Broker Upgrades and Downgrades & Key UK Corporate Snapshots 06 November 2015

UK Broker Upgrades / Downgrades

US Broker Upgrades / Downgrades

Key UK Corporate Snapshots Today

3i Infrastructure Plc (3IN.L) Announced, in its interim results for the six months ended 30 September 2015, that net gains on investments at fair value through profit or loss dropped to £61.9 million from £91.3 million recorded in the same period a year ago. Profit after tax narrowed to £80.7 million from £117.4 million. The board declared an interim dividend of 3.625p per share. Separately, the company announced the appointment of Richard Laing as Chairman, with effect from 1 January 2016.

ACACIA MINING Plc (ACA.L) Announced that its Chief Operating Officer, Michelle Ash, will be leaving the company with immediate effect, with Brad Gordon, CEO, resuming direct responsibility for the operations.

AstraZeneca Plc (AZN.L) Announced that it has entered into a definitive agreement to acquire ZS Pharma. ZS Pharma uses its proprietary ion–trap technology to develop novel treatments for hyperkalaemia (high potassium levels), a serious condition of elevated potassium in the bloodstream, typically associated with chronic kidney disease (CKD) and chronic heart failure (CHF). Under the terms of the agreement, the company will acquire all of the outstanding capital stock of ZS Pharma for $90 per share in an all-cash transaction, or approximately $2.7 billion in aggregate transaction value. Acquisition includes potential best-in-class hyperkalaemia treatment currently under US FDA regulatory review. Acquisition is expected to contribute product sales from 2016 and benefit the company’s return to growth strategy.

BHP Billiton Plc (BLT.L) Announced that a critical incident occurred at Samarco Mineração S.A’s iron ore operation in Minas Gerais, Brazil. The company holds a 50% stake in Samarco Mineração S.A.

British Land Co Plc (BLND.L) Announced that it has appointed Roger Madelin to lead the development of its 46 acre Canada Water site. Roger Madelin will join the company at the beginning of February 2016 and will also sit on the company’s Executive Committee.

Bunzl Plc (BNZL.L) Announced that it has completed three major acquisitions. The company acquired Casa do Epi Ltda in Brazil that operates from a facility in the state of Minas Gerais with a sales office in São Paulo. It also acquired the businesses of Cemelim in Barcelona, Spain while it acquired ICB Cleaning Supplies in Auckland, New Zealand. Both the companies are distributors of cleaning and hygiene supplies.

Capita Plc (CPI.L) Announced that it has in aggregate, acquired a 9.99% stake in Xchanging plc in relation to its recommended final cash offer for the entire issued and to be issued share capital of Xchanging, as announced on 14 October 2015. The company acquired 24,760,355 Xchanging shares on the open market at a price of 160p per Xchanging share.

EKF Diagnostics Holdings Plc (EKF.L) Announced that the company has entered into an agreement with the majority of the former shareholders of Selah (Majority Shareholders) under which the Majority Shareholders release to EKF certain shares in EKF that had been issued as part of the consideration but held in escrow (Escrow Shares), and also to waive the right to receive any future earnout consideration (Earnout Shares) and EKF agrees to waive any potential claims against the Majority Shareholders (the Agreement). The Agreement has been signed by the Majority Shareholders who had the right to receive 96.5% of the Escrow Shares and 96.5% of any further Earnout Shares.

Feedback Plc (FDBK.L) Announced, in its final results for the year ended 31 May 2015, that its reported revenue stood at £0.4 million, compared to £7,250 in the preceding year. Loss net of tax was £1.1 million compared to £0.5 million. The company’s basic and diluted losses per share was 0.58p, compared to 0.35p. Additionally, it announced the appointment of Dr Balaji Ganeshan, Mike Hayball and Dr Alex Menys to the Board.

Inmarsat Plc (ISAT.L) Announced, in its third quarter results ended 30 September 2015, that revenues fell to $939.3 million from $952.9 million posted in the same period preceding year. The company’s profit before tax stood at $250.1 million, compared to a profit of $272.4 million reported in the previous year. The basic earnings per share stood at 0.43c compared to earnings of 0.48c reported in the previous year. The company’s cash and cash equivalents stood at $271.9 million (2014: $246.4 million).

International Consolidated Airlines Group (IAG.L) Announced a considerable upgrade to its long term return and equity cash flow objectives. Long-term planning goals for 2016-2020 include: return on Invested Capital targeting sustainable 15%, an operating profit margin of 12% to 15%, average EPS growth of 12%+ per annum, EBITDAR of approximately €5.6 billion average per annum, capex: targeting less than €2.5 billion per annum, Equity free-cash flow of €1.5 billion to € 2.5 billion per annum. In addition, the company announced the following changes in the executive management teams within its operating companies. Keith Williams will be retiring as Executive Chairman of British Airways in April next year and Alex Cruz, currently Chairman and Chief Executive Officer of Vueling, will be replacing him. Also, Nick Swift will be stepping down as Chief Financial Officer of British Airways in April next year and Steve Gunning, current Chief Executive Officer of IAG Cargo, will be replacing him. Further appointments will be announced in due course. Additionally, Group traffic in October, measured in Revenue Passenger Kilometres, increased by 16.6% versus October 2014; Group capacity measured in Available Seat Kilometres rose by 13.2%. Group premium traffic for the month of October increased by 5.7% on a pro-forma basis.

