News Column

UK WINNERS & LOSERS: Pharmaceuticals Hit By Scrutiny Of Tax Inversion

August 6, 2014

Neil Thakrar



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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Sage Group, up 0.5%. The company is among the biggest winners in the blue-chip index after it said that it has appointed Stephen Kelly as chief executive officer, succeeding Guy Berruyer, with effect from November 5. Kelly has served as chief operating officer for the UK government, responsible to the minister for the Cabinet Office since 2012. In the role he was responsible for Efficiency & Reform, as well as encouraging the government's agenda for small and medium-sized organisations.



Legal & General Group, up 0.1%. The life pensions and investment company has reported a 7.1% rise in pretax profit, driven in the main by the performances of its retirement and private equity arms. It posted a GBP636.0 million pretax profit in the six months to end-June, compared with GBP594.0 million in the corresponding period last year. Legal & General increased its interim dividend to 2.90 pence from 2.40p.

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FTSE 100 - LOSERS

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Shire, down 4.4%, Smith & Nephew, down 3.1%, AstraZeneca, down 2.9%. The companies have been the focus of recent merger and acquisition activity that had been based around US companies buying foreign names with the intention of re-domiciling their tax liabilities to benefit from lower corporate tax rates. The "tax inversion" deals have come under increased scrutiny by regulators and lawmakers in the US. Walgreens, a big US drug retailer, has backed down in the face of increased political pressure and will retain its headquarters in the US, rather than move to the UK, which it could do after its full acquisition of pharmaceutical retailer Boots. Such a decision would appear to make any further approaches for those UK names that have already been targeted less likely.



Barclays, down 2.3%, Reckitt Benckiser Group, down 2.2%, Anglo American, down 2.1%, and GlaxoSmithKline, down 2.1%. The companies are among the heaviest fallers in the blue-chip index after going ex-dividend, meaning new buyers no longer qualify for the latest dividend payouts.



SABMiller, down 1.9%. The brewing company is another FTSE 100-listed company that has gone ex-dividend. It also has said it has plans to appoint Jan du Plessis as chairman in July next year, to succeed John Manser. SABMiller said du Plessis, aged 60, will join the board as an independent non-executive director with effect from September 1, after which it intends to appoint him as chairman in succession to Manser at the conclusion of its annual general meeting in July 2015, when Manser retires. du Plessis is currently chairman of Rio Tinto, and has been a non-executive director of Marks and Spencer Group since 2008 and senior independent director since March 2012.

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FTSE 250 - WINNERS

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Interserve, up 3.7%. The support services and construction company has posted a big rise in revenue and pretax profit in the first half of 2014 and hiked its dividend on the back of improved demand in international construction and support-services businesses. It said revenue jumped 29% to GBP1.37 billion in the six months ended June 30 from GBP1.07 billion in the same period a year earlier, boosted by higher revenue from its support services, construction and equipment services businesses. Pretax profits rose 36% to GBP50.2 million from GBP36.8 million last year, leading the company to hike its interim dividend by 10% to 7.5 pence from 6.8 pence.

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FTSE 250 - LOSERS

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Serco Group, down 5.4%. Numis Securities has downgraded the support-services company to Reduce from Hold, lowering its price target to 295 pence from 360p and saying that there are significant risks to the company's short- to medium-term forecasts. The market is already pricing in a significant operational turnaround at Serco following the appointment of new Chief Executive Rupert Soames, says Numis analyst Julian Cater. This, however, may be premature as it will take a considerable length of time to stabilise a business that has seen huge staff turnover and significant contract attrition, before any sort of recovery can be delivered, he warns.



RPC Group, down 3.2%, Pennon Group, down 3.1%, andHiscox down 3.1%, are three more companies that have gone ex-dividend.

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AIM ALL-SHARE - WINNERS

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Tricorn Group, up 7.8%. The tube manipulation specialist's shares have risen after AIM All-Share index-listed Avingtrans said it had struck a deal to acquire the trade and certain assets of Tricorn's subsidiary RMDG Aerospace for GBP1.1 million. Avingtrans said the deal would strengthen its Sigma Components aerospace division and would add new customers to its portfolio. It will fund the deal through existing debt facilities. Avingtrans shares are quoted down 6.9% at 141.00 pence.



Zamano, up 5.3%. The internet and mobile technology company said it has recorded a "material increase" in first-half revenue compared to the immediately previous six-month period, boosted by better UK sales and higher sales levels in Australia. Zamano said it is now focused on looking for acquisition, investment and joint-venture opportunities in the UK and Ireland in order to accelerate the development of the business.

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AIM ALL-SHARE - LOSERS

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The Hotel Corp, off 46%. The investment company said that the UK Group of Hotels, in which it holds 49.92% interest, has gone into administration. The Hotel Corp's investment was fully written down in the accounts of the company as at December 31, 2013.



Acta SpA, down, 20% The hydrogen energy company said it has raised GBP2.0 million via a share placing with institutional investors, funds it said it will use to finance working capital requirements for its current commercial expansion. The shares were placed at 3.0 pence per share. Acta SpA's shares are currently quoted at 3.13 pence. "The net proceeds of the placing will be utilised to finance the company's strategic developments together with the anticipated growth of the company beyond the current financial year as commercial deployments accelerate and repeat orders continue to expand through larger deployments with major telecommunication companies," the company said in a statement.



SolGold, down 13%. The gold exploration company said its Hole 7 drilling at the Cascabel copper-gold porphyry project in Ecuador has now finished, with progressively falling levels of mineralisation from 1,298.3 metres depth. It said the Hole 7 site reached a total depth of 1,672.76 metres and intervals of strong copper sulphide mineralisation continued from 1,251.26 metres down to 1,298.3 metres. SolGold said visible copper sulphides continued through the remainder of the hole but at progressively falling levels and that there was a fall in quartz vein intensities showing that the hole was reaching its margin.

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Source: Alliance News


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