Broker Upgrades and Downgrades & Key UK Corporate Snapshots 07 January 2016

UK Broker Upgrades / Downgrades

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Berkeley Energia Limited (BKY.L) Announced that the Mineral Resource Estimate for the Retortillo deposit has been updated resulting in a 15% increase in grade. Retortillo is located adjacent to the proposed process plant and along with the Zona 7 deposit will be the first to be mined. The updated resource estimate is now being included in the optimisation studies aimed at making the Salamanca project one of the world’s lowest cost producers. The increase in the grade is expected to add to the positive impact the increase in grade of the Zona 7 ore has had on the project’s overall economics.

Centamin Plc (CEY.L) Announced, in its preliminary production results for the quarter ended 31 December 2015 from its Sukari Gold Mine (“Sukari”) in Egypt, that preliminary total gold production for the quarter was 117,644 ounces, a 12% increase on the previous quarter and an 8% decrease on Q4 2014. This brings full year production to 439,072 ounces, a 16% increase on 2014 and within guidance of between 430,000 and 440,000 ounces for 2015. Open pit total material movement decreased 4% on the previous quarter to 13,754kt with open pit ore production increasing by 1% to 2,229kt. The run of mine ore stockpile balance decreased by 328kt to 704kt at the end of the period. During the quarter an unfortunate incident occurred within the open pit operation, when a contractor’s employee was involved in a rock collapse whilst relocating a grade control drill rig. The operator, and sole occupant of the drill rig, was fatally injured in the incident. A full review of the relevant operating procedures has been completed, subsequent to which open pit mining rates have increased towards target levels. The underground operation delivered 300kt of ore, a 4% decrease on Q3 2015. Quarterly throughput at the process plant was 2,758kt, a 3% increase on the previous quarter and in line with our target rate of 11 million tonnes per annum (Mtpa). Meanwhile, forecast production for 2016 from the Sukari Gold Mine is 470,000 ounces at a cash operating cost of $680 per ounce and all-in-sustaining cost (AISC) of $900 per ounce. This would represent a 7% increase on 2015 production and a reduction over 2015 cost guidance of $700 per ounce cash operating cost and $950 per ounce AISC.

Clarkson Plc (CKN.L) Announced, in its pre-closing trading update, that the trading was in line with the previous expectations. In its previous trading statement released on 3 November 2015, it stated that adjusted profit before tax for the year ending 31 December 2015 to be in the region of £50 million.

Cluff Natural Resources Plc (CLNR.L) Announced, in its pre-close update for the financial year to 31 December 2015, that in the course of the year, the company has moved its primary focus from its Underground Coal Gasification (UCG) assets to developing its portfolio of five conventional oil and gas licences in the Southern North Sea. The moratorium will remain in place, pending a government study and public consultation, which is expected to conclude in spring 2017. While the company is confident that the evidence in relation to UCG will result in the moratorium being lifted, it has stopped all expenditure related to the Kincardine Project and is now focussing its attention outside of Scotland, in particular the North East of England, where the company believes the political situation is more favourable with regards to UCG and considerable support exists for investment in energy and industry with a view to regeneration. The company has a total of nine UCG licences in the UK of which six are based in England and Wales and are therefore not subject to the moratorium. The company has however made significant positive progress in advancing its North Sea assets which were awarded in December 2014. Further to the announcement on 12 October 2015, the company is still owed £331,125, which was due in September 2015, from the subscriber for 7,791,188 shares in the company’s placing earlier in the year. At 31 December 2015, the unaudited cash position of the company was £1.1 million.

easyJet Plc (EZJ.L) Announced, in its passenger statistics for December 2015, that passengers flown increased by 4.6% to 4.8 million in December, this strong performance is despite the predicted reduction in bookings in the weeks following the terrorist attacks in Paris. The company is France’s second largest airline and around 23% of the airline’s capacity ýduring December was on French touching routes and as a consequence the load factor fell by 1.8ppt to 86.6%. Load factors are now recovering to normal levels and management do not anticipate any change to full year market expectations.

