News Column

UK WINNERS & LOSERS: Blinkx Shares Almost Halve On Earnings Warning

July 2, 2014

James Kemp



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

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FTSE 100 - WINNERS

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BHP Billiton, up 0.8%. The mining company said it is considering further job cuts at its iron ore operations in Australia, according to the Business Spectator on Wednesday. The Australian business news website said the company's iron ore unit president, Jimmy Wilson, said on Wednesday that BHP's "aspiration is to at least hold our headcount the same or reduce it while we are increasing our volumes." Wilson added that any further job cuts would not be in response to market prices, which have dropped significantly this year in line with BHP expectations, and that there is no targeted number of layoffs, Business Spectator said. In June, media reports suggested the company is planning further job cuts as it seeks to reduce costs, but at the time BHP declined to confirm an Australian Broadcasting Corp radio report that the number could reach 3,000.

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FTSE 100 - LOSERS

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Royal Mail, down 1.9%, Burberry Group, down 1.5%, and Babcock International Group, down 1.2%. The companies are among the leading fallers in the blue-chip index after going ex-dividend, meaning new buyers no longer qualify for the latest dividend payout.



Tullow Oil, down 0.5%. The oil and gas exploration company said that its revenues and gross profits for the first half of 2014 are expected to be in line with expectations but that it will book a USD415 million exploration write-off charge after poor drill results in Mauritania, Ethiopia and Norway. It said that it expects to post roughly USD1.3 billion in revenues for the six monthsto end-June, a figure which is flat on the previous year, and USD650 million in gross profits, a reduction of 15% from USD764 million in the first half 2013. Tullow also said that after mixed exploration results during the period, along with the relinquishments of certain licences as the company focused on its high-grade assets, it expects a net exploration write off of USD415 million for the first half of the year.

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FTSE 250 - WINNERS

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Ocado Group, up 5.3%. The gain follows a volatile trading session for Ocado on Tuesday - after moving sharply higher at the open, it ended the day as the mid-cap index's biggest faller. The heavy losses were posted despite the online grocery retailer saying that it swung to profit in the first half of its financial year, driven by its tie-up with FTSE 100-listed WM Morrison. However, this negative sentiment has been reversed Wednesday, and the stock sits atop the FTSE 250 winners table. Deutsche Bank has raised Ocado to Hold from Sell, but cut its price target to 330 pence from 350p Wednesday, while JPMorgan has lowered its price target on the company to 476p from 500p.



Kier Group, up 3.2%. The construction and support services company's shares have jumped after it said its underlying trading performance for the full year remains on track for expectations with good visibility of earnings in 2015. The company said its construction division experienced a good second half with an encouraging level of opportunities. Operating margins remain stable at around 2% and the order book of secured or probable work stood at GBP2.6 billion, which represents around 90% of anticipated revenue for the year to June 2015. It said its services division has also performed well, with its order book stable at GBP3.6 billion, while the property divisions also has benefited from an increase in investor appetite.



Carillion, up 1.9%. The construction company said its performance in the first half was in line with expectations, and that it remains on track to resume revenue growth in the full year, despite an expected dip in first-half revenue due to the rescaling of its UK construction activities. In a separate note, Carillion said it has been selected as the preferred bider to expand Liverpool Football Club's Main Stand and the associated public realm improvements. The upgrade is expected to take around 20 months to complete with construction costs worth in the region of GBP75 million.



Spirent Communications, up 1.7%. The company said it has agreed to acquire Radvision Ltd's technology business unit for USD25.0 million in cash, funded from existing resources. Israel-based Radvision, which is owned by the US's Avaya Inc, provides voice and video communications services over the internet and mobile networks, including high-speed 4G Long-Term Evolution networks. Spirent said it expects the acquisition to add to earnings and generate cash in its first full year.



Premier Oil, up 1.3%. The oil and gas company said that first gas under its domestic swap agreement in Indonesia began to flow on Tuesday, allowing the company to provide gas into both Indonesia and Singapore from the Natuna Sea Block A, offshore Indonesia. It said that under the swap deal, it will supply up to an additional 40 billion British thermal units of gas per day to Singapore from the Natuna block. The additional supplies will replace Premier Oil's current flow of gas from Natuna to Singapore, freeing up the previous supply volumes to be re-directed into the Indonesian domestic gas market.

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FTSE 250 - LOSERS

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De La Rue, down 3.5%, Dairy Crest Group, down 2.8%, TalkTalk Telecom Group, down 2.2%, Cranswick, down 2%, Homeserve, down 1.9%, ITE Group, down 1.9%, ICAP, down 1.8%, Halfords Group, down 1.5%, and N Brown Group, down 1.2%. The companies are all among the biggest losers in the mid-cap index after going ex-dividend.

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AIM ALL-SHARE - WINNERS

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Petards Group, up 22%. The security and surveillance systems maker said it has won a deal worth over GBP4.5 million from the UK Ministry of Defence to upgrade countermeasures equipment fitted to some Royal Air Force aircraft. It said the project will start immediately and is expected to contribute to revenue in the current and the two subsequent financial years, with the largest proportion falling within 2015. It expects to complete the project by the end of the first quarter of 2016. "We are encouraged by this morning's announcement, which yet again demonstrates Petards' standing with the MoD following the GBP7 million order received last year," said WH Ireland analyst John Cummins.



Graphene NanoChem, up 15%. The company said it is confident it will meet the market's expectations for its 2014 results and will see substantial revenue increases from 2015, after it won its first purchase order for its graphene-enhanced PlatDrill Series oilfield chemicals. Graphene Nanochem had entered into a framework agreement with Scomi Oiltools Sdn Bhd last November, and said the order for the PlatDrill chemicals, for an unnamed national oil company, was down to that framework deal. It expects revenue from the initial purchase order to be GBP1.0 million, payable on delivery. It said the initial deal is for the delivery of 7,800 barrels, or about 1,000 tonnes, into a planned four-well onshore drilling programme that will start this month.



The Rethink Group, up 14%. The recruitment company said it has extended a contract it has with retail giant FTSE 100-listed Marks and Spencer Group for a further three years. The talent manager said that it will continue to provide M&S with IT staff at a number of the retailer's London offices. It didn't provide any financial details of the contract, but said the extension started in June.



Acta SpA, up 11%. The hydrogen energy company has seen its shares rise after it sold three of its Acta Power systems to its Australian distributor and commercial partner for a back-up power application for one of the country's largest mobile phone operators, and said it is set to win more sales through this channel. The contract is a repeat order, and is expected to be fulfilled in the second half of 2014.



Mosman Oil & Gas, up 8.9%. The oil exploration and development company said it has entered a deal to buy Australian onshore and offshore oil company Trident Energy Ltd for USD1.6 million in shares along with a cash loan. It said the deal, which should complement and expand its regional exploration portfolio, will be paid for in three tranches. The company said it firstly will issue 2.9 million shares in Mosman to acquire Trident's equity, before settling Trident's outstanding loans, directors fees and creditors payments by the issue of up to 2.5 million further shares. Mosman said it has also agreed to provide a loan payment of up to AUD750,000 to Trident,

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AIM ALL-SHARE - LOSERS

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Blinkx, off 45%. The company, which provides companies with advertising for use with online videos, said its earnings before interest, tax, depreciation and amortisation will be around USD5 million below management expectations, as it saw lower demand than expected in its Desktop division. It said that as a result of this lower demand over the last three months it has seen a shortfall in revenues and EBITDA. The firm attributed this to "industry-wide issues of efficiency and effectiveness", which it said had been compounded by the lingering effects of a disparaging blog about its business in January.

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Source: Alliance News


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