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Company spotlight: Ennstone

FINANCE

EXPANDING from a safe business such as quarrying into contracting appears risky but Ennstone has already done this in Scotland and is repeating the move in England The idea of chairman Vaughan McLeod is to provide a route to market for the group's products. That is why Ennstone is paying £2.1 million ? £1.6 million in cash and £500,000 later ? for J&H Parry & Sons of Shawbury.

With two asphalt plants and half a dozen quarries in England, Ennstone has the products to service J&H Parry, which only turned over £4.1 million in 2004 but made a £230,000 profit that year.

J&H Parry also has cash of £620,000 and the business will benefit Ennstone's accounts with the regular cash payments that remain attractive for all companies, large and small, working in the risky business of contracting.

Apart from Hanson, Ennstone is the only quoted UK materials outfit left standing after a rash of consolidation and Mr McLeod has been fully involved in the deal-making.

He snaff led up Johnston then broke the street cleaning to aggregates firm up, keeping just the parts that suited Ennstone.

Unfortunately, before Ennstone could get its hands on Johnston, the firm's contracting arm was sold off ? hence the latest deal.

This activity has not helped Ennstone's gearing, which, at around 85 per cent, is a bit too high for the City's liking but as a small player Mr McLeod's business cannot afford to stand still. Buying J&H Parry will help provide the regular cash Ennstone needs to keep on moving.