News Column

UK WINNERS & LOSERS: Balfour Beatty Drops 18% On Profit Warning

May 6, 2014

James Kemp



LONDON (Alliance News) - The following stocks are the leading risers and fallers within the main London indices midday Tuesday.

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FTSE 100 - WINNERS

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Persimmon, up 3.6%, and Barratt Developments, up 1.8%. The housebuilders are among the leading gainers in the blue-chip index on the back of a positive research note by Barclays. "Against an improving backdrop, the recent sell off of house builders warrants close attention," the bank says. It believes that there are currently strong fundamentals for the housebuilding sector, with greater visibility provided by the extension of the Help to Buy scheme, a largely disciplined land market, and a more supportive planning system. Furthermore, "where headwinds exist - notably the threat of rising interest rates - they remain relatively benign in our view," Barclays says. The bank has raised Persimmon's price target by over 15% to 1,540.00 pence, up from 1,334.00p, and Barratt's target to 501.00p, up from 471.00p.

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FTSE 100 - LOSERS

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Aberdeen Asset Management, down 6.7%. The group said its first-half pretax profit fell after net revenue came under pressure due to a decrease in fees received, while operating expenses also increased in what was a difficult period for emerging markets. It said pretax profit fell by 10% to GBP168.7 million in the six months to end-March, compared with GBP188.2 million in the corresponding period a year earlier. Net revenue decreased by GBP12.5 million to GBP503.5 million due to declines in net management fees, performance fees and transaction fees. Operating expenses increased by GBP10.7 million to GBP335.2 million as Aberdeen booked a GBP15.3 million cost related to the acquisition of Scottish Widows Investment Partnership Group from Lloyds Banking Group at the end of the second-quarter. The SWIP acquisition didn't contribute to results because its completion fell at the end of the reporting period, but Aberdeen estimated that pretax profit would have increased by GBP48.0 million if it had been included.



Barclays, down 4.4%. The bank's shares have fallen after it reported a decline in first-quarter adjusted pretax profit as it was hurt by a slump in the performance of its investment bank. It said it made a GBP1.69 billion adjusted pretax profit in the first three months of the year, 5.6% lower than the GBP1.79 billion reported for the corresponding quarter a year earlier. Adjusted net operating income fell to GBP6.10 billion from GBP7.03 billion. The adjusted figures, which strip out own credit, costs of provisions for mis-sold products, and goodwill impairment, were presented alongside an 18% increase in statutory pretax profit to GBP1.82 billion. The investment bank, which has been criticised for its high staff costs and declining profitability, reported a 41% decline in fixed-income, currencies and commodities income, which fell to GBP1.23 billion due to subdued client activity and changes in business mix as the division prepares for its strategic review. Overall, the investment bank's pretax profit fell by almost half, to GBP668.0 million from GBP1.32 billion a year earlier.



AstraZeneca, down 2%. The British drugs company set out its defence Monday against a GBP63 billion takeover offer from US rival Pfizer Inc, urging its investors to be patient because it is set to grow quickly after it invests in its pipeline and transforms the company over the next few years. The company, which Friday rejected the US company's latest informal GBP50-a-share offer, reaffirmed that its revenue in 2017 would be broadly in line with the USD25.71 billion it reported in 2013. However, it expects revenue to more than double over the following five years, reaching more than USD45 billion by 2023. It said core earnings will grow at an even faster rate over the same period as it restructures and cuts costs.



Anglo American, down 1.7%. FTSE 250-listed Lonmin has announced that the Association of Mineworkers and Construction Union plans to continue the ongoing platinum miners' strike in South Africa into its fifteenth week and noted that many employees have indicated their wish to return to work but fear for their personal safety. The platinum sector in the country has been crippled by strikes at mines owned by Lonmin, Impala Platinum Holdings and Anglo American Platinum, a subsidiary of Anglo American as the AMCU attempts to achieve significantly better wages.

