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ENRC says "confident" on governance review

ENRC reported revenues up 32% this morning, but offered little in the way of insight into its corporate governance issues.

The FTSE 100 was down 41 points at 10:15.

Profits before tax at ENRC were up 32.8% for the first half of the year.

Following its well-publicised rows with former non-executives, CEO Felix Vulis said only: “I can report that the Board corporate governance review, announced at the AGM, is well underway. We are confident that the review will result in the right Board needed to lead the Group through its next growth phase.”

Analysts at Collins Stewart said of the comments:

Given the recent issues, this seems to be a highly optimistic statement and is likely to be sceptically received by investors. Amongst its peer global diversified group, ENRC is the second cheapest behind Vedanta, trading at 3.3x 2011 EV/EBITDA and 5.4x 2011 P/E, versus peer average of 4.1 and 6.7 respectively. We see this discount continuing to remain as ENRC has become a ‘no go’ stock for many investors due to corporate governance issues. We see few reasons for the stock to re-rate to previous levels, unless we see a sustained rally in ferrochrome prices.

The shares were at one stage the top performer among the FTSE 100, rising 2% to 644.5p.

Elsewhere, SAB Miller rose 0.5% to £21.28 after going hostile in its bid for Foster’s.

The UK’s largest building contractor Balfour Beatty reported revenues including joint ventures up 1% and pre-tax profits down 9% for the first half.

The company is heavily exposed to weak construction markets in both the UK and US.

In its statement it said:

Nearly a year on from the UK government’s Comprehensive Spending Review, the impact of the reduction in government spending is evident in UK infrastructure markets and consequently in our UK order book. We have been adapting our business by shifting our focus to where we see opportunities and by implementing our cost reduction initiatives efficiently and without delay. Meanwhile, the commercial markets in London are showing signs of recovery, although it is too early to call this a trend.

In the US market, the delay in the re-authorisation of a six-year transportation bill and the lack of bank financing in commercial markets are adversely impacting our business.

Balfour has grown quickly in recent years even as the construction sector has suffered, so the slower growth rates knocked the shares this morning – the stock was 5% down at 249p.

Car dealership and parts supplier Lookers reported revenues up 1.4% and flat profits for its first half, to the end of June 2011.

Analysts at Panmure Gordon said:

It’s clear that the trading outlook is deteriorating given the current economic uncertainty. However, we do believe Lookers is relatively well positioned given the strength of its parts operation as well as its exposure to brands such as Land Rover, which are expected to perform well given the strength of its order book on new brands such as Range Rover Evoque. In addition, the company has announced it has completed a strategic review post the bid and concluded it will expand both the motor and parts business organically and by “meaningful and complementary acquisitions.” While net debt has been rapidly declining, the company will be looking for additional headroom on its facilities as part of its ongoing refinancing process. We believe negotiations with the banks are at an advanced stage, and would expect this to be finalised next month.

Lookers shares rose 5.5% to 53p. © Guardian News & Media Limited 2011 | Use of this content is subject to our Terms & Conditions | More Feeds