Broker Upgrades and Downgrades & Key UK Corporate Snapshots 24 July 2015

UK Broker Upgrades / Downgrades

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1PM Plc (OPM.L) Announced final results for the year ended 31 May 2015. The Group has again exceeded market expectations with total revenue for the year increasing 31% to £5.5 million (FY14: £4.2 million), while profit before tax rose by 20% to £1.62 million (FY14: £1.35 million). Earnings per share increased by 4.8% to 3.72p (FY14: 3.55p). Demand for products and services remains buoyant. Monthly sales have doubled since the last financial year and the Board is confident that new business origination will continue to increase over the next 12 months. The Board remains focussed both on organic growth, including the introduction of new financial products and also on potential merger and acquisition opportunities as they arise. The Board has a clearly stated strategic plan to significantly grow the business over the coming years and increase shareholder value commensurately, which will require both.

Aggreko Plc (AGK.L) Announced, in its trading update, that the company expects 2015 interim and full year results to fall short of current market expectations. In Power Projects, its 325MW of gas contract extensions in Bangladesh are entering the final stages of approval, with our expectation being that 180MW will be secured into the first half of 2016 and the remaining 145MW for three years. The ongoing security challenges in Yemen have impacted the company’s ability to operate at full capacity and it remains concerned about the impact for the remainder of the year. The company expects its full year profit before tax to be between £250 million and £270 million at current exchange rates, which have moved adversely in recent months.

Ashley House Plc (ASH.L) Announced that its first 60 apartment Extra Care scheme in Grimsby has been completed and handed over to the client, a Registered Provider. All apartments are in the process of being let, with a substantial waiting list existing. Initial feedback is extremely positive. It also reported that it is currently considering offers for long term equity funding for its Extra Care schemes from well respected investors. The initial agreement with M&G Investment Management Limited to fund £100m of senior debt is established and is now supplemented by an offer, subject to completion of due diligence, for development finance from National Westminster Bank Plc. It also has received a proposal from a significant, well-funded business to acquire its interest in the NHS LIFT Joint Ventures (together the “LIFT investment”).

Audioboom Group Plc (BOOM.L) Announced, its un-audited financial results for the six months ended 31 May 2015, that revenue surged to £0.046 million from £0.024 million posted for the five months ended 31 May 2014. The company’s loss before tax stood at £3.3 million, compared to a loss of £2.1 million reported for the five months ended 31 May 2014. The basic and diluted loss per share stood at 0.61p compared to loss of 13.4p reported for the five months ended 31 May 2014. The company’s cash and cash equivalents stood at £6.1 million (2014: £3.1 million)

Barr(A.G.) Plc (BAG.L) Announced a pre-close trading update in respect of the six months to 25 July 2015. In the six month period to date trading has remained subdued as anticipated. Half year sales revenue is expected to be about £128m which is a drop of about 5% on the prior year. On an ongoing basis, allowing for the impact of the loss of the Orangina brand and the divested Findlays brand, sales declined by approximately 3.5%.Despite challenges our margins remain in line with management expectations. As expected at the start of the year, financial performance in the current financial year will be more weighted to the second half given strong performance in the first half of last year, combined with the significant operational improvement programme currently being implemented. The company expects trading across the market will remain competitive, however assuming there are no significant changes to the competitive or customer landscape and that it continues to make good progress on all our change initiatives, it plans to regain sales momentum which would enable it to meet its expectations for the full year. The company will provide a further more detailed update in its interim results on 22 September 2015.

Beazley Plc (BEZ.L) Announced, in its results for six month ended 30 June 2015, that gross premium rose to $1099.7 million from $1077.7 million posted in the same period preceding year. The company’s profit before tax stood at $154.5 million, compared to a profit of $132.9 million reported in the previous year. The basic earnings per share stood at 17.2c compared to earnings of 13.5c reported in the previous year. The company further stated that a first interim dividend of 3.3p per ordinary share (2014: 3.1p) is payable in respect of the six months to 30 June 2015. The financial statements do not provide for this dividend as a liability. A second interim dividend of 6.2p per ordinary share and a special dividend of 11.8p was paid on 27 March 2015 to shareholders in respect of the six months ended 31 December 2014. The first interim dividend will be payable on 4 September 2015 to shareholders (save to the extent that shareholders on the register of members on 7 August 2015 will be paid a dividend of 3.3p by a subsidiary of the company (being Beazley DAS Limited) resident for tax purposes in the United Kingdom pursuant to elections made in which case such shareholders shall have a right to be paid the aforementioned dividend but shall have no right to the first interim dividend).

