Ennstone Plc - Preliminary Results For The Year Ended 31 December 2005.Ennstone plc, which operates a number of UK and US companies involved in the production and sale of aggregates, reports strong operating performances across the business and excellent progress in delivering on its key strategic objectives. Financial Highlights Revenue up 43% to [pounds]159.8m (2004: [pounds]111.5m) Operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. up 61% to [pounds]18.0m (2004: [pounds]11.2m*) Profit before tax up 103% to [pounds]13.0m (2004: [pounds]6.4m*) Adjusted earnings per share up 19% to 2.9p (2004: 2.4p*) Total dividend per share up 7.3% to 1.32p (2004: 1.23p) *before goodwill impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. Operational Highlights Strong operating performance Successful integration of Johnston business Sale of Engineering business and disposal of non-core assets for [pounds]30m Strategic bolt-on acquisitions in UK and US Key planning permissions planning permission Noun formal permission granted by a local authority for the construction, alteration, or change of use of a building planning permission n → licencia de obras secured Vaughan McLeod, Executive Chairman, commented: oWe have achieved excellent operating profits, both in the UK and US, the result of hard work from all our people which has enabled us to deliver an excellent result for 2005. oWe have made key disposals during the year, raising over [pounds]30 million. The business is in very good shape and we are confident of achieving strong progress over the next two years.o CHAIRMAN'S STATEMENT I am very pleased to report that the Group made significant progress in 2005 with strong operating performances in both UK and US aggregates. The UK aggregates result is particularly pleasing following the successful integration of the Johnston business which was acquired in November 2004. Key disposals during the year, including the sale of Johnston's engineering interests and other non core assets, generated gross proceeds in excess of [pounds]30 million. In addition, the Group entered into an option agreement, prior to the year-end, to sell part of the Building Products site at Telford, a Johnston site, for [pounds]10.5 million, subject to planning consent for residential use. Financial Results The Group is now required to report results under International Financial Reporting Standards International Financial Reporting Standards (IFRS) are standards and interpretations adopted by the International Accounting Standards Board (IASB). Many of the standards forming part of IFRS are known by the older name of International Accounting Standards (IAS). (IFRS IFRS International Financial Reporting Standard(s) IFRS Inter Frame Relay Service IFRS Indiana Facilities Registry System ) and these accounts have been presented on this basis. The comparative figures for 2004 have been restated accordingly. The strong operating performance resulted in Group revenue increasing by 43% to [pounds]159.8 million (2004: [pounds]111.5 million). Total Group operating profit, including the Group's share of associates, increased to 18.6 million (2004: [pounds]4.1 million). Basic earnings per share for the year were 2.39p per share (2004: loss 2.86p per share). Cash generated by operations was [pounds]24.9 million (2004: [pounds]13.6 million). Net debt at 31 December was [pounds]102.8 million (2004: [pounds]96.7 million) and total equity at 31 December 2005 was [pounds]113.1 million (2004: [pounds]102.2 million) resulting in gearing of 90.9% (2004: 94.6%). Our strategy is to reduce this to around 75% by the end of 2007. Dividend The Board is proposing a final dividend of 0.92 pence pence n. Chiefly British A plural of penny. pence Noun a plural of penny USAGE: Since the decimalization of British currency and the introduction of the abbreviation p, per share, up 8.2%, resulting in a total dividend for the year of 1.32 pence per share, an increase of 7.3% over the previous year. The increase is in line with our progressive dividend policy and reflects the Board's confidence in the Group's strategy and the success of its delivery. UK Aggregates Our UK aggregates business made excellent progress with its strategy to maximise higher margin value added Value Added The enhancement a company gives its product or service before offering the product to customers. Notes: This can either increase the products price or value. products and to secure direct routes to market. Ennstone Thistle thistle, popular name for many spiny and usually weedy plants, but especially applied to members of the family Asteraceae (aster family) that have spiny leaves and often showy heads of purple, rose, white, or yellow flowers followed by thistledown seeds (a favorite , our Scottish operation, returned record profits. Its strong performance was partly due to the successful completion of the high profile A92 contract which completed some seven months ahead of schedule, demonstrating our ability to respond quickly to the demands