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Ennstone results quell investor revolt threat
13:04 17 Sep 2004
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Ennstone's latest sparkling results could herald the end of the
squabbling with North Atlantic Value (NAV), the shareholder leading
an investor revolt.
The aggregates and asphalt group made a pre-tax profit of £2m (£1.7m) in the six months to 30 June on a turnover of £53m (£46m).
Charles Groves of North Atlantic Value was upset when Ennstone first put in a £48m bid for the Johnston Group. Arguing that chief executive Vaughan McLeod had got his sums wrong, Groves called on shareholders to block the move.
But after Ennstone was trumped by a higher bid from Tarmac worth £53m, the outsider's view has been that McLeod's offer was cautious rather than reckless.
In order to bed down the Johnston deal quickly, Tarmac has offered Ennstone Johnston Roadstone's quarry and asphalt operation at Leinthall for £11m. The offer was driven by Tarmac's need to sell on the asphalt element to avoid a potential intervention by the competition authority.
"We started due diligence on the books last Friday," said McLeod, "and I reckon it will take two to three weeks to complete the investigation."
Winning Leinthall would give Ennstone 25% of Johnson's asphalt volume and 40% of its dry stone capacity.
Ennstone's UK aggregates division contributed £40m of group turnover. The future plan is to expand the group but to run with 65% to 75% of turnover continuing to stem from the UK.
Ennstone reported tough conditions in the Midlands market, where overall demand is down by 7%, prices have got competitive and new work is being bid at lower margins.
Ennstone Breedon's niche product, Breedon Golden Amber Gravel, has met with a growing demand and now sells throughout England.
In Scotland, Ennstone Thistle's contracting business won several surfacing contracts which helped increase asphalt volumes.
BEAR Scotland, the highway maintenance joint venture of which Ennstone is a member, also made a steady recovery. Ennstone's losses this year were trimmed back to £250,000 and the firm is on line to move into profit next year.
The aggregates and asphalt group made a pre-tax profit of £2m (£1.7m) in the six months to 30 June on a turnover of £53m (£46m).
Charles Groves of North Atlantic Value was upset when Ennstone first put in a £48m bid for the Johnston Group. Arguing that chief executive Vaughan McLeod had got his sums wrong, Groves called on shareholders to block the move.
But after Ennstone was trumped by a higher bid from Tarmac worth £53m, the outsider's view has been that McLeod's offer was cautious rather than reckless.
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In order to bed down the Johnston deal quickly, Tarmac has offered Ennstone Johnston Roadstone's quarry and asphalt operation at Leinthall for £11m. The offer was driven by Tarmac's need to sell on the asphalt element to avoid a potential intervention by the competition authority.
"We started due diligence on the books last Friday," said McLeod, "and I reckon it will take two to three weeks to complete the investigation."
Winning Leinthall would give Ennstone 25% of Johnson's asphalt volume and 40% of its dry stone capacity.
Ennstone's UK aggregates division contributed £40m of group turnover. The future plan is to expand the group but to run with 65% to 75% of turnover continuing to stem from the UK.
Ennstone reported tough conditions in the Midlands market, where overall demand is down by 7%, prices have got competitive and new work is being bid at lower margins.
Ennstone Breedon's niche product, Breedon Golden Amber Gravel, has met with a growing demand and now sells throughout England.
In Scotland, Ennstone Thistle's contracting business won several surfacing contracts which helped increase asphalt volumes.
BEAR Scotland, the highway maintenance joint venture of which Ennstone is a member, also made a steady recovery. Ennstone's losses this year were trimmed back to £250,000 and the firm is on line to move into profit next year.
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