News Column

UK WINNERS & LOSERS: Just Eat Delivers Tasty Revenue Growth

August 12, 2014

Jon Darby



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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Prudential, up 2.0%. The financial services group upped its interim dividend by 15% to 11.19 pence per share, as it reported a 7% increase in operating profit based on longer-term investment returns before tax, though results were hurt by sterling's strength. Prudential made a GBP1.52 billion operating profit in the six months ended June 30, compared with GBP1.42 billion in the corresponding period last year. It reported an 18% increase in operating profit in the US, or 28% at constant rates, buoyed by long-term business such as life insurance, a 10% increase in the UK, helped by higher levels of bulk annuity transactions, and a 2% rise in Asia, or 19% at constant exchange rates.



RSA Insurance Group, up 1.0%, after Credit Suisse upgraded the insurer to Neutral, from Underperform.



BAE Systems, up 0.8%. The engineer has won a GBP348 million contract from the British Government to build three Offshore Patrol Vessels, formalising a deal initially announced last year. The vessels will be built at BAE's Clyde shipyards in Scotland, safeguarding around 800 jobs, and will be used in counter-terrorism, counter-piracy and anti-smuggling operations, the Ministry of Defence said.

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FTSE 100 - LOSERS

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Hargreaves Lansdown, down 2.9%. The retail stock broker suffered a knock from UBS, which initiated coverage with a Sell rating and a price target of 850 pence, more than 20% below Monday's closing price, saying that the market "significantly overestimates" the potential for new business. While Hargreaves Landsown is sill poised to do well from an increasing do-it-yourself investment market, UBS argues that the shares are priced to expect significant net flows of 25% per year over the coming three years, but that it is forecasting more like 15% as competition and other risks increase.

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FTSE 250 - WINNERS

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Just Eat, up 10%. In its maiden interim results since its April floatation, the online takeaway food delivery service reported strong profit and revenue growth in the first half of its financial year, driven by orders from mobile devices following the launch of its iPad app in the UK. The group reported pretax profit of GBP8.6 million for the six months to June 30, up from GBP3.1 million a year earlier, as revenue rose 58% to GBP69.8 million, from GBP44.1 million. Despite the share price leap to a peak Tuesday of 243.9 pence, the stock remains below its 260p floatation price.



Serco, up 4.5%. The outsourcing company reported a poor set of interim results, but they were broadly in line with expectations and accompanied by the news that new Chief Executive Rupert Soames has hired former Aggreko colleague Angus Cockburn as the company's chief financial officer. The struggling outsourcing company said it swung to a pretax loss of GBP7.3 million, from a GBP106.1 million profit last year, as the company was hit again by reductions in Australian immigration services, reductions on other contracts which had attracted higher-than-average margins, and additional costs to improve operational performance on some contracts. Revenue declined 5% to GBP2.02 billion, from GBP2.11 billion. Cockburn, Aggreko's long-time CFO under Soames, had become interim CEO of the temporary power supplier when Soames moved to Serco. However, Cockburn had also told Aggreko he didn't want to become full-time CEO and was ready to seek new challenges. He will join Serco from the end of October.



Ladbrokes, up 2.6%. Shares in the betting company have risen despite reporting a drop in first half profit, as it expressed confidence in delivering strong growth going forward. "We now have the products, the platforms, the people and the brand in place to deliver. Ladbrokes today is a far stronger company and well positioned for growth," said Chief Executive Richard Glynn. Ladbrokes first half pretax profit fell sharply to GBP27.7 million, from GBP55.1 million the year before, despite revenue rising to GBP577.8 million from GBP563.0 million. "With the new Premiership football season kicking off this weekend, traders are buoyed with confidence that Ladbrokes' new online platform can form the basis for a solid operational performance going forward," said Accendo Markets trader Samuel Springett.

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FTSE 250 - LOSERS

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Ophir Energy, down 2.7%. The oil producer has suffered a downgrade to Hold, from Buy, by Societe Generale, as analysts think the "visible forward drilling programme now lacks exposure to high impact frontier exploration wells." The downgrade follows an unsuccessful drilling campaign in Gabon in the first half, for which Soc Gen has a risked element of its price target, which has now been moved down to 230 pence from 350 pence.



SIG, down 1.3%. The building products distributor reported a fall in first half pretax profit as it was hit by restructuring costs, goodwill impairment charges, and losses on the sales of its German roofing operations and of its Miller Pattison home energy-efficiency business. The company said its pretax profit fell to GBP11.8 million in the six months ended June 30, down from GBP13.1 million in the corresponding period a year earlier. Investors have had a negative reaction despite SIG increasing its interim dividend by 23% to 1.42 pence from 1.15p.

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AIM - WINNERS

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Cloudbuy, up 21%. The software company said it has won a contract with an Australian state government to provide an e-procurement marketplace, which it estimates could generate a fee of approximately AUD900,000 on a yearly basis which could in due course rise to a maximum of AUD7.2 million. The initial contract is for a minimum period of six months.



Totally, up 11%. The group said that its subsidiary Totally Health Ltd has been appointed by Bedfordshire Clinical Commissioning Group to undertake a clinical health coaching programme focused on the management of long term conditions, including Totally's first chronic heart failure programme. Totally said revenues from the contract are expected to amount to approximately GBP65,000 over the six month trial period.



Serica Energy, up 10%. The oil and gas producer posted a half-year loss, in line with the previous year, but expressed optimism for the full-year on the back of its acquisition of a stake in the Erskine field in the North Sea from BP, sending its shares higher. Serica said it made a pretax loss of USD2.6 million in the six months to June 30. Its cash balance at the end of the period was USD19 million, with no debt. The company acquired the 18% stake in the Erskine field from BP in June for USD11.1 million in cash and 27 million shares. The deal gives Serica a cash flow boost, increases its proven and probable reserves and helps its efforts to bring the nearby Columbus field into production.



Greka Drilling, up 11%. The oil equipment company said the five GD75 rigs set to be used for its drilling contract with Essar Oil have now arrived at the East Coast Haldia Port in India on schedule, with preparations now underway to bring the rigs to the Durgapur site this month. The first wells at Durgapur are due to be started in September 2014, with the drilling campaign at the site set to last 12 months. Greka said the infrastructure needed to support the drilling is in place and the training of its local drill teams is nearing completion.



Scancell Holdings, up 5.5%. The biotechnology company saw its shares rise on Tuesday after it released results showing animals treated with a combination of its SCIB1 product and PD-1 checkpoint inhibition showed enhanced tumour destruction and much longer survival times than when only one of the treatments was administered.

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AIM - LOSERS

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John Lewis of Hungerford, down 19%. The kitchen and furniture designer and manufacturer saw its shares drop after the company unveiled plans to change its name and reorganise its business into two divisions. The plan is for the company to change its name to Grove Oxfordshire PLC, and set up two new operating divisions - John Lewis of Hungerford Ltd and Artisan Installation Company Ltd.



Sunrise Resources, down 5.9%. The mining company said it diamond size distribution from its Soapy Bore kimberlite site at the Cue Diamond Project in Western Australia were less favourable than the Target 5 samples. The group said that all kimberlite samples from the Cue Diamond Project are diamondiferous, and said it recovered 227 diamonds from 272kg of kimberlite processed, coming out at 0.83 stones per kg.

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Source: Alliance News


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