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FTSE 250 - WINNERS

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Countrywide, up 2.5%. The estate agency said it expects to deliver full-year profit at the top end of its expectations after a strong first quarter which saw its lettings business thrive as the UK's housing market continues its recovery. In an interim management statement for the period up to May 5, the property services group said total income in the first quarter rose to GBP157.1 million from GBP121 million in the first quarter of 2013. It said house exchanges were up 29% during the period compared with the first quarter 2013, while residential lettings properties under management volumes rose 28%. The number of mortgages arranged increased 33% in the first quarter 2014 compared with the same period in 2013. First quarter 2014 lettings revenues were up 20%, with earnings before interest, taxes, depreciation, and amortization from lettings up 50%.

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FTSE 250 - LOSERS

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Balfour Beatty, down 18%. The building and engineering firm said that its construction business has continued to struggle which will result in "significantly" lower group pretax profit for 2014 than previously expected. It said there has been significant performance improvement in the regional construction business, but the mechanical and electrical engineering and major buildings projects businesses have both experienced significant operational issues. As a result group pretax profit for 2014 is expected to be significantly lower than previous expectations, in the range of GBP145 million and GBP160 million. Balfour also said Chief Executive Andrew McNaughton has stepped down with immediate effect, and Non-Executive Chairman Steve Marshall will take over as executive chairman until a successor has been appointed.



Lonmin, down 1.7%. The platinum miner's shares are among the biggest fallers in the mid-cap index Tuesday after it said that a meeting on Monday between South Africa's AMCU, Lonmin, Impala Platinum, and Anglo American Platinum on Monday had failed to end the miners strike that has crippled the platinum sector in South Africa.

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AIM ALL-SHARE - WINNERS

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Xcite Energy, up 17%. The oil and gas exploration and development company has started a collaboration agreement with Statoil Ltd and Shell UK, part of Royal Dutch Shell, to share technical and operational information in order for potential joint operations at the Bentley and Bressay fields in UK North Sea. It said the collaboration team will work together to analyse the current available information and develop a number of proposals of assessment of the sites. Xcite said the proposals include the potential utilisation of common infrastructure, assets and operations during the phased development of the Bentley Field and the future development of the Bressay Field, adding that the collaboration should lead to a number of mutual opportunities which should be beneficial to all stakeholders.



Tristel, up 12%. The maker of infection prevention, contamination control and hygiene products said its wipes system for decontaminating endoscopes used in ear, nose and throat departments had been recommended in an article in a Russian scientific journal, a development it hopes will lead to a jump in sales in the country. It said its wipes system was recommended in an article published in the April 2014 issue of the peer-viewed journal "Russian Otorhinolaryngology".



Leni Gas & Oil, up 11%. The oil and gas exploration and development company said initial tests at its GY-664 well, the first new development well at the Goudron Field in Trinidad, have shown a larger-than-expected region of oil and gas bearing sands at the site. The company said initial analysis of the well showed the presence of over 350 feet of oil bearing sands and drilling is now continuing to a planned total depth of 4,000 feet in order to test its primary objectives in the Gros Morne and the Lower Cruse Sands at depths below 2,800 feet.

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AIM ALL-SHARE - LOSERS

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Fastnet Oil & Gas, off 44%. The exploration and production company said it has failed to find commercial hydrocarbons at its first well in a series of wells designed to open up a new major producing region in the Foum Assaka offshore block in Morocco. The group said the FA-1 well reached a total depth of 3,830 metres and will now be plugged and abandoned after it failed to find high enough levels of oil and gas.



Magnolia Petroleum, down 20%. The US-focused onshore oil and gas production company said it suffered a significant downgrade in its proved and producing gas reserves following a reassessment of the Mississippi Lime region geology in the US. It said assessment on April 1 of its proved and developed producing reserves resulted in a 5.7% increase in its oil and condensate reserves to 167 million barrels but a 45% fall in its gas reserves to 450 million cubic feet, compared with a previous estimate on August 1, 2013.



Green Compliance, down 11%. The company said it finished the year to end-March in line with management expectations, as it now moves to focus on its water hygiene and treatment business. During the period, the company said a refinancing, coupled with the divestment of its pest control and fire services divisions, had allowed it to exit the year completely focused on its water arm. It said the second half of the year produced 10% growth in water revenue over the first half, as it renewed several significant treatment contracts during the period.

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Source: Alliance News


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