Intu Properties Plc (INTU.L) Announced, in its trading update for the period from 1 July 2015 to 6 November 2015, that it is on target for a return to like-for-like net rental income growth for the year as a whole through improved lettings and rising occupancy. It continued improvement in retailer demand with 84 new long term leases agreed for £18.0 million of new annual rent, 11.0% above previous passing rent and in line with valuation assumptions. Occupancy increased by 40 basis points since 30 June 2015 to 95.5%. Year-on-year footfall to date is marginally up in the UK and up 5% in Spain, both outperforming their respective Experian benchmarks. UK development pipeline on track with £60.0 million of developments completing at intu Victoria Centre and intu Potteries, where the cinema and restaurants are fitting out for their scheduled openings in December 2015. On site at intu Eldon Square, intu Metrocentre and intu Bromley with restaurant developments. Cash and available facilities of over £550.0 million and debt to asset ratio of 44.0% at 30 September 2015.

John Lewis of Hungerford Plc (JLH.L) Announced, in its trading update ahead of reporting its results for the year ended 31st August 2015, which it expects to announce in late December 2015, that the Board expect to report sales for the year to 31st August 2015 of £7.8 million. The 5.0% increase over the £7.4 million reported in 2014 was achieved from a strong trading performance in the final quarter. As previously reported all three preceding quarters had been flat on the comparable periods in the previous year. These sales figures are based on the revenue recognition policy, which is to recognise revenue at the point orders are despatched. As previously announced, the Board expects the business to achieve a nominal operating profit in the second half and therefore to report an overall loss for the full year. In the current financial year despatched sales and forward orders for Q1 stand at £1.9 million. However, the year-on-year comparison is distorted by changes to our operating policy which has had the effect of delaying the point at which some sales are reported. The background to this is provided below and it has contributed to a significant increase in the forward order book for deliveries in Q2 and beyond. This currently stands at £1.3 million.

Obtala Resources Limited (OBT.L) Announced, in its agricultural update, that it has been awarded “AA” grade certification for BRC Global Standard for Food Safety for Morogoro farm for dried fruits and vegetables. It signed a Memorandum of Understanding with international fruit trading company, a division of Groupo Cabal, the former owners of Del Monte Fresh. The company plans to establish a significant banana plantation in Tanzania of 150 hectares under ‘plant to order’ programme for second half of 2016 to fulfil Middle Eastern market. It has shown a strong interest in Middle East for fresh vegetables after the Dubai exhibition. It is currently finalising packaging requirements for the end users and is in discussions with Emirates Airlines to act as it carrier of choice for the products.

Pacific Alliance China Land Limited (PACL.L) Announced that quarterly report detailing the activities of the company for the quarter ended 30 September 2015 has been issued by Pacific Alliance Real Estate Ltd, the investment manager of the company. Electronic copies of the report have been emailed to shareholders.

Pantheon Resources Plc (PANR.L) Announced, in its operational update, that during the drilling operations of the VOS#1 well on the JV’s Tyler County acreage, an oil and gas bearing zone has been encountered at a depth of approximately 12,600 feet. As a result of well intervention operations in relation to controlling this zone, which also included flaring of natural gas, Pantheon now anticipates an additional c.14 days of drilling to reach the main targeted horizons. Following the successful sidetrack operation, the VOS#1 well is presently drilling ahead and on a trouble free basis it is estimated to take approximately a further two weeks to reach target depth. If warranted, testing operations will occur thereafter.

Physiomics Plc (PYC.L) Announced, in its strategic update, that it was pursuing various M&A targets, particularly in oncology therapeutics companies that could benefit from the application of Virtual Tumour and its other modelling tools. It has identified a number of potential targets, including an important one where the synergy with its modelling skills is strong. The company will be pursuing all opportunities while it does not guarantee at this stage about any transaction to proceed.

Reach4Entertainment Enterprises Plc (R4E.L) Announced, in its trading update, that it expects to report turnover for the year ending 31 December 2015 in line with market expectations. Q3 EBITDA were in line with the budget, mainly due to strong revenue growth of 8.8%, offsetting lower gross margins and increased personnel costs. Full year results will be subjected to the company’s performance in Q4 that generally delivers 40-50% of the full year’s EBITDA. The company currently expects to deliver a full year EBITDA with the range of £1.6 million to £1.8 million. The company also announced, in its update on the restructuring agreement with AIB, that it has been progressing discussions with the equity investors who were approached to raise the equity funding to which will enable the company to fulfil its repayment obligations under the agreement.

Scottish Mortgage Investment Trust Plc (SMT.L) Announced, in its unaudited interim results for the six months ended 30 September 2015, that gain on sales of investments stood at £112.3 million, compared to £63.6 million in the preceding period. Loss net of tax was £357.1 million compared to profit after tax of £258.7 million. The company’s diluted loss per share was 27.99p, compared to earnings per share of 21.16p.