Beximco Pharmaceuticals Ltd (BXP.L) Announced, its un-audited financial results for the six months ended 30 June 2015, that revenue surged to BDT6249.2 million from BDT5322.3 million posted in the same period preceding year. The company’s profit before tax stood at BDT1093.6 million, compared to a profit of BDT1018.5 million reported in the previous year. The basic earnings per share stood at BDT2.61 compared to earnings of BDT1.88 reported in the previous year. The company’s cash and cash equivalents stood at BDT194.9 million (2014: BDT222.2 million).

BowLeven Plc (BLVN.L) Announced that Zingana, the first well in a two exploration well programme, has been drilled to its planned total depth (TD) and logged. Hydrocarbons were encountered in the prognosed Paleocene (Tertiary) aged reservoir intervals and detailed log evaluation is being undertaken. The rig will now be moved to the Moambe well location as planned. Moambe, located just over two kilometres east of Zingana, is a previously undrilled Paleocene (Tertiary) aged robust three-way dip closed fault block. As previously outlined, the intention is to drill, log and evaluate both wells prior to determining any testing plan.

British American Tobacco Plc (BATS.L) Announced that its Canadian subsidiary, Imperial Tobacco Canada and the Canadian subsidiaries of Philip Morris International and Japan Tobacco International have had their request to cancel a CAD$1.1 billion provisional execution order granted by the Quebec Court of Appeal, late yesterday. The provisional execution order was imposed by the Superior Court of Quebec as part of a CAD 15.6 billion judgement in two Class Action cases, issued on June 01 2015.

Brooks Macdonald Group Plc (BRK.L) Announced, in its trading update for its financial year ended 30 June 2015, that trading for the year was in line with expectations and good progress has been made despite unhelpful markets during the fourth quarter period. The company continued to pursue organic growth, whilst enhancing the Group’s team, capabilities and systems. The company successfully moved our London head office in May to new West End premises; this will facilitate further expansion and underlines its growth ambitions for the future. The Group’s property management business, Braemar Estates, had property assets under administration of £1.14 billion at the year end (30 June 2014: £1.13 billion), an increase of 0.88%, or £0.01million. Meanwhile, the Group intends to issue its results for the year on Thursday, 17 September 2015.

Close Brothers Group Plc (CBG.L) Announced, in its pre-close trading update for five months to 30 June 2015, that it delivered a good performance in the period, driven by continued good returns in the Banking division, improved trading conditions in Winterflood and continued steady progress in Asset Management. The Banking division continues the delivery of a solid performance of loan book growing at 4.4% in the period and 7.7% year to date to £5.7 billion, reflecting a continuous growth in property, asset and motor finance. The net interest margin and bad debt ratio were stable. In Securities, Winterflood benefited from improved market conditions and increased investor risk appetite, compared to the difficult trading environment seen in the first half. Asset Management delivered 7% growth in Assets under Management year to date to £10.4 billion with continued solid net inflows, despite negative market movements in June. The revenue margin was stable. The outlook for the group remains unchanged and it expects to deliver another good performance for the full year.

DDD Group Plc (DDD.L) Announced that its Australian subsidiary, Dynamic Digital Depth Research Pty Ltd (DDD), has filed a lawsuit in Los Angeles alleging that LG Electronics’ (LG) range of 3D televisions infringe three of DDD’s US patents. The complaint alleges that the automatic 2D to 3D conversion function performed by LG’s range of 3D televisions infringes the claims of DDD’s U.S. Patent No. 6,477,267 “Image Conversion and Encoding Techniques”, US Patent No. 6,496,598 “Image Processing Method and Apparatus”, and US Patent No. 7,489,812 “Conversion and Encoding Techniques”.

