UK WINNERS & LOSERS: Serco Battered, Distil Soars On Christmas Hopes

LONDON (Alliance News) - The following stocks are amongst the biggest risers and fallers within the main London indices midday Monday.
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FTSE 100 WINNERS
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Tesco, up 2.3%. Bernstein has raised the company to Outperform from Market-Perform, with a price target of 235.00 pence. The UK grocer trades at 188.70p.

Imperial Tobacco Group, up 0.8%. Societe Generale has raised the company's price target to 3,100.00p from 3,000.00p, saying that Imperial's potential US acquisition in 2015 could prove to be an important catalyst. The stock currently trades at 2,802.00p.
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FTSE 100 LOSERS
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Hammerson, down 1.3%. The commercial property company said conditions are improving in its UK retail estate, while conditions in its French market remain subdued, although stable. The company said UK shopping centre sales are up 2.6% so far in 2014, while French sales are down 2.8%. It also reported that total rent from new group lettings are up 37%, and the total area of lettings is up 21%.
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FTSE 250 WINNERS
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Cairn Energy, up 11%. The oil and gas explorer announced it has made a second oil discovery in its exploration programme offshore Senegal. Results from the SNE-1 well shows a 95 metre gross oil bearing column with a net oil pay of 36 metres. Preliminary estimates for the contingent resource range from 150 million barrels of oil to 670 million barrels of oil. Further evaluation is being carried out at the well, and the company is hoping to reach lower targets as it continues drilling. Liberum analyst Andrew Whittock says the discovery should put greater confidence in Cairn's operations in Senegal.

AVEVA Group, up 4.8%. The engineering data and design IT system provider reiterated its full-year expectations, despite a "disappointing" first half performance in which pretax profit fell on lower revenue. It also raised its interim dividend to 5.5 pence per share from 5.0 pence a year before. AVEVA posted a pretax profit of GBP14.2 million for the six months to end-September, down from GBP27.3 million a year before, as revenue fell 21% to GBP85.9 million from GBP108.5 million. The company said its rental licence fee revenue had been reduced by around GBP13 million due to the phasing of key rental contracts, rental contracts not being renewed in Brazil, and lower levels of activity in the Asia Pacific region.

Lonmin, up 4.7%. The platinum group metals miner is up despite saying it swung to a pretax loss after the longest strike in the platinum industry's history halted production in South Africa for five months of the year. For the year ended September 30, the company swung to a pretax loss of USD326 million, compared with a USD140 million profit in 2013. Revenue fell to USD965 million, from USD1.52 billion, after it was hit by the strike action by the Association of Mineworkers and Construction Union and by subdued metal prices.

Just Retirement Group, up 2.5%. The specialist insurer said it has generated GBP25 million in defined benefit sales in the first quarter, including a GBP75 million deal announced in October with an undisclosed client, and announced a further defined benefit sale of GBP76 million which will be completed later this week. The group also said sales volumes post the first quarter are in line, except for higher defined benefit sales, and said it maintains its outlook for the year, "despite difficult market conditions". However, Just Retirement's total sales fell in the quarter by 42% year-on-year, with individually written annuity volumes dropping 59% in the wake of the pension reforms introduced by UK Chancellor George Osborne.
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FTSE 250 LOSERS
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Serco Group, down 31%. The outsourcing company issued another profit warning, revealed the scale of the provisions and writedowns it will have to book, and proposed an equity rights issue to shore up its balance sheet once more. New Chief Executive Rupert Soames said the company will also sell businesses, including most of its private sector business process outsourcing operations, as it will specialise in outsourcing work for governments internationally going forward. On top of cutting its guidance for 2014 and 2015, it plans to tap shareholders for another GBP500 million in the first quarter of 2015, expects to book provisions and writedowns of GBP1.5 billion, will talk with its lenders about amending its debt covenants, and has scrapped dividend payments for the time being.

Redrow, down 3.0%. The housebuilder said the UK housing market has returned to a more normal seasonal pattern after its recent boom and price rises have moderated, as it also cautioned that planning permissions were being hampered by political posturing ahead of next year's general election. In a statement ahead of the company's annual general meeting Chairman Steve Morgan said Redrow's sales rate per outlet per week for its regional businesses is 0.65, compared with the "abnormally high rate" of 0.87 in the summer of 2013.
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AIM ALL-SHARE WINNERS
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Distil, up 117%. The company said it has gained a range of new distribution outlets and promotions for its products in the UK in the lead up to Christmas. Distil's RedLeg Spiced Caribbean Rum is now available in the Castle Pub estate run by Mitchells & Butlers, while wholesaler Booker Group is adding the product to all of its cash and carry branches. Elsewhere, it said J Sainsbury is promoting its Blackwoods gin product and Tesco has Blackwoods Vodka listed in 51 stores.

ReThink Group, up 16%. The talent management and recruitment company proposed a tender offer for up to 30% of its issued share capital, and the cancellation of its trading on AIM to become a private company. The company plans to tender up to 34.95 million shares at 5 pence per share, which it said is a premium to its closing mid-market price last Friday. ReThink's board "unanimously" recommends shareholders vote in favour of the de-listing, although it made no recommendation regarding the tender offer. It said it considers it appropriate that shareholders who are unable or unwilling to hold shares in the company after a de-listing be able to realise their investment under the offer.
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AIM ALL-SHARE LOSERS
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Weatherly International, off 18%. The company said it has agreed a share subscription deal with fellow AIM-listed Polo Resources in order to raise GBP900,000. Weatherly said it will issue 30.8 million shares at 2.925 pence per share to Polo, a sharp discount to its opening price of 3.75 pence per share on Monday. Polo has also committed to subscribe to a further 76 million Weatherly shares at the same price in order to raise around GBP2.2 million. Along with the Polo subscription, Weatherly said it intends to raise another GBP3.8 million through a 4 for 19 offering of approximately 129.8 million shares at the same issue price to its existing shareholders.

Quindell, down 12%. The company is down even after it tried to reassure investors about a recent deal done by several of its directors who took out loans to buy shares and put some of their share holdings up as security for the deal. On November 5, Chairman Robert Terry, Finance Director Laurence Moorse and Non-Executive Director Steve Scott bought nearly 1.6 million shares in total, using funds from a loan provided by Equities First Holdings LLC. A company controlled by Scott, Bickleigh Ridge Ltd, also bought 175,000 shares using the same mechanism, it was announced two days later. In a statement Monday, Quindell said the deal with Equities First is a sale and repurchase agreement, and the three directors had transferred the legal and beneficial interest in "a number of shares" to the US company in return for a payment from Equities First of a sum equal to 67% of the three-day average market value per share less a financing arrangement fee of 3%.
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By Neil Thakrar; neilthakrar@alliancenews.com

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