Breedon Aggregates said the medium-term prospects for its Scottish business were “very good”, despite awaiting official clearance for a key £34 million acquisition north of the border.
The company moved in April to buy up several assets of Aggregate Industries in Scotland, while also completing a separate deal over Marshalls assets in England.
However, within weeks of the Aggregate purchase being announced, the Office of Fair Trading stepped in and issued a call for comments over whether the deal would result in a substantial lessening of competition in the UK marketplace.
Breedon yesterday said it had cooperated fully with the OFT probe and expected a positive outcome to the review.
The company was pleased with its new acquisitions but admitted it had been forced to plough in cash to upgrade the plant which had suffered years of under-investment.
“Having now owned these business for nearly three months, we are delighted with the assets we have acquired and the quality of the nearly 200 people who have joined us,” Breedon said in an interim update.
“During our due diligence investigation of these businesses we identified that both had suffered from a period of significant under-investment over the past few years, and we have moved quickly to replace vital equipment and to improve production efficiency, which will help drive an improved performance in the future.
“The review of the Scottish acquisition by the Office of Fair Trading, announced on April 30, is continuing and we have provided the information that they have requested.
“We continue to believe that there are no material issues affecting competition in these markets, but full integration of the acquired units is on hold until the review is completed.”
Despite the hold-up, Breedon said it was confident in its Scottish business, and there were a number of major opportunities on the horizon.
“In Scotland, the medium-term prospects look very good, with the £750 million Aberdeen ring road expected to start early next year and a £3 billion upgrade of the A9 planned over the next 12 years.
“We expect modest increases in spending by Transport Scotland on road maintenance as the election approaches, and the anticipated approval of the main electricity connector to the Hebrides is expected to trigger a number of renewable energy projects there.
“We expect product volumes in the second half of the year, on a like-for-like basis, to be slightly ahead of the comparable period last year, with the exception of asphalt which will continue to suffer from reduced local authority spending until recently allocated funding starts to come through.”
In the UK overall, the company, which employs around 1,000 staff, saw revenues grow 21% to break the £100m barrier in the six months to June 30, while underlying pre-tax profits came in at £5.34m up from £2.16m in the comparable period a year earlier.