Faron Pharmaceuticals Ltd (FARN.L) Announced, that that its Japanese licensing partner Maruishi Pharmaceutical Co., Ltd. (“Maruishi”) has obtained positive results from the Phase II Japanese study for TraumakineR conducted by Maruishi in Japan. TraumakineR is in development for the treatment of acute respiratory distress syndrome (“ARDS”). TraumakineR (Maruishi code is MR11A8) was safe and well tolerated in all tested dosing groups (daily 2.5 mcg, 5.0 mcg and 10 mcg for six days). The all-cause mortality rate at Day 28, being the primary efficacy end point, was 22.2% across all patients (4/18). The typical mortality rate for patients with an average APACHE II score of 31.6, as published by Critical Care Medicine (1985; 13:818-829), is 75%. The Day 28 mortality rate across the two highest dosing cohorts (5 mcg and 10 mcg), below which dosing level there is no full drug effect, was 16.6%.

First Property Group Plc (FPO.L) Announced that it has in conjunction with a club of investors, acquired a portfolio of nine regional Lidl supermarkets in Romania at a cost of €10.5 million. The net operating income being generated by the properties is currently €1.16 million per annum, equating to a yield on purchase costs of around 11% per annum. The weighted average unexpired lease term of the portfolio of properties exceeds seven years. The investment was part funded by equity of approximately €4 million, of which the Group invested €1 million, pari passu with other investors. The remaining equity was invested by a family office and other third parties. The forecast annual pre-tax profit from the investment is circa €720,000 per annum, of which the Group’s share would be circa €180,000 per annum, equating to a pre-tax rate of return on equity of around 18% per annum. The Group will, in addition, earn management fees of some €100,000 up-front and €125,000 per annum.

Great Portland Estates Plc (GPE.L) Announced that it has exchanged contracts on two separate transactions with Deka Immobilien Investment GmbH. In the first transaction, it has sold its 33 Margaret Street, W1 property to Deka-Immobilien Europa fund for £216.3 million, fetching a price of £2,085 per sq. ft. and a net initial yield of 3.30%. In the second transaction, it has acquired the 50 Finsbury Square, EC2 property from Deka-Immobilien Global fund for £119.0 million, reflecting £941 per sq. ft. price and a net initial yield of 5.32% after costs.

Hardide Plc (HDD.L) Announced the opening of its new production facility in Virginia, USA. The plant is now starting production trials with existing customers to validate the coating process at the site with volume production expected to commence in calendar Q2 2016. In January 2015 the company began an investment of up to $7 million in Martinsville-Henry County to expand its production operations to North America. In addition, the Company also plans to expand in the aerospace and advanced engineering sectors and develop applications for its newly-patented coating for diamonds. The new facility is expected to create up to 29 jobs over the next three years.

Hornby Plc (HRN.L) Announced a broad range of new products and technologies that it is launching in 2016. These products will be showcased at upcoming Toy Fairs around the world, including London, Hong Kong and Nuremberg. The company will be leveraging the success of its many well-known international brands as well as developing new technologies to ensure the company is at the forefront of the market. Hornby is looking to target children aged 5-8 with a new range of battery-operated trains, launching in late 2016. The company is also looking to introduce a new generation to railway modelling with a high quality range of wooden toy trains. Airfix Quickbuild was the fastest-growing part of the brand in 2015, with the McLaren P1, Lamborghini Aventador and Bugatti Veyron being particularly successful. The company expects this to continue in 2016 as it extends into new categories including construction, emergency vehicles and dinosaurs. Airfix Engineer is also set to expand later this year. The new range will include six exciting new models: Early 4-Cylinder Engine, V8 Muscle Engine, Steam Locomotive, Radial Engine, V12 Aero Engine, & Jet Turbine Engine. Scalextric ARC PRO is a state of the art powerbase, which works with a free to download tablet or smartphone app. Scalextric Pro Chassis Ready allows racers to go even faster by installing and running performance parts from Slot.it – the go-to brand for car upgrades and racing. Humbrol 3D Printing is a new concept the company is looking to launch in late 2016, which will allow 3D items to be formed from a range of coloured filament. Corgi celebrates its 60th Anniversary in 2016 and will launch a range of new and specially created models this year, all in special limited edition 60th Anniversary packaging, as well as new Classic Thunderbirds models based on the original TV series. Pocher will launch its first 1:4 motorcyle kit – the iconic Ducati Superbike 1299 Panigale S. The model comes ready painted and consists of more than 600 parts including functional suspension, wheels and brakes.

HydroDec Group Plc (HYR.L) Announced that the transformer oil produced from its Canton re-refinery has achieved ‘500hr’ oil status, certifying the oil to be high quality transformer oil and a prerequisite to accessing the larger power transformer market. With all six trains at Canton now in service, the company is also pleased to confirm the achievement of an all-time daily production record from the Canton plant of over 94,000 litres with all six trains operative at the end of December 2015. The Canton plant produced 10.5 million litres of processed oil in 2015 in line with previously stated projections.

