Five-minute Q&A: Vaughan McLeod

Agg-Net caught up with chairman of the Ennstone Group Vaughan McLeod on the day the company’s share price fell to a 52week low after the group announced full year targets for 2008 would not be met.

Agg-Net: Not so good a day then?

McLeod: (laughs) I’ve had better. But it had to be done, though. I like to warn people rather than spring surprises. It is a matter of visibility. I just can’t see what is going to happen to the market going forward. Just look at house building and Taylor Wimpey failing to secure funds. CRH has also put out profit warnings. Shareholders needed to know what was going on.

Agg-Net: What are the plus points?

McLeod: There are many. Firstly we have invested in state-of-the-art asphalt plant and other lower cost, low energy devices. This investment is already starting to pay off as energy prices continue skyward. We also have a flat management structure. This streamlines our operation. And we have significant and growing mineral reserves. Over the next two years we plan to grow this further by converting 50million tonnes of unconsented reserves into consents. And our reserves have not been valued since 2002. We are currently getting them re-evaluated.

Agg-Net: Ennstone Thistle appears to be performing well.

McLeod: Yes, I am a little nervous about shouting about this too much but it looks as if the Scottish arm could have a good second half. The SNP has allocated funding for road maintenance. Around 80-85% of spend in our area, which is north of Sterling, goes on maintenance work. So if the funds continue flowing it looks positive.

Agg-Net: And other operations?

McLeod: Well, Poland is a massive success. It is heading for record profits and turnover. There is strong regional investment in infrastructure and that in turn is driving strong volume and price increases. We have two new quarries being introduced later this year so this should boost aggregate production. Construction products is also looking fine at the moment. But the US is ruddy tough. After the first four months of the year trading conditions slumped. We need a change of government there, I think, to help kick start the economy.

Agg-Net: Finally, any magic wands?

McLeod: No, not really. The difference this time, compared with previous downturns, is that the banks don’t appear to have any money. When you talk to them they say they have re-capitalised but are still dealing with past problems. Banks starting to lend money again would be a step in the right direction.