2023

Consolidated Statement of Cash Flows

for the year ended 31 December 2023

NOTES TO GROUP PRELIMINARY STATEMENT

1.     Accounting Policies

The consolidated financial statements have been prepared in accordance with UK-adopted international accounting standards and with those parts of the Companies Act 2006 applicable to companies reporting under accounting standards as adopted for use in the UK.

The consolidated financial statements are presented in sterling and all values are rounded to the nearest thousand ("£000") except where otherwise indicated.

2.     Financial Information

The financial information set out in this Preliminary Announcement does not constitute the Group's statutory financial statements for the years ended 31 December 2023 or 2022. The financial information has been extracted from the Group's statutory financial statements for the years ended 31 December 2023 and 2022. The auditors have reported on those financial statements; their report was unqualified, did not include references to any matters to which the auditors drew attention by way of emphasis and did not contain a statement under Section 498(2) or (3) of the Companies Act 2006.

The statutory accounts for the year ended 31 December 2023 will be filed with the Registrar of Companies following the Company's Annual General Meeting. The statutory accounts for the year ended 31 December 2022 have been filed with the Registrar of Companies. The report of the auditors on those statutory accounts was also unqualified, and also did not contain a statement under section 498(2) or (3) of the Act.

3.     Earnings Per Share

Basic  

The calculation of earnings per share from continuing operations based upon the profit for the year of £9,662,000 (2022: £8,877,000) and 92,535,734 (2022: 94,467,688) weighted average number of ordinary shares.

Diluted                       

The calculation of diluted earnings per share from continuing operations based upon the profit for the year of £9,662,000 (2022: £8,877,000) and 95,482,319 (2022: 96,444,459) weighted average number of ordinary shares.

4.     Dividend

The Board has recommended a final dividend for the year of 3.00 pence per share, to be paid on 10 July 2024 to shareholders whose names appear of the register of members at the close of business on 7 June 2024. 

5.     Annual Report and Accounts

Copies of this announcement are available and the Annual Report will be available in due course on the Group's website www.mbhplc.co.uk and from the Company's registered office at Freshfield Lane, Danehill, Haywards Heath, West Sussex RH17 7HH.