IXICO Plc (IXI.L) Announced, in its final results for the year ended 30 September 2015, that its reported revenue stood at £3.1 million, compared to £3.4 million in the preceding year. Loss net of tax was £1.2 million compared to £2.3 million. The company’s diluted loss per share was 7.9p, compared to 15.2p.

Leeds Group Plc (LDSG.L) Announced, in its interim results for the six months ended 30 November 2015, that revenue stood at £18.49 million, compared to £18.58 million in the same period last year. Operating profit stood at £1.03 million, compared to £1.06 million. Profit after tax was £0.69 million, compared £0.70 million. Basic and diluted profit per share stood steady at 2.5p. The KMR joint venture opened new shops in Saarbrücken and in Bamberg in the period, to bring the total number of stores to 16, and the business continues to trade in line with the expectations of the Directors. In order to maximise funds available for this purpose and to reflect the investment in the Hemmers facility during the current year, the Board does not propose an interim dividend.

Macau Property Opportunities Fund Limited (MPO.L) Announced, in an investor update for Q4 2015 that ongoing marketing efforts led to an increase in the number of leasing enquiries and viewings. It also noted that Occupancy level at The Waterside is showing signs of stabilisation. Macau’s property market remained muted during the quarter, but supply remains tight. 2015 gaming revenue registered a decline of 34% year-on-year to $29 billion. The new loan facility of US$36 million finances the principal repayments of the previous tranches of the bank facility for One Central Residences.

Majestic Wine Plc (MJW.L) Announced, in its trading update for the 10 weeks of Christmas Trading from 27 October 2015 to 4 January 2016, the company delivers c.30% of total sales during the period. Total sales growth was 42.6% compared to the same period last year, boosted by the acquisition of Naked Wines. On a pro forma basis over the Period Group sales were up 12.2%. Majestic Retail like for like sales grew 7.3% in the period, supported by the previously indicated strategic investments to reinvigorate sales growth with a new and simplified pricing policy and improved customer experience in store and on-line. As expected these investments resulted in higher costs and a slightly lower percentage gross margin during the period.

Marks & Spencer Group Plc (MKS.L) Announced, in its third quarter trading update, that its Food business witnessed a record sales growth of 3.7%, 17% of which mainly in the Christmas festive season. In General Merchandise business, it faced challenging trading conditions and fell short on availability. Its website – M&S.com – delivered a strong performance with continued improvement in the traffic as well as customer experience. It expects general merchandise gross margin to be in the range of +200 to +250bps. The company also announced that Marc Bolland will retire as the CEO in 2016. Steve Rowe, Executive Director of General Merchandise, will take over the role of CEO.

Mobile Streams Plc (MOS.L) Announced, in its trading update, that the recent Argentine peso devaluation has had effect on its balance sheet and profit and loss account. The Argentine peso devalued approximately 25% during December 2015, due to the release of currency restrictions, which now allows currency to flow freely in and out of Argentina. The devaluation effect on December revenues was £0.3 million. The effect on net assets is approximately £0.8 million reduction in value and follows a reduction in its £3.2 million of peso denominated assets following the devaluation. EBITDA for the 6 months to 31 December 2015 will be reduced by approximately £0.8 million. Cash at 31 December 2015 was £1.5 million, with no debt.

MX Oil Plc (MXO.L) Announced further details on the four Land Contract Areas (LCAs) it was awarded, alongside its local partner Geo Estratos, during the third phase of the Bid Round 1 Licensing Round for onshore conventional concessions in Mexico. In line with the company’s focus on proven conventional fields, all four LCAs are located in the prolific Tampico-Misantla Basin, which has to date produced around six billion barrels of oil and currently produces approximately 70,000 barrels of oil per day (bopd). The four LCAs awarded to the company/Geo JV, comprising Tecolutla, La Laja, Ponton, and Paso de Oro, all have previously discovered but underexploited fields. These were largely explored and developed using 2-D seismic data and produced from vertical wells at rates of up to 2,528 bopd. The company and Geo believe that by using 3-D seismic data, drilling horizontal wells and applying other recovery enhancement techniques, multiple low risk opportunities exist to maximise the recovery of reserves and significantly increase flow rates. The company intends to commission a Competent Person’s Report (CPR) in the near-term to confirm the investment potential of the four awarded LCAs.