EPE Special Opportunities Plc (ESO.L) Announced that it has acquired the Limited Partnership interest held by DES Holdings IV(A) LLC (ESD) in ESO Investments 1 LP (ESO 1 LP), a Limited Partnership in which the company is the majority Limited Partner. Following the transaction, the company is now the sole Limited Partner in ESO 1 LP. The total value of the Acquisition is £8.6 million, with £5.7 million to be paid in cash at completion and £2.9 million in cash before 30 September 2015. The company also announced that certain private investors have agreed to subscribe for loan notes issued by the company in the principal amount of £4.5 million and the principal amount of £0.25 million (175,895) ordinary shares of 5p each of the company at a price of 142.13p per ordinary share, with such issuance of ordinary shares conditional on admission.

Gaming Realms Plc (GMR.L) Announced that it has conditionally agreed to acquire from RealNetworks, Inc., the following assets: GameHouse US and Canadian Game studios; Social & Mobile Freemium portfolio games and publishing network; Slingo Brand & Patents; certain game domains including Sudoku.com and Mahjong.com; an intellectual property licence relating to the GameHouse Promotion Network and the entire issued share capital of Backstage Technologies. The total consideration for the acquisition is $18 million, and is comprised of a $10 million cash payment on completion and two tranches of $4 million each in deferred consideration, payable 12 and 24 months after completion respectively. Up to 50% of each tranche of Deferred Consideration can, at the election of RealNetworks, be satisfied by the issue of ordinary shares in the company. In addition, the company announces that it has conditionally raised £12.5 million through the proposed placing of up to 50 million new ordinary shares of 10p each in the capital of the company at a price of 25p per Placing Share. The Placing will fund up to $14 million of the consideration in respect of the acquisition and will also provide, inter alia, ongoing working capital for the enlarged group.

Greka Drilling Limited (GDL.L) Announced, its operations update for H1 2015, that 28 wells were drilled (H1 2014: 19 wells), of which 19 wells were drilled in China (2 Laterals and 7 Verticals and directional), 9 wells drilled in India. 18 wells were drilled (64%) for Green Dragon Gas Ltd. (“Green Dragon Gas”). 10 wells were drilled (36%) for other clients. Total of 26367 metres was drilled, a 25% increase over H1 2014 (21159 metres). 16447 metres were drilled in China and 9920 meters in India. 20721 man-hours of training were conducted for company staff in China and India, a 137% increase over H1 2014 (8752 man-hours). Vertical wells were drilled in China averaged 11.2 days compared to 9.3 days in H1 2014. Directional wells were drilled in China averaged 11.8 days compared to 11.5 days in H1 2014.

Greka Engineering & Technology Ltd (GEL.L) Announced, its operations update for H1 2015, that 661520 thousand cubic feet (18.7 million cubic metres) Gas was processed, a 16% increase over H1 2014 (568463 thousand cubic feet/16.1 million cubic metres). Sales volume stood at 577897 thousand cubic feet (16.3 million cubic metres), a 21% increase over H1 2014 (477720 thousand cubic feet /13.5 million cubic metres). Self-consumption volume was 83623 thousand cubic feet (2.4 million cubic metres). No time was lost in the Gas processing due to injury or accident during the period. Electricity generation stood at 8,420,174 kwh, of which Power sales volume was 6,824,111 kwh, a 26% increase over H1 2014 (5,429,281 kwh), consumption for operations was 1,596,063 kwh. No time was lost in electricity generation due to injury or accident. 10.0km of gas gathering pipeline was constructed. Well gas gathering pipeline stood at 51.9 km. 6.2km of power lines were built which stood at 83.2 km at the end of H1 2015. The company added 6 new customers. Total no of customers in China stood at 156 at the end of H1 2015.

Hammerson Plc (HMSO.L) Announced, in its results for the six months ended 30 June 2015, that gross rental income stood at £118.3 million, compared to £92.9 million in the same period last year. Operating profit stood at £374.2 million, compared to £404.0 million. Profit after tax was £328.8 million, compared to £362.5 million. Basic and diluted earnings per share stood at 41.6p, compared to 50.8p. Interim dividend per share stood at 9.5p, compared to 8.8p.

HICL Infrastructure Company Limited (HICL.L) Announced that Ian Russell will become the Chairman of the Board of Directors, replacing Graham Picken; and Frank Nelson will become the Senior Independent Director, replacing John Hallam.