Snacktime Plc (SNAK.L) Announced that Mark Stone, CEO, has decided to leave the Company for personal reasons. Mark will remain on the Board until the end of April 2016 and will continue to oversee the activities of Snack in the Box and Drinkmaster. Sergei Kornienko, a Non-Executive Director, will take over responsibility for the group’s two vending companies with immediate effect while a search is made for a replacement full-time CEO. Further to the Company’s announcement of 25 September 2015, Tim James, CFO, has resigned and will leave the Board today. Separately, the company announced that its previously announced intentions to refinance through an equity issue and reconstruction of its balance sheet debt are progressing, and further announcements will be made in due course, as appropriate.

Stratex International Plc (STI.L) Announced that first gold pour has been achieved at its 45.0%-owned Altintepe gold mine, where joint-venture partner Bahar Madencilik has recently funded all pre-production costs, including $39.0 million towards construction. The company’s initial investment in Altintepe stands at just $1.5 million.

Sula Iron & Gold Plc (SULA.L) Announced that further to the drilling contract entered into with Energold Drilling Corp on 16 October 2015, it has commenced its extended drill programme at its Ferensola Gold Project. SRK Consulting (UK) Ltd has defined an independent JORC compliant gold exploration target for the Ferensola Gold Project with a tonnage range of between 5 and 7 million tonnes at a grade range of between 4 and 8 grammes per tonne, equating to between 0.8 and 1.5 million ounces Au. The Exploration Target has been restricted to a 2km strike length segment of a regional fold belt that has a potential overall strike length in excess of 10km, and which has additional mineralisation potential to that included in the exploration target area. Fully funded drill programme now commenced comprising 1,500 metres.

Synthomer Plc (SYNT.L) Announced, in its Q3 Trading Update for the third quarter ended September 30, 2015, that the Europe and North America segment has continued to perform in line with the positive trends seen during the first half of the year. Whilst volumes were lower than Q3 2014 due to ongoing weakness in its Paper business, it continued to make good progress driven by a further improvement in Construction and Coatings and Functional Polymers. The Asia and Rest of World segment has continued to perform strongly in Q3, with both volumes and unit margins higher than in Q2 and Q3 2014. This ongoing momentum reflects a further rise in volumes and unit margins in its Nitrile business. The Group debt increased from £77.2 million to £94.8 million following the Final Ordinary and Special dividend payments of £42.8 million on 3 July 2015, offset by continued strong cash generation of £26.0 million during the period. Meanwhile, the Group’s balance sheet remains strong with the net debt/ EBITDA ratio below 1x.

TalkTalk Telecom Group Plc (TALK.L) Citing the cyber-attack on the company’s website on 21st October 2015, it has been working to establish exactly what happened and, importantly, understand the extent of any individual customer data stolen during this attack. Ongoing forensic analysis of the site confirmed that the scale of the attack was much more limited than initially suspected, and it can be confirmed that only 4% of TalkTalk customers have any sensitive personal data at risk.

Travis Perkins Plc (TPK.L) Announced the Group’s supply chain strategy, including its vision of a world class supply chain, the activities required to achieve this and the benefits to its customer proposition and further growth of the Group. No new trading information will be disclosed during the briefing.

Tullett Prebon Plc (TLPR.L) Announced, in its trading update in relation to the period from 1 July 2015, that the results which were communicated to the market in June this year, concluded that the central role played by interdealer brokers at the heart of the global wholesale OTC markets remains secure, but that revenue declines were likely to continue in a number of traditional interdealer broker products. Over the summer and through September and October the level of activity in the wholesale OTC financial markets has continued to be under pressure from the structural and cyclical factors affecting the interdealer broker industry. Market volumes continue to be adversely affected by the more onerous regulatory environment applicable to many of our bank customers whose trading activity has been suppressed by the deleveraging of their balance sheets and lower risk appetite. The strategic review concluded that the Energy and commodities markets do not currently face all the same pressures as the traditional interdealer broker product areas, and we have continued to benefit from the investments we have made in this sector. The performance of PVM Oil Associates Limited and its subsidiaries (“PVM”), which was acquired in November last year, has continued to be strong. Revenue in the four months July to October of £255 million was 9% higher than the £233 million reported for the same period last year. Excluding PVM, revenue in the four months July to October was 5% lower at constant exchange rates than in the same period last year. Year to date (January to October) revenue of £671 million was 13% higher than the £594 million reported for the same period last year. Excluding PVM, year to date revenue was 3% lower at constant exchange rates than in the same period last year.

Workspace Group Plc (WKP.L) Announced that it has received planning permission to redevelop Cremer Business Centre on Cremer Street in Hoxton, E2. The existing building comprising 41,000 sq. ft. of office and light industrial space, valued at £10 million at March 2015, would be replaced by a new six floor business centre providing 57,000 sq. ft. of net lettable space at an estimated cost of £21 million.