NBNK Investments Plc (NBNK.L) Announced that following the share subscription and tender offer implemented on 11 January 2013, the company continued to seek appropriate acquisitions in line with its investing policy. The current situation is that the company is engaged in discussions with target companies which, if one or more of the targets is acquired, would fulfil the its investing policy.

Northcote Energy Ltd (NCT.L) Announced, in its update on Mexico, that it has been awarded four Land Contract Areas in Veracruz, Mexico by MX Oil, alongside its local partner Geo Estratos, during the third phase of the Bid Round 1 Licensing Round for onshore conventional concessions in Mexico. All four LCAs, namely Tecolutla, Ponton, La Laja and Paso de Oro, are located in the prolific Tampico-Misantla Basin, which has to date produced around six billion barrels of oil and currently produces approximately 70,000 barrels of oil per day (‘bopd’).

Penna Consulting Plc (PNA.L) Announced, in its trading update, that the momentum established during H1 has continued and strengthened and in Q3 Penna has experienced a further substantial increase in the level of trading. Profits before tax (unaudited) for the 9 month period ended 31st December 2015 were 51% higher than in the same period of the previous year at £4.92 million (2014: £3.25 million). The Company is benefitting from increased expenditure per client, improved margins and a series of important new client wins. Accordingly management’s expectations of profits for the year to 31st March 2016 have been materially increased.

Persimmon Plc (PSN.L) Announced, in its trading update for the year ended 31 December 2015, that it saw a strong growth in the group as its legal completions rose by 8% to 14,572 new homes (2014: 13,509). Revenues climbed by 13% to £2.9 billion (2014: £2.6 billion). The group’s average selling price also advanced by 4.5% to £199,100 (2014: £190,533). The forwards sales value rose by 13% to £1,100 million (2014: £973 million). The company separately announced that Nigel Greenaway, Chief Executive of South Division, has decided to retire from the board. David Jenkinson has been promoted as the Group Managing Director with immediate effect and will report directly to Jeff Fairburn, Chief Executive of the Group. Also, Richard Pennycook, Senior Independent Director and Mark Preston, Non-Executive Director, will resign from the board after the conclusion of the company’s AGM on 14 April 2016. Moreover, Nigel Mills has been appointed to the board as a Non-Executive Director and will also become a member of the Remuneration Committee from 4 April 2016.

Poundland Group Plc (PLND.L) Announced, in its third quarter trading statement for the 13 weeks ended 27 December 2015 (”Q3”), that total Q3 sales growth of 29.4% (excluding Spain, including 99p Stores). Total constant currency sales growth of 30.1% (excluding Spain, including 99p Stores). Within this, Poundland contributed 9.0 percentage points, including 3.0 percentage points from converted 99p Stores, whilst the acquired 99p Stores’ trading throughout the period under their own fascia contributed 21.1 percentage points. Trading conditions highlighted at the interim results continued in Q3 as high street footfall declined. Despite these conditions, as a result of strong cost and margin control, it expect pre-tax profit for the year to March 2016 to be towards the lower end of the range of market expectations. Meanwhile, the company is in a strong position to execute its growth plans. The 99p Stores’ conversion programme has commenced well and at pace with 25 stores converted. The vast majority of the estate will be converted to Poundland by the end of April 2016. Sales growth in the converted stores is in line with plan and we continue to expect to generate incremental EBITDA of at least £25 million from the acquisition. The acquisition is principally a property deal for the Group, adding 40% to its estate and nearly 160 stores in the South of England, where it under-represented and where prime property assets have historically been difficult to acquire. The company opened a net 14 stores in the UK and in Ireland during Q3 which, together with the 25 stores converted from 99p Stores, takes its Poundland store numbers to 628 in the UK and 51 Dealz stores in Ireland (2015: 519 and 34 respectively). It also have 227 stores in the remaining 99p Stores estate. The Group generated strong cash flow during the period and ended Q3 with net cash of £35.4 million (2015: net cash of £33.9 million).

President Energy Plc (PPC.L) Announced, in its relating to its Argentine assets, that recent devaluation of the Peso and new Government policy on oil prices and incentives for gas production, viewed positively and that five workovers being planned for commencement during Q1 2016 with further follow-on well candidates thereafter. Meanwhile, Two workovers successfully completed in December with results ahead of expectations. President also announces Carlos Felices has stepped down from his full time role as Country Manager in Argentina having been appointed to the Main Board of Directors of YPF, the Argentine National Oil Company.