of modern day highway authorities. Our contracting and surfacing business continues to make rapid progress and has been, in all our operating regions, a significant part of the growth of Ennstone Thistle. The strategy to provide a greater proportion of in-house aggregates into our value added products progressed well during the year and we have invested in further ready mixed concrete plants with twelve units now operational. During the year, we acquired JH Connon, a contracting and ready mixed concrete business in the important Grampian region, further strengthening our market position. Ennstone Johnston, the enlarged English operation, brought together Johnston and our own English aggregates businesses. The combination of these two operations has improved our geographic coverage of the Midlands region, and generated good synergy The enhanced result of two or more people, groups or organizations working together. In other words, one and one equals three! It comes from the Greek "synergia," which means joint work and cooperative action. and cost benefits. We now have an excellent mixture of high quality aggregate reserves which gives us the ability to meet customer demands for both dry and coated products. The Midlands market remained competitive with resulting pressure on profit margins. This was partly offset by our strategy of maximising aggregate margins through value added products, which continued during the year. The key to this strategy was our ability to obtain planning permissions for new asphalt asphalt (ăs`fôlt, –fălt), brownish-black substance used commonly in road making, roofing, and waterproofing. Chemically, it is a natural mixture of hydrocarbons. and concrete plants throughout our operations. In October, we acquired J & H Parry, a surfacing contractor in the West Midlands West Midlands, former metropolitan county, central England. Created in the 1974 local government reorganization, the county embraced the Birmingham conurbation and comprised seven metropolitan districts: Walsall, Wolverhampton, Dudley, Sandwell, Birmingham, Solihull, , further enhancing the development of our integrated English business model in line with our achievements in Scotland. Since the end of the year, we have also acquired the asphalt and aggregate business of Ayton Products, based in Norfolk, and Smiths (Construction), a surfacing contractor in the East Midlands The East Midlands is one of the regions of England and consists of most of the eastern half of the traditional region of the Midlands. It consists of the combined area of Derbyshire, Leicestershire, Rutland, Northamptonshire, Nottinghamshire and most of Lincolnshire. , thereby significantly extending our market coverage and providing further outlets for the Group's aggregates. Both of the Johnston quarries Quarries may refer to:
The manufacture of coated roadstone demands the combination of a number of aggregates, sand and a filler (such as stone which supply the West Midlands market. Recently, we gained planning permissions for new ready mixed concrete plants at both sites and this enables additional aggregates from these quarries to be used in downstream From the provider to the customer. Downloading files and Web pages from the Internet is the downstream side. The upstream is from the customer to the provider (requesting a Web page, sending e-mail, etc.). products. We also gained planning permission for a ready mixed concrete plant at our sand and gravel gravel, particles of rock, i.e., stones and pebbles, usually round in form and intermediate in size between sand grains and boulders. Gravel is composed of various kinds of rock, the most common constituent being the mineral quartz. quarry Quarry Cerynean stag captured by Hercules as third Labor. [Gk. and Rom. Myth.: Hall, 149] Cretan bull savage bull caught by Hercules as seventh Labor. [Gk. at Ling ling: see cod. Hall, which covers the Coventry and Rugby markets. In addition, the important planning permission to build an asphalt plant, together with a ready mixed concrete plant, at the Group's largest quarry at Cloud Hill, Breedon on the Hill, was granted in October. Breedon Special Aggregates, our Breedon Golden Amber Gravel and bagged aggregates operation, continued its excellent progress. This first-class decorative aggregates business has established its own niche product market and continues to grow and perform very well. UK Building Products Ennstone Building Products combines the Group's concrete products and natural stone business, which has developed into a key division of the Group. This business has seen growth in volumes for water attenuation Loss of signal power in a transmission. Attenuation The reduction in level of a transmitted quantity as a function of a parameter, usually distance. It is applied mainly to acoustic or electromagnetic waves and is expressed as the ratio of power densities. systems, although demand for pipes and cable troughing troughing collective term for water or feed troughs. has been static. Products going into the private house building sector have seen some reduction in volumes but the growth in social housing has softened soft·en v. soft·ened, soft·en·ing, soft·ens v.tr. 1. To make soft or softer. 