Holders Technology Plc (HDT.L) Announced, in its interim results for the half year ended 31 May 2015, that revenues declined to £5.5 million from £6.9 million recorded in the same period a year ago. Loss after tax narrowed to £0.08 million from £0.1 million.

Japan Residential Investment Company Limited (JRIC.L) Announced, in its unaudited interim results for the six months ended 31 May 2015, that its net rental income stood at £6.6 million, compared to £3.8 million in the preceding period. Profit after tax was £6.9 million, compared to loss net of tax of £6.3 million. The company’s basic and diluted earnings per share was 3.3p, compared to 3.0p.

KBC Advanced Technologies Plc (KBC.L) Announced, in its trading update, that trading in the first half has been as anticipated. Trading in the first half has been as anticipated. The firm’s order backlog, together with good visibility on the future pipeline of contracted work and software sales, gives the Board confidence that the Group’s performance for the full year would be in line with its expectations.

Ladbrokes Plc (LAD.L) Announced proposed recommended merger of Ladbrokes plc and the Coral group to create a leading European betting and gaming group. The merger will create Ladbrokes Coral plc, a leading multi-channel and internationally diversified business with a compelling strategy to accelerate online growth, deliver substantial synergies and drive value. On an illustrative aggregated basis, Ladbrokes Coral plc will have net revenue of £2.1 billion and £392 million of EBITDA (excluding cost synergies of at least £65 million) and a pro forma market capitalisation of c.£2.3 billion. To effect the merger, Ladbrokes will issue new ordinary shares to the existing shareholders of Gala Coral representing 48.25% of the enlarged issued share capital of the Combined Entity (prior to the c. 9.99% equity placing announced by Ladbrokes today). Existing Ladbrokes shareholders will own 51.75% on the same basis. Ladbrokes announced today a total dividend of 3p per share for FY 2015 with dividends remaining at this level until EPS cover exceeds 2x underlying EPS, at which time a 2x dividend cover policy would be adopted. It is expected that the new Board of the Combined Entity will adopt the same policy. The company also announced a non-pre-emptive placing of up to 92,378,680 new ordinary shares in the Company (the “Placing Shares”) representing up to approximately 9.99% of the Company’s existing issued ordinary share capital (excluding treasury shares) to both existing and new institutional investors in the Company (the “Placing”). The net proceeds of the Placing will strengthen the balance sheet of the enlarged Ladbrokes Coral group, providing additional financial flexibility to manage and grow the enlarged business. Total Headline net revenue incl. High Rollers fell to £588.8 million in six months ended 30 June 2015 from £589.3 million reported in the same period a year ago. Total Headline operating profit incl. High Rollers fell 38.2% to £41.7 million from £67.5 million reported in the same period a year ago. The company also announced a three year, marketing led, plan to: aggressively grow UK Digital recreational sportsbetting customer base, through more intense brand and direct marketing, to build digital scale and accelerate growth; increase footfall in UK Retail, through increased sponsorship, marketing, investment in SSBTs and selective improvements to fabric, to improve OTC revenue and address performance; deliver multi-channel revenue growth from UK Retail and Digital customer base through investing in retail staff training and incentivisation, relevant offers and systems; and accelerate Ladbrokes Australia’s revenue growth further through more intensive marketing and increasing headcount plans to grow market share.

LMS Capital Plc (LMS.L) Announced, in its half year results for the six months ended 30 June 2015, that net gains on investment stood at £3.45 million, compared to £13.67 million in the same period last year. Profit after tax was £1.00 million, compared to £11.32 million. Diluted earnings per share stood at 0.7p, compared to 6.3p. Additionally, the company also announced a proposal to change its investment policy from its current realisation strategy to enable it instead to make investments in the global energy sector. Subject to shareholder approval of this Change of Investment Policy, an investment team comprising Robert Rayne, Tom Daniel, Bernard Duroc-Danner and Tony Hayward will oversee the new strategy. Julian Metherell will act as a senior adviser to the Investment Team.

