UK WINNERS & LOSERS: Petrofac And Tullett Prebon Lead Indices Lower

LONDON (Alliance News) - The following stocks are the leading risers and fallers within the main London indices midday Friday.
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FTSE 100 - WINNERS
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WPP, up 0.5%. Shares in the media buying giant have risen after France-based Publicis and US-based Omnicom mutually terminated their merger agreement. "While there may be some hopes that this will benefit WPP in the short-term, we see the consequences for the agency space as negative," says Liberum Capital analyst Ian Whittaker. Whittaker believes that there may be short-term hopes that WPP may benefit from any management turmoil in the groups, but says that in the shorter-term, the collapse of the agreement is likely to lead to a more competitive environment and, in the longer-term, it "dashes the hopes that the merger would lead to an easing of pressures in staff costs and client fees."
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FTSE 100 - LOSERS
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Petrofac, down 16%. The oil and gas services company has achieved good Engineering, Construction, Operations & Maintenance progress in its first quarter, but has warned that net profit will fall in 2014 due to lower-than-expected earnings from its Integrated Energy Services operations, due partly to delays in development of is major Greater Stella Area project. It said it now expects its net profit to fall to between USD580 million and USD600 million in 2014 from USD650 million in 2013, which it attributed to low earnings from the Integrated Energy Services division. The company said in February that it expected net income in 2014 to be either flat or to grow modestly year-on-year.

International Consolidated Airlines Group, down 3.3%. The group's shares are among the heaviest fallers in the blue-chip index, having initially risen sharply at the UK equity market open. The decline comes despite the company predicting that its operating profit will rise in 2014, after its operating loss almost halved in the first quarter as the continued restructuring of Iberia drove down losses at the Spanish airline. The parent of British Airways and Spanish airlines Iberia and Vueling said it now expects its 2014 operating profit to be at least EUR500 million above the EUR770 million it booked in 2013. It reiterated that it expects revenue to remain relatively flat, but cost cutting will push up its profit margin.

Rolls-Royce Holdings, down 1.5%. The firm has announced that it has won orders from a variety of international customers for its offshore ship designs and equipment worth more than GBP60 million. However, Barclays has downgraded the company to Underweight from Overweight and lowered its target price to 930.00 pence from 1,225.00p. Following a "detailed analysis" of the company's civil and defence aerospace businesses, Barclays believes that, "the 'pause in growth' cited by management for the full-year 2014 will likely extend into 2015 and 2016."
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FTSE 250 - WINNERS
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Grafton Group, up 2%. The builders merchants and DIY company said it is continuing to see recovery in its markets which started in the second half of 2013, with group revenue up 14% in the first four months of 2014. It said revenues rose to GBP654 million in the period to the end of April, from GBP576 million in the same 2013 period.
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FTSE 250 - LOSERS
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Tullett Prebon, down 7.2%. The interdealer broker said it will take a charge in its accounts in order to cut costs further, as it reported a decline in revenue due to subdued financial markets while also announcing a deal worth up to USD160.0 million to acquire oil-futures broker PVM Oil Associated Ltd. Revenue in the four months to April amounted to GBP248.0 million, 15% lower than the comparable period a year earlier. Blaming difficult market conditions, Tullett said it will take "a number of actions" to further reduce headcount and other fixed costs. It expects the measures to reduce annual fixed costs by about GBP20.0 million, but also estimated that the cost of making the cuts will be around the same amount of what will be saved in a year, half of which is expected to be non-cash.

Drax Group, down 2.2%. The UK energy provider has warned that it is now expecting earnings to be below current market forecasts as power prices have fallen by more than expected, leading to weaker gas markets, and as renewables obligation certificates prices also have fallen. It said that since publishing its preliminary results on February 18, mild weather across Europe had led to weaker gas markets and a further fall in power prices, while abnormally high wind generation has pushed down the price of its renewables obligation certificates prices. The group also confirmed it is moving ahead with its legal action against the UK government in relation to its contracts-for-difference dispute.

Man Group, down 1.7%. The hedge fund manager said its funds under management increased over the course of the first-quarter, boosted by net inflows, but Chief Executive Manny Roman said it remains cautious with regards to the remainder of the year. Overall, funds under management increased by USD900.0 million to USD55.0 billion in the quarter to end-March, lifted by USD2.0 billion in net inflows in the period. However, "whilst we are pleased to have recorded a solid quarter of net inflows, we remain cautious in our outlook for asset flows for the rest of the year given recent mixed absolute investment performance," Roman said.
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AIM ALL-SHARE - WINNERS
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Wessex Exploration, up 32%. Shares in the energy company continued to rise Friday, having jumped 32% on Thursday, after it confirmed on Thursday that it was still in advanced negotiation regarding a potential acquisition of a prospective offshore asset in the Far East. It said that the proposed acquisition would not be classified as a reverse takeover under AIM rules.
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AIM ALL-SHARE - LOSERS
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21st Century Technology, off 24%. The closed circuit camera television and monitoring systems company swung into a loss for 2013 and suspended payment of its dividend, as it plans to re-focus its business after it lost a significant contract with FTSE 250-listed Go-Ahead Group. It posted a pretax loss of GBP218,000 for 2013, down from a restated pretax profit of GBP1.8 million, as revenue declined to GBP10.8 million from GBP14.0 million.

Metminco, down 14%. The copper and gold miner's shares have fallen sharply after it said it didn't know why its shares had jumped and trading volumes increased recently. Shares had closed 19% higher Thursday, having touched 1.587 pence, their highest level since late March.

San Leon Energy, down 10%. The group said it was continuing talks with TransAtlantic Petroleum PLC about the details of a proposed work programme on sites in Poland that the US-based company is farming in to, after TransAtlantic said Thursday that it had decided not to proceed with the full acquisition. In late March, San Leon Energy said it has signed a farm-out deal under which TranAtlantic Petroleum Ltd will fund all of a six-well programme on nine concessions in Poland, earning a 50% stake in the sites in Poland's Permian basin and becoming their operator. At that time, San Leon said the estimated value of the work programme was between USD60 million and USD70 million. TransAtlantic was expected to pay USD5.0 million to San Leon as a contribution to back costs and a further USD5.0 million once a total of 150,000 barrels of oil equivalent have been sold. The deal would have left TransAtlantic with a 50% interest in the concessions, San Leon with 37.5% and Hutton Energy with 12.5%.

Ithaca Energy, down 9.7%. The oil and gas exploration and development company said it has been hit by delays at the Greater Stella Area development in the North Sea, moving back production until mid 2015. The firm, which holds a 54.66% interest in Stella, said the topsides construction programme has advanced more slowly than planned for the project, while FTSE 100-listed Petrofac, which has a 20% interest in the field, said that the FPF-1 production vessel will not be moved to the Stella Field until spring 2015, meaning that first production would be held back until mid-2015. Ithaca said that the incremental cost to the company of the delayed start-up is estimated at between USD5 million and USD10 million, due mainly to project management costs but said the funding position of the company has not been materially hit by the delays.
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By James Kemp; jameskemp@alliancenews.com; @jamespkemp

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