2. To undermine or reduce the strength, morale, or resistance of. 3. the impact. Demand for natural stone products from Stainton and De Lank lank adj. lank·er, lank·est 1. Long and lean. See Synonyms at lean2. 2. Long, straight, and limp: lank and floppy hair. has been buoyant Buoyant The term used to describe a commodities market where the prices generally rise with ease when there are considerable signals of strength. Notes: These types of markets can be very volatile as the prices are rapid to rise and fall with investor sentiment. . In 2006, we expect the Building Products division to use an increasing proportion of Group materials, providing a further route to market for our aggregates. In addition, as we maximise the production of single sized aggregates at Cloud Hill, this division provides us with an excellent outlet for the washed fines, a by-product by·prod·uct or by-prod·uct n. 1. Something produced in the making of something else. 2. A secondary result; a side effect. by-product Noun 1. from this process. US Aggregates In the US, Ennstone, Inc. delivered on its key strategic objectives for 2005, not only achieving an excellent result, but laying the foundations for a strong performance in 2006 with the recent acquisitions of Bluestone bluestone, common name for the blue, crystalline heptahydrate of cupric sulfate called chalcanthite, a minor ore of copper. It also refers to a fine-grained, light to dark colored blue-gray sandstone. Concrete, Roxbury Ready Mix and B&B Concrete. We have also completed the acquisition of McKnight Sand & Gravel which will provide a further 5.5 million tons of sand and gravel reserves in the Pennsylvania area. Collectively, these acquisitions significantly strengthen our regional market position. US trading was excellent and delivered another strong result, partly due to the continued buoyant housing market in Virginia. This, combined with ongoing investment in our US operations, both through acquisition and greenfield Greenfield, town (1990 pop. 18,666), seat of Franklin co., NW Mass., at the confluence of the Deerfield and Green rivers, near their junction with the Connecticut; settled 1686, set off from Deerfield and inc. 1753. development, has given us a strong position in our markets. We now have an integrated supply position with wide regional coverage. Due to the growth in demand for sand and gravel by our ready mixed concrete operations, we are increasing aggregate production capacity and bringing new quarries on stream. This will provide us with an excellent base for our business and underpin profit growth in future years. Polish Aggregates Ennbeton, now a wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. , continues to pursue its acquisition strategy to gain a substantial market share in North West Poland in both aggregates and ready mixed concrete. Recently, a sand and gravel operation at Dobropole and two ready mixed concrete plants near Poznan were acquired. These acquisitions are a significant step towards achieving our objectives and lay the foundations for further progress in 2006 and beyond. With growth in the Polish market starting to become evident, the opportunities for our business are exciting. Associated Company associated company associate n → Partnerfirma f associated company n → società collegata BEAR Scotland Limited, our associated highways maintenance business, had a successful year, moving into profit for the first time. Although BEAR did not retain the North West Highway Maintenance contract, the company has proved that it has the management expertise to run a successful operation and will be endeavouring to retain the North East contract which is likely to be out for tender later this year. People The appointment of a Finance Director is imminent. Accordingly, John Barlow John Barlow was an English diplomat and spy in the time of Henry VIII. Barlow was intimately involved in the King's attempts to secure a divorce from his first wife, Katherine of Aragon from the Pope. will retire from the Board at the forthcoming Annual General Meeting on 18 May. John has agreed to make himself available to the Group on a consultancy basis thereafter to ensure a smooth handover n. 1. The act of relinquishing property or authority etc. to another; as, the handover of occupied territory to the original posssessors; the handover of power from the military back to the civilian authorities s>. to his successor. We welcomed Eric Gadsden to the Board in May, as an independent non-executive director A non-executive director (NED, also NXD) or outside director is a member of the board of directors of a company who does not form part of the executive management team. He or she is not an employee of the company or affiliated with it in any other way. . He brings with him a wealth of industry