Lonmin Plc (LMI.L) Announced in its production results for the three months to 30 June 2015 (unaudited) and a business update, that the rolling 12 month average Lost Time Injury Frequency Rate (LTIFR) for the 12 months to 30 June 2015 increased to 5.26 incidents per million man hours compared to 2.76 at 30 June 2014 and 3.61 at 30 June 2013. Mining operations in the third quarter of 2015 were held back by an increase in the frequency and duration of Section 54 safety stoppages, in particular at K3, our biggest shaft. A total of 2.7 million tonnes was mined in the quarter, 2.4 million tonnes higher than the strike impacted prior year period. Output from the Generation 1 shafts was in line with the management of the depleting shafts. Saleable Platinum metal-in-concentrate at 172,672 ounces was 149,054 higher than the strike impacted prior year. The smelting and refining operations ran at full capacity processing the stock that had built up earlier in the year when the Number One and Two furnaces were down for repairs. Sales of 231,778 Platinum ounces were in-line with refined production but the weak price environment continued during the third quarter and Dollar metal prices were significantly weaker than prior year periods. The Marikana underground mining operations (including Pandora) produced 2.6 million tonnes during the third quarter, an increase of 2.4 million tonnes on the prior year period. The fourth quarter production has started well and absent any material Section 54 safety stoppages expects to achieve Platinum saleable metal-in-concentrate of 750,000 platinum ounces and sales guidance of 730,000 platinum ounces for the year.

Motive Television Plc (MTV.L) Announced that Motive Television Services Ltd, its fully-owned subsidiary, has amended the Service Level Agreement (“SLA”) with long-standing customer Digiturk (Krea Icerik Hizmetleri Ve Produksiyon Anonim Sirketi) to upgrade and extend the Content ExpressT platform. The platform will be used by Digiturk to support the delivery of ultra-high definition content, often referred to as ‘4K UHD’, for Digiturk subscribers that own UHD televisions.

Pearson Plc (PSON.L) Announced that sales were up 1% at CER to £2.2 billion. Adjusted operating profit from continuing operations was down 4% at CER to £72 million (2014: £73 million). At preliminary results on 27 February 2015 the company stated that it expects to report adjusted earnings per share of between 75p and 80p in 2015, on the basis of ownership of PowerSchool for all of 2015 and based on exchange rates as at 21 January 2015. This guidance remains unchanged. The company expects cyclical and UK policy related factors to stabilise in 2015. The US policy environment remains uncertain.

RTC Group Plc (RTC.L) Announced, in its interim results for the half year ended 30 June 2015, that revenues rose to £29.5 million from £25.3 million recorded in the same period a year ago. Profit after tax widened slightly to £0.32 million from £0.31 million. The Directors proposed an interim dividend of 1.0p per share (2014: 0.5p).

Sage Group Plc (SGE.L) Announced that an application has been made to the UK Listing Authority for the block listing of 350,000 ordinary shares of 14/77p each in the Company to the Official List and to the London Stock Exchange for these shares to be admitted to trading. The expected date of admission is 27 July 2015.

Snacktime Plc (SNAK.L) Announced an update prior to the commencement of its close period. The actual result for the year ended 31 March 2015 remains subject to final agreement with auditors, however it is likely that the profit estimate of £550k EBITDA and exceptional items of £650k announced on 1 April 2015 may be impacted by increases in provisions of circa £270k across group companies. This change is primarily attributable to a more prudent estimate [by the Company] of the values of stock and cash in machines. Sales for the full year are expected to be circa £16.7 million as previously notified. Current year trading has been encouraging with two significant wins and a strong pipeline in the vending division and improved EBITDA. Cash remains under pressure however with cash generation from EBITDA being consumed by continuing payments for exceptional items, capital expenditure and the servicing of our debt. This situation is expected to continue for the remainder of the calendar year until the net cash benefit from improved trading and overhead changes is fully reflected in trading cashflows. The Company expects to notify its results for the year ended 31 March 2015 at the end of September 2015.

Vodafone Group Plc (VOD.L) Announced, in its trading update for the quarter ended 30 June 2015, that group total revenue was £10.1 billion and group service revenue was £9.2 billion. On an organic basis Group service revenue increased 0.8% (Q4: 0.1%). In Europe, organic service revenue has continued to recover. UK service revenue increased 0.2% (Q4: -0.6%), supported by a continued strong performance in mobile consumer contract. Trading in the first quarter was consistent with management’s expectations underlying the outlook statement for the 2016 financial year. The Group therefore confirms its outlook for the 2016 financial year.