Michelmersh Brick Holdings PLC (LON:MBH) is to sell the 25 acre former Dunton Brothers brickworks at Chesham in Buckinghamshire, for £2.68mln in cash.
The specialist brick, land development and landfill company is selling the land to London Green Resources Limited, with completion of the sale, which is subject to the procedures of the Environment Agency, is likely to be towards the end of the first half of this year.
The land was valued on Michelmersh’s books at £1.25mln, and after costs have been taken into account, the company expects to record a surplus on the sale of more than £1mln.
Michelmersh reiterated guidance given in October that results for 2016 are likely to be on a par with those seen in 2015, though year-end cash balances are likely to be higher than expected.
Speaking to Proactive Investors, joint-chief executive officer Frank Hanna noted that since the softening of sterling in the wake of the EU referendum votes, “imports have fallen dramatically”.
“What that does is bring UK-centric products back into focus. They’re more competitive [in pricing terms]; you’ve got the sustainability story around it – local bricks for local markets – and also there was a rush to import bricks at any cost when there was a significant shortage of bricks, and I think we’ve redressed that balance,” Hanna said.
Though not dismissing the suitability of all bricks made overseas for use on UK buildings, Hanna believes there is a large proportion “that do not fit the UK vernacular”.
He remains generally upbeat about the prospects of the UK market.
“The fundamentals are still very positive,” he asserts, while any schemes brought forward by the government to address the housing shortage “will see is throw our hat into the ring,” he vowed.
On the subject of government initiatives, Hanna said: “You look at the news stories, the regeneration thing, the 200,000 homes that they are looking to build, the new garden cities – that’s all positive for us.”
Hanna also pointed to the recent spate of trading updates from house builders: “When you look at the forecasts, they are still pretty upbeat.”
The lack of affordable housing for first-time buyers in Britain has long been a problem but Hanna thinks the country is now starting to see a lack of “normal family homes” in the middle sector, too, and that needs to be addressed.
Hanna pointed out that the company is not just dependent on the new homes market, as it also serves the repair, maintenance and improvement (RMI) market.
“50% of our product goes into the RMI sector through builders’ merchants, and that’s doing very well for us at the moment.”
Shares in Michelmersh were up 2.8% towards the end of trading.