experience. Malcolm Gibbins, previously finance director of Ennstone Johnston, was appointed as Company Secretary in July. Philippa Marriott, non-executive director, who's current term ends at the Annual General Meeting, will not be offering herself for re-election. Philippa joined the Board with the acquisition of Johnston to help with the integration process, and we thank her for her valuable support. She has agreed to be available to the Group on a consultancy basis. On behalf of the Board, I would like to thank everyone in the Group for their dedication, hard work, loyalty and enthusiasm in delivering these excellent results. This would not have been possible without the continuing commitment and professionalism professionalism the upholding by individuals of the principles, laws, ethics and conventions of their profession. of all our people. Outlook 2006 will bring new challenges in an ever changing market. Energy and raw material costs across the Group, which increased significantly during 2005, will continue to rise in the current year. The Group has been able to partially recover these costs through price increases, but maintaining our lowest cost base position may prove challenging. In 2006 our Scottish business will have a year of consolidation, whilst maintaining its strong market position. The significant capital expenditure programme in our English aggregates business will allow us to continue to increase the proportions of our own materials to be used in value added products and provide a full product range across the Midlands market. Our US business will continue to develop and following the recent acquisitions of ready mixed concrete operations, we expect the strong performance to continue. Over 2006 and 2007, with foundations being laid through acquisitions and capital expenditure across the business, we are confident that the Group will make excellent progress. The year has started in line with our expectations. Vaughan McLeod Chairman 14 March 2006 OPERATING REVIEW Scotland Ennstone Thistle enjoyed another excellent year with record sales of the main product lines, aggregates, asphalt and concrete, resulting in significantly increased profit. We continue to develop the business for the future. During the year, we completed major refurbishment re·fur·bish tr.v. re·fur·bished, re·fur·bish·ing, re·fur·bish·es To make clean, bright, or fresh again; renovate. re·fur of the crushing crushing deaths of newborn animals, especially those in litters, caused by the mother lying on them accidentally. Contributed to by weakness of the neonate or awkward accommodation. A problem in piglets and puppies. Called also overlying. and screening systems at Ethiebeaton and Shierglas. These enhancements have allowed us to increase both production quality and quantity whilst reducing costs. Investment in a limestone limestone, sedimentary rock wholly or in large part composed of calcium carbonate. It is ordinarily white but may be colored by impurities, iron oxide making it brown, yellow, or red and carbon making it blue, black, or gray. The texture varies from coarse to fine. filler fill·er 1 n. One that fills, as: a. Something added to augment weight or size or fill space. b. A composition, especially a semisolid that hardens on drying, used to fill pores, cracks, or holes in wood, plaster, production facility at Shierglas will enable our business to be completely self-sufficient in this product which is used primarily in asphalt manufacture. We have continued to increase capacity in value added products and, during the year, have increased the number of ready mixed concrete plants from five to twelve. These are largely located within our own quarries and are ideally positioned to service both existing and new customer requirements. In April, we purchased the contracting and ready mixed concrete business of J H Connon. This business, which supplies the important Grampian market, has been fully integrated and is providing the opportunities we expected. In September, we successfully completed the supply and lay of asphalt to the A92 contract which allowed the new dual carriageway dual carriageway Noun Brit, Austral & NZ a road with a central strip of grass or concrete to separate traffic travelling in opposite directions Noun 1. between Dundee and Arbroath to open seven months early. This new road is expected to bring development opportunities to the area and, with our Ethiebeaton quarry completely modernised Adj. 1. modernised - brought up to date; "modernized methods" modernized progressive - favoring or promoting progress; "progressive schools" with a high capacity, low operating cost asphalt plant, we are well placed to cater for increased demand. We have also recently started work on a contract to resurface re·sur·face v. re·sur·faced, re·sur·fac·ing, re·sur·fac·es v.tr. To cover with a new surface: resurfacing a road; resurfaced the floor. v.intr. and upgrade three airport runways at Oban, Coll and Collansy for Argyle and Bute Council. Our Scottish