Ennstone lifts value of UK quarries to £123m

Ennstone has issued some good news this morning: an independent valuer says that its UK assets are worth £123m, some £73m higher than their existing book value.

That lifts the net asset value of Ennstone’s shares by 16p, putting their theoretical worth at 53p, says one city analyst.

But Ennstone’s trading update, issued this morning, has something of a sting in its tail as the group has told the Stock Exchange that is has “identified some concerns regarding its banking covenants”.

As a result is has taken steps to eliminate those concerns. That process will call for the injection of £11m of new funds, which in turn will probably mean asset disposals.

David O’Brien, analyst with stockbroker Altium, says: “Ennstone is considering a number of options to strengthen the balance sheet. We think these are likely to take the form of either asset disposals or an equity fundraising. The preference has to be for the former.”

Vaughan McLeod, Ennstone chief executive, said that demand for aggregates is “fine” with Scotland going well and England performing as expected.

McLeod said that demand for Ennstone’s concrete products has slowed up over the past six weeks with the consequence that the “back end of the year” will be down on expectations.

“Our concrete products are early parts, for example elements such as sewer pipes that are used when opening up new construction sites. It is a sign that there is a slowing up of that type of activity.”