Rathbone Brothers Plc (RAT.L) Announced, in its trading update for the three months ended 31 December 2015, that total funds under management at 31 December 2015 were £29.2 billion, up 5.8% from £27.6 billion at 30 September 2015 and up 7.4% from £27.2 billion at 31 December 2014. Funds managed by the company were £26.1 billion at 31 December 2015, up 5.7% from £24.7 billion at 31 December 2014. The FTSE 100 Index decreased 4.9% and the FTSE WMA Balanced Index decreased 0.2% over the same period. Total net inflows in the company for the fourth quarter were £368 million (Q4 2014: £327 million). The total for the year was £1.4 billion (2014: £4.0 billion, which included the impact of acquisitions made during that year). The underlying rate of net organic growth in funds under management in Rathbone Investment Management for the three months ended 31 December 2015 was 3.7% (2014: 2.1%) and 3.0% for the year ended 31 December 2015 (2014: 4.0%). Funds managed by the company were £3.1 billion at 31 December 2015, up 24.0% from £2.5 billion at 31 December 2014. Total net fund inflows totalled £165 million in the fourth quarter of 2015 (Q4 2014: £115 million) and were £371 million for the full year (2014: £554 million). Following the announcement on 1 October 2015, the Company completed the purchase of the remaining 80.1% of the issued share capital of Vision Independent Financial Planning Limited and Castle Investment Solutions Limited on 31 December 2015. Meanwhile, the Company will issue its preliminary statement of annual results for the year ended 31 December 2015 on Wednesday 24 February 2016. It further announced that it has exchanged contracts for a 17 year lease on 75,000 sq ft of office space at 8 Finsbury Circus. This will secure sufficient capacity in London to meet its longer term growth plans. It is expected that the business will move from Rathbones’ current 44,000 sq ft premises at 1 Curzon Street in the first quarter of 2017.

SIG Plc (SHI.L) Announced that it will report its trading update for the twelve months ended 31 December 2015 on Thursday 14 January 2016.

SKIL Ports & Logistics Limited (SPL.L) Announced, in its update regarding the development of its port and logistics project in Navi Mumbai, India, that following completion of the bund, the first four temporary piles have been completed and the piling gantry is now on site and fully assembled. Over the next three weeks, the piling gantry will be mounted on temporary piles, whilst the initial permanent piles will be driven into the ground using a tripod. Whilst the focus over the last month has been concentrated on commencing piling, onsite reclamation work continues to progress in line with the company’s engineering plan. A concrete production facility, or batching plant, has also arrived on site and will be mounted on 28 temporary piles, which are being driven on to the reclamation area. The company also announced that Mr. Sunil Tandon, a Non-Executive Director, has decided to resign due to an increase in his other work commitments. Mr Tandon will continue to support the company on an advisory basis and the company will seek to appoint an additional non-executive director to assist in the transition of the project from the development phase to the operational phase.

Somero Enterprises, Inc. (SOM.L) Announced, in its update on trading for the financial year ended 31 December 2015, the Company expects to report Revenue ahead of current market expectations for the full year. Furthermore, as a result of an improved gross margin performance, the Company now expects to report EBITDA materially ahead of current market expectations for the period. Demand in the second half of 2015 has remained robust across its core product range with North America and Europe contributing significantly to sales growth while performance in China was healthy and remained stable. The particularly strong finish to the year in Europe and full year performance in the Middle East notably exceeded the Board’s prior expectations. The year-end demand for the Company’s products in North America was predominantly driven by technology upgrades and fleet additions, highlighting lengthy project backlogs for our customers that extend well into 2016. On a product basis, while large line machine sales continue to represent the majority of our volume, small-line revenues, including the S-485 introduced at the end of 2014, were key contributors to growth. Somero’s final results for the year ending 31 December 2015 will be announced on 1 March 2016.

The Ottoman Fund Limited (OTM.L) Announced that the company continues with its efforts to recover money embezzled from the Fund’s Turkish subsidiaries and to repatriate the company’s remaining capital from Turkey to Jersey. The company has retained civil and criminal lawyers in Turkey and is proceeding in accordance with their advice in its efforts to recover the embezzled funds. The Fund will make further announcements in due course and expects to release its final results for 2015 no later than the end of February.