business is now strong in aggregates, asphalt, concrete and contracting in all our markets and its performance in recent years is delivering better and better returns. England Aggregates Ennstone Johnston had a year of significant change. The quarries acquired as part of the acquistion of the Johnston Group in November 2004 have been successfully integrated into the existing business. This has enabled synergy, cost savings and procurement The fancy word for "purchasing." The procurement department within an organization manages all the major purchases. benefits to be achieved, as well as further increasing the use of our own materials in downstream value added products. The continuing availability of recycled materials, together with the absence of any major contracts in our core Midlands market, has made it difficult to increase prices on certain high volume dry stone aggregates putting pressure on margins. However, the completion of the planned upgrade to the processing plant at Cloud Hill Quarry, facilitating increased production of higher grade materials, means we are well placed to meet the significant increases in internal demand for high quality aggregates. This demand will further increase following our imminent entry into the East Midlands asphalt and ready mixed concrete markets. Although the market for single sized material was bouyant, price improvement, year on year, was slightly disappointing. Trading conditions were difficult in the West Midlands asphalt market during most of the year. However, approval for Gripfalt, our own proprietary, high performance, thin surfacing material for use on trunk roads, together with the acquisition of J & H Parry, giving us an asphalt contracting ability, had a positive effect during the last quarter. Breedon Special Aggregates, our niche market A niche market also known as a target market is a focused, targetable portion (subset) of a market sector. By definition, then, a business that focuses on a niche market is addressing a need for a product or service that is not being addressed by mainstream providers. specialist products business, produces and markets materials highly valued for their aesthetic qualities. This business continued to perform very well during the year, with an especially encouraging performance being experienced in our bagging operation. We were successful in securing planning permission for both an asphalt and a ready mixed concrete plant at Cloud Hill. We also secured planning consent for ready mixed concrete plants at Ling Hall, Leinthall and Leaton and finalised the planning consent in respect of the additional 5.9 million tonnes of high quality consented reserves at Leaton. These developments give us an excellent platform to build on in 2006 and 2007. The acquisition of Ayton Product's asphalt and aggregate operations in January 2006, brought with it a new, purpose built, high production capacity asphalt plant in Norwich which will enable us to open up new routes to market for our aggregates in that area. In February 2006 the Group acquired Smiths, a major contracting business, operating in the East Midlands and surrounding sur·round tr.v. sur·round·ed, sur·round·ing, sur·rounds 1. To extend on all sides of simultaneously; encircle. 2. To enclose or confine on all sides so as to bar escape or outside communication. n. areas, which will support our investment in asphalt plants and be a major user of our materials. Building Products Ennstone Building Products manufactures concrete products, natural stone and reconstituted stone products. These products are distributed nationally and provide the group with additional routes to market for our aggregates. Emphasis has been placed throughout the year on increasing the use of the groups own aggregates which now provide more than 80% of our requirements for this business. The commissioning of a new dust washing plant at Cloud Hill in March 2006 will enable the business to increase this to over 90%. The concrete drainage drainage, in agriculture drainage, in agriculture, the removal of excess water from the soil, either by a system of surface ditches, or by underground conduits if required by soil conditions and land contour. market has been extremely competitive, especially in the second half of the year. Box culvert sales however, continue to grow due to the importance of storm water attenuation systems and the business has added to its production capacity to reflect its increasing presence in this market. The demand for cable troughing from the rail industry was disappointing in 2005, although enquiry levels improved in the second half of the year. The Group has invested in mouldage for the complete range of troughing required by Network Rail and the increased production capacity places us in a strong position to respond rapidly to the sudden peaks in demand that occur in this market. As a result we expect significant volume increases in 2006. Both Burford and De Lank had an excellent year and benefited from improvements that have been made to the operating efficiency of production equipment in the factories. At Stainton, natural walling sales were buoyant, but demand for reconstituted stone products slowed. A new production line for the manufacture of ashlar walling was installed at Stainton during the year which significantly increased output and reduced the cost base with strong growth of sales volumes being achieved. Consent has been received for additional reserves at one of our Northern quarries, Blaxter, which secures long term supplies to meet the growing demand for masonry masonry: see brick; concrete; stonework; tile. masonry Craft of building in stone, brick, or block. By 4000 BC, Egypt had developed an elaborate cut-stone technique. and natural walling products. The Building Products business now has a broad market base, is a significant user of Ennstone Johnston material and is well placed to deliver significant growth in 2006. United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. The US business witnessed strong growth for its products throughout the year resulting in record profits for the seventh successive year. Strong demand for ready mixed concrete, helped by favourable weather conditions, placed a strain on the supply chain of raw materials, particularly in the second quarter. Utilisation of our in-house haulage fleet, excellent working relationships with key suppliers, and recent investment in additional capacity ensured that increased demands were met. The strength of the market enabled full recovery of increases in fuel and raw material costs. Three Rivers Three Rivers, Que., Canada: see Trois Rivières. Aggregates was acquired in March. Located in Pittsburgh, Pennsylvania “Pittsburgh” redirects here. For the region, see Pittsburgh Metropolitan Area. Pittsburgh (pronounced IPA: /ˈpɪtsbɚg/) is the second largest city in the Commonwealth of Pennsylvania. , this wharf WHARF. A space of ground artificially prepared for the reception of merchandise from a ship or vessel, so as to promote the convenient loading and discharge of such vessel. based business imports high quality limestone and sand and gravel products into the central Pittsburgh markets. Three Rivers Aggregate's prime, strategic market position, coupled with the use of its in-house haulage, has enabled the enlarged Pennsylvania aggregate business to extend its product range and supply area with direct routes to market through better utilisation of transport. Additionally, the acquisition of McKnight in March 2006 will provide additional sand and gravel reserves whilst further strengthening and extending our market coverage. Continuing our policy of pursuing bolt-on acquisitions, the Group has recently acquired Bluestone Concrete, Roxbury Ready Mix, and B & B Concrete. The addition of these ready mixed concrete plants has strengthened the company's supply capabilities realising both actual and synergy benefits. Demonstrating the commitment to attain higher standards of compliance, the Group's in-house health and safety system has been implemented throughout the business. Dedicated health, safety and technical staff are ensuring continued compliance with ever increasing governmental and environmental legislation. The US business has now been restructured into a concrete division, capable of producing more than 750,000 cubic yards of ready mixed concrete, and an aggregates division, capable of producing 3 million tons of aggregate each year. The US operations closed the year strongly despite the early onset of winter. We expect another strong performance in 2006 benefiting from our increased production capacity and extended geographical area supported by the recent acquisitions. Poland Ennbeton has made strong progress towards achieving its strategy of obtaining a 25% market share of ready mixed concrete sales in North West Poland. During the year, Zwirownia Dobra, a sand and gravel quarry with seven million tonnes of reserves, was acquired giving us long term material supplies for our concrete outlets in Szczecin. Additionally, the recent acquisition of two ready mixed concrete plants in Poznan extended our market coverage in that area, one of Poland's busiest commercial cities. We continue to pursue target acquisitions and have several opportunities at an advanced stage of negotiation. We believe we are now in a strong position to benefit from improvements in the Polish economy and we are starting to see significant progress in Ennbeton's performance. Please Note: The views expressed by our contributors are not necessarily those of CJ Connect, Contract Journal or Mondaq Ltd. College Hill Associates Ltd 78 Cannon Street Cannon Street is a road in the south of the City of London. It runs roughly parallel with the River Thames, and about 250 metres north of it. It is the site of the ancient London Stone. London EC4N 6HH UNITED KINGDOM Click Here for related articles (c) Mondaq Ltd, 2006 - Tel. +44 (0)20 8544 8300 - http://www